The reverse-mortgage program is now one of the fastest-growing categories of federally backed loans.
Under the program, mortgage firms can lend property owners 62 and older up-front payments for about half the market value of their homes. The property owners then can stay in their houses and use the money as they wish until they sell the homes or die. Until then, no payments are required, other than covering taxes, repairs, and related expenses.
Consumer advocates give the program mixed reviews, saying it helps some financially pressed seniors, but it can be abused by unscrupulous lenders.
The Pennsylvania Department of Banking initially issued Diamond Industries a cease-and-desist order in December because it was not licensed to work in the mortgage business but was offering the loans in ads. The department said Diamond's Web site had stated that the company was the "#1 provider of Reverse Mortgages" in the region.
The banking department on Tuesday finished a consent decree in which Diamond agreed to stop advertising for any type of mortgage.
Besides offering reverse mortgages, Diamond and Sapphire had been advertising for HUD-backed home-repair loans. That is the same loan program that P. Angelo used.
In the interview yesterday, Sklaroff said it was unfair to question him about P. Angelo's activities because that firm had been closed long ago.
A 1998 Justice Department news release about the 200 fraudulent P. Angelo loans said that, "Melvin Sklaroff, principal owner of P. Angelo & Sons Inc., of Pennsauken, a mortgage-banking company, pleaded guilty to a three-count federal information charging conspiracy to commit wire fraud and two substantive wire fraud violations."
Asked about the federal case yesterday, Sklaroff said he knew nothing about it and hung up the phone.
Diamond's problems are not isolated to Pennsylvania.
The Better Business Bureau of New Jersey gives the firm an "F" rating, the worst ranking, because of more than a score of consumer complaints it received about the company.
The Better Business Bureau also said Diamond was wrongly using the agency's BBB emblem.
"On September 4, 2009, BBB became aware that this business is displaying the BBB trademark on their Web site without authorization," the BBB said on its Web site. "This business is not a member of BBB, and our policies prohibit such a display. Upon contact by BBB, the company failed to respond."
As of late yesterday, the Diamond Web site still displayed the BBB insignia.
Contact staff writer Mark Fazlollah at 215-854-5831 or firstname.lastname@example.org.