An Atlanta mortgage firm and its owner agreed to pay $20.8 million in restitution and penalties to settle charges by a fledgling federal agency that it duped customers into paying high fees and interest with a bait-and-switch mortgage scheme.
The Consumer Federal Protection Bureau said this week that Amerisave Mortgage Corp. and an affiliated appraisal firm agreed to pay $14.8 million in refunds to customers and $4.5 million in penalties. The firms’ owner, Patrick Markert agreed to pay an additional $1.5 million to the bureau’s civil penalty fund.
Under the consent order, the companies and Markert did not admit or deny guilt.
The CFPB, launched in 2011, is a child of the Dodd-Frank financial reform law that was enacted after the 2007-2009 financial crisis.
The agency said Amerisave, which offers mortgages nationwide through its online service, gave customers unrealistically low quotes based on a nearly perfect credit score even after they had entered their correct credit scores. But by the time Amerisave told applicants they would have to pay higher interest rates because of their weaker credit scores, the company had already pushed them into spending hundreds of dollars on an appraisal and other costs, the agency said.
The CFPB also said Amerisave unfairly inflated appraisal fees and didn’t disclose its ownership of the firm, Novo Appraisal Management Co., that handled the appraisals.
“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. The agency’s action “puts an end to Amerisave’s unacceptable bait-and-switch scheme and holds Patrick Markert personally responsible for his illegal actions,” he said.
The companies also agreed to stop using deceptive practices and charging illegal fees.
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