May 24, 2018

Amerisave On the Hook for Alleged Mortgage Scheme

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Amerisave On the Hook for Alleged Mortgage Scheme

The Consumer Financial Protection Bureau is ordering Amerisave Mortgage to pay $19.3 million, alleging the lender scammed thousands of customers with a bait-and-switch mortgage-lending scheme. CFPB also accuses Amerisave affiliate Novo Appraisal Management Company and Patrick Markert, the owner of both companies, of being involved in the scam.

Be on the Lookout

CFPB says that between mid-2011 and 2014, Amerisave advertised misleading interesting rates and then locked customers in with pricey up-front fees. The agency alleges that Amerisave failed to honor its advertised rates to customers and illegally overcharged them for affiliated "third-party" services.

"By the time consumers could have discovered that the advertised low rates were too good to be true, they had already committed to pay hundreds of dollars to Amerisave," says CFPB Director Richard Cordray.

Amerisave advertised its low interest rates through online banner ads and searchable rate tables on third-party websites. When customers clicked on the ad, they were then directed to Amerisave's website, which provided consumers with quotes based on an 800 FICO score, even if customers had entered a lower FICO score on the previous third-party website. As such, CFPB says that customers were being provided with misleadingly low interest rates.

CFPB also says that consumers were required to order and pay for an appraisal before Amerisave would provide a Good Faith Estimate for the mortgage. Amerisave then charged consumers for "appraisal validation" reports and failed to disclose that the service was being provided by Novo, a move that violates RESPA, CFPB stated in its allegations. CFPB asserts that the price charged on the appraisal report was inflated by as much as 900 percent.

Amerisave and Novo have been ordered by CFPB to refund $14.8 million to customers who were affected, as well as pay $4.5 million as a penalty. Markert is ordered to pay an additional $1.5 million penalty.

Source: “Amerisave to Pay $19.3M for Bait-and-Switch Mortgage Scheme,” Atlanta Business Chronicle (Aug. 12, 2014) and “CFPB Takes Action Against Amerisave Mortgage,” HousingWire (Aug. 13, 2014)