Convicted Felons Approved As Licensed Mortgage Brokers
You trust them with personal information and to help you buy your home.
Yet, an exclusive NewsChannel5 investigation found bank robbers and identity thieves working in the mortgage business. Incredibly, they all received a license from the state.
It's not the place you'd expect to refinance your home.
Sherry Mahaffey just had major surgery. Doctors had to remove both her legs because of blood clots.
"This lady came for me to sign the papers on a second mortgage," said Mahaffey.
That's when she and her husband signed papers they say destroyed them financially.
"I didn't know what I was doing because I was on narcotics for pain," said Mahaffey.
The Mahaffeys claim a woman with WMC Mortgage promised a fixed rate loan.
"What she was, was a con-artist, and I was the chump and she chumped us real good," said Michael Mehaffey.
Soon after signing, their interest rate rose to more than ten percent nearly doubling their monthly mortgage payment. Now their home is in foreclosure.
"It really makes me mad that we're dealing with crooks," said Sherry Mahaffey.
While we don't know if the Mahaffey's were in fact dealing with crooks, Newschannel5 Investigates discovered it is not unusual for criminals to work as loan officers.
For years the state allowed convicted felons to enter a profession that gave them access to personal information and opened the door to mortgage fraud.
Take convicted bank robber Charlton Hildreth.
In 2001, he walked into a bank wearing a wig, claiming to have a bomb. After prison, he applied for a mortgage license from the state and was accepted.
The state licensed Toran Hampton while he was on probation for bank fraud.
Hampton's criminal record is pages long.
But his biggest crime involved obtaining private bank account numbers and stealing thousands of dollars.
His mortgage ad targets people with less than perfect credit.
Our investigation found other mortgage professionals convicted of financial crimes including identity theft and forgery.
"I think it's outrageous. I think there ought to have been some checks done," said State Senator Roy Herron (D) of Dresden, Tennessee.
He has led the fight to regulate sub-prime mortgage loans and was shocked by what we found.
"What they were doing was morally criminal at the least and obviously we're learning now there were actually convicted criminals doing much of this," said Herron .
We took our findings to the department that regulates mortgage professionals.
Commissioner Greg Gonzales of the Department of Financial Institutions told us, "We're finding the same thing now with the ability to do the FBI background checks."
Surprisingly, state regulators say during the height of the sub-prime lending crisis there was nothing to keep bank robbers or anyone else from getting a license.
Investigative Reporter Ben Hall asked, "Was anyone who was applying getting a license?"
said Commissioner Gonzales. "Right. By law the registration of mortgage loan originators was automatic.
A new federal law now requires the state to review the criminal background of loan officers and revoke their license if they were convicted of a financial felony.
"We're systematically going through thousands of background checks to determine the background of these individuals," said Commissioner Gonzales.
A recent Miami Herald Investigation found more than 10,000 convicted criminals in the mortgage industry in Florida.
Authorities in Wisconsin confirm hundreds of convicts working there.
We may never know how many felons are still working in Tennessee because state officials won't release basic information about who they've licensed.
"By law I'm required to keep confidential information received by the department," said Commissioner Gonzales.
Unlike other states, complaints against people in the mortgage industry aren't public in Tennessee, neither are their applications.
"When people are in a position of public trust making loans originating loans, their names, their identifying information enough so that you can run a background check on them should be public information," said Senator Herron.
The Mahaffey's are suing the company that sold them their mortgage.
But they're worried about joining so many others who've lost their homes.
"Now it looks like it's going to happen to us," said Sherry Mahaffey as she broke into tears.
The state association that represents mortgage professionals says they have lobbied the legislature for years for more regulation, and they welcome the background checks.
State officials said the background checks will take most of the year to complete.