RSSThe Consumer Financial Protection Bureau fined real estate settlement services provider Meridian Title Corporation $1.25 million for violations of the Real Estate Settlement Procedures Act. The bureau’s consent order, found here, alleges illegal kickbacks relating to consumers referred to an affiliated title-insurance business.
The bureau found violations of Section 8(a) of REPSA which is entitled “Prohibition of Kickbacks and Unearned Fees.” That section states that “no person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.”
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. The CFPB found that Meridian failed to make necessary disclosures to more than 7,000 consumers when it selected Arsenal to provide title insurance and also did not satisfy other RESPA requirements.
“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 consent order requires Meridian to pay the $1.25 million in redress to consumers who were referred to and purchased title insurance from Arsenal but did not receive appropriate disclosures. In addition, the title company must implement policies and procedures to avoid RESPA violations in the future by ensuring that it properly discloses to consumers whenever it makes an applicable referral.
As is typical of all CFPB consent orders, Meridian also must cooperate fully with the bureau in any investigation related to or associated with the RESPA violation by providing truthful and complete information, evidence, and testimony. Also, Meridian is required to maintain detailed records “all documents and records necessary to demonstrate full compliance” with the order.
