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.