Monthly summary of mortgage activities, May 2005

Monthly Summary of
Mortgage Activities
Georgia Department of Banking & Finance

Inside this Issue

2

FY 2006 License Distribution

2

Georgia Residential Mortgage Fraud Act

2

Licensee Advertising

3

New Licensing Financial

Requirements

3

Internet Survey

4

On-Line Branch Relocation

Notifications

4

Fraud Tools

4

Mortgage Division Training

5

Administrative Actions and Issues

2990 Brandywine Road Suite 200
Atlanta, GA 30341 Phone: (770) 986-1269
Fax: (770) 986-1029

FOR THE PERIOD ENDING
May 2005
SUMMARY OF ACTIVITIES
MORTGAGE DIVISION
WEB SITE: www.state.ga.us/dbf

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News Items
FY 2006 License Distribution
For those licensees who have successfully completed the submission of their renewal applications for licensing for FY2006, please note that new licenses for the year will be mailed out beginning mid-June 2005.
If you do not receive your new license by the first week of July, please contact the office.

GEORGIA RESIDENTIAL MORTGAGE FRAUD ACT

As many of you are aware, Senate Bill 100 was passed during this year's legislative session. It provides for tough new penalties for those who participate in mortgage fraud schemes. This legislation is a part of Chapter 8 of Title 16 of the Official Code of Georgia. Specifically, a person commits the offense of residential mortgage fraud when, with the intent to defraud, such person (O. C. G. A. 16-8-103):

"(1) Knowingly makes any

deliberate

misstatement,

misrepresentation, or omission

during the mortgage lending

process with the intention that it

be relied on by a mortgage

lender, borrower, or any other

party to the mortgage lending

process;

(2) Knowingly uses or facilitates the use of any deliberate

2

. . . . .

misstatement, misrepresentation, or omission, knowing the same to contain a misstatement, misrepresentation, or omission, during the mortgage lending process with the intention that it be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process;

(3) Receives any proceeds or any other funds in connection with a residential mortgage closing that such person knew or resulted from a violation of paragraph (1) or (2) of this Code section;

(4) Conspires or endeavors to violate any of the provisions of paragraph (1), (2), or (3) of this Code section; or

(5) Files or causes to be filed with the official registrar of deeds of any county of this state any document such person knows to contain a deliberate misstatement, misrepresentation, or omission."

District attorneys and the Attorney General have the authority to conduct the criminal investigation and prosecution of all cases of residential mortgage fraud under this article or under any other provision of this title.

Persons violating this act shall be guilty of a felony and, if convicted, will be punished by imprisonment for not less than one year nor more than ten years, by a fine not to exceed $5,000.00, or both.

If a violation of this article

involves

engaging

or

participating in a pattern of

residential mortgage fraud or a

conspiracy or endeavor to

. . . . . . . . . .

engage or participate in a pattern of residential mortgage fraud, the punishment for violation of the act calls for even stiffer penalties.

And it is significant to note that each residential property transaction subject to a violation of this article is a separate offense.

The first arrests under the new law have occurred in Gwinnett County, where four persons were arrested May 27, 2005. The four are accused of attempting to obtain at least $60,000 from a lender by inflating the value of a property by placing fake liens on it.

Those arrested were charged with mortgage fraud under the Act.

At a press conference, Attorney

General Thurbert Baker

reiterated that he intends to

pursue actions under the new

bill. The bill is available from

the

following

link:

http://www.legis.state.ga.us/le

gis/2005_06/versions/sb100_As_

passed_Senate_8.htm

LICENSEE ADVERTISING

It has come to the attention of

the Department that many

companies are appealing to

would-be mortgage clients by

using advertising that would

appear to be from the

customer's existing or prior

mortgage company.

These

advertisements often appear to

be legal documents, with "Deed

of Trust" or other terminology in

bold lettering within the

document, describing the terms

. . . . . . . ..

of the note of the current or former lender and, while not directly stating there is a problem with the loan, the document makes it appear that there may at least be potential problems with the existing note or the payoff of an old note.
Potentially Misleading

Licensees need to be aware of the fact that consumer complaints are a basis used by the Department for scheduling examination frequency.
NEW LICENSING FINANCIAL REQUIREMENTS

http://www.legis.state.ga.us/le gis/2005_06/sum/sb82.htm
DON'T FORGET-SURVEY!

The unsuspecting borrower does not realize, and can not readily discern from these documents, that this is an advertisement, the sole purpose of which is to get the borrower to contact the number in the advertisement for the purpose of obtaining a new mortgage from the advertiser.
Consumer Concerns
The Department has determined that the use of such an advertisement is alarming to the consumer and appears to mislead the consumer into thinking that there is a problem with their existing loan, or the payoff of the prior loan. Such potentially misleading advertisements are in potential violation of Georgia Code Section 7-1-1016, which prohibits licensees from engaging in false, misleading, or deceptive advertising.
Licensees should understand that the use of such advertisements is discouraged by the Department, particularly where other lenders are named in these documents. Such apparently defaming advertising could lead to possible legal action by the lenders named in the advertisement against the licensee creating the ad.
What is known for certain is that such advertisements DO lead to many consumer complaints against those licensees who use this type of advertising.

A final (for a while) reminder the Department's Housekeeping Bill contained significant changes to the provisions relating to the financial requirements for licensing, Code Section 7-11003.2 as noted below. Beginning July 1, 2005, licensees must meet the requirements noted below.
The use of audited financial statements, demonstrating a required minimum net worth, is no longer accepted for licensing purposes. This change also applies to HUD approved lenders and correspondents. Beginning July 1, 2005, brokers must have a surety bond or letter of credit from a federally insured financial institution in the amount of $50,000, and lenders must have either a bond or letter of credit in the amount of $150,000. Both the bond and the letter of credit must be written on the Department approved forms, which are available from the internet at:
www.state.ga.us\dbf\mortgage_f orms.html.
Please review the new requirements so that you will be in compliance by the FY2007 renewal period, which begins in February 2006.
The marked-up version of the housekeeping bill can be found on the internet at:

ON-LINE RENEWAL SURVEY
We want your opinions and suggestions!
Please take a moment to complete the on-line renewal survey on the web by using the following link:
https://services.georgia .gov/esp/survey.do?sur veyId=2306
You did not have to complete your application on line to provide us your thoughts regarding on-line applications. So please let us know what you think.
The survey will be available through the end of June. Your suggestions will help us improve the process in future renewal periods.
Many thanks to those of you who have already provided your comments. Results will be announced.

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Other Items

submitted. The application is available at the following website address:

http://www.fbi.gov/publications /financial/fcs_report052005/fcs_ report052005.pdf

ON-LINE BRANCH RELOCATIONS COMING

Beginning mid-June, licensees will be able to enter APPROVED/EXISTING branch location changes on-line.

As promised, the Department

wants to facilitate your

compliance with the Georgia

Residential Mortgage Act by

providing

more

on-line

applications. As you know,

Section 7-1-1006 (e) requires

licensees to notify the

Department in writing of any

change in the address of

approved branches 15 days

before the change in location is

made.

The new on-line system will

allow you to enter these

changes,

avoiding

any

transcription errors which may

occur when the notice is entered

by a third party within the

Department. After entering the

change, Department personnel

are notified of the change, it is

reviewed, and posted into the

database and to the internet

listings for your license.

Branch Manager and Main Office Changes Temporarily Excluded

Please note, however, that MAIN OFFICE LOCATIONS are not included in this initial on-line system, so that the relocation of a MAIN OFFICE must still be submitted in hardcopy format. It is also very important to note that if the branch change involves the installation of a new manager for the branch, then an application form for approval of a new branch manager must be

4

. . . . .

http://www.state.ga.us/dbf/pdf doc/BrnMgrChg_R0705.pdf
This form must be submitted prior to installation of the new manager.
We will let you know as soon as the web site is finalized, and provide access information to you at that time. This will be a secure site requiring specific identifying information for the protection of your license information.

FRAUD TOOLS

There are many tools available to assist licensees in detecting and preventing fraud, as noted below.

FBI Report Provides Help With Loan Losses Due To Fraud

The FBI has issued a report

Financial Crimes Report to the

Public ("Report"). The Report,

released on May 4, 2005, details

recent activity of the FBI's

Financial Crimes Section which

focuses on crimes involving

fraud. Mortgage fraud has been

identified as a principal target

for investigations, and to help

combat this expanding problem,

the FBI hopes to increase

cooperation between the FBI and

mortgage lenders. The FBI's

mortgage

activities

are

consolidated in one unit, the

Financial Institution Fraud Unit.

According to the Report, the FBI views equity skimming, flipping and mortgage-related identity theft as currently increasing mortgage fraud trends. The report can be found at

. . . . . . . . . .

FFIEC Report Identifies Red Flags and Best Practices

To help lenders understand the

problem

and

establish

procedures and best practices to

detect and prevent mortgage

fraud, the Federal Financial

Institutions Examination Council

(FFIEC) issued a report in

February 2005 that identifies

mortgage fraud red flags and

discusses ways to stop mortgage

fraud in a white paper titled The

Detection, Investigation, and

Deterrence of Mortgage Loan

Fraud Involving Third Parties.

The publication and related

white papers are available at:

http://www.ffiec.gov/exam/whi tepapers.htm

MORTGAGE DIVISION TRAINING
Please be advised that June 6 through June 10, 2005, members of the Mortgage Division staff will be in training. If you need to get in touch with a member of the staff, please leave an e-mail message. We will be periodically checking messages. A listing of e-mail addresses is available on the web at:
www.state.ga.us/dbf/staff.html.
Should you need to speak to a member of the staff, you may contact our receptionist at 770/986-1136 to leave a message. Please understand that the call may not be returned until the beginning of the following week.

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Administrative Actions and Issues
CEASE AND DESIST ORDERS - Issued Ashadele, Sandy, Stone Mountain, GA - Cease and Desist Order issued April 21, 2005 became final on May 11, 2005. Clark, Sandra, Stone Mountain, GA Cease and Desist Order issued April 19, 2005 became final on May 20, 2005. Egerton, Sophia, Riverdale, GA Cease and Desist Order issued May 6, 2005 became final on May 27, 2005. Johnson, Desmond, Covington, GA Cease and Desist Order issued April 21, 2005 became final on May 22, 2005. Metro Mortgage Brokers of America, Inc. (license no. 14656) - Cease and Desist Order issued April 13, 2005 became final on May 12, 2005. Tenpow, Renee, Stone Mountain, GA Cease and Desist Order issued May 3, 2005 became final on May 24, 2005. Thomas, Shateris Nicole Laster Cease and Desist Order issued May 2, 2005 became final on May 23, 2005. Williams, Taryn - Cease and Desist Order issued May 5, 2005 became final on May 26, 2005.
CEASE AND DESIST ORDERS Lifted None
FINAL CONSENT ORDERS Issued None
SUPERIOR COURT INJUNCTIONS None

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FINE PUBLICATION

Information regarding fines assessed against a specific licensee and against whom there are no pending administrative actions, is available on an individual licensee basis by submitting a written request to the following e-mail address: dbfmort@dbf.state.ga.us

FINE REASON

2 Licensees fined for Advertising Violations 4 Licensees fined for Audit filed late 2 Licensees fined for Background Checks
violations 2 Licensees fined for Books and Records 2 Licensee fined for Unapproved Branch 2 Licensee fined for Unapproved Branch Manager 2 Acq. of 25% ownership without approval

1 Licensees fined for Employment of a Felon 2 Licensee fined for GaFLA violations 2 Licensees fined for Loan Files not properly maintained 4 Licensees fined for Prohibited Acts 4 Licensee fined for Check returned for insufficient
fund 4 Licensees fined for Renewal filed late

________________________________________________________________________________________________________

LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN MAY 2005

ID# COMPANY NAME
20088 CBB, Inc. 20161 Masari, Inc. USA 20169 Joshua Daniel Whiteis 20179 Jerry F. McCarthy 20203 MTGLQ Investors, L.P. 20243 Peach State Home Mortgage, 20267 Waterside Mortgage, Inc. 20292 PHH Home Loans, LLC 20298 Option 1 Lending, LLC 20299 New World Mortgage, Inc. 20302 Citi Mortgage Specialists, Inc. 20310 3rd Party Resources, Inc. 20315 Aggressive Mortgage Corp. 20324 Cobb Energy Mortgage 20330 Stonequest Mortgage, Inc. 20331 1st Executive Mortgage, Inc. 20332 United Funding, Inc. 20333 Classic City Financial, Inc. 20337 Executive Home Lending20348 T L Brown Investment Group, 20349 Carlos Miguel Gasquez 20350 Interfinancial Group, Inc. 20357 Cyrus Ellison

CITY
EAST LANSING ORANGE DALLAS LAWRENCEVILLE NEW YORK NORCROSS DALLAS MOUNT LAUREL SUWANEE MURRIETA ATLANTA ATLANTA RICHMOND CONYERS CANTON LITHONIA CUMMING ATHENS OOLTEWAH DULUTH ROSWELL ATLANTA NORCROSS

ST MB ORIGINAL RENEWAL
APPROVAL CODE

MI B CA B GA B GA B NY R GA B GA B NJ L GA B CA L GA B GA B VA B GA L GA B GA B GA L GA B TN B GA B GA B GA B GA B

05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005

05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005 05/06/2005

REINSTATED

6

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LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN MAY 2005

ID# COMPANY NAME

CITY

ST MB ORIGINAL RENEWAL REINSTATED
APPROVAL CODE

20361 MLD Mortgage Inc. 16563 Custom Mtg Svcss, Inc. +

FLORHAM PARK ALPHARETTA

NJ L GA B

20230 Nationwide Mortgage Lenders of DECATUR

GA L

20291 The Miller Mortgage Group, Inc. STOCKBRIDGE

GA B

20313 Caldwell Financial Services, Inc. JEFFERSONVILLE IN B

20338 Allsource Lending, Inc.

TUCKER

GA B

20351 Mid Atlantic Capital, LLC

SEWELL

NJ L

20352 ARC Mortgage, Inc.

CALXTON

GA B

20384 Chase Family Mortgage, Inc. ACWORTH

GA B

20386 Front Row Mortgage Company ATLANTA

GA B

19988 Nustar Mortgage Resources, OVERGAARD

AZ L

20232 Shalonne Williams

MACON

GA B

20316 Madison Area Mortgage, Inc. MADISON

GA B

20321 Premium Mortgage Group, Inc. SAVANNAH

GA B

20353 The Mortgage Butler, LLC

ATLANTA

GA B

20360 First Ohio Lending, Inc.

INDEPENDENCE OH L

20413 Trinity Mortgage Capital, Inc. KNOXVILLE

TN B

20428 Mortgage Brokers Group of

ATLANTA

GA B

20431 Advance Mortgage Solutions, MATTESON

IL B

20260 Morgan Stanley Mortgage

NEW YORK

NY R

20288 AAXA Discount Mortgage, Inc. WILMINGTON

NC B

20339 C. R. Mayo, LLC

DECATUR

GA B

20356 Harbourton Mortgage

SANTA ROSA

CA L

20380 Eric C. Rose

ROSWELL

GA B

20381 Bryco Funding, Inc.

SAN FRANCISCO CA L

20390 Primestar Mortgage, Inc. (MN) ST. LOUIS PARK MN L

20396 Marvin Perez-Salva

MABLETON

GA B

20397 EFI Capital Corp.

GARDEN CITY

NY B

20403 Casa Hipotecaria, Inc.

ATLANTA

GA B

20411 Old Port Lending, Inc.

DULUTH

GA B

20434 Innergy Lending, LLC

DULUTH

GA L

15143 Robert M. Smith

JONESBORO

GA B

15412 C&A Financial Enterprises, Inc. MACON

GA B

05/06/2005 06/15/2001 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 02/04/2000 02/11/2000

05/06/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/13/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/20/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/27/2005 05/06/2005 05/13/2005

05/06/2005 05/13/2005

TOTAL: 56

MB CODES B = BROKER L = LENDER R = REGISTRANT

*

Upgrade Broker to Lender

+

Downgrade Lender to Broker

#

Upgrade Lender to Registrant



Downgrade Registrant to Lender

7

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LICENSEES/REGISTRANTS REVOKED, EXPIRED, SUSPENDED, WITHDRAWN OR DENIED IN MAY 2005

ID# NAME
5976 MTG EXPRESS LTD 7154 PATIO ENCLOSURES INC 11395 HOME POINTE MTG 11738 RES LENDING CORP 12676 PINE VALLEY MTG CORP 13115 AMAXIMIS LENDING LTD 14656 METRO MTG BKRS AMER 15520 AMER RES FUNDING INC 15591 NEXSTAR FINL CORP 15685 AMENITY MTG INC 17704 PRINCIPAL RES MTG
TOTAL: 11

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

REVOKED

EXPIRED SUSPENDED 05/12/2005

WITHDRAWN
05/03/2005 05/03/2005 05/24/2005 05/06/2005 05/06/2005 05/27/2005
05/24/2005 05/13/2005 05/06/2005 05/03/2005

DENIED

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