Ex-felon fighting denial of mortgage loan license

May 8, 2014

The state’s authority to license mortgage loan originators is at stake in a case pending at the Indiana Court of Appeals.

The court is hearing a request by the state to reverse a Marion County Superior Court decision in December that orders the Indiana Department of Financial Institutions to issue a mortgage loan license to Michael Massey.

The department denied Massey a license on grounds of unfit character, citing his robbery of two fast-food restaurants in Vanderburgh County.

That was 38 years ago.

The department cited a number of statutes including one that justifies denial for those who committed “crimes of dishonesty.”

But attorneys for Massey, now in his early 50s, argue that federal law related to mortgage originator licensing does not regard armed robbery within the context of a crime of dishonesty. They cited the Secure and Fair Enforcement for Mortgage Licensing Act, or SAFE.

“That conviction has no … value on Massey’s credibility nor his character and fitness to receive an Indiana mortgage license,” states an argument filed in the Marion Superior case last year.

Massey passed both state and federal mortgage origination examinations. Court records state that he was employed by Ameriquest Mortgage Co. in 2003 and at one time was a mortgage loan originator for American Mortgage Funding and Stonegate Mortgage.

Marion Superior Judge Theodore Sosin ruled in favor of Massey last December.  In compliance with the court order, the department issued Massey a mortgage loan originators license, pending appeal, although he does not currently have an employer or sponsor.

In January, Attorney General Greg Zoeller asked the Court of Appeals to overturn the county court’s decision.

Zoeller argues the state indeed has broad authority in licensing, and that Indiana has elevated mortgage loan originators to the status of “licensed professionals.”

Zoeller wrote that any felony conviction is clear evidence that a person lacks the “requisite good moral character” to be licensed as an attorney in Indiana, for example. The same goes for public school teachers, insurance agents and certified public accountants, the state argues.

He also noted that as of July a process was put in place allowing those convicted of certain crimes to seek an expungement. Massey apparently has not done so.

On April 3, the Conference of State Bank Supervisors filed a brief in support of the state, saying the trial court failed to understand the federal statutes and did not take into account that Indiana has different licensing requirements.

“The precedent for Indiana and other states is a real concern,” said Mark Tarpey, deputy director of consumer credit at the Indiana Department of Financial Institutions.


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