By the Division of Banks
COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2004-028

CONSENT ORDER


In the Matter of
NATIONAL LENDING CORPORATION
South Boston, Massachusetts

Mortgage Broker License No. MB2228


WHEREAS, National Lending Corporation, South Boston, Massachusetts ("National Lending" or the "Corporation"), a licensed 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 January 12, 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 mortgage broker, National Lending agrees to the issuance of this CONSENT ORDER ("ORDER") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of National Lending was conducted pursuant to Massachusetts General Laws chapter 255E, section 8, as of February 23, 2004, 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 broker in the Commonwealth; and

WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of National Lending as of February 23, 2004 alleged certain failures to comply with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a mortgage broker in Massachusetts.

ORDER

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

  1. The Corporation shall immediately cease collecting loan discount fees from consumers and shall issue a reimbursement to the consumer identified in the Report from whom a loan discount fee was collected by National Lending where the amount collected as a loan discount fee was not previously disclosed to the consumer as a loan fee, point(s), or similar fee, in writing, prior to the closing of the loan. The amount of such reimbursement shall equal the total amount collected from the individual consumer as a loan discount fee that was not previously disclosed to the consumer as an origination fee, point(s), or similar fee, in writing, prior to the closing of the loan.

    1. Within twenty (20) days of the effective date of this ORDER, National Lending shall submit to the Commissioner evidence of the reimbursement issued pursuant to this Section of the ORDER, including the consumer's name, the date the loan closed, the check number, and the amount of the reimbursement;

    2. The Corporation shall revise its procedures to ensure that all loan fees, points, or other similar fees charged in a residential mortgage loan transaction are accurately and consistently disclosed to consumers in all documents and disclosures prepared by National Lending; and

    3. The Corporation shall ensure that a system of internal controls is established to monitor National Lending's compliance with the revised practices and procedures established and implemented pursuant to this Section of the ORDER.

  2. National Lending 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 as a mortgage broker in a residential mortgage loan transaction in Massachusetts. The provisions of this Section of the ORDER shall necessarily prohibit National Lending 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.

  3. Within 20 days of the effective date of this ORDER, National Lending shall revise its procedures to ensure that 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.

  4. Within 20 days of the effective date of this ORDER, National Lending shall revise its procedures to ensure that all applicable consumers are provided with an Attorney General's Mortgage Broker Disclosure Form, completed in accordance with, and in the form specified, by the provisions of the Office of the Attorney General's regulation 940 CMR 8.05(1). The revisions to be implemented to address this Section of the ORDER shall include, but are not limited to, ensuring that the Attorney General's Mortgage Broker Disclosure Form is completed with as much information as is available at the time the disclosure is provided to the consumer.

  5. Within 20 days of the effective date of this ORDER, National Lending shall revise its procedures to ensure that all Good Faith Estimates provided to consumers are completed in accordance with, and within the time period specified, by the provisions of the Real Estate Settlement Procedures Act, 24 CFR Part 3500.7.

  6. National Lending shall immediately revise its advertising policies and procedures to ensure that in all advertisements, as that term is defined under the Division's regulation 209 CMR 32.02, used by National Lending, the Corporation shall disclose the type and number of its Massachusetts mortgage broker license in accordance with the Division's regulation 209 CMR 42.15 and the Office of the Attorney General of Massachusetts' regulation 940 CMR 8.04(2).

  7. National Lending shall comply with all laws and regulations applicable to its conducting the business of a 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 National Lending as of February 23, 2004.

    1. Within 20 days of the effective date of this ORDER, National Lending shall submit to the Commissioner a written response that addresses each of the violations and areas of concern specified in the Report. The written response shall describe the revised policies and procedures adopted by National Lending to implement all corrective actions set forth in (i) the "Examiner's Comments and Conclusions" section of the Report and (ii) the provisions of this ORDER. The written response shall further reflect the Corporation's acknowledgement and understanding of the recent amendments to the Division's regulation 209 CMR 42.00 et seq. which became effective on May 21, 2004 and included, in part, provisions relative to advertising materials and authorization to enter rate lock agreements in Massachusetts;

    2. Within thirty (30) days from the effective date of this ORDER, National Lending 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 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. National Lending shall establish, implement, and maintain procedures and policies to ensure that all applicable staff receives adequate instruction and ongoing, periodic training to ensure proper implementation and execution of the revised policies and procedures implemented pursuant to this ORDER.

  8. 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 December 31, 2004, National Lending 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 National Lending'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.

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

  10. 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 broker license under General Laws chapter 255E, section 6 while this ORDER is in effect.

  11. 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.

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

  13. The provisions of this ORDER shall be binding upon National Lending, its officers, directors, and their successors or assigns.

  14. 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.

  15. 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 National Lending.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 12th day of January, 2005.

By: Steven L. Antonakes
Commissioner of Banks