Anna Child Group

AmeriSave Mortgage Fraud is an example of what to avoid as a consumer

Source:  DS News 8/12/14

Credit FraudMany Huntington Beach consumers are shopping for mortgages online, but as with many other online purchases homeowners need to be careful when mortgage shopping on lender websites.  Here is an example of a recent fraud by one lender, but they are most likely not the only online lender using this scheme to rip-off borrowers:

The Consumer Financial Protection Bureau (CFPB) announced on August 12 that it had levied $19.3 million in penalties against Atlanta-based online lender AmeriSave Mortgage Corporation for engaging in a bait-and-switch scheme that allegedly cheated consumers out of millions.

AmeriSave, its affiliate, Novo Appraisal Management Companies, and CEO/owner of both companies, Patrick Markert, were penalized for misleading consumers by advertising fraudulent low rates and then failing to honor those rates once the consumers were locked in after paying expensive up-front fees. The consumers were then illegally overcharged for the services of a third party affiliate…

“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,” CFPB Director Richard Cordray said. “Today’s action puts an end to AmeriSave’s unacceptable bait-and-switch scheme and holds Patrick Markert personally responsible for his illegal actions.”

AmeriSave required those inquiring about mortgage rates to provide them with payment authorization information for an appraisal and often charged them in excess of $400 or more in up-front fees before providing them with a Good Faith Estimate (GFE) for the mortgage, the Bureau found. The CFPB ruled that this practice violated the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).

The Bureau said that AmeriSave referred these orders for appraisals to its affiliate, Novo, without telling consumers and then charged consumers for an “appraisal validation” report without telling them that Novo was providing that service. Novo allegedly marked up the cost of these reports by up to 900 percent. 

If you would like to read the entire article written by DS News, see the following link.

As a Realtor, I like to refer my clients to a “Brick & Mortar” local area lender that I can go “visit in person” if I need to get something done.  There is nothing like being able to deliver documents quickly and in person to keep a busy lender on track.  A local lender who is interested in both the current loan and future loans will do a far better job than an online lender who does not expect to get any future business.  If you need a referral to a good local lender, please contact me.

Thanks for Reading!  And, keep the homebuyer & home seller referrals coming… those people you send allow me to have the time and resources to publish this Market Update each month!  Please share this information via: word of mouth, email link, and/or social media.  I really appreciate it!