First, the business bad guys, represented today by Amerisave Mortgage Corp., which the Consumer Financial Protection Bureau has ordered to pay $19.3 million for providing a deceptive bait-and-switch scheme on would-be borrowers.
The CFPB found that the Atlanta-based online company, which lends in all 50 states, lured consumers by advertising misleading interest rates. Then locked them in with costly up-front fees, failed to honor its published rates and illegally overcharged them for affiliated third-party services.
Here's how it worked, according to the CFPB:
Since 2011, the company advertised inaccurate rates and terms in online banner ads and searchable rate tables on third-party websites, inducing consumers to pursue a mortgage with Amerisave. Once at Amerisave's website, consumers received quotes based on an 800 FICO score, even when they had previously entered a score well below 800 on the third-party site that led them to Amerisave in the first place.
The company also required consumers to pay for an appraisal before it would provide a good-faith estimate; then it ordered the appraisal from an affiliated company. Borrowers weren't told that tiny fact until later.
Then, at closing, Amerisave charged its customers for something called "appraisal validation" reports without disclosing that the service was provided by an affiliated company. They also weren't told the fee was marked up by as much as 900%.
In its investigation, the CFPB found that Amerisave and its owner, Patrick Markert, pocketed more than $3 million in indirect profit distributions by overcharging unknowing borrowers. The validation reports cost $20, but Amerisave charged $100, with the $80 windfall finding its way to Markert's wallet.