Lawyers and top officials of The Mortgage Specialists broker in Plaistow, N.H., are reviewing filings from Massachusetts and New Hampshire banking regulators alleging unfair business practices at the company.
Banking officials in Massachusetts and New Hampshire have ordered The Mortgage Specialists Inc. to stop processing home financing loans, and to place any pending loans with other qualified lenders or mortgage brokers.
The company's main office is at the Haverhill border. It is easily identified by the large multicolor electronic sign on its property. The Mortgage Specialists also operates branches in Peabody and Worcester as well as several branches in Southern New Hampshire.
The Massachusetts Division of Banks on July 31 issued a cease and desist order to The Mortgage Specialists, saying it violated state and federal laws against unfair and deceptive business practices by knowlingly inflating borrower income and falsifying documents. The company has brokered thousands of loans, according to court documents.
It is not known how many of the loans processed by the company are for property in Haverhill, said Kimberly Haberlin, a spokeswoman for the Massachusetts Office of Consumer Affairs and Business Regulation.
The New Hampshire State Banking Department issued a temporary cease and desist order to The Mortgage Specialists on Thursday, July 24. That order carried possible fines of $200,000.
On the company's Web site, a statement signed by owner and chief executive officer Michael Gill reads:
"You may have read that we have had some compliance issues with the New Hampshire Banking Department. Please know that these are compliance issues and only that. There has never been a customer that has been cheated or defrauded. In 18 years of doing business and tens of thousands of loans closed, we have never repurchased a loan. We feel that because of the climate in this industry that this has been blown up. We feel confident that we will resolve this with the banking department quickly.
"Know this: We are one of the largest retail lenders in the United States. We can compare our record to any other company. Our company is based on integrity first and we make our reputation one customer at a time."
There is no mention on the company Web site of the Massachusetts order.
Alex Walker, a Manchester, N.H., lawyer who said he expects to represent the company on both the Massachusetts and New Hampshire orders, said they are under review.
"We hope to reach out to the banking division to make sure we are complying in all respects to the order and hope to reach a resolution of this matter that satisfies the (Massachusetts) banking division that the company is in compliance and continues to comply with the law in all respects," Walker said.
The Massachusetts order, issued through the Suffolk County Superior Court's civil division, said a state inspection found documents showing The Mortgage Specialists falsified asset and income information in three 2005 residential loan transactions for one borrower, a nurse employed by the state of Massachusetts.
On a loan that closed in January 2005, the paperwork showed that the borrower earned more than $7,000 a month, or more than $87,000 a year.
On two other loans, which closed in May and September of 2005, applications showed the nurse earned more than $8,000 a month, or roughly $99,000 a year.
Payroll records for the nurse show she earned less than $18,000 a year, according to the order. Banking division investigators were able to check because state employees' salary records are public documents, the order says.
The state order does not identify the nurse by name or by hometown. Haberlin said that information is protected by banking privacy laws.
The order also alleges that The Mortgage Specialists altered loan documents by cutting and pasting customers' signatures to business forms.
No criminal charges have been brought in Massachusetts. Haberlin declined comment on whether information would be provided to the state attorney general's office until the investigation is complete.
According to Massachusetts law, The Mortgage Specialists has 20 days to respond to the order from the date is was issued and to ask for a hearing.
Walker said he and the company will use those 20 days to conduct its own review and will make a decision according to the results of its own study.
At a hearing, The Mortgage Specialists would be required to demonstrate that it had put procedures in place to improve the business practices cited by the banking division, Haberlin said.
If it does not respond, the order becomes permanent and the company would no longer be able to arrange mortgages for Massachusetts properties, Haberlin said.
The company has 30 days from date of issue to respond to the New Hampshire order.