Monday, Dec. 15, 2008 | 2:07 a.m.
Nevada regulators have failed to adequately oversee mortgage companies, according to a legislative audit released last week.
As Cy Ryan reported on the Las Vegas Sun’s Web site Thursday, auditors said the Mortgage Lending Division failed to examine all the state’s mortgage companies annually, as required. It also failed to collect about $1.5 million in assessments, fees and fines. The audit, based on the division’s work in 2007, also found that 87 percent of companies considered high-risk were not given follow-up reviews.
For example, one company received poor marks in its examination in November 2002. It was not reexamined until May 2008.
The audit said problems with the division’s enforcement “allowed companies and individuals who committed serious violations to avoid or postpone paying fines.”
Lawmakers were told the division had not hired 10 examiners, as it was authorized to do. And the division was behind on doing the regular reviews of the industry. The audit made several recommendations aimed at getting the division back on track and up to date with its reviews. Mortgage Commissioner Joseph Waltuch, a former executive of disgraced subprime lender New Century Financial Corp., said the division would follow the audit’s recommendations. Hired in September 2007, Waltuch said the division was living up to its mission, but lawmakers contradicted that.
“You are not meeting your mission,” said Assemblywoman Sheila Leslie, D-Reno. “The performance is abysmal.”
Abysmal indeed. The mortgage division is supposed to protect both consumers and investors, yet judging from the audit report, it is doing neither.
That is particularly troubling considering the mortgage industry’s collapse was largely based on improper or illegal lending practices. In Nevada, which has been the epicenter of the foreclosure crisis, the state should be increasing oversight of the mortgage industry and making sure regulators have all the tools they need to protect consumers.
This audit is a sign the Gibbons administration has failed to understand that. Lawmakers should press the administration to make sure proper changes are made.