Maryland Tells Unlicensed Mortgage Firm To Shut Down

Sunday, September 16, 2007

Maryland's Division of Financial Regulation has ordered Frederick C. Lee Jr. and his Georgia company, Financial Independence Group, to stop all mortgage-related business after discovering that Lee and his company were originating loans in Maryland without a license.

The state issued an cease-and-desist order on Thursday, saying it wanted to "protect the public interest."

No one associated with Financial Independence Group "is allowed to do business by assisting a borrower with a loan application," said Joseph E. Rooney, Maryland's deputy commissioner of financial regulation. "If we find evidence that anyone is doing loans, we will prosecute to the full extent of the law."

Originating loans without a license is a felony and can result in a fine of up to $25,000 and a prison sentence of up to five years, or both.

The state alleges that Lee, a Georgia resident, has originated 42 loans since January. Rooney said his office is continuing its investigation to determine whether others working for Financial Independence have acted as loan officers in violation of the law.

"We will go after each and every person operating without a license," he said.

Lee has 15 days to request a hearing to dispute the allegations.

Neither Lee nor his attorney responded to phone calls and e-mails seeking a response to questions about the cease-and-desist order. Contacted on his cellphone, Lee said he wanted to meet to discuss the questions but as soon as he was asked about the order, the line went dead. Subsequent efforts to reach him failed.

If the state issues a final order against Lee, he and others working on behalf of his company could face civil penalties of up to $1,000 for a first violation and $5,000 for each subsequent violation. The case also may be referred to the Maryland State's Attorney's Office for criminal prosecution, Rooney said.

Maryland is the second state to issue a cease-and-desist order for Lee and his mortgage operation, whose activities were described in the Color of Money column. The Georgia Department of Banking and Finance issued final cease-and-desist orders within the last year for Lee and several of his companies for running a mortgage business without a license.

Rooney said borrowers who have closed loans since January that were arranged by Lee or someone working on behalf of Financial Independence Group should call the Maryland's Financial Regulation division at 888-784-0136 and ask for Stephen Prozeralik, director of enforcement.

-- Michelle Singletary


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