By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2008-016

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST


In the Matter of
POST ROAD FUNDING, INC D/B/A MILLENNIUM MORTGAGE
Springfield, Massachusetts

Mortgage Broker License No(s): MB2217 and MB4325 .


The Commissioner of Banks ("Commissioner") having determined that POST ROAD FUNDING, INC. D/B/A MILLENNIUM MORTGAGE ("Millennium Mortgage" or the "Corporation"), located at 1111 Main Street, Springfield, 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
 


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. Millennium Mortgage is, and at all relevant times has been, a Massachusetts Corporation doing business in the Commonwealth. Millennium Mortgage's main office is located at 1111 Main Street, Springfield, Massachusetts.

3. According to the Division's records, Ward Weizel is the President and partial owner of Millennium Mortgage.

4. According to the Division's records, Paul Hatidani is an officer and majority owner of Millennium Mortgage.

5. Millennium 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 MB2217, to Millennium Mortgage to engage in the business of a mortgage broker in Massachusetts on or about March 28, 2001. License number MB2217 authorized Millennium Mortgage to conduct its mortgage broker business from the Corporation's main office located at 1111 Main Street, Springfield, Massachusetts.

6. Millennium Mortgage maintains an additional licensed office location at 340 Main Street, Worcester, Massachusetts, from which the Corporation conducts its mortgage broker business. According to records maintained on file with the Division, the Commissioner issued a mortgage broker license, license number MB4325, to Millennium Mortgage for that location on or about March 10, 2006.

7. 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 or any rule, or regulation issued thereunder, and with any law, rule, or regulation applicable to the conduct of the business of a mortgage broker.

8. On Thursday, July 24, 2008, pursuant to Massachusetts General Laws chapter 255E, section 8, the Division commenced an examination/inspection of the books, accounts, papers, records, and files maintained by Millennium Mortgage to evaluate the Corporation's compliance with the laws, regulations, and regulatory bulletins applicable to the conduct of a mortgage broker business in Massachusetts (the 2008 examination/inspection). The 2008 examination/inspection was conducted at the Corporation's main office in Springfield, Massachusetts. The findings of the 2008 examination/inspection indicate that Millennium Mortgage engaged in acts and practices in violation of state laws and regulations as set forth herein and, in addition, sets forth other violations and areas of concern observed during the 2008 examination/inspection.



A. Unfair or Deceptive Acts and Practices



Alteration and/or Manipulation of Mortgage Loan Related Documents

9. The Division's regulation 209 CMR 42.12A(8), effective as of September, 8, 2006, states:

It is a prohibited act or practice for a mortgage broker of mortgage lender to falsify income or asset information on a mortgage loan application or mortgage loan documents.

10. Massachusetts General Laws chapter 93A, section 2(a) states:

Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

11. The Attorney Generals regulation 940 CMR 8.06(1) states, in part:

It is an unfair or deceptive act or practice for a mortgage broker or lender to make any representation or statement of fact if the representation or statement is false or misleading or has the tendency or capacity to be misleading.

12. The 2008 examination/inspection revealed that Millennium Mortgage manipulated various mortgage loan related documents by using "white out" to obscure information related to the loan underwriting and approval process as set forth below. Millennium Mortgage also manipulated other mortgage loan related documents by cutting income, asset, and employment information from sources and individuals unrelated to the prospective borrowers and pasting/taping such information to documents including but not limited to pay stubs and W2 statements which were generated for the prospective borrowers. Examples include, but are not limited to the following:

(a) Loan #11694684:

i. A full documentation loan application prepared by Millennium Mortgage and signed on September 13, 2006, for a loan which ultimately closed on October 6, 2006, indicated that the borrower, a health care provider at a nursing services agency, earned approximately $2,700 monthly or $32,400 annually.

ii. At least three copies of a pay stub located in the loan file maintained by Millennium Mortgage indicated that the year to date gross income for the borrower as of September 15, 2006 was $22,991.66. Each of the copies of the pay stub had been manipulated to establish representations about the prospective borrower:

a. One copy of the pay stub was manipulated by using "white out" to obscure the employer and employee information which, upon closer inspection, was determined to be a pay stub previously issued to a loan originator employed by Millennium Mortgage.

b. A second copy of the pay stub contained employment information that corresponded to the employment information reported on the full documentation loan application signed on September 13, 2006, however, the employment information, including the borrowers name and employer name, was pasted onto the pay stub with "clear tape".

c. A third copy of the pay stub located in the file, contained information relating to the social security number, marital status, and taxable allowances which had been pasted onto the pay stub with "clear tape".

iii. A "10-03 Quick Form", so-called, which was routinely used by Millennium Mortgage to gather preliminary information from the prospective borrower for a loan application, indicates that the monthly income of the borrower was approximately $1,400 or $16,800 annually.

iv. The discrepancy between the information reflected on the loan application dated September 13, 2006, the altered pay stubs, and the information on the "10-03 Quick Form" reveals that Millennium Mortgage overstated the borrowers annual income by approximately $15,600.

v. A review of an employment verification letter located in the loan file revealed that it had been prepared on behalf of another applicant and thereafter altered by superimposing employment information including the gross salary of the borrower using "clear tape".

(b) Loan "A" 1:

i. Correspondence from the Social Security Administration indicated that a letter addressed to an individual on behalf of the borrower had been altered by removing the reference to the individual and altering the document so as to appear as though the borrower was the only recipient of the correspondence.

ii. A review of a copy of an employer letter maintained in the loan file indicated that the following statement had been added to the letter in reference to the borrower's income "...YTD is $5,853.60." The information was added by pasting/taping the statement onto the document which contained additional employee information.

(c) Loan #000553731-1:

i. A copy of an insurance binder located in the loan file reviewed by the Division's examiners revealed that the "special conditions/other coverages" section of the insurance binder contained the following phrase: "policy period from 6/12/08 to 6/12/09 policy premium $392.00." The phrase "paid in full" was thereafter taped directly below the preceding phrase so as to appear as though the annual insurance premium had been paid in full.

(d) Loan "B."

i. A Verification of Employment Form ("VOE") located in the loan file and reviewed by the Division's examiners indicated that the borrower, a certified nurse's aid ("CNA") earned approximately $11.46 hourly and $8,558.51 as of August 21, 2007. Four pay stubs reviewed by the Division's examiners corroborated the information reflected on the VOE.

ii. Two loan applications reviewed by the Division's examiners indicated that the same borrower was employed by a realty company as a manager and earned $3,000 monthly or $36,000 annually. However, a review of the loan file found no corroborating evidence of such employment.

iii. Two additional loan applications reviewed by the Division's examiners indicated that the same borrower was employed as a CNA at a different nursing home than that referenced above in subparagraph (d)(i) and earned $3,000 monthly or $36,000 annually.

iv. Original copies of W-2 statements for 2005 and 2006 revealed that the same borrower's annual income was $4,215.31 and $14,933.67 respectively.

v. Altered copies of W-2 statements for 2006 which were discovered in the loan file maintained by Millennium Mortgage revealed that the applicant's income had been increased from $14,933.67 to $36,949.12. The income information had been altered by pasting/taping the altered information over the actual income.

vi. Two automated underwriter submissions ("submissions") prepared and submitted by Millennium Mortgage and dated June 12, 2007 and November 5, 2007 reflected an increase in the borrower's monthly income. The June 12, 2007 submission reflected a monthly income of $1,986.25 and the November 5, 2007 submission reflected a monthly income of $2,986.25.

vii. Several copies of pay stubs located in the loan filed reviewed by the Division's examiners revealed that pay stubs originally issued by the Town of Amesbury, Massachusetts to an unrelated individual were manipulated, by pasting the borrower's information on the employee section of the pay stub so as to appear as though the pay stub was issued to the borrower. This altered pay stub reported the borrower's year to date income as $27,906.63 as of September 28, 2007. The borrower's income was misrepresented by approximately $20,000.

(e) Loan "C."

i. A "10-03 Quick Form" located in the loan file indicates that the borrower earned $2,658.40 monthly as a technician and the co-borrower earned $2,217.64 monthly as a CNA.

ii. Pay stubs and W-2 statements located in the loan file corroborate the information reflected on the "10-03 Quick Form."

iii. Additional copies of W-2 statements located in the loan file revealed that the W-2 statement(s) were altered by superimposing the co-borrower's name and employment information onto the borrower's W-2 statement.

iv. A letter from the co-borrower's employer indicating a change in name of the company had been altered to add a title to the signatory's name.

(f) Loan "D."

i. A pay stub located in the file appears to have been generated by using the pay stub of an unrelated individual and inserting the prospective borrower's information, including employer, payment dates, and address by superimposing such information onto the pay stub so as to appear as though the borrower earned the salary reported for the unrelated individua

(g) Loan #0000201049:

i. A stated income loan application for a loan that ultimately closed on July 21, 2005 indicated that the borrower, a truck driver for a beverage distributor earned $6,500 monthly or $78,000 annually.

ii. An employer letter from a human resources representative, located in the loan file, revealed that the borrower earned $11.00 per hour as a fork truck driver. This indicates that applicant would have had to work approximately 19 hours per day in order to earn the income stated on the loan application.

(h) Loan # 0509205754:

i. A stated income loan application prepared by Millennium Mortgage for a loan which closed on October 5, 2005 indicated that the applicant maintained a bank account at a depository institution with a balance of $5,000.

ii. A Verification of Deposit form ("VOD") located in the loan file maintained by Millennium Mortgage illustrated that the applicant maintained two accounts with the depository institution with balances of $5.40, and $6.97, and average balances of $328.83 and $266.74 respectively since the account had been opened on January 13, 2005.

13. Millennium Mortgage knew or should have known that the above referenced income and/or asset information may have been relied upon in underwriting the mortgage loan by the mortgage lender or financial institution to which the mortgage loan applications were brokered by Millennium Mortgage.

Misrepresentation of the Applicant's Residency Status

14. The 2008 examination/inspection revealed that in several instances Millennium Mortgage concealed and/or misrepresented information relating to the occupancy of the premises in violation of 940 CMR 8.06(1). Millennium Mortgage had submitted to lenders mortgage loan applications for two or more properties on behalf of a single borrower concurrently, with each application indicating that the subject property was to be used as the borrower's primary residence.

15. Without limitation, the above practices were observed in the following six loan transactions:

(a) Loan No(s).: 2112108765; 0848206270; 0000486260; 06-227372; 0658840; and 0605195918.

16. The Division's regulation 209 CMR 42.12A(7), effective as of September 8, 2006, states:

It is a prohibited act or practice for a mortgage broker or mortgage lender to sign a consumer's name to a mortgage loan application or mortgage loan documents on behalf of a consumer.

17. Books and records reviewed during the 2008 examination/inspection revealed that Millennium Mortgage engaged in a pattern and/or practice of signing consumer's signatures on various mortgage broker disclosures including but not limited to Good Faith Estimates, Privacy Disclosures, and Certification and Authorization Agreements.

18. Several loan files reviewed by the Division's examiners indicated that the borrowers signatures varied significantly from signatures provided on loan documents signed at settlement. In addition, in at least one reviewed loan file an applicant's signature had been obscured with "white out" as the borrower's name had been misspelled during an apparent attempt by Millennium Mortgage to sign the document on the borrower's behalf.

19. The above practices were observed in, but not limited to, the following loan transactions: Loan No(s).: 11694684; 000553731-1; and 11423922.

B. Engaging Unauthorized Individuals to Originate Mortgage Loans in Massachusetts

20. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicate that Millennium Mortgage, at all relevant times, retained individuals in an independent contractor's capacity, who were engaging in the mortgage broker business and who were associated with and under the direction of Millennium Mortgage.

21. By prior published opinions, the Division set forth the standards which an individual operating in an independent contractor capacity would have to satisfy, in advance, when seeking to engage in the mortgage broker business that would be associated with and under the direction of a licensed mortgage broker under General Laws chapter 255E, section 2.

22. Pursuant to the Division's published Opinion 97-222, the position of the Division of Banks is that exemption from licensure is available only to individuals and not to a corporate entity. The relationship between the licensee and the individual must be exclusive and the individual must execute an Exemption Affidavit to that effect. The licensee must execute a Statement of Accountability for all activities of the individual associated with it. The individual seeking the exemption must be primarily engaged in the activity it is seeking to perform under the direction of a licensed mortgage broker.

23. The Division's published Opinion 97-061 further states that "this exemption would be effective provided that the licensee completes and files with the Division, in advance, a Statement of Accountability agreeing to take responsibility for the exempt individual's activities and the individual seeking the exemption completes and files the required Exemption Affidavit."

24. Books and records reviewed by the Division's examiners during the 2008 examination/inspection revealed that Millennium Mortgage did not file the required Exemption Affidavits and Statements of Accountability for any of the independent contractors who were operating on behalf of the Corporation.

25. Books and records reviewed by the Division's examiners during the 2008 examination/inspection revealed that three individuals originated loans in Massachusetts on behalf of Millennium Mortgage in their capacity as independent contractors, but were not engaged in the activity of a mortgage broker as their primary occupation.

26. Books and records reviewed by the Division's examiners during the 2008 examination/inspection revealed, in addition, that two individuals engaged in originating loans in Massachusetts on behalf of Millennium Mortgage were not working in the mortgage broker industry exclusively on behalf of Millennium Mortgage.

C. Undisclosed Fees

27. Massachusetts General Laws chapter 183, section 63 states, in part:

A mortgagee, or a mortgage lender or mortgage broker as defined in section one of chapter two hundred and fifty-five E, shall not charge a loan fee, finder's fee, points, so-called, or similar fees in a mortgage transaction involving residential property located in the commonwealth of four or less units and occupied in whole or in part by the mortgagor, except to the extent that such fees or points have been previously disclosed to the mortgagor in writing, which disclosure may be in the form required by section seventeen D of chapter one hundred and eighty-four, or such other form which discloses said fees or points. A mortgagor shall not be obligated to pay fees or points which have not been previously disclosed as required herein.

28. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicate that the Millennium Mortgage collected broker fees at the loan closing in amounts which the Corporation's books and records failed to illustrate had been fully and accurately disclosed to consumers, in writing, in the amounts charged at closing, if at all. Without limitation, these practices were observed in the following loan transactions: Loan No(s). 7883336-00 and 1890561308.

D. Payment of Referral Fees

29. The Real Estate Settlement Procedures Act's, ("RESPA") implementing regulation, 24 CFR 3500.14(b) states in part:

No person shall give . . . any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person. Any referral of a settlement service is not a compensable service, except as set forth in '3500.14(g) (1). A company may not pay any other company or the employees of any other company for the referral of settlement service business.

30. The RESPA implementing regulation, 24 CFR 3500.14(c) states, in part:

No person shall give . . . any portion, split, or percentage of any charge made or received for the rendering of a settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed. A charge by a person for which no or nominal services are performed or for which duplicative fees are charged is an unearned fee and violates this section.

31. During the 2008 examination/inspection, a review of an income statement prepared and provided by Millennium Mortgage to the Division's examiners for review identified "referral fee payments" of $1,000 and $2,330 to at least two individuals.

32. Upon inquiry, Mr. Hatidani, General Manager of Millennium Mortgage stated that approximately 7 to 10 previous customers had been compensated for referring new customers whose loan applications resulted in a closed loan. Documents later provided by Mr. Hatidani to the Division's examiners indicated that at least six individuals had been paid a referral fee. It was determined that the six individuals compensated did not perform minimum services required to justify payment of a fee as set forth by applicable interpretive guidance by the U.S. Department of Housing and Urban Development, the government agency responsible for interpreting RESPA.

E. Failure to Disclose License Revocation in a License Renewal Application

33. On April 17, 2007, the Division received Millennium Mortgage's 2007 Mortgage Broker License Renewal Application ("2007 License Renewal Application"), as required pursuant to the Division's licensing requirements.

34. Question 4(C) of the 2007 License Renewal Application, signed under the pains and penalties of perjury by Mr. Hatidani, asked the following question: "In the past twelve months, has any State or federal regulatory agency or foreign financial regulatory authority: (5) denied, suspended, or revoked the licensee's or any control affiliate's or control person's registration or license or otherwise, by order, prevented it from associated with a financial services-related business or restricted its activities?" The answer to the question provided by Mr. Hatidani was "No."

35. On February 4, 2008, Millennium Mortgage's 2008 License Renewal application ("2008 License Renewal Application") was processed through the National Mortgage Licensing System ("NMLS"), as required pursuant to the Division's licensing requirements.

36. Question I of the 2008 License Renewal Application, submitted through NMLS by Mr. Hatidani asked the following question: "Within the past 10 years... Has any State or federal agency...ever: (5) denied, suspended, or revoked your registration of license, disciplined you or otherwise by order, prevented you from associating with a financial services-related business or restricted your activities?" The answer to the question provided by Mr. Hatidani was "No."

37. The Division's examiners determined that the questions referenced in Paragraphs 34 and 36 of this Temporary Order were not answered truthfully, as the Rhode Island Department of Business Regulation had issued a Notice of License Revocation to Millennium Mortgage that became effective on June 23, 2006.

F. Failure to Provide Required Notice of Significant Events

Failure to Provide Notification of the Closing of a Licensed Office Location

38. The Division's Regulation 209 CMR 42.13(2) states:

Licensees shall provide thirty days prior written notice of any change or closing of a Massachusetts location to the Commissioner and shall contain such other information as the Commissioner may require.

39. During the 2008 examination/inspection, representatives of Millennium Mortgage and the building's management company, notified the Division's examiners that the Worcester, Massachusetts licensed location had been closed for several weeks. As of the date of this Temporary Order, the Division has not received written notice of the closure of the Worcester location.

Failure to Provide Notification of Regulatory Action

40. The Division's regulation at 209 CMR 42.12(1)(c) states, in part:

(1) A Licensee shall notify the Commissioner immediately, and in writing within one business day, of the occurrence of any of the following significant developments: . . . (c) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action, in any state against the Licensee, and the reasons thereof.

41. On March 17, 2008, the Connecticut Department of Banking ("Connecticut Banking Department") issued a Notice of Automatic Suspension, Notice of Intent to Revoke the Corporation's First Mortgage Broker License, and Notice of Right to Hearing against Millennium Mortgage ("Notice of Automatic Suspension").

42. The Notice of Automatic Suspension alleged that on January 22, 2008, the Connecticut Banking Department received notification from Millennium Mortgage's insurance company indicating that the Corporation's mortgage broker bond would be cancelled as of February 27, 2008. As a result, on January 24, 2008, the Connecticut Banking Department forwarded a notification of the cancellation to Millennium Mortgage in order to give the Corporation the opportunity to show compliance with the requirements of the retention of Millennium Mortgage's mortgage broker license. As of the date of the issuance of the Notice of Suspension, the Connecticut Banking Department alleged that Millennium Mortgage had failed to replace the bond.

43. On April 18, 2008, the Notice of Automatic Suspension became permanent, as a result of Millennium Mortgage's failure to request a hearing or to replace the mortgage broker bond as required pursuant to the Connecticut Banking Department's licensing requirements.

44. As of the effective date of this Temporary Order, the Division has not received notification from Millennium Mortgage of the occurrence of any of the events referenced above in Paragraphs 41 through 43 of this Temporary Order.

G. Failure to Properly Maintain Books and Records

45. The Division's regulation 209 CMR 42.09(1) states:

Each Licensee shall keep and use its books, records and accounts in a manner which will allow the Commissioner to determine whether the Licensee is complying with the provisions of M.G.L. c. 255E and applicable state and federal laws and regulations. Each Licensee shall comply with the provisions of 209 CMR 48.00...

(b)The mortgage broker ... shall retain for a minimum of three years after a mortgage loan is made the following: the original loan origination and compensation agreement as set out in 209 CMR 42.16; a copy of the settlement statement; an account of fees received in connection with the loan; correspondence; papers or records relating to the loan; and such other documents as the Commissioner may require.

46. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicated that Millennium Mortgage failed to retain sufficient documentation to enable the Division's examiners to determine whether the Corporation was complying with certain laws and regulations governing mortgage brokers in Massachusetts, including but not limited to, compliance with mandated timing requirements.

H. Providing Mortgage Lender Disclosures to Consumers

47. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicate that Millennium Mortgage, a mortgage broker, routinely provided several mortgage lender disclosures to consumers in violation of and exceeding its authority under G. L. c. 255E.

48. The mortgage lender disclosures include, but are not limited to, Equal Credit Opportunity Notices, Servicing Disclosure Statements, and Notice to Applicant of Right to Receive Copy of Appraisal Report.

I. Failure to Properly Complete Good Faith Estimates

49. The Real Estate Settlement Procedures Act ("RESPA") regulation 24 CMR 3500.7, Appendix B section 13 states, in part:

Any . . .fee or payment received by the mortgage broker from either the lender or the borrower arising from the initial funding transaction, including a servicing release premium or yield spread premium, is to be noted on the Good Faith Estimate and listed in the 800 series of the HUD-1 Settlement Statement.

50. Books and records reviewed during the 2008 examination/inspection revealed that, in one of the loan files reviewed, Millennium Mortgage failed to disclose the yield spread premium paid at closing on the good faith estimate provided to the borrower(s), as specifically identified in the Report.

J. Engaging in Prohibited Advertising Practices

51. Attorney General's regulation 940 CMR 8.04(1) states:

It is an unfair or deceptive act or practice for a mortgage broker or lender to make any representation or statement of fact in an advertisement if the representation or statement is false or misleading or has the tendency or capacity to be misleading, or if the mortgage broker or lender does not have sufficient information upon which a reasonable belief in the truth of the representation or statement could be based.

52. Millennium Mortgage's website contains the following statements:

  • "We offer you the competitive rates...Apply online today for a no-cost, no-obligation pre-approval!"
  • We lend in the following states: All States
  • In addition to our standard loan programs, you may benefit by obtaining one of our many special programs...
  • We can help you realize your homeownership dreams by offering you all the best advantages: ...Low Rates...All Types of Mortgage Programs...
  • Apply online to be pre-approved.

53. Such representations have the tendency or capacity to mislead consumers as they present the appearance that Millennium Mortgage, a mortgage broker is approving or funding loans.

54. The Division's regulation 209 CMR 42.12A(4) states:

It is a prohibited act or practice for a mortgage broker to advertise any interest rate or loan term described in 209 CMR 32.24(3)(a) in any media without the following statement: "We arrange but do not make loans". No advertisement by a mortgage broker in any media shall contain language which indicates or suggests that the mortgage broker will fund or approve a mortgage loan or guarantee any rate.

55. Millennium Mortgage's website advertises loan terms without including the statement, "We arrange but do not make loans" as required pursuant to 209 CMR 42.12A(4).

56. The Division's regulation 209 CMR 42.15 states, in part:

A Licensee shall also disclose the type and number of its license(s) in all advertisements.

57. Attorney General's regulation 940 CMR 8.04(2) states, in part:

It is an unfair or deceptive act or practice for a mortgage broker or lender to advertise without clearly and conspicuously disclosing its business name, the words "broker" or "lender", as applicable, and the license number.

58. Millennium Mortgage failed to disclose the Corporation's license type and number and failed to use the word "broker" on both of the Corporation's active websites.

59. In addition to the violations specifically set forth in this Temporary Order, a Report of Examination/Inspection on Consumer Compliance prepared as of July 24, 2008 and to be provided to Millennium Mortgage after the issuance of this Temporary Order, describes other violations and areas of concern observed during the 2008 examination/inspection.

CONCLUSIONS OF LAW

60. Based upon the information contained in Paragraphs 1 through 59, Millennium Mortgage has failed to demonstrate and maintain the character, reputation, integrity, and general fitness that would warrant the belief that the 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 regulation 209 CMR 42.06(2)(c).

61. Based upon the information contained in Paragraphs 1 through 59, by altering loan documentation including income, asset and employment information related to the loan approval process, Millennium Mortgage has violated on numerous occasions the Division's regulation 209 CMR 42.12A(8), Massachusetts General Laws chapter 93A, section 2(a) and the Office of the Attorney General's implementing regulation 940 CMR 8.06(1).

62. Based upon the information contained in Paragraphs 1 through 59, by engaging in the act or practice of altering documents relating to the mortgage loan process by signing consumers signatures on various disclosures prior to submitting such documents to the mortgage lender, Millennium Mortgage has violated the Division's regulation 209 CMR 42.12A(7), Massachusetts General Laws chapter 93A, section 2(a) and the Office of the Attorney General's implementing regulation 940 CMR 8.06(1).

63. Based upon the information contained in Paragraphs 1 through 59, Millennium Mortgage has solicited or accepted residential mortgage loan applications for property located in Massachusetts from individuals engaging in the activity of a mortgage broker who were not employed by the Corporation and who otherwise failed to qualify for an exemption from licensure as set forth by the Division by prior published opinions, including without limitation Opinions 96-221, 97-061, and 97-222 in violation of General Laws chapter 255E, section 2.

64. Based upon the information contained in Paragraphs 1 through 59, Millennium Mortgage compensated individuals through payments of unlawful referral fees, in apparent violation of the RESPA implementing regulation 24 CFR 3500.14(b) and 24 CFR 3500.14(c).

65. Based upon the information contained in Paragraphs 1 through 59, by falsely representing to the Division, through the 2007 license renewal application, that no regulatory action had been entered against Millennium Mortgage during the relevant time in response to Question 4(C)(5), Millennium 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)(c).

66. Based upon the information contained in Paragraphs 1 through 59, by failing to notify the Commissioner, in writing, at least thirty days prior to the closing and relocation of the Worcester office location, Millennium Mortgage violated the Division's regulation 209 CMR 42.13(2).

67. Based upon the information contained in Paragraphs 1 through 59, by failing to notify the Commissioner, in writing, within one business day, of the regulatory action taken against the Corporation by the Connecticut Banking Department, Millennium Mortgage is in violation of the Division's regulation 209 CMR 42.12(1)(c).

68. Based upon the information contained in Paragraphs 1 through 59, by failing to keep and use its books and records in a manner which would allow the Commissioner to determine whether the Corporation was complying with applicable state and federal laws and regulations, Millennium Mortgage has violated the Division's regulations 209 CMR 42.09(1) and 209 CMR 48.03.

69. Based upon the information contained in Paragraphs 1 through 59, by providing disclosures to consumers that only lenders are authorized to provide Millennium Mortgage has exceeded its authority as a mortgage broker in violation of Massachusetts General Laws chapter 255E, section 2.

70. Based upon the information contained in Paragraphs 1 through 59, by failing to properly complete the Good Faith Estimate disclosure Millennium Mortgage has violated the RESPA regulation 24 CFR 3500.

71. Based upon the information contained in Paragraphs 1 through 59, by including statements that contained false or misleading language or had the tendency to be false or misleading, on the Corporation's website, Millennium Mortgage has violated the Attorney General's regulation 940 CMR 8.04(1).

72. Based upon the information contained in Paragraphs 1 through 59, by advertising loan terms on the Corporation's website without including the statement, "We arrange but do not make loans," Millennium Mortgage has violated the Division's regulation 209 CMR 42.12A(4).

73. Based upon the information contained in Paragraphs 1 through 59, by failing to disclose and/or inaccurately disclosing the Corporation's license type and number on the Corporation's websites, Millennium Mortgage has violated the Division's regulation 209 CMR 42.15 and the Attorney General's regulation at 940 CMR 8.04(2).

74. Based upon the information contained in Paragraphs 1 through 59, by failing to retain all copies of the Loan Origination and Compensation Agreement provided to consumers, Millennium Mortgage has violated the Division's regulation 209 CMR 42.12A(5) and 209 CMR 42.09(1)(b).

75. Based upon the information contained in Paragraphs 1 through 59, by conducting business using a name other than that which is stated on his mortgage broker license, Millennium Mortgage has violated Massachusetts General Laws Chapter 255E, section 5.

76. Based upon the information contained in Paragraphs 1 through 59, by providing disclosures to consumers that contained language that was false or misleading or had the tendency or capacity to be false or misleading, Millennium Mortgage violated the Attorney General's regulation 940 CMR 8.06(1).

77. Based upon the information contained in Paragraphs 1 through 59, the Commissioner has determined that:

(a) Millennium 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.

(b) The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Millennium Mortgage.

78. Based upon the information contained in Paragraphs 1 through 59, had the facts and conditions found therein existed at the time of Millennium Mortgage 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 59, present sufficient grounds for the revocation of Millennium 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

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

80. ORDERED that Millennium Mortgage and any and all officers, members, managers, employees, independent contractors, or agents, operating on behalf of Millennium 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, Millennium 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.

81. IT IS FURTHER ORDERED, that Millennium 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. In addition, Millennium Mortgage shall adopt or revise, as applicable, policies and procedures to ensure adherence to all regulations concerning the maintenance of such escrow account under 209 CMR 42.11.

82. IT IS FURTHER ORDERED that Millennium 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. Millennium Mortgage shall obtain the prior approval of the Commissioner before placing such applications to the qualified broker(s) or lender(s).

83. IT IS FURTHER ORDERED that Millennium 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 Temporary 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 Millennium Mortgage's open application list as a mortgage broker, including but not limited to, the following: The names of all individuals from whom Millennium 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 Corporation's submitted loans.

84. Millennium 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 84 of this Temporary Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in Millennium Mortgage's books and records and shall be available to the Commissioner, in their entirety, upon request.

85. 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.

86. IT IS FURTHER ORDERED that this Temporary Order shall not be construed as approving any act, practice, or conduct not specifically set forth herein which was, is, or may be in violation of relevant state or federal laws and regulations. The findings, conclusions, and required action set forth in this Temporary Order are in addition to, and not in lieu of, any findings, conclusions, and corrective action which may be set forth in the Report of Examination/Inspection, prepared by the Division of Banks as of July 24, 2008.

87. 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 Millennium 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.



1The Division has assigned alpha-identifiers to loan transactions in which a loan number was not available from the records maintained by Millennium Mortgage.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS

Dated at Boston, Massachusetts, this 29th day of August, 2008.

By: Steven L. Antonakes
Commissioner of Banks