Officials say the company’s president misused the confidential files of his clients.
AUGUSTA – The state agency that licenses mortgage lenders restricted the authority of Colonial Mortgage Corp. of Portland to accept new customers and ordered the lender’s license revoked effective June 20.
The disciplinary action taken Wednesday by the Office of Consumer Credit Regulation was based on allegations that Colonial’s president, Aaron Lewis, convinced more than 20 individuals, many of them Colonial as mortgage customers, to lend money to Lewis. The order requires partial restitution to those individuals and it permits them to file private lawsuits to recover the remainder.
A consent agreement approved by agency Director Will Lund and the Attorney General’s Office restricts Colonial’s activities for the next 30 days to closing pending loans for which lending commitments or rate locks have been obtained. No new loan applications can be accepted by the company and all advertising must cease immediately.
“In his role as president of Colonial Mortgage, Mr. Lewis had access to consumers’ confidential financial information,” said Lund. “He used that information to identify consumers who had sufficient monetary resources, and then convinced those consumers to make loans to him. Lewis then failed to repay many of the loans as promised,” Lund added.
The consent agreement bars the company from the mortgage lending business after June 20 and prohibits Lewis individually from applying to do business as a mortgage lender or loan broker in the future without first obtaining specific permission from the Attorney General’s Office.
Lewis also must provide restitution of more than $28,000 by June 20. Failure to comply with the agreement’s provisions will lead to an additional penalty of $35,000.
The Office of Consumer Credit Regulation will oversee the process of shutting down the company, according to Lund, to prevent any misuse of consumer information in Colonial’s possession.
Files of approximately 1000 former customers will be transferred to state storage. The application files of those from whom funds were borrowed will be returned to those individuals, and Colonial’s computerized records of consumers’ financial information will be deleted, according to terms of the consent agreement.
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