Business wasn’t exactly booming for mortgage lenders after the great recession and housing market slump, but that doesn’t mean they had the right to mislead consumers just to make a few (million) bucks. One company that allegedly did just that must repay million of dollars to customers it wronged.
The Consumer Financial Protection Bureau this week announced that online mortgage lender Amerisave Mortgage Corporation, its affiliate, Novo Appraisal and the companies’ owner, Patrick Markert, will pay a total of $19.3 million in refunds and penalties for a purported bait-and-switch scheme operated between 2011 and 2014.
The CFPB charges that Atlanta-based Amerisave allegedly lured consumers into taking out loans by advertising misleading interest rates, locking consumers in with costly up-front fees, failed to honor its advertised rates and illegally overcharged consumers for affiliated “third-party” services.
Between mid-2011 and 2014, Amerisave advertised inaccurate interest rates and terms using online banner ads and searchable rate tables on third-party sites, luring consumers to pursue a mortgage with the company, the CFPB reports.
Interested consumers were then directed to Amerisave’s website , where they received quotes based on an 800 FICO score, even when consumers had previously entered a FICO score below 800 on the third-party site. This tactic led to consumers receiving misleadingly low quotes.
In order to continue the mortgage lending process, Amerisave required consumers to order and give payment authorization information for an appraisal before it would offer a Good Faith Estimate (GFE) for the mortgage.
Consumers were led to believe that Amerisave was bargaining in good faith for the third-party appraisal, which the company described as a “special deal” for consumers.
However, the appraisal orders were being referred to Amerisave’s own affiliated company – Novo. According to the CFPB, at the time of closing Amerisave would charge consumers for the appraisal validation reports, which had been marked up by Novo by as much as 900%.
Under the order, Amerisave and Novo must provide $14.8 million in refunds to consumers harmed by the companies’ deceptive actions and must stop advertising unavailable mortgage rates.
Additionally, Amerisave will pay a $4.5 million penalty, while Markert, the owner of the companies, must pay $1.5 million in penalty payments to the Bureau’s Civil Penalty Fund.
CFPB Orders Amerisave To Pay $19.3 Million For Bait-And-Switch Mortgage Scheme [Consumer Financial Protection Bureau]