Mortgage company conned customers about savings -- CFPB

by Ryan Smith13 May 2015
The Consumer Financial Protection Bureau sued a mortgage payment company this week, alleging the company wasn’t truthful about the interest savings customers could gain by participating in a payment program.

The CFPB filed a lawsuit against Nationwide Biweekly Administration, an Ohio-based company that transmits funds between borrowers and their mortgage servicers. The agency also sued Loan Payment Administration, a wholly-owned subsidiary of Nationwide.

Nationwide touts a product called “Interest Minimizer,” which allows consumers to make half of their monthly mortgage payment fortnightly. Doing so results in borrowers making one additional monthly mortgage payment per year. The company charges a fee of $995 to enroll in the program, and between $84 and $101 in payment processing fees each year. Between 2011 and 2014, the company collected about $49 million in setup fees. Nationwide claims in its marketing that the program will help borrowers save money.

The CFPB, however, alleges that Nationwide misled borrowers about the cost of the program. According to the agency, borrowers will pay more in fees than they would save in interest, at least for the first several years they are enrolled in the program. Borrowers “will not save the ‘monthly’ amounts promised by Nationwide until they are nearly halfway through their loan term,” the CFPB stated in its complaint. “Most of the promised savings will not be realized until the last years of the loan.”

According to the CFPB, an average borrower would have to remain in the program for nine years even to recoup the fees they paid to be a part of the program.

The CFPB is seeking compensation for affected homeowners and an injunction against Nationwide, Loan Payment Administration, and their owner.

“These companies and their owner, Daniel Lipsky, took advantage of consumers with false promises of savings on their mortgage,” said CFPB Director Richard Cordray. “Homeowners deserve accurate information in the financial marketplace. Today we are taking action to end these illegal and deceptive practices, and to hold these companies accountable for their actions.”

COMMENTS

  • by | 5/13/2015 10:37:22 PM

    In 2010, NBA made the decision to do something no other biweekly administrator, that they are aware of, has done. They commissioned a CPA firm accredited by the Association of Certified Fraud Examiners to conduct an audit of their internal procedures, specifically relating to their biweekly program called the Interest Minimizer. This was done to demonstrate that NBA does in fact operate with 100% integrity in 4 important areas:
    1. NBA's savings estimates are Accurate
    2. Funds are protected by FDIC insured banks
    3. Funds are remitted to lenders on time
    4. NBA's programs operate as indicated in contracts
    Go to www.InterestMinimizer.com and click on the "Gold Seal" at the top of the home page for the official audit report.
    Also, go to the Why Us page and click on "The Facts About NBA" - "The Heart of NBA" - "Customer Survey" - "Testimonial Videos"
    NBA does NOT take advantage of consumers with false promises of savings on their mortgage. NBA's heart and passion has always been for the consumer, not the lender.
    Even consumers who use NBA's service for only 1 year will save MORE over the term of their mortgage than what they paid to NBA in fees.

  • by | 5/13/2015 10:37:44 PM

    Recently NBA analyzed its 100 oldest active customers and found that to mid-April 2015, they had saved a combined $3.5 million in interest charges with only a combined $128,000 in fees. This equates to about $27 in interest savings for every $1 in fees, a 2,700% return.
    NBA is the only biweekly administrator that provides a 100% savings guarantee with its Loan Audit Shield. NBA provides their customers with an audit of their mortgage on an annual basis upon their request to confirm their savings and to uncover any lender errors, which have occurred many times. These lender errors would most likely not have not been realized by the customer had NBA not provided the audit.
    NBA has a 97.3% customer satisfaction rate. A nationwide survey completed by the Nielsen Group in 2015 revealed that 88% of borrowers do not pay an extra payment each year on their own to equal an automated biweekly program. This has been updated from the prior 99% statistic.
    Only the first extra biweekly debit is retained as the setup fee (for 15 year mortgages, it is only half of a biweekly debit). ALL of the remaining extra debits are directed 100% toward the customers mortgage principal. Some administrators hold the extra debits till the end of the year, NBA does NOT. NBA submits them to the lender on the next payment cycle. Also, most administrators earn interest off the customers funds while they hold the funds, NBA does NOT. Many years ago NBA chose not to earn interest off thier customers funds to provide complete protection to their funds.

  • by | 5/13/2015 10:38:16 PM

    NBA surveyed over 1,350 customers who have been active on the Interest Minimizer biweekly program. The results of the survey:
    1. 99.4% of customers would recommend the Interest Minimizer program to someone else.
    2. 98.7% said Yes that NBA is providing them all that stated they would receive from the Interest Minimizer biweekly program.
    NBA is striving for 100% satisfaction in all areas, but they realize that not every company is perfect. Please be sure to check out the "Heart of NBA" section on their website to understand the heart and passion of NBA's president Daniel Lipsky. The savings benefits that all biweekly programs provide are focused solely on benefiting the customer, not the lender. With all humility, if there is any customer that feels NBA has harmed them in any way, please understand that NBA will absolutely make things right. NBA has a 97.3% customer satisfaction rating and hope that one day it will be 100%. With the dedication NBA has for their customers, it is possible. The only true measure of NBA's success is the larger and larger amount of confirmed interest savings that all their customers have achieved. Without this proven measure of success, NBA has failed.
    Again, NBA recently analyzed their 100 oldest active customers and found that
    to mid-April 2015, they had saved a combined $3.5 million in interest
    charges with only a combined $128,000 in fees. This equates to about
    $27 in interest savings for every $1 in fees, a 2,700% return.

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