Florida Lender Settles with State Regulators

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First Mortgage America, a Fort Lauderdale mortgage lender, was under fire for its business and marketing practices
By Jeff Harrington

St. Petersburg Times, Fla.

RISMEDIA, August 10 ? (KRT) ? First Mortgage America, a Fort Lauderdale mortgage lender under fire for its business and marketing practices, has made peace with state regulators.

Under terms of a settlement reached Friday, First Mortgage agreed to pay $150,000 in fines and expenses and change TV ads and Web site marketing that regulators said misled borrowers about the costs of its loans.

At least one questionable ad for the company’s Only One Mortgage program is on the air and will be modified.

First Mortgage, which also does business as the Financial Group, did not admit liability, but agreed to state review of future ads.

Blair Wright, the company’s president and owner, could not be reached at his office for comment Tuesday.

Regulators originally asked an administrative judge to revoke the company’s license in April 2004, but then agreed to talks.

“The department feels this is a fair settlement for both sides,” said Bob Tedcastle, the chief of Finance Regulation within the Florida Office of Financial Regulation.

First Mortgage has broadcast ads in the Tampa Bay area and elsewhere citing mortgage rates as low as 1.25 percent. But First Mortgage didn’t always clarify that the “teaser” rate was adjustable, or that it might last as little as one month before rising.

Moreover, First Mortgage required many borrowers to use a particular title service and property appraiser. In many cases, however, it didn’t disclose that those businesses were run by relatives of its president, Wright.

On April 6, 2003, the St. Petersburg Times published an examination of First Mortgage’s business practices. Nine days later, the state began an investigation that would lead to its April 2004 complaint, hand-delivering subpoenas to each of the company’s offices.

A state investigation found that 105 of 115 randomly selected customers paid higher closing costs than the company forecast in its good-faith estimates. The average shortfall was $4,560.

It wasn’t Wright’s first encounter with regulators.

As early as 1992, Wright, then president of a mortgage company called U.S. Financial Center Inc., signed a consent order that said his company had “distributed misleading advertisements and promotional materials.”

In the latest settlement, First Mortgage agreed to pay a fine of $50,000 along with $100,000 toward expenses incurred by the investigation. It agreed to make sure employees are fully trained and to amend its Web site for Only One Mortgage within 90 days. After resolving a dispute with an advertising firm, it has 90 days to amend a TV ad that’s airing.

In addition to submitting future advertising campaigns to the state, the company also must furnish quarterly reports. It pledged to give borrowers “full written disclosure” of loan fees and costs, Tedcastle said.

The state also determined First Mortgage made several “minor” violations to state code by failing to properly maintain a lending transaction journal and various loan documentation.

Copyright ? 2005, St. Petersburg Times, Fla.

Distributed by Knight Ridder/Tribune Business News.

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