Regulation

Amerisave, Novo ordered to pay $20 million for alleged lending scheme

AmerisaveAmerisave Mortgage Corp. and affiliate Novo Appraisal Management Company, along with their owner, were recently ordered by the CFPB to pay out more than $20 million in penalties and refunds for allegedly operating a bait-and-switch mortgage-lending scheme.

According to the CFPB, Amerisave—an online mortgage lender based in Atlanta—allegedly attracted customers by advertising misleading rates and then overcharged them for affiliated “third-party” services from its own affiliated company. The watchdog alleges the companies and their owner violated the Truth in Lending and Real Estate Settlement Procedures Act.

Amerisave and Novo were ordered by the agency to pay $14.8 million in refunds to consumers harmed by the alleged practices and $4.5 million in penalties. Owner Patrick Markert was ordered to pay a $1.5 million penalty.

“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.”

As part of the order, Amerisave will be required to implement a quality control program and retain an independent consultant to review its advertising practices. The company is also prohibited from charging fees or making referrals to affiliates before providing the required disclosure forms to consumers.

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