Loan broker shut down by state

BREWER – A Brewer loan broker will close his doors and pay a fine of $500 under a consent agreement reached with the state after regulators uncovered violations and other irregularities.

The consent agreement signed by Francis Fox, operator of East Coast Funding Inc., a loan brokerage company, requires that Fox formally close his business by April 1 and prohibits him from applying for a state loan broker’s license. A loan broker isn’t licensed to make loans, but instead serves as a go-between for customers looking for a loan and lenders.

An investigation into Fox’s operation found that Fox failed to keep a required separate escrow account for customers’ fees and instead melded that money with his operational account, said Will Lund, director of the Office of Consumer Credit Regulation. In addition, Fox allegedly filed false corporate documents by listing people as corporate officers even though they didn’t know they had been named.

Fox had other problems as well. Several appraisers have come forward to claim they had not been paid by Fox, whose license issued in June 2003 came up for renewal at the end of January 2004. It was then, Lund said, that information and questions began to surface, issues that prompted the investigation.

Lund said consumers came forward with questions, and some real estate agents reported that East Coast Funding had irregular hours and that Fox was hard to reach.

Authorities said it appeared that Fox was not adequately prepared to be a loan broker.

“We think that he just got in over his head,” Lund said.

Fox did not return phone messages left this week. The outgoing message on the answering machine stated that East Coast Funding was working aggressively to finish existing applications and that no new accounts were being accepted. Fox also stated in the message that no one would be in the office Monday or Tuesday of this week because his son was ill.

On Wednesday, Fox did provide state officials with a list of current customers, about five names, although Lund said the list did not include a lot of details and that investigators were looking for more information.

Lund said that some East Coast Funding customers may be able to switch to other loan brokers – there are about 250 of them licensed in the state – while others may be able to seek compensation for losses from a $10,000 surety bond Fox was required to establish to be licensed. Fox was ordered to pay $500 to the state for the costs of the investigation.

The Office of Consumer Credit Regulation can be reached at WWW.MaineCreditReg.org or 1-800-332-8529.