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Stewart Sues Brokers

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Some of the mortgage brokers who previously operated as part of a defunct net branch network are embroiled in a $3 million mortgage fraud lawsuit in the Massachusetts state courts.

Stewart Title has sued more than two dozen people, including several QuoteMeARate.com brokers, alleging they participated in a mortgage fraud scheme in the Bay State resulting in more than $3 million in losses for Stewart.

The Houston-based title insurer claims disbarred attorney Alan Mason, who served as a title agent for the company from 1988 to December 2005, masterminded a scheme that fell apart in September 2005 when Stewart began receiving claims from lenders and property owners. Stewart said it has received 32 claims under policies issued by Mason for properties in Massachusetts.

The lawsuit alleges Mason and others recruited people to obtain mortgages and property deals with no money down, and that, as the title lawyer, Mason, did not pay off refinanced mortgages. Instead, he allegedly continued making monthly payments on the old mortgages. The proceeds from the mortgages were spent on cars, boats, antiques and other real estate, according to the lawsuit.

Stewart said it is part of a conspiracy of many years duration in which kickbacks were paid to several mortgage brokers who worked for QMAR. The brokers allegedly received fees in at least 19 of the 32 transactions.

The lawsuit was filed in Massachusetts state court in February.

QMAR abruptly closed it doors in March.

Mason and the defendants are facing legal heat from several sources.

According to the complaint, Mason and his alleged co-conspirators are under investigation by a host of federal and state agencies including the FBI and a federal grand jury.

QMAR’s attorney declined to comment.

It isn’t the first time a national net branch company closed down clouded in mortgage fraud.

Dallas-based Advantage Investors Mortgage abruptly closed its doors in early 2004.

Advantage, the 19th largest loan broker in the country at the time according to American Banker-Bond Buyer, sent its vendors a letter in March 2004 that said as of Feb. 13 “Advantage Investors Mortgage Corporation Inc … ceased operations.”

“On Feb. 26, 2004, Advantage’s senior secured lender foreclosed upon and sold all of Advantage’s assets through a foreclosure sale,” the letter said. “All Advantage accounts with your company are hereby closed.”

Advantage was embroiled in a scandal during 2002 when the owner of one of its branches was accused of using a Virginia title insurance agency to illegally divert loan proceeds for his own benefit. That case, where defendant James R. Niblock was accused of wiring ill gotten funds to overseas banks, left the company scrambling to distance itself from criminal activity.

Related:

Net Branch Closes Doors
A Texas-based nationwide mortgage brokerage with as many as 300 branches abruptly shut down Friday, according to two of the company’s branch managers.

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