Broker Beats State

A Massachusetts judge has ruled that a mortgage broker was the victim — and not the perpetrator — of a fraudulent mortgage license scheme.

In November of last year, Jose de la Rosa was applying for a license and preparing to set up his BFG Mortgage in Massachusetts.

While BFG, short for Boston Financial Group, operated in Florida, he wanted to branch into the Boston area.

And that’s where his troubles started.

He met Wilfredo Rodriguez through a mutual friend, according to a Dec. 19 order.

Rodriguez claimed to have experience as a loan officer and contacts in the large Hispanic community of North Shore, an area close to Boston, the order, signed by Associate Justice Thomas P. Billings of the Massachusetts Superior Court, said.

Rodriguez asked about working for BFG; de la Rosa felt he could be an asset after he obtained his Massachusetts license. The two agreed that Rodriguez would begin working in Jan. 2006, but Rodriguez started to show up at BFG’s offices “to help with such this as furniture assembly and moving,” according to the court’s 27-page ruling.

On Dec. 19 of 2005, Rodriguez was alone in the office while de la Rosa had gone for lunch.

Apparently Rodriguez rooted through some of BFG’s files and found a letter from the state Division of Banks along with correspondence from Fremont Invest & Loan of Tampa, Fla., a subprime lender that was seeking business from de la Rosa.

De la Rosa had informed Fremont in October that he had not yet received his license. But on Dec. 19, for reasons that have never been fully explained, Rodriguez used a copier, a fake letter he wrote, Scotch-tape and the regulator’s letterhead to fashion a phony letter indicating that BFG had been issued a Massachusetts license.

He then faxed the forged letter to Fremont’s offices.

De la Rosa was unaware of Rodriguez’s scheme.

“Why Rodriguez would have done this is harder to explain,” the judge said. “Perhaps he needed an income sooner rather than later; wanted to begin placing loans and earning commissions and assumed Fremont would not check with the (state) to verify the letter.”

But Fremont did check and was informed BFG’s license had not been approved. Regulators requested a copy of the forged letter and moved quickly, issuing a cease and desist order to de la Rosa.

Regulators denied BFG’s license, and accused de la Rosa of using false documents to show he had a license, more than a year ago.

“Boston Financial Group attempted to facilitate its unlicensed mortgage broker activity by providing the lender with a fabricated letter,” the state said in a Dec. 21 press release announcing the action against BFG. “Introducing a false document into the mortgage lending market upon which the lender was to rely is a serious violation of the laws governing — the mortgage industry.”

De la Rosa began trying to piece together what happened.

He talked to people had been in the office or who might have information. That included Rodriguez.

“When he asked Mr. Rodriguez if he knew anything about the letter,” the judge said, “he met with complete silence on the other end.”

De la Rosa broke off his business arrangement with Rodriguez and appealed the state’s ruling. He does not know of his whereabouts.

“It is clear that Rodriguez was not an employee of BFG,” the judge found. “He came and went as he pleased. BFG never compensated him, and never offered to compensate him, for the setup work he did in December.

“Rather, the plan was to compensate him, on a commission-only basis, once BFG obtained its license,” according to the ruling. “Rodriguez was not, however, authorized to take loan applications, to close loans or to deal with lenders.”

“He had his own agenda, but nobody knows for sure,” de la Rosa said. “We have no idea where he is. I’m just glad it’s all over.“

The judge overruled the state’s decision to deny BFG’s brokerage license. The order indicates it was a potential employee of BFG Mortgage — and not owner de la Rosa — who perpetuated the fraud.

Billings ordered the Massachusetts Commissioner of Banks to issue the license to BFG Mortgage and de la Rosa.

De la Rosa already operates BFG Mortgage in Florida and told MortgageDaily.com he originated about $75 million in prime and subprime loans last year. He employs four loan officers in the Sunshine State.

“It took awhile, but it was well worth it,” a buoyant de la Rosa told MortgageDaily.com. “Technically, (the state) has 30 days to appeal. It doesn’t look like they will. I’m really satisfied with the decision of the court. Hopefully, they won’t appeal and we can get back in business.”