By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER LICENSING
Docket No. 2004-020

CONSENT ORDER


In the Matter of
Cornerstone Mortgage Corporation
Waltham, Massachusetts

Mortgage Lender and Mortgage Broker License No(s). MC0066, et al.


WHEREAS, Cornerstone Mortgage Corporation, Waltham, Massachusetts ("Cornerstone Mortgage" or the "Corporation"), a licensed mortgage lender and mortgage broker under Massachusetts General Laws chapter 255E, section 2 has been advised of its right to Notice and Hearing pursuant to General Laws chapter 255E, section 7(a), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER ("CONSENT AGREEMENT") with representatives of the Division of Banks ("Division") dated December 20, 2004, whereby, solely for the purpose of settling this matter, and without admitting any allegations or implications of fact or the existence of any violation of state or federal laws and regulations governing the conduct and operation of a mortgage lender and/or a mortgage broker, Cornerstone Mortgage agrees to the issuance of this CONSENT ORDER ("ORDER") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of Cornerstone Mortgage was conducted pursuant to Massachusetts General Laws chapter 255E, section 8, as of December 17, 2003, to assess the Corporation's level of compliance with applicable Massachusetts statutes and the Division's regulations governing the conduct of those engaged in the business of a mortgage lender and a mortgage broker, respectively, in the Commonwealth;

WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of Cornerstone Mortgage as of December 17, 2003 alleged non-compliance with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a mortgage lender and mortgage broker in Massachusetts; and

WHEREAS, the Report further alleged that, during the relevant time period, Cornerstone Mortgage had engaged in the activities of a mortgage lender and mortgage broker from an unlicensed location in Massachusetts in violation of applicable state statutes and regulations pertaining to the licensing of those engaged in the business of a mortgage lender and mortgage broker in Massachusetts.

ORDER

NOW COME the parties in the above-captioned matter, the Division and Cornerstone Mortgage, and stipulate and agree as follows:

  1. Cornerstone Mortgage, when performing in the capacity of a mortgage broker, shall immediately desist from providing consumers with any oral representations or assurances, or any written documentation that states, suggests, or infers that the Corporation is locking an interest rate or processing an interest rate lock as a mortgage broker on residential property in Massachusetts. The provisions of this Section of the ORDER shall necessarily prohibit Cornerstone Mortgage, when performing in the capacity of a mortgage broker, from directly or indirectly collecting any compensation from consumers, mortgage lenders, or investors in consideration of a rate lock agreement relative to any residential property located in Massachusetts.

  2. Cornerstone Mortgage shall immediately cease engaging directly or indirectly in the business of a mortgage lender and/or mortgage broker in any residential mortgage loan transaction, as those terms are defined under Massachusetts General Laws chapter 255E, section 1, from any location whether within or without the Commonwealth, without first obtaining a license from the Commissioner for such location in accordance with Massachusetts General Laws chapter 255E, section 2 and applicable published Opinions of said statute issued by the Commissioner and in effect from time to time.

  3. In consideration of the activities identified by the Division and detailed in the Report on pages 1-2 and 1-3 and addressed by the provisions of Sections 1 and 2 of this ORDER, the Corporation agrees to the following:

    1. Cornerstone Mortgage agrees to submit a payment in the amount of ten thousand dollars ($10,000.00) in satisfaction of an administrative penalty collected in consideration of Cornerstone Mortgage's alleged engaging in the business of a mortgage lender and mortgage broker at 1850 Blue Hill Ave., Mattapan, Massachusetts, without a mortgage lender or a mortgage broker license from the Commissioner to conduct business at such location during the relevant period. The administrative penalty shall be satisfied as follows:

      1. Five thousand dollars ($5,000.00) shall be due and payable immediately; and

      2. Five thousand dollars ($5,000.00) shall be due and payable within ninety (90) days of the effective date of this ORDER.

    2. Cornerstone Mortgage shall remit payment(s) pursuant to Sections (3)(a)(i) and (3)(a)(ii) of this ORDER for the amount then due, payable to the "Commonwealth of Massachusetts," to the Office of the Commissioner of Banks, One South Station, 3 rd Floor, Boston, Massachusetts 02110. The Division shall remit the payment(s) for deposit into the General Fund of the Commonwealth.

  4. Within twenty (20) days of the effective date of this ORDER, Cornerstone Mortgage shall revise its procedures to ensure that, when performing in the capacity of a mortgage broker, the Corporation refrains from providing any consumer with any disclosure which, pursuant to the applicable statute, regulation, or regulatory bulletin, is intended to be issued exclusively by the lender or creditor in the residential mortgage loan transaction.

  5. Cornerstone Mortgage shall comply with all laws and regulations applicable to its conducting the business of a mortgage lender and mortgage broker in Massachusetts, including, but not limited to, Massachusetts General Laws chapter 255E, and the Division's regulation 209 CMR 42.00 et seq. Such obligations shall necessarily include the duty to address and correct, within 20 days from the effective date of this ORDER, all violations and areas of concern as specified in the Report issued pursuant to the Division's examination/inspection of Cornerstone Mortgage as of December 17, 2003.

    1. On or about August 4, 2004, the Corporation provided the Division with a written response, signed by an authorized officer of the Corporation, which (i) addressed each of the violations and areas of concern specified in the Report and (ii) described the revised policies, programs, and procedures that Cornerstone Mortgage has established and implemented in order to maintain compliance with applicable statutes and regulations governing the conduct of those engaged in the business of a mortgage lender and mortgage broker in Massachusetts;

    2. Within thirty (30) days from the effective date of this ORDER, Cornerstone Mortgage shall establish, implement, and maintain quality control standards which provide for a loan review process to assess the Corporation's compliance with (a) the statutes, rules, regulations, regulatory bulletins, and other relevant provisions of law applicable to those engaged in the business of a mortgage lender and mortgage broker in Massachusetts and (b) the revised policies and procedures implemented pursuant to the provisions of this ORDER. Such procedures and policies shall be designed to prevent the recurrence of the violations and areas of concern addressed in the Report; and

    3. Cornerstone Mortgage shall establish, implement, and maintain procedures and policies to ensure that all applicable staff receives adequate instruction and ongoing, periodic training to address proper implementation and execution of the revised policies and procedures implemented pursuant to this ORDER.

  6. On the thirtieth (30 th) day after the end of each calendar quarter following the date of this ORDER, beginning with the calendar quarter ending March 31, 2005, Cornerstone Mortgage shall furnish written progress reports to the Division, which shall address and include the following:

    1. A description of the form, content, and manner of any actions taken to address each Section of this ORDER and the results thereof;

    2. Written findings, reviewed and signed by an authorized senior officer of the Corporation, detailing a review of management's and staff's adherence to the policies, programs, and procedures adopted pursuant to this ORDER and to applicable statutes, regulations, and rules, as well as a description of any operational changes implemented during such quarter which are intended to improve Cornerstone Mortgage's compliance condition in Massachusetts and the results thereof; and

    3. The reporting requirement to the Division contained in this Section of the ORDER shall remain in effect and shall not be amended or rescinded without the prior written modification, termination, or suspension of the applicable provision of this ORDER from the Commissioner.

  7. Nothing in this ORDER shall be construed as permitting Cornerstone Mortgage to violate any law, rule, regulation, or regulatory bulletin to which the Corporation is subject.

  8. In consideration of the foregoing ORDER, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke the Corporation's mortgage lender and/or mortgage broker license under General Laws chapter 255E, section 6 while this ORDER is in effect.

  9. Failure to comply with the terms of this ORDER shall constitute grounds for license suspension and/or revocation pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.

  10. This ORDER shall become effective immediately upon the date of its issuance.

  11. The provisions of this ORDER shall be binding upon Cornerstone Mortgage, its officers, directors, and their successors or assigns.

  12. The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this ORDER shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.

  13. This ORDER and the CONSENT AGREEMENT are the complete documents representing the resolution of the matters presented by the Report. There are no other agreements between the Division and Cornerstone Mortgage.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 20th day of December, 2004.

By: Steven L. Antonakes
Commissioner of Banks