Further Foreclosures Will Be Inevitable If Lenders With Questionable Past Once More Taking Over Charge
November 27th, 2008
Further foreclosures will be inevitable if lenders with questionable past are allowed once more to take over charge. In Clearwater Jerry Cugno set up his firm, Premier Mortgage Funding in 2002. Since then it became one of the jumbo sub-prime lenders having 750 branches manned by 5,000 brokers across the country. Today Cugno is 59 years old and a successful man having pocketed millions in dollars. He rewarded his best salespersons with lavish cruises in the Caribbean and sparkling Hummers. Meanwhile Premier was marked with a poor record of not following regulations – one of the prime causes that led to innumerable foreclosures.
The states of Wisconsin, Ohio, North Carolina, Georgia and Florida revoked the licenses of Premier on various counts. Four other states hauled the company up for appointing brokers who did not have licenses or violations of a similar nature. Finally the foreclosure crisis caused the firm to file for bankruptcy and protection of the court in July 2007 in Tampa. In March a branch of Premier in Cleveland pleaded guilty on felony charges for fraudulent mortgage.
Despite all this, Premier did not shut down. Records show that even after filing bankruptcy it issued mortgages worth $250 million backed by FHA insurance to 2,000 borrowers. Towards the end of October, a spokesperson of FHA said that the body was not aware of the condition of Premier and would welcome any information that Business Week would be able to give.
It seems strange that the government, after being once bitten by the foreclosure crisis, did not put Premier on a watch list. According to HUD that oversees the activities of FHA, Premier has a default rate of 9.2% – the second highest among the jumbo lenders in the country.
Undeterred the Cugno family has launched a new company named Paramount Mortgage Funding. It functions on a floor below that of the headquarters of Premier. Only weeks after Premier had sought bankruptcy, the FHA granted a license to Paramount to issue new mortgages that had the backing of the government. Jerry Cugno brashly commented, “I am the only person in the country who really understands FHA.” Nicole Cugno his young daughter, as the vice president of Paramount is busy giving instructions to the newly appointed branch managers. Ignoring the troubles connected with Premier, the Cugno family claims that Paramount is dutifully serving its borrowers. They point out that the two – Premier and Paramount are two separate entities.
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