Michelle Singletary investigates a mortgage company flagrantly breaking the law and making false promises.
The Treasury Secretary Henry M. Paulson has put out the government’s plan for changing the nation’s financial regulatory structure.
Paulson wants to give more regulation of the people who arrange loans — the mortgage brokers.
He wants to protect consumers from phony promises, hidden fees and what is called "predatory lending."
Paulson offers the creation of a federal Mortgage Origination Commission that would establish minimum standards for loan officers. It would also evaluate, rate and report on each state’s efforts to license and regulate these mortgage salespeople.
This case highlights how state- and nationally regulated financial institutions can fail to verify that borrowers are working with licensed loan officers.
Lee has been banned from arranging loans in
Marylandand because neither he nor his companies were licensed for such activity. And yet, in violation of those orders, people working for Lee have continued to arrange mortgage loans that for many borrowers are inappropriate, according to sources and company documents. Several Georgia homeowners acknowledged that they gave personal information to people working for CashFlow in order to get their loan applications processed. Candice Thompson, whose business card says she’s a CashFlow marketing representative, assured one Maryland loan applicant that she was licensed and that the company was free of any legal troubles. Maryland
Thompson is not licensed as a loan officer in
, according to state officials. The company is under investigation. Maryland
Lee denies that Financial Independence ever arranged mortgage loans. Last year, Wachovia, the fourth-largest U.S. bank, funded 196 loans totaling about $54.2 million that Lee brought to the financial institution, according to an e-mail sent to Lee by Scott Davenport, a former national account executive with Wachovia.
Soon after I inquired about Wachovia’s business transactions with Lee,
was fired. Wachovia spokesman Don Vecchiarello said in a statement: "In its wholesale channel, Wachovia deals directly with numerous mortgage broker companies. Key Financial Corp., based in Davenport Clearwater, Fla., was listed as the customer contact on a loan application taken by Thompson of CashFlow and processed by Wachovia. The mortgage sales process is broken. Maryland