| Broker Vs Broker
CA originator fraudulently uses license of mortgage broker November 12, 2004 By PATRICK CROWLEY |
| In an unusual case of identity theft, an unlicensed originator used the California license of a legitimate mortgage broker to submit loans to New Century’s wholesale unit and collect the associated fees — leading to a lawsuit and leaving claim to nearly a quarter million dollars in commissions unresolved.Edward Arce was a veteran of the mortgage industry who had just gone out on his own when he was put into contact with Jared Tornow.
It was October of 2002 and Arce was trying to drum up business for his new brokerage, Envizion Financial. Tornow and his girlfriend, Susan Cridland — a top producer for subprime lender New Century Mortgage Corp. — said they could do “tons of deals” with New Century and other lenders, said Arce’s lawyer, Greg Brown. Arce heard nothing until December, when he was approached by another mortgage broker who was looking for a commission. “My client was like, ‘what commission?”’, Brown said. According to a lawsuit Brown filed on Arce’s behalf in Orange County, Calif., Superior Court, Tornow did not have a license to work as a mortgage broker. Instead, Tornow used the name of Arce’s company to arrange more than $6 million in mortgage loans made by New Century, according to court documents. “Cridland used her position at New Century to help Tornow perpetrate a fraud,” Arce alleges in the court documents. “Cridland was New Century’s sales manager and Tornow’s girlfriend. Cridland knew (Arce) was not a New Century approved mortgage lender.” Brown told MortgageDaily.com that Tornow “used Arce’s name and license to do the deals.” Acre was awarded $27,000 in damages for breach of contract and compensatory damages against Tornow and Cridland for fraud. Neither could be reached to comment. But the case is not over. A judge is expected to rule Nov. 17 if Tornow must pay $237,000 in profits he allegedly earned using Arce’s business, Brown said. Brown is also continuing to pursue unspecified punitive damages, and he believes New Century should be held accountable and liable because it should have uncovered the fraud earlier. Reacting to the court ruling, a New Century spokeswoman said the company has been vindicated. “We believe the jury’s decision supports New Century’s position that it acted ethically and appropriately in all respects,” the Irvine, Calif.-based lender’s Erin Freeman said in a statement to MortgageDaily.com. She would not comment further. Brown said Cridland was eventually fired by New Century but that the company should have acted sooner. Parent New Century Financial Corp. is a lending giant that controls about 9% of the U.S. subprime market. The company announced September loan production topped $3.2 billion, bringing third quarter production to $10 billion — a 16% jump over the third quarter of 2003. |
|
Patrick Crowley is a political reporter and columnist and former business writer for The Cincinnati Enquirer. Email Patrick at: pcrowley@enquirer.com |
