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The Consumer Financial Protection Bureau yesterday fined real estate settlement services provider Meridian Title Corp. over violations of the Real Estate Settlement Procedures Act, ordering the company to pay up to $1.25 million to harmed consumers, HousingWire.com reported. The CFPB stated that the South Bend, Indiana-based company routinely steered consumers to Arsenal Insurance Corporation, a title insurer company owned in part by three of Meridian’s own executives. As a title insurance agent, Meridian receives orders for title insurance policies from lenders and real estate agents, and in some cases directly from consumers, and assigns those orders to title insurance underwriters, the CFPB explained. By steering consumers to Arsenal Insurance and not disclosing its relationship with the title insurer, Meridian Title illegally benefitted from the referrals for title insurance, the CFPB claims. 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 CFPB.

A California couple who were dragged through a Bank of America Corp. foreclosure called “brazen” and “heartless” by a bankruptcy judge have joined the lender’s request to be spared from a $45 million punishment, Bloomberg News reported. Bankruptcy Judge Christopher Klein in Sacramento must now decide whether to approve a settlement that would rescind both the penalty and the scathing 107-page decision that accompanied it in March. While Judge Klein said that the size of the punitive damages award against Bank of America was meant to “not be laughed off in the boardroom,” the couple who endured what the judge described as a “Kafkaesque nightmare” say the deal they’ve struck will leave them better off and avoid years more litigation and appeals.

A government agency is targeting lenders who aggressively push military veterans to refinance their home loans, leading the borrowers in some cases to rack up thousands of dollars in unnecessary fees, the Wall Street Journal reported today. Ginnie Mae, the government-owned corporation that guarantees certain mortgage securities, said that it is planning to discuss with at least half a dozen lenders their refinance practices. It is also contemplating civil legal action against some lenders, and recently has formed a “Lender Abuse Task Force” with the Department of Veterans Affairs. Michael Bright, Ginnie Mae’s acting president, said in an interview that the consequences of refinance “churning” — where loans are refinanced more often than normal, usually at no benefit to the borrower — have rippled across the mortgage ecosystem. This creates uncertainty for investors and higher prices for many borrowers, he added. Ginnie Mae this year instituted new rules to curb rapid refinancing, including telling lenders that in some cases they would have to wait until a loan was at least six months old before refinancing it. But Bright said in a recent letter to Sen. Elizabeth Warren (D-Ma.) that some lenders are intentionally trying to evade efforts meant to curb churning. “When people say the mortgage industry has learned its lesson, this seems to suggest that that may not be the case,” Bright said, referring to the financial crisis.

Student loan debt has been an obstacle for many potential home buyers, and Lennar Corp. is trying to do something about it, the Wall Street Journal reported today. A subsidiary called Eagle Home Mortgage plans today to introduce a program under which it will pay off a significant chunk of the student loan of a borrower who purchases a home from Miami-based Lennar. Housing experts said other builders are likely to look to mimic the program, which could help lure more of the critical first-time-buyer segment into home purchases. Eagle will make a payment to a buyer’s student loans of as much as 3 percent of the purchase price, up to $13,000. The contribution doesn’t directly increase the purchase price of the home or add to the balance of the loan. Such programs come with the risk, however, that the incentive drives up the price of new homes.

The U.S. is investigating lenders for allegedly pressuring veterans and members of the military into unneeded mortgage refinances — unsavory conduct that not only leads to higher consumer costs but has consequences for one of the world’s largest bond markets, Bloomberg News reported today. The probe is being conducted by Ginnie Mae, a government-owned corporation whose purpose is to make mortgages more affordable. It does so by guaranteeing repayment on $2 trillion of mortgage bonds even if borrowers default on the underlying loans. Ginnie-backed securities support several federal housing initiatives, including programs in which loans are made through the Department of Veterans Affairs. The concern is that some lenders are improperly pushing veterans and servicemembers to refinance loans that have been wrapped into Ginnie securities. Lenders are hounding consumers to refinance loans over and over again in a short period of time, according to Ginnie Acting President Michael Bright. The practice, known as churning, generates high fees for lenders but can leave servicemembers with larger loan balances.