California Consumer Financial Protection Bureau Discussion

Section 5 Discussion
Jaret Leiva 5/3/2019 11:06:02 AM
On August 12, 2014, the Consumer Financial Protection Bureau (CFPB) took action against Amerisave Mortgage Corporation, its
affiliate, Novo Appraisal Management Company, and the owner of both companies, Patrick Markert, for engaging in a deceptive bait-
and-switch mortgage-lending scheme that harmed tens of thousands of consumers. Amerisave Mortgage Corporation, an Atlanta-
based online mortgage lender, advertises and lends in all 50 states and the District of Columbia. The CFPB found that Amerisave 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. Between mid-2011 and 2014, Amerisave advertised its interest
rates and terms using online banner ads and searchable rate tables on third-party websites. The CFPB found that Amerisave posted
inaccurate rates on these banner ads and rate tables, inducing consumers to pursue a mortgage with Amerisave. When consumers
were directed to Amerisave’s own website, Amerisave gave consumers quotes based on an 800 FICO score, even when consumers had
previously entered a FICO score below 800 on the third-party website that led them to Amerisave. This resulted in Amerisave offering
many consumers misleadingly low quotes. Additionally, Amerisave required consumers to order and give payment authorization
information for an appraisal before provided a Loan Estimate (LE) for the mortgage, and did not tell consumers until later that the
appraisal orders were being referred to its own affiliated company. Under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. The CFPB’s order
requires Amerisave, Novo, and Markert to take the following actions: o Pay $14.8 million in consumer refunds; o Stop advertising
unavailable mortgage rates; o No longer charge illegal fees; o Pay $6 million in fines: Amerisave will make a $4.5 million penalty
payment, and Patrick Markert will make an additional $1.5 million penalty payment, to the CFPB’s Civil Penalty Fund.
What laws and/or regulations did Amerisave violate and how?
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