By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2009-136

FINDINGS OF FACT AND
TEMPORARY ORDER TO
CEASE AND DESIST


In the Matter of
FINANCIAL RESOURCES MORTGAGE, INC.
Meredith, New Hampshire

Mortgage Broker License No.: MB1563


The Commissioner of Banks ("Commissioner") having determined that Financial Resources Mortgage, Inc., ("Financial Resources Mortgage" or the "Corporation"), located at 15 Northview Drive, Meredith, New Hampshire has engaged in, or is engaging in, or is about to engage in, acts or practices constituting violations of Massachusetts General Laws chapters 255E and 255F, and applicable regulations found at 209 CMR 41.00 and 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) and chapter 255F, section 11(a).

FINDINGS OF FACT

  1. The Division of Banks ("Division") is an agency of the Commonwealth of Massachusetts with jurisdiction over matters relating to the licensing and regulation of those engaged in the business of a mortgage lender and mortgage broker pursuant to Massachusetts General Laws chapter 255E, section 2 and Massachusetts General Laws chapter 255E, section 8.
  2. The Division also has jurisdiction over the licensing and regulation of persons engaged in the business of a mortgage loan originator in Massachusetts pursuant to Massachusetts General Laws chapter 255F, section 2 and its implementing regulation 209 CMR 41.00 et seq.
  3. Financial Resources Mortgage is, and at all relevant times, has been a foreign corporation conducting business in the Commonwealth of Massachusetts. Financial Resources Mortgage's main office is located at 15 Northview Drive, Meredith, New Hampshire.
  4. Financial Resources 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 MB1563, to Financial Resources Mortgage to engage in the business of a mortgage broker on or about November 8, 1999. At all relevant times Scott D. Farah has been President and sole officer/director of the Corporation.
  5. The Division's records indicate that Financial Resources Mortgage has no licensed mortgage loan originators sponsored by the Corporation to conduct business in Massachusetts, and the Corporation is currently in an "approved-inactive" status as reflected on the Nationwide Mortgage Licensing System ("NMLS").
  6. A. Failure to Provide Notice of Significant Events

    (1) Failure to Provide Notification of Regulatory Action

  7. The Division's regulation at 209 CMR 42.12(1)(c) states, in part:
  8. 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) [R]eceiving notification of the institution of . . . cease and desist, suspension or revocation procedures, or other formal or informal regulatory action, in any state against the Licensee, and the reasons thereof.

  9. On November 13, 2009, the State of New Hampshire Banking Department ("New Hampshire Department") issued an Order to Show Cause and Cease and Desist Order Case No. 09-127, against Financial Resources Mortgage ("New Hampshire Order"). The New Hampshire Order contains a Staff Petition in which the staff of the New Hampshire Department alleged the following violations of New Hampshire law:
    1. Violation of New Hampshire Revised Statutes Annotated ("RSA") 397-A: 3, II: Loan Originator Operating Without a License;
    2. Violation of RSA 397-A: 3, III: Employment of Unlicensed Loan Originator;
    3. Violation of Gramm-Leach-Bliley Act, Title V, Section 501(a) via RSA 397-A: 2 III;
    4. Violation of RSA 397-A: II, I Record Keeping: Failure to Properly Maintain Records;
    5. Violation of RSA 397-A: 11, IV Record Keeping: Failure to Preserve Original Records; and
    6. Violation of RSA 397-A: 10, III Failure to Provide Notification of Closing;
  10. As of the effective date of this Temporary Order, the Division has not received notification from Financial Resources Mortgage of the New Hampshire Order.
  11. (2) Failure to Provide Notice of Cessation of Operations

  12. The Division's regulation at 209 CMR 42.13(2) states:
  13. 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.

  14. On or about November 13, 2009, the Division became aware, through an article appearing on an online publication and the New Hampshire Order referenced above, that Financial Resources Mortgage had ceased operations.
  15. According to the Division's records, Financial Resources Mortgage conducts all of the Corporation's mortgage business in the Commonwealth, through the Corporation's main office located in Meredith, New Hampshire.
  16. As of the issuance of this Temporary Order, Financial Resources Mortgage has not notified the Division of the Corporation's cessation of operations.
  17. B. Failure to Provide Access to Books and Records

  18. Massachusetts General Laws chapter 255E, section 8 states, in part, that:
  19. Each licensee shall, when directed by said commissioner, permit said commissioner or his duly authorized representative to inspect its 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, said commissioner or his representative shall have access to the offices and place of business, books, accounts, papers, records and files of all such licensees.

  20. The Division's regulation 209 CMR 42.09(4) states in part:
  21. [A] Licensee shall make such other statements and reports to the Commissioner as he or she may require from time to time…

  22. The Division's regulation 209 CMR 48.03(1) states in part:
  23. 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 . . . General Laws chapter 255E and other provisions applicable to the conduct of the licensed business.

  24. On November 13, 2009, the Division repeatedly attempted to submit a letter via facsimile and e-mail to Scott D. Farah, President of Financial Resources Mortgage, requesting that Financial Resources Mortgage submit, among other things, a detailed record of all pending residential mortgage loan applications on properties located in all of the states in which Financial Resources Mortgage operated the mortgage broker business, including Massachusetts. The Division's attempts to contact Financial Resources Mortgage via e-mail and facsimile were unsuccessful, as a result the Division forwarded the aforementioned request via the United States Postal Service. The Division required that such information be submitted to the Division no later than November 16, 2009.
  25. As of the date of this Temporary Order, the information requested in Paragraph 16 of this Temporary Order has not been provided to the Division.
  26. As set forth above, Financial Resources Mortgage has been unable or unwilling to provide the Division with information regarding the location and status of any pending Massachusetts residential loan applications that the Corporation may have taken prior to the cessation of operations.
  27. Based upon the foregoing facts, the Division is unable to ascertain the current status of all of Financial Resources Mortgage's Massachusetts residential loan applications which remained pending at the time Financial Resources Mortgage elected to cease operations and the extent of the harm, if any, to Massachusetts residential loan applicants.
  28. CONCLUSIONS OF LAW

  29. Based upon the information contained in Paragraphs 1 through 19, Financial Resources Mortgage failed to notify the Commissioner in writing, within one business day, that on November 13, 2009 the New Hampshire Banking Department issued an Order to Show Cause and Cease and Desist Order in violation of the Division's Regulation 209 CMR 42.12(1)(c)
  30. Based upon the information contained in Paragraphs 1 through 19, Financial Resources Mortgage failed to provide the Commissioner with thirty days prior written notice of the Corporation's intention to cease business operations, in violation of the Division's regulation 209 CMR 42.13(2).
  31. Based upon the information contained in Paragraphs 1 through 19, Financial Resources Mortgage has failed to provide the Division with information regarding the status of pending loan applications that may have been taken prior to the cessation of operations, in violation of General Laws chapter 255E, section 8 and the Division's regulation 209 CMR 42.09(4).
  32. Based upon the information contained in Paragraphs 1 through 19, Financial Resources Mortgage has failed to provide the Division with sufficient information regarding the location of its books and records, specifically those relating to any pending Massachusetts residential loan applications, in violation of the Division's regulation 209 CMR 48.03(1).
  33. Based upon the information contained in Paragraphs 1 through 19, Financial Resources Mortgage 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 42.06(2)(c).
  34. Based upon the information contained in Paragraphs 1 through 19, the Commissioner has determined that:
    1. Financial Resources 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 Massachusetts General Laws chapter 255E, section 7 and 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 Financial Resources Mortgage.
  35. Based upon the information contained in Paragraphs 1 through 19, had the facts and conditions found therein existed at the time of Financial Resources 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 19 present sufficient grounds for the revocation of Financial Resources Mortgage's mortgage broker license pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulation 209 CMR 42.07(2)(b).
  36. ORDER TO CEASE AND DESIST

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

  37. ORDERED that Financial Resources Mortgage and any and all officers, members, managers, employees, independent contractors, or agents, operating on behalf of Financial Resources 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, Financial Resources 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.
  38. IT IS FURTHER ORDERED that Financial Resources 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.
  39. IT IS FURTHER ORDERED that Financial Resources 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. Financial Resources Mortgage shall obtain the prior approval of the Commissioner before placing such applications to the qualified broker(s) or lender(s).
  40. IT IS FURTHER ORDERED that Financial Resources 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:
  41. All information on file as of the date of submission regarding Financial Resources Mortgage's open application list as a mortgage broker, including but not limited to, the following: The names of all individuals from whom Financial Resources 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.

  42. Financial Resources 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 29 of this Temporary Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in Financial Resources Mortgage's books and records and shall be available to the Commissioner, in their entirety, upon request.
  43. 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.
  44. 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 Financial Resources 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 4th day of December, 2009

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