Q: I heard a commercial for a bank offering mortgages but I was a little thrown off when the ad said their interest rates are too low to disclose on the radio. The phone number for the company is 877-860-CASH. What’s up with this company?
A: The name of the company is CashCall Inc./CashCall Mortgage. If that doesn’t set off alarms for you right out of the gate, then I don’t know what would.
First, if you look up the company through the Better Business Bureau, you’ll see it has a C-minus rating, primarily because it’s been sued or faced legal action from various state agencies in California, Florida, New York, Pennsylvania, Maryland, Colorado, Minnesota and a bunch of others.
Among the cases you’ll find:
In August 2013, New York’s attorney general filed suit against CashCall Inc. for violating the state’s usury and licensed lender laws. “The companies charged annual rates of interest from 89 percent to more than 355 percent to thousands of New York consumers,” the BBB says on its web site. “These interest rates far exceed the maximum rate allowed under New York law, which is limited to 16 percent for most lenders not licensed by the state.”
And in December 2013, the Consumer Financial Protection Bureau filed suit against CashCall Inc., saying the company issued loans to consumers but claimed it didn’t have to obey consumer protection laws. The CFPB said CashCall said the funding for the loans was provided by Western Sky, which claimed to be part of an Indian tribe, and that that status would “void any licensing requirements and other consumer protections.”
“The CFPB alleges however, that Western Sky was not in fact part of an Indian Tribe and was actually just a front to allow CashCall to violate state and federal laws,” according to the list of government actions against CashCall. “The CFPB suit seeks to order CashCall to forfeit these loans and award civil money penalties.”
In both of these cases, the actions are pending.
And last year, the company settled with the Michigan Department of Insurance and Financial Services. The company was accused of servicing and collecting loans with interest rates that ranged from 89 percent to 169 percent. CashCall agreed to cease and desist and establish a $2.2 million settlement fund to be distributed to all Michigan consumers with Western Sky loans.
Other consumer complaints against CashCall say the company charged late fees on payments that weren’t late and took money out of customers’ checking accounts without authorization. (It apparently requires direct debit. Shocker.)
In one complaint, a customer said he borrowed $10,000 from CashCall 7-1/2 years ago and had been paying $333 a month. He checked his remaining balance and found it was $9,827.33. He had paid out $29,637 on a $10,000 loan and was told he still owed $9,827. So he had paid only $123 in principal in seven years?
As far as the company saying it couldn’t disclose its interest rate, that should be alarming. It’s also strange because the company states today’s interest rate pretty prominently at the top of its home page. Today, it’s 3.38 percent, with no closing costs. (Another red flag.)
In any case, that’s less than the national average, according to Freddie Mac. (Another red flag.) And it’s in line with local banks that aren’t shrouded in so much mystery and don’t have such long records of complaints alleging egregious behavior. And the local banks are overseen by many layers of regulators, and they don’t claim to be insulated from government regulation because of alliance with any Indian tribes.
Finally, I’ll be honest; I’m not completely sure whether the company is offering mortgage loans, or unsecured loans without the home as collateral. In my research, I found references to both. Maybe they actually offer both. It doesn’t really matter.
I wouldn’t take out a loan from a business with this many question marks.