HUD Settles Case With Six Home Builders In Alleged Scheme To Hide Title Insurance Kickbacks

HUD allegations of violations of Federal law by six major homebuilders involving hidden title insurance kickbacks, referral fees, etc. allegedly received by them were settled by the parties, according to the following excerpt from a 10-29-07 HUD press release:

• The U.S. Department of Housing and Urban Development [...] announced separate settlement agreements with six major homebuilders that engaged in complex business arrangements involving captive title reinsurance. The agreements announced [...] stem from alleged violations of The Real Estate Settlement Procedures Act (RESPA) and total nearly $1.4 million. [...] “There’s no legitimate purpose for captive title reinsurance when it comes to single-family homes,” said Brian D. Montgomery, HUD Assistant Secretary for Housing and Federal Housing Commissioner. “It’s increasingly clear to us that these complicated business arrangements serve no other purpose than to hide referral fees and kickbacks which are expressly forbidden by law.” [...] In HUD’s view, any captive title reinsurance arrangements in which payments are not bona fide and exceed the value of the reinsurance are a violation of RESPA.

The six builders targeted by HUD in this enforcement action were: Pulte Homes, Inc., KB Home, Beazer Homes USA, Inc., Meritage Homes Corp. and affiliates, The Ryland Group, Inc., and Technical Olympic USA, Inc. (TOUSA Homes), along with their captive title reinsurance companies.

For more, see HUD Announces Six Settlement Agreements With Builders Involved In Captive Title Reinsurance Arrangements (Nearly $1.4 million in settlements the result of Department’s enforcement effort).

For links to the six separate 10-29-07 settlement agreements, as well as RESPA settlement agreements resulting from enforcement actions by HUD against other alleged RESPA violators, see RESPA Settlement Agreements, on the HUD website.

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