Feds file suit against mortgage-payment firms
The Consumer Financial Protection Bureau on Monday filed a lawsuit against two mortgage-payment companies, saying they duped consumers into thinking they would quickly save money on their mortgages when enrollment fees ensured that wouldn't happen.
The lawsuit was filed against Nationwide Biweekly Administration, Loan Payment Administration, and Daniel Lipsky, owner of both companies, over their so-called "Interest Minimized" program.
Nationwide did not immediately return a call requesting comment.
From August 2011 until September 2014, the Ohio-based companies collected about $49 million in setup fees from more than 100,000 consumers, the agency said in its suit.
The companies sold consumers on the idea that they would make big savings on their mortgages quickly, while in reality it would take years to save enough money to cover the cost of signing up for the program, the agency said.
"The defendants know that consumers will pay more in fees than they save in interest for the first several years in the program, and that many consumers will leave the program without saving any money at all," the bureau said in its release.
Saying the company had violated its prohibition against unfair, deceptive or abusive acts or practices, the consumer agency is seeking compensation for harmed consumers, a civil penalty, and an injunction against the companies and their owner.
