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Lender Agrees to Refund $4.7 Million to North Carolina Homeowners

""WR Starkey Mortgage, LLP"":http://www.wrstarkey.com/, a national mortgage lender based in Plano, Texas, has agreed to pay $4.7 million to[IMAGE]

North Carolina homeowners exploited by a scheme related to the sale and financing of overpriced manufactured and modular homes sold by ""Phoenix Housing Group, Inc."":http://www.phoenixhousingonline.net/ (PHG).

In conjunction with the attorney general, the ""North Carolina Office of the Commissioner of Banks"":http://www.nccob.org/nccob (NCCOB) announced that the company will pay $26,000 to each of the 171 victimized homeowners. In addition to those refunds, Starkey will provide nearly $300,000 in refunds to other North Carolina borrowers for alleged violations, and the company has contributed more than $300,000 to the State Home Foreclosure Prevention Project.

The North Carolina Department of Justice will send letters to homeowners who are eligible for the $26,000 refund from Starkey. Other refunds being issued pursuant to the NCCOB settlement will be sent by mail to affected borrowers within 30 days.

As a result of an examination of Starkey, NCCOB alleged that the company had numerous violations of the North

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Carolina law, including collaborating with PHG to provide financing for consumers purchasing inflated manufactured and modular homes through PHG employees without proper mortgage licenses and without complete supervision and control by Starkey's management.

Additionally, the company was accused of extending credit to consumers without regard to the consumers' ability to repay the loans and adding discount points to mortgages when the points were not knowingly and voluntarily elected by the borrowers and when the points did not result in a reduction in the interest rate on the borrowers' mortgages. The company was also accused of placing inaccurate, positive rental histories on consumers' credit reports to boost the consumers' credit worthiness for loans.

Though Starkey has neither admitted nor denied the allegations, the company has made several corporate changes as a result, including removing the president of the company and hiring both a new head of quality control and outside counsel to serve as a compliance watchdog for the corporation. In addition to these changes, the chairman and CEO of Starkey has resigned.

Mark Pearce, chief deputy commissioner of banks believes this settlement can serve as a warning against fraud. ""This settlement shows that lenders supporting and benefiting from fraud will pay a steep price,"" he said. ""Equally important as Starkey's willingness to make amends to homeowners caught up in this scheme is Starkey's transformation in its operations and controls to ensure that borrowers are treated right.""

Funded by industry fees, NCCOB regulates state-chartered banks, savings and loans, trust companies, more than 600 mortgage lenders and more than 6,000 loan officers, and numerous finance companies, check-cashers, and other financial services.

About Author: Joy Leopold

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