First Magnus Financial Corp. Broke A Federal Law By Providing Incentive Payments To Mortgage Brokers
July 24th, 2018 by AHB
First Magnus was covered here several months back when it refused, or stated it simply couldn’t, send paychecks it owed to employees. At that time, the lender was also filing for bankruptcy.
This was then:
“First Magnus Financial Corp. still is not sending out paychecks to its former employees. But the Tucson-based mortgage lender announced it is creating an assistance fund of more than $1 million to ease the burden.”
“In a news release, the company said paychecks have been delayed because its accounts were frozen by investors that provided capital to First Magnus to make loans. The company was forced to shut down operations last week because it could no longer sell the loans it originates on the secondary market.”
“Earlier, the company told employees to expect their checks by mail rather than direct deposit. Under both state and federal law, checks were due to employees on Monday.”
Seems things have caught up with them. Just released today, this is how things are looking for them now:
Defunct mortgage lender First Magnus Financial Corp. broke a federal law by providing incentive payments to mortgage brokers, according to a report.
The U.S. Department of Housing and Urban Development’s report issued July 14 said Tucson-based First Magnus violated the Real Estate Settlement Procedures Act by providing volume-based incentives for Federal Housing Administration-insured loans.
HUD found that First Magnus paid $58,571 in incentives from Jan. 1, 2003 to Dec. 31, 2005 to seven brokers for the origination of 169 FHA-insured mortgages totaling more than $24 million.
First Magnus collapsed and filed for bankruptcy during the credit crunch last August. It is currently being liquidated.
Company executives have founded a new company, Stonewater Mortgage Corp., that is operating out of First Magnus’ old headquarters in Tucson.
No doubt, it likely came as a surprise to those who have been involved with the lender…
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