Surprise inspections by Illinois regulators have recently cost some of the state’s mortgage brokers hundreds of thousands of dollars in fines so far. The inspections are the result of a new crackdown on mortgage fraud.
The Illinois Department of Financial and Professional Regulation handed out fines of nearly $200,000 to 22 licensed residential mortgage offices and shut down one brokerage, according to an April 28 statement.
The moves come following an order issued earlier this year by Gov. Rod R. Blagojevich for the department to begin a series of unannounced inspections of mortgage companies “in response to growing instances of mortgage fraud,” regulators said in a statement.
“This sweep is the first of planned quarterly reviews of the mortgage industry to help protect homebuyers from predatory mortgage lenders,” according to the statement.
Blagojevich said in the statement that the state “will not tolerate activities that could harm homeowners.”
“Now, mortgage firms are on notice that we’ll be dropping in unannounced to make sure their brokers are complying with the law,” the governor said.
The department’s investigation alleges that 19 mortgage firms employed 35 unregistered loan originators.
“In the most egregious violation,” the department said, “First Star Financial Corporation, located at two locations (in Burr Ridge and Schaumburg) had 10 unregistered loan originators working in its offices.”
The company was fined $50,000; $25,000 for each of the two offices employing the unlicensed originators.
The other fines were for minor violations, the department said.
The state also suspended the license of Liberty Mortgage Corp. of Oak Brook after the company allegedly refused to give regulators access to its records. The suspension will remain in effect until a 180-day administrative review is completed. The company was also fined $50,000 for allegedly denying the access to the state.
The sweeps will “complement” regular inspections the state periodically performs, Dean Martinez, Secretary of Financial and Professional Regulation, said in the statement.
“We will use all the tools available to us to discipline companies which violate (the) laws and regulations designed to protect Illinois homeowners,” Martinez said.
Problems state investigators are on the lookout for include multiple businesses operating from the same location; home-based mortgage companies operating without the proper permits and permissions; business offices closed during regular office hours, which must be clearly posted; and companies operating from locations different from the address listed with the state.
“Buying a home should be the culmination of the American dream,” Blagojevich said, “not the beginning of a nightmare of fraud.”
