WASHINGTON—The Consumer Financial Protection Bureau has acted against real estate settlement services provider Meridian Title Corp. for steering consumers to a title insurer owned in part by several of its executives without making disclosures about the businesses’ affiliation.
The CFPB said it found that Meridian failed to disclose its relationship with the title insurer and illegally benefitted from the referrals for title insurance. Under the consent order, the CFPB is ordering Meridian to ensure that it ceases the illegal practice, provide disclosures whenever it makes a covered referral, and pay up to $1.25 million in redress to consumers.
“Meridian Title illegally steered consumers into purchasing a product from an affiliated company to add to its bottom line,” said CFPB Director Richard Cordray. “We’re ordering it to halt this practice and pay up to $1.25 million to consumers who were harmed.”
Meridian Title Corporation is a real estate settlement agent and title insurance agency headquartered in South Bend, Ind. As a settlement agent, Meridian provides real estate settlement services and conducts loan closings in connection with residential real estate transactions.
The CFPB found that Meridian routinely selected Arsenal Insurance Corporation, a company owned in part by three of Meridian’s own executives, as the title insurance underwriter for its customers. When it selected Arsenal, the CFPB found that Meridian was able to keep extra money beyond the commission it would normally have been entitled to collect, based on an understanding that Meridian would select Arsenal as underwriter.
“A company like Meridian that receives anything of value pursuant to an agreement or understanding that business will be referred to an affiliated business like Arsenal must generally disclose its relationship to the consumer in question, among other conditions, in order to avoid a violation of the Real Estate Settlement Procedures Act. In its investigation, the CFPB found that Meridian failed to make the necessary disclosures to more than 7,000 consumers when it selected Arsenal to provide title insurance and also did not satisfy other conditions for avoiding a violation of the law,” the CFPB said.
A copy of the consent order is available at: http://files.consumerfinance.gov/f/documents/201709_cfpb_meridian-title-corp_consent-order.pdf