By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER LICENSING
Docket No. 2005-019

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST


In the Matter of

MATRIX INVESTMENT CORPORATION,
Groton, Connecticut

Mortgage Lender and Mortgage Broker License No. MC1103


The Commissioner of Banks ("Commissioner") having determined that MATRIX INVESTMENT CORPORATION ("Matrix Investment" or the "Corporation"), located at 618 Poquonnock Road, Groton, Connecticut 06340 has engaged, or is engaging 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).

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 a mortgage lender and/or a mortgage broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.

  2. Matrix Investment is, and at all relevant times, has been a corporation doing business in the Commonwealth of Massachusetts. Matrix Investment is licensed by the Commissioner as a mortgage lender and mortgage broker as required by Massachusetts General Laws chapter 255E, section 2. Matrix Investment engages in the business of a mortgage lender and mortgage broker at 618 Poquonnock Road, Groton, Connecticut. According to records maintained on file with the Division, the Commissioner issued Matrix Investment's initial license to engage in the business of a mortgage lender on March 23, 1999. According to records maintained on file with the Division, the Commissioner issued Matrix Investment's initial license to engage in the business of a mortgage broker on November 16, 2000. According to records maintained on file with the Division, the Commissioner issued Matrix Investment's combined mortgage lender and mortgage broker license on June 1, 2003, with license number MC1103.

  3. Matrix Investment has refinanced at least two (2) mortgage loans secured residential property in Massachusetts in which Matrix Investment agreed to fund, but failed to timely disburse the loan proceeds.

  4. On July 29, 2005, the State of Connecticut Department of Banking suspended Matrix Investment's licenses to engage in the business of making first and secondary mortgage loans and to act as a first and secondary mortgage broker in Connecticut pursuant to an Order of Summary Suspension, Notice of Intent to Revoke First Mortgage Correspondent Lender/Broker and Secondary Mortgage Correspondent Lender/Broker Licenses, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing ("Connecticut Order").

  5. The Connecticut Order states that the Connecticut Banking Commissioner has reason to believe that Matrix Investment engaged in conduct that would constitute grounds to revoke the Corporation's licenses, including, but not limited to, failure to perform written agreements with a borrower.

  6. On July 25, 2005, the New York Banking Department suspended Matrix Investment's mortgage banking license for a period of 30 days. According to the State of New York Banking Department Weekly Bulletin, dated July 29, 2005, "The [NY] Superintendent finds that Matrix Investment has defaulted in performing its financial obligations and has engaged in dishonest or inequitable practices that have caused substantial harm to the persons afforded the protection or Article 12-D."

  7. According to information obtained by the Division from Mr. Marty Weiss a representative of National City, National City suspended Matrix Investment's warehouse line of credit as of July 26, 2005 at 2:00 pm.

  8. The Division's regulation at 209 CMR 42.12(1)(b) states, in part:

    1. A Licensee shall notify the Commissioner immediately, and in writing within one business day, of the occurrence of any of the following significant developments: . . .(e) Expiration, termination or default, technical or otherwise, of any existing line of credit or warehouse credit agreement.

  9. As of the effective date of this TEMPORARY ORDER, the Division has not received notification from Matrix Investment of the occurrence of the events referenced above in Section 7 of this TEMPORARY ORDER.

  10. On or about October 17, 2003, the Connecticut Department of Labor, a regulatory agency of the State of Connecticut, assessed civil penalties against Matrix Investment for violations of the Connecticut General Statutes relating to record keeping, payment of wages and payment of overtime.

  11. The Division's regulation at 209 CMR 42.12(1)(c) states, in part:

    1. A Licensee shall notify the Commissioner immediately, and in writing within one business day, of the occurrence of any of the following significant developments: . . . (c) [R]eceiving notification of . . . formal or informal regulatory action, in any state against the Licensee, and the reasons thereof.

  12. On March 5, 2004 the Division received Matrix Investment's renewal application for the license period of June 1, 2004 through May 31, 2005, in which the Corporation answered "no" to question number 10, which asks, in part, "In the past twelve (12) months, has any governmental or regulatory agency ever initiated an informal or formal regulatory action or order against the applicant? . . ."

  13. As of the effective date of this TEMPORARY ORDER, the Division has not received notification from Matrix Investment of the occurrence of the events referenced above in Section 10 of this TEMPORARY ORDER.

    CONCLUSIONS OF LAW

  14. Based upon the information contained in paragraphs 1 through 13, MATRIX INVESTMENT CORPORATION has failed to demonstrate the financial responsibility, character, reputation, integrity, and general fitness that would warrant the belief that the business will be operated honestly, fairly, and soundly in the public interest in violation of Massachusetts General Laws chapter 255E, section 4 and the Division's regulation 209 CMR 42.06(2)(c).

  15. Based upon the information contained in paragraphs 1 through 13, Matrix Investment failed to notify the Commissioner in writing, within one business day, that the Corporation was the subject of a regulatory action instituted by the Connecticut Department of Labor, in violation of 209 CMR 42.12(1)(c).

  16. Based upon the information contained in paragraphs 1 through 13, Matrix Investment failed to notify the Commissioner in writing, within one business day that National City suspended Matrix Investment's warehouse line of credit, in violation of 209 CMR 42.12(1)(e).

  17. Based upon the information contained in paragraphs 1 through 13, the Commissioner has determined that:

    1. MATRIX INVESTMENT CORPORATION has engaged, or is about to engage in, acts or practices which warrant the belief that it 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 including, but not limited to, the provisions of the Division's regulations at 209 CMR 42.00 et seq.; and

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

  18. Based upon the information contained in paragraphs 1 through 13, had the facts and conditions found therein existed at the time of Matrix Investment's original mortgage lender license application, the Commissioner would have been warranted in refusing to issue such license. Further, the facts and conditions set forth in paragraphs 1 through 13 present sufficient grounds for the revocation of Matrix Investment's mortgage lender license number MC1103 pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulation at 209 CMR 42.04(2)(b) and 209 CMR 42.07(2)(b).

    ORDER TO CEASE AND DESIST

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

  19. ORDERED that MATRIX INVESTMENT CORPORATION and any and all employees, independent contractors, or agents operating on behalf of Matrix Investment, and their successors or assigns, shall immediately cease engaging in the activities of a mortgage lender or broker, as defined under Massachusetts General Laws chapter 255E, section 1, relative to any residential property in Massachusetts, not otherwise expressly permitted by the terms of this TEMPORARY ORDER. Therefore, MATRIX INVESTMENT CORPORATION IS ordered to immediately cease soliciting or accepting, either directly or indirectly, any residential mortgage loan applications from consumers for residential property located in Massachusetts.

  20. IT IS FURTHER ORDERED that MATRIX INVESTMENT CORPORATION 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.

  21. IT IS FURTHER ORDERED that MATRIX INVESTMENT CORPORATION shall immediately place the Corporation's entire open application list of Massachusetts mortgage loans 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 the Corporation was performing in the capacity of either a mortgage lender or a mortgage broker. MATRIX INVESTMENT CORPORATION shall obtain the prior approval of the Commissioner before placing such applications to the qualified lender.

  22. IT IS FURTHER ORDERED that MATRIX INVESTMENT CORPORATION shall submit to the Commissioner a detailed record, prepared as of the date of submission, 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 the Corporation's open application list, including but not necessarily limited to, the following:

    1. All information on file as of the date of submission regarding Matrix Investment's open application pipeline as a mortgage lender, including but not limited to, the following: The names of all individuals from whom MATRIX INVESTMENT CORPORATION have 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, cleared to close, etc.); scheduled closing dates; and a list identifying the applicable lender with whom the applicants' application was placed. The latter list should include telephone numbers of contact persons familiar with the Corporation's submitted loans.

    2. Matrix Investment's balance sheet and year-to-date income statement as of the date of submission. The balance sheet should indicate Matrix Investment's cash position at each of its depository banks as well as Matrix Investment's bank account numbers.

  23. IT IS FURTHER ORDERED that MATRIX INVESTMENT CORPORATION shall immediately secure all pending mortgage loan application files and, to the extent that any original documents must be forwarded to the relevant mortgage lender pursuant to Section 19 of this TEMPORARY ORDER, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in the Corporation's books and records and shall be available to the Commissioner, in their entirety, upon request.

  24. 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 Massachusetts General Laws chapter 30A.

  25. 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 MATRIX INVESTMENT CORPORATION 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 18th day of August, 2005.

By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts