EagleTribune.com, North Andover, MA

August 1, 2008

Plaistow mortgage company faces fraud charges

By Meghan Carey

PLAISTOW — The state Banking Department has received nine consumer complaints about The Mortgage Specialists in the last few years, but it was the department's routine check of the Route 125 business that led to fraud charges.

In a recent examination of the real estate and mortgage firm, the state said it found that the company forged customer signatures, altered and destroyed documents, and broke other state and federal laws.

The Mortgage Specialists was issued a cease-and-desist order it must respond to within 30 days, according to department spokesman Rich Arcand. The company, which received the order last week, could face $200,000 in fines and revocation of its license.

The firm's New Hampshire offices in Salem, Windham, Manchester and Somersworth, remain open for business.

Yesterday, the company's Peabody and Worcester, Mass., locations were also issued a cease-and-desist order by the Massachusetts Division of Banks in the wake of similar allegations.

The Mortgage Specialists' lawyer, Alex Walker of Manchester, said his client has had a history of compliance and is working with the New Hampshire Banking Department to resolve the matter.

"The company is prepared to take whatever steps are necessary to ensure that the Banking Department is satisfied with the bank's internal procedures and operations and is compliant in every respect," he said.

Banking Department staff visited the main office in Plaistow a few weeks ago to perform an examination that is routinely administered every 18 months, Arcand said.

When the department asked for 20 files stored at a site within a 10-minute drive, it took more than four hours for employees to return with the folders, according to the cease-and-desist order. Documents were missing from all the files, but the department said it later found some of them in a bin waiting to be shredded.

The department found customers' signatures had been photocopied and attached to new documents, the order said. Two broker fee agreements and an application for a federal mortgage loan were also altered.

The Mortgage Specialists couldn't provide two requested files of canceled loans, and the Banking Department said it also found those files in the shred bin.

The department contacted officials in Massachusetts because it allegedly found two altered documents included with forms from that state.

The Massachusetts Division of Banks was just finishing its own routine examination when it uncovered the use of unfair and deceptive practices, such as inflating borrower income, according to the cease-and-desist order the state issued yesterday.

"The division's temporary cease-and-desist order requires The Mortgage Specialists to place all remaining loans with a qualified lender or broker with no loss to consumers and forbids the company from initiating any new mortgage loan transactions," spokeswoman Kimberly Haberline said.

Salem branch manager David Caillouette admitted to the Banking Department that he manipulated documents but wouldn't say if it was authorized by the company, the New Hampshire cease-and-desist order said.

Owner Michael Gill of Windham and employees Lisa Tracy, Jean Duerr and Caillouette are cited in the order.

The charges include 14 counts of fraud, 20 counts of incomplete records, 15 counts of dishonest and unethical practices, and three counts of destruction of records.

The Mortgage Specialists are no strangers to controversy in this area.

In 2004, the company erected a 71/2-by-100-foot electronic sign on the Haverhill, Mass., side of its property because such signs would violate Plaistow's ordinance. Haverhill officials issued Gill a cease-and-desist order to remove the sign because it was a distraction to drivers traveling north on Route 125.

Gill hired a lawyer and refused to comply.

The Banking Department is continuing its investigation, but Arcand wouldn't say how many more files will be investigated. No information was available on the nine consumer complaints received in the last few years and whether they are related to the case.

The department based its charges on just 20 files, but Walker said The Mortgage Specialists has closed "tens of thousands" of loans since it opened in 1991.

A hearing has yet to be scheduled, but if the department finds customers were harmed, those people will be notified, Arcand said.

That could be the case for the signer of one 30-year fixed mortgage, which was allegedly altered into a 40-year adjustable rate mortgage with a balloon payment at the 30-year mark, according to the New Hampshire cease-and-desist order.