Mortgage Industry Update: The Bankrate Lawsuit

Obtaining an interest rate quote from a website such as 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 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! 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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