Thread: Mortgage company shut down

http://www.azcentral.com/news/articles/ ... n0225.html

Mortgage company shut down
Mesa-based firm caught in state's fraud crackdown
Catherine Reagor
The Arizona Republic
Feb. 25, 2007 12:00 AM

Regulators have shut down Mesa-based Eagle First Mortgage and its more than 75 Valley branches, citing illegal lending practices.

The Arizona Department of Financial Institutions pulled the license of the mortgage firm and its broker, David Sanchez, last week. Regulators described more than 100 illegal money transactions, loan activities and hiring practices.

The firm, one of the largest that Financial Institutions has shut down, has until March 14 to finish any outstanding loans and close its doors.

"Eagle First is surrendering its license as a result of multiple and repeat violations," said Felecia Rotellini, superintendent of the Department of Financial Institutions, which regulates mortgage firms.

A wave of mortgage fraud started spreading across the Valley last year that could cost lenders millions of dollars and erode values and confidence in Arizona's real estate market and economy.

Most of the fraud is coming from cash-back deals that involve obtaining a mortgage for more than a home is worth and pocketing the extra money. But there are other types of fraud such as faking and forging documents and lying about income and other personal information for loans.

The Department of Financial Institutions joined forces with other state and federal regulators and law enforcement agencies late last year to form a mortgage fraud task force to go after offenders.

The department began its examination of Eagle First's operations last summer. In the fall, it reported its findings to the Attorney General's Office and the Office of Administrative Hearings. Eagle First agreed to shut its doors instead of go through the process of a hearing on the case.

The Department of Financial Institutions has the power to fine or close a mortgage firm. But only a prosecutor like the attorney general can go after a mortgage broker for criminal activity. Regulators would not comment on whether any criminal action would be taken against Eagle First.

Eagle First Mortgage has been cited for offenses before. In early 2004, it was fined for 10 violations. Some of its recent violations include laws it had broken three years ago, according to the Department of Financial Institution's consent order.

Sanchez started Eagle First in 2003. The firm, which worked with many first-time buyers with credit problems, started to rapidly add branches in 2004.

Sanchez did not return phone calls to his Mesa office.

Several employees also were named in the complaint. Those employees are not licensed and could get jobs at other mortgage firms. So could Sanchez, as long as he does not apply to be a broker again. Brokers must be licensed.

It's estimated there are as many as 18,000 unlicensed people taking mortgage applications, negotiating rates and getting loan commissions statewide.

Legislation recently was introduced in Arizona to license all loan officers and originators to help crack down on bad loans and mortgage fraud.

Chris Mozilo, president of the Arizona Mortgage Lenders Association, could not comment on the Eagle First case because he did not know the details. But he said the Department of Financial Institutions is doing a good job with limited resources "cleaning out the bad actors" in the mortgage business.

"It's very positive for the industry and consumers," he said.

As part of the department's investigation, Eagle First agreed last month not to take on new business. A statement on the firm's Web site, last updated in January, said nothing of its closing. The site says, "We successfully finance 98 percent of our applicants."

Sanchez started Eagle First in 2003. The firm, which worked with many first-time buyers with credit problems, started to rapidly add branches in 2004.

Hmmm.........something tells me a lot of these first-time buyers were criminal aliens.

Good new for law abiding Americans!

Hope it sends a message!

A wave of mortgage fraud started spreading across the Valley last year that could cost lenders millions of dollars and erode values and confidence in Arizona's real estate market and economy.

As long as the people up front get their money, they don't care who is left holding the bag. I hope the other lenders take note of this situation and do what is right.