Monthly summary of mortgage activities, Aug. 2002

Monthly Summary of Mortgage Activities
Georgia Department of Banking and Finance
2990 Brandywine Road, Suite 200, Atlanta, GA 30341-5565
AUGUST 2002 SUMMARY OF ACTIVITIES - MORTGAGE DIVISION
---------------------------------------------------------------------------------------------------------------------------------------------------**IMPORTANT NOTES**
DISTRIBUTING THE MONTHLY SUMMARY: The Monthly Summary of Mortgage Activities is E-mailed each month to licensees. The Department requests that all licensees provide the Department a valid E-mail address in order to receive the Monthly Summary each month in a timely manner. For all other licensees, the Monthly Summary is available on the Department's website http://www.state.ga.us/dbf/bulletins.html each month. This delivers the Mortgage Summary to you more rapidly and efficiently. If you have not already provided the Department with your E-mail address, please contact the Mortgage Division at dbfmort@dbf.state.ga.us or at 770986-1633 if you have any questions.
Licenses issued in Georgia are subject to revocation, withdrawal or suspension. To verify the current status of a license call 770-986-1269 or check our web site at http://www.state.ga.us/dbf/
Georgia Fair Lending Act - A REMINDER!!
The Georgia Fair Lending Act (HB 1361) goes into effect October 1, 2002. This law has a significant impact on your lending and brokering activities and we encourage you to review the questions and answer database which has been compiled from questions submitted by industry licensees and other professionals. It is located on the web at www.state.ga.us/dbf/publications.html#GAFLA.
If you have additional questions please submit them to gafla@dbf.state.ga.us. In order to ensure that everyone receives consistent interpretations of this law, telephone inquires should be deferred to the E-mail request for information. Also, please keep in mind that certain mortgage loan processors are included in this law. The Department will attempt to answer as quickly as possible new issues which may be submitted and which have not been previously addressed. Please reference that your correspondence regards the Georgia Fair Lending Act in order to expedite the Department's handling of the correspondence.
We encourage you to review the information available so that you have the proper procedures in place prior to the effective date of the legislation.
!!ATTENTION LENDERS!! SURVEY
By now , licensed lenders should have received a GEORGIA FAIR LENDING ACT SURVEY. This survey will help the Department determine the industry's preparedness to comply with the Georgia Fair Lending Act which becomes effective October 1, 2002. All licensed lenders must respond to this survey. If you have not received your copy of the survey prior to September 1, 2002, you should contact the Department at 770-986-1136. The due date for filing this survey is September 4, 2002.

SUPERVISION OF BRANCHES REQUIRED IN GEORGIA PURE"NET BRANCHES" ARE NOT ALLOWED
About once a month a licensee is shocked to discover that their license is being revoked due to "mistakes" made at one of their branch offices. The licensees often claim that they had no control over the operations at that branch because it was a "net" branch! Just in case you have missed reading and understanding the branching laws in Georgia: Traditional "NET" BRANCH RELATIONSHIPS ARE NOT PERMITTED BY THE GEORGIA CODE. O.C.G.A. Section 7-1-1006 (g) requires that when a licensee applies for a branch, they must submit the name of the person that they have hired (and are responsible for the supervision of ) to run that office. See Section 7-1-1006 (g) and the Department's Rule 80-11-1-. 04. The activities of that office and the actions of its manager and employees are the responsibility of the licensee (Section 7-14-1002 (c)). We have even discovered some lender licensees selling "franchises" in Georgia to use their name. In several instances, unapproved offices were then opened at unapproved locations using copies of the license from legitimate locations. The fine for permitting an unlicensed location to operate is $250 (See rule 80-11-3-.01 (c)); the fine for permitting a branch to be managed by an unapproved individual is $250 (Rule 80-11-3-.01 (n)). Background checks will be performed on all branch managers (Rule 80-11-1-.04 (b)). Please refer to the comments elsewhere in this summary regarding the penalties for employment of a felon who has not complied with the remedies provided by Section 7-1-1004 (d).
When we discover a lender operating from an unapproved location (whether a "franchise" or not), the lender is fined $250 for each unapproved location and $250 for each unapproved branch manager. Revocation procedures against that licensee may be initiated as provided for in Section 7-1-1017. Also, the lender may be fined $1,000 for each loan generated from an unapproved location. We often find that these unapproved branch offices are managed by individuals who have criminal or credit background problems and are unable to obtain a license in their own name. We also often find that after an unapproved branch and its manager cause the licensee to have its license revoked, this unapproved branch manager will open an unapproved branch for another licensee. The cycle continues until the lenders take responsibility for the individuals they hire and perform proper background checks on these individuals (Section 7-1-1004 (f)), and obtain approval (required by Section 7-1-1006 (f)) for the branch location that they intend to operate. Because of this cycle and pattern of behavior, the "branch manager" will often receive a "Cease and Desist Order" for operating an unlicensed location (Section 7-1-1002). If this results in a final a Cease and Desist Order, he or she will be barred from working in the industry for three years (Section 7-1-1004 (I)).
The Department will consider the following factors in determining whether an office location qualifies as a branch or is a separate business/legal entity which must be licensed separately:
1. The owner or lessee of the property location proposed as a branch.
2. Whether branch employees are supervised employees of the applicant/licensee or unsupervised independent contractors paid on a 1099 basis.
3. All required books and records must be maintained at the principal place of business (Rule 80-11-2-.01). Income and expense items must be accounted for on the books of the licensee at the main location. No separate books and records may be maintained for each location (although subsidiary records may be maintained for convenience purposes).
4. If the licensee is a lender, they must provide funding for the loans generated by that branch. It is not appropriate for a lender's branch to broker loans to other lenders.
While these factors may not negate approval of an application for a branch, they are used to evaluate whether or not a branch application or an application for a license is appropriate and needed.

EMPLOYMENT OF FELONS
An unfortunate trend has been noticed in the Mortgage Industry in Georgia. While we rarely receive an application from an individual who is unable to complete the licensing requirements due to a problem with their criminal background, we often discover that these individuals are seeking employment from persons licensed by this Department. Please be reminded that the provisions of O.C.G.A. 7-1-1004(d) allow the Department to revoke any license where a felon is on staff. If the Department discovers that a licensee has employed a felon who has not complied with the remedies allowed by Section 7-1-1004 (c), the licensee will be fined $1,000 for each violation, and will be issued a Notice of Intent to Revoke their license. The Department intends to pursue this problem aggressively.
PER LOAN FEES - "Per loan" fees for the first half of 2002 were due by September 1, 2002. If you have reported the "per loan" fees to the Department during the past 12 months or if you hold a Georgia Residential Mortgage Lender license, please go to our web site to download the "per loan" fee reporting form. Please use this form to remit your fees. If you are a licensed mortgage broker or if you are exempt from licensing or registration a copy of the "per loan" fee reporting form can be found on our website or in Rule 80-5-1-.04 (2) issued by this Department. Fines for late filing of your Per Loan Fees have been posted. If you do not close the loan in your name, and your name is not on the security deed - you do not owe any "per loan" fees. Proper payment of these fees will be monitored by our examination team.
OUT OF STATE BROKERS
The Official Code of Georgia Section 7-1-1003.1 states, in part, that if the applicant for a new or renewal mortgage broker license does not have a physical place of business in Georgia, then a license or a renewal may only be issued if the applicant's home state also does not require that in order to be licensed a mortgage broker must have a physical place of business in their home state. This location must be staffed by at least one supervised employee. It can not be a post office box or any other place where the public receives mail, deliveries, or messages. Currently the states of Alabama, Massachusetts, New Jersey, Pennsylvania, and South Carolina have the requirement that brokers have a physical place of business in their home state.
CEASE AND DESIST ORDERS - Issued
South County Financial Services, Kennesaw, GA - Cease and Desist Order issued 02-13-02 and became final 0305-02. Publication was deferred due to pending application. Application has now been withdrawn.
FINAL CONSENT ORDER
On August 16, 2002, the Department entered into a Consent Order with Challenge Financial Investors Corp., dba Challenge Mortgage, license no. 15790.

LICENSEES/REGISTRANTS REVOKED, EXPIRED, SUSPENDED, WITHDRAWN OR DENIED IN AUGUST 2002

ID# NAME
5693 CHICAGO MTG CORP

CODE
BD

REVOKED

EXPIRED

SUSPENDED

WITHDRAWN
08/30/2002

DENIED

LICENSEES/REGISTRANTS REVOKED, EXPIRED, SUSPENDED, WITHDRAWN OR DENIED IN AUGUST 2002

ID#
6258 7249 11511 12239 13376 13701 13742 14278 14465 14537 14948 15892 15918 15951 16737 17230 17454 17486

NAME
C&M MTG $ERVICES INC PREFERRED MTG GROUP INC WALKER, ESSIE MAE ALL SVC MTG INC ABERNETHY, ERNEST H. BILLINGS, SANDY BROWN, PARTHENIA L NOBLES, WILLIAM A. SOSEBEE, TRACY W PRYOR, KENNETH R CRIGLER, ANITA P FOWLKES, LIZZIE A CROUCH, MICHAEL T ESTES, WILLIAM A II HOME TOWN APPROVALS INC CASH OUT MTG CORP SOUTH COUNTY FINL SVCS KENNETH C. GREENE

CODE
BD BD BD BD BD BD BD BD BD BD BD BD BD BD BD LD BD BD

REVOKED
08/16/2002 08/05/2002 08/06/2002
08/27/2002 08/06/2002 08/06/2002 08/06/2002 08/06/2002
08/06/2002 08/06/2002 08/06/2002 08/01/2002

EXPIRED

SUSPENDED WITHDRAWN
08/28/2002 08/30/2002
08/05/2002
08/16/2002 08/30/2002 08/02/2002

DENIED

TOTAL: 19

LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN AUGUST 2002

ID# COMPANY NAME

17404 17416 17471 17209 17299 17371 17406 17485 17506 17515 17431 17262 17467 17501 17503 17518 17542 17468

B & B Mortgage, Inc. Kimberly Boggs Sterling Home Mortgage Reliable Family Mortgage, LTD Millennium Group, Inc. Arencibia Financial Services, Loan Funding Corporation of Investor's Choice Mortgage Co. Larry Wilson Georgia Mortgage Financial, Inc. Rowe Group Corporation (The) American Advantage Mortgage TMG Real Estate & Financial Stanley Nzuonkwelle Alliance Financing Mortgage Mortgage Capitol, Inc. Capitol City Home Loans, Inc. Mortgage 9-1-1, Inc.

CITY
ROSWELL SMYRNA SOUTH DECATUR ATLANTA CHICAGO NEWPORT BEACH CYPRESS ATLANTA MARIETTA LITHONIA ATLANTA LOUISVILLE ATLANTA MT PROPSECT LILBURN STONE MOUNTAIN JACKSONVILLE

ST MB CODE

GA B

GA B

IL

L

GA B

GA B

IL

B

CA L

TX B

GA B

GA B GA B GA B KY L GA B

IL

L

GA B

GA R

FL B

ORIGINAL APPROVAL
08/02/2002 08/02/2002 08/02/2002 08/09/2002 08/09/2002 08/09/2002 08/09/2002 08/09/2002 08/09/2002 08/09/2002 08/16/2002 08/23/2002 08/23/2002 08/23/2002 08/23/2002 08/23/2002 08/23/2002 08/30/2002

RENEWAL
08/02/2002 08/02/2002 08/02/2002 08/09/2002 08/09/2002 08/09/2002 08/09/2002 08/09/2002 08/09/2002 08/09/2002 08/16/2002 08/23/2002 08/23/2002 08/23/2002 08/23/2002 08/23/2002 08/23/2002 08/30/2002

REINSTATED

LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN AUGUST 2002

ID# COMPANY NAME

CITY

17491 17508 17517 17540 17541 17543 12868 16131 16443 14573

AGA Investors, LLC MegaStar Financial Corporation Homequest Financial Services, Beacon Mortgage Group, Inc. First State Mortgage Company Heritage Mortgage Service, Inc. World Wide Financial Services, Interland Associates, Inc. HomeOne Credit Corp. Wall Street Mortgage

ALBANY DENVER LITHONIA ALPHARETTA LONGWOOD GAINESVILLE SOUTHFIELD SAVANNAH HOUSTON ALPHARETTA

ST MB CODE
GA B CO L GA B GA B FL B GA B MI L GA L TX L GA B

ORIGINAL APPROVAL
08/30/2002 08/30/2002 08/30/2002 08/30/2002 08/30/2002 08/30/2002 10/03/1997 10/13/2000 08/17/2001 04/30/1999

RENEWAL
08/30/2002 08/30/2002 08/30/2002 08/30/2002 08/30/2002 08/30/2002 08/09/2002 08/09/2002 08/09/2002 08/30/2002

REINSTATED
08/09/2002 08/09/2002 08/09/2002 08/30/2002

TOTAL: 28

B = BROKER L = LENDER R = REGISTRANT

+ Downgrade Lender to Broker * Upgrade Broker to Lender

FINES ASSESSED IN AUGUST 2002

ID#

ISSUE

DATE

FINE

FINE

REASON

PAID DATE

COMPANY NAME

CITY

ST

5910 08/05/200 B&R

$500. 09/04/20 Future Funding Inc.

Atlanta

GA

5910 08/05/200 FILE

$500. 09/04/20 Future Funding Inc.

Atlanta

GA

5910 08/05/200 FILE

$500. 09/04/20 Future Funding Inc.

Atlanta

GA

6635 08/02/200 UL

$3000.

Stewart Finance Company

Union Point

GA

6635 08/02/200 B&R

$1000.

Stewart Finance Company

Union Point

GA

6635 08/02/200 FILE

$4000.

Stewart Finance Company

Union Point

GA

7361 08/02/200 CIC

$500. 08/15/20 Siding Factory, Inc. (The)

Chattanooga

TN

7361 08/02/200 B&R

$500. 08/15/20 Siding Factory, Inc. (The)

Chattanooga

TN

11536 08/21/200 1099

$2000.

Johnson & Associates Financial

Union City

GA

11536 08/21/200 B&R

$500.

Johnson & Associates Financial

Union City

GA

11536 08/21/200 B&R

$500.

Johnson & Associates Financial

Union City

GA

12049 08/02/200 1013

$2000. 09/04/20 American Southern Financial

Acworth

GA

12049 08/02/200 B&R

$500. 09/04/20 American Southern Financial

Acworth

GA

12598 08/02/200 1099

$1000. 09/04/20 America's Home Lender, Inc.

Woodstock

GA

12744 08/02/200 FILE

$1000. 08/30/20 Darwyn Shane Comer

Macon

GA

13177 08/23/200 BR

$1000.

Carteret Mortgage Corporation

Centreville

VA

13177 08/23/200 MGR

$1000.

Carteret Mortgage Corporation

Centreville

VA

13240 08/02/200 B&R

$500.

Infinity Mortgage Solutions, Inc.

Decatur

GA

14388 08/02/200 B&R

$500. 09/04/20 Financial Matters, LLC

Fairburn

GA

14388 08/02/200 FILE

$500. 09/04/20 Financial Matters, LLC

Fairburn

GA

15193 08/02/200 B&R

$500.

Residential Acceptance Corporation Atlanta

GA

15791 08/21/200 FILE

$500.

Glover Mortgage Services, Inc.

Perry

GA

16047 08/05/200 1013 16047 08/05/200 FILE

$1000. $500.

H&H Mortgage, LLC H&H Mortgage, LLC

Atlanta

GA

Atlanta

GA

FINES ASSESSED IN AUGUST 2002

ID#

ISSUE

DATE

FINE

FINE

REASON

PAID DATE

COMPANY NAME

CITY

ST

16047 08/05/200 FILE

$500.

H&H Mortgage, LLC

Atlanta

GA

16047 08/05/200 B&R

$500.

H&H Mortgage, LLC

Atlanta

GA

16047 08/05/200 B&R

$500.

H&H Mortgage, LLC

Atlanta

GA

16101 08/02/200 B&R

$500. 08/12/20 Cloverleaf Housing, Inc.

Cartersville

GA

16101 08/02/200 FILE

$500. 08/12/20 Cloverleaf Housing, Inc.

Cartersville

GA

16351 08/05/200 FEL

$1000. 09/03/20 Mortgage Resource Group, Inc.

Marietta

GA

16351 08/05/200 CIC

$500. 09/03/20 Mortgage Resource Group, Inc.

Marietta

GA

16423 08/02/200 B&R

$500.

Marimac Mortgage Corporation

College Park

GA

16431 08/21/200 B&R

$500.

United Mortgage Funding

Doraville

GA

16431 08/21/200 FILE

$500.

United Mortgage Funding

Doraville

GA

16431 08/21/200 FILE

$500.

United Mortgage Funding

Doraville

GA

17029 08/29/200 1013

$5000.

First Preference Mortgage Corp.

Waco

TX

17299 08/08/200 UL

$1000. 08/08/20 Millennium Group, Inc.

Atlanta

GA

FINE REASON

1099 1099 employees

B&R BR CD CIC EMP FEE

Books & records Unapproved branch
Violation of Cease & Desist Order Acq. of 25% ownership without approval
Employer under C&D or revocation $6.50 fees not paid

LAR NSF
REL REN
UL OTH

FILE Loan files not properly maintained
Late filing Written Annual Report Check returned for insufficient funds
Relocation of office without notice Renewal filed late
Doing business with unlicensed entity Miscellaneous other