Advertisements for a bi-weekly payment program that didn’t deliver as promised have resulted in regulatory orders and millions of dollars in penalties against a payment processor and the servicing subsidiary of Fidelity National Financial Inc.
Paymap Inc. has marketed its Equity Accelerator Program
since July 2011. The electronic payment system promised to automatically make bi-weekly mortgage payments on behalf of borrows.
Advertisements mailed to prospective clients allegedly promised
tens of thousands of dollars in interest savings even though there was no supporting evidence for the claim. On its website, average savings were quoted at more than $33,000.
Paymap collected a $295 enrollment fee and $2.50 per automatic debit made to the borrower’s bank account, according to a news release from the Consumer Financial Protection Bureau.
In all, Paymap received $33.4 million in total fees.
“In fact, the Equity Accelerator Program did not make more frequent payments on consumers’ mortgages,” the CFPB said.
But it did make more frequent withdrawals from their bank accounts.
As a result, just a “tiny percentage, if any,” of the borrowers saved that much in interest, according to the regulator.
Paymap partnered with mortgage servicers to market the program to their borrowers.
One of those servicers was Fidelity-subsidiary LoanCare
LLC, which participated in the program during 2012.
LoanCare borrowers were sent solicitations on the
Virginia Beach, Virginia-based servicer’s letterhead. In return it received a portion of the fees.
The CFPB alleges that the pair of companies violated the
Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition against deceptive acts and practices.
Separate consent orders were issued by the bureau against Paymap and LoanCare.
The orders require the companies to stop the deceptive and illegal adverting and to provide credible evidence for claims they do make.
Paymap is required to return the $33.4 million in fees it collected to the consumers
and pay a $5 million civil penalty.
LoanCare is required to pay an $0.1 million penalty.
