Paramount Equity May be in Trouble!

Come on... you must know who these guys are!

They advertise on many Sacramento area radio stations and in a ½ hour drive you could probably hear 2-3 of their radio spots. 

Does this ring a bell?...

" I am Hayes Barnard, owner of Paramount Equity, and the recent launch of our mortgage bank is allowing us to offer rates lower than ever before"  or  " I am Hayes Barnard, owner of Paramount Equity, rates are a historic lows"....

Now are you with me?

Turns out these guys have a couple of different offices on the west coast.  One of which is located in the state of Washington.

Well a lawsuit was filed by the State of Washington, Department of Financial Institutions (Division of Consumer Services) on Monday against Paramount Equity.

This law suit alleges that Paramount Equity may have been misleading consumers and charging fees they did not earn.

I have summed it up for you here...

False and misleading advertisements:

Their advertising boosted

•1.       Interest rate savings could be realized by the use of their "in house" bank.  Also they were one of the few banks who could offer a 5.5% mortgage and so one. Turns out that Paramount Equity is not a bank and actually a mortgage broker with correspondent banking lines.  Opps!

•2.       Free appraisals.  Remember the ad where they said they were so confident that your loan would be approved that they would pay for your appraisal? Turns out that they allegedly bumped up their other fees in order to cover the cost of that free appraisal.

•3.       "Best Rate and Fee Guarantee" Paramount Equity represented they would "guarantee to beat any written fee and rate structure". Looks like Paramount allegedly did not disclose the nature, limitations, and conditions for the guarantee in their advertising. It was only after you closed the loan with the other company would they pay out the $500 promised.

To top it all off Paramount allegedly may have been deceptive in disclosing fees and interest rate to their borrowers.

•1.       Deceptive Good Faith Estimate Charges
It looks like they may have "worked the numbers" allegedly in their favor with the borrowers moving fees that were paid to them into other columns (to hide their true fees) and charged fees that were not earned.  Like charging allegedly discount points to buy down the interest rate and forgot to use the fees to actually adjust the borrower's interest rate.  You never know, it may have been a clerical error!

•2.       Untimely variable interest disclosures
In 11 of the 43 transactions Paramount did not timely provide borrowers with a required disclosure relating to the variable interest rate.  Also it appears (allegedly) they were advertising rates for adjustable rate mortgages but promoting them as fixed interest rates.

Read the law suit filed this week for yourself:

http://www.dfi.wa.gov/CS%20Orders/C-07-405-08-SC01.pdf

Here is a link to their website:

http://www.paramountequity.com/index.cfm

Here is a link to the press release: http://www.dfi.wa.gov/consumers/news/2008/paramount.htm

Looks like the State of Washington is trying to go after $500,000 in fines and requiring Paramount Equity to pay back those borrowers who were allegedly burned.

My thoughts on this (and these are my thoughts by the way and do not reflect that of my broker)is it is tough enough on a daily basis trying to convince a new client that we are one of the good guys, when you have folks like this who may or may not be doing the right thing.

My advice... don't get caught up in the hype of advertising.  Work with someone you can trust and you will never have to worry that you are being ripped off or taken advantage of. Getting sucked in by some low ball interest rate and a good faith estimate by a shady mortgage person means nothing!  It is an estimate!  I can't tell you how many times we have had to go up against companies who "forget" to disclose all of the fees involved just so they get the deal.

Our policy is to provide the most accurate Good Faith Estimate we can at the beginning.  Then right before our clients sign their loan documents, we create a Closing Cost Comparison Worksheet that compares what we originally quoted them (our fees, lender fees, title fees and pre paid items) to what the actual numbers ended up at.  We just had a signing yesterday where we were off by $.016!  Now that is pretty darn good if you ask me, especially because it was a bank owned home and we don't get all the title fees upfront.

I will be curious if their advertising "slow down" any now that this has hit the news.  I checked online and it looks like their Google ad words and yahoo pay per click ads have been reduced.  They are probably saving up for their defense fund! Ohhh now that was a low blow.

For one I will be thankful.  I can't tell you how many conversations my husband and I have had about these commercials and how ridiculous they are.

This blog written by:

Team Newington
Sacramento Mortgage Planners
(916) 687-6868
www.SuperiorLoanTeam.com