FRANKFORT, KY – June 11, 2010 – (RealEstateRama) — The Kentucky Department of Financial Institutions (DFI) today issued a cease and desist order against a mortgage company called Home Ownership Possibilities for Everyone LLC (HOPE) in Louisville, Ky. The order prohibits HOPE from engaging in the mortgage business in Kentucky. The order states the company operated as a mortgage loan broker, but was not licensed or exempt from licensure; charged illegal upfront fees; and made misrepresentations, concealed facts or engaged in business that has tended to work as a fraud.
“This is a case of a product that really was too good to be true,” said DFI Nondepository Division Director Nicole Biddle. “HOPE claimed to offer mortgage loans for purchasing or refinancing at less than 2 percent and with no closing costs. But for some loans that have closed in Kentucky, no funding was actually provided.”
HOPE has at least 230 loans in the process of origination, 52 of which involved Kentucky properties in 17 cities. At least four of those loans have closed on Kentucky properties but were not funded, which is known as a “dry closing.”
In addition, the company charged an upfront, nonrefundable “membership” fee of $300 as part of the application process, as well as an additional 3 to 3.5 percent of the loan amount paid in advance to an escrow account. According to Kentucky Revised Statute Chapter 286.8, application fees may not exceed $100 and upfront fees are illegal.
The FBI also is investigating this case. DFI’s cease and desist order can be viewed online at www.kfi.ky.gov/legalresources/enforcementactions/mortgageea.htm. The order mandates that the company immediately stop doing business in Kentucky; fund the four dry closings; put all Kentucky customer funds in an escrow account for restitution; and send DFI weekly notifications on all loans relating to Kentucky consumers. HOPE has the right to request a hearing to appeal the order.
“Kentucky is leading the effort to protect consumers from companies engaged in unsound or illegal practices,” said DFI Commissioner Charles Vice. “This is an example of DFI’s Consumer Protection Branch utilizing its consumer complaint process to identify, investigate and ultimately take legal action in order to protect Kentucky citizens. Through DFI’s investigation, led by Gayle Keltner, we were able to quickly put a stop to a potentially abusive practice.”
Customers who were in the process of obtaining loans from HOPE should start the application process with another lender, Vice said. To file a complaint against HOPE, submit the complaint form found online at www.kfi.ky.gov/complaint/ficomplaint.htm or call 800-223-2579.
DFI is an agency in the Public Protection Cabinet. It supervises the financial services industry by examining, chartering, licensing and registering various financial institutions, securities firms and professionals operating in Kentucky. DFI’s mission is to serve Kentucky residents and protect their financial interests by maintaining a stable financial industry, continuing effective and efficient regulatory oversight, promoting consumer confidence and encouraging economic opportunities.
Kelly May, Public Information Officer
kelly.may (at) ky (dot) gov