State agency fines two lenders

Kevin Rademacher

Wednesday, Feb. 25, 2004 | 10:41 a.m.

The state Mortgage Lending Division has fined a pair of lenders that process home loans for Las Vegas consumers.

Scott Bice, who took over as chairman of the newly created division in December, fined Novastar Home Mortgage Inc. $80,000 for unauthorized broker activity. He also issued a cease and desist order against the company that remained in place until the company licensed its Nevada branches.

Brent Stewart, a vice president at Novastar's Kansas City, Mo., headquarters, said the fine has been paid and that the company is again processing loans in Nevada.

"We are acting as business as usual at this point," he said.

Corey Williams, branch manager for the Novastar location at 4550 W. Oakey Blvd., said the cease and desist order prevented the company from originating Nevada loans for about a month.

The Mortgage Lending Division now lists four licensed Las Vegas branches for Novastar and two more in Reno.

Williams said the licensing problem emerged when the state changed its regulations last year following the Legislature's creation of the Mortgage Lending Division.

"We used to be exempt (from licensing requirements)," he said.

Bice said prior to the implementation of new regulations on Dec. 31, subsidiaries of national companies were exempt because they were subject to federal regulation.

"The reality of the situation is that these ... companies are where a lot of those issues come up," he said.

The company also fined Encore Funding $5,000 for failure to register its mortgage agents with the division.

Gus Muro, manager of Encore's office at 4775 S. Durango Dr., said the fine has been paid and the agents have now been registered.

"We have a corporate office out of California," he said. "The registration forms were sent to them and not forwarded to the state. ... It has been resolved."

Muro praised the state's action.

"I definitely agree with all of the implementation of new rules that have gone on," he said. "(Bice) threatened us and we took care of it. It helps the industry as a whole to weed out the bad element."

Bice said both investigations were sparked by calls from consumers. He said it appears that no customer suffered any loss but complained about the licensing of the companies. He said customers can check the licensing status of mortgage agents or companies at www.mld.nv.gov or by calling the division at (702) 486-0780.