By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER LICENSING
No. 2006-002

CONSENT ORDER


In the Matter of

BEST INTEREST RATE MORTGAGE COMPANY, LLC
Westmont, New Jersey

Mortgage Broker License No. MB3406


WHEREAS, BEST INTEREST RATE MORTGAGE COMPANY, LLC, Westmont, New Jersey ("Best Interest Rate Mortgage" or the "Company"), 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 May 22, 2006, 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, Best Interest Rate Mortgage agrees to the issuance of this CONSENT ORDER ("ORDER") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of Best Interest Rate Mortgage was conducted pursuant to General Laws chapter 255E, section 8, as of September 27, 2005, to assess the Company'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 Best Interest Rate Mortgage as of September 27, 2005 alleged substantial non-compliance 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 Best Interest Rate Mortgage, and stipulate and agree as follows:

  1. Best Interest Rate Mortgage shall immediately take all necessary steps to review and revise the Company's policies and procedures to ensure that any loan fees, mortgage broker fees, application fees, processing fees, or similar fees collected as compensation for administrative costs incurred in originating the mortgage loan, are not charged to consumers except to the extent that such fees or points have been properly disclosed to the consumer, in writing, prior to the closing of the mortgage loan.
    1. The Company shall cause to be made a review of all Massachusetts residential mortgage loans originated by Best Interest Rate Mortgage since April 24, 2004 and shall identify all mortgage loan transactions in which the amount actually paid by the consumer as a loan fee, mortgage broker fee, application fee, or similar fee, as recorded on the settlement agreement, exceeded the amount disclosed to the consumer, in writing, for such fees prior to closing;
    2. In each mortgage loan transaction identified pursuant to Section (1)(a) of this ORDER, Best Interest Rate Mortgage shall reimburse the consumer the difference between the actual charge assessed to the individual consumer as a loan fee, mortgage broker fee, processing fee, or similar fee and the amount disclosed in writing for such fees prior to closing;
    3. With the Company's written response to the findings presented in the Report, which is to be submitted to the Commissioner pursuant to Section 13(a) of this ORDER, Best Interest Rate Mortgage shall submit to the Commissioner a list of all borrowers identified pursuant to the above described review of residential mortgage loan transactions, including those borrowers specifically identified in the Report, to whom a reimbursement is owed by the Company in accordance with this Section of the ORDER;
    4. With the Company's first written progress report, submitted pursuant to Section 14 of this ORDER, Best Interest Rate Mortgage shall submit evidence of all reimbursements issued to consumers pursuant to this Section of the ORDER, including the consumers' names, the dates the loans closed, check numbers, and the amount of the reimbursements; and
    5. Best Interest Rate Mortgage shall ensure that a system of internal controls is established to monitor the Company's compliance with the revised practices and procedures established and implemented pursuant to this Section of the ORDER.
  2. Best Interest Rate Mortgage shall immediately take all necessary steps to review and revise the Company's policies and procedures to ensure that, as a licensed mortgage broker in a mortgage loan transaction, the Company does not charge the consumer a loan discount fee or collect any other compensation from consumers (i) in consideration of services which the Company, as a mortgage broker, is prohibited from performing in a mortgage loan transaction or (ii) where no, or only a nominal, service is provided by the Company.
    1. Within twenty (20) days of Best Interest Rate Mortgage's receipt of the Report, the Company shall reimburse the consumer identified in the Report under the heading "Unearned Fee" for the amount collected as a "loan discount fee;" and
    2. With the Company's written response to the findings presented in the Report, Best Interest Rate Mortgage shall submit evidence of the reimbursement issued to the consumer pursuant to Section 2(a) of this ORDER, including the consumer's name, the date the loan closed, check number, and the amount of the reimbursement.
  3. After issuing all required reimbursements in accordance with the provisions of Sections 1 through 2, inclusive, of this ORDER, Best Interest Rate Mortgage shall submit to the Commissioner updated year-to-date financial statements in order to evidence the Company's continued financial soundness. The financial statements, prepared in accordance with generally accepted accounting principles, shall include a balance sheet, a statement of income and expense, and a statement of cash flows, signed and dated under the pains and penalties of perjury by an authorized senior officer of the Company.
  4. Best Interest Rate Mortgage shall deposit all application fees, processing fees, and all other prepaid mortgage loan fees, which it may accept, in an escrow trust account to be maintained at a federally insured bank. Moreover, Best Interest Rate Mortgage shall refrain from commingling fees collected from any mortgage loan applicant with the Company's funds held in any of its operating accounts while the mortgage loan transaction remains pending, in accordance with the provisions of 209 CMR 42.11.
  5. Best Interest Rate Mortgage shall immediately revise its procedures to ensure compliance with the records retention provisions of 209 CMR 42.09 and 209 CMR 48.00 and retain its books and records in a manner which will demonstrate the Company's compliance with the timing requirements of applicable disclosures, including but not limited to, the Attorney General's Mortgage Broker disclosure under the Attorney General's regulation 940 CMR 8.05(5) and the Loan Origination and Compensation Agreement under the Division's regulation 209 CMR 42.12A(5). The procedures implemented to address this Section of the ORDER shall necessarily require that Best Interest Rate Mortgage retain a copy of all correspondence received from the lender documenting the loan outcome for each loan application.
  6. Best Interest Rate Mortgage shall immediately revise its procedures to ensure that all residential mortgage loan applicants are provided with a Loan Origination and Compensation Agreement, completed in accordance with, and in the form specified, by the provisions of the Division's regulation 209 CMR 42.16.
  7. Best Interest Rate Mortgage shall immediately 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).
  8. Best Interest Rate Mortgage shall immediately revise its procedures to ensure that the Company 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.
  9. Best Interest Rate Mortgage shall immediately review and revise all forms provided to consumers to eliminate any representations or statements that could be considered false, misleading, or have the tendency to be misleading, including, but not limited to, any representations that the Company, a licensed mortgage broker, is authorized to approve or fund a residential mortgage loan.
  10. Best Interest Rate Mortgage shall immediately revise its procedures to ensure that the good faith estimate contains a legend specifying that the form is being provided by the Company, a mortgage broker, and no lender has yet been obtained, as required by the Real Estate Settlement Procedures Act (RESPA) implementing regulation 24 CFR 3500.7, Appendix C, footnote 1.
  11. Best Interest Rate Mortgage shall immediately revise its procedures to ensure that the Company discloses yield spread premiums, as a dollar amount or range, on good faith estimates in accordance with the provisions of the RESPA implementing regulation 24 CFR 3500.7.
  12. Best Interest Rate Mortgage shall immediately revise its advertising materials, including but not limited to the Company's website, to eliminate any representation or statement that could be considered false, misleading, or have the tendency to be misleading, including, but not limited to, any representation that the Company, a licensed mortgage broker, is authorized to approve or fund a residential mortgage loan. The revisions to the Company's advertising materials implemented in response to this Section of the ORDER shall further ensure that the Company discloses 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's regulation 940 CMR 8.04(2).
  13. The Company shall comply with all laws and regulations applicable to its conducting the business of a mortgage broker, 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 twenty (20) days of receipt of the Report, all violations and areas of concern as specified in the Report.
    1. Within twenty (20) days of the Company's receipt of the Report, Best Interest Rate Mortgage shall submit to the Commissioner a written response that addresses each of the violations specified in the Report. The written response shall describe the revised policies and procedures adopted by Best Interest Rate Mortgage 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;
    2. Best Interest Rate Mortgage shall establish, implement, and maintain quality control standards which provide for a loan review process to assess the Company'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 provisions of this ORDER. Such quality control standards shall be designed to prevent the recurrence of the violations and areas of concern addressed in the Report; and
    3. Best Interest Rate Mortgage shall establish, implement, and maintain procedures and policies to ensure that all applicable staff persons receive adequate instruction and ongoing, periodic training to ensure proper implementation and execution of the revised practices and procedures implemented pursuant to this ORDER.
  14. 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, 2006, Best Interest Rate 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; and
    2. Written findings prepared by the Company 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 Best Interest Rate Mortgage's compliance condition in Massachusetts and the results thereof.
  15. The reporting requirement to the Division referenced in Section 14 of this 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.
  16. Nothing in this ORDER shall be construed as permitting Best Interest Rate Mortgage to violate any law, rule, regulation, or regulatory bulletin to which Best Interest Rate Mortgage is subject.
  17. In consideration of the foregoing ORDER, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Best Interest Rate Mortgage's mortgage broker license under General Laws chapter 255E, section 6, while this ORDER is in effect.
  18. Notwithstanding any term of this ORDER to the contrary, the Commissioner in his discretion, may issue a written extension of time to the Company to comply with any requirements of this ORDER.
  19. 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.
  20. This ORDER shall become effective immediately upon the date of its issuance.
  21. The provisions of this ORDER shall be binding upon Best Interest Rate Mortgage and its officers and/or directors, and their successors or assigns.
  22. 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.
  23. This ORDER and the CONSENT AGREEMENT are the complete documents representing the resolution of this matter. There are no other agreements between the Division and Best Interest Rate Mortgage.

By ORDER AND direction of the Commissioner of Banks.

Dated at Boston, Massachusetts, this 22nd day of May 2006.

Steven L. Antonakes
Commissioner of Banks