By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER AND MORTGAGE LENDER LICENSING
Docket No. 2003-036

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST


In the Matter of

PLATINUM CAPITAL GROUP
Irvine, California

Mortgage Lender and Mortgage Broker License
No.(s) MC0958 and MC3142


The Commissioner of Banks ("Commissioner") having determined that PLATINUM CAPITAL GROUP ("Platinum Capital" or the "Corporation"), located at 17101 Armstrong Avenue, Suite 200, Irvine, California and a branch location located at 200 Baker Avenue, Concord, Massachusetts, 01742 has engaged, or is engaged in, or is about to engage in, acts or practices constituting violations of Massachusetts General Laws chapter 255E, and applicable regulations found at 209 CMR 42.00 et seq., hereby issues the following FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST ("TEMPORARY ORDER") pursuant to General Laws chapter 255E, section 7(b). The activities include conducting business with unlicensed entities as well as unlawful activities being conducted by Platinum Capital in an unlicensed branch location.

FINDINGS OF FACT

  1. The Division of Banks ("Division"), through the Commissioner, has jurisdiction over the licensing and regulation of persons and entities engaged in the business of either a mortgage lender or a mortgage broker in Massachusetts, or both, pursuant to Massachusetts General Laws chapter 255E, section 2.

  2. Platinum Capital is, and at all relevant times has been, a corporation organized under the laws of the State of California. Platinum Capital is located at located at 17101 Armstrong Avenue, Suite 200, Irvine, California and a branch location located at 200 Baker Avenue, Concord, Massachusetts, 01742 according to records submitted by Platinum Capital and maintained on file with the Division.

  3. Platinum Capital is licensed by the Commissioner as a mortgage lender and mortgage broker as required by Massachusetts General Laws chapter 255E, section 2. The Commissioner issued Platinum Capital's initial licenses to engage in the business of a mortgage lender and mortgage broker in the Commonwealth of Massachusetts on March 10, 1998. On August 6, 2003, Platinum Capital was granted a branch license to conduct mortgage loan activity at 200 Baker Avenue, Concord, Massachusetts, 01742. Platinum Capital holds mortgage lender and mortgage broker license numbers MC0958 and MC3142, which are set to expire on May 31, 2004.

  4. On September 26, 2003, duly authorized examiners from the Division, in the performance of their official duties, attempted to conduct an inspection of Platinum Capital's books, accounts, records, and files of the Corporation. The Corporation, its management and employees failed to provide immediate access to the Corporation's books and records to the examiners.

A. Failure to Acquire a Mortgage Lender or Mortgage Broker License Prior to Conducting Mortgage Loan Activity

  1. On or about June 27, 2003, Platinum Capital submitted to the Division an application to obtain a branch license from the Commissioner to engage in the business of a mortgage lender and mortgage broker at 200 Baker Ave., Concord, Massachusetts.

  2. Platinum Capital was approved by the Commissioner to conduct business at the 200 Baker Ave., Concord, Massachusetts location on or about August 6, 2003.

  3. On September 26, 2003, after being granted access to the books and records, the Division's examiners conducted an inspection of the Concord, Massachusetts branch location. Books and records reviewed by field examiners indicate that Platinum Capital had accepted applications at the Concord, Massachusetts location in early June, 2003. Further, Platinum Capital's branch pipeline report submitted to the Division subsequent to the visitation indicated that loan applications were accepted by Platinum Capital as early as April 24, 2003. Platinum Capital's branch pipeline report indicated that 27 mortgage loan applications had been accepted by Platinum Capital prior to the approval of its branch license application.

B. Findings Indicating that the Corporation had Engaged in the Mortgage Loan Business in Violation of the Memorandum of Understanding with the Corporation

  1. On June 27, 2001, duly authorized examiners from the Division, in the performance of their official duties, conducted an examination/inspection of Platinum Capital's books, accounts, records, and files of the Corporation.

  2. During the course of the examination/inspection, the examiners observed numerous violations, including, but not limited to, the Corporation's acting as both a mortgage lender and a mortgage broker in the same transaction, a violation also cited in a prior examination/inspection conducted by the Division.

  3. As a result of the findings of the examination/inspection as of June 27, 2001, Platinum Capital was assessed a less-than-satisfactory compliance rating and a Memorandum of Understanding was issued by the Division and signed by the Corporation on October 10, 2001 (the "Memorandum of Understanding").

  4. On or about September 26, 2003, after being granted access to the Corporation's books and records, the Commissioner conducted an inspection of the Concord, Massachusetts branch location. Books and records reviewed by field examiners indicated the recurrence of similar violations noted in the examination/inspection and which were required to be addressed and corrected pursuant to the terms of the Memorandum of Understanding. The loan files inspected by the examiners which contained documents disclosing Platinum Capital as the lender or creditor in the mortgage loan transaction when acting in the capacity of a mortgage broker, included, but were not limited to, the following:

Loan Number Situs of Property Settlement Date
0000998928Westford, MAAugust 14, 2003

CONCLUSIONS OF LAW

  1. Based upon the information contained in paragraphs 1 through 11, Platinum Capital is not an entity otherwise exempted from the licensing requirements of Massachusetts General Laws chapter 255E, section 2 for those engaged in the business of a mortgage lender or a mortgage broker, or both, in Massachusetts.

  2. Based upon the information contained in paragraphs 1 through 11, Platinum Capital has unlawfully engaged in the activity of a mortgage lender without a license from the Commissioner in violation of Massachusetts General Laws chapter 255E, §2 and the Division's regulation 209 CMR 42.00 et seq.

  3. Based upon the information contained in paragraphs 1 through 11, Platinum Capital, while acting in the capacity of a mortgage broker, has provided consumers with misleading disclosures which, by their terms, have the tendency to make assurances to the consumer that the interest rate requested was guaranteed by Platinum Capital by operation of providing commitment letters, Truth-in-Lending disclosures and other mortgage lender disclosures. Providing consumers with such disclosures, while performing in the capacity of a mortgage broker, are repeat violations as cited in the previous examination/inspection and as set forth by the terms of the Memorandum of Understanding.

  4. Based upon the information contained in paragraphs 1 through 11, the Commissioner has determined that:

    1. Platinum Capital has engaged, or is about to engage in, acts or practices which warrant the belief that the Corporation is not operating honestly, fairly, soundly and efficiently in the public interest in violation of standards governing the licensing and conduct of a mortgage lender or mortgage broker including, but not limited to, the provisions of the Division's regulations at 209 CMR 42.00 et seq.

    2. The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Platinum Capital.

ORDER TO CEASE AND DESIST

  1. After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:

  2. ORDERED that Platinum Capital, its officers, directors, employees, and their successors or assigns, shall immediately cease engaging in the activities of a mortgage broker, as defined under Massachusetts General Laws chapter 255E, §1, relative to any residential property in Massachusetts, not otherwise expressly permitted by the terms of this TEMPORARY ORDER. Therefore, Platinum Capital is ordered to immediately cease soliciting or accepting residential mortgage loan applications from consumers for residential property located in Massachusetts.

  3. IT IS FURTHER ORDERED that Platinum Capital, its officers, directors, employees, and their successors or assigns, shall immediately cease engaging in the activities of a mortgage lender, as defined under Massachusetts General Laws chapter 255E, §1, relative to any residential property in Massachusetts.

  4. IT IS FURTHER ORDERED that Platinum Capital shall immediately place any fees previously collected from Massachusetts consumers relative to any pending mortgage loan applications in a separate escrow account maintained at a federally insured bank.

  5. IT IS FURTHER ORDERED that Platinum Capital shall place its entire open application list to a qualified lender with no loss to applicants. The open application list to be placed with a qualified lender shall include all transactions in which Platinum Capital was performing in the capacity of either a mortgage broker or a mortgage lender. Platinum Capital shall obtain the prior approval of the Commissioner before placing such applications to the qualified lender.

  6. IT IS FURTHER ORDERED that Platinum Capital shall submit to the Commissioner a detailed record of all of the Corporation's pending residential mortgage loan applications on property located in Massachusetts. The records to be produced shall be submitted to the Commissioner within five (5) days of the effective date of this TEMPORARY ORDER and shall include all information on file, regarding Platinum Capital's open application list, including but not necessarily limited to, the following:

    The names of all individuals from whom Platinum Capital has accepted an application for a residential mortgage loan; the applicants' addresses and telephone numbers; the amount of all prepaid loan fees submitted by the customer; the amount of each loan; application status (i.e. filed, submitted to lenders); scheduled closing dates; an indication of whether Platinum Capital was performing in the capacity of a mortgage broker or a mortgage lender in the transaction; and a list of applicable wholesale lenders. The latter list should include telephone numbers of contact persons familiar with Platinum Capital's submitted loans.

  7. IT IS FURTHER ORDERED that Platinum Capital shall immediately secure all pending mortgage loan application files and shall make such files, in their entirety, available to the Commissioner upon request.

  8. IT IS FURTHER ORDERED that Platinum Capital shall submit to the Commissioner the Corporation's year-to-date balance sheet and statement of income and expense. The balance sheet should indicate Platinum Capital's cash position at each of its depository banks as well as the corresponding bank account numbers. The balance sheet and statement of income and expense shall be signed and dated by an authorized officer of Platinum Capital under the pains and penalties of perjury to certify that the information reported is true and accurate and prepared in accordance with generally accepted accounting principles.

  9. IT IS FURTHER ORDERED that this TEMPORARY ORDER shall become effective immediately and shall remain in effect unless set aside, limited, or suspended by the Commissioner or upon court order after review under General Laws chapter 30A.

  10. IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such TEMPORARY ORDER shall become permanent and final only upon receipt of a written request for such a hearing from Platinum Capital within twenty (20) days of the effective date of this TEMPORARY ORDER. If no hearing is requested within this twenty (20) day period, this TEMPORARY ORDER shall become permanent and final until it is modified or vacated by the Commissioner.

By ORDER AND direction of the Commissioner of Banks.

Dated at Boston, Massachusetts, this 31st day of October, 2003.

By: Thomas J. Curry
Commissioner of Banks
Commonwealth of Massachusetts