First Mortgage America, accused of using misleading radio ads and shoddy business practices, wants its day in court.
By SCOTT BARANCIK
Published June 10, 2004
First Mortgage America is not going down without a fight.
In April, state regulators asked an administrative judge to fine the Fort Lauderdale lender and revoke its license amid accusations of misleading radio ads and other dubious business practices.
Now the company, which once hired Tampa disc jockey Bubba the Love Sponge Clem to hawk its loans on the air, says it wants its day in court.
"The totality of the misstatements and inaccuracies contained within the complaint ... paint a prejudicial picture," wrote First Mortgage's lawyer in the case, Theresa Van Vliet, a former prosecutor whose expertise includes white-collar criminal defense.
Florida regulators say they have some pretty good reasons for trying to put First Mortgage, which does business as The Financial Group, out of business:
A recent state investigation of First Mortgage America found that 105 of 115 randomly selected customers paid higher closing costs than the company forecast in its good-faith estimates. Average shortfall? $4,560 per borrower. Largest? $16,789, according to a state complaint filed in late April.
Radio ads that the company broadcast in the Tampa Bay area and elsewhere cited mortgage rates as low as 1.25 percent. But First Mortgage didn't always clarify that the rate was adjustable - or that it might last as little as one month before rising.
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 First Mortgage president and owner Blair Wright.
A mortgage consultant hired by state regulators to review First Mortgage customer files was incensed. "There is a consistent disregard for compliance, rules or regulations," Sidney Weigner wrote. "The citizens of the state of Florida remain at risk as long as these individuals are involved in any capacity with the mortgage industry."
Based on these and other findings, the state's Office of Financial Regulation wants to strip First Mortgage of its license to broker or make home loans; force it to pay restitution to certain customers; and impose hefty fines and other penalties on Wright and Donald Troisi, who manages the company's Tampa office. Wright and Troisi would not comment Wednesday.
Wright, 45, described in a company bio as a "financial wunderkid" who founded his first mortgage company at age 24, has said First Mortgage won't back down. The petition filed May 27 by Van Vliet not only seeks permission to stay in business but also requests repayment of attorneys' fees.
As of Wednesday, a hearing date had not been set.
The state may be tempted to settle the matter out of court, as it often does. The agency recently lost its lead attorney on the First Mortgage case, Brynne Vanhettinga, as well as her supervisor. Other agency lawyers are scrambling to get up to speed on the facts.
Wright and his businesses have an "extensive history" of encounters with regulators, according to the agency's complaint.
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 early 2000, agency employees examining First Mortgage found evidence of deceptive ads, as well as a pattern of underestimating closing costs and collecting unauthorized fees - much the same as they found in their most recent investigation. In 2002, the agency issued Tampa manager Troisi a written warning about alleged closing-cost irregularities.
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.
So far, the agency has not referred the First Mortgage case to state prosecutors for possible criminal investigation, said Bob Tedcastle, chief of the Bureau of Financial Regulation. It has not followed consultant Weigner's advice to notify the Federal Trade Commission about possible violations of the Fair Credit Reporting Act.
Nor has it alerted regulators in Minnesota or Colorado, the two other states where First Mortgage does business, about its findings.
"If we revoke their license and/or impose fines and/or restitution," Tedcastle said in a recent interview, "we will make sure that it is a public document, and other states would be made aware of it."
