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Friday, August 15, 2014

CFPB Takes Actions against Mortgage Originator for UDAAP Violations

This week, the Consumer Financial Protection Bureau (CFPB) took enforcement action and fined a mortgage originator and affiliate for "unfair and deceptive practices" regarding false rate advertisements, up-front fees, affiliate referral arrangements, and inflated prices.
According to the CFBP Release, the Bureau "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. The Bureau 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. Amerisave and Novo will provide $14.8 million in refunds to harmed consumers and pay a $4.5 million penalty. Patrick Markert, as an individual, will pay an additional $1.5 million penalty."
The CFPB found that Amerisave:
  • Deceptively advertised low interest rates that were not available;
  • Locked consumers in with costly up-front fees;
  • Failed to properly disclose its affiliate relationship; and
  • Charged unfairly inflated prices for services through its affiliate.
The ABIA has a Task Force of members that work on issues related to the CFPB's regulation of insurance products. If you are an ABIA member and would like to learn more about ABIA's work with CFPB to educate them about the bank-insurance industry or join our CFPB Task Force, please contact us and visit our website.