By Cory Hopkins
Banker & Tradesman Reporter

A surprise inspection by the Division of Banks found several incidences of possible fraud by a former Boston city councilor. That prompted the division Tuesday to issue a temporary cease-and-desist order against Dedham-based HomeRun Mortgage.

Peggy Davis-Mullen, a former four-term, at-large Boston city councilor and mayoral candidate in 2001, is the owner and operator of HomeRun Mortgage, which has offices in Dedham and Brockton. Tuesday afternoon, the Division of Banks confirmed that the owner of the mortgage company and the former city councilor are one and the same.

After the DOB secured loan documents and file cabinets last week, Davis-Mullen on Monday refused to permit the division’s examiners access to the Brockton and Dedham offices.  Mullen also provided the DOB with notice that she was withdrawing her pending mortgage broker renewal applications. According to the Division of Banks, HomeRun’s licenses expired May 31.

During the course of a surprise on-site inspection of the company’s Dedham office on July 10, the Division of Banks said Davis-Mullen could not provide requested information relating to the operating accounts of HomeRun Mortgage and payments made to loan originators.

Bank examiners then “reviewed several loan files that contained mortgage loan documents that had been altered by whiting out information and cutting and pasting borrower information.  These documents included purchase and sale agreements, settlement statements, loan applications and credit reports.  As a result, the Division’s examiners immediately sealed and secured file cabinets and internal offices containing all remaining loan files on the premises for further review,” according to the official order.

The DOB’s temporary cease-and-desist order requires HomeRun to place all remaining loan applications with a qualified lender or broker with no loss to consumers and forbids the company from initiating any new mortgage loan transactions.  In addition, the order prohibits HomeRun from altering or destroying any home mortgage loan records, according to a statement from the DOB.

HomeRun processed just under 100 mortgage loans in 2006 and 2007 and had experienced minimal mortgage activity in 2008.

Calls to HomeRun’s offices went unanswered.