Mortgage Daily

Published On: April 6, 2004
Nevada Takes More Actions Against OriginatorsMortgage agency cracking down on unlicensed and deceptive activities

April 6, 2004


More loan originators have been nailed by the state of Nevada for unauthorized lending activities. The latest actions against four mortgage companies were taken as part of a crackdown on unlicensed lending and deceptive advertising.

Nevada’s industry regulating agency, the Mortgage Lending Division, announced that its commissioner Scott Bice issued Cease and Desist Orders to four businesses in the Las Vegas area for allegedly conducting unauthorized lending and advertising activities in the state. Within the past two months, the regulator has announced disciplinary actions against 10 mortgage originators.

According to Bice, the division is receiving “tremendous support” with increased calls from both the public and industry operators who alert them of potential unauthorized mortgage activity. Bice said people are becoming more aware of the potential risks in doing business with and through unlicensed companies.

“It is of paramount importance for our agency to be accessible and proactive in order to escort unlicensed or misleading operators out of Nevada,” Bice added.

The division said it issued Star Funding a cease and desist order for failing to license all the locations in which it conducts business and for employing mortgage agents that were not registered through the regulating agency.

Under a Stipulated Settlement Agreement, the regulator said Star Funding agreed to pay $7,500 to the state for investigative and attorney costs, and to cease operations at the 1621 Eastern Avenue, Las Vegas, location, until it obtained a license for the office and all agents were registered.

The agency said it imposed a $10,000 fine and an order to cease and desist on Complete Home Loans for unlicensed activity, including misleading advertising. According to the regulator, Complete Home distributed a direct mail piece to a Nevada resident that listed a San Clemente, Calif. address and an 800 call number in an attempt to entice an application for a home loan. While Complete has a license for its Las Vegas location, the division said its investigators found that it maintains a call center in the California location to handle calls generated from the advertisement’s 800 number.

Additionally, Bice said the wording in the solicitation could mislead consumers to think it was from a government entity because it included such phrases as “Government Loan Programs Department” and “VA Guaranty Number,” and was signed by the “Director of Governmental Loan Programs.”

According to the commissioner, it is against the law for a mortgage broker to operate from a location other than the licensed site, to use language simulating communication from a government entity in ads, and to publicly release an advertisement intended to promote mortgage business prior to the division’s approval.

“In these unprecedented times of extremely low interest rates, it is important for mortgage loan consumers and the general public to use their own due diligence and question the validity of offers that either seem too good to be true or imply that a company has a ‘special’ government program,” said Bice. “Our Division is here to guide everyone who has questions through the lending process.”

Neither Star Funding nor Complete Home returned calls upon’s requests.

The regulator said it reached a Stipulated Settlement Agreement with Federal Mortgage Funding, doing business as Utah Financial Inc., which paid a $5,000 penalty. According to the settlement, although Utah Financial is licensed to conduct activity in other Nevada offices, Federal is not a state-licensed broker and did not obtain approval to direct mail a mortgage advertisement to a Nevada resident. The ad additionally included a simulated check that had an American Bankers Association number, micro encoding, or other marks intended to create the appearance of being a negotiable check, said the division.

Utah Financial spokesman said the ad was sent by an unlicensed agent working for its mortgage originating arm, Federal.

“Company policies and procedures designed to eliminate this type of error were not followed in this case,” said the spokesman in an e-mail statement to “The individual loan officer involved has been appropriately disciplined and all Utah Financial loan officers have been retrained in company policies and procedures to ensure that this mistake is not repeated.”

The state also reported assessing a $5,000 fine on Brian Martin, who acted as a broker for West Horizon Mortgage and Cornerstone Mortgage, and ordered him to stop conducting mortgage activity without a license. Martin, the division said, hired, trained and supervised loan officers for Cornerstone, which according to its owner, originates about $8 million a month and employs about 20 people.

Bice said Cornerstone became aware of the state’s order against Martin, but continued to allow him to conduct business at an unlicensed branch.

Cornerstone entered into a Stipulated Settlement Agreement with Bice, in which among other things, it agreed to pay the state $7,500 and to cease solicitation and origination of loans from the unlicensed location, said the regulator.

Cornerstone owner Rick Bell told that the company did not intentionally go against the regulator’s rules and that upon the settlement agreement, Cornerstone was ordered to fire Martin, not cease operations.

Bell said he hired Martin to fulfill a management position, knowing he was not registered with the state. Martin came to him after working for Western Horizon, which did not have a license and operated in the same building as Cornerstone. According to Bell, upon complying with directions and advice given to him by officials at the Carson City office of the Mortgage Lending Division, Martin did not need to be registered because in the management position, he did not originate loans. Bell said the happenings occurred as Bice’s regulating agency was being set up in the Las Vegas location, and when it did come into regulation, he was told he should not have complied with the advise given from Carson City.

“If (the Carson City office is) not supposed to give me advice, then they should pass the call on,” Bell said. “It’s not up to me to govern the state’s employees, but they were certainly out to charge me and ridicule me for the way I govern my employees.”

“I’m glad they’re taking some action and coming into town and cleaning up,” Bell said. However, he added, there are many incidents of fraud and bigger threats to the industry and the public in need monitoring than what he did.

“I’m just a small town guy trying to help the guy next door,” said Bell. “I don’t feel like we were still at fault, obviously we weren’t or we would have been closed down.”

Coco Salazar is an assistant editor and staff writer for


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