Casa Blanca Mortgage/Shearson - Wholesale & Retail

From information sent to us in December, it is our understanding more than a dozen states have investigations concerning Casa Blanca Mortgage's out-of-state lending practices. It's possible there is evidence Brokers have been lending in states they are not approved in through the Shearson contract system. If this is the case, subpoenas could be issued within the next few months.

This could be significant, because the brokers are not net branches. They are paid via 1099. Shearson Mortgage operates under a California Finance Lender's license AND a DRE License. This is excerpted from Shearson's Mortgage Loan Originator Agreement — Out of State (.pdf) form on their website:

Section 1. NATURE OF RELATIONSHIP. In connection to loans submitted to Shearson Mortgage from out of State.

- You will be a Designated Employee of Shearson Mortgage in regards to out-of-state applications submitted to Shearson Mortgage.

- You are acting as a Designated Employee for Shearson Mortgage and have agreed to and executed an enforceable Broker Agreement between you and Shearson Mortgage.

- We require that you assist in the origination of the loan application as to the requirements of Section 8 of the Real Estate Settlement Procedures Act.

Section 2. COMPENSATION.

- Loan applications under this Agreement are to be submitted with Shearson Mortgage as an originator of the application, and the loan will be closed under the Shearson Mortgage name.

- Compensation for the loan application submitted to Shearson will be issued to the Broker of record.

- Year-end 1099 form will be under the Broker of Record's name and federal tax identification number

- Recapture of Premium, Repurchase Requests, Early Payoff and Early Payment Default penalties assessed Shearson Mortgage will be the responsibility of the Broker to reimburse to Shearson Mortgage.

In a forum post on a popular industry web site, it appears a California Manager for the company is supporting the 'out-of-state' work-around:

"We also offer brokers who hold a California Broker License the opportunity to do business in any of the 38 states that we are approved in. No more waiting 2 weeks to a month to get paid on those out of state loans."

A source noted "Of particular interest is the owner Mike Chung whose name appears on thousands of loans as the loan officer even though he allegedly never spoke to the borrowers or had any contact with them." A quick check with CA's DRE shows Mr. Chung's license is currently expired. He is shown as the "DESIGNATED OFFICER" for Casa Blanca Mortgage, Inc, with Shearson Mortgage as a DBA. Mr. Chung may have stepped down as company President, replaced by former Countrywide and American Home Mortgage formers.

Shearson Wholesale, located in Woodland Hills, CA, operates as a division of Casa Blanca Mortgage, Inc., dba Shearson Mortgage, currently doing business in 37 states according to their current rate sheets (.pdf). Although the web site states it "is not available to the public," the rate sheets are publicly accessible as of this writing. We could find no licensing information on this Wholesale division in California DRE or DOC records online, and are not aware if any is needed.

On 12-31-07, the company announced they would no longer be lending in Nevada. They had previously withdrawn from Michigan, and have been issuing routine announcements of product and pricing changes since late November 2007.

December volume is reportedly around $17.5 million closed. We have been told they have about 15 AE's and 20 Op's staff.

We have a forum thread on this topic here. Please contact us if you can provide more information.

NOTE: Shearson Wholesale, Shearson Mortgage and Casa Blanca Mortgage, Inc. are not affiliated with Shearson Financial Network Inc. (OTCBB: SHSN) or its subsidiaries, including Shearson Home Loans.