Major Banks Allegedly Engaged In $6 Billion Mortgage Insurance Kickback Scheme

American Banker reports that “many of the country’s largest banks received $6 billion in kickbacks from mortgage insurers over the course of a decade, according to a previously undisclosed investigation by the Inspector General of the Department of Housing and Urban Development.” Major mortgage lenders, including Citigroup and Wells Fargo, allegedly demanded that insurers “cut them in on the lucrative business of insuring the mortgages they produced during the housing boom,” when subprime predatory lending exploded out of control. Such a scheme potentially violates the Real Estate Settlement Procedures Act, a 1974 law prohibiting abusive home sales. The charges have been referred to the Department of Justice.