A local mortgage broker is permanently banned from conducting business in North Carolina and must pay refunds and civil penalties to numerous clients following a Wake County Superior Court judgment.
The decision comes in the wake of a complaint filed in January by Attorney General Roy Cooper, accusing Carolina Mortgage Group and primary owner Jeffrey D. Cox of taking thousands of dollars in upfront fees from clients but failing to refinance mortgages as promised.
“Businesses that charge upfront fees without doing the work need to be held accountable,” Cooper said in a statement released Tuesday. “Consumers trying to get better rates should get their money back if the company doesn’t do what it promises.”
The default judgment means the defendants failed to file an answer to the Jan. 21 complaint, and as a result all the state allegations were deemed admitted by the court.
Superior Court Judge James Roberson on July 24 ordered Cox and CMG to cancel all contracts and pay $20,940 in refunds and $90,000 in civil penalties to clients for what was described as unfair and deceptive business practices.
Of the total $110,940, refunds were ordered to be paid to two consumers and civil penalties of $5,000 were ordered to be paid to 18 different consumers, including the two receiving refunds.
The N.C. Commissioner of Banks had already revoked Cox’s mortgage loan operator license and CMG’s mortgage broker license on Aug. 15, 2014, after that office received 15 complaints about the defendants between July, 2013 and April, 2014. That led to an order requiring the defendants to pay $90,345 in penalties and $46,145 in refunds to clients.
Cox, who previously had offices in Zebulon and Wilson, also faces criminal charges of obtaining property by false pretenses and residential mortgage fraud.
The lawsuit filed by Cooper claimed the unfair and deceptive business practices dated back to at least 2012.
Cox would “often tell the consumer that he could complete the refinancing quickly – usually promising the consumer the time period between completing paperwork and closing would be about 30 days,” the complaint stated.
He asked clients for an origination fee of about 1 percent of the amount of their mortgage, and would then typically ask the clients to pay for appraisals of their properties, according to the lawsuit.
As time passed, Cox allegedly produced an array of excuses – from health issues to promises of even lower interest rates – to keep clients on the hook. Ultimately, the purported loans never closed and Cox did not honor refund requests by clients, according to the allegations.
The Attorney General’s Consumer Protection Division also received five complaints against Cox and CMG including one from Ellen and Karl Holst, who became desperate for a speedier resolution after filing one of the complaints made to the Commissioner of Bank’s Office, in October, 2013.
Couple made whole
The lawsuit described the Holsts’ experience as typical of the complaints received regarding Cox.
They asked for a refund of the $10,485 they had paid in origination fees and appraisals for their Wake Forest home and five rental properties in Wendell and Zebulon. Cox assured them he would pay them back but instead set up phony closing dates and eventually stopped communicating, the complaint charged.
The Holsts missed out on a lower interest rate offered by their bank while being led on by Cox and CMG, according to the lawsuit. The rate they later ended up with from their bank was .75 percent higher than the rate the bank had offered them prior to being contacted by Cox.
The Holsts were reimbursed the entire amount under a bond associated with Cox and his company, Ellen Holst said Wednesday. The couple was also on the list of those set to receive $5,000 in civil penalties.
“I understand these (cases) take time to pull through, and even up to the very end we didn’t expect to recoup all the loss,” Ellen Holst said. “It was a nice surprise to see that things worked out the way they should.”