By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2010-225

FINDINGS OF FACT AND
TEMPORARY ORDER TO
CEASE AND DESIST


In the Matter of
AGENCY LENDING, LLC
West Greenwich, Rhode Island

Mortgage Broker License No(s). MB5328


The Commissioner of Banks ("Commissioner") having determined that AGENCY LENDING, LLC ("Agency Lending" or the "Licensee"), with its main address located at 45 Nooseneck Hill Rd., West Greenwich, Rhode Island 02817 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) and chapter 255F, section 11(a).

FINDINGS OF FACT

  1. The Division of Banks ("Division"), through the Commissioner, has jurisdiction over the licensing and regulation of persons and entities engaged in the business of a mortgage lender and mortgage broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.
  2. The Division, through the Commissioner, 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.
  3. Agency Lending is, and at all relevant times has been, a Massachusetts licensed mortgage broker doing business in the Commonwealth.
  4. A. Failure to Submit Financial Statements as Required

  5. The Division's regulation 209 CMR 42.06(2)(b)3 states:
  6. 3. Renewal Applications. Within 90 days of the close of its fiscal year, an Applicant for mortgage broker license renewal shall submit financial statements for the preceding fiscal year that have been audited or reviewed by an independent certified public accountant and such other financial information as the Commissioner may require. [Emphasis supplied.]

  7. On or about October 22, 2009, the Division sent detailed instructions to all licensed mortgage brokers and mortgage lenders regarding the 2010 license renewal application process.
  8. The license renewal instructions notified each recipient that by December 31, 2009, all mortgage lender and mortgage broker licensees were required to remain in compliance with 209 CMR 42.03 and 209 CMR 42.06, respectively, including the requirement to submit to the Division audited or reviewed financial statements, as determined by the type of license(s) held, within ninety (90) days of the end of a licensee's fiscal year end.
  9. On or about March 16, 2010, the Division sent a reminder notice to all licensed mortgage brokers and mortgage lenders regarding the 2010 license renewal requirements. Pursuant to the instructions contained therein, all licensed mortgage brokers and mortgage lenders with a fiscal year end date of December 31 st were directed to file through the Nationwide Mortgage Licensing System (NMLS) the required financial statements by no later than March 31, 2010.
  10. On March 31, 2010, Agency Lending uploaded financial statements through the NMLS that had been prepared on a compilation basis. These financial statements were not in accordance with the 2010 license renewal instructions or the Division's regulation, as they were neither audited nor reviewed by an independent certified public accountant, as required.
  11. As of the date of this Temporary Order, the Licensee has failed to provide the required financial statements to fulfill the Division's license renewal requirements.
  12. B. Failure to Submit Annual Report

  13. Massachusetts General Laws chapter 255E, section 8 states, in part:
  14. Each licensee shall annually, on or before a date determined by the commissioner, file a report with the commissioner containing such information as said commissioner may require concerning the business and operations conducted by the licensee in the commonwealth during the preceding calendar year.

  15. The Division's regulation 209 CMR 42.10 states:
  16. By March 31, each Licensee shall file an annual report with the Commissioner in such form as the Commissioner shall prescribe for the preceding calendar year. The annual report shall be in writing, subscribed by the Licensee under the pains and penalty of perjury.

  17. The license renewal instructions issued by the Division on October 22, 2009 and subsequent reminder notice on March 16, 2010 as described above, also notified all licensed mortgage brokers and mortgage lenders of the requirement that all licensees were required to submit to the Division a completed Mortgage Lender/Mortgage Broker Annual Report for the period ending December 31, 2009 ("Mortgage Lender/Mortgage Broker 2009 Annual Report") by March 31, 2010. In both sets of instructions, licensees were notified that a $50.00 per calendar day late fee would be assessed to all licensees that failed to submit the Mortgage Lender/Mortgage Broker 2009 Annual Report by March 31, 2010.
  18. On May 18, 2010, the Division received Agency Lending's Mortgage Lender/Mortgage Broker 2009 Annual Report, which resulted in late annual report filing fee. As of the date of this Temporary Order, the late fee is still outstanding.
  19. C. Failure to File the Massachusetts Corporation (or Foreign Corporation) Annual Report (or LLC Annual Report)

  20. Massachusetts General Laws, chapter 156C, section 12 states, in part, that:
  21. a) In order to form a limited liability company, one or more authorized persons must execute a certificate of organization. The certificate of organization shall be filed in the office of the state secretary and set forth:

    (1) the name of the limited liability company;

    (2) the address of the office in the commonwealth required to be maintained by section five;

    (3) the name and address of the resident agent for service of process required to be maintained by section 5; provided, however, that the agent's written consent to the appointment shall be either in the certificate or attached to it;

    (4) if the limited liability company is to have a specific date of dissolution, the latest date on which the limited liability company is to dissolve;

    (5) if the limited liability company has managers at the time of its formation, the name and address of each manager;

    (6) the name of any other person in addition to any manager who is authorized to execute any documents to be filed with the office of the state secretary and at least one such person shall be named if there are no managers;

    (7) the general character of the limited liability company's business;

    (8) if desired, the names of one or more persons authorized to execute, acknowledge, deliver and record any recordable instrument purporting to affect an interest in real property, whether to be recorded with a registry of deeds or a district office of the land court; and

    (9) any other matters the authorized persons determine to be included therein.....

    (c) All limited liability companies formed under this chapter shall also file an annual report with the state secretary setting forth the information required in subsection (a).

  22. The license renewal instructions issued by the Division on October 22, 2009 and March 16, 2010 as described above, also notified all licensed mortgage brokers and mortgage lenders of the requirement that all licensees were required to submit to the Secretary of the Commonwealth the applicable Massachusetts Corporation (or Foreign Corporation) LLC Annual Report (collectively, the "Corporate Annual Report") within two and one half months of the end of Agency Lending's fiscal year end.
  23. As of the date of this Temporary Order, the Licensee has failed to file a 2009 Corporate Annual Report.
  24. On November 11, 2009, Agency Lending, through a duly appointed and authorized representative, affirmed a series of attestations in completing the Company's Massachusetts license renewal application through the NMLS (the "Renewal Attestation"). The Renewal Attestation provided that the licensee acknowledged and agreed to expediently update and correct the information in the licensee's NMLS record as it changed. Agency Lending further attested, in part, to an understanding that, "submitting false or misleading information, or omitting pertinent or material information, may be grounds for administrative action and/or criminal action."
  25. Agency Lending's Renewal Attestation further provided, in part, the following:
    1. The Licensee/Registrant remains in good standing with each jurisdiction's Secretary of State office, or other applicable agency, for each jurisdiction being requested to renew its license/registration;
    2. The Licensee/Registrant meets the financial responsibility requirements and/or net worth requirements, as required by each jurisdiction being requested to renew its license/registration; and
    3. The licensee acknowledged an understanding, and agreed to comply with, the laws and regulations pertaining to the conduct of the licensed business.
  26. On or about May 13, 2010, the Division issued a Final Notice to Agency Lending, providing notification of the deficiencies with Agency Lending's license renewal status and directing Agency Lending to comply with the license renewal process by supplying the outstanding renewal requirements identified in paragraph(s) 4 through 19. The directive required the Company to respond with all applicable information by no later than May 24, 2010. As of the date of this Temporary Order, Agency Lending has failed to submit all, or part of, the required documentation to the Division.
  27. CONCLUSIONS OF LAW

  28. Based upon the information contained in Paragraphs 1 through 19, by failing to file the financial statements in the form required by regulation and as indicated during the license renewal process, Agency Lending has violated 209 CMR 42.06(2)(b)3.
  29. Based upon the information contained in Paragraphs 1 through 19, by failing to file its Mortgage Lender/Mortgage Broker 2009 Annual Report in a timely manner, Agency Lending has violated Massachusetts General Laws chapter 255E, section 8 and 209 CMR 42.10.
  30. Based upon the information contained in Paragraphs 1 through 15, by failing to file its 2009 Corporate Annual Report, Agency Lending has violated Massachusetts General Laws chapter 156C, section 12 and the standards of the license renewal process.
  31. Based upon the information contained in Paragraphs 1 through 15, the Commissioner has determined that:
    1. Agency Lending has engaged in, is engaging in, or is about to engage in, acts or practices which warrant the belief that it is not operating honestly, fairly, soundly and efficiently in the public interest in violation of standards governing the licensing and conduct of a mortgage lender and mortgage broker including, but not limited to, the provisions of the Division's regulations at 209 CMR 42.00 et seq.; and
    2. The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Agency Lending.
  32. Based upon the information contained in Paragraphs 1 through 15, had the facts and conditions found therein existed at the time of Agency Lending's original mortgage broker license application, the Commissioner would have been warranted in refusing to issue such license(s). Further, the facts and conditions set forth in Paragraphs 1 through 15 present sufficient grounds for the revocation of Agency Lending's mortgage broker license(s) pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulation at 209 CMR 42.07(2)(b).
  33. ORDER TO CEASE AND DESIST

  34. After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
  35. ORDERED that Agency Lending and any and all officers, members, managers, employees, independent contractors, or agents, operating on behalf of Agency Lending, and their successors or assigns, shall immediately cease engaging in the activities of: (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, on behalf of Agency Lending relative to any residential property in Massachusetts, not otherwise expressly permitted by the terms of this Temporary Order. Therefore, Agency Lending is ordered immediately to cease soliciting or accepting, either directly or indirectly, any residential mortgage loan applications from consumers for residential property located in Massachusetts.
  36. IT IS FURTHER ORDERED that Agency Lending, 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.
  37. IT IS FURTHER ORDERED that Agency Lending 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. Agency Lending shall place such applications with a licensed Massachusetts broker(s) or lender(s), as appropriate, or with a financial institution(s) that is exempt from the mortgage licensing requirements under Massachusetts General Laws chapter 255E, section 2.
  38. IT IS FURTHER ORDERED that as soon as possible, but in no event later than two days after the effective date of this Temporary Order, Agency Lending shall submit the following information in writing to the Commissioner:
    1. A detailed record of all pending residential mortgage loan applications, which shall include, but is not limited to, the following: customer name, address, telephone number; all prepaid loan fees submitted by the customer; amount of loan; application status (i.e. filed, submitted to lenders); scheduled closing date; rate lock status; the location of all original open application files; and a list of applicable wholesale lenders. The latter list should include telephone numbers of contact persons familiar with Agency Lending 's submitted loans.
  39. IT IS FURTHER ORDERED that Agency Lending shall immediately secure all pending mortgage loan application files and, to the extent that any original documents must be forwarded to the relevant mortgage lender or mortgage broker pursuant to this Temporary Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in Agency Lending's books and records and shall be available to the Commissioner, in their entirety, immediately upon request on the date and time specified by the Commissioner.
  40. IT IS FURTHER ORDERED that Agency Lending shall submit financial statements for the preceding fiscal year in the form required by the license renewal provisions of 209 CMR 42.00 et seq.
  41. IT IS FURTHER ORDERED that Agency Lending shall submit a completed Mortgage Broker 2009 Annual Report, in the form provided on the Division's website, and thereupon submit a payment to the Division of the amount then outstanding due to the late filing of the Mortgage Broker 2009 Annual Report.
    1. The amount of the late fee shall be determined in accordance with General Laws chapter 255E, section 8 by applying a rate of $50.00 per calendar day for each day after March 31, 2010 on which the Report remained outstanding. The Licensee may contact the Division to clarify or confirm the calculation of the late fee amount; and
    2. Agency Lending shall remit payment in accordance with this Paragraph of the Temporary Order for the amount then due, payable to the "Commonwealth of Massachusetts," to the Office of the Commissioner of Banks, Attn: Mortgage Licensing, 1000 Washington St., Floor 10, Boston, MA 02118.
  42. IT IS FURTHER ORDERED that Agency Lending shall submit a corporate annual report(s) to the Secretary of the Commonwealth as required pursuant to applicable laws and regulations.
  43. IT IS FURTHER ORDERED that this Temporary Order shall become effective immediately and shall remain in effect unless vacated, modified, or suspended by the Commissioner or upon court order after review under Massachusetts General Laws chapter 30A.
    1. It is understood that the Licensee may petition the Commissioner to vacate or modify this Temporary Order upon presenting to the Division satisfactory evidence that the Licensee has fully complied with the provisions of this Temporary Order.
  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 Agency Lending 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 15th day of June, 2010

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