Office of Consumer Affairs and Division of Banks Announce Falmouth-Based Mortgage Lender Shut Down for Servicing Loans Illegally
BOSTON – The Patrick-Murray Administration’s Office of Consumer Affairs and Business Regulation (OCABR) and Division of Banks announced today that the Division ordered Falmouth-based mortgage lender Mortgage Security, Inc. to immediately cease mortgage lending and loan servicing activities to Massachusetts consumers.
Recently, the Division received complaints from consumers alleging that Mortgage Security failed to properly remit escrow money collected for the payment of real estate taxes to the respective cities and towns, and homeowners had been charged late fees and penalties. The Division’s investigation found that Mortgage Security received scheduled mortgage payments from borrowers, including escrow payments, and then failed to pay the borrowers’ real estate taxes and homeowners’ insurance payments for several months.
Mortgage Security has been licensed by the Division since October 1993 as a mortgage lender and mortgage broker. Through its relationship with an authorized company, Mortgage Security had previously serviced mortgage loans.
“Failure to properly service these mortgage loans is a significant breach of Mortgage Security’s responsibilities,” said OCABR Undersecretary Barbara Anthony. “The investigation uncovered significant violations that have resulted in substantial harm to consumers and may have put their homes in jeopardy.”
The Division’s review of Mortgage Security’s records also revealed several inconsistencies in borrowers’ account balances and that consumer funds were mixed with other company funds.
Borrowers’ escrow funds must be held separately to insure that real estate and insurance payments are made as required. Additionally, the company failed to maintain adequate records, failed to properly register as a loan servicer and charged borrowers excessive late fees. Mortgage Security has been ordered to immediately cease any activities as a mortgage broker, mortgage lender and loan servicer in Massachusetts.
Mortgage Security will have a right to request a hearing before the Division.
“The Division has ordered Mortgage Security to place any fees or payments collected from borrowers into a separate account at an insured bank,” said Commissioner of Banks David J. Cotney. “The Division will continue to pursue actions against any company that engages in unsafe and unsound practices which put consumer funds at risk.”
Consumer Affairs and the Division of Banks offer the following advice to consumers:
- Check the Division’s website at www.mass.gov/dob and the NMLS Consumer AccessSM at www.nmlsconsumeraccess.org to ensure that all loan servicers are properly registered with the Division of Banks.
- Review all mortgage statements to ensure all payments and disbursements are accounted for. Contact your servicer immediately if any discrepancies are noted.
Anyone with questions regarding Mortgage Security, Inc. may contact the Division of Banks’ Consumer Hotline at 1-800-495-BANK (2265) x 501.
The Division of Banks is an agency within the Office of Consumer Affairs and Business Regulation and oversees state-chartered banks and credit unions, check sellers, debt collectors, foreign transmittal agencies, mortgage lenders and brokers. Follow the Office of Consumer Affairs at its blog, on Facebook and Twitter, @Mass_Consumer.