Accusations of deceptive ads has led to complaints against the Financial Group, spurring regulators to investigate.
By JEFF HARRINGTON
Published April 30, 2004
A Florida lender accused for more than a decade of running deceptive ads for low-cost mortgages in the Tampa Bay area and elsewhere may have its license revoked.
The state's Office of Financial Regulation has filed a cease-and-desist order against First Mortgage America, a Fort Lauderdale company that does business as the Financial Group.
In an administrative complaint dated April 16, regulators accused the Financial Group of a pattern of misrepresenting the fees and conditions of its loans through misleading radio ads. Prospective clients are led to believe the loan rates are at a fixed percentage, regulators said, while the terms are actually for adjustable rate mortgages.
The probe into the lender and its owner, Blair Wright, began after the state received more than 50 consumer complaints.
Regulators are pursuing the relatively rare step of revoking the agency's license because of its marketing techniques. In addition to Tampa, the Financial Group does business in Miami, Dania, West Palm Beach and Sarasota.
Wright said in a statement Thursday that he would fight the revocation at a state hearing. No date for that hearing has been set.
"They are the same generic ad that have been used since the date of inception of the company (February 1998)," he said. "Our ads have always met state regulations and the one time the department has asked us to expand our disclosure, we've gone ahead and done so."
Wright said his company's other offices in Colorado and Minnesota are not affected by Florida's actions.
In April 2003, the St. Petersburg Times profiled the Financial Group and its controversial marketing pitches.
One critic, Tom Stottlar of Clearwater, said he was drawn in by the company's pitch for a 3.95 percent "Fannie Mae" loan. He later found out that 3.95 percent rate lasted only a month; the interest rate for the remaining 29-plus years would fluctuate, possibly into the double-digits. Stottlar applied for a 6.5 percent fixed-rate loan with the company instead, only to be turned down.
The way the Financial Group structured some loans, regulators said, some debtors could see their mortgage loan balance increase because their monthly payment was not enough to cover the monthly principal and rising interest payments.
Don Saxon, director of Florida's Office of Financial Regulation, said the Financial Group also masked fees for obtaining loans. Consumers need those details "so they have the ability to make informed decisions on one of the most important purchases they will make," Saxon said.
The Better Business Bureau of West Florida earlier gave the Financial Group an "unsatisfactory record" based on a pattern of complaints that have gone unanswered.
This is not Wright's first tangle with regulators. The state investigated another company Wright ran in 1991 over concerns of deceptive advertising. In 1992, Wright paid a $5,000 fine on behalf of U.S. Financial Center relating to what state investigators said were misleading ads. There also were several state investigations in the 1990s into another operation Wright was involved in called U.S. Financial Corp.
- Times files contributed to this report. Jeff Harrington can be reached at email@example.com or 813 226-3407.