Challenge Financial Investors Corp.

Raleigh, FL: (Jun-07-07) The state of North Carolina brought charges against Challenge Financial Investors Corp., alleging that it did not supervise its loan officers and solicited mortgage applications from brokers who were unlicensed to do business in the state. Joseph Smith, North Carolina's commissioner of banks, stated that Challenge Financial headquartered in St. Petersburg, FL operated a net branch company where loan officers operated with minimal supervision and paid a small fee for each loan in Challenge's name. He claimed that such a venture violated North Carolina law. Smith's office further said that Challenge solicited and accepted more than 100 mortgage applications from brokers who were not licensed to do business in the state. However, the office said, it did not find any evidence that the company issued loans with unfair terms.

In a settlement reached, Challenge Financial will pay $848,000 to the state of North Carolina to settle allegations. As part of the settlement agreement, it will further reimburse Smith's office $27,525 in investigative costs. It also will put safeguards in place to ensure that its loan officials are supervised and that it does not accept mortgage applications from unlicensed brokers. [TRIANGLE BUSINESS JOURNAL: UNLICENSED BROKERS]

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Published on Jun-8-07