|North Carolina is holding a mortgage broker liable for putting borrowers into loans they could not afford. Meanwhile, regulators in other states are cracking down on deceitful and unlicensed originators.
James Hall, operator of Hall Financial Services, is accused of taking advantage of customers who were losing homes because they are unable to make the payments.
In a 52-page complaint, the North Carolina Banking Commission said that a third of the loans Hall brokered are in foreclosure proceedings. Hall also allegedly used deceptive tactics to place "borrowers in loans which they could not reasonably be expected to afford," the state said.
Hall, who could not be reached to comment, "inflated the income of certain loan applicants and misrepresented that they had bank account balances, retirement plan balances, held certain jobs and had personal property of at least $25,000 when, in fact, they did not," according to the state's complaint.
Regulators said that in addition to brokering a first mortgage for borrowers, he also arranged "soft" second mortgages "that were not discussed with the borrowers."
The second mortgages covered 20 percent of the sales price and had to be paid off in three years, the state said.
"(Hall) placed borrowers into 'soft' second mortgages, knowing that such mortgages contained balloon payments -- which exceeded their borrowers' repayment abilities," regulators said.
The North Carolina Attorney General's office has also said it is working to revoke Hall's license.
In Mississippi, the Department of Banking and Consumer Finance has issued cease and desist orders to three mortgage brokers.
Leslee Christian and Martha Hughes of Real Estate Mortgage Services in Olive Branch have been ordered to stop brokering loans because they have each "engaged in course of business that is not in good faith and did engage in fraudulent underwriting practices".
William Striplin of AmeriSouth Mortgage LLC of Southaven was issued a similar order for the same alleged violations. No other details were available.
Georgia regulators have come down hard on Aapex Discount Mortgage Corp. and its president, Roy Williams, for breaking the state's mortgage lending laws.
Aapex has lost is license and "can never apply ... for another license to be a mortgage broker or mortgage lender," the Georgia Department of Banking and Finance said in a statement.
Regulators said Williams is banned from the mortgage industry for three years. Aapex is based in Florida.
Georgia also issued a cease and desist orders to four other brokers.
Julius Colbert was issued an order for operating without a license.
Charles Washington was also operating without a license, the state said. And he also allegedly misrepresented facts and concealed information that induced a borrower to take a loan.
Broker Derek Gabriel of Marietta was ordered to cease and desist for concealing information, failing to account for loan files, doing business with unlicensed brokers and failing to maintain proper records.
And Royal Crown Bancorp of Union City, CA, was tagged for operating without a Georgia license, the state said.