The Consumer Financial Protection Bureau took action against Amerisave Mortgage and ordered it to pay $19.3 million for deceiving tens of thousands of mortgage customers with a bait-and-switch loan scheme.
The charges were against Amerisave, its affiliate, Novo Appraisal Management Company, and the owner of both companies, Patrick Markert.
According to the bureau, the mortgage firm lured consumers by advertising misleading interest rates, locked them in with costly up-front fees, failed to honor its advertised rates and then illegally overcharged them for affiliated “third-party” services.
“By the time consumers could have discovered the advertised low rates were too good to be true, they had already committed to pay hundreds of dollars to Amerisave,” said CFPB Director Richard Cordray.
“This action puts an end to Amerisave’s unacceptable bait-and-switch scheme and holds Patrick Markert personally responsible for his illegal actions,” Cordray added.
Amerisave and Novo will provide $14.8 million in refunds to harmed consumers and pay a $4.5 million penalty. In addition, Patrick Markert, as an individual, will pay an additional $1.5 million penalty.
The CFPB asserted that:
- The company deceptively advertised low interest rates that were not available, which goes against the Consumer Financial Protection Act and the Mortgage Acts and Practices Rule.
- Amerisave locked consumers in with costly up-front fees, violating the Truth in Lending Act and the Real Estate Settlement Procedures Act.
- It failed to properly disclose its affiliate relationship, which is in violation of RESPA.
- The mortgage firm charged unfairly inflated prices for services through its affiliate.
