Brokers, lenders face state action
The Massachusetts Division of Banks said it issued 87 cease-and-desist orders against licensed mortgage brokers and lenders for failing to provide required financial information, including evidence they posted tens of thousands of dollars in bond money.
Steven Antonakes, the state's bank commissioner, said the companies, many of which are based out of state, had "ample opportunity to secure and submit" the money. The requirement was added in 2007 to protect consumers and ensure that mortgage lending firms have sufficient resources. The financial statements were due March 31.
"Failure to submit a bond could be an indication of the underlying weakness of the company," Antonakes said. "However, given the current state of the mortgage industry, I expect the unresponsiveness of these companies is a result of their winding down their operations or having already closed."
By yesterday afternoon, five Massachusetts-based companies on the state's list had provided the necessary data and were released from the cease-and-desist order. They include Approved Home Mortgages, Inc., JP Mortgage Group LLC, Mason Mortgage LLC, Multi-State Mortgage Inc., and Slade Mortgage Group Inc.
The other 82 companies are prohibited from accepting new applications and must transfer all pending applications to a qualified lender or broker at no cost to their customers.
Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association, said some mortgage companies don't have the money to comply with the rule, while others are closing because of the slumping real estate market.
For more information, consumers can call the state's mortgage hotline at 800-495-2265, extension 1501. 