In particular, the Regulation Z restriction expressly requires that an upfront credit report fee be bona fide and reasonable. Potentially, the CFPB markup position is based on the upfront fee restrictions in Regulation X and Regulation Z. Quicken Loans, Inc., the United States Supreme Court ruled that RESPA section 8 does not prohibit a single service provider from marking up the cost of a settlement service, such as a credit report. The Consent Order states that Amerisave did not disclose Novo’s affiliation or that there was a 24 hour cancellation fee of 50% until after the consumer had authorized payment and at Amerisave’s encouragement, scheduled the appraisal for “as soon as possible.”Īddressing the effect on consumers, the CFPB states in the press release that “By leading customers to believe that 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.” In the Consent Order, the CFPB asserts that “By marking up the cost of credit reports and requiring appraisal fee credit or debit card authorizations before giving consumers their first GFE and receiving an indication of the consumer’s intent to proceed with a loan covered by the GFE, Amerisave violated RESPA, Regulation X and TILA, Regulation Z.”Īs we have previously covered, in Freeman, et al. The CFPB asserts that Amerisave also required consumers to order and authorize a $375 to $500 payment for an appraisal from Novo before receiving a GFE.
The CFPB asserts that during this time, individual and joint credit reports actually cost Amerisave only $7.50 and $12, respectively. Then, around the time the prohibition became effective, the $35 fee was charged as a credit report deposit fee. The CFPB alleges that before the Regulation Z prohibition on imposing upfront fees beyond a bona fide and reasonable credit report fee became effective, the upfront $35 fee charged by Amerisave was an application fee. But in certain cases the CFPB is not clear regarding what conduct in its view violated which specific restriction under the Regulations. It appears that in referring to a “GFE” the CFPB is referring to the Good Faith Estimate under Regulation X and the initial TILA disclosure under Regulation Z. Although the CFPB cited the upfront fee restrictions under Regulation X and Regulation Z that apply to residential mortgage loans, the CFPB did not note that the Regulation X restriction applies to applications received on or after Januand the Regulation Z restriction applies to applications received on or after July 30, 2009. In addition, the Consent Order states that from at least January 2009 to May 2011, Amerisave charged consumers a $35 fee at the outset of a mortgage application, before Amerisave provided them with a GFE and the consumer indicated an intent to proceed. The fact that the mortgage quote was actually based on an 800 credit score was not disclosed to consumers until after they began a mortgage application.
According to the CFPB, these advertisements were inaccurate, and when consumers were directed to Amerisave’s own website, the company advertised interest rates based on an 800 credit score quote, even when the majority of consumers had already entered their own lower credit scores on the third-party websites that led them to Amerisave. The companies and principal did not admit or deny the CFPB’s findings of fact or conclusions of law.Īccording to the CFPB’s press release, “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.”īetween mid-20, the CFPB said, Amerisave advertised its interest rates and terms in all 50 states and the District of Columbia using banner ads and rate tables on third-party websites. On August 12, the CFPB announced that it has issued a Consent Order under which Atlanta-based Amerisave Mortgage Corporation, its affiliate appraisal management company, Nova Appraisal Management Company, and a principal and indirect owner of both companies, Patrick Markert, agreed to pay nearly $21 million for deceiving and overcharging consumers in a bait-and-switch mortgage-lending scheme.
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