The Mortgage Specialists - Retail

Massachusetts and New Hampshire's Banking Departments issued "Temporary Cease and Desist Orders" against The Mortgage Specialists, Inc. based in Plaistow, NH on July 24th and 31st respectively. Wrote one tipster, "There has been a lot of this type of activity from the Banking Dept. in both MA and NH regarding The Mortgage Specialists."

SeacoastOnline reported, "The division's temporary cease and desist order requires The Mortgage Specialists to place all remaining loans with a qualified lender or broker with no loss to consumers and forbids the company from initiating any new mortgage loan transactions." According to an article in the Union Leader:

"State regulators and investigators claim an inspection showed that The Mortgage Specialists:

• Represented photocopied customer signatures as originals;
• Removed a signature from a loan file;
• Altered broker fee agreements after the consumer signed the documents;
• Failed to keep customer application files under lock as required by the Gramm-Leach-Bliley Act;
• Fraudulently issued a 40-year adjustable rate mortgage with a balloon payment at the end of 30 years to a customer who had applied for a fixed-rate, 30-year mortgage.

The department alleges The Mortgage Specialists committed a total of 50 violations of state banking laws, each subject to an administrative fine of up to $2,500. If the violations were upheld after hearing and applied to both the corporation and the four named defendants, administrative fines could total $1 million."

As of August 18, The Mortgage Specialists, Inc. entered into voluntary "Consent Orders" with both states (view MA or NH) "...solely for the purpose of settling this matter, and without admitting any allegations or implications of fact or the existence of any violation of state or federal laws." They must engage an independent auditing firm to perform daily on-site review of all files processed dating back to March of 2005 and pay monetary fines of $300,000 to each state. New Hampshire tacked on an additional $25,000 penalty for failure to pre-screen against the National Do Not Call List, and also fined the company's principals assessing $50,000 each of President Michael Gill and Lisa Tracy, its Controller and designated Compliance Officer. The Mortgage Specialists, Inc. was given 60 days to employ a compliance manager acceptable to the state to oversee a new compliance office.

It was reported that The Mortgage Specialists Inc. has 120 employees and five NH branch offices in Manchester, Nashua, Salem, Somersworth and Windham, as well as two Massachusetts branches in Peabody and Worcester. An unverified report we were sent of 2007 loan production indicated average volume of over $45 million per month.

In an open letter on their web site, President Michael Gill writes: "Please know that these are compliance issues and only that. There has never been a customer that has been cheated or defrauded." To view the letter as an image file, click here.

The affects of the allegations and State orders can certainly undermine the public's confidence in the Mortgage Broker industry as a whole. Feel free to comment! Please email us if you can add any more details.