CFPB fines deceptive mortgage company $20M

The Consumer Financial Protection Bureau instituted new laws designed to provide greater safeguards and information to borrowers.
The Consumer Financial Protection Bureau instituted new laws designed to provide greater safeguards and information to borrowers. (Content That Works)
Posted: August 16, 2014

The Consumer Financial Protection Bureau has forced a retail chain, USA Discounters, to pay $400,000 and a mortgage lender, Amerisave Mortgage Corp., and its owner to pay more than $20 million in refunds and penalties for deceptive charges imposed on service members and home buyers, the agency said this week.

The CFPB said Amerisave used a deceptive "bait-and-switch" scheme, luring customers with mortgage rates available only to people with an unusually high FICO credit score of 800 - even when they had entered a lower score on a referral site that led to Amerisave.

"For certain types of loans, the advertised rates were simply not available," the CFPB said this week. "For others, the rates advertised were appreciably lower than the rates the typical Amerisave customer was actually likely to lock."

The CFPB said Amerisave's violations continued after borrowers applied. For instance, the Atlanta lender required mortgage shoppers to order and authorize payment for an appraisal, and to pay for a credit report marked up as much as 350 percent, before it provided a formal "Good Faith Estimate" of a loan's cost.

"By leading customers to believe they were already obligated to pay such costly fees, often $400 or more, Amerisave restricted consumers' ability to shop for alternative products and better prices," the CFPB said.

The CFPB said Amerisave's owner and CEO, Patrick Markert, received more than $3 million in "indirect profit distributions" from an affiliate, Novo Appraisal Management Co., for "appraisal validation reports" Amerisave required at closing - reports the agency said were marked up as much as 900 percent. It said Amerisave never properly disclosed its relationship with Novo.

In addition to nearly $15 million in refunds, Amerisave will pay $4.5 million and Markert will pay $1.5 million in civil penalties, the agency said.

The CFPB said Thursday that USA Discounters Ltd., of Norfolk, Va., would refund $350,000 to service members charged a deceptive $5 fee at its stores, which sell furniture, appliances, and other items near military bases.

The agency said the fee supposedly covered services such as verifying whether purchasers were covered by the Servicemembers Civil Relief Act, which protects active-duty personnel from some actions by creditors.

"These services were characterized as a benefit to service members, but they only helped USA Discounters sue service members," the agency said. The CFPB said the retailer also would pay a $50,000 penalty.

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