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State Regulators Busy

State Regulators Busy

Recent mortgage licensing activity

June 20, 2007

By PATRICK CROWLEY

photo of Patrick Crowley
Among the latest mortgage license activity was an attempt by Connecticut’s top banking regulators to deny a license to former executives of a failed subprime wholesaler. A Wyoming regulator is pushing for tougher oversight of that state’s mortgage originators.Randal Roberge, the former chief financial officer of Mortgage Lenders Network USA — which failed earlier this year as it was besieged with repurchase requests for delinquent subprime loans it originated, has applied for a Connecticut mortgage brokerage license. Roberge applied as InHome Capital.

But in a blistering two-page letter to the former CFO, Connecticut Banking Commissioner Howard Pitkin said he denied the application because of the problems at MLN.

“As an integral part of senior management your involvement in MLN does not warrant my belief that the … business will be operated soundly and efficiently,” Pitkin wrote in the letter, which the department made available to MortgageDaily.com.

“I am unable to find at this time that you, as the member of senior management responsible for the legal, compliance and finance functions at MLN, possess the financial responsibility, character, reputation, integrity and general fitness” to operate the business, Pitkin wrote.

Roberge could not be reached to comment.

MLN filed for bankruptcy protection earlier this year. At one time it originated more than $10 billion annually and maintained a servicing portfolio of more than $15 billion and 100,000 accounts, according to Connecticut regulators.

Connecticut was among eight states that issued cease and desist orders against MLN after the problems came to light and the company failed to fund loans.

“Due to MLN’s failures — approximately 1,500 families nationwide and 75 in Connecticut were left without funding or suffered financial difficulties,” Pitkin wrote.

Connecticut is pursuing criminal charges against former MLN President Mitchell Heffernan for allegedly failing to pay more than $3 million in wages to employees.

Over in Wyoming, the Deputy Banking Commissioner is trying to prevent problems similar to those caused by MLN by tightening its mortgage lending laws.

In a testimony to state lawmakers, Mike Williams asked for legislation that would be “proactive” and “try to identify any trends in Wyoming that” have caused problems in other states, according to a copy of his remarks obtained by MortgageDaily.com.

Wyoming needs to increase its oversight and authority over the mortgage licensing process for the more than 1,200 brokers operating in the state.

Williams noted the “objective is to clean-up existing language, reorganize and clarify (regulations) regarding the disclosure of fees and terms, increase consistency between lenders and brokers and make surety bond requirements more prescribed.”

Wyoming should also conduct criminal background checks, including fingerprinting, of mortgage lenders and brokers seeking licenses and join the national licensing system that 37 other states are using, he said.

By joining the Nationwide Mortgage Licensing System, Wyoming could increase accountability and efficiency while cutting done on regulatory costs.

In Georgia, the state’s Department of Banking and Finance has announced that cease and desist orders against three brokers have become final.

Richard G. Pounds of McDonough and Tameka Thomas of Snellville purposefully withheld information requested by the state during an examination, regulators said in a statement.

Carmine Colbert of Loganville, the operator of JCC Capital, was ordered to cease and desist for brokering loans without a license, the state said.


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