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.
Edward J. Hammonds was the manager of Diamond Mortgage’s Lawrence, Mass., branch since Aug. 2004.
During a June 20 on-site inspection conducted at the company’s headquarters in Taunton, Mass., and at its Lawrence branch, investigators found misstated income on 1003s.
Officials also accused Diamond of “placing loan applicants into stated income loan products based upon borrower income information that the corporation knows or should know to be inaccurate or not reasonably reliable” and also using income from persons not listed “nor intended to be obligated under the note.”
After the investigation, Diamond owner Steven Newberger told MortgageDaily.com in a phone interview that he discovered Hammonds had not only allowed borrower income to be misstated, but he was also paying others outside of the company to originate loans without Newberger’s knowledge. He subsequently severed his relationship with Hammonds, he said.
The Lawrence office was immediately shut down, Newberger said.
But unbeknownst to him, Hammonds, who could not be reached for a comment, already had a mortgage license and was opening the doors of his own company — Lawrence-based Synergy Mortgage, Newberger said.
“I had shut down the branch and terminated everyone a month before,” Newberger said. “Ed was already operating at Synergy and I had already turned in the [Lawrence branch] license.”
On Aug. 11, the state’s bank commissioner delivered the cease and desist orders to both Diamond, just for its Lawrence branch, and to Synergy.
Anxious to get back to business as usual, Newberger said he signed the order and paid the $200,000 fine without hesitation, which states no admittance of wrongdoing. “I wanted to get it behind me,” he explained. “I decided not to fight the fine because they offered me the chance, and I could get on with my life.”
As for the Taunton branch, Newberger said it is flourishing, “no one has quit here and we are continuing to run unencumbered.”