A settlement agent out of Indiana will pay more than a million dollars as part of an order alleging that it steered business to an affiliated business without disclosing the affiliation.
On Wednesday, the Consumer Financial Protection Bureau issued a consent order against Meridian Title Corp. for alleged violations of the Real Estate Settlement Procedures Act.
The bureau claims that the South Bend, Indiana-based firm steered
consumers to a title insurer owned in part by several of its executives. But no disclosures were made to customers about the business affiliation.
The affiliated company, Arsenal Insurance Corp., is owned by three of Meridian’s own executives. When customers were steered to Arsenal, Meridian earned more from the transaction than it otherwise would have.
“The CFPB found that Meridian failed to disclose its relationship with the title insurer and illegally benefited from the referrals for title insurance — which is usually required in real estate purchases involving a mortgage loan,” an accompanying statement from the bureau said.
The action, which was taken under the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires Meridian to ensure the illegal practice stops. It also must provide disclosures when it makes a covered referral.
In addition, the CFPB order requires $1.25 million in redress be paid to consumers.
“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,” the news release stated. “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.”
