The Consumer Financial Protection Bureau (CFPB) has issued a consent order against South Bend, Ind.-based Meridian Title Corp., ordering the title agency to pay up to $1.25 million for steering consumers to a title insurer owned in part by several of its executives without disclosing the businesses’ affiliation.
CFPB also ordered Meridian to implement policies and procedures to ensure it makes proper disclosures to consumers whenever it makes an applicable referral.
“Meridian Title illegally steered consumers into purchasing a product from an affiliated company to add to its bottom line,” CFPB Director Richard Cordray said in a release announcing the enforcement action. “We’re ordering it to halt this practice and pay up to $1.25 million to consumers who were harmed.”
According to the CFPB, Meridian routinely referred title insurance underwriter business to Arsenal Insurance Corp., a company owned in part by three Meridian executives. “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,” the CFPB release stated.
That extra money was determined to be a thing of value, thus leading to a violation of RESPA.
The CFPB said its investigation revealed that Meridian failed to make the necessary disclosures to more than 7,000 consumers when it selected Arsenal to provide title insurance.
Among the areas in which Meridian was ordered to comply was by establishing, implementing and maintaining testing policies, procedures, and standards, and technology designed to create a compliance management system that will monitor the delivery of forms disclosing its affiliated business arrangement with Arsenal, and any other affiliated arrangements it has.
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