By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2008-006

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST


In the Matter of
OlympiaWest Mortgage Group, LLC
Vienna, Virginia

Mortgage Lender and Mortgage Broker License No. MC5124


The Commissioner of Banks ("Commissioner") having determined that OlympiaWest Mortgage Group, LLC ("OlympiaWest" or the "Company") located at 1950 Old Gallows Road, Vienna, Virginia, 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

  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 lender and mortgage broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.
  2. OlympiaWest is, and at all relevant times, has been a foreign company conducting business in the Commonwealth of Massachusetts. OlympiaWest's main office is located at 1950 Old Gallows Road, Vienna, Virginia.
  3. OlympiaWest is licensed by the Commissioner as a mortgage lender and mortgage broker (collectively "mortgage company") 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 to OlympiaWest to engage in the business of a mortgage lender and mortgage broker in Massachusetts on or about February 25, 2005, with license no. MC3777. OlympiaWest failed to renew its mortgage company license no. MC3777, which expired on May 31, 2007. According to the Division's records, OlympiaWest was issued a new mortgage company license to engage in the business of a mortgage lender and mortgage broker on or about December 4, 2007, with license no. MC5124.
  4. According to the Division's records, Alfred John Luessenhop, Jr. is the chairman of the Company and holds a seventy-five percent ownership interest in OlympiaWest. Mark Fegani is the president and holds a twenty-five percent ownership interest in OlympiaWest.
  5. On Wednesday, February 20, 2008, the Division received an e-mail from a licensed Massachusetts mortgage broker ("Mortgage Broker A") stating that he had been informed that OlympiaWest was ceasing operations. Mortgage Broker A also stated that OlympiaWest was refusing to close and fund "a couple of loans" that he had placed with OlympiaWest.
  6. Mortgage Broker A also submitted to the Division a copy of the e-mail that had been sent to Mortgage Broker A by a regional sales representative of OlympiaWest in which the sales representative indicated that OlympiaWest's wholesale division had ceased operations and would not fund one of the loans brokered by Mortgage Broker A.
  7. On February 20, 2008, in order to investigate the conditions reported through the email referenced in the above Paragraph, the Division submitted a letter to OlympiaWest via email and facsimile requiring that, among other things, the Company submit a detailed record, prepared as of the close of business on February 19, 2008 (the "pipeline report"), of all pending residential mortgage loan applications on properties located in each of the states in which OlympiaWest operated, including Massachusetts.
  8. On Thursday, February 21, 2008, the Division was notified via an e-mail sent by another licensed Massachusetts mortgage broker, ("Mortgage Broker B"), that OlympiaWest had failed, or was about to fail, to timely disburse loan proceeds in at least three mortgage loan transactions involving residential property in Massachusetts relating to loan applications which Mortgage Broker B had placed with OlympiaWest.
  9. According to Mortgage Broker B, three refinance loans (Loan #999080484 for $344,000 Loan #999908327 for $317,000; and Loan #999080268 for $355,600) that his firm had brokered to OlympiaWest, had closed on February 15, 2008, February 20, 2008, and February 21, 2008, respectively, and were scheduled to fund on February 21 2008 (Loan #999080484), and February 25, 2008 (Loan #999908327 and Loan #999080268), after the expiration of the loan rescission period.
  10. Mortgage Broker B also notified the Division that a fourth loan, Loan #999080267, for $248,000, had been scheduled to close, but due to matters allegedly identified by OlympiaWest as technical problems, the closing package had never been forwarded to the settlement agent.
  11. Mortgage Broker B forwarded to the Division a copy of an e-mail that had been sent by a regional sales representative of OlympiaWest to the Company's brokers on Wednesday, February 20, 2008, notifying the mortgage brokers that OlympiaWest had suspended all wholesale operations and all loans were no longer eligible for funding. The e-mail message stated in part, that, "Effective 2/20/08, OMG Wholesale has suspended its operations. At present, the company's warehouse provider has provided written notice of its intention to exit the warehouse business and has suspended funding to the company effective February 20, 2008. Accordingly, all loans are no longer supported and no longer eligible for funding."
  12. "OMG Wholesale" refers to "Olympia Mortgage Group Wholesale," which OlympiaWest has described to the Division as the wholesale division within OlympiaWest. Upon information and belief, it appears that Olympia Mortgage Group Wholesale's mortgage lending business in Massachusetts was at all times conducted under OlympiaWest's Massachusetts mortgage company license(s).
  13. On Thursday, February 21, 2008, OlympiaWest submitted the pipeline report as requested by the Division via e-mail. The pipeline report reflected the purported status of all residential mortgage loan transactions from OlympiaWest's national operations, including all pending Massachusetts transactions.
  14. The e-mail referenced in Paragraph 13 stated, in part, that:

    "Because of the current volatile mortgage environment, all loan approvals were expressly conditioned as follows ‘LOAN APPROVAL SUBJECT TO ELIBILITY AND PRICING REVIEW PRIOR TO FUNDING. LOAN NO LONGER SUPPORTED WILL BE SUBJECT TO CHANGE OF PRICING AND/OR LOAN TERMS.' At present the company's warehouse provider has provided written notice of its intention to exit the warehouse business and has suspended funding to the company effective February 20, 2008. . . . OWMG is solvent and believes, acting on the condition set forth in all conditional approvals and other rights it may have, it has the right to suspend operations of OMG Wholesale."

  15. On Monday, February 25, 2008, the Division received notification from a third licensed Massachusetts mortgage broker ("Mortgage Broker C") that one mortgage loan (Loan # 9999080678 for $150,000) that his firm had brokered to OlympiaWest had closed on February 15, 2008, had been scheduled to fund on February 21, 2008 after the expiration of the rescission period, and had failed to fund as of February 25, 2008.
  16. On Monday, February 25, 2008, the Division became aware that certain information reflected on the pipeline report forwarded to the Division by OlympiaWest was inaccurate. According to the information reflected on the pipeline report, loan documents for Loan #999080268 were identified as having "been ordered." However, Mortgage Broker B indicated that the loan had, in fact, closed on February 20, 2008 and was scheduled to be funded on February 25, 2008. The pipeline report also indicated that loan documents for Loan #9990800267 were "out." However, Mortgage Broker B indicated that the closing package was not received by the settlement agent on or before the scheduled date of closing, due to "technical problems."
  17. On February 26, 2008, the principals of OlympiaWest participated in a teleconference with representatives of the Division and representatives of other states (the "February 26 teleconference"). During the teleconference, OlympiaWest's representatives indicated that the warehouse lender for the Company's wholesale operation had frozen the Company's line of credit because OlympiaWest had been required to repurchase a residential mortgage loan. The Company reported that it disputed its repurchase liability, claiming that a third party had underwritten the loan pursuant to its delegated underwriting authority and that OlympiaWest should not be obligated to repurchase the loan which had been characterized as fraudulent by the warehouse lender. This explanation for the termination or suspension of OlympiaWest's warehouse line of credit differs from the explanation provided to brokers as set forth in Paragraph 11, as well as from the explanation provided to the Division in the e-mail referenced in Paragraph 14.
  18. During the February 26 th teleconference, representatives of OlympiaWest stated that the Company was unwilling and/or unable to ensure that the consumers whose loan documents were executed and for which a loan closing had occurred but failed to fund as described in Paragraphs 9 and 15, would be restituted for the additional costs incurred as a result of OlympiaWest's failure to fulfill its obligation to fund the closed loans.
  19. The Division's regulation at 209 CMR 42.12A(16) states:

    It is a prohibited act or practice for a mortgage lender to contract with a consumer through the underwriting and subsequent execution of mortgage loan closing documents and thereafter fail to fund the mortgage loan.

  20. The Attorney General's regulation 940 CMR 8.06(8) states:

    It is an unfair or deceptive act or practice for a lender to fail to disburse funds in accordance with any commitment or agreement with the borrower.

  21. Based upon information and belief, the loans referenced in Paragraphs 9 and 15 have not yet funded as of the effective date of this Temporary Order.
  22. The Division's regulation at 209 CMR 42.12A(17) states:

    A violation of 209 CMR 42.12A shall constitute grounds for the issuance of a cease and desist order under M.G.L. c. 255E, § 7; shall constitute grounds for license suspension or revocation under M.G.L. c. 255E, § 6 and shall constitute grounds for an administrative fine or penalty under M.G.L. c. 255E, §§ 11 and 12.

  23. By a letter to the Division dated February 26, 2008 from Alfred John Luessenhop, Jr., Principal of OlympiaWest, the Company indicated that it was surrendering its Massachusetts mortgage company license. The letter was sent via e-mail and by U.S. Mail. On February 28, 2008 the Division received the hard copy of the aforementioned letter which also included as an attachment the Company's original license certificate for its Massachusetts license MC5124.
  24. The facts and circumstances set forth in Paragraphs 1 through 21, which precipitated the issuance of this Temporary Order, preceded OlympiaWest's attempt to surrender its Massachusetts mortgage company license as described in Paragraph 23.

    CONCLUSIONS OF LAW

  25. Based upon the information contained in Paragraphs 1 through 24, by contracting with consumers for the refinance of mortgage loan(s) through the underwriting and subsequent execution of mortgage loan closing documents relating to Massachusetts residential property, and thereafter failing to fund the mortgage loan(s), OlympiaWest has violated the Division's regulation 209 CMR 42.12A(16) and the Attorney General's regulation 940 CMR 8.06(8).
  26. Based upon the information contained in Paragraphs 1 through 24, by contracting to originate mortgage loan(s) that OlympiaWest did not have sufficient warehouse funds available to fund, or any other available alternative source of funds, OlympiaWest has engaged in unsafe or unsound practices in violation of the Division's regulation 209 CMR 42.04(2)(b)3.
  27. Based upon the information contained in Paragraphs 1 through 24, OlympiaWest has failed to demonstrate the financial responsibility, 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 42.03(2)(c) and 209 CMR 42.06(2)(c).
  28. Based upon the information contained in Paragraphs 1 through 24, the Commissioner has determined that:
    1. OlympiaWest 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, 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 OlympiaWest.
  29. Based upon the information contained in Paragraphs 1 through 24, had the facts and conditions found therein existed at the time of OlympiaWest 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 24 present sufficient grounds for the revocation OlympiaWest's mortgage lender and mortgage broker license pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulation at 209 CMR 42.04(2)(b) and 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:

  30. ORDERED that OlympiaWest and any and all officers, directors, employees, or agents operating on behalf of OlympiaWest, and their successors or assigns, shall immediately cease engaging in the activities of a mortgage lender and 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 Temporary Order. Therefore, OlympiaWest 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.
  31. IT IS FURTHER ORDERED that OlympiaWest, 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.
  32. IT IS FURTHER ORDERED that OlympiaWest shall immediately place with one or more qualified broker(s) or lender(s), with no loss to applicants, the following: (a) OlympiaWest's entire portfolio of Massachusetts residential mortgage loans which were closed by OlympiaWest, and remain unfunded as of the issuance of this Temporary Order; and (b) OlympiaWest's entire pending application list, as of February 19, 2008, of Massachusetts residential mortgage loans. It being understood that "no loss to the applicant" shall mean that any loan which was closed by OlympiaWest, as well as any application which was approved by OlympiaWest, shall be placed to a lender willing to fund, or close, the mortgage loan under the same terms and conditions extended by OlympiaWest. In the event that no such placement can be made, OlympiaWest 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. OlympiaWest shall obtain the prior approval of the Commissioner before placing such applications to the qualified lender(s) or broker(s) as appropriate.
  33. IT IS FURTHER ORDERED that in any instance in which OlympiaWest failed to fund a closed loan and in which the consumer, prior to the effective date of this Temporary Order, obtained funding through an alternate lender, OlympiaWest shall reimburse each consumer the amount necessary to put the consumer in the same position as if OlympiaWest had funded the mortgage loan under the terms and conditions agreed upon at the closing of the loan.
  34. IT IS FURTHER ORDERED that OlympiaWest 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 include all information on file regarding the Company's Massachusetts mortgage loan portfolio, including but not necessarily limited to, the following:
    1. Within one (1) day of the effective date of this Temporary Order, OlympiaWest shall submit to the Commissioner all information on file as of the date of submission regarding the Company's portfolio of mortgage loans that were closed by OlympiaWest prior to the effective date of this Temporary Order, but remain as yet unfunded. Such information shall include, but is not limited to, the following: The names of all individuals from whom OlympiaWest processed an application and closed the residential mortgage loan, but failed to fund; the applicants' addresses and telephone numbers; the loan number; the amount of all prepaid loan fees submitted by the customer; the amount of each loan; the loan terms; the current funding status; the actual closing dates; the loan purpose (i.e. purchase or refinance); and identification of the applicable lender with whom each application will be placed. The record should include telephone numbers of contact persons at each lender who is familiar with the Company's submitted loans;
    2. As soon as possible, but not later than five (5) days after the effective date of this Temporary Order, OlympiaWest shall submit to the Commissioner all information on file as of the date of submission regarding the Company's pipeline of pending mortgage loan applications including but not limited to, the following: The names of all individuals from whom OlympiaWest has accepted an application for a residential mortgage loan; the applicants' addresses and telephone numbers; the loan number; the amount of all prepaid loan fees submitted by the customer; rate lock status; the amount of each loan; application status (i.e. filed, submitted to lenders, cleared to close, etc.); loan terms, if approved; scheduled closing dates; the loan purpose (i.e. purchase or refinance); and identification of the applicable lender or broker with whom each application will be placed. The record should include telephone numbers of contact persons at each lender or broker who is familiar with the Company's submitted loans;
    3. On the last business day of each subsequent week after the effective date of this TEMPORARY ORDER, OlympiaWest shall provide the Commissioner with an updated, written status report of the mortgage loan applications identified above under subparagraphs 34(a) and 34(b). The form of the status report shall follow the format of the initial submission under subparagraphs 34(a) and 34(b) and shall indicate the final disposition of the loan application and include the final terms under which each approved loan is closed. The reporting requirement shall continue until each of the approved applications is placed with a lender and funded, funded by OlympiaWest, or withdrawn by the applicant(s); and
    4. Within one (1) day of the effective date of this Temporary Order, OlympiaWest shall submit to the Commissioner OlympiaWest's balance sheet and year-to-date income statement, prepared as of the date of submission, and attested by a duly authorized officer of the Company. The balance sheet shall indicate OlympiaWest's cash position at each of its depository banks as well as OlympiaWest's bank account numbers.
  35. IT IS FURTHER ORDERED that OlympiaWest 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(s) and or mortgage broker(s) pursuant to Paragraph 32 of this Temporary Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in OlympiaWest's books and records and shall be available to the Commissioner, in their entirety, upon request.
  36. 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.
  37. 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 OlympiaWest 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 29th day of February, 2008.

By: Steven L. Antonakes
Commissioner of Banks