Amerisave Mortgage Corporation, its affiliate and owner will pay out $19.3 million in refunds and fines for deceptive bait-and-switch mortgage lending scheme.
The Consumer Financial Protection Bureau (CFPB) ordered Amerisave, its affiliate Novo Appraisal Management Company and the owner of both companies, Patrick Markert to pay out $14.8 million in refunds to the thousands of customers that were duped in the scheme and $4.5 million in civil penalties. Markert will pay an additional $1.5 million in penalties.
The Atlanta-based online mortgage lender advertises and lends nationwide using online banner ads and searchable rate tables in third-party websites.
The Bureau found that Amerisave posted inaccurate rates on these banner ads and rate tables, encouraging consumers to pursue a mortgage with the company. When consumers were directed to Amerisave's own website, Amerisave gave consumers quotes based on an 800 FICO score, even where consumers had previously entered a FICO score below 800 on the third-party website. This resulted in Amerisave offering many consumers misleadingly low quotes.
Amerisave required consumers to order and give payment authorization information for an appraisal before it would provide a Good Faith Estimate (GFE) for the mortgage, and did not tell consumers until later that the appraisal orders were being referred to its own affiliated company, Novo Appraisal Management Company. At closing, Amerisave also charged consumers for "appraisal validation" reports, without disclosing that the service was provided by Novo and that it had marked up the reports by as much as 900 percent. Amerisave described the rates as being a "special deal" for their customers. Novo purchased the reports for an average of $20. Novo then charged Amerisave customers $100 for the service, ultimately passing much of the $80 windfall back to Markert.