The Office of Consumer Affairs and Business Regulation and the Division of Banks shut down a Falmouth-based mortgage lender for failing to properly service mortgage loans it had made. 

Mortgage Security Inc. was ordered to immediately cease mortgage lending and loan servicing to Massachusetts consumers.  Mortgage Security has been licensed by the Division since October 1993 as a mortgage lender and mortgage broker. Through its relationship with an authorized company, Mortgage Security had previously serviced mortgage loans.

According to authorities, the division received complaints from customers that Mortgage Security did not properly remit escrow money collected for the payment of real estate taxes to the respective cities and towns, and homeowners wound up getting hit with late fees and penalties. The division found that the company had received scheduled mortgage payments, including escrow payments, from its customers and then failed to pay those borrowers’ real estate taxes and homeowners’ insurance payments for several months.

The division also found inconsistencies in borrowers’ account balances and consumer funds mixed with other company funds during its investigation.

Additionally, according to authorities, the company failed to maintain adequate records, failed to properly register as a loan servicer and charged borrowers excessive late fees.

"Failure to properly service these mortgage loans is a significant breach of Mortgage Security’s responsibilities," OCABR Undersecretary Barbara Anthony said in a statement. "The investigation uncovered significant violations that have resulted in substantial harm to consumers and may have put their homes in jeopardy."

In the statement, Commission of Banks David J. Cotney said the division also ordered Mortgage Security to play any fees or payments collected from borrowers into a separate account at an insured bank.