Regulators Put Mortgage Broker Out of Business : Home loans: The Office of Thrift Supervision sends a signal to the industry by taking action against Centrust Financial.
Sending a signal to mortgage brokers, the Office of Thrift Supervision said Monday that it has banned a Garden Grove company from doing business in the banking industry for what the federal agency alleges were phony home loan applications.
Taking action for the first time against a mortgage broker, the OTS banned Centrust Financial from peddling loans to, or otherwise working with, banks, savings and loans and other regulated financial institutions.
The agency accused the small mortgage broker of concocting a sham deal to obtain $643,907 from Plaza Home Mortgage Bank, a Santa Ana thrift, and providing false information in an attempt to obtain a $637,600 loan from United Savings Bank in San Francisco.
Centrust and its manager, Carter C. Green, agreed to the ban without admitting or denying the agency’s charges.
The OTS, which is looking into the activities of real estate agents and other mortgage brokers, is trying to halt what it sees as a growing trend among both professionals and borrowers to rip off S&Ls; and banks by obtaining loans based on sham deals or phony facts.
“We are most concerned about real estate agents and mortgage brokers who systematically encourage people to submit false loan documentation,” said John F. Robinson, the agency’s regional director in San Francisco.
The agency as well as financial institutions have referred as many as 300 cases of false loan applications in Orange County alone to the FBI in Santa Ana, said Michael S. Anderson, FBI agent in charge of institutional fraud.
“We have professionals trying to make a living in a down market and people trying to buy houses without financial wherewithal,” Anderson said in explaining the large number of cases. He would not say whether the FBI was investigating Centrust.
Plaza, which called in the OTS and the FBI, uses about 5,500 independent loan brokers in 12 states to line up mortgages, and it has been burned on sham deals by only three brokers, said Phyllis Downes, an executive vice president of Plaza Home Mortgage Bank.
“Most of the misrepresentations we see are professionals who push loans through for borrowers who are marginally qualified,” she said.
Even so, Robinson said, the serious nature of the Centrust deals has become “a big problem” for a number of West Coast thrifts that rely on independent brokers to bring in borrowers.
Neither Green nor other Centrust employees could be reached for comment. The office telephone has been disconnected, and Downes said the office is believed to be closed.
The proceeds from the Plaza loan were to be used for a Dana Point condominium that a Centrust customer allegedly was buying for her home. The OTS said the false statements in the loan documents included the woman’s intent to live there, an inflated salary figure for her and an inflated value for the property.
No payments were ever made on the loan, and Plaza eventually sued Centrust, Green and others. It settled the case for $400,000 and collected nearly $100,000 from parties other than Centrust and Green, Downes said. She said the thrift has not been able to find Green since.
