Deal will let OneCap keep servicing hard-money loans

A state financial regulator on Thursday announced an agreement that allows OneCap Mortgage Corp. to continue servicing hard-money loans it made with investor money.

OneCap, a hard-money or private lender, raised money from 2,000 investors and was servicing $400 million in short-term mortgage loans on behalf of the investors in 2007 when state financial regulators ordered OneCap to stop alleged violations of state regulations.

The company solicited money from individual investors and used the money to make loans to developers, typically for double-digit interest rates. The Mortgage Lending Division received seven different complaints about practices at OneCap in October 2007 as the real estate market was imploding in Southern Nevada.

Nevada Mortgage Lending Commissioner Joseph Waltuch ordered OneCap to stop violating regulations and imposed a $250,000 fine, which he later lowered to $35,000 and collected. The Nevada Financial Institutions Division separately fined OneCap for making unsecured installment loans without an installment loan license and collected a $85,000 fine from the firm.

The Mortgage Lending Division agreement "will now start the clock ticking on certain items that OneCap must comply with, including an audit of its trust accounts," Waltuch said in an e-mail. "It will permit the division to focus on new matters that may arise."

The agreement, which was signed earlier by One Cap Mortgage President Vince Hesser, allows the company to continue servicing loans for investors.

"They are collecting money and serving the investors the best they can, given the economy," said Harold Gewerter, attorney for OneCap.

OneCap did not return calls for comment.

Escrow Unlimited contracted to provide loan servicing for OneCap, which was allowed under the settlement. However, Escrow Unlimited President Eric Puhl said his company has canceled the agreement effective Aug. 15. Puhl declined to say why, but Gewerter said there were complaints from investors about servicing fees.

Bob Day, a Henderson investor, said that OneCap already was paid for servicing fees.

The agreement allows One- Cap to start making loans again if approved by the Mortgage Lending Division, but a real estate analyst says that is unlikely because of the recession and OneCap's tarnished image.

Day said he wanted the settlement to require OneCap to provide phone numbers and e-mails for investors who agreed to disclosure of the information. Then, investors could have organized and tried to arrange for loan servicing from a company of the investors choice, Day said.

"These actions (by the Mortgage Lending Division) are so weak it doesn't do the investors any good, period," Day said.

Day does not advocate putting OneCap into receivership or bankruptcy.

The real estate provided as collateral for the hard-money loans has no value in many cases, Day said.

Day said he is pessimistic about chances of recovering money from OneCap loans.

"I think the money is all gone," Day said.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.