In August, the Consumer Financial Protection Bureau (CFPB) ordered Amerisave Mortgage Corporation to pay sanctions for its conduct in illegal bait-and-switch lending schemes that cost borrowers millions of dollars.
The Bureau discovered the Atlanta-based nationwide online lender, its subsidiary, Novo Appraisal Management Company, and the proprietor of both companies, Patrick Markert, had been enticing customers with deceptive interest rates, locking borrowers in with expensive upfront fees, failing to honor the promised rates, and then fleecing customers with affiliated "third-party" services.
The CFPB's action brings to an end Amerisave's fraudulent operations conducted between mid-2011 and 2014. The company posted online banner ads through third-party websites proclaiming false interest rates and terms to attract consumers. Regardless of the credit score entered by the consumer on the third-party site, when redirected to Amerisave's site, the consumer was given a rate quote based on a FICO score of 800, therefore giving consumers a "too good to be true" quote.
Amerisave would then trap borrowers by requiring them to order and authorize payment for an appraisal, which would be referred to Amerisave's affiliate, Novo, prior to providing a Good Faith Estimate for the mortgage. Additionally, borrowers would be blind-sided at closing with charges for services by Novo Appraisal Management Company that had been marked up by as much as 900 percent. Amerisave further violated consumer trust by describing their offerings with the undisclosed affiliate, Novo, as a "special deal."
At the conclusion of its investigation, the CFPB determined that Amerisave was guilty of the following mortgage bad faith lending practices:
- Purposely and fraudulently promoting low interest rates that were not available to consumers
- Trapping borrowers with exorbitant fees prior to supplying them with a good faith estimate
- Failing to inform consumers of its partnership with Novo
- Charging excessive fees for services provided by its subsidiary, Novo
Consumer Financial Protection Bureau Sanctions
By virtue of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Bureau has the jurisdiction to enforce sanctions against companies participating in unscrupulous, fraudulent, or malevolent practices. The CFPB has mandated that Amerisave, Novo, and Markert adhere to the following sanctions:
- The companies are required to pay $14.8 million to reimburse swindled borrowers.
- The companies are prohibited from advertising unattainable mortgage rates.
- Amerisave is prohibited from charging fees or making referrals to its subsidiaries without the appropriate disclosure forms.
- Amerisave must pay $4.5 million, and Patrick Markert must pay $1.5 million in penalties to the CFPB's Civil Penalty Fund
Contact National Consumer Protection Lawyers
If you have been a victim of bad faith lending practices, contact Golomb Legal for a free case evaluation. Our national consumer protection lawyers have successfully pursued class action cases against banks, finance companies, and insurance companies.
To learn more about your legal options or to schedule a free consultation call the Philadelphia class action lawyers at Golomb Legal today at 1-800-355-3300 or 1-215-985-9177 or fill out our confidential Contact Form.
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