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Mortgage Cartel Alleged

Mortgage Cartel Alleged

American Interbanc adds Bankrate to lawsuit

June 19, 2006


photo of Paula Parisot
Paula Parisot
Bankrate Inc. has joined a host of companies being sued by a mortgage lender that claims the group is deceiving prospective borrowers.

American Interbanc Mortgage has added the mortgage news publisher to the list of defendants it has already filed a lawsuit against.

The complaint was originally filed with the Superior Court of California, County of Orange, in March 2002, according to court documents. Among the original defendants were Delaware-based Novastar Home Mortgage, Florida-based Amerisave Mortgage Corp. and California-based Mountain States Mortgage Center Inc.

American Interbanc claims the defendants used “bait and switch tactics” with their rates on mortgage directory Web sites and

Following the filing of its lawsuit, the California lender alleges the defendants then banned together and conspired to “pressure” both and to remove American Interbanc from their directory list or else, as a group, they would terminate their contracts with the directory companies.

The move, the complaint says, was an effort to get “American Interbanc to drop its false advertising lawsuit.”

Bankrate e-mail and phone messages, referring to American Interbanc executive Mike Dannelly as “the lawsuit guy,” were among the evidence submitted in the case.

One Bankrate executive reportedly said, “I don’t want them back on the site until the lawsuit is dropped or settled.”

When American Interbanc’s contract was not renewed in September 2002, Dannelly inquired as to why, the complaint said. Subsequently, one of his employees received an e-mail that said Bankrate was not going to do business with them and that, “Apparently … this has to do with a lawsuit American Interbanc has against some of our other advertisers.”

Bankrate asserts that the relationship with American Interbanc was terminated because it “Misused the Comment Box and Behaved Antagonistically,” according to the complaint. Comments posted by the lender reportedly included, “Beware of quotes you can’t lock in. It’s called FRAUD.”

But the contract was not renewed based solely on Bankrate’s discomfort with the lawsuit American Interbanc filed against its other customers, the complaint contends.

Bankrate was then added as a defendant to the lawsuit.

In its annual 2005 report, the North Palm Beach, Fla.-based publisher discussed the lawsuit and said American Interbanc and was seeking a sum “not less than $16.5 million” for damages and “not less than $33 million in punitive damages.

Bankrate executive Bruce Zanca told that they would “vigorously defend ourselves as we have said in our public filings.”

American Interbanc executive Mike Dannelly told in a brief phone interview that due to litigation matters he had no comments at this time.

But his attorney, Bill Claster, did tell that in addition to the hearing for this complaint there is another hearing on June 13 “with respect to the (facilitating of) false advertising claims asserted against Bankrate.”

Paula Parisot is a feature reporter and a blogger at who has also worked in the mortgage industry.

e-mail Paula at:

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