A Florida-based mortgage lender has agreed to pay $848,000 to settle allegations by North Carolina regulators that the company operated without proper supervision and control of its loan officers.

Challenge Financial Investors Corp. was accused of operating a “net branch” company, where loan officers were allowed to operate with minimal supervision in exchange for a small fee for each loan originated in the company’s name.

Challenge, which does business as CFIC Home Mortgage, accepted more than 100 mortgage applications from individuals not licensed to do business in North Carolina, the Office of the Commissioner of Banks alleged.

“We will not allow mortgage companies to play fast and loose with our licensing requirements,” Deputy Commissioner of Banks Mark Pearce said in a statement. “We hope that other companies will take note of this agreement and make sure they operate with complete supervision of their loan officers.”

North Carolina regulators say they found no evidence of abusive loan terms in mortgages brokered by Challenge, and the company will be permitted to petition the state to waive or reduce the penalty. The penalty is to be paid in installments until 2012. Challenge is being required to install and implement software to detect, identify and fine unlicensed individuals who attempt to originate mortgage loans.

Georgia officials revoked Challenge’s mortgage lender’s license on March 2 and fined the company $193,000 under a consent order. Although the order did not give a reason, the Denver Post has reported that Georgia regulators discovered Challenge employed convicted felons.

The Post and the St. Petersburg Times have published stories in recent weeks on a Challenge employee, Michael Wise, who was chairman of the now-defunct, Denver-based savings-and-loan, Silverado Banking. The stories said the Florida Department of Financial Services is investigating Challenge.

Wise pleaded guilty to wire fraud in 1999 and received a 3 1/2-year sentence in connection with allegations that he bilked investors in a private mortgage company he helped build in Colorado, the Post reported.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription