TRENTON, N.J., Aug. 20 — Late Friday New Jersey Department of Banking and Insurance Commissioner Steven M. Goldman signed an order alleging that Arizona-based First Magnus Financial Corp. has violated state lending law, and the Department has taken action to revoke the license and levy fines against the firm.
Goldman signed a cease and desist order and an order to show cause directing First Magnus, of Tucson, to immediately stop taking mortgage applications in New Jersey, and stop closing loans without available funding. In addition, the company is ordered to secure alternate funding sources for those loan applications that are in process, and to provide weekly reports on the progress of these efforts.
First Magnus must also make all records available to DOBI examiners and place into escrow all fees collected from customers with unfunded loans. The company is also asked to show cause as to why its mortgage lending licenses should not be revoked, and to pay up to $5,000 for each individual violation.
First Magnus maintained a principal New Jersey office in Cherry Hill. Last week, the company closed its New Jersey office following the loss of funding sources. DOBI is in the process of determining how many borrowers have been affected, but last year First Magnus ranked 15th among New Jersey mortgage lenders, with approximately 4,000 loans and $900 million in loan volume.
The DOBI order alleges violation of five sections of New Jersey’s Licensed Lenders Act, including:
- Failure to distribute funds for mortgage loans that were closed or were approved for closing;
- Failure to deliver funds following the closing of loans within the required timeframe;
- Taking mortgage loan applications with knowledge that the loans could not be funded;
- Closing offices in New Jersey without proper notification to the Department;
- Failure to maintain the required net worth.
The company has 20 days to request an administrative hearing objecting to the order. If no hearing is requested, the order will then become final.
Goldman advised consumers who have recently submitted an application with First Magnus to contact their mortgage broker and ask them to find new lender. Additional information will be posted on the DOBI Web site as it becomes available at www.state.nj.us/dobi/. Individuals with questions regarding a loan pending with First Magnus may call the DOBI Consumer Hotline at (609) 984-2777.