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Tuesday, Jul 22, 2014

St. Pete mortgage company pays record settlement, faces more complaints


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ST. PETERSBURG - Business magnate Bill Edwards' home lending company recently agreed to a record $7.5-million settlement with federal regulators who accused Mortgage Investors Corp. of calling millions of U.S. military personnel listed on the Do Not Call registry.

There's more trouble on the horizon for Edwards, who made his millions with Mortgage Investors Corp. but has become a power broker in St. Petersburg as the operator of The Mahaffey Theater and the man trying to turn around the BayWalk shopping complex. He's also a major Republican Party contributor who made a bid for Tampa's troubled Channelside shopping and entertainment center.

Edwards' company is being sued by the federal government and faces a complaint from the state Department of Agriculture and Consumer Services that could result in further financial penalties.

The Federal Trade Commission announced its multimillion-dollar settlement with Mortgage Investors last week, on the 10th anniversary of the federal Do Not Call registry, after filing a complaint accusing the company of calling 5.4 million numbers on the list to offer mortgage refinancing.

The company also misled consumers by suggesting they could get no-cost fixed-rate mortgages, even though it only offers adjustable rate mortgages, the FTC alleged in its complaint.

The settlement comes as Mortgage Investors prepares for a federal lawsuit claiming several banks charged hidden fees to veterans for loans backed by the U.S. Department of Veteran's Affairs.

In a separate case, the Florida Department of Agriculture and Consumer Services has filed complaint against the company for 84 alleged violations of the state's Do Not Call rule, which could lead to another $84,000 in fines, department spokesperson Erin Gillespie said.

"It came straight from consumers complaining to our hotline that this company was violating the Do Not Call list," said Gillespie.

Mortgage Investors' corporate attorney Wes Bailey said company officials could not comment on pending litigation.

An attorney representing the company in the FTC case said the settlement means they don't admit to violations in the complaint.

"The order speaks for itself when it says we don't admit to any of the allegations or any of the claims in the complaint," said Lesli Esposito of the DLA Piper law firm.

"MIC [Mortgage Investors Corp.] simply made the business decision to resolve the matter, so they can move forward with business and helping veterans."

The FTC has levied higher fines on other companies for violating the Do Not Call registry, but the agency has never negotiated a settlement this large before, said Dama Brown, an attorney in the FTC's Atlanta office.

Mortgage Investors has 20 days to respond to the Florida Department of Agriculture complaint.

Do Not Call list violations are the top complaint the department receives each year statewide, and the Mortgage Investors case is one of the largest in recent memory, Gillespie said.

These aren't the first telemarketing complaints against the company. In 2003, the Oklahoma attorney general moved to stop Mortgage Investors from calling people on the list.

A pending federal lawsuit could prove more damaging than either of those cases.

Last year, six banks agreed to settle claims totaling $161.7 million from a lawsuit claiming they charged hidden fees to veterans in violation of an agreement with the Department of Veteran's Affairs, which backs the loans.

Mortgage Investors and Wells Fargo sought to dismiss the case, filed by the federal government; but last November, a judge denied their motions, and attorneys are preparing to go to court.

Edwards bought Mortgage Investors in 1994 and it has grown into one of the largest providers of refinancing for U.S. military veterans' home loans.

His reputation in the St. Petersburg business community has grown with the company and through his work in the music industry as a producer with Big 3 Entertainment.

Last year, Edwards donated $600,000 to build the 75-foot tower at the south end of the Howard Frankland Bridge to welcome visitors to St. Petersburg just before the Republican National Convention in Tampa.

jboatwright@tampatrib.com

727-215-1277

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