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More Mass. Brokers Busted

State cracking down on mortgage activity

October 10, 2006

By MortgageDaily.com staff


Massachusetts regulators have issued cease and desist orders against two mortgage brokers for alleged fraud and four mortgage companies that were operating without required licenses.

The Division of Banks closed licensed brokerages Confidence Mortgage and Middlesex Financial Associates LLC as result of its ongoing sweep looking for evidence that borrowers were led into loans they cannot afford by inflating borrower income, according to an announcement last week.

The division issued a temporary cease and desist order against Confidence after an on-site inspection at the main office in Lawrence, Mass., revealed that Confidence had submitted to lenders applications in which the loan prospect's stated gross monthly income differed significantly from the gross income in other pertinent documentation. Evidence was also found that Confidence allegedly altered or redacted information contained in loan file documents relating to the income or employment of the applicant.

On one loan, the total amount of stated income on the application was more than $43,000 over the total amount of documented income, according to the cease and desist order against Confidence, which did not respond to MortgageDaily.com's request for a statement.

The division found that Middlesex was conducting mortgage broker business at an unlicensed office in Lowell. As a result of site inspections, the division reportedly found that Middlesex completed loan applications in which it misrepresented the number of units of the property to be mortgaged and that the properties were to be the primary residence of the same individual, and failed to accurately represent that the same gross income would be applied to make payments on two separate loans on two separate properties.

Confidence was not immediately available for comment and Middlesex declined to comment.

The companies have 20 days to appeal the division's orders.

Of the other four actions taken, three were against mortgage businesses that operated at unlicensed locations while Treasury Financial Group out of Buffalo, N.Y., was not licensed at all to conduct business in the state and was using the license number of an unrelated company, the division said.

"I hope the message is loud and clear that we will not tolerate unfair and deceptive practices or fraud to be committed by licensed companies and we will take swift action to shut down any businesses writing mortgages without the proper license," said Commissioner of Banks Steven L. Antonakes in the announcement.

The actions against the six companies are the latest in Massachusetts' crackdown on mortgage fraud -- bringing to 17 the number of enforcement actions the division has taken in the past few weeks of which many involved reduced documentation loans. Three weeks ago, the division also issued an industry letter to mortgage companies and emergency regulations as part of its plan to address abusive mortgage practices and prevent foreclosures.

On Oct. 17, the division will hold a public hearing in Boston on the emergency regulations.


Related: 

Cease & Desist Issued Against Mass. Broker
A Massachusetts branch manager who falsified loan documents and paid fees to unlicensed originators has been shut down by the state -- costing his employer $200,000.

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