Official says she cannot force CM Capital into receivership
The state's top regulator for hard-money lenders on Tuesday said that she has no authority to put failed hard-money lender CM Capital Services into receivership.
Nancy Corbin, acting commissioner of the Mortgage Lending Division, said in an email that she couldn't force the Henderson firm into receivership because it surrendered its license.
Hard-money lenders solicit money from individual investors and use the money to make short-term loans to developers and others who provide real estate as collateral.
CM Capital of Henderson was managing $400 million in assets for several thousand investors. In February, CM Capital paid $215,000 in a fine and administrative fees to the mortgage division as part of a settlement for unspecified violations .
Three weeks ago, the mortgage division notified CM Capital that it intended to revoke the lender's license because the company was insolvent. CM Capital on March 30 surrendered its license rather than allow it to be revoked.
Many investors who lost money at CM Capital say they are angry.
Investors complain in emails that Todd Parriott, CEO of CM Capital, is a director of another licensed mortgage broker with authority to make hard-money loans. That firm is Residential Capital Mortgage Corp., which does business as Ignite Funding.
Carrie Cook, a spokeswoman for CM Capital, said Parriott has no management role at Residential Capital but is a minority investor.
Although CM Capital isn't originating loans, it will continue to service outstanding loans and to manage foreclosed properties for investors, Cook said.
Dean Altschuler, a certified public accountant and informal leader of CM Capital investors, said the Nevada attorney general's office should act.
"I agree with (Corbin's) position," he said. "But I don't agree that she should wash her hands of the situation."
The mortgage division has the authority to immediately take over a hard-money lender based on violations, but the division has refrained from doing so in recent years, hard-money-lending insiders say.
In some past cases, hard-money lenders voluntarily agreed to receiverships, because the licensed lenders feared the state would take over their operations, insiders said.
However, neither CM Capital or OneCap Mortgage, a hard-money lender that lost its license in a recent revocation, went through receivership. Integrated Financial Associates filed for Chapter 11 bankruptcy protection in March.
Contact reporter John G. Edwards at
jedwards@reviewjournal.com or 702-383-0420.
