For Immediate Release - October 02, 2006

Division of Banks Announces Latest Actions in Crackdown on Mortgage Fraud

Division of Banks Announces Latest Actions in Crackdown on Mortgage Fraud

As part of an ongoing strategy to crack down on mortgage fraud the Division of Banks (Division) today announced the latest issuance of cease and desist orders against an additional two licensed mortgage brokers with offices located in Lawrence, Marshfield, and Somerville, and four unlicensed entities operating at locations in Everett, Lawrence, and Malden, bringing the total number of enforcement actions taken in the past few weeks to 17. Many but not all of the most egregious violations have involved reduced documentation loans which typically do not require the verification of a borrower's income.

The Division also released a Consumer Alert to help consumers understand some of the important "Dos and Don'ts" in the mortgage process to avoid deceptive or fraudulent mortgage practices. For example, a consumer should never sign blank loan documents or buy a home that they cannot afford. In addition, consumers should always comparison shop before obtaining a mortgage and hire their own attorney to represent their interests.

The actions today against the licensed mortgage brokers ( Confidence Mortgage, Middlesex Financial Associates LLC) were the result of the Division's ongoing sweep looking for evidence that consumers were led into loans they cannot afford by inflating borrower income. Of the four actions taken, three were against entities for operating a mortgage business at unlicensed locations. The other entity, Treasury Financial Group out of Buffalo, New York, is not licensed at all to conduct business in Massachusetts and was found to be using the license number of an unrelated company.

"I hope the message is loud and clear that we will not tolerate unfair and deceptive practices or fraud to be committed by licensed companies and we will take swift action to shut down any businesses writing mortgages without the proper license," said Commissioner of Banks Steven L. Antonakes.

Today's actions followed the release three weeks ago of an industry letter and emergency regulations to address abusive mortgage practices, and an announcement of an upcoming mortgage summit designed to bring together government, industry, and community groups to address the broader issue of foreclosures.

The Division will hold a public hearing on the emergency regulations on October 17, 2006 at 10:00 AM at One South Station, 5 th Floor, in Boston.

The purpose of the proposed amendments is to add 10 additional prohibited acts and practices to existing regulations governing mortgage lenders and mortgage brokers. These amendments were filed by the Division as Emergency Regulations on September 8, 2006 and this hearing is part of the process to make the amendments permanent. Additional changes or amendments may be made based on comments received at the public hearing or during the comment period.