By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2010-209

CONSENT ORDER


In the Matter of
AFFILIATED MORTGAGE SERVICES CORPORATION
Wakefield, Massachusetts

Mortgage Broker License No. MB5070


WHEREAS, AFFILIATED MORTGAGE SERVICES CORPORATION, Wakefield, Massachusetts ("Affiliated Mortgage Services" or the "Corporation"), a licensed mortgage broker under Massachusetts General Laws chapter 255E, section 2, has been advised of its right to Notice and Hearing pursuant to General Laws chapter 255E, section 7(a), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER ("Consent Agreement") with representatives of the Division of Banks ("Division") dated June 8, 2010, whereby, solely for the purpose of settling this matter, and without admitting any allegations or implications of fact or the existence of any violation of state or federal laws and regulations governing the conduct and operation of a mortgage broker, Affiliated Mortgage Services agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of Affiliated Mortgage Services was conducted pursuant to General Laws chapter 255E, section 8, as of August 21, 2008, with a follow-up review conducted May 29, 2009, to assess the Corporation's level of compliance with applicable Massachusetts statutes and the Division's regulations governing the conduct of those engaged in the business of a mortgage broker in the Commonwealth; and

WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of Affiliated Mortgage Services alleged substantial non-compliance with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a mortgage broker in Massachusetts.

ORDER

NOW COME the parties in the above-captioned matter, the Division and Affiliated Mortgage Services, and stipulate and agree as follows:

  1. Affiliated Mortgage Services shall establish, implement, and maintain procedures to ensure that all broker fees, processing fees, points, or similar fees collected by the Corporation as compensation for administrative costs incurred in originating the mortgage loan are not charged to consumers except to the extent that such fees or points have been fully disclosed to the consumers by the Corporation, in writing, prior to the closing of the mortgage loan in accordance with Massachusetts General Laws chapter 183, section 63.
    1. The Corporation shall reimburse the consumers identified in the Report for the amounts collected as a broker fee, processing fee, points or similar fee at settlement that had not been disclosed to the consumers in full, in writing, prior to loan closing. The amount of such reimbursements shall equal the difference between the actual charges assessed to the consumers and the amount disclosed in writing for such fee prior to loan closing;
    2. The Corporation shall conduct a review of all Massachusetts residential mortgage loan applications processed by the Corporation since February 14, 2006, and shall reimburse all consumers from whom any broker fee, processing fee, point, or similar fee collected as compensation for administrative costs of origination was charged by the Corporation where the amount charged for such fee or point was not previously disclosed in full to the consumer, as a broker fee, processing fee, points, or similar fee, in writing, prior to the closing of the loan. The amount of such reimbursements shall equal the difference between the actual charges assessed to the individual consumer and the amount disclosed in writing prior to loan closing; and
    3. With its written response to the findings presented in the Report, which is to be submitted to the Commissioner pursuant to Section 16 of this Consent Order, the Corporation shall submit evidence of the reimbursements issued pursuant to this Section of the Consent Order. Evidence of the reimbursements shall include the consumers' names, the dates the loans closed, the check numbers, the amount of the reimbursements, and certified mail receipts to illustrate the consumers' receipt of the reimbursements.
  2. Affiliated Mortgage Services shall establish, implement, and maintain quality control procedures governing the placement of loan applications into alternative documentation loan programs (including, but not limited to, stated income; no income, no asset verification; no income verification; no ratio loans; low and no documentation loans; etc.) to ensure accurate application completion procedures; verification and due diligence procedures; and books and records retention in compliance with applicable state and federal laws, regulations, and regulatory bulletins governing the conduct and operation of those engaged in the business of a mortgage broker in Massachusetts.
    1. Compliance with this Section of the Consent Order shall require that Affiliated Mortgage Services review the Division's Regulatory Bulletin 5.1-103: Guidance on Non-Traditional Mortgage Product Risks, the Division's September 2006 Industry Letter, and the Division's Regulatory Bulletin 5.1-104: Statement on Subprime Mortgage Lending and implement procedures to ensure Affiliated Mortgage Services' compliance therewith.
  3. Within thirty (30) days from the receipt of the Report, Affiliated Mortgage Services shall submit to the Division a written profit plan consisting of goals and strategies for improving the Corporation's profitability.
    1. The written profit plan shall include, at a minimum:
      1. identification of the major areas in, and means by which, management shall seek to improve the Corporation's operating performance and enhance capital formation;
      2. realistic and comprehensive budgets;
      3. a budget review process to monitor the income and expenses of the Corporation to compare actual figures with budgetary projections;
      4. a description of the operating assumptions that form the basis for, and adequately support, major projected income and expense components; and
      5. a statement of the Board of Directors commitment to the continued maintenance of acceptable levels of liquidity and capital.
    2. Performance under the written profit plan shall be reported to the Division and submitted with quarterly progress reports prepared pursuant to Section 17 of the Consent Order.
  4. Affiliated Mortgage Services shall establish and implement procedures to maintain all loan files in the Corporation's books and records in a manner sufficient to evidence compliance with applicable state and federal statutes and regulations, in accordance with the record keeping requirements specified by the Division's regulations 209 CMR 42.09 and 209 CMR 48.03. Such procedures shall necessarily require that the Corporation properly document the initial date of application in a residential mortgage loan transaction and ensure that all disclosures are properly dated and maintained in a manner that will allow the Commissioner to determine whether time-sensitive documents are being provided to consumers within the mandated timing requirements.
  5. Affiliated Mortgage Services shall establish, implement, and maintain procedures to ensure that all consumers receive a loan origination and compensation agreement in accordance with the provisions of the Division's regulation 209 CMR 42.16. For each consumer loan file, a completed copy of the loan origination and compensation agreement shall be retained in the Corporation's books and records, as provided in 209 CMR 42.09(1)(b).
  6. Affiliated Mortgage Services shall establish, implement, and maintain procedures to ensure that the Corporation accurately discloses yield spread premiums on the Good Faith Estimate, in accordance with the provisions of Real Estate Settlement Procedures Act (RESPA) implementing regulation 24 CFR 3500.
  7. Affiliated Mortgage Services shall establish, implement, and maintain procedures to ensure that the Corporation refrains from providing consumers with any disclosure which, pursuant to the applicable statute, regulation, or regulatory bulletin, is intended to be issued exclusively by the lender or creditor in the residential mortgage loan transaction.
  8. Affiliated Mortgage Services shall establish, implement, and maintain procedures to ensure that all consumers receive a Notice of Privacy Policies and Practices in accordance with, and in the form required by, the Federal Trade Commission's Regulation 16 CFR 313. For each consumer loan file, a copy of the Notice of Privacy Policies and Practices shall be retained in the Corporation's books and records as evidence of compliance.
  9. Affiliated Mortgage Services shall establish, implement, and maintain procedures to ensure that the Corporation files an annual report with the Commissioner by March 31 st of each year, as required pursuant to the Division's regulation 209 CMR 42.10.
  10. Affiliated Mortgage Services shall revise its "Borrower's Certification and Authorization" form to eliminate any representation or statement that could be considered false, misleading, or have the tendency to be misleading, including, but not limited to, any representation that the Corporation, a licensed mortgage broker, is approving or funding the loan.
  11. Affiliated Mortgage services shall establish, implement and maintain procedures to ensure that the Credit Score Disclosure is provided to consumers in accordance with the requirements of the Fair Credit Reporting Act, Section 609(g). For each consumer loan file, a completed copy of the Credit Score Disclosure shall be retained in the Corporation's books and records as evidence of compliance.
  12. Affiliated Mortgage Services shall at all times conduct business exclusively under the business name stated on its mortgage broker license as issued by the Commissioner. Having obtained a mortgage broker license from the Commissioner to conduct business in Massachusetts as "Affiliated Mortgage Services Corporation" the Corporation shall conduct business in Massachusetts exclusively under that name. The Corporation shall necessarily review and revise its written forms and disclosures to ensure that the Corporation is identified in a manner consistent with the name stated on its mortgage broker license as issued by the Commissioner.
  13. Affiliated Mortgage Services shall review and revise as necessary the Corporation's website to ensure that the Corporation's license type and number are disclosed, in accordance with the Division's regulation 209 CMR 42.15 and the Attorney General's regulation 940 CMR 8.04(2).
  14. Affiliated Mortgage Services shall comply with all laws and regulations applicable to his conducting the business of a mortgage broker, including, but not limited to, Massachusetts General Laws chapters 255E and 255F, and the Division's regulations 209 CMR 41.00 et seq. and 209 CMR 42.00 et seq. Such obligations shall necessarily include the duty to address and correct all violations and areas of concern addressed in the Report.
    1. Within twenty (20) days of Affiliated Mortgage Services' receipt of the Report, the Corporation shall submit to the Commissioner a written response that addresses each of the violations and areas of concern specified in the Report. The written response shall describe the revised policies and procedures adopted by Affiliated Mortgage Services to implement all corrective actions set forth in: (i) the "Examiner's Comments and Conclusions" section of the Report and (ii) the provisions of this Consent Order;
    2. Within thirty (30) days from the effective date of this Consent Order, Affiliated Mortgage Services shall establish, implement, and maintain quality control standards and internal auditing procedures which provide for a loan review process to assess the Corporation's compliance with: (i) the statutes, rules, regulations, regulatory bulletins, and other relevant provisions of law applicable to those engaged in the business of a mortgage broker in Massachusetts and (ii) the provisions of this Consent Order. Such quality control standards shall be designed to prevent the recurrence of the violations addressed in the Report; and
    3. Affiliated Mortgage Services shall establish, implement, and maintain procedures and policies to ensure that all applicable staff persons receive adequate instruction and ongoing, periodic training to ensure proper implementation and execution of the revised practices and procedures implemented pursuant to this Consent Order.
  15. On the thirtieth (30 th) day after the end of each calendar quarter following the date of this Consent Order, Affiliated Mortgage Services shall furnish written progress reports to the Division, which shall address and include the following:
    1. A description of the form, content, and manner of any actions taken to address each Section of this Consent Order and the results thereof;
    2. Updated financial statements prepared as of the last day of such calendar quarter. The quarterly financial statements shall include a balance sheet, a statement of income and expense, and statement of cash flows, and all relevant notes thereto, prepared in accordance with GAAP, and signed under the pains and penalties of perjury by an authorized senior officer of Affiliated Mortgage Services who possesses the requisite knowledge and experience to provide a certification to the Division of the information therein reported; and
    3. Written findings prepared by Affiliated Mortgage Services detailing a review of management's and staff persons' adherence to the policies, programs, and procedures adopted pursuant to this Consent Order and to applicable statutes, regulations, and rules, as well as a description of any operational changes implemented during such quarter which are intended to improve Affiliated Mortgage Services' compliance condition in Massachusetts and the results thereof.
  16. The reporting requirement to the Division referenced in Section 15 of this Consent Order shall remain in effect and shall not be amended or rescinded without the prior written modification, termination, or suspension of the applicable provision of this Consent Order from the Commissioner.
  17. Nothing in this Consent Order shall be construed as permitting Affiliated Mortgage Services to violate any law, rule, regulation, or regulatory bulletin to which Affiliated Mortgage Services is subject.
  18. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Affiliated Mortgage Services' mortgage broker license under General Laws chapter 255E, section 6, while this Consent Order is in effect.
  19. Failure to comply with the terms of this Consent Order shall constitute grounds for license suspension and/or revocation, or other formal regulatory action pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
  20. This Consent Order shall become effective immediately upon the date of its issuance.
  21. The provisions of this Consent Order shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this Consent Order shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
  22. This Consent Order and the Consent Agreement are the complete documents representing the resolution of violations noted in the Report. The Memorandum of Understanding addressing the financial concerns raised during the annual reporting and renewal process still remain in effect as agreed to previously.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 8th day of June, 2010

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