Charlotte mortgage originators accused of fraud remain in business

Adam Goulet, Joshua Hankins and Roger Sterling Moore were dealt what looked like professional setbacks when they lost their licenses to originate mortgages for homebuyers in North Carolina.

In separate cases, federal authorities said all three gave false information to lenders when they bought investment properties in Charlotte.

But all three remain in the mortgage business because of settlements with the North Carolina banking commissioner. They are making loans from their Charlotte offices for mortgages in about a dozen other states where they are licensed, including South Carolina.

A federal law designed to increase trust in the mortgage industry has loopholes that allow loan originators accused of fraud to negotiate settlements and keep issuing mortgages in other states.

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 requires states to participate in the Nationwide Mortgage Licensing System, a public database that shows the states where an originator is licensed. The database also shows whether an originator’s license has been stripped or expired.

In the Charlotte area, at least a half dozen originators who lost their North Carolina licenses over fraud claims remain employed by mortgage companies.

Some have paid tens of thousands of dollars to settle the allegations. And by settling, they have avoided legal battles that might have revoked their licenses. Under the SAFE Act, someone with a revoked license cannot be licensed in any state.

“When we look at enforcement across the country, it appears that the minimum requirements of the SAFE Act may need to be enhanced to ensure that bad actors prosecuted in one jurisdiction are not able to continue operating in another,” said Al Ripley, director of consumer and housing affairs for the North Carolina Justice Center.

“We really don’t want to have a system where people are caught committing fraud but the way that cases are handled only enables that individual or that company to ultimately stay in business or re-enter the industry later.”

Fraud cases vary

The allegations against the originators still operating in Charlotte range from residential mortgage fraud to identity fraud.

In the cases of Goulet and Moore, federal officials named them among participants in a Dilworth mortgage scheme that ran from roughly 2005 to 2008.

All six participants falsified mortgage applications for speculative real estate investments, according to the claims in the civil fraud case. Federal authorities say the six lied about income, assets and other items on the applications and falsely claimed that they were buying the homes as primary residences.

In settlements with federal authorities last year in which they did not admit or deny wrongdoing, Moore was ordered to pay $85,000 and Goulet was ordered to pay $7,500 in penalties.

This year, Goulet and Moore entered into consent orders with the N.C. Office of the Commissioner of Banks, agreeing to cancel their licenses for at least one year and pay penalties.

Moore works in Charlotte, where he is president of Neighborhood Lender. He holds originator licenses in four states, according to the Nationwide Mortgage Licensing System. Goulet also works in Charlotte for Neighborhood Lender and holds originator licenses in three states.

Moore’s attorney, Ed Hinson, said his client is “engaged in originating mortgages in states where he remains licensed.”

Hinson said the allegations against his client stemmed from Moore’s personal activities, not through dealings with clients of his mortgage business.

Goulet’s attorney, Chris Fialko, declined to comment.

In separate civil cases, federal authorities accused Hankins and co-conspirator Scott Sopko of lying to lenders in 2006 and 2007 to obtain millions of dollars in loans for speculative real estate investments in Charlotte. According to federal lawsuits filed in February, the two told lenders the properties would be their primary residences when their plans were to sell them for a profit.

To settle the claims, Hankins and Sokpo each agreed to pay penalties of $55,000 without admitting or denying wrongdoing. In a related action, a year ago the two entered into consent orders with the North Carolina banking commissioner to cancel their licenses for a year and pay penalties.

Hankins and Sokpo, who both worked for Charlotte-based Wyndham Capital Mortgage at the time of the federal allegations, remain with the company. Hankins is a sales manager in its Charlotte offices and holds originator licenses in 11 states. Sopko manages the company’s Greenville, S.C., office, according to Wyndham’s website. He holds licenses in 14 states.

Hankins and Sokpo’s attorney, Anthony Scheer, said the accusations were based on his clients’ personal mortgage applications, not work they did in their capacity as loan originators. Jeff Douglas, CEO of Wyndham, pointed out that Hankins and Sokpo were never convicted of a crime or admitted guilt.

“They are licensed in the other states and ... they don’t handle any North Carolina state-specific loans,” Douglas said.

In an unrelated case, another originator, Shannon Keziah, lost her North Carolina license after pleading guilty in 2011 to a misdemeanor charge of financial identity fraud, according to documents from the commissioner of banks. In a 2012 consent order with the commissioner, Keziah agreed to have her license suspended until December 2016 and did not admit or deny allegations.

Since September, she has been working at Charlotte-based and holds originator licenses in nine states. CEO Keith Luedeman said the identity fraud allegations stemmed from a “dispute” with a former boyfriend of Keziah’s.

“After our detailed review of the facts, we decided the matter was so minor that it was fine for her to originate in the states that had granted her a license after reviewing the same information we did about her case,” Luedeman said.

Licenses kept through accords

Settlements and consent orders limit what action other states can take against originators accused of wrongdoing, industry observers say.

“It allows someone who wants to game the system to essentially decide, ‘I’m going to forgo my ability to do business in this state in exchange for doing business in another state,’ ” said Chris Kukla, senior vice president for the Durham-based Center for Responsible Lending.

Settlements are not unique to North Carolina. Other state regulators reach such accords with mortgage professionals.

In a statement, the N.C. Office of the Commissioner of Banks said it handles cases “on a case by case basis, and our primary focus is to limit harm to consumers.”

As for Goulet and Moore, the S.C. Department of Consumer Affairs was aware that they had lost their North Carolina licenses, said Carri Grube Lybarker, head of the agency that licenses mortgage brokers. Regulators can see who has lost a license through the Nationwide Mortgage Licensing System.

But because Goulet and Moore lost their licenses through a consent order, as opposed to a proceeding that might have found guilt, they can still be licensed in South Carolina, Lybarker said.

Under the SAFE Act, those with a felony in the past seven years are ineligible for an originator license. Anyone who has ever had a felony for fraud, dishonesty, breach of trust or money laundering is also ineligible, as are those who have ever had their originator license revoked.

Originators seeking a license from a state must also demonstrate “financial responsibility, character and general fitness.”

Transparency for consumers

The Nationwide Mortgage Licensing System has created more transparency in the mortgage industry. In addition to disclosing whether an originator is licensed, the database provides the public with other information about originators, including employment history.

But some say state regulators should be required to post the actual enforcement actions against originators so consumers will know what led to the license loss.

North Carolina’s banking commissioner office is posting enforcement actions on the database, such as consent orders. Bill Matthews, executive vice president of the Conference of State Bank Supervisors, which runs the Nationwide Mortgage Licensing System, said not all states are contributing.

In South Carolina, regulators are not posting settlements but are posting other types of actions, such as court orders.

“I think the states are working through their priorities,” Matthews said. “It would be better consumer protection if all state enforcement actions were on the system.”

That’s crucial for consumers, said Kukla of the Center for Responsible Lending. “Consumers should be able to know if a broker voluntarily surrendered their license under allegations of fraud. That’s public record, but it’s really hard for someone to find.”

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