By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2007-032

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST &
ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING


In the Matter of
ALL STATES MORTGAGE COMPANY, INC.
Boston, Massachusetts

Mortgage Broker License No. MB2467


The Commissioner of Banks ("Commissioner") having determined that ALL STATES MORTGAGE COMPANY, INC., ("All States Mortgage" or the "Corporation"), with its main business office located at 581 Boylston Street, Suite 302, Boston, Massachusetts, has engaged in, or is engaged 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 & ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING (collectively referred to as the "Order") pursuant to General Laws chapter 255E sections 6 and 7(b).

I. FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST

A. FINDINGS OF FACT AND REGULATORY BACKGROUND

  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 broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.
  2. All States Mortgage is, and at all relevant times has been, a corporation conducting business in the Commonwealth. All States Mortgage's main office is located at 581 Boylston Street, Suite 302, Boston, Massachusetts.
  3. All States Mortgage is licensed by the Commissioner as a mortgage broker under Massachusetts General Laws chapter 255E, section 2. According to records maintained on file with the Division, the Commissioner issued mortgage broker license number MB2467 to All States Mortgage to engage in the business of a mortgage broker at 581 Boylston Street, Boston, Massachusetts on or about November 13, 2001.
  4. Nuhu G. Mohammed is the President, director, and sole shareholder of All States Mortgage.

    (i) Felony Indictments/Convictions Affecting a Determination of the Licensee's Financial Responsibility, Character, Reputation, Integrity and General Fitness to Engage in the Licensed Business

  5. On March 3, 2006, the United States Attorney's Office filed a sealed complaint against Mr. Mohammed in the United States District Court, District of Massachusetts. Magistrate Judge Joyce London Alexander issued an arrest warrant against Mr. Mohammed on the same date.
  6. On March 8, 2006, Mr. Mohammed was arrested pursuant to the warrant issued on March 3, 2006.
  7. On March 28, 2006, a federal Grand Jury, impaneled in the United States District Court, District of Massachusetts, returned an indictment against Mr. Mohammed charging him with one count of False Statement in Application for a United States Passport in violation of Title 18 United States Code, Section 1542 and two counts of Identity Theft in violation of Title 18, United States Code, Section 1028 (collectively, the "Charges").
    1. Count one of the indictment alleged that on or around May 5, 2004, Mr. Mohammed "did willfully and knowingly make a false statement in an application for passport, [by] falsely representing himself to be Miguel Fernandez, a United States citizen, with intent to induce and secure the issuance of a passport under the authority of the United States….," in violation of Title 18 United States Code, Section 1542;
    2. Count two of the indictment alleged that, on or around May 5, 2004, Mr. Mohammed "did knowingly possess an identification document (other than one issued lawfully for the use of the possessor) and a false identification document, to wit: a Puerto Rico birth certificate in the name of Miguel Fernandez, with the intent such document be used to defraud the United States," in violation of Title 18, United States Code, Section 1028; and
    3. Count three of the indictment alleged that, on or around May 5, 2004, Mr. Mohammed "did knowingly possess an identification document (other than one issued lawfully for the use of the possessor) and a false identification document, to wit: a Massachusetts Identification Card in the name of Miguel Fernandez, with the intent such document or feature be used to defraud the United States…," in violation of Title 18, United States Code, Section 1028.
  8. On April 13, 2007, Mr. Mohammed entered a guilty plea as to all three felony counts referenced in Paragraph 7 of this Order. On August 23, 2007, the U.S. District Court for the District of Massachusetts entered judgment against Mr. Mohammed on each count, sentencing him to probation for a term of thirty-six (36) months with criminal monetary penalties totaling five thousand, three hundred dollars ($5,300.00). The sentence was within the advisory guideline range and the court found no reason to depart from such guidelines.
  9. Massachusetts General Laws chapter 255E, section 6 states, in part, that:

    Upon the filing of an application for a license, if the commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant, and of the partners or members thereof if the applicant is a partnership or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated honestly, fairly, soundly and efficiently in the public interest consistent with the purposes of this chapter, he shall thereupon issue the applicant a license to engage in the business of a mortgage lender or mortgage broker. If the commissioner shall not so find, he shall not issue a license and he shall notify the applicant of the denial.

  10. Massachusetts General Laws chapter 255E, section 6 states, in part, that:

    The commissioner may suspend or revoke any license issued pursuant to this chapter if said commissioner finds that: (i) the licensee has violated any provision of this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; or (ii) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license.

    (ii)Failure to Notify the Division of the Occurrence of Significant Developments

  11. The Division's regulation at 209 CMR 42.12(2) states, in part, that:

    A Licensee shall notify the Commissioner immediately, and in writing within five business days, of the occurrence of any of the following significant developments: . . . (b) Criminal felony indictment or conviction of any of the Licensee's officers, directors, principal stockholders, or affiliates.

  12. All States Mortgage failed to notify the Commissioner, as required by 209 CMR 42.12(2)(b), of both the felony indictment of Mr. Mohammed and of his subsequent conviction on such Charges.
  13. On May 2, 2007, the Division received All States Mortgage's 2007 Mortgage Broker License Renewal Application ("License Renewal Application"), and a Criminal Offender Record Information Request Form signed by and for Mr. Mohammed, authorizing the Division to access Mr. Mohammed's criminal offender record information ("CORI"), in accordance with the Division's licensing requirements. Through the License Renewal Application, All States Mortgage sought the renewal of its Massachusetts mortgage broker license for the twelve-month period ending May 31, 2008.
  14. The License Renewal Application, which was signed under the pains and penalties of perjury by Mr. Mohammed on May 1, 2007, included the following question, numbered (4)(A): "In the past twelve months, has the licensee, or any control affiliate or control person: (1) been convicted of or plead guilty or nolo contendere ("no contest") in a domestic, foreign, or military court to any felony? (2) been charged with any felony." The answer to the question provided by Mr. Mohammed was "No."
  15. The License Renewal Application Form instructions expressly define a 'control person' as a natural person that exercises, "The power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. Any person that (i) is a director, general partner or executive officer; (ii) directly or indirectly has the right to vote 10% or more of a class of a voting security or has the power to sell or direct the sale of 10% or more of a class of voting securities;…"
  16. Mr. Mohammed submitted the License Renewal Application to the Division less than three weeks after he had entered his guilty plea on the three felony counts in the U.S. District Court.
  17. On May 8, 2007, the Division received Mr. Mohammed's CORI results from the Criminal History Systems Board ("CHSB"). The Division determined that the application question referenced in Paragraph 14 of this Order appeared to have been answered inaccurately as the CORI report indicated that Mr. Mohammed had been charged with three felonies which appeared to remain pending as of the preparation date of the CORI report.
  18. On July 3, 2007, the Division mailed Mr. Mohammed a letter requesting an explanation of the information revealed on the CORI report and advising him of his rights under the CHSB regulations, including the opportunity to challenge the accuracy or relevance of the information revealed on the CORI report.
  19. In response to the Division's July 3, 2007 inquiry, Mr. Mohammed submitted a written statement dated July 13, 2007. Mr. Mohammed stated that he "mistakenly assumed that the questions pertained to the corporation, All State[s] [Mortgage], and not [himself], as an individual." He also noted that he pled guilty to the charges on the advice of his counsel but that he "personally disputed the charges."
  20. By signing the License Renewal Application, Mr. Mohammed represented and agreed to, "keep the information contained in this form current and to file accurate supplementary information on a timely basis."
  21. Although specifically addressed by Question (4)(A) of the License Renewal Application, Mr. Mohammed again failed to notify the Division of the entering of the indictments referenced in Paragraph 7 of this Order, and of his entering of a guilty plea on such Charges. In fact, Mr. Mohammed did not disclose the occurrence of his felony indictments and guilty plea until the Division requested additional information from him after reviewing his CORI report during the processing of All State Mortgage's License Renewal Application.

    (iii) Material Misrepresentations to the Division

  22. Mortgage brokers in Massachusetts are licensed and regulated under Massachusetts General Laws chapter 255E, which is administered and enforced by the Commissioner. Pursuant to Massachusetts General Laws chapter 255E, section 8, the Division is authorized to inspect the books, accounts, papers, records, and files of mortgage brokers transacting business in Massachusetts to determine compliance with the provisions of Massachusetts General Laws chapter 255E and any rule, or regulation issued thereunder, and with any laws, rules, regulations, and regulatory bulletins applicable to the conduct of the business of a mortgage broker.
  23. On July 14, 2006, pursuant to the authority granted under Massachusetts General Laws chapter 255E, section 8, the Division commenced an examination/inspection of the books, accounts, papers, records, and files maintained by All States Mortgage to evaluate the Corporation's compliance with the laws, rules, regulations, and regulatory bulletins applicable to the conduct of a mortgage broker business in Massachusetts (the "2006 examination/inspection").
  24. The Report of Examination/Inspection issued pursuant to the 2006 examination/inspection ("Report") alleged that All States Mortgage failed to comply with certain applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a mortgage broker in Massachusetts. The Report, and all of the correspondence exchanged between All States Mortgage and the Division in response to the Report, is incorporated herein by reference.
  25. By letter dated February 20, 2007, sent via certified mail, the Division notified All States Mortgage that, as a result of the numerous compliance violations cited in the Report, the Division would be requiring an informal enforcement action in the form of a Memorandum of Understanding ("Memorandum").
  26. The February 20, 2007 mailing referenced in Paragraph 25 of this Order included a copy of the Report as well as the Memorandum, and notified All States Mortgage that a detailed written response to each of the matters addressed in the Report and a copy of the signed Memorandum would be due within thirty (30) days of receipt of all documents. The Report and Memorandum were delivered to All States Mortgage's business office in Boston, Massachusetts on February 23, 2007.
  27. On or around June 14, 2007, via a letter mailed by First Class Mail, the Division notified All States Mortgage that the Division had not received a response to the Report from All States Mortgage and advised the Corporation that the response to the Report, and the signed Memorandum, would be due within two weeks.
  28. On June 18, 2007, the Division received the All States Mortgage's response to the Report as well as the Memorandum executed by Mr. Mohammed as of June 15, 2007. The Memorandum is incorporated herein by reference.
  29. The findings of the Report and Section III of the Memorandum required that All States Mortgage reimburse the consumers identified in the Report for the amounts collected as a broker fee, loan fee, points or similar fee at settlement that had not been disclosed to the consumers, in writing, prior to loan closing. The Corporation was required to submit evidence of such reimbursements with its written response to the Report.
  30. After reviewing the documents referenced in Paragraph 28 of this Order, the Division notified All States Mortgage by letter dated July 25, 2007 that the response to the Report was unsatisfactory. Among other deficiencies, All States Mortgage failed to submit evidence of the reimbursements paid to borrowers identified in the Report, as required pursuant to the Memorandum.
  31. On August 8, 2007, the Division received All States Mortgage's response to the July 25, 2007 letter. In its response to the Division, the Corporation stated, "I am enclosing correspondence addressing the violations and issues to be resolved . . . . I am providing you evidence of the refunds paid to the seven borrowers identified in the Report for undisclosed fee violations." However, the Corporation failed to include such evidence of the reimbursements.
  32. By letter dated September 17, 2007, the Division again notified All States Mortgage of deficiencies in the Corporation's response, including but not limited to, failure to provide evidence of the reimbursements required pursuant to Section III of the Memorandum. The Division required a response from All States Mortgage within twenty days of receipt of the letter.
  33. On September 20, 2007, All States Mortgage contacted the Division to request additional time in which to respond to the Division's September 17, 2007 letter. The Division verbally agreed to extend the deadline until October 15, 2007.
  34. On October 23, 2007, the Division received All States Mortgage's response to the Division's correspondence of September 17, 2007. Included in the Corporation's response were copies of checks evidencing reimbursements to the borrowers that were required pursuant to Section III of the Memorandum. Each of the checks enclosed in the Corporation's response was dated October 15, 2007, despite All States Mortgage's previous representations to the Division that the reimbursements had been made on or around August 8, 2007.

    B. CONCLUSIONS OF LAW

  35. By engaging in activities which resulted in his conviction on the felony charge of False Statement in an Application for a United States Passport, Mr. Mohammed has failed to demonstrate the financial responsibility, integrity, and general fitness that would warrant the belief that All States Mortgage will be operated honestly, fairly, soundly, and efficiently in the public interest as required by Massachusetts General Laws chapter 255E, section 4 and the Division's regulation 209 CMR 42.06(2)(c).
  36. By engaging in activities which resulted in his conviction on two felony charges of Identity Theft, Mr. Mohammed has failed to demonstrate the financial responsibility, integrity, and general fitness that would warrant the belief that All States Mortgage will be operated honestly, fairly, soundly, and efficiently in the public interest as required by Massachusetts General Laws chapter 255E, section 4 and the Division's regulation 209 CMR 42.06(2)(c).
  37. By failing to notify the Commissioner, in writing, within five business days that on March 28, 2006, Mr. Mohammed, President, director, and sole shareholder of All States Mortgage was indicted on three felony counts in the United States District Court, District of Massachusetts, All States Mortgage violated 209 CMR 42.12(2)(b).
  38. By failing to notify the Commissioner, in writing, within five business days that on April 13, 2007, Mr. Mohammed entered a plea of guilty on three felony counts in the United States District Court, District of Massachusetts, All States Mortgage violated 209 CMR 42.12(2)(b).
  39. Based upon the information contained in Paragraphs 1 through 34, had the foregoing existed at the time of All States Mortgage's original mortgage broker license application, such conditions would have warranted a denial by the Commissioner of the license application and are grounds for the suspension or revocation of All States Mortgage's mortgage broker license number MB2467 pursuant to Massachusetts General Laws chapter 255E, section 6.
  40. Based upon the information contained in Paragraphs 1 through 34, the Commissioner has determined that:
    1. All States Mortgage has engaged in, or is about to engage in, acts or practices which warrant the belief that the Corporation is not operating honestly, fairly, soundly and efficiently in the public interest in violation of standards governing the licensing and conduct of a mortgage broker 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 All States Mortgage.

    C. ORDER TO CEASE AND DESIST

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

  41. ORDERED that All States Mortgage, its officers, directors, employees, and their successors or assigns, shall immediately cease engaging in the activities of a mortgage 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 Order.
  42. IT IS FURTHER ORDERED, that All States Mortgage shall immediately place any fees previously collected from Massachusetts consumers, relative to any pending mortgage loan applications accepted at any office location, into a separate escrow account, designated for such purpose and maintained at a federally insured bank.
  43. IT IS FURTHER ORDERED that All States Mortgage shall immediately place with one or more qualified broker(s) or lender(s), as appropriate based on the status of the application and with no loss to applicants, all of its pending Massachusetts residential mortgage loan applications. All States Mortgage shall obtain the prior approval of the Commissioner before placing such applications to the qualified broker(s) or lender(s).
  44. IT IS FURTHER ORDERED that All States Mortgage 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 Order and shall include all information on file, regarding the Corporation's open application list, including but not necessarily limited to, the following:

    All information on file as of the date of submission regarding All States Mortgage's open application list, including but not limited to, the following: The names of all individuals from whom All States Mortgage has 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; rate lock status; and a list identifying the applicable broker(s) or lender(s) with whom the applicants' application was placed. The latter list should include telephone numbers of contact persons familiar with the Corporation's submitted loans.

  45. IT IS FURTHER ORDERED that All States Mortgage shall immediately secure all pending residential mortgage loan application files and shall make such files, in their entirety, available to the Commissioner upon request.
  46. IT IS FURTHER ORDERED that within thirty (30) days of the effective date of this Order, the Corporation shall cause to be made a review of all Massachusetts residential mortgage loans originated by All States Mortgage since June 8, 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;
    1. In each mortgage loan transaction identified pursuant to Paragraph 46, All States 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;
    2. Within thirty (30) days of the effective date of this Order, All States Mortgage shall submit to the Commissioner a list of all borrowers identified pursuant to the above described review of residential mortgage loan transactions to whom a reimbursement is owed by the Corporation in accordance with this Paragraph of the Order; and
    3. Within sixty (60) days of the effective date of this Order, All States Mortgage shall submit evidence of all reimbursements issued to consumers pursuant to this Paragraph of the Order, including the consumers' names, the dates the loans closed, check numbers, the amount of the reimbursements, and sufficient evidence to illustrate the consumers' receipt of the reimbursements.
  47. IT IS FURTHER ORDERED that this 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 General Laws chapter 30A.
  48. IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such ORDER shall become permanent and final only upon receipt of a written request for such a hearing from All States Mortgage within twenty (20) days of the effective date of this ORDER. If no hearing is requested within this twenty (20) day period, this ORDER shall become permanent and final until it is modified or vacated by the Commissioner.

    II. ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING

    A. VIOLATIONS

    NOW, THEREFORE, based upon the Findings of Fact set forth above, the Division hereby sets forth the following Charges against All States Mortgage:

  49. The Division hereby re-alleges and incorporates by reference the Findings of Fact presented in Paragraphs 1 through 34 of the Order as though fully set forth.
  50. The Division hereby re-alleges and incorporates by reference the Conclusions of Law presented in Paragraphs 35 through 40 of the Order as though individually set forth as separate Charges providing the basis of this ORDER TO SHOW CAUSE.

    B. PRAYER FOR RELIEF

  51. WHEREFORE, the Division, by and through the Commissioner , prays for a final decision as follows:
    1. For a final Agency decision in favor of the Division and against All States Mortgage for each Charge set forth in this ORDER TO SHOW CAUSE;
    2. For a final Agency decision revoking All States Mortgage's mortgage broker license, number MB2467 to conduct business as a mortgage broker in Massachusetts;
    3. For a final Agency decision prohibiting All States Mortgage, or any of its officers or directors, or their successors or assigns, from applying for a mortgage lender or mortgage broker license under Massachusetts General Laws chapter 255E, section 2, or for any other license from the Commissioner, for a period of forty-eight (48) months from the effective date of the final Agency decision;
    4. For costs and fees of the Division's investigation of this matter; and
    5. For such additional equitable relief as the Presiding Officer may deem just and proper including, without limitation, an order directing All States Mortgage to issue the reimbursements as set forth in the Order.

    C. NOTICE OF RIGHT TO A HEARING

  52. All States Mortgage or its authorized representative is required to file an Answer or otherwise respond to the Charges contained in this ORDER TO SHOW CAUSE within twenty-one (21) days of its effective date, pursuant to the Standard Adjudicatory Rules of Practice and Procedure, 801 C.M.R. 1.01 (6)(e). If All States Mortgage fails to response to this ORDER TO SHOW CAUSE within the twenty-one (21) day period, the TEMPORARY ORDER TO CEASE AND DESIST shall become permanent and final until it is modified or vacated by the Commissioner. Failure to file an Answer may also result in a default judgment against the Corporation in the matter of the revocation of All States Mortgage's mortgage broker license. The Answer, and any subsequent filings that are made in conjunction with this proceeding, shall be directed to the Division, with a copy to Prosecuting Counsel.

    All papers filed with the Division shall be addressed to the attention of:

    Administrative Hearings Officer
    Division of Banks
    One South Station, 3 rd Floor
    Boston, Massachusetts 02110

    Prosecuting Counsel for this matter is:

    Valerie M. Carbone, Esq.
    Division of Banks
    One South Station, 3 rd Floor
    Boston, Massachusetts 02110

  53. You are further advised that All States Mortgage has the right to be represented by counsel or other representative, to call and examine witnesses, to introduce exhibits, to cross-examine witnesses who testify against All States Mortgage, and to present oral argument. The hearing will be held at a date and time to be determined and will be conducted according to Massachusetts General Laws, chapter 30A, sections 10 and 11, and the Standard Adjudicatory Rules of Practice and Procedure, 801 C.M.R. 1.01 and 1.03.
  54. All States Mortgage or its representative may examine any and all Division records relative to this case prior to the date of the hearing, during normal business hours, at the office of the Prosecuting Counsel. If you elect to undertake such an examination, please contact the Prosecuting Counsel at (617) 956-1552 in advance to schedule a time that is mutually convenient.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 5th day of November, 2007.

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