By Nate Jones
Staff Writer
Attorney General Steve Rowe announced in a Jan. 18 press release that Maine Mortgage Group (MMG) of Scarborough agreed to a Superior Court Consent Decree as a result of a complaint filed with the his office. Although MMG agreed to the court’s decree, they did not admit any wrongdoings concerning the state’s charge that they helped falsify a mortgage application in attempts to make the applicant appear to be a good loan risk, a direct violation of the Unfair Trade Practice Act.
“It wasn’t the case at all,” Shawn Boulet, a partner at MMG said.
Will Lund, director of the Office of Consumer Credit Regulation (OCCR), said the complaint was filed in April of last year by Victoria Noiles of Portland after MMG granted her husband, David Noiles, a short term loan of $7,000.
Boulet and business partner Chris Castaldo,  said that the loan was brokered on a friendly basis.
David Noiles was a personal friend of Boulet’s for three years, Boulet said, as they used to play poker together weekly. Boulet said when David Noiles came to him for funds, they originally looked at “cashing out” the Noiles’ mortgage to acquire the money. When that didn’t work, MMG agreed to broker the $7,000 loan in the spring of 2006.
“I was acting as a friend first and a businessman second,” Boulet said. “The only problem was I happened to own half of the mortgage company.”
“The OCCR and the Attorney General obviously get very concerned about instances in which consumers tell us a lender or loan broker loaned them money on a short term basis, especially during the application process,” Lund said.
Boulet and Castaldo said that they made efforts to accommodate the Noiles’ by giving them a reduced fixed interest rate on the loan.
“The funds were all verified,” Boulet said. “Had I been scheming, I could have just written him a check.”
Castaldo said he attributed a large part of the attorney general’s actions toward the case to be an attempt to gain good publicity “at a time when mortgage companies are the bad guys” due to the state of the housing market.
“A few companies are ruining it for everybody,” Castaldo said. “Mortgage companies are the last in the chain of command.”
Boulet said small mortgage companies are easy targets for investigations, pointing out that while consumers risk their credit, the costs of a legal battle may easily overwhelm a small business such as MMG, regardless of their actions concerning the complaint.
“The attorney general works for free,” Castaldo said. “We can’t fight with that.”
Maine Mortgage Group is currently out of business, although Boulet and Castaldo said it was not the cost of the eight month legal battle that caused the company to close but rather “the times in general.”
Boulet said he had no notice from the Noiles’ before they filed the complaint with the attorney general, even though he communicated with David Noiles regularly.
“Of course we would have tried to help him out,” he said. “We felt terrible that they thought we’d try to hurt them.”
Lund said MMG was not the first company to use the “friendly gesture” defense. The complaint filed by Victoria Noiles was passed onto the OCCR by the attorney general. Assistant Attorney General Jim McKenna said they originally considered the complaint a regulatory issue rather than a legal one.
Lund said the OCCR receives 1,000 complaints a year, many times from consumers. The OCCR primarily enforces a Consumer Credit Code, which is aimed at preventing mortgage lenders and loan brokers from coaching consumers into false statements, Lund said.
“The giving of money to a consumer takes coaching a step further,” Lund said. “Now they’ve enabled consumers to say they have the money, and that isn’t the case.”
Lund said according to the investigation conducted by the OCCR, MMG earned a total of $5,502 through various fees from both the Noiles’ and the lending bank.
Lund said that although the OCCR was “unable to make a connection” in the complaint against MMG via the Consumer Credit Code, they often view funds earned by loan brokers who use the “friendly gesture” defense as an ulterior motive.
Boulet said that the fees collected on the Noiles’ loan were far below normal, in accordance with their efforts to assist the family.
 “We worked with [OCCR]; they investigated, we looked at the results and decided [MMG] was in violation of the Unfair Trade Practice Act.” McKenna said, who also explained that the Unfair Trade Practices Act was a more broad regulation.
McKenna said he attributed false representation by mortgage lenders and loan brokers to be a large part of the current housing market recession.
“Banks have learned to have a pretty good feel for what a legitimate loan is,” McKenna said. “Don’t get yourself into a loan you can’t afford; let the bank do the work for you.”
Although contacted, David and Victoria Noiles said they did not have any comments on the issue.
Per the Consent Decree signed by MMG, the mortgage company must return all funds they acquired from the loan in addition to providing $3,615 in restitution to the Noiles’ and paying a $5,000 civil penalty.
Boulet and Castaldo said they will continue to practice mortgaging separately, and both agreed that if MMG had the funding they would have fought the state’s charges in court.
“It’s how I make my living,” Castaldo said. “This is just politics at its best.”