WASHINGTON (8/13/14)--The Consumer Financial Protection Bureau (CFPB) has ordered Atlanta-based online mortgage lender Amerisave Mortgage Corp. and its affiliate to pay $19.3 million for "deceptive bait-and-switch" lending practices.
Amerisave and Novo Appraisal Management Co. will pay $14.8 million to affected consumers and a $4.5 million penalty. The companies' owner, Patrick Markert, was fined an additional $1.5 million. Fines will go to the CFPB's Civil Penalty Fund.
"Amerisave lured consumers in with deceptive advertising, trapped them with costly upfront fees, and then illegally overcharged them for services from an undisclosed affiliate," said CFPB Director Richard Cordray. "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."
Amerisave drew in consumers nationwide with online ads that teased rates that did not match the consumers' credit scores or did not exist. "Through use of these inaccurate rates and terms, Amerisave lured consumers into pursuing a mortgage with the company," the CFPB said, which found this practice deceptive under the Consumer Financial Protection Act and the Mortgage Acts and Practices Rule.
The CFPB also alleged that Amerisave required consumers to schedule appraisals that cost between $375 and $500 before obtaining an official estimate of mortgage costs, in violation of the Truth in Lending Act and the Real Estate Settlement Procedures Act.
The company also referred customers to Novo without disclosing its affiliate relationship with the appraisal company.
The CFPB order also requires Amerisave, Novo and Markert to stop advertising unavailable mortgage rates and stop charging illegal fees.