Arizona Mortgage Company Closed Pending Investigation
An Arizona mortgage company and more than 75 of its branch offices in the metropolitan Phoenix area have been shut down by financial regulators in the state, the Arizona Republic reports.
The Arizona Department of Financial Institutions cited illegal lending practices in pulling the license of Eagle First Mortgage and its broker, David Sanchez, last week.
Regulators described more than 100 illegal transactions, loan activities and hiring practices.
The department began examining Eagle First’s operations last summer. In the fall, it reported its findings to the Attorney General’s Office and to the Office of Administrative Hearings. Eagle First agreed to shut its doors instead of go through the process of a hearing on the case.
The Department of Financial Institutions has the power to fine or close the mortgage firm. But only a prosecutor like the attorney general can go after a mortgage broker for criminal activity. Regulators wouldn’t say if criminal action would be taken against Eagle First.
A wave of Phoenix home loan fraud started spreading across the metropolitan area last year that could cost lenders millions of dollars and erode values and confidence in Arizona’s real estate market and economy.
Most of the fraud is coming from cash-back deals that involve obtaining a mortgage for more than a home is worth and pocketing the extra money. But there are other types of fraud, such as faking and forging documents and lying about income and other personal information for loans.
The Department of Financial Institutions joined forces with other state and federal regulators and law enforcement agencies late last year to form a task force to go after offenders in the Arizona housing market.
The home mortgage company had been cited before. Back in early 2004, it was fined for 10 violations. Some of its recent violations include laws it had broken three years ago, according to the Department of Financial Institution’s consent order.
Several employees also were named in the complaint. Those employees aren’t licensed and could get jobs at other mortgage firms. So could Sanchez, as long as he doesn’t apply to be a broker again. All Arizona mortgage brokers must be licensed.
Regulators have estimated that there are as many as 18,000 people taking mortgage applications, negotiating mortgage rates and getting commissions statewide without licenses to do so.
SOURCE: Arizona Republic