MassHousing board member quits
Head of lender shut by state doesn't want to be 'a distraction'
The head of an Andover-based company that was shut down by the state for alleged mortgage-related violations resigned yesterday as a member of the board of directors of the state's affordable housing bank.
Carl D. McFadden, president of the now shuttered First Call Mortgage Company Inc., said he quit the board of MassHousing because, "I don't want to be a distraction. MassHousing is doing such tremendous work. I'm very proud of the work I did on the board of MassHousing."
His departure comes several days after local housing activists said it was no longer appropriate for him to remain on the nine-member board of the agency, which last fiscal year provided $466.4 million in affordable home loans for low- and moderate-income residents.
Massachusetts regulators in September issued a cease and desist order to First Call Mortgage, alleging the company falsified borrowers' incomes on loan documents and sold reverse mortgages without notifying state officials, as well as denying it was doing so. McFadden also faces a $767,500 fine from New Hampshire regulators for other mortgage-related incidents.
"There are very qualified people who would love to be on the board who haven't violated state law," said Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance yesterday. "He did the right thing."
Staff officials of MassHousing, officially known as the Massachusetts Housing Finance Agency, declined to comment on McFadden's resignation.
MassHousing board members are appointed by the governor for seven-year terms. McFadden was put on the board in 2005 by then-Governor Mitt Romney.
This week, housing officials in the Patrick administration said they would look into McFadden's situation at MassHousing.
Yesterday a spokeswoman for the Executive Office of Housing and Economic Development said the state had not yet received a resignation letter and couldn't comment on McFadden.
"If and when we do receive the letter," said Kofi Jones, "we will begin the selection process in earnest to find an experienced and qualified individual who will help us meet the goal of expanding affordable housing opportunities in Massachusetts."
Joe Kriesberg, president of the Massachusetts Association of Community Development Corporations, said McFadden's decision will help MassHousing.
"MassHousing is an organization whose mission is to help low- and moderate-income people, which has a track record of doing a good job, and it should be governed by people with a similar track record," said Kriesberg. "This allows MassHousing to move forward."
McFadden's legal troubles continue in New Hampshire where the state Banking Department on Wednesday ordered him and other company officials to appear at a hearing Dec. 16 to respond to allegations that First Call had "dishonest or unethical practices," failed to supervise staff, and broke state and federal laws.
New Hampshire regulators allege First Call employees failed to disclose key information to borrowers, such as not providing required disclosures for balloon mortgages, and not disclosing payments from lenders for steering borrowers into high interest loans.
Regulators also said First Call employees would leave consumer loan files unsecured and social security numbers and bank accounts in plain view, in violation of federal law.
New Hampshire also cited the company for failing to notify regulators that McFadden sold shares of the company in 2007 to former Fidelity Investments star fund managers Peter S. Lynch and George Vanderheiden. Both Lynch and Vanderheiden are now facing $85,000 fines from the state.
Hanover-based Direct Finance Corp. has since bought First Call's assets and McFadden is now serving as a consultant, said Direct Finance president Alain Valles.
Jenifer McKim can be reached at jmckim@globe.com. 