State regulators fined a Las Vegas broker $40,000 for unlicensed and high-risk mortgage investment ads. While the company's apparent chief was licensed through her affiliation with a net branch firm, she operated the high-risk business separately.
The Nevada Mortgage Lending Division announced it issued a cease and desist order to Nancy Nash and Palace Worldwide Enterprises for advertising that they can provide mortgage loans, as well as investments in private mortgages with returns up to 16 percent.
Nash and Palace are not licensed to act as mortgage brokers, the regulator said.
Nash used her affiliation as a licensed agent with net branch All Fund Mortgage to operate the investment scheme outside of All Fund, state officials charge. She would allegedly encourage borrowers to pull the equity out from their homes with a first or second mortgage and invest the proceeds with Palace Worldwide Enterprises or other companies she was affiliated with.
The regulating division said it received evidence of four separate advertisements that Nash and Palace used without first obtaining its authorization, as Nevada law requires.
The ads, which represented returns as "guaranteed annually, without risking principal" and stated "released equity in the home would be used to provide a monthly income through the collateral of principal in a 100% paid-for building," violated state law because they falsely represented the investment is guaranteed, secured or protected.
"Private mortgage investments carry certain risks just as any investment that offers a high rate of return," warned division Commissioner Scott Bice in the announcement.
The $40,000 fine Nash and Palace are ordered to pay is the maximum allowable for the four violations. The two parties have 20 days to request a hearing.
Palace did not respond to MortgageDaily.com's request for comment.