COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MORTGAGE LENDER AND
Docket No. 2008-023
FINDINGS OF FACT AND TEMPORARY
ORDER TO CEASE AND DESIST
In the Matter of
GOLD REVERSE, INC.
f/k/a PACIFIC COMMUNITY MORTGAGE, INC.
Mortgage Company License No. MC4718
The Commissioner of Banks ("Commissioner") having determined that GOLD REVERSE, INC. f/k/a PACIFIC COMMUNITY MORTGAGE, INC. ("Gold Reverse" or the "Corporation"), located at 2099 S. State College Boulevard, Anaheim, California, has engaged in, 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
- 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 mortgage broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.
- Gold Reverse is, and at all relevant times has been, a foreign Corporation doing business in the Commonwealth. Gold Reverse's main office of record is located at 2099 S. State College Boulevard, Anaheim, California.
- Gold Reverse is licensed by the Commissioner as a mortgage lender and mortgage broker under Massachusetts General Laws chapter 255E, section 2. According to records maintained on file with the Division, the Commissioner initially issued a mortgage company license, license number MC4718 to Gold Reverse, under its former name of Pacific Community Mortgage, Inc., to engage in the business of a mortgage lender and mortgage broker on or about March 29, 2007. On or about August 8, 2008, the Corporation notified the Division of its new name, Gold Reverse, Inc., which is the name under which the Corporation is currently licensed in the Commonwealth.
- Mortgage lenders and 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 lenders and mortgage brokers transacting business in Massachusetts to determine compliance with the provisions of Massachusetts General Laws chapter 255E or any rule, or regulation issued thereunder, and with any law, rule, or regulation applicable to the conduct of the business of a mortgage lender and mortgage broker.
- On September 4, 2008, pursuant to Massachusetts General Laws chapter 255E, section 8, the Division commenced an examination of Gold Reverse's books and records to evaluate the Corporation's compliance with the laws, regulations, and regulatory bulletins applicable to the conduct of a mortgage lender and mortgage broker business in Massachusetts (the "examination").
- The Division presented the findings of the examination in a letter (the "Division's letter"), which was issued to Gold Reverse on the effective date of this Temporary Order The Division's letter identified significant failures to comply with applicable state and federal laws, rules, regulations, and regulatory bulletins governing the conduct of those engaged in the business of a mortgage lender and mortgage broker in Massachusetts.
Making Reverse Mortgage Loans without Approval
- Books and records reviewed during the examination revealed that Gold Reverse acted as a lender in all three of the reverse mortgage loan files reviewed. In addition, all three reverse mortgage loans were made by the Corporation between May 2007 and July 2007. Gold Reverse had identified the three reverse mortgage loans as representing the total of all Massachusetts mortgage loans completed under its Massachusetts license since the date of initial licensure, March 29, 2007.
- On or about August 7, 2008, Gold Reverse submitted to the Division an application for approval to offer reverse mortgage loans to Massachusetts consumers. As of the date of this Temporary Order, the Division has not approved the Corporation to offer any reverse mortgage loan programs.
- Gold Reverse knew or should have known that Massachusetts law requires mortgagees intending to make reverse mortgage loans to submit for the Division's approval a program which meets specific criteria set forth in Massachusetts General Laws Chapter 167E, section 7, and made applicable to mortgagees through Massachusetts General Laws chapter 183, section 67.
- Books and records reviewed by the Division's examiners revealed that Gold Reverse has made at least three reverse mortgage loans on residential property located in the Commonwealth without receiving approval to do so.
CONCLUSIONS OF LAW
- Based upon the information contained in Paragraphs 1 through 10, Gold Reverse has failed to demonstrate and maintain the character, reputation, integrity, and general fitness that would warrant the belief that the mortgage lender and mortgage broker 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 regulations 209 CMR 42.03(2)(c) and 209 CMR 42.06(2)(c).
- Based upon the information contained in Paragraphs 1 through 10, by making reverse mortgage loans prior to obtaining approval from the Division, Gold Reverse violated Massachusetts General Laws chapter 167E, section 7, applicable to all mortgagees by Massachusetts General Laws Chapter 183, section 67.
- Based upon the information contained in Paragraphs 1 through 10, the Commissioner has determined that:
- Gold Reverse has engaged in, is engaging in, 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 and mortgage broker including, but not limited to, Massachusetts General Laws chapter 255E, the provisions of the Division's regulations at 209 CMR 42.00 et seq.; and
- The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Gold Reverse.
- Based upon the information contained in Paragraphs 1 through 10, had the facts and conditions found therein existed at the time of Gold Reverse's original mortgage lender and mortgage broker 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 10 present sufficient grounds for the revocation of Gold Reverse's mortgage lender and mortgage broker licenses pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulations at 209 CMR 42.04(2)(b) and 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:
- ORDERED that Gold Reverse and any and all officers, members, managers, employees, independent contractors, or agents, operating on behalf of Gold Reverse, and their successors or assigns, shall immediately cease engaging in the activities of: (a) a mortgage lender and mortgage broker, as those activities are defined under Massachusetts General Laws chapter 255E, section 1, and (b) a mortgage loan originator, as those activities are defined under Massachusetts General Laws chapter 255F, section 1, relative to any residential property in Massachusetts, not otherwise expressly permitted by the terms of this Temporary Order. Therefore, Gold Reverse 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.
- IT IS FURTHER ORDERED that Gold Reverse, 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.
- IT IS FURTHER ORDERED that Gold Reverse 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. It being understood that "no loss to the applicant" shall mean that any loan which may have been closed by Gold Reverse and remains unfunded, as well as any pending application which has been approved by the Corporation but has not yet closed, shall be placed to a lender willing to fund, or close, the mortgage loan under the same terms and conditions extended by Gold Reverse. In the event that no such placement can be made, Gold Reverse shall either independently fund the mortgage loan under such terms and conditions or buy down the mortgage loan offered by the lender so that the applicant does not incur a loss as a result of such placement. Gold Reverse shall obtain the prior approval of the Commissioner before placing such applications to the qualified lender(s) or broker(s) as appropriate.
- IT IS FURTHER ORDERED that as soon as possible, but in no event later than two days after the effective date of this Temporary Order, Gold Reverse shall submit the following information in writing to the Commissioner:
- A detailed record of all pending residential mortgage loan applications, from both the Corporation's lending and its brokering operations, which shall include, but is not limited to, the following: customer name, address, telephone number; all prepaid loan fees submitted by the customer; amount of loan; application status (i.e. filed, submitted to lenders); scheduled closing date; rate lock status; the location of all original open application files; and a list of applicable wholesale lenders. The latter list should include telephone numbers of contact persons familiar with Gold Reverse's submitted loans; and
- The entire loan file for each of the Massachusetts reverse mortgage loans closed by the Corporation.
- IT IS FURTHER ORDERED that Gold Reverse 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 or mortgage broker pursuant to Paragraph 18 of this Temporary Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in Gold Reverse's books and records and shall be available to the Commissioner, in their entirety, immediately upon request on the date and time specified by the Commissioner.
- 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.
- 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 Gold Reverse 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.
- Gold Reverse is hereby notified of the Division's decision pursuant to a letter issued on the date of this Temporary Order, to deny its pending application for approval of its reverse mortgage program.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 24th day of September, 2008
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts
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