HOWARD PITKIN
Banking commissioner
The state of Connecticut continued to crack down on mortgage companies, with regulators announcing they have issued three new cease-and-desist orders to alleged rules violators.
The state Department of Banking issued cease-and-desist orders to Yvette Allen of Stanley Capital Mortgage’s Norwalk office and Raymond L. Patrice of VIP Mortgage’s Stratford office. According to the DOB, both had accepted multiple, separate applications from borrowers, all of which claimed to be for the borrowers’ primary place of residence.
The actions are part of a recent round of stepped-up enforcement of mortgage lending regulations. According to Marlene Mannix, manager of the DOB’s Banking Department, Commissioner Howard Pitkin has been supportive of the enforcement efforts.
The DOB alleges that Patrice, who was registered as a loan originator with VIP Mortgage Corp., took two applications from a borrower on the same day for the purchase of two different properties in Connecticut. The applications indicated that each of the two properties would be the borrower’s primary residence.
“We found he had taken two separate [applications] from one individual,” Mannix said.
Both applications were approved; Credit Suisse Financial Corp. funded a first and secondary mortgage loan on the first property. That closed on Feb. 23 of this year. IndyMac Bank backed first and secondary mortgage loans on the second property, which closed on Feb. 27.
The loan originator should have been aware that the applicant was applying for loans for two homes on the same day and claiming to live in both, Mannix said. If a home is purchased as an investment, it is deemed a riskier product than a primary place of residence, and rates are usually higher, Mannix said. But both loans closed, and neither of the two lenders knew of the other, which would have affected the debt-to-income ratio and their assessment of the risk involved.
“It’s very likely that neither of the investors would ever have approved these loans” had they known about the other application, Mannix said. “That’s pretty serious investor mortgage fraud.”
Patrice has the right to a hearing on the matter, and Mannix said it is likely that will occur. The DOB issued the cease-and-desist order, and an order imposing a civil penalty.
“[Patrice] committed a fraud, misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose material particulars of mortgage loan transactions to a lender or lenders entitled to such information,” according to the cease-and-desist order.
Allen’s case was similar. She worked for New Jersey-based Stanley Capital Mortgage until March of 2005. On Oct. 11, 2004, the DOB alleges, Allen took a loan application from a borrower for the purchase of a Connecticut property. The application indicated the property would be the borrower’s primary residence.
First Franklin Financial Corp., a division of National City Bank of Indiana, took on a first mortgage loan for the property that closed on Nov. 12.
Ten days later, on Nov. 22, 2004, Allen took another loan application from the same borrower for the purchase of a second property in Connecticut. That application also indicated the property would be the borrower’s primary residence. According to the cease-and-desist order, the address stated in the application as the borrower’s residence was the same as that stated in the October loan application, and the application did not reflect the borrower’s mortgage obligation for the loan that closed on Nov. 12.
Based on the second application, IndyMac Bank issued a first mortgage loan that closed on Dec. 30, 2004.
“The loan originator should have been more aware of [the situation],” Mannix said.
That October, Allen also took a loan application from a different borrower to refinance his primary residence in Connecticut that allegedly misstated the borrower’s income.
According to the cease-and-desist order, the application stated the borrower’s monthly base income from his job was $5,000, and that he owned one other property. Based on that application, IndyMac made a first mortgage loan that closed on Dec. 31, 2004.
On Oct. 29, Allen took another loan application from the same borrower for the purchase of an investment property. In the application, the borrower’s monthly base income was listed as $5,500, but it was actually $4,604, according to the DOB. Based on that application, Greenpoint Mortgage Funding issued first and secondary mortgage loans, which closed on Jan. 27, 2005.
The DOB also issued a cease-and-desist order to California-based Greater Acceptance Mortgage for several reasons. According to the order, from 2002 to 2004 the company issued at least 27 first mortgage loans and, in connection with each of the loans, imposed prepaid finance charges that in the aggregate exceeded greater than 5 percent of the principal amount of the loan or $2,000, the maximum amounts allowed.
In 2003 and 2004, the company employed or retained at lease five originators without registering them. The company also relocated to Santa Ana, Calif., without giving prior written notice to the banking commissioner. The company had not communicated with the DOB as of The Commercial Record’s press deadline.
