Banking -- Mortgage Brokers Charged -- Attorney General Files Complaints Against 7

Attorney General Ken Eikenberry today filed civil complaints against seven Puget Sound area mortgage brokers, saying they took advantage of the boom in refinancing to mislead and defraud borrowers.

"In the past year my office has been flooded with complaints about mortgage brokers," Eikenberry said.

In some cases, mortgage brokers have collected application fees and other money from borrowers and failed to keep it in trust accounts, Eikenberry said.

In other cases, brokers run misleading advertisements, promising to "lock in" interest rates they cannot deliver. Others have insisted on charging previously undisclosed fees when loans reach the closing stage and borrowers who refuse to pay could end up without financing and could see their real estate deals fall through.

Mortgage brokers represent multiple lenders, steering borrowers to lending institutions, taking applications and handling much of the paperwork involved in financing or refinancing a home.

Eikenberry said he is "deeply troubled by the number of (mortgage) brokers who have been ignoring or blatantly violating state law."

The complaints were filed today against Mountain Pacific Mortgage Corp. of Bellevue, New World Mortgage of Seattle, Highland Pacific Mortgage of Bellevue, Great Mortgage Financial Services of Kent, Home Towne Mortgage of Puyallup, Investree Mortgage of Bellevue and Amco Mortgage Services of Everett.

Eikenberry said other mortgage brokers remain under investigation. "Of those who have been investigated by my office thus far, only two have been found to be in complete compliance with the State Mortgage Broker Practices Act," he said.

Eikenberry said borrowers "should shop extensively before choosing a mortgage broker and rely on recommendations from friends and associates rather than advertisements."