A mortgage broker and a rapidly growing FHA lender operating in Washington have agreed to pay fines totaling more than $300,000 over allegations of false advertising. The move is the latest in the state's crackdown on mortgage lending activity.
Linden Home Loans and its two owners, Christopher Opdyke and Mark Sullivan, entered into to a consent order with the state's Department of Financial Institutions, a statement yesterday said. The Kirkland, Wash.-based mortgage broker agreed to pay a $75,000 fine and costs of $4,000.
Linden, which didn't admit to doing anything wrong, also agreed to a suspension of its license for 30 days. The license was voluntarily surrendered on July 7.
A statement of charges was originally issued against Linden on Dec. 14, 2007.
While the company allegedly advertised itself on television as the "home of the 1 percent mortgage" with no points and fees, the state claimed that its investigation found no borrowers actually received these terms. In addition, Linden was accused of failing to make required disclosures. The company was offering option adjustable-rate mortgage with negative amortization.
"Linden's offer was illusory -- consumers who responded to the bait were switched to higher rate and higher cost mortgages," Deb Bortner, director of the department's division of consumer services, said in a December 2007 announcement. "The borrowers who did get the 1% rate -- only 44 of 333 borrowers -- paid fees that in some cases grossly exceeded traditional broker fees."
Another firm, Englewood, Colo.-based Assurity Financial Services, and owners Calvin Hamler and Troy Hamler, were accused of sending deceptive advertisements by mail. The mailers, sent to borrowers with federally insured loans and ARMs, offered prospects hundreds or thousands of dollars in refunds and often appeared to be from the federal government.
"Both the VA and HUD had advised Assurity to stop claiming a special relationship with their agencies," Bortner said in a March Announcement. "While Assurity made some changes, many solicitations still left the impression they were being sent by or at the direction of those agencies."
A statement of charges was issued against Assurity on March 5, 2008. Without admitting guilt, the consumer loan company agreed in a consent order to pay a $250,000 fine plus $5,000 in costs. The state suspended $125,000 of the fine as long as the company complies with the injunctive provisions of the consent order. Both Hamlers are banned from the consumer loan industry for five years.
In May, a branch of Assurity was among eight firms to lose approval from the U.S. Department of Housing and Urban Development to originate FHA loans. It was the second time Assurity had a branch terminated. In 2006, HUD terminated the FHA approval of one of Assurity's branches because of a high number -- 54 -- of early payment defaults.
Assurity had been growing at a rapid clip, boosting its staff from 220 in August 2007 to 521 by December, the company's Managing Partner Calvin Hamler told MortgageDaily.com in a December interview. He said originations had gone from $335 million in 2006 to $505 million last year. This year, the company projected $1 billion in production.
Bortner noted both Linden and Assurity halted the ad campaigns after the state filed charges.
The latest actions follows the revocation of Paramount Equity Mortgage Inc.'s license over claims by the state of deceitful advertising, faulty disclosures and unlicensed originators.
In June, Washington's Gov. Chris Gregoire announced plans to fine Countrywide Home Loans $1 million for discriminatory lending and require it to pay more than $5 million in unpaid assessments. She also said the state was seeking to revoke the lender's mortgage license because of alleged illegal activity.
In the Matter of Determining Whether there has been a violation of Mortgage Broker Practices Act of Washington by: Linden Loans LLC, doing business as Linden Home Loans, and Christopher W. Opdyke and Mark S. Sullivan, as sole owners and members of Linden Loans LLC
No. C-07-366-08-CO01, Aug. 7, 2008
In the Matter of Determining Whether there has been a violation of the Consumer Loan Act of Washington by: Assurity Financial Services LLC, and Calvin B. Hamler, Troy P. Hamler, sole owners and managing members of Assurity Financial Services LLC