By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2010-195

CONSENT ORDER


In the Matter of
HOME ADVANTAGE MORTGAGE CORPORATION

Littleton, Massachusetts

Mortgage Broker License No. MB0650


WHEREAS, HOME ADVANTAGE MORTGAGE CORPORATION, Littleton, Massachusetts ("Home Advantage" 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 August 20, 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, Home Advantage agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of Home Advantage was conducted pursuant to General Laws chapter 255E, section 8, as of November 3, 2008, and continuing through September 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 Home Advantage as of November 3, 2008 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 Home Advantage, and stipulate and agree as follows:

  1. Home Advantage shall establish, implement and maintain policies and procedures to ensure that the Corporation maintains all loan documents 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 Massachusetts General Law chapter 255E and the Division's regulations 209 CMR 42.09 and 209 CMR 48.03.
    1. The Corporation shall retain for a minimum of three years all correspondence and records relating to each loan application, including but not limited to: all documents related to income/asset verification; signed loan application forms; credit reports; appraisals; lender documentation, including underwriting guidelines; employment verification documentation; all required disclosure forms; and all correspondence and papers relating to the mortgage loan.
    2. The Corporation shall properly document the initial date of application 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.
  2. The Licensee shall submit a payment of five thousand dollars ($5,000) in satisfaction of an administrative penalty collected in consideration of Home Advantage's failure to retain documents and records as required by 209 CMR 42.09. Home Advantage shall remit payment in full of the amount indicated above, payable to the "Commonwealth of Massachusetts," with the executed copy of this Consent Order, to the Office of the Commissioner of Banks, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118-2218. The Division shall remit the payment for deposit into the General Fund of the Commonwealth.
  3. Home Advantage shall establish, implement and maintain policies and procedures to ensure that that Corporation refrains from requiring or permitting consumers to sign blank or partially completed mortgage loan documents as set forth in the Division's regulation 209 CMR 42.12(a).
  4. Within twenty (20) days of the effective date of this Consent Order, Home Advantage shall produce a Capital Plan that describes how the Licensee will establish and maintain an adjusted net worth of at least twenty-five thousand dollars ($25,000.00). The Capital Plan required under this Section shall be submitted to the Division for review by mail to Massachusetts Division of Banks, at the following address: Massachusetts Division of Banks, Attention: Mortgage Broker Examination Unit, 1000 Washington Street, 10th Floor, Boston, MA 02118. The Capital Plan shall address both internal and external sources of capital augmentation, including capital infusion, conversion of debt to equity, retention of earnings, asset sales, or any other means that are acceptable to the Division:
    1. For purposes of this Consent Order, the terms "capital" and "net worth" shall be defined in accordance with the Division's regulation 209 CMR 42.02 whereby Home Advantage's net worth shall equal the Licensee's total assets less total liabilities, omitting the following assets:
      1. that portion of an applicant's assets pledged to secure obligations of any person or entity other than that of the applicant;
      2. any asset due from officers or stockholders of the applicant or persons in which the applicant's officers or stockholders have an interest;
      3. an amount in excess of the lower of the cost or fair market value of mortgage loans in foreclosure, or real property acquired through foreclosure;
      4. an investment shown on the balance sheet in joint ventures, subsidiaries, or affiliates, which is greater than the fair market value of the assets;
      5. goodwill or value placed on insurance renewals or other similar intangible value;
      6. organization costs;
      7. the value of servicing contracts not determined in accordance with the Financial Accounting Standards Board's ("FASB") Statement of Financial Accounting Standards No. 65, "Accounting for Certain Mortgage Banking Activities", and any subsequent revisions thereto;
      8. for an applicant that is applying to hold the mortgage broker or mortgage lender license as a natural person, any real property having thereon a dwelling house with accommodations for four or less separate households and occupied, or to be occupied, in whole or in part by the applicant; and
      9. any other intangible asset, as may be determined by the Commissioner.
  5. Within sixty (60) days of the effective date of this Consent Order, Home Advantage shall establish an adjusted net worth of at least twenty-five thousand dollars ($25,000.00) and shall maintain an adjusted net worth of at least $25,000.00 at all times thereinafter while the Massachusetts mortgage broker license(s) are maintained.
    1. Satisfaction of this Section of the Consent Order shall necessarily require that Home Advantage submit sufficient documentation to the Division to evidence how the increased net worth standard was satisfied which may include, without limitation, evidence of a cash contribution or a debt conversion, as applicable;
    2. Within sixty (60) days of the effective date of the Consent Order, Home Advantage shall submit to the Division a balance sheet and statement of income and expense for Home Advantage that illustrates Home Advantage's compliance with the provisions set forth in Section 6 of this Consent Order. The financial statements must be prepared in accordance with generally accepted accounting principles ("GAAP") and signed and dated under the pains and penalties of perjury by an authorized senior officer of Home Advantage who possesses the requisite knowledge and experience to provide a certification to the Division of the information therein reported; and
    3. The materials to be submitted pursuant to subsections 6(a) and 6(b) shall be mailed to the Division at the following address: Massachusetts Division of Banks, 1000 Washington Street, Attention: Mortgage Broker Examination Unit, 10th Floor, Boston, MA 02118.
  6. Home Advantage shall establish, implement, and maintain procedures to ensure that all consumers receive a loan origination and compensation agreement that strictly conforms to the content and format as set forth in 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).
  7. Home Advantage 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. Home Advantage 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 the Real Estate Settlement Procedures Act (RESPA) implementing regulation 24 CFR 3500.
  9. Home Advantage shall establish, implement, and maintain procedures to ensure that the Corporation provides an Affiliated Business Arrangement Disclosure Statement to all consumers who are referred to Home Advantage's affiliated law firm. Such disclosure statement shall be in the format set forth in Appendix D of the RESPA implementing regulation 24 CFR 3500.
  10. Home Advantage 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.
  11. Home Advantage shall establish, implement, and maintain procedures to ensure that the Notice of Privacy Policies and Practices provided to consumers complies with the requirements of 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.
  12. Home Advantage shall cease from issuing the "Massachusetts Net Tangible Benefit Disclosure and Acknowledgment" or any other such documentation indicating that a home loan is in a borrower's interest pursuant to the Division's regulation 209 CMR 53.07. It is understood that when the Corporation brokers a loan subject to the Division's regulations regarding a lender's determination and documentation of borrower's interest, Home Advantage is not permitted to make an affirmative determination that a home loan is in the borrower's interest nor assign the responsibility for making this determination to the borrower. However, the Corporation may request information from a borrower on behalf of the lender or transmit information to the borrower on behalf of the lender.
    1. The Corporation shall issue a written notification to each mortgage lender who has received the "Massachusetts Net Tangible Benefit Disclosure and Acknowledgment" from the Corporation. Said written notification shall be in conformance with the requirements set forth in the Report. The Corporation shall retain a copy of each notification in the Corporation's books and records until such time as the Division conducts its next Examination/Inspection.
  13. Home Advantage shall implement corrective action to ensure that the Corporation's license type is disclosed on its website, in accordance with the Division's regulation 209 CMR 42.15 and the Attorney General's regulation 940 CMR 8.04(2).
  14. Home Advantage shall review and revise the Corporation's website, to eliminate any representations or statements 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.
  15. Home Advantage shall comply with all laws and regulations applicable to 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, within thirty (30) days of receipt of the Report, all violations and areas of concern addressed in the Report.
    1. Within thirty (30) days of Home Advantage's 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 Home Advantage 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, Home Advantage shall establish, implement, and maintain quality control standards 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. Home Advantage 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.
  16. On the thirtieth (30 th) day after the end of each calendar quarter following the date of this Consent Order, Home Advantage 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; and
    2. Written findings prepared by Home Advantage 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 Home Advantage's compliance condition in Massachusetts and the results thereof.
    3. A quarterly balance sheet and income statement signed by an officer of the Corporation with knowledge of the accuracy of the information reported.
  17. The reporting requirement to the Division referenced in Section 16 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.
  18. Within thirty (30) days of receipt of the relevant invoice from the Division, Home Advantage shall submit payment in full for the amount owed for the costs of the Division's 2008 examination/inspection. The payment shall be made payable to the "Commonwealth of Massachusetts" and mailed to Massachusetts Division of Banks, 1000 Washington Street, 10th Floor, Boston, MA 02118.
  19. Nothing in this Consent Order shall be construed as permitting Home Advantage to violate any law, rule, regulation, or regulatory bulletin to which Home Advantage is subject.
  20. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Home Advantage's mortgage broker license under General Laws chapter 255E, section 6, while this Consent Order is in effect.
  21. 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.
  22. This Consent Order shall become effective immediately upon the date of its issuance.
  23. 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.
  24. This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements between the Division and Home Advantage.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 20th day of August, 2010

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

THIS CONSENT ORDER WAS TERMINATED ON NOVEMBER 16, 2011.