COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
Docket No. 2008-013
FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST
In the Matter of
HOMERUN MORTGAGE, LLC
Mortgage Broker License No(s): MB2640 and MB3016
The Commissioner of Banks ("Commissioner") having determined that HOMERUN MORTGAGE, LLC ("HomeRun Mortgage" or the "Company"), located at 260 Court Street, Dedham, Massachusetts, 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 broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.
- HomeRun Mortgage is, and at all relevant times has been, a Massachusetts limited liability company doing business in the Commonwealth. HomeRun Mortgage's main office is located at 260 Court Street, Dedham, Massachusetts.
- HomeRun 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 initially issued a mortgage broker license, license number MB2640, to HomeRun Mortgage to engage in the business of a mortgage broker in Massachusetts on or about May 30, 2002. License number MB2640 authorized HomeRun Mortgage to conduct its mortgage broker business from the Company's main office located at 260 Court Street, Dedham, Massachusetts (the "Dedham location").
- HomeRun Mortgage maintains an additional licensed office location at 1106 Main Street, Brockton, Massachusetts, from which the Company conducts its mortgage broker business. According to records maintained on file with the Division, the Commissioner issued a mortgage broker license, license number MB3016, to HomeRun Mortgage for that location on or about February 28, 2003.
- Massachusetts General Laws chapter 255E, section 8 states, in part, that:
The commissioner shall inspect a licensee's relevant records and evidence of compliance with the provisions of this chapter or any rule or regulation issued hereunder and with any other law, rule or regulation applicable to the conduct of the business for which it is licensed under this chapter. For the purposes of such inspection, the commissioner or a representative of the commissioner shall have access to the offices and place of business, books, accounts, papers, records and files of all such licensees.
- The Division's regulation at 209 CMR 48.06(2) as made applicable to the Company by 209 CMR 42.09(1) states, in part, that:
Failure of a Licensee to keep its books and records in accordance with 209 CMR 48.00 et seq. may result in suspension or revocation of the license under the authority contained in the specific statute applicable to the Licensee.
- On Monday, July 7, 2008, pursuant to Massachusetts General Laws chapter 255E, section 8, the Division commenced an examination/inspection of HomeRun Mortgage's books and records at the Dedham location for the purpose of assessing 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.
The Dedham location was locked upon arrival. The Division's examiners then telephoned Peggy Davis-Mullen, the manager and sole member of HomeRun Mortgage, who indicated that she was out of state and she agreed to meet with the Division's examiners at the Dedham location on Thursday, July 10, 2008.
- On Thursday, July 10, 2008, the Division's examiners returned to the Dedham location to commence an on-site inspection and conduct a review of the Company's books, records, accounts, and files. In addition, the Division's examiners spoke with Ms. Davis-Mullen, and verbally requested that HomeRun Mortgage provide certain specific records, including, but not limited to:
- HomeRun Mortgage's operating account information;
- Payroll information;
- A loan list for all brokering activity since the Division's last office inspection and access to all files;
- Reconcilement(s) for all cash accounts, including the operating account of HomeRun Mortgage;
- Reconcilement(s) for all customer escrow accounts; and
- A copy of HomeRun Mortgage's examination/inspection response to the Report of Examination/Inspection on Consumer Compliance issued by the Division in 2006 along with supporting materials evidencing HomeRun Mortgage's completion of the corrective measures required by the findings of such Report.
- In subsequent communications via telephone and in person with Ms. Davis-Mullen on Thursday, July 10, 2008, the Division's examiners emphasized that all information requested in Paragraph 8 of this Temporary Order was required as soon as possible.
- During the conversations referenced in Paragraph 9, of this Temporary Order, the Division's examiners expressed concern with some of the information reviewed and provided by Ms. Davis-Mullen during the course of the day. As a result, the Division's examiners requested additional information relating to the operating accounts of HomeRun Mortgage and payments made to loan originators as well as other interested parties related to the mortgage broker business. Ms. Davis-Mullen indicated that she was unable to provide this information to the Division's examiners.
- During the course of the examination/inspection, referenced in Paragraph 7 of this Temporary Order the examiners reviewed several loan files that contained mortgage loan documents that had been altered by whiting out information and cutting and pasting borrower information. These documents included purchase and sale agreements, settlement statements, loan applications, and credit reports. As a result, the Division's examiners immediately sealed and secured file cabinets and internal offices containing all remaining loan files on the premises for further review.
- During a conversation with Ms. Davis-Mullen on Thursday, July 10, 2008, she stated that she would be unavailable on Friday, July 11, 2008 and the Division's examiner's indicated that they would return on Monday, July 14, 2008 at 9:00 a.m. to proceed with the examination/inspection. Ms Davis-Mullen confirmed that she would be present at the Dedham location to permit the Division's examiners access to the location.
- On, Monday, July 14, 2008, the Division's examiners arrived at the Dedham location and were denied access to the files as the licensed location was locked and there was no indication that Ms. Davis-Mullen was available. The Division's examiners attempted to contact Ms. Davis-Mullen on her cellular phone several times between 9:00 a.m. and 10:30 a.m. however all but one call was unanswered. One telephone call was answered by an unknown individual, however upon receiving notice that the Division's examiners were at the licensed location, the unidentified individual terminated the phone call. The Division's examiners attempted to place calls to the Company's office phones but received busy signals on all lines. In response, the Division's examiners left at least three voicemail messages on both Ms. Davis-Mullen's cellular phone and another cellular number that was provided to the Division's examiners. As of the effective date of this Temporary Order, Ms. Davis-Mullen remains unresponsive to the Division's repeated attempts to contact her.
- As of the effective date of this Temporary Order, the Division has not received any of the documents requested in Paragraph 8 of this Temporary Order and continues to be denied access to the licensed location in order to conclude its examination.
- By a letter to the Division dated Friday, July 11, 2008 and faxed to the Division on that date, Ms. Davis-Mullen, notified the Division that the Company was withdrawing it's pending applications to renew the Company's mortgage broker licenses MB2640 and MB3016, effective immediately.
- The facts and circumstances set forth in Paragraphs 1 through 14, which precipitated the issuance of this Temporary Order, preceded HomeRun Mortgage's attempt to withdraw its renewal application for its Massachusetts mortgage broker licenses as described above.
CONCLUSIONS OF LAW
- Based upon the information contained in Paragraphs 1 through 16, HomeRun Mortgage repeatedly failed to provide the Division's representatives with full access to HomeRun Mortgage's books, accounts, records and files to permit an inspection of such records, in violation of Massachusetts General Laws chapter 255E, section 8.
- Based upon the information contained in Paragraphs 1 through 16, HomeRun Mortgage has failed to demonstrate the 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).
- Based upon the information contained in Paragraphs 1 through 16, the Commissioner has determined that:
- HomeRun Mortgage 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 broker including, but not limited to, 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 HomeRun Mortgage.
- Based upon the information contained in Paragraphs 1 through 16, had the facts and conditions found therein existed at the time of HomeRun Mortgage's original 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 16, present sufficient grounds for the revocation of HomeRun Mortgage's mortgage broker licenses pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulation at 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:
- ORDERED that HomeRun Mortgage and any and all officers, members, managers, employees, independent contractors, or agents operating on behalf of HomeRun Mortgage, and their successors or assigns, shall immediately cease engaging in the activities of; (a) a 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, HomeRun Mortgage 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 HomeRun Mortgage 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 HomeRun 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. HomeRun Mortgage shall obtain the prior approval of the Commissioner before placing such applications to the qualified broker(s) or lender(s).
- IT IS FURTHER ORDERED that HomeRun Mortgage shall submit to the Commissioner a detailed record, prepared as of the date of submission, of all of the Company'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 Company's open application list, including but not necessarily limited to, the following:
All information on file as of the date of submission regarding HomeRun Mortgage's open application list as a mortgage broker, including but not limited to, the following: The names of all individuals from whom HomeRun 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 or lender with whom the applicants' application was placed. The latter list should include telephone numbers of contact persons familiar with the Company's submitted loans.
- HomeRun Mortgage shall immediately secure all pending residential mortgage loan application files and, to the extent that any original documents must be forwarded to the relevant mortgage lender(s) and or mortgage broker(s) pursuant to Paragraph 24 of this Temporary Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in HomeRun Mortgage's books and records and shall be available to the Commissioner, in their entirety, upon request.
- IT IS FURTHER ORDERED that HomeRun Mortgage shall submit to the Commissioner a copy of each of the books, records, and files which were requested during the Division's examination/inspection on July 10, 2008, as set forth in Paragraph 8 of this Temporary Order, and which HomeRun Mortgage has failed to provide to the Division as of the issuance of this Temporary Order.
- IT IS FURTHER ORDERED that HomeRun Mortgage shall immediately secure all records, files, and documents ("Records") pertaining to the Company including those previously secured by the Division as referenced in Paragraph 11 of this Temporary Order. HomeRun Mortgage is prohibited from destroying, altering, and/or modifying any of the referenced Records. The Records shall be available to the Commissioner in their entirety upon request.
- 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 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 HomeRun Mortgage 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 15th day of July, 2008.
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts