Mortgage Industry Update: The Bankrate Lawsuit

Obtaining an interest rate quote from a website such as Bankrate.com is one thing, but securing financing based on that rate with favorable terms is quite another. Let me toot my own horn here for a moment.

I will never forget the borrower who e-mailed me rates from Bankrate.com every other day for two months. He wanted to know exactly what my rate would be in comparison every time he sent me one of those e-mails. I would patiently provide the information requested. Sometimes I’d wait a day though.  In the end he came to the conclusion that the lenders offering those ridiculously low rates couldn’t be trusted. I quietly agreed and did his mortgage. Since his closing I’ve had the opportunity to work with several of his family members!

Bankrate.com has faced legal problems since 2002 for the bait-and-switch gimmicks a lot of lenders have engaged in on their mortgage comparison page. Legitimate lenders who participate on Bankrate’s website sued the “players”. Today I read that several of these lenders have been hit with a $46 million judgment.  Read the full  story here at Inman Real Estate News.

It should be noted that

Without admitting fault or liability, Bankrate in October agreed to pay American Interbanc $3 million to settle allegations that the company did little to prevent lenders from engaging in bait-and-switch tactics.

What about the borrowers who were victims of this gimmick? Well here is what the news story says:

The settlement provides $3.2 million for about 1,588 borrowers, with awards ranging from $67 to $19,618. The average award will be about $2,011.

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