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Broker Fined & Suspended Over Fake Disclosures, Overcharges

Broker Fined & Suspended Over Fake Disclosures, Overcharges

Hare Mortgage suspended by Mississippi

December 9, 2005

By PATRICK CROWLEY

A Mississippi mortgage company has lost its license and been hit with hefty fine for what regulators call “severe” violations of the state’s mortgage laws.The owners of Hare Mortgage in Meridian, Miss., have agreed to the suspension and the $10,000 fine handed down by the Mississippi Department of Banking and Commerce, a department spokeswoman has confirmed to MortgageDaily.com.

Charges against the company, first brought in December of last year, include overcharging consumers brokers’ fees and falsifying documents, the spokeswoman said. The company could have fought the charges in an administrative hearing but instead negotiated a settlement with regulators.

The state opened its investigation after receiving complaints from consumers, the spokeswoman confirmed. As part of the probe regulators seized boxes of documents from the company’s office.

Owner Rhonda Hare could not be reached to comment, but the state said she did cooperate with the investigation.

Hare will be allowed to process the loans she has already brokered, the state said.

Hare Mortgage is accused of breaking Mississippi’s Mortgage Consumer Protection Law. Under the law a mortgage broker is permitted to charge a borrower up to 7.95 percent of the loan’s amount.

The fee is paid for the broker finding a mortgage lender for the customer and helping process the transaction.

A copy of the law, posted on the department’s Internet Web site, said brokers are not permitted to “charge or collect any direct payment, compensation or advance fee from a borrower unless and until a loan is actually found … and in no event shall that direct payment, compensation or advance fee exceed 7.95 percent.”

The state found “several instances” of consumers being overcharged for the loan fee, the spokeswoman said.

In addition to the $10,000 fee, Hare Mortgage will have to reimburse customers that were overcharged. That figure has not yet been determined.

The state also alleged that documents, including disclosure statements, were falsified by Hare Mortgage. Such a practice can add costs to the price of a home, the spokeswoman said.

Mississippi regulations enacted in August 2004 indicate that disclosure statements must be accurate and kept as part of the customers file at the mortgage brokerage office. Those files must also include several other documents, including the original mortgage application, an appraisal of the property and the final HUD settlement statement.

Under the state law mortgage broker’s are not permitted “misrepresent the material facts” of a loan transaction or “engage in any transaction, practice or course of business that is not in good faith, or that operates a fraud upon any person in connection with … any mortgage loan.”


Patrick Crowley is a MortgageDaily.com feature journalist and blogger, and a reporter, blogger and columnist for The Cincinnati Enquirer. e-mail Patrick at: PatCrowley@MortgageDaily.com

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