By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
DEBT COLLECTOR
LICENSING
Docket No. 2003-031

CONSENT ORDER


In the Matter of
FAIRBANKS CAPITAL CORP.
Salt Lake City, Utah

Debt Collector License No. DC0624; DC0785; DC0786


WHEREAS, Fairbanks Capital Corp. (now known as Select Portfolio Servicing, Inc.) Salt Lake City, Utah (the "Corporation"), a licensed debt collector under Massachusetts General Laws chapter 93, section 24A, has been advised of its right to Notice and Hearing pursuant to General Laws chapter 93, section 24J, 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 January 6, 2005, 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 debt collector, the Corporation agrees to the issuance of this CONSENT ORDER ("ORDER") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of the Corporation was conducted pursuant to General Laws chapter 93, section 24C, as of May 27, 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 collection agency, respectively, in the Commonwealth; and

WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of the Corporation as of May 27, 2003 alleged substantial non-compliance with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a collection agency in Massachusetts.

ORDER

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

  1. A. Management Review

  2. On November 3 rd , 2004, the Corporation provided the Division with a detailed description of the revised policies, programs, and procedures that it has implemented and maintains to address the results of the Corporation's internal audit which the Corporation conducted, as referenced on page 3 of the Report, and all of which had been reviewed previously by the Board of Directors (the "Board") of the Corporation to achieve and maintain compliance with applicable Massachusetts statutes and the Division's regulations governing the conduct of those engaged in the business of a debt collector in Massachusetts.

  3. On November 3 rd , 2004, the Corporation submitted to the Commissioner a written report (it being understood that a Secretary's Certificate to reflect that the Corporation's Board of Directors reviewed such report shall be submitted to the Commissioner not later than February 10, 2005 in accordance with the provisions of the CONSENT AGREEMENT) which addresses:

    1. the identification of the type and number of senior management and officer personnel necessary to manage adequately and supervise properly the Corporation's servicing of mortgage loans secured by Massachusetts real property;

    2. a statement that each individual identified pursuant to subsection (a) of this Section of the ORDER possesses the ability, experience, and other qualifications necessary to perform competently present and anticipated duties, to follow and enforce the Corporation's revised policies and procedures adopted pursuant to Section 1 of this ORDER, and to comply with the provisions of this ORDER; and

    3. a determination of the level of staffing needed to conduct competently the Corporation's operations affecting Massachusetts consumers.

  4. On November 3 rd , 2004, the Corporation presented to the Commissioner: (a) evidence that (i) it has in place a compliance program, managed by qualified personnel who have qualifications and experience commensurate with his or her duties and responsibilities with the Corporation and who shall have responsibility for all consumer compliance and related matters, including, but not limited to, monitoring the Corporation's compliance and ensuring that corrective action is taken to address all violations and areas of concern identified by the Division in the Report, and (ii) such personnel have been provided the necessary written authority to implement the provisions of this ORDER; (b) a written certification from the Corporation's chief operating officer with respect to the matters described in the foregoing clause (a); and, (c) it shall be understood that a Secretary's Certificate to reflect that the Corporation's Board of Directors reviewed such matters shall be submitted to the Commissioner not later than February 10, 2005 in accordance with the provisions of the CONSENT AGREEMENT. The acceptability of such personnel shall be assessed on the possession and demonstration of a comprehensive knowledge of the Massachusetts statutes and the Division's regulations governing the conduct of those engaged in the business of a debt collector in Massachusetts and his or her conduct with respect to: (x) compliance with the requirements of this ORDER; (y) compliance with applicable laws and regulations; and (z) implementing and monitoring all internal control procedures adopted pursuant to this ORDER.

    B. Lender Placed Insurance

  5. Within thirty (30) days of the effective date of this ORDER, the Corporation shall review all loans secured by a lien on residential property located in Massachusetts and serviced since the Corporation initially received its collection agency license from the Commissioner as of January 11, 2000, and shall take the following actions relative to lender placed hazard insurance:

    1. Reverse and reimburse in full all improper or unnecessary lender placed hazard insurance charges that it imposed on consumers for loans secured by residential property in Massachusetts during the period January 1, 1999 to the effective date of this ORDER, together with any charges that follow as a result of improper lender placed hazard insurance (such as late fees). For purposes hereof, "Improper or unnecessary charges" refers to charges for lender placed hazard insurance when the consumer had overlapping hazard insurance in force. Reversal or reimbursement of charges will be automatic if the Corporation has satisfactory written evidence in its possession of overlapping hazard insurance coverage. If the Corporation does not have satisfactory written evidence of overlapping insurance coverage then, within 30 days of the effective date of this ORDER, the Corporation will provide written notice and a period of 90 days for such consumer (or his or her insurance agent or other designee) to supply satisfactory written evidence of overlapping hazard insurance coverage during the period during which the lender placed hazard insurance was in force. Consumers who provide such evidence will be entitled to the same treatment as consumers for whom the Corporation already has satisfactory written hazard insurance evidence. Failure to obtain the benefit where such failure is due solely to the consumer's failure to supply such evidence shall excuse any obligation on the Corporation's part to provide the benefit. The written notice to be sent under this subsection of the ORDER to the identified consumers must be submitted by the Corporation to the Commissioner for approval before the letters are sent;

    2. Submit to the Commissioner a list of all consumers identified pursuant to the above described review of residential mortgage loans to whom a reversal or reimbursement of charges is owed by the Corporation in accordance with subsection (a) of this Section 4. Such list shall indicate whether the reversal or reimbursement of charges occurred automatically in accordance with the provisions of subsection (a) of this Section of the ORDER;

    3. Provide the Commissioner with evidence of the reversal or reimbursement of charges issued to consumers for whom such reversal or reimbursement of charges occurred automatically in accordance with the provisions of subsection (a) of this Section of the ORDER. Such evidence shall include the consumers' names, the address of the subject property, check numbers (if applicable) and an itemization of the amount of the reversal or reimbursement of charges;

    4. Take affirmative measures to ensure that any consumer's credit history that was impacted adversely as a result of the duplicative lender placed hazard insurance is amended to reflect such a correction;

    5. Within one hundred and fifty (150) days of the effective date of this ORDER, the Corporation shall submit to the Commissioner evidence of the reversal or reimbursement of charges issued to consumers for whom such reversal or reimbursement of charges occurred pursuant to the consumers providing the Corporation with satisfactory written evidence of overlapping hazard insurance coverage during the relevant period. Such evidence of reversal or reimbursement shall include the consumers' names, the address of the subject property, check numbers (if applicable) and an itemization of the amount of the reversal or reimbursement of charges;

    6. Ensure that all applicable staff receive adequate instruction and training to ensure proper implementation and execution of revised practices and procedures implemented by the Corporation to prevent obtaining or charging the consumer for lender placed hazard insurance where the consumer maintains adequate, effective insurance on the property; and

    7. Ensure that a system of internal controls is established to monitor the Corporation's compliance with the revised practices and procedures established and implemented pursuant to this Section of the ORDER relative to lender placed hazard insurance.

    C. Prepayment of Certain Mortgage Notes

  6. Within thirty (30) days of the effective date of this ORDER, the Corporation shall review all loans secured by a first lien on residential property located in Massachusetts and serviced since the Corporation initially received its collection agency license from the Commissioner as of January 11, 2000, and shall:

    1. Review all consumer accounts which have been assessed a prepayment fee and identify all accounts in which such fee was charged in a manner inconsistent with Massachusetts General Laws chapter 183, section 56, including, but not limited to: (i) any fee charged at a time beyond the maximum thirty-six (36) month period permitted by the statute; (ii) any fee charged in excess of the applicable maximum rate permitted by the statute; or (iii) the calculation of the principal balance, upon which such prepayment fee was assessed, was determined at a time other than the time at which the loan was actually paid off;

    2. Reimburse, by credit or refund all consumers identified pursuant to subsection (a) of this Section of the ORDER for all portions of prepayment fees charged in excess of the terms contained in the consumer's note or the amount authorized by Massachusetts General Laws chapter 183, section 56, whichever is less;

    3. Provide evidence of the credits or refunds issued to consumers, including consumer names, the date the loan was closed, date the loan was prepaid, check numbers (if applicable) and an itemization of the amount of the credits or refunds;

    4. Revise the Corporation's practices and procedures to address and correct the matters raised on pages 4 and 5 of the Report relative to the Corporation's prepayment fee calculation procedures, and to ensure that the Corporation performs reasonable due diligence upon acquisition of all loans serviced by the Corporation and secured by Massachusetts real property to confirm that the terms of all loans subject to the provisions of Massachusetts General Laws chapter 183, section 56 conform to the requirements of that statute and to prevent the Corporation, in its capacity as a licensed debt collector, from unlawfully collecting funds from consumers under terms which violate the aforementioned statute;

    5. Ensure that all applicable staff receive adequate instruction and training to ensure proper implementation and execution of the revised practices and procedures implemented by the Corporation to ensure compliance with the provisions of Massachusetts General Laws chapter 183, section 56; and

    6. Ensure that a system of internal controls is established to monitor the Corporation's continued compliance with the provisions of the aforementioned statute.

    D. Late Charges

  7. Within thirty (30) days of the effective date of this ORDER, the Corporation shall review all loans secured by a lien on residential property in Massachusetts and serviced since the Corporation initially received its collection agency license from the Commissioner as of January 11, 2000, and shall:

    1. Reimburse by credit or refund all late charges paid by consumers in excess of the maximum rate of three percent (3%) of overdue principal and interest permitted by Massachusetts General Laws chapter 183, section 59. (The Corporation shall credit all accounts to which late fees were assessed in excess of the amounts permitted by General Laws chapter 183, section 59, but remain outstanding on the consumers' account balance as of the effective date of this ORDER. The amount of such credit shall equal the difference between the actual late charge assessed to the individual consumer and the maximum amount permitted by the aforementioned statute);

    2. Provide the Commissioner with evidence of the credits or refunds issued to consumers, including customer names, the date the loans closed, check numbers and an itemization of the amount of reimbursements;

    3. Revise the Corporation's practices and procedures to ensure that the Corporation performs reasonable due diligence upon acquisition of all Massachusetts loans to confirm that the terms of all loans subject to the provisions of Massachusetts General Laws chapter 183, section 59, conform to the requirements of that statute and to prevent the Corporation, in its capacity as a licensed debt collector, from unlawfully collecting funds from consumers under terms which violate the aforementioned statute;

    4. Ensure that all applicable staff receive adequate instruction and training to ensure proper implementation and execution of the revised practices and procedures implemented by the Corporation to ensure compliance with the provisions of Massachusetts General Laws chapter 183, section 59; and

    5. Ensure that a system of internal controls is established to monitor the Corporation's continued compliance with the provisions of the aforementioned statute.

    E. Payoff Statement Fees

  8. Within thirty (30) days of the effective date of this ORDER, the Corporation shall review all loans secured by a lien on residential property in Massachusetts and serviced since the Corporation initially received its collection agency license from the Commissioner as of January 11, 2000, and shall:

    1. Identify and reimburse by credit or refund any consumer who was charged a payoff statement fee that was duplicative of a payoff statement fee charged within 30 days prior thereto. The amount of such reimbursement shall equal the full amount determined to be a duplicate charge;

    2. Provide evidence of the credits or refunds issued to consumers, including consumer names, the date of all payoff statement fee assessments, check numbers (if applicable) and an itemization of the amount of credits or refunds;

    3. Ensure that all applicable staff receive adequate instruction and training to ensure proper implementation and execution of the revised practices and procedures implemented by the Corporation to prevent charging duplicate payoff statement fees with-in a 30-day time period; and

    4. Ensure that a system of internal controls is established to ensure that the Corporation refrains from charging or collecting any duplicate charge with-in a 30-day time period for a statement pursuant to any request by a consumer for a loan payoff statement.

    F. Collection Procedures

  9. On November 3 rd , 2004, the Corporation presented to the Commissioner:

    (a) Evidence that it has revised the Corporation's policies, practices, and procedures to incorporate each of the recommendations and directions contained on pages 7 through 9, inclusive, of the Report relative to the Corporation's collection procedures applicable to Massachusetts consumers and accounts; (b) a written certification from the Corporation's chief operating officer with respect to the matters described in the forgoing clause (a); and (c) it shall be understood that a Secretary's Certificate to reflect that the Corporation's Board of Directors reviewed such matters shall be submitted to the Commissioner not later than February 10, 2005 in accordance with the provisions of the CONSENT AGREEMENT. The revisions implemented in accordance with this Section of the ORDER include, but are not limited to, the following:

    1. Establish, implement, and maintain procedures and policies consistent with the Division's regulation 209 CMR 18.14 to govern the frequency with which the Corporation contacts Massachusetts consumers;

    2. Establish, implement, and maintain procedures and policies consistent with the Division's regulation 209 CMR 18.13-18.14 regarding contacts with persons other than the consumer at the consumer's residence;

    3. Establish, implement, and maintain procedures and policies consistent with the Division's regulation 209 CMR 18.14(1)(e) relative to the notice requirements of the regulation;

    4. Establish, implement, and maintain procedures and policies to monitor the Corporation's compliance with the provisions of this Section of the ORDER and with the Massachusetts statutes and the Division's regulations governing the conduct of those engaged in the business of a debt collector in Massachusetts. Such procedures and policies shall be designed to prevent the recurrence of the collection procedure violations alleged in the Report; and

    5. Establish, implement, and maintain procedures and policies to ensure that all applicable staff receive adequate instruction and ongoing, periodic training to ensure proper implementation and execution of the revised practices and procedures implemented pursuant to this Section of the ORDER.

    G. Written Progress Reports

  10. On the thirtieth (30 th) day after the end of the calendar quarter ending December 31, 2004, and each succeeding calendar quarter, the Corporation 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. Monthly financial statements, prepared in accordance with generally accepted accounting principles, for each month of such calendar quarter, including a balance sheet, a statement of income and expense, and a statement of cash flows, signed and dated under the pain and penalty of perjury by an authorized senior officer of the Corporation;

    3. Written findings prepared by the Chief Executive Officer and the General Counsel 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 the Corporation's compliance condition in Massachusetts, together with a Secretary's Certificate to reflect that the Corporation's Board of Directors reviewed such findings;

  11. The Corporation shall comply with all laws and regulations applicable to its conducting the business of a debt collector, including, but not limited to, Massachusetts General Laws chapter 93, sections 24 through 28 inclusive, and the Division's regulation 209 CMR 18.00 et seq. Notwithstanding the preceding sentence or any provision of this Consent Order to the contrary, nothing in this Consent Order shall be deemed, construed, or otherwise considered to make any provision of law applicable to the activities of the Corporation to the extent that such law would not apply to the activities of the Corporation in the absence of this Consent Order. Nothing in this Consent Order shall be deemed, construed, or otherwise considered to be a waiver of any party to contest, challenge, or otherwise dispute whether or not any provision of Massachusetts law is preempted by federal law, and the parties hereby expressly preserve and reserve any and all such rights, except that the Corporation shall have no right to contest or challenge any obligation contained in Paragraphs 4, 5, 6 and 7 to reimburse or issue credits to consumers for actions occurring prior to the effective date of this Order.

  12. 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 debt collector licenses under Massachusetts General Laws chapter 93, section 24I, while this ORDER is in effect.

  13. Failure to comply with the material 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.

    H. Agreement of Commissioner

  14. 13.The Commissioner acknowledges that by its execution, this ORDER constitutes a complete release and settlement by the Division of all claims in connection with the matters investigated. The Division shall not institute any action or proceeding arising out of any claims concerning the matters investigated, except that the Division may institute an action or proceeding to enforce the terms and provisions of this ORDER or to act against future violations.

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

  16. The provisions of this ORDER shall be binding upon the Corporation and its officers and directors and their successors or assigns.

  17. 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.

  18. This ORDER does not relieve the Corporation, or any of its officers, directors, or their successors or assigns, of any responsibilities or obligations such parties may have to comply with other actions or agreements entered by or with the Commissioner.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 6th day of January, 2005.

By: Steven L. Antonakes
Commissioner of Banks