Consumer First customers may be able to recoup fees State regulator says bond should cover prepay losses

August 03, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Borrowers with incomplete home loans from Consumer First Mortgage Inc. should be able to recover any losses in fees tied to the mortgage, financial regulators said yesterday.

State examiners have been investigating the Columbia-based lender since complaints surfaced Thursday that it failed to fund loans for dozens of houses set to change ownership by the end of July.

"Our preliminary assessment is if any consumers have put up fees, there is enough of a safety net to protect them," said H. Robert Hergenroeder, the Maryland commissioner of financial regulation.

A $200,000 bond the company posted with the state would cover losses Maryland borrowers might have incurred by paying points or appraisal or credit report fees, then never getting the loan at settlement, Hergenroeder said.

In its probe, the state is reviewing the number of borrowers in Maryland whose settlements were delayed or were approved before it was discovered that mortgage money was missing.

The state wants to ensure that Consumer First will bring in new lenders to fund the loans, Hergenroeder said.

He said those lenders are not obligated to keep borrowers' original mortgage rates but that he hopes "the mortgage lending industry would act in a responsible manner."

One lender, MNC Mortgage Corp., has agreed to take over approximately 60 Consumer First loans.

"It looks like business as usual. Because it's such a competitive mortgage market, there are people jumping in to pick up the loans," said Michael Gisriel, senior vice president of LTC Fountainhead Title Group of Columbia.

That organization already has found new lenders for five loans it was to have closed Wednesday for Consumer First.

Nine-year-old Consumer First also makes and brokers mortgages Virginia, Pennsylvania, Delaware and New Jersey.

Pub Date: 8/03/96

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.