Volume 1 Number 18
May 3, 2004











TEXT-ONLY VERSION


 




REGULATORS SEEK REVOCATION OF SOUTH FLORIDA MORTGAGE LENDER’S LICENSE

State regulators announced today that they are seeking revocation of a South Florida mortgage lender’s license for predatory lending practices, including misrepresenting loan terms and fees.  The lender, First Mortgage America, Inc., provided loans to consumers through several of its branch offices, including Miami, Dania, West Palm Beach, Sarasota and Tampa.
The Office of Financial Regulation (OFR) filed an Administrative Complaint against First Mortgage America, Inc., d/b/a The Financial Group, Inc., on April 16, 2004.  The Complaint seeks revocation of the firm’s mortgage lender’s license and other penalties.  The Financial Group, Inc., is headquartered in Ft. Lauderdale.
State regulators initiated a statewide examination into the lender’s activities and its owner, Blair Wright, after receiving more than fifty consumer complaints alleging, in part, “ misleading advertisements, misrepresentation of loan terms and conditions and misrepresentation of fees.”
According to examiners, The Financial Group, Inc., engaged in frequent radio advertising of very low interest rates.  Potential borrowers were led to believe that the low rates advertised on the radio were fixed rate mortgages, when in fact they were adjustable rate mortgages. The loans were structured such that the monthly payment may not be sufficient to cover the monthly principal and interest payment resulting in an increase rather than a decrease to their mortgage loan balance.
Examiners also determined that The Financial Group, Inc., failed to disclose or underestimated to potential borrowers the total costs to be incurred in obtaining their mortgage loan.
“It is essential that mortgage companies reasonably disclose the cost of obtaining a mortgage loan to consumers so they have the ability to make informed decisions on one of the most important purchases they will make,” said Don Saxon, Director of the Office of Financial Regulation.  Mortgage companies that fail to comply with Florida law will be investigated and appropriate action will be taken to protect consumers.  
Regulators should be commended for taking swift and severe action against a company that has been preying on Florida consumers," said Florida's Chief Financial Officer Tom Gallagher, who oversees the Department of Financial Services and launched a public education campaign last year to warn the public against predatory lending practices.  "Whether you're purchasing your first home, refinancing or need a home equity loan, watch out for excessively high interest rates and hidden fees, bait-and-switch tactics, and unnecessary add-ons.”
Consumers seeking mortgage loans are encouraged to verify that they are dealing with a licensed mortgage broker or lender.  The Department of Financial Services' toll free consumer help line is available at 1-800-342-2762 from 8:00 a.m. to 7:00 p.m. E.S.T., Monday-Friday.