Georgia Department of Banking & Finance NON-DEPOSITORY FINANCIAL INSTITUTIONS Monthly Summary of Mortgage Activities For the Period Ending March 2007 INSIDE THIS ISSUE NEWS ITEMS Mortgage Licensing System 1 Mortgage Fraud Information 1 2007 Legislative Update 2 ADMINISTRATIVE MATTERS Examination Issues-GAFLA 2 FY 2008 Renewals 3 DBF Website 3 Continuing Education-Course Content & Provider Notes 3 Administrative Actions & Fine Data 4/5 Licenses Revoked, Expired...Denied 6 Licenses Approved & Reinstated 7 2990 Brandywine Rd. Suite 200 Atlanta, GA 30341 Phone: 770.986.1269 NEWS ITEMS Mortgage Licensing System GEORGIA DEPARTMENT OF BANKING AND FINANCE ANNOUNCES COMMITMENT TO PARTICIPATE IN CSBS/AARMR MORTGAGE LICENSING SYSTEM On February 28, 2007, Commissioner Braswell announced that the Department plans to participate in the Residential Mortgage Licensing System ("System") now under development by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR). The System will be used by participating state residential mortgage regulators to accept and process national, uniform license applications and renewal forms that have been created by state regulators over the past two years. Licensees will be able to electronically manage a single record in the System to apply for, amend, renew, and surrender licenses in one or more regulated jurisdictions. The System will manage state licenses for mortgage companies, branches, and individuals. Although the system is scheduled to be operational by January 2008, Georgia will not be participating in the system before 2009. Read the full text of the Press Release, PR 2/28/2007: DBF Announces Commitment to Participate in Mortgage Licensing System on our website at: http://dbf.georgia.gov/ dbfpublications industry professionals. The conference resulted in increased cooperation and information sharing between all participants to combat mortgage fraud. South Carolina has published a study, while geared towards consumers, provides a comprehensive overview of several topics that licensees might want to share with their customers, or which may answer some of questions concerning the recent trends in the industry, such as: Mortgage Fraud Information What is Mortgage Fraud? What is Causing the Increase in Mortgage Fraud? SOUTH CAROLINA PUBLISHES MORTGAGE FRAUD STUDY Who Pays for Mortgage Fraud? What is the Extent of Mortgage Fraud? The South Carolina Department of Consumer Affairs, in coordination with the North Carolina Commissioner of Banks, the Georgia Department of Banking and Finance, the Florida Office of Financial Regulation and the Department of Housing and Urban Development (HUD) (Southeastern Region), sponsored a mortgage fraud conference in Savannah, Georgia, on June 22, 2006. The conference, "Stop Mortgage Fraud, Spot it! Stop it!," was attended by state and federal regulators and law enforcement, including the sponsors, the FBI, the US Attorney for SC and NC, other law enforcement and regulators, and How Do We Combat Mortgage Fraud? Recommendations The text of the complete study is available from the South Carolina Department of Consumer Affairs on the web at: www.scconsumer.gov Continued on Page 2 Monthly Summary of Mortgage Activities For the Period Ending March 2007 Page 2 2007 Legislative Update: GRMA As reported previously, the Department's Housekeeping Bill for this legislative session is Senate Bill 70. The legislation is currently making its way through the session, having been passed by the Senate and is under consideration by the House. The following are the significant items related to the Georgia Residential Mortgage Act, Article 13 of Chapter 1 of Title 7 of the Official Code of Georgia, Sections 7-1-1000 to 7-11021. As the legislative session comes to a close, please be aware of changes as adopted to the Georgia Residential Mortgage Act. A complete marked-up version of the housekeeping bill can be found on the internet at: http://www.legis.ga.gov/ legis/2007_08/fulltext/sb70.htm Proposed Amendments Title 7, Chapter 1, Article 13 Official Code of Georgia Licensing of Mortgage Lenders and Mortgage Brokers 7-1-1001 The proposed change removes the availability of a licensing exemption for a person, other than a natural person, to make five or fewer loans per year. 7-1-1004 This amendment requires licensees and applicants to commence performing background checks within ten days of the initial hire of an employee. In addition the timeframe in which the Department may not issue a license or may revoke a license from an applicant or licensee that employs any person against whom a final cease and desist order has been issued has been extended from three to five years. 7-1-1006 This amendment eliminates branch application approval by operation of law if an application is not acted upon by the Department within 30 days. 7-1-1008 This amendment requires that a person who directly or indirectly acquires 10% or more of the ownership of a licensed entity must follow certain approval steps. The prior provision set the ownership threshold at 25%. 7-1-1009 This amendment clarifies that a licensee should maintain separate personal and business records. 7-1-1016 This amendment provides language prohibiting the use of loan information pertaining to a designated individual in advertisements without required disclosures being made. 7-1-1017 Language has been added to allow the Department to suspend or revoke a mortgage broker education approval on any ground on which it might refuse to issue an approval. The amendment also includes a provision that any notice or final order sent by certified mail that is returned to the Department as "refused" or "unclaimed" will be deemed to have been received by the addressee. 7-1-1018 This amendment includes a provision that any notice or final order sent as required which is returned to the Department as "refused" or "unclaimed" is deemed to have been received by the addressee. ADMINISTRATIVE MATTERS Examination Issues GAFLA It has come to the Department's attention that many mortgage brokers rely on lenders to make the determination whether their residential mortgage loans have points and fees of 5% or more, as calculated under the Georgia Fair Lending Act ("GAFLA"). This is a very risky practice, as mortgage brokers are held equally responsible for any violations that may be committed. Penalties for violation of GAFLA subjects the creditor, which includes mortgage brokers who failed to conduct appropriate due diligence, to damages, including actual, consequential, incidental, and punitive damages; statutory damages of twice the interest paid and forfeiture of all future interest; costs and reasonable attorney fees; equitable claims, including injunctions; class actions; special rescission rights of up to 5 years after consummation; enforcement proceedings from the Attorney General, the Department of Banking and Finance, and Department of Insurance; and criminal prosecution. In addition to conforming to GAFLA, you must ensure that you are in compliance with Mortgage Division Rule 80-11-2.02(1)(l), (Continued on page 3) UPCOMING SPEAKING ENGAGEMENTS NDFI Director of Mortgage Supervision Sandra Sheley and Examiner Bob Bauguss will be speaking at the Atlanta Mortgage Bankers Association Luncheon on April 10th. NDFI Senior Examiner Betty Thomas will be speaking at the I-85 North Board of Realtors on Thursday, April 12, 2007 at Noon. The topic is "Changes to Lending Laws". She will also provide an update on mortgage fraud. Ms. Thomas will also be speaking to ReMax Atlanta on April 10th. Useful Links MORTGAGE FORMS: CODE, REGULATIONS & APPLICATIONS DBF.GEORGIA.GOV/DBFMTGF ORMS UPDATING LICENSE INFORMATION DBF.GEORGIA.GOV/DBFMTGF ORMS MORTGAGE SUMMARY DBF.GEORGIA.GOV/DBFMTGSUM MARY Continued on Page 3 Monthly Summary of Mortgage Activities For the Period Ending March 2007 Page 3 FY 2008 Renewals The FY2008 on-line license renewal period has closed. Late renewal fines have been assessed, and for broker/ processor licensees who failed to obtain Continuing Education credits prior to April 1, the $1,000 fine will be assessed. Should any additional information be required for any license renewal, the licensee will be contacted by e-mail or fax ONLY. Renewals requiring additional information cannot be approved until such information is received and approved. With few exceptions, all outstanding fines and fees must be paid. As most licensees wait until the deadline to make their renewal application, the bulk of the renewal reviews have only begun. Please do not contact the Department regarding the status of your renewal. We will contact you if additional information is required. BROKERS/PROCESSORS ONLY CONTINUING EDUCATION REQUIREMENT If you failed to meet the continuing education requirement to renew by the March 31 deadline, then a $1,000 fine will be assessed, in addition to the $300 late renewal fine which was assessed as of April 2. In order to renew, the continuing education credits must be obtained prior to June 30, 2007, and both fines noted above must be paid. DBF Website AS noted last month, the Department has launched a new website within the State's georgia.gov web portal. It contains a new layout which should provide enhanced navigation. The following information should also provide some quick tips for finding information on our old site. Please note the new website Education Providers: (GAFLA--Continued from page 2) address, http://dbf.georgia.gov. Rule 80-11-4-.01(7)(c) indicates W h i l e t h e o l d U R L that providers shall assign a which states, in part, that you http://www.gadbf.org will still access certificate number to each must maintain, "[a]n indication the site, use of that URL will attendee of a seminar, course or of whether each loan has points automatically redirect the user to the class. Also, Education providers and fees of 5% or more, as new address. approved to provide licensing calculated under the Georgia education courses for Georgia Fair Lending Act." As an The new site regulated entity is organized by type. The main licensees ("in state" providers as noted in regulation), must keep lists of attendees for at least two example, you have this may decide indication to or menu navigation, which is in the years. "indicator" located in each loan upper left-hand corner of the main file or you may choose to display page, contains the following options: Some in-state providers ARE NOT it on your Mortgage Loan assigning a certificate number, Transaction Journal. Consumer Resources rather using the license number. Banks & Holding Companies While this might be incorporated Credit Unions into a certificate numbering Instead of relying on others, do Mortgage Brokers & Lenders scheme by the provider, a single not put your business at risk of Money Service Businesses Publications Laws and Regulations number for several classes is not incurring any of the penalties sufficient. The certificate numbers need to be unique to the course mentioned. Perform the GAFLA and the licensee, and not result in calculations yourself. You can Clicking on any of the links by entity duplicate numbers in the system. visit the Department's website, http://dbf.georgia.gov for more will open submenus where additional specific information on GAFLA menu choices narrow the search. and additional resources that The new website is designed to put you may find helpful. most items the user needs within their specific menu framework. The search feature has been greatly improved, and should provide users much needed assistance. It is in the upper-right hand corner of each page. REMINDER Financial Statements CONTINUING EDUCATION: COURSES & PROVIDER NOTES Department Rule 80-11-4-.01(7) provides information for licensees regarding the content of the courses that qualify for continuing education credits, and reiterates recordkeeping requirements for licensees as well as in-state providers, as noted below: Course Content: Rule 80-11-4-.01(7)(a) covers content. Continuing education courses must pertain to the topics noted in that paragraph. Not all elements must be taken each year with the exception of fraud prevention, but the hours earned must center on the topical areas noted. The Department would like to remind licensees, particularly lender licensees, that financial statement filings are no longer required by the Department at any time, and particularly with the renewal. The GRMA was changed in 2005 to eliminate the net worth requirement as a means for qualifying for a license, providing instead for a surety bond or letter of credit in the amount of $150,000 for lenders, and $50,000 for brokers. Since that became effective, submission of financial statements is no longer required, so please DO NOT submit these statements to the Department. Continued on Page 4 Administrative Actions For the Period Ending February 2007 CEASE AND DESIST ORDERS--ISSUED Page 4 Apiafi, Samuel A., Norcross, GA Cease and Desist Order issued February 9, 2007 became final on March 20, 2007. Asset Buyers Consortium, LLC, Covington, GA Cease and Desist Order issued February 16, 2007 became final on March 19, 2007. Direct Lending Partners, LLC, Clearwater, FL Cease and Desist Order issued February 27, 2007 became final on March 30, 2007 Do Mato, Melissa, aka Melissa A. Sant, d/b/a Mortgage Investment Brokers, Inc., McDonough, GA Cease and Desist Order issued February 2, 2007 became final on March 5, 2007. Gabriel, Derek, Marietta, GA Cease and Desist Order issued February 13, 2007 became final March 6, 2007. Graham, Brian, Atlanta, GA Cease and Desist Order issued February 13, 2007 became final March 16, 2007. Jackson, Lisa, Marietta, GA Cease and Desist Order issued January 29, 2007 became final on March 1, 2007. Johnson, Gerald, Marietta, GA -- Cease and Desist Order issued March 5, 2007 became final on March 26, 2007. Joyce, Eric d/b/a Bear Creek Home Lending, Anamosa, IA Cease and Desist Order issued February 13, 2007 became final on March 16, 2007. Lenox Investment Group, Inc., Atlanta, GA Cease and Desist Order issued February 13, 2007 became final on March 16, 2007. Marcelin, Gladys dba gladyshomeloans.com, Marcelin Mortgages, Georgetown Mortgage, Atlanta, GA Cease and Desist Order issued January 30, 2007 became final on March 2, 2007. Maximus Investment Group, LLC, Atlanta, GA Cease and Desist Order issued February 9, 2007 became final on March 12, 2007. McHenry, Vince dba Madison Processing Services, Hanover, PA Cease and Desist Order issued February 2, 207 became final March 5, 2007. Nobles Realty & Associates, LLC, Norcross, GA Cease and Desist Order issued January 31, 1007 became final March 3, 2007. Real Estate Services Conglomerate (RESCOG), Washington, DC Cease and Desist Order issued February 13, 2007 became final March 16, 2007. Sheppard, Alana (Misreps), Roswell, GA Cease and Desist Order issued February 13, 2007 became final March 29, 2007. Sheppard, Alana (Unlicensed), Roswell, GA Cease and Desist Order issued February 13, 2007 became final March 29, 2007. Watkins, Joseph, Ellenwood, GA Cease and Desist Order issued March 8, 2007 became final March 29, 2007. Zielinski, Joshua Bryan, d/b/a Veracity Mortgage, Inc., Los Angeles, CA Cease and Desist Order issued February 9, 2007 became final March 12, 2007. Continued on Page 5 Administrative Actions For the Period Ending February 2007 Page 5 CEASE AND DESIST ORDERS--LIFTED OR RESCINDED Novelle Financial Services, Inc., Laguna Hills, CA (license no. 16974) Cease and Desist Order issued January 25, 2007 was rescinded on March 9, 2007. FINAL CONSENT ORDERS --ISSUED Brewer, Anthony, Lithonia, GA - Consent Order entered into March 29, 2007. Challenge Financial Investors, St. Petersburg, FL--(license no. 17517) - Consent Order entered into March 02, 2007. Homequest Financial Services, Stone Mountain, GA - (license no. 17517) - Consent Order entered into March 29, 2007. North American Real Estate Services, Coral Springs, FL-- (license no. 18601) - Consent Order entered into March 15, 2007. Santoli, Andres, Coral Springs, FL-- Consent Order entered into March 15, 2007 SUPERIOR COURT INJUNCTIONS None 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 7 Licensees fined for Advertising Violations 1 Licensee fined for Unapproved Branch 1 Licensee fined for Unapproved Branch Manager 83 Licensees fined for $6.50 Fees Not Paid 1 Licensee fined for Prohibited Acts 1 Licensee fined for doing business w/ Unlicensed Entity Continued on Page 6 Monthly Summary of Mortgage Activities For the Period Ending March 2007 Page 6 LICENSEES/REGISTRANTS REVOKED, EXPIRED, SURRENDERED, WITHDRAWN OR DENIED IN MARCH 2007 ID# 11932 12730 13148 13189 13241 15057 15773 NAME CLEARLIGHT MTG CORP CONCORDE ACCEPTANCE CORP CENTRAL PACIFIC MTG CO E-LOAN INC OCEANS FUNDING CO INC LOANCITY (INC) RITCHIE & ASSOC INC 15790 16199 17517 18067 CHALLENGE FINL INV CORP CONSUMER MTG SVCS INC HOMEQUEST FINANCIAL SVCS BUCKINGHAM MTG CORP 19211 19573 20174 20192 20260 20308 20362 20706 21846 21894 NEW LOGIC MTG LLC MTG LOAN SPECIALISTS INC FMF CAP LLC HMB FUNDING CORP III MORGAN STANLEY MTG CAP INC S&L BROKERS LLC PROCESSING SOLUTIONS INC INTL HM MTG INC DOGWOOD MTG SVCS LLC VULCAN FINL CORP CODE LD LD LD LD LD LD BD LD LD LD LD BD LD LD LD RD BD BD BD BD LD REVOKED 03-02-2007 03-29-2007 EXPIRED SURRENDERED WITHDRAWN 03-29-2007 03-09-2007 03-12-2007 03-01-2007 03-22-2007 03-27-2007 03-16-2007 DENIED 03-08-2007 03-15-2007 03-16-2007 03-02-2007 03-16-2007 03-23-2007 03-30-2007 03-22-2007 03-09-2007 03-26-2007 03-15-2007 03-22-2007 TOTAL: 21 Continued on Page 7 Monthly Summary of Mortgage Activities For the Period Ending March 2007 Page 7 LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN MARCH 2007 ID# COMPANY NAME CITY 22207 22290 22292 22321 22340 22344 22066 22233 22241 22268 22297 22316 22318 22326 22328 22221 22238 22383 22216 22346 16974 Trinity Funding, Inc. Premier Financial Funding, Inc. Generation Mortgage Company Omega Mortgage Acceptance Corp. Dynasty Financial Consulting, Inc. American Legacy Mortgage, Inc. First Liberty, Inc. Dominion, Inc. Century City Mortgage, LLC Realty Funding Corporation (KS) Equity South Mortgage, LLC WSB Mortgage Services, Inc. A-1 Mortgage Corporation Act Now Financial, LLC Gold Star Mortgage Financial Group, Corporation Advantage Mortgage Funding, LLC Quality Financial Solutions, Inc. DFS Lending, LLC 1st Patriot Mortgage, Inc. Mountain Range Funding, LLC Novelle Financial Services, Inc. Bayshore Ellicott City Atlanta Laguna Hills Marietta Gainesville Laguna Hills Buford Jonesboro Leawood Douglasville Fair Oaks Mableton Snellville Ann Arbor Tampa Commack Valrico Orange Park Westminster Laguna Hills ST MB CODE NY B MD B GA L CA L GA B GA B CA L GA B GA L KS B GA B CA L GA B GA B MI L FL B NY B FL B FL B CO L CA L ORIGINAL APPROVAL 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-16-2007 03-16-2007 03-16-2007 03-23-2007 03-23-2007 12-21-2001 RENEWAL 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 03-02-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 04-04-2007 03-09-2007 TOTAL: 21 REINSTATED 03-09-2007 * Upgrade Broker to Lender + Downgrade Lender to Broker # Upgrade Lender to Registrant Downgrade Registrant to Lender MB CODES B = BROKER L = LENDER R = REGISTRANT To receive this publication: This publication is e-mailed monthly to interested parties and is also available from the Department's website at: http://www.state.ga.us/dbf/bulletins.html If you would like to be added to our distribution list, please send an email to: dbfmort@dbf.state.ga.us. Please include your name, company, and phone number. To unsubscribe, please notify the Department at the same e-mail address noted.