OneCap Mortgage told to cease and desist

A state regulator late Tuesday served hard money lender OneCap Mortgage Corp. with a cease-and-desist order, demanding the firm stop using misleading ads or notices and stop illegally using investor money for loans not secured by real estate.

Mortgage Lending Commissioner Joseph Waltuch also fined OneCap $250,000 and ordered the fine to be paid in full within 30 days.

Waltuch didn't shut down One- Cap, but the order says that the commissioner may suspend or revoke OneCap's license if the company fails to comply with the order.

Waltuch declined comment late Tuesday. Attempts to reach OneCap President Vince Hesser and other representatives of OneCap Mortgage for comment failed.

The cease-and-desist order follows a flurry of lawsuits in which investors complained about OneCap's handling of loan servicing agreements.

OneCap Mortgage has offices at 5440 W. Sahara Ave., but it's not known how many work for it and affiliated companies.

It's also unknown how much investor funds OneCap manages or how many investors entrusted OneCap with money. Industry insiders believe it may be the largest hard money lender to encounter serious regulatory problems since the 2006 failure of $962 million asset USA Capital.

So-called hard-money or private lenders like OneCap solicit money from individual investors and use the money to lend to developers. Investors enjoy the relative security of having real estate collateral to back up their loan investments.

However, the order signed by Waltuch says that OneCap also was making "asset-based loans," which are secured by inventory or machinery. Asset-based loans are not backed by real estate collateral and OneCap is not licensed to make these loans, according to the order.

In some cases, investors were assured that loans would be repaid because individuals, including Hesser, provided a guarantee for the loan. That violates state law, according to the order.

The order mentions several problem loans.

Shadow Ranch Indio, a limited liability company that invested in vacant land, received a $10 million loan from investors who were reassured with personal guarantees but not protected with real estate collateral.

The commissioner directed OneCap to provide an audited financial statement within 10 days for the fiscal year ending June 30. He also ordered OneCap to give him a list of all loan transactions since Jan. 1, 2004, within a week.

The order directs OneCap to disclose the contents of the order on documents given to investors. Advertisements must be submitted to the Mortgage Lending Division for prior approval.

The company must shut down its Web site within three days of the order, OneCap appears to have already disabled the Web site.

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