Two Clay County mortgage loan modification companies were ordered shut down on Thursday by the Florida Office of Financial Regulation (OFR) and the county’s Sheriff Office, issuing search warrants at the same time enabling authorities to sift through the companies’ records for possible malfeasance.
Ordered closed were Global Equity Solutions, located at 3332 Old Jennings Road in Middleburg and Hope Financial Services at 252 College Drive in Orange Park.
Immediately following the clamp down and the execution of search warrants by the sheriff’s office, the OFR also issued cease-and-desist orders prohibiting the two companies from conducting further business activities though the government agencies refused to withhold any names for now pending the outcome of the ongoing investigation.
The OFR added that charges may be pursued by its office depending on the information that the investigation would yield, following their careful appreciation and verification of the records covered by the search warrant.
Industry experts said that the companies’ closure was a landmark incident in the Jacksonville area, marking the first time that business operations offering mortgage modification services had attracted inquiries and severe actions from government agencies.
They noted too that mortgage loan modifications have become quite prevalent in the area since the onset of the economic downturn in 2007, signifying the crippling and wide-ranging effect of the housing market crisis that ensued following the global crunch.
The protracted housing market problem prompted President Barack Obama to launch his Making Home Affordable program in 2009, aimed to cut down mortgage payment obligations of distressed homeowners facing foreclosure and carrying federal-sponsored Fannie Mae and Freddie Mac loans.
OFR communications director Flora Beal said that by January 1, the Florida state government has implemented stricter requirements for businesses offering mortgage loan modification services, though she admitted that the new directive was not necessarily observed by companies performing the services.
Beal noted that businesses and individuals engaged in loan modification services must obtain license to operate from the government and were barred by a state law from collecting up front fees for their dealings.
She added that companies performing loan modifications in Florida without an active license face the prospect of a five-year imprisonment and up to $5,000 in fines for every offense committed, stressing that the act itself invites felony charges.
On its initial investigation, the OFR discovered that Global Equity and Hope Financial had dispensed their services across the country by utilizing online marketing, mass mailings and call center agents and were able to attract up to 250 open contracts, from which they received up front fees ranging from $1,200 to $1,800.
Beal said that basing on the initial findings, the two companies had violated the law as she noted that their businesses may have enticed hundreds more of clients in Florida though information seized by the OFR has so far shown that only a few individuals were affected in Clay County.
In light of the incident, Beal reminded troubled homeowners that no advance payments were required for processing and completing loan modification as she stressed that quite a number of already distressed people were taken advantage of and still ended up facing foreclosure after paying some money.