Monthly Summary of Mortgage Activities Georgia Department of Banking and Finance 2990 Brandywine Road, Suite 200, Atlanta, GA 30341-5565 FOR THE PERIOD ENDING MARCH 2004 SUMMARY OF ACTIVITIES - MORTGAGE DIVISION WEBSITE: www.state.ga.us/dbf --------------------------------------------------------------------------------------------------------------------------------------- LICENSE RENEWALS - FY 2005 The Department would like to thank those of you who filed your FY 2005 License Renewals on-line. The program works well, and with only one or two minor issues which had to be corrected, the program is a great timesaver and will be used again in future renewals. The last day to enter an application on-line was March 31, 2004. Please also note, however, that renewal applications, whether completed on-line or in hard-copy format, were due by April 1, 2004. Failure to properly file the renewal application will result in a $300 late fine. As in prior years, and for all licensees, whether renewing on-line or by mail, all outstanding issues such as any fines, fees, stale audits, complaint resolution, etc. must be resolved before your renewal license will be granted. Licensees who do not complete the renewal process by June 30, 2004, will have their licenses expire, will have to cease operations, and will have to complete the license application process in full before being allowed to again operate a residential mortgage business. Going forward, the Department encourages licensees who qualify for the on-line renewal to take advantage of this process, which will reduce processing time, eliminate mailing concerns, ensure quality data entry, and allow the Department to offer more on-line services in the future. We would like to again thank all of you who renewed online for your participation. BACKGROUND CHECKS - REQUIREMENTS AND FREQUENCY The Georgia Residential Mortgage Act (GRMA), O.C.G.A. Section 7-1-1004 (d), prohibits a licensee from employing convicted felons who have not previously sought and obtained the remedies provided for in the Code, such as a pardon or the successful completion and documentation of probation under a first offender statute. In addition, Code Section 7-1-1004 (f) requires all licensees to conduct background checks on their covered employees, as defined in that same code section, to adequately determine existing and potential employees' criminal histories. Please note: Code Section 7-1-1004 (f) also requires that such background checks be handled by the Georgia Crime Information Center pursuant to Code Section 35-3-34 and the rules and regulations of the Georgia Crime Information Center. Several licensees have recently utilized private companies to perform background checks and have unnecessarily subjected their licenses to fines and revocation. Many licensees have asked how often this background check needs to be performed, as neither the GRMA nor the Department's Rules addresses frequency or requires that a licensee run criminal background checks periodically after the initial employment check. The Department has consistently held that a licensee should do follow-up background checks no less frequently than every 24 months, unless the licensee has reason to believe there is a need to review an individual's criminal background record more frequently. In doing so a licensee would demonstrate "due diligence" on their part in that they do not have in their employ a felon who received their conviction after hiring. In such a case, a licensee who periodically runs employment background checks and who subsequently discovers that they have a felon on staff, and the felony occurred after the initial hiring would, in most circumstances, be assessed a fine for the violation and issued a cease and desist order to preclude future violations of this law if they took immediate steps to correct the violation, but in most cases would not be subject to revocation of their license. However, revocation could occur if an employer 1) knew, or 2) should have known (based on information received, prolonged absence from work, etc.), that an employee had a subsequent felony conviction but allowed the individual to remain on staff and did not take the appropriate and timely action to correct the violation. **ANNOUNCEMENTS** RETIREMENTS AND APPOINTMENTS RETIREMENT - Larry S. Moor Yet another employee of the Mortgage Division of the Georgia Department of Banking and Finance has decided to retire after 34 years of services to the State. Larry Moor was born in Atlanta, Georgia and has lived most of his life in Georgia and Virginia. After graduating from the University of Georgia in 1971, Larry served as a commissioned officer in the field artillery branch of the US Army and Army Reserves. Larry began his career with the state on January 1, 1972 as a field operative with the Georgia Department of Revenue and transferred to the Banking Department in 1973. He initially worked as a field examiner until transferring to the main office in 1982. At that time, as an Assistant Deputy Commissioner, he was responsible for the administrative supervision of the banks and holding companies for two of our bank supervision Districts. He was also the primary contact for the international banks operating in Georgia and was responsible for the supervision of the activities of two largest and most active holding companies - SunTrust and Nationsbank. At various times, Larry also served as the Department's liaison with the Georgia Real Estate Appraisal Board, Interagency Fraud Task Force, and Supervisory EDP Task Force. He achieved professional recognition as a Certified Financial Examiner and Certified Examinations Manager. On July 1, 1993, Larry became the Assistant Deputy Commissioner serving the Department's Corporate Division where he was the initial point of contact for groups and their attorneys forming new bank charters and holding companies. At that time, the Mortgage Division was just starting operations; and in 1995, Larry transferred to the Mortgage Division. In that capacity, he supervised the mortgage licensing process and the team of examiners handling mortgage fraud investigations, as well as examiners assigned to the Mortgage Division from one of the banking districts. After 9 years in the Mortgage Division, Larry decided that it was time to continue the youth movement in the Mortgage Division and let some of the younger employees enjoy the pleasures of serving the mortgage community. Appointment - Rod Carnes Rod Carnes, who previously served as the Senior Special Investigations Examiner for the Mortgage Division, has been appointed to the position of Supervisory Manager-Licensing, which was held by Larry Moor. Rod is a graduate of the University of Georgia and began his career with the Department in 1998 as the first full-time Mortgage Examiner. New Employee Gloria Smith has joined the Mortgage Division as Secretary/Receptionist. Gloria previously worked for the Department's Administrative Division in a similar capacity. In addition to being a tried and proven employee, Gloria is also fluent in both Spanish and English. We welcome Gloria to the Mortgage Division and wish for her a long and successful career with the Department. LOCK-IN AGREEMENTS Licensees are reminded that the Department considers it misleading for a loan officer or anyone else associated with a loan application under the Georgia Residential Mortgage Act (the Act) to use the words "lock in" or "locked in" to a consumer when they are talking about the wholesale lock in between a broker and lender/investor. It is not the use of the word, it is the connotation that the rate has been locked for the consumer if it has not. Our understanding of a wholesale lock-in is that it is between the broker and lender/investor, not between either of these and the consumer. A licensee may choose to offer retail lock-ins (between a consumer and a loan broker or lender) or not, but caution should be taken in handling the wholesale lock in so as not to lead the consumer to believe they have a retail lock-in when they do not. According to the Act, "Lock-in agreement" means "a written agreement whereby a lender or a broker required to be licensed...guarantees for a specified number of days or until a specified date the availability of a specified rate of interest for a mortgage loan, a specified formula by which the rate of interest will be determined, or a specific number of discount points if the mortgage loan is approved and closed within the stated period of time". REMINDER: Mortgage licensees and registrants are reminded that all employees must be compensated on a W-2 basis. Persons compensated on a 1099 basis are considered to be independent contractors and must be individually licensed if they engage in any residential mortgage related business practices. Licensees that compensate unlicensed individuals on a 1099 basis subject their license to administrative actions, including possible revocation. REAL ESTATE BROKERS AND UNLAWFUL RESIDENTIAL MORTGAGE ACTIVITIES Although a real estate broker may refer consumers to a mortgage broker or mortgage lender, Georgia law prohibits a real estate broker from accepting any fee or compensation in any form whatsoever for directly or indirectly negotiating, placing, or finding a mortgage for a Georgia consumer. O.C.G.A. 7-1-1001 (4). In order for a real estate broker to receive compensation legally for such services, that real estate broker must first obtain a mortgage broker or mortgage lender license or demonstrate that he, she, or it is exempt form GRMA's licensing requirements. Compensating a real estate broker for such services will subject a Georgia licensed mortgage broker or mortgage lender to revocation procedures as such conduct constitutes engaging in residential mortgage activities with unlicensed person. O.C.G.A. 7-1-1002. AUDITED FINANCIAL STATEMENTS - Lenders and some brokers have licenses that are dependent upon the filing of current audited financial statements with this office. Those whose audits are more than 15 months old may be subjected to fines and/or revocation of their license. It is the RESPONSIBILITY of the licensee, as professionals licensed to operate in the mortgage industry, to insure that these audits are current AT ALL TIMES. Care must be taken to employ a CPA who has time to service your account in a manner so as to protect your license. Requests for an extension will not be granted. License renewals will not be granted for those licensees whose audits are not current. Please keep in mind that the net worth requirements in Georgia are predicated on tangible assets. Assets including but not limited to items such as "goodwill" and accounts "due from" shareholders, affiliated companies, directors or officers will not count as tangible assets. PER LOAN FEES - "Per loan" fees for the second half of 2003 were due by March 1, 2004. If you hold a Georgia Residential Mortgage Lender license, you should have received a Reporting Form in January 2004. Please use this form to remit your fees. Contact the Department or use the internet if you did not receive your form. Regardless of the volume of loans (even "0" loans closed), you should send in the fee report. 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. The fine for late filing of your Per Loan Fees is $1,000. These fines will be posted to the delinquent licensees. 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; however, you should still send in the form reflecting "0" loans closed if that is the case. Proper payment of these fees will be monitored by our examination team. Failure to pay the fees may result in non-renewal of your license. E- MAIL Worms With the recent e-mail virus attacks, both the state's and the Department's Technology Departments have introduced stronger e-mail content filtering and blocking for incoming infected messages. As a result, many messages containing attachments have the attachments filtered, or often the entire message itself is deleted. If you are e-mailing the Department and you have not received a response in a day or two, please resend the message, being mindful of the SUBJECT line or other content that may be filtered by anti-virus programs. VERIFYING LICENSED ENTITIES Rule 80-11-4-.05 of the Mortgage Division Rules states, in part, that it is the licensee's responsibility to "know" that it is conducting business with a licensed entity. You run the risk of conducting business with an unlicensed entity if you do not verify the license. The fine for "dealing with unlicensed persons" under Rule 80-11-3-.01 (4) is $1,000 per transaction and your license shall be subject to suspension or revocation. Anyone who purchases, sells, places for processing or transfers a mortgage loan or loan application to or from a person who is required to be licensed but is not properly licensed will be fined. You can check the license status of any licensee by going to the Department's web site at http://www.ganet.org/dbf/mortgage.html . From there you can check by entering the licensee's name, license number, or city, or leave the selection box blank and you will get a complete listing of licensees. There is also an option to download the entire list into an Excel spreadsheet. CEASE AND DESIST ORDERS - Issued Affordable Mobile Homes, LLP, Toccoa, GA (license no. 15584) - Cease and Desist Order issued February 23, 2004 and became final on March 30, 2004. Jones, David, Dublin, GA - Cease and Desist Order issued February 18, 2004 and became final on March 19, 2004. Ocmulgee Homes II, Dublin, GA - Cease and Desist Order issued February 18, 2004 and became final on March 19, 2004. Petgrave, Sandra, Stone Mountain, GA - Cease and Desist Order issued April 14, 2003 and became final on March 1, 2004. Summit Equity Funding, LLC, Atlanta, GA (license no. 13455) - Cease and Desist Order issued February 4, 2004 and became final on March 5, 2004. CEASE AND DESIST ORDER - Lifted Effio, Patricia, Norcross, GA - Cease and Desist Order issued September 17, 2003 was LIFTED on March 29 2004. Final Consent Order On March 31, 2004 the Department entered a Consent Order with Charles E. Honstine whereby Mr. Honstine will abide with the Cease and Desist Order that was issued. On March 1, 2004, the Department entered a Consent Order with Universal Home Mortgage, Inc. In which Universal agreed to surrender its license and cease conducting business as of March 5, 2004. LICENSEES/REGISTRANTS REVOKED, EXPIRED, SUSPENDED, WITHDRAWN OR DENIED IN MARCH 2004 ID# 7289 7417 11944 13455 15584 16144 16961 NAME CODE M&T MTG CORP RD PRUDENTIAL SECURITIES INC RD INDEPENDENT REALTY CAP LD SUMMIT EQUITY FUNDING LLC BD AFFORDABLE MOBILE HMS BD RODNEY SMITH INC BD SOUTHMOR MTG CORP LD REVOKED EXPIRED SUSPENDED 03/05/2004 03/20/2004 WITHDRAWN 03/25/2004 03/29/2004 03/31/2004 03/12/2004 03/01/2004 DENIED TOTAL: 7 ID# 18828 19085 19142 19156 19205 18990 19025 19194 14335 15317 19198 19202 LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN MARCH 2004 COMPANY NAME Acoustic Home Loans, LLC Pacific Northwest Mortgage 1st Solutions Mortgage, Inc. PainLess Processing, Inc. Golden Mortgage Financial, LLC Collateral One Mortgage Janice Abernathy Thompkins AMS Partners, LP Solstice Capital Group, Inc. * Heathrow Funding, Inc. + Total Financial Solutions, Inc. Michael Pippen CITY ENCINO SAN JOSE ACWORTH NORCROSS STONE MOUNTAIN BOCA RATON SHARPSBURG HOUSTON FOUNTAIN VALLEY CUMMING KENNESAW ATLANTA ST MB CODE CA L CA L GA B GA P GA B FL L GA P TX L CA L GA B GA B GA B ORIGINAL APPROVAL 03/05/2004 03/05/2004 03/05/2004 03/05/2004 03/05/2004 03/12/2004 03/12/2004 03/12/2004 04/02/1999 06/09/2000 03/05/2004 03/05/2004 RENEWAL 03/05/2004 04/14/2004 03/05/2004 03/05/2004 04/07/2004 03/12/2004 03/12/2004 04/07/2004 03/19/2004 03/19/2004 04/07/2004 04/07/2004 REINSTATED TOTAL: 12 B = BROKER L = LENDER R = REGISTRANT * Upgrade Broker to Lender + Downgrade Lender to Broker # Upgrade Lender to Registrant Downgrade Registrant to Lender FINES ASSESSED IN MARCH 2004 ID# ISSUE DATE FINE PAID DATE COMPANY NAME CITY ST 5878 5919 6063 6063 03/29/2004 03/05/2004 03/15/2004 03/15/2004 $1000. $1000. $1000. $1000. Mortgage Solutions, Inc. Infinity Mortgage Corporation Accent Mortgage Services, Inc. Accent Mortgage Services, Inc. Marietta GA Atlanta GA Alpharetta GA Alpharetta GA 6063 03/15/2004 $3000. Accent Mortgage Services, Inc. Alpharetta GA 6220 03/05/2004 $1000. Relocation Financial Services, Inc. Norwell MA 6342 03/05/2004 $1000. 03/23/2003 Caversham Financial, Inc. Atlanta GA 6651 03/05/2004 $1000. 03/09/2004 Federated Home Mortgage, Inc. Alpharetta GA 6933 03/05/2004 $1000. 03/11/2004 Phoenix Global Mortgage Corporation Atlanta GA 7289 03/05/2004 $1000. M & T Mortgage Corporation Buffalo NY 7310 03/05/2004 $1000. National Guaranty Mortgage Corporation Atlanta GA 7504 03/01/2004 $3000. Shabtay Varon Atlanta GA 7504 7504 03/01/2004 03/01/2004 $7000. $1000. Shabtay Varon Shabtay Varon Atlanta GA Atlanta GA ID# 7504 7504 12060 12060 12060 12109 12244 12310 12348 12676 12719 12719 12719 12719 12719 12719 12719 12719 12719 12719 12719 12746 12751 12752 12868 13099 13110 13242 13242 13242 13242 13242 13242 13242 13242 13398 13590 13590 13590 13590 13590 13590 13590 13629 13697 13795 FINES ASSESSED IN MARCH 2004 ISSUE DATE 03/01/2004 03/01/2004 03/05/2004 03/05/2004 03/05/2004 03/15/2004 03/05/2004 03/05/2004 03/05/2004 03/05/2004 03/15/2004 03/15/2004 03/15/2004 03/15/2004 03/15/2004 03/15/2004 03/15/2004 03/15/2004 03/15/2004 03/15/2004 03/15/2004 03/05/2004 03/05/2004 03/05/2004 03/05/2004 03/05/2004 03/05/2004 03/02/2004 03/02/2004 03/02/2004 03/02/2004 03/02/2004 03/02/2004 03/02/2004 03/02/2004 03/05/2004 03/04/2004 03/04/2004 03/04/2004 03/04/2004 03/04/2004 03/04/2004 03/04/2004 03/05/2004 03/05/2004 03/05/2004 FINE $1000. $1000. $1000. $500. $1000. $5000. $1000. $1000. $1000. $1000. $2000. $1000. $1000. $1000. $1000. $1000. $1000. $1000. $1000. $17000. $500. $1000. $1000. $1000. $1000. $1000. $1000. $5000. $1500. $1000. $1000. $5000. $1000. $1000. $1000. $1000. $4000. $2000. $5000. $1000. $1000. $1000. $1000. $1000. $250. $1000. PAID DATE 03/12/2004 03/12/2004 03/12/2004 03/21/2004 04/01/2004 04/05/2004 03/15/2004 03/18/2004 03/18/2004 COMPANY NAME Shabtay Varon Shabtay Varon First Community Lending, Inc. First Community Lending, Inc. First Community Lending, Inc. Georgia State Mortgage, Inc. First Mortgage Group, L.L.C. Dream House Mortgage Corporation Southern Home Equity, Inc. Pine Valley Mortgage Corporation International Realty Group, Inc. International Realty Group, Inc. International Realty Group, Inc. International Realty Group, Inc. International Realty Group, Inc. International Realty Group, Inc. International Realty Group, Inc. International Realty Group, Inc. International Realty Group, Inc. International Realty Group, Inc. International Realty Group, Inc. Ocean West Enterprises, Inc. Platinum Capital Group World Wide Credit Corporation World Wide Financial Services, Inc. Jim Walter Homes, Inc. Buckhead Mortgage Associates, Inc. Hunter Mortgage Company Hunter Mortgage Company Hunter Mortgage Company Hunter Mortgage Company Hunter Mortgage Company Hunter Mortgage Company Hunter Mortgage Company Hunter Mortgage Company PSB Lending Corp. Progressive Home Mortgage Progressive Home Mortgage Progressive Home Mortgage Progressive Home Mortgage Progressive Home Mortgage Progressive Home Mortgage Progressive Home Mortgage Genisys Financial Corp. Money Source, Inc. Golden First Mortgage Corp. CITY ST Atlanta GA Atlanta GA Acworth GA Acworth GA Acworth GA Conyers GA Duluth GA Providence RI Statesboro GA Duluth GA Marietta GA Marietta GA Marietta GA Marietta GA Marietta GA Marietta GA Marietta GA Marietta GA Marietta GA Marietta GA Marietta GA Tustin CA Irvine CA San Diego CA Southfield MI Tampa FL Roswell GA Atlanta GA Atlanta GA Atlanta GA Atlanta GA Atlanta GA Atlanta GA Atlanta GA Atlanta GA Plano TX COLLEGE PARK GA COLLEGE PARK GA COLLEGE PARK GA COLLEGE PARK GA COLLEGE PARK GA COLLEGE PARK GA COLLEGE PARK GA San Diego CA Atlanta GA Melville NY FINES ASSESSED IN MARCH 2004 ID# ISSUE DATE FINE PAID DATE COMPANY NAME CITY ST 13817 13872 14400 03/05/2004 03/05/2004 03/05/2004 $1000. $1000. $1000. United California Systems International, Inc. Atlanta GA American Mortgage Express Financial San Diego CA H&R Block Mortgage Corportion Lake Forest CA 14483 03/05/2004 $1000. One World Mortgage Corporation Duluth GA 14592 03/05/2004 $1000. Wilshire Credit Corporation Beaverton OR 14683 03/05/2004 $1000. First City Mortgage, Inc. Atlanta GA 14718 03/05/2004 $1000. 03/11/2004 Hillcrest Mortgage & Properties, Inc. Atlanta GA 15334 03/10/2004 $25. First American Equity Corp. Dalton GA 15334 15346 15557 15581 03/10/2004 03/04/2004 03/05/2004 03/15/2004 $25. $1000. $1000. $1000. First American Equity Corp. Dalton GA IWAYLOAN, L.P. Houston TX Mortgage Resource Services, Inc. Fayetteville GA Bond Street Mortgage, LLC Tucker GA 15581 15581 15581 15692 03/15/2004 03/15/2004 03/15/2004 03/05/2004 $1000. $1000. $500. $1000. Bond Street Mortgage, LLC Bond Street Mortgage, LLC Bond Street Mortgage, LLC Vertical Lend, Inc. Tucker GA Tucker GA Tucker GA Melville NY 15745 03/11/2004 $5000. All Star Mortgage, Inc. Columbus GA 15745 03/11/2004 $1000. All Star Mortgage, Inc. Columbus GA 16035 03/05/2004 $1000. 1st Republic Mortgage, Inc. (New York) Floral Park NY 16218 03/15/2004 $1000. First Security Home Mortgage Corporation Atlanta GA 16218 03/15/2004 $1000. First Security Home Mortgage Corporation Atlanta GA 16218 03/15/2004 $1000. First Security Home Mortgage Corporation Atlanta GA 16218 03/15/2004 $1000. First Security Home Mortgage Corporation Atlanta GA 16218 03/15/2004 $2000. First Security Home Mortgage Corporation Atlanta GA 16232 03/05/2004 $1000. 03/15/2004 Home Star Mortgage Services, L.L.C Paramus NJ 16334 03/05/2004 $1000. HomePlace Mortgage Services, LLC Kennesaw GA 16364 03/05/2004 $1000. 1stPalm Financial Services, LLC Jacksonville FL 16630 03/05/2004 $1000. 04/01/2004 Homesouth Mortgage Services, Inc. Birmingham AL 16939 03/01/2004 $4000. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $10000. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $6000. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $1000. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $1000. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $1500. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $500. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $1000. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $500. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $1000. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $4000. Heart of Georgia Financial Services, Inc. Dublin GA 16939 03/01/2004 $1000. Heart of Georgia Financial Services, Inc. Dublin GA 17035 03/05/2004 $1000. Endeavor Capital, LLC Atlanta GA 17495 03/05/2004 $1000. Diversified Mortgage, Inc. Clearwater FL 17555 03/05/2004 $1000. 04/01/2004 Greenlight Financial Services, Inc. Irvine CA 17727 03/05/2004 $1000. Merit Financial, Inc. Kirkland WA 17781 03/05/2004 $1000. Founders Mortgage USA, LLC Sewell NJ 17879 03/05/2004 $1000. Churchill Financial, Inc. Fort Lauderdale FL FINES ASSESSED IN MARCH 2004 ID# ISSUE DATE FINE PAID DATE COMPANY NAME CITY ST 17997 18095 18096 03/09/2004 03/05/2004 03/10/2004 $500. $1000. $33.8 Hometown Equity Mortgage of Atlanta, Inc. Atlanta GA ARGO Mortgage and Investment, Inc. Daytona Beach FL 1st Nations Mortgage Corporation Charlottesville VA 18255 03/05/2004 $1000. Global Home Loans & Finance, Inc. Melville NY FINE REASON 3 Licensees fined for prohibited acts 1 Licensee fined for 1099 employees 23 Licensees fined for books & records 3 Licensees fined for Acq. of 25% ownership without approval 43 Licensees fined for $6.50 fees not paid 3 Licensees fined for employment of a felon 12 Licensees fined for files not properly maintained 3 Licensees fined for check returned for insufficient funds 3 Licensees fined for doing business with unlicensed entity 1 Licensee fined for failure to report prohibited acts 5 Licensees fined for advertising violation 5 Licensees fined for GAFLA violation 6 Licensees fined for background check violation