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» ADMINISTRATION: 'KEY' HOUSING INDICATORS IMPROVE, RECOVERY STILL 'FRAGILE' The housing industry is making "important progress across many key indicators," according to the Obama administration's housing scorecard released in April, but true to form, the administration tempered the positive news with warnings that the "overall recovery remains fragile." The scorecard, jointly released by HUD and the Department of Treasury, combines housing data from the public and private sectors to provide an overview of the housing market. It pointed to rising home prices across all major indexes and more than $1.64 trillion in equity returned to homeowners over the past year. In conjunction with the scorecard, the administration also released its progress report on the Making Home Affordable Program. As of February, more than 1.1 million homeowners found payment relief through the government's Home Affordable Modification Program (HAMP). On average, homeowners in the program are able to save about $546 on their mortgage payments each month. Among borrowers with non-GSE mortgages who qualified for HAMP, about 70 percent received a principal reduction with their modification. Homeowners also found relief through the Home Affordable Foreclosure Alternative (HAFA) program. According to Treasury, more than 126,000 homeowners have managed to avoid foreclosure with a HAFA short sale or deed-in-lieu. KNOW THIS In the private sector, the U.S. economy has added an average of 175,000 jobs per month since March 2010, a rate that is more than 20% higher than that of the prior expansion, according to Guggenheim Partners. VISIT US ONLINE @ DSNEWS.COM CFPB FILES COMPLAINTS AGAINST MORTGAGE INSURERS FOR ALLEGED KICKBACKS The Consumer Financial Protection Bureau (CFPB) announced enforcement actions against four mortgage insurance companies who allegedly gave kickbacks to lenders in exchange for business. The CFPB filed complaints against Genworth U.S. Mortgage Insurance Corporation (USMI), Mortgage Guaranty Insurance Corporation (MGIC), Radian Guaranty, and United Guaranty Corporation (UGC) for their alleged roles in kickback arrangements. The proposed orders require the companies to pay $15.4 million in penalties to the bureau. According to an agency press statement, the CFPB alleges the four insurers provided kickbacks to mortgage lenders by purchasing captive reinsurance that was "essentially worthless but was designed to make a profit for the lenders." In exchange for the kickbacks, the insurers are believed to have received lucrative business referrals. The alleged arrangements took place for more than 10 years, including the years leading up to the financial crisis, according to government officials. "Illegal kickbacks distort markets and can inflate the financial burden of homeownership for consumers," said CFPB director Richard Cordray. "We believe these mortgage insurance companies funneled millions of dollars to mortgage lenders for well over a decade. The orders announced today put an end to these types of arrangements and require these insurers to pay more than $15 million in penalties for violating the law." In addition to paying the fines, the companies have agreed to reform their practices. Under the proposed orders, the insurers are prohibited from entering into any new captive mortgage reinsurance arrangements with affiliates of mortgage lenders. They are also barred from obtaining captive reinsurance on any new mortgages for a period of 10 years. As pre-existing arrangements come to a close, the insurers will forfeit any right to the funds not directly related to collecting on reinsurance claims. The companies will continue to be monitored by CFPB and are required to make reports in order to ensure their compliance with the provisions of the orders. In a statement, Genworth USMI president and CEO Rohit Gupta asserted that the company received guidance from HUD on developing its captive reinsurance arrangements and that the arrangements were permissible. However, the insurer agreed to settle so it could "focus [its] resources on working with customers to help borrowers responsibly achieve and maintain homeownership, and to resolve the uncertainties inherent in such a review and any possible resulting litigation." MGIC also addressed the matter in a press release, commenting that its arrangements followed HUD guidelines and pointing out that borrowers were notified and given an opportunity to opt out of any captive insurance transactions. In its own statement, Radian noted it has not entered into any new captive reinsurance arrangements since 2007. While the company says its arrangements complied with the Real Estate Settlement Procedures Act (RESPA) and caused no harm, president Teresa Bryce Bazemore said Radian is "pleased to put this behind us." 25

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