Nevada Nails Four More Mortgage Companies

The Nevada Mortgage Lending Division, an agency created last year within the state’s Department of Business and Industry, announced it issued an Order to Cease and Desist to Carteret Mortgage Corp. The Virginia-headquartered company, which says it is licensed in 40 states, received the order because it employed an unregistered mortgage agent, Bart Gabe, who operated from a different location than the licensed broker location, the division said.

Commissioner Scott Bice also reached a Stipulated Settlement Agreement with Direct Equity Mortgage, LLC, for running business ads on four billboards in the Las Vegas area without state authorization, reported the regulating agency. Prior to public release, mortgage brokers must first submit any advertisement it intends to use to the commissioner for approval. The Las Vegas company agreed to pay $10,000 in investigative costs and attorneys’ fees, said the Division.

Neither Carteret nor Direct Equity returned MortgageDaily.com’s calls for comment.

Another Order to Cease and Desist was issued to California-licensed and -based emagineloans.com for sending a direct mail solicitation to a Nevada resident “in an attempt to entice or obtain an application” for a mortgage loan, said the agency. The Yorba Linda-based company was ordered to pay an administrative fine of $10,000 for conducting mortgage activity in Nevada without being licensed in this state, the division reported.

In a phone interview, head of Emagine Loans Inc., Christian Winters, said the distribution of the direct mail was an “honest” mistake. Included in the public information lists that Emagine buys to obtain title holder addresses, were some Nevada addresses. The solicitations were sent to each of the residential addresses and one of these belonged to a president or owner of a Nevada mortgage company, who then sent the solicitation to Bice, said Winters.

“I understand if someone commits fraud or something like that, people like that need to be out of the business,” said Winters, who’s company is a six-man operated business. “This was just a mailing mistake, we were not attempting to do business in Nevada.”

Winters did point out that Emagine was, at the time of the mailing, and still is in the process of getting licensed in Nevada where it wishes to expand its business; therefore it has requested in court filings that an appropriate fine be given to resolve the issue and avoid it from interfering in its future plans.

“All lenders must comply with Nevada statutes or face disciplinary actions,” said Bice, who assumed his position Dec. 1, 2003, in the announcement. “An important part of the regulatory function of our offices is to protect consumers from unfair business practices. This is what we do on a daily basis.“

The state also took action to revoke the license of Source One Capital Group, “a Texas based lender operating in Nevada with shared office space and a shared employee writing Texas loans subject to Nevada law,” reported the Division.

Source One president, Jim Carpenter, said that the “shared employee” was a “qualified” employee working for Source One and a separate company. While the previous commissioner had approved of these actions, Bice has taken a different position on the applicable statutes and regulations, he added.

“(Bice) says basically if we want to have business in Nevada, we have to have a full-time qualified employee that’s specifically designated as our qualified employee,” said Carpenter. “We don’t think he’s correct, but at this point we don’t have sufficient amount of activity in Nevada to make it an issue.”

Carpenter said Source One primarily operates in Texas and is a subsidiary of a Nevada-based corporation. He added that Source One intends to “fully comply with his interpretation of the law” if it chooses to operate in Nevada again. “In a show of good faith,” Source One decided to forego its license in the short term although it “has not admitted to any wrongdoing or violations of the Nevada law because in its view, it was operating entirely within the law and with the approval of the previous Nevada regulators.”

“There was a prior agreement between Source One and the previous commissioner,” a spokeswoman for Nevada’s Mortgage Lending Division said in an e-mail statement. “However, based upon the license issued to the company and the interpretations of the applicable statutes by commissioner Bice, all parties agreed with the action taken.”

Last month, the Division announced it took disciplinary action against NovaStar Home Mortgage Inc. and Encore Mortgage — also for unauthorized practices.