Massachusetts’ Division of Banks (MDB) received two formal complaints from a non-profit specialist in foreclosure prevention against Your Home Mortgage (YHM).  YHM is also the subject of a lawsuit initiated by Greater Boston Legal Services (GBLS) for alleged discrimination and unfair and deceptive practices against a YHM client, Jaime Alvarez.

Alvarez used Maurice Osorno, a broker for YHM, to purchase his home.  Alvarez said that he and Osorno are both from the same country and that he trusted Osorno, because he treated him like family.  Alvarez stated that Osorno never explained to him the terms of the loan, but that he trusted Osorno implicitly.  Now, Alvarez is facing foreclosure.

Despite his $38,000 annual salary, Alvarez was able to buy a home through Osorno with mortgage payments totaling $52,000 a year.  GBLS attorney Nadine Cohen wrote a letter to the MDB on behalf of Alvarez stating that it appeared that Alvarez’s income was not verified when YHM approved his mortgage.  To Cohen’s surprise, the MDB wrote back that they found nothing wrong with what MDB had done.

Therein lies the rub.

In a 2007 state audit, it was noted that the MDB needed to be more aggressive in its enforcement regarding mortgage lenders and brokers.  Results of the audit declared that the agency’s capacity to examine mortgage brokers had not kept up with the increased number of mortgage lenders/brokers under its authority.  Translated that means that the MDB needs to initiate more action to scrutinize the activity of mortgage lenders/brokers.

It appears in the response Cohen received from her letter to the MDB that the problem has not yet been solved.  The lax attitude in addressing blatant oversights, like not addressing income on a mortgage application, or overlooking income or both violate federal law.

So, here’s the bottom line.

The MDB has twice as many investigators of any other state, ranks second in number of foreclosures in the nation and ranks last in number of serious crimes prosecuted – only 43 serious prosecutions in the past 2.5 years.  That’s the worst record in all of New England.

There are several questions that beg to be asked at this point.  With the high rate of foreclosures, wouldn’t you think that there has to be some mortgage fraud that occurred – whether it’s the lender or the borrower?  Also, with all the investigators – again, twice as many as any other state in the Union – what are they doing?

Why is the state ranked last in the number of serious crimes?  Can it be that Massachusetts (the MDB) just has something that all the others states don’t have?  If so, we need to find out what it is, so that we can distribute it to the other 49 states.