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The Consumer Financial Protection Bureau (CFPB) has fined real estate settlement services provider Meridian Title Corporation $1.25 million for allegedly steering consumers to a title insurer that is part-owned by several of its executives without disclosing the affiliation between the companies.
The CFPB stated that South Bend, Ind.-based Meridian violated the Real Estate Settlement Procedures Act (RESPA) in selecting Arsenal Insurance Corp. as the title insurance underwriter for its customers. Arsenal is owned in part by three Meridian executives, and the CFPB said 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.
Under the CFPB’s order, Meridian’s fine will go to consumers who were referred to and purchased title insurance from Arsenal but did not receive appropriate disclosures.
“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.”
