Bogus mortgage brokers beware

A crackdown on unlicensed mortgage brokers and unregistered mortgage agents in Nevada has a long way to go, says the official leading the charge.

Scott Bice, commissioner of the state's new Mortgage Lending Division, said last week he views rogue mortgage brokers as a threat to consumers.

Last week, Bice issued a cease-anddesist order and imposed an $80,000 fine against Novastar Home Mortgage Inc.

for unauthorized mortgage broker activity.

Novastar, which signed a stipulated settlement agreement with the state, will be allowed to continue operating in Nevada if it licenses each of its branches.

One of those offices operates in Reno.

Bice also signed a settlement with American Gold Mortgage Group of Las Vegas, which operates as Encore Mortgage.

Encore agreed to pay a $5,000 fine for its failure to register its mortgage agents and also agree to submit registration forms immediately.

More administrative actions are likely.

Bice, who took the job Dec.

1, said in an interview that he's called about three times a week to conduct field investigations of unlicensed and unregistered mortgage agents.

Much the work, he said, centers on so-called "net branches." Mortgage brokers eager to expand their businesses contract with entrepreneurial loan originators across town or across the state.

Those "net branch" systems often aren't properly licensed or registered.

Bice said he will demand tighter control of loan originators by the parent companies.

Some of the attention focused on the mortgage industry results from the creation of the Mortgage Lending Division.

The division was created by the Legislature last year.

Previously, oversight of mortgage lenders had been the responsibility of the state's Financial Institutions Division.

"It was a huge amalgamation of companies to be regulated," Bice said of the previous regulatory system.

"It's now easier for us to focus on the specifics of this industry."

The new law also will require mortgage agents to be licensed beginning July 1.

Currently, they are required only to be registered.

The difference? Higher standards for continuing education, mostly.

License fees are $170; registration was $70.

Bice said between 10,000 and 11,000 mortgage agents are believed to reside in the state, although only about half of them are active.

He said industry groups have supported the division's efforts to inform brokers and loan agents of the new requirements.

The new mortgage division receives 20-30 complaints a day from consumers, and Bice said his staff follows up on all of them.

"Nothing is too small for us to look into," he said.

"I think people see a big difference in the way we operate this division."

Bice worked for private mortgage companies for 14 years after his graduation from the University of Texas.

Before taking the state job, he worked five years for the U.S.

Department of Housing and Urban Development monitoring lenders in an eight-state area.