Amerisave Fined $19.3 Million For False Advertising and More

Bait-and-Switch is a serious crime.

Bait-and-Switch is a serious crime.

It was bad enough seeing the impossibly low interest rates posted by Amerisave, but when they showed up on reputable websites like Bankrate and Mortgage Professor, it was downright disturbing. Why would they let a liar post on their websites? Didn’t they value their reputations? I sent an email asking and received a very unsatisfactory reply. It seemed like the god of greed was ruling over decency.

I heard from several good folks who had read Mortgage Rip-Offs and Money Savers that they were promised a low interest rate and then locked in at a higher rate. And the fees! The huge, ridiculous fees! It was like old fashioned highway robbery.

But justice finally caught up with the scheme that took advantage of borrowers in all 50 states. The Consumer amerisave logoFinance Protection Bureau, the watchdog organization set up by the White House, busted Amerisave, its affiliate Noro Appraisal Management Company, and the owner, Patrick Markert.

The Result:

* $14.8 million must be paid back to consumers who were sucked in and taken advantage of.

* $6 million in fines and penalties for the companies and Mr. Markert.

* An order to stop advertising rates that are not actually available.

* An order to follow the disclosure law by revealing the relationship between the lender and the appraisal company.

* An order to stop collecting money from borrowers before providing a Good Faith Estimate (which is illegal).

The Lesson for Everyone

Listen to your gut instinct and common sense. When someone claims to have an interest rate that is so much lower than every other lender in America, you know something is amiss. Choose the honest, ethical loan officer over the smooth-talker who refuses to answer your questions directly. Never give your credit card to pay for a lender fee or appraisal before you have received a Good Faith Estimate.

To read more about this news story, see the CFPB post here.

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Crooked Credit Union Tries Bait-and-Switch Scam

i-m-always-disappointed-liar-quotes-500x444“What are your lender fees?” I asked the loan officer (LO) at the credit union. I was shopping for a mortgage for one of my coaching clients, and I explained the scenario: No cash out refinance, 15-year fixed rate, 80% loan-to-value, A credit.

“We don’t have any fees,” said Ms. LO.

I thought that was impossible, so I replied, “I am not talking about having no points. I need to know what your lender fees are, such as underwriting, processing, and any other fees.”

Then to be crystal clear, I added, “I need to know the dollar amount that will show on the Good Faith Estimate, page 2, #1, ‘Our Origination Fee’.”

“Just a minute, let me go check with my manager,” she said.

I waited. When she came back, she said, “My manager says we don’t have an origination.”

“Wow, that’s great! I’m going to have my client call you,” I said. I proceeded to tell her my client would call in the morning, because it was just a few minutes to closing time.  Ms. LO thanked me and said she’d look forward to helping her.

You can imagine my shock and surprise when my client emailed me the Good Faith Estimate she received from Ms. LO at the credit union the next day. Take a look for yourself:

_____________________________________________

YOUR ADJUSTED ORIGINATION CHARGES

1. Our origination charge                                  1,954.00
     This charge is for getting this loan for you.__________

Instead of a zero charge, there was a $1,954, almost two thousand dollars!

Outraged, I called Ms. LO to ask about this switcheroo.

“You remember quoting me a zero origination fee,” I reminded her. “So why does the GFE show a $1,954 origination fee?”

Long pause. Then, “I don’t know.”

“That is a very big different, almost two thousand dollars,” I said.

“Yes it is. Hold on while I go ask my manager,” she said.

After several minutes, she was back. “My manager says we changed the fee yesterday.”

“You changed the fee from zero to $1,954 all in one day? From 4:00 p.m. to the morning, it changed that much, all at once? I don’t think so,” I said.

“Unfortunately, it changed,” she said.

“Changed, as in bait-and-switch?” I asked.

Silence.

What is bait-and-switch? It is when a company baits you with one cost and then changes it to something else when you try to get it.

Bait-and-switch is illegal. But it is still happening. 

The new lending laws have not extinguished all the liars. Liars are lurking in all institutions: banks, brokers, and yes, also in credit unions.

This is why I tell people they cannot choose a mortgage by the type of lending institution. I don’t name names on my public blog, but if you would like to know the name and location of this credit union and the loan officer, send me an email via my Ask a Question page (in the toolbar above), and I’ll be happy to tell you so that you can avoid this crooked institution.

If anyone tries pulling a bait-and-switch on you, I would encourage you to report them to the Consumer Financial Protection Bureau. That is what they are here for, to protect you. The handy online complaint form is here.

Google Busted for Illegal Mortgage Ads

Cover.Homebuyers BewareChapter 26: “Stop Clicking On Mortgage Ads”

I wrote that in 2009. Fair warning I wish more people had heeded.

The Federal government has shut down 85 websites for preying on vulnerable homeowners through their shady, deceptive ads on Google.  No surprise,Google made a fortune off of those fraudulent ads. Now Consumer Watchdog is urging Google to donate that “tainted revenue” to a fund helping out victims of these scams. It remains to be seen if that will happen.

The most common online ad that people suckered for was a scheme that told homeowners to stop paying their mortgages and instead divert their funds to a company that would get them a good loan modification. It included transferring property deeds (ownership) to the scammers. And as if that wasn’t enough, they also had to pay an upfront fee. These home owners were vulnerable because they used the Google search engine to look for a “loan mod” or a “stop foreclosure,” and then clicked on the ads that showed up.

Like I said, “Stop clicking on mortgage ads.” And that includes those ads that offer an impossibly low interest rate to home buyers, too.

I’ve looked at those amazing, rock bottom rates, and invariably, the fees are so high, it makes no financial sense whatsoever. With rates so low now, borrowers are better off paying no points and one (reasonable) flat lender fee.  Some of the deceptive interest rate ads show up on good, legitimate websites, so don’t be fooled.

Feel free to post a comment. For more details about the Google ad bust, see here.