Four mortgage insurers agreed to pay about $15 million to settleclaims they paid kickbacks to mortgage lenders in exchangefor business, the U.S. consumer watchdog says.

The Consumer Financial Protection Bureau (CFPB) says the dealstook place over more than a decade leading up to the U.S. financialcrisis and may have boosted mortgage insurance costs forconsumers.

Genworth Financial unit Mortgage Insurance Corp., AmericanInternational Group Inc.'s United Guaranty Corp., Radian GroupInc's Radian Guaranty Inc. and MGIC Investment Corp.'s MortgageGuaranty Insurance Corp. neither admitted nor denied theregulator's findings, according to the settlement orders.

"Homeownership is difficult and expensive enough for most peoplewithout extra costs imposed by financial kickbacks that are kepthidden from them," CFPB Director Richard Cordray says.

Bureau officials say the CFPB is continuing to investigatelenders who may have received kickbacks.

U.S. regulators have been cracking down on practices believed tohave harmed borrowers in the years leading up to the 2007-2009financial crisis. The consumer bureau, which was created in 2010 bythe Dodd-Frank law, oversees mortgages, credit cards, student loansand other products.

The mortgage scheme at issue in the settlement, which CFPBofficials say appears to have begun in the mid-1990s, involved homebuyers who made down payments of less than 20 percent. Becausethose were seen as riskier loans, lenders often required theborrowers to buy mortgage insurance.

Lenders generally choose the company to provide mortgageinsurance. Those insurers then may obtain their own insurance,known as "reinsurance," to guard against losses.

The CFPB says the four mortgage insurers involved in itssettlement purchased reinsurance from subsidiaries of the lenders,an arrangement known as "captive reinsurance," and paid higherprices for it than they should have.

In effect, this meant insurers paid mortgage lenders to steerbusiness their way in violation of the Real Estate SettlementProcedures Act (RESPA), which prevents kickbacks in real estatetransactions, the CFPB says.

Dodd-Frank gave the CFPB the authority to enforce the40-year-old law.

"We believe these mortgage insurance companies funneled millionsof dollars to mortgage lenders for well over a decade," Cordrayadds. 

'AVOID THE DISTRACTION'

Several of the insurers in the settlement say they developedtheir captive reinsurance arrangements with guidance from U.S.regulators.

"While we believe our captive arrangements complied with RESPAand caused no harm to consumers, this settlement was an opportunityto eliminate distractions at an acceptable cost," Radian GuarantyPresident Teresa Bryce Bazemore says in a statement.

United Guaranty also said it settled to "avoid the distraction"and that it believes its practices were fair.

MGIC says borrowers were given the chance to opt out of captivereinsurance transactions. Genworth addsthat consumers paid the same amount for insuranceregardless of whether they were part of a captive reinsurancearrangement.

CFPB officials declined to specify how much the insurers paid tothe reinsurance arms of lenders, how much lenders and insurers mayhave benefited from the deals, or which additional companies couldface enforcement actions.

Kent Markus, the CFPB's enforcement head, says the fourcompanies involved in the settlement are the only insurers writingpolicies today that engaged in captive reinsurance arrangementsduring the period leading up to the financial crisis.

He says steps such as a 10-year ban on putting new mortgagesinto captive reinsurance arrangements would prevent the practicefrom resurfacing as lending increases.