By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2010-325

TEMPORARY
ORDER TO CEASE AND DESIST

AND

NOTICE OF ADMINISTRATIVE
PENALTY

In the Matter of
A-PLUS MORTGAGE, LLC D/B/A APM MORTGAGE
West Warwick, Rhode Island

Mortgage Broker License No. MB4599


The Commissioner of Banks ("Commissioner") having determined that A-PLUS MORTGAGE, LLC D/B/A APM MORTGAGE ("APM Mortgage" or the "Company") located 35 Quaker Lane, Suite 2, West Warwick, Rhode Island, 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 TEMPORARY ORDER TO CEASE AND DESIST AND NOTICE OF ADMINISTRATIVE PENALTY ("Order") pursuant to General Laws chapter 255E, section 7(b) and General Laws chapter 255E, section 11.

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. APM Mortgage is, and at all relevant times, has been a limited liability company conducting business in the Commonwealth. APM Mortgage's main office is located at 35 Quaker Lane, Suite 2, West Warwick, Rhode Island.
  3. APM 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 issued a mortgage broker license, license number MB4599 to APM Mortgage to engage in the business of a mortgage broker on or about November 9, 2006. License number MB4599 authorized APM Mortgage to conduct the mortgage broker business from the Company's main office located at 35 Quaker Lane, Suite 2, West Warwick, Rhode Island.
  4. Between July 27, 2010 and August 16, 2010, the Division was forwarded copies of at least four solicitations ("Solicitations") received by Massachusetts consumers from APM Mortgage. Copies of the Solicitations are attached as Exhibit 1, Exhibit 2, Exhibit 3 and Exhibit 4.
  5. Massachusetts General Laws chapter 167, section 37 states in part:

    A person, domestic or foreign corporation, partnership, association, limited liability company or similar entity shall not make reference to an existing bank, federal bank, federal branch, foreign bank, out-of-state bank, out-of-state branch, out-of-state federal bank as defined in section 1 of this chapter, or federal credit union as defined in section 1 of chapter 171, or any subsidiary thereof, without the express written consent of the bank, federal bank, federal branch, foreign bank, out-of-state bank, out-of-state branch, out-of-state federal bank or federal credit union, or any subsidiary thereof, or make reference to a loan number, loan amount or other specific loan information on the outside of an envelope, visible through the envelope window, or on a postcard in connection with any written solicitation or an email for products or services to a specifically identified consumer.

    A person, domestic or foreign corporation, partnership, association, limited liability company, association or similar entity, which is considered to have violated this section, shall be considered to have engaged in an unfair and deceptive practice and shall be a violation of chapter 93A.

  6. The Division's Regulation 209 CMR 42.12A(9) states:

    It is a prohibited act or practice for a mortgage broker or mortgage lender to make false promises to influence, persuade, or induce a consumer to a sign a mortgage loan application or mortgage loan documents.

  7. 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.

  8. The 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.

  9. The Solicitations identified the consumer's lender as JP Morgan Chase Bank on Exhibit 1 and 2 and Scituate Federal Savings Bank on Exhibit 3.
  10. On or about August 16, 2010, the Division received a written complaint regarding the advertising activities of APM Mortgage. The correspondence indicated that the Company had not received any authorization to utilize the name of one of the banks identified in Paragraph 9 of this Order.
  11. The Solicitation, referenced in Paragraph 9 of this Order as Exhibit 1 was marked as an "URGENT NOTICE!" and urged the consumer to "PLEASE CALL IMMEDIATELY." The body of the Solicitation notified the consumer that they should contact a certain number as it was regarding their mortgage with "JP MORGAN CHASE BANK." Additionally, the Solicitation notified the consumer that APM Mortgage could "consolidate their existing mortgage and revolve their debt into one low monthly payment."
  12. The Solicitation advised the consumer that AMP Mortgage was lending on a "government program" for a specified timeframe, however failed to identify what program the Company was referring to. In addition, the Solicitation contained a webpage address noting that it was the consumer's "personal webpage" and instructed the consumer to visit the webpage using the customer's e-mail address.
  13. The Solicitation referenced in Paragraph 9 of this Order as Exhibit 2, appeared to have been mailed by JP Morgan Chase Bank as it was marked as "RE: JP Morgan Chase Bank" and stated that the consumer's mortgage with JP Mortgage Chase Bank had "gone under review." The body of the Solicitation notified the consumer that as their mortgage had gone under review, they would be able to freeze their mortgage into a fixed rate mortgage with "a lower monthly payment and/or additional cash out." In addition, the Solicitation also stated that if the consumer restructured their loan within the specified time period, the consumer would be able to "skip 2 monthly payments," a statement that was both inaccurate and misleading. The Solicitation advised the consumer to call APM Mortgage at a specific number to "begin the restructure process."
  14. The Solicitation, referenced in Paragraph 9 of this Order as Exhibit 3 appeared to have been mailed by Scituate Federal Savings Bank as it was marked as "RE: Scituate Federal Savings and Loan Association," and stated that the consumer's mortgage with Scituate Federal Savings Bank had "gone under review." The body of the Solicitation notified the consumer that as their mortgage had gone under review, they would be able to freeze their mortgage into a fixed rate mortgage with "a lower monthly payment and/or additional cash out." In addition, the Solicitation also stated that if the consumer restructured their loan within the specified time period, the consumer would be able to "skip 2 monthly payments," a statement that was both inaccurate and misleading. The Solicitation advised the consumer to call APM Mortgage at a specific number to "begin the restructure process."
  15. Both Solicitations identified and attached as Exhibit 2 and Exhibit 3 contained both an Equal Housing Lending Logo and Department of Housing and Urban Development seal. APM Mortgage is licensed as a mortgage broker in the Commonwealth and therefore is not be permitted to distribute advertising materials that contain the Equal Housing Lending Logo.
  16. The Solicitation, identified as Exhibit 4 appeared to have been forwarded by a government agency as it contained a seal that indicated that the document was forwarded from the "Federal Housing Commission,' and identified the Solicitation as a "SECOND NOTICE STIMULUS ACT IRC SECTON 6109C." The body of the Solicitation stated in part "ECONOMIC STIMULUS ACT-BAILOUT REFERENCE NUMBER." The Solicitation notified the consumer that as a result of the Economic Stimulus Act the Federal Housing Authority had "adjusted their lending policies," and as a result the Consumer was eligible to apply for lower fixed rates.
  17. Language indicating that the offer was not being offered by a government agency was included in the Solicitation, notwithstanding the representations identified above which indicate a government affiliation. However, such language was in a font size that was significantly smaller than that in the body of the Solicitation and was located in a non-prominent location at the bottom of the Solicitation.
  18. Based on the Division's records, APM Mortgage is not a government agency.

    CONCLUSIONS OF LAW

  19. Based upon the information contained in Paragraphs 1 through 18, APM 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).
  20. Based upon the information contained in Paragraphs 1 through 18, by mailing Massachusetts consumers multiple Solicitations that contained a reference to a bank without the bank's express written consent, APM Mortgage has violated Massachusetts General Laws chapter 167, section 37 and Massachusetts General Laws chapter 93A.
  21. Based upon the information contained in Paragraphs 1 through 18, by mailing Massachusetts consumers multiple Solicitations that contained false or misleading language or language that had the tendency to be false or misleading, including language that could lead the reader to believe that the Solicitation was issued by the consumer's mortgage lender, or a government agency, and asserting that the consumer was eligible for a mortgage consolidation through a government program, lower monthly payment, a new fixed mortgage, and that the consumer could skip two monthly payments, which APM Mortgage did not have sufficient information upon which a reasonable belief in the truth of that representation could be based, APM Mortgage has violated Massachusetts General Laws chapter 93A, section 2(a), and the Office of the Attorney General's implementing regulation 940 CMR 8.04(1).
  22. Based upon the information contained in Paragraphs 1 through 18, by mailing Massachusetts consumers a Solicitation that made false promises to influence, persuade or induce a consumer to sign a mortgage loan application, including references the consumer's eligibility for a new fixed rate mortgage, lower monthly payments, and eligibility to skip 2 monthly payments, APM Mortgage violated the Division's regulation 209 CMR 42.12A(9).
  23. Based upon the information contained in Paragraphs 1 through 18, the Commissioner has determined that:
    1. APM Mortgage has engaged in, is engaging in, or is about to engage in, acts or practices which warrant the belief that the public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to APM Mortgage.

    ORDER TO CEASE AND DESIST AND NOTICE OF ADMINISTRATIVE PENALTY

  24. After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
  25. ORDERED that APM Mortgage shall cease mailing any Solicitations to Massachusetts consumers that contain any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading including but not limited to:
    1. Solicitations that contain language that could lead the reader to believe that the Solicitation is being issued by an existing bank, federal bank, federal branch, foreign bank, out-of-state bank, out-of-state branch, out-of-state federal bank or a federal credit union;
    2. Solicitations that contain any reference to an existing bank, federal bank, federal branch, foreign bank, out-of-state bank, out-of-state branch, out-of-state federal bank or a federal credit union; and
    3. Solicitations that have the tendency to make false promises to influence, persuade or induce a consumer to sign a mortgage loan application including references to the consumer's eligibility for a new fixed rate mortgage, lower monthly payments, and eligibility to skip 2 monthly payments.
  26. IT IS FURTHER ORDERED that within five (5) days of the effective date of this Order, APM Mortgage shall submit to the Commissioner a detailed record, prepared as of the date of submission, of all Massachusetts consumers to whom the Company distributed the Solicitation. The records to be produced shall include the consumers' names and addresses.
  27. IT IS FURTHER ORDERED that within twenty (20) days of the effective date of this Order, APM Mortgage shall submit a payment of ten thousand dollars ($10,000.00) in satisfaction of an administrative penalty collected in consideration of the Company's engaging in deceptive advertising. Such administrative penalty is imposed pursuant to Massachusetts General Laws chapter 255E, section 11. The Company shall remit payment pursuant to this Paragraph of the Order for the amounts due, payable to the "Commonwealth of Massachusetts," to the Office of the Commissioner of Banks, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118-6400. The Division shall remit the payment for deposit into the General Fund of the Commonwealth.
  28. The administrative penalty imposed on APM Mortgage is subject to review as provided in Massachusetts General Laws chapter 30A. Accordingly, APM Mortgage may request a hearing to contest said administrative penalty. Such request for a hearing must be filed in writing within 20 days of APM Mortgage's receipt of this Order. If the Company fails to request a hearing within the prescribed time frame pursuant to this Paragraph, the aforementioned administrative penalty shall be deemed final and binding and shall be due and owing to the Commonwealth.
  29. IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such Order shall become permanent and final only upon receipt of a written request for such a hearing from APM Mortgage within twenty (20) days of the effective date of this Order. If no hearing is requested within this twenty (20) day period, this Order shall become permanent and final until it is modified or vacated by the Commissioner.
  30. IT IS FURTHER ORDERED that this 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.
  31. IT IS FURTHER ORDERED that APM Mortgage shall review and revise, as necessary, the Company's policies and procedures to ensure that individuals performing on behalf of the Company neither act, nor represent themselves, as a government agency; and
  32. IT IS FURTHER ORDERED that a copy of each advertisement used by APM Mortgage shall be retained in the Company's books and records and shall be made available to the Division at its examinations/inspections of APM Mortgage.

    GENERAL PROVISIONS

  33. APM Mortgage shall revise its advertising practices and procedures to ensure that all solicitations and advertising materials used by the Company do not contain any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading.
  34. APM Mortgage shall take all necessary steps to ensure that the Solicitations or any similar solicitation is not published or distributed to consumers in Massachusetts.
  35. APM Mortgage shall implement, establish and maintain a system of internal controls to monitor the Company's compliance with the laws and regulations applicable to advertising practices including, but not limited to the Division's regulations 209 CMR 42.12A and the Office of the Attorney General's regulation 940 CMR 8.00 et seq.
  36. APM Mortgage shall establish, implement and maintain policies and procedures to ensure that all advertisements are thoroughly reviewed by senior management prior to publication or distribution to consumers. Such procedures shall include a review of the criteria utilized to generate mailing lists to ensure that targeted solicitations are appropriate for the consumers to whom such solicitations are distributed.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 10TH day of September, 2010

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

This Order was terminated pursuant to a Consent Order on December 13, 2010.