The Consumer Financial Protection Bureau called out Meridian Title for continous RESPA violations. Meridian is ordered pay $1.25 million to affected consumers and “stop violating the law and start providing disclosures,” according to the CFPB’s press release.
Meridian got in trouble for making an additional profit by referring consumers to the title insurance underwriting company Arsenal Insurance Corps, which is owned in part by three of Meridian’s own executives.
“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.”
The violation stems from Meridian’s abuse of their role as a title insurance agency. As a title insurance agent, Meridian receives orders for title insurance policies and assigns those orders to underwriters. The core issue was that Meridian received an extra kickback when they selected Arsenal–owned in part by Meridian executives–as the title insurance underwriter and didn’t disclose the information to consumers.
“When [Meridian] 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,” according to the release.
The CFPB investigation concluded that Meridian failed to make the necessary disclosures to more than 7,000 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 report clarifies
Read the Consumer Financial Protection Bureau’s full press release here.