February-April 2007
The Office of Consumer Finance (OCF) recently issued several administrative cease and desist orders relating to the turmoil in the subprime mortgage loan market.
On March 13, cease and desist orders were issued to New Century Mortgage Corporation and its affiliate Home123 Corporation, of Irvine, Calif. Both companies had already shut their doors to new applications. State regulators around the country worked with the companies to determine the extent of application pipeline problems, and to remedy them. Brokers and trade groups, including the New Jersey Mortgage Brokers Association, provided critical help for consumers stranded in the pipeline. In New Jersey, all pipeline consumers were provided with alternate funders before the companies petitioned for bankruptcy. In April, both companies entered into Consent Orders with the Department, entailing the surrender of their licenses.
On April 13, cease and desist orders were issued to New Jersey-based LoanCity and Atlanta-based Southstar, two licensed lenders also caught in the funding fallout from subprime market troubles. Southstar has since surrendered its licenses. LoanCity has not. A final order revoking its licenses will be forthcoming.
On April 18, a cease and desist order was issued to Dana Capital Group, Inc., also based in Irvine. This order did not require the total and immediate shut down of operations, but rather targeted a range of repeated activities conducted in violation of New Jersey laws and regulations. Chief among the violations were the massive use of unlicensed, “net” branch offices and unregistered mortgage solicitors, and the charging of numerous fees not permitted by New Jersey law. The order required an immediate halt to all business conducted outside of compliance, refunds of the impermissible fees, and also required Dana to show cause why its licenses should not be revoked for such conduct. Dana shut its doors to new applications on April 30, and has recently stated that it is beginning a process of “dissolution,” purportedly a California State law alternative to the protections normally afforded by a petition for bankruptcy. As of this writing, the cease and desist order remains in place, and State regulators around the country will be dealing with the company and the consequences of its failure for some time to come.
The OCF, together with the American Association of Residential Mortgage Regulators, and other state regulators, continues to closely monitor a number of other troubled licensed lenders.
On a different front, the OCF has been developing new forms of notices and orders to enforce the annual report submission requirements as provided in the new dedicated funding law, P.L. 2005, c. 199, and in amendments thereto recently signed into law, at P.L. 2007, c. 81. The OCF will soon be issuing such notices and orders as may be necessary to enforce compliance with the annual report submission requirements. |
Final Orders Issued in 2006
Seth Roslyn, while employed as a registered solicitor, received funds which should have been made payable to his employer. This activity demonstrated dishonesty in violation of N.J.S.A. 17:11C-18a(5). Final Order No. E05-0291F, issued January 12, 2006, revoked the solicitor registration of Seth Roslyn, imposed a $5,000 penalty, and imposed a 10 year bar from future licensure or registration.
Richard Geck, while employed as a registered solicitor, pled guilty to one count of theft. This conduct provides for revocation pursuant to N.J.S.A. 17:11C-18. Final Order No. E05--0230, issued February 15, 2006, revoked the solicitor registration of Richard Geck, and imposed a 10 year bar from future licensure or registration.
Andre Bernard Inc. T/A M S Funding Corp. was a licensed lender with mortgage banker authority with Maria L. Mercadante, the individual licensee. The licensee's surety bond was cancelled, and the company failed to obtain coverage in violation of N.J.S.A. 17:11C-13. Final Order No. E04-0014F, issued March 20, 2006, revoked the licenses of Andre Bernard Inc. and Maria Mercadante, and imposed a $2,500 penalty.
Olympia Mortgage Corp. was a licensed lender with mortgage banker authority whose license was surrendered November 12, 2004. Esther Pinter was the licensed individual. The company failed to pay the cost for the official examination of the business in violation of N.J.S.A. 17:11C-42(a). Final Order No. E05-0090F, issued March 20, 2006, suspended the licenses of Olympia Mortgage Corp. and Esther Pinter, and imposed a penalty of $5,000. |
