By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2010-248

TEMPORARY
ORDER TO CEASE AND DESIST

AND

NOTICE OF ADMINISTRATIVE
PENALTY


In the Matter of
NFM, INC.
Linthicum, Maryland

Mortgage Company License No(s). MC3591, MC5001, and MC5380


The Commissioner of Banks ("Commissioner") having determined that NFM, INC., ("NFM" or the "Corporation"), located at 505 Progress Drive, Suite 100, Linthicum, Maryland, 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 lender and mortgage broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.
  2. NFM is, and at all relevant times, has been a foreign corporation conducting business in the Commonwealth of Massachusetts. NFM's main office is located at 505 Progress Drive, Suite 100, Linthicum, Maryland.
  3. NFM is licensed by the Commissioner as a mortgage lender and mortgage broker under Massachusetts General Laws chapter 255E, section 2. According to records maintained on file with the Division, the Commissioner issued a mortgage company license, license number MC3591 to NFM to engage in the business of a mortgage lender and mortgage broker on or about October 6, 2004. License number MC3591 authorized NFM to conduct the mortgage company business from the Corporation's main office located at 505 Progress Drive, Suite 100, Linthicum, Maryland.
  4. NFM maintains additional office locations from which the Corporation conducts its mortgage lender and mortgage broker business. According to records maintained on file with the Division, NFM currently possesses two (2) additional mortgage company licenses from the Commissioner for locations operated in Marlton, New Jersey and Reisterstown, Maryland.
  5. On or about May 14, 2010, the Division was forwarded a copy of a mortgage loan solicitation ("Solicitation") received by a Massachusetts consumer from NFM. A copy of the solicitation is attached as Exhibit 1. pdf format of nfmexhibit107202010.pdf
  6. 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.

  7. The Attorney General's regulation 940 CMR 8.04(1) states, in part:

    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.

  8. The Solicitation, marked as a "FEDERAL HOUSING," notice appeared to have been forwarded from an "Audit Review" department with a form number and includes several references which collectively create an appearance that the Solicitation was issued by a government agency. Specifically, the Solicitation contains a seal that resembles the Seal of the United States Federal Government. The Seal contained language that indicated that the Solicitation was an "Official Notice" and from the "Interest Rate Reduction Department." In addition, the body of the Solicitation referenced a case number that with "FHA" referenced.
  9. The body of the Solicitation notified the consumer that records indicated that the consumer "had yet to file for Federal programs sponsored by Federal Housing" and furthermore that the consumer was "entitled to these funds and further assistance." Additionally, the Solicitation advised consumers to contact an assigned Federal Housing Case Manager immediately as the "notice [was] crucial to [their] program acceptance.
  10. 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 then that in the body of the Solicitation and was located in a non-prominent location at the bottom of the Solicitation.
  11. Based on the Division's records, NFM is not a government agency.
  12. 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 sign a mortgage loan application or mortgage loan documents.

  13. The Solicitation included a list of program benefits including: No Closing Costs; Refunds of Mortgage Insurance Premiums; Lower Interest Rates and Payments; No Increase in Loan Balance; No Appraisal-for a limited time; and No Income Verification. However, language at the bottom of the Solicitation indicated that eligibility was subject to income, credit and home value and that 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.

    CONCLUSIONS OF LAW

  14. Based upon the information contained in Paragraphs 1 through 13, NFM has failed to demonstrate and maintain the character, reputation, integrity, and general fitness that would warrant the belief that the mortgage lender and 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 regulations 209 CMR 42.03(2)(c) and 209 CMR 42.06(2)(c).
  15. Based upon the information contained in Paragraphs 1 through 13, by mailing Massachusetts consumers a Solicitation containing 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 a government agency, NFM 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).
  16. Based upon the information contained in Paragraphs 1 through 13, 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 to benefits of the program that included factors such as no income verification and no appraisals, NFM violated the Division's regulation 209 CMR 42.12A(9).
  17. Based upon the information contained in Paragraphs 1 through 13, the Commissioner has determined that:
    1. NFM 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 NFM.

    ORDER TO CEASE AND DESIST AND NOTICE OF ADMINISTRATIVE PENALTY

  18. After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
  19. ORDERED that NFM shall cease mailing any Solicitations to Massachusetts consumers and 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 a government agency; and
    2. 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 benefits of the program that included factors such as no income verification and no appraisals.
  20. IT IS FURTHER ORDERED that within five (5) days of the effective date of this Order, NFM shall submit to the Commissioner a detailed record, prepared as of the date of submission, of all Massachusetts consumers to whom the Corporation distributed the Solicitation. The records to be produced shall include the consumers' names and addresses
  21. IT IS FURTHER ORDERED that within twenty (20) days of the effective date of this Order, NFM shall submit a payment of ten thousand dollars ($10,000.00) in satisfaction of an administrative penalty collected in consideration of the Corporation's engaging in deceptive advertising. Such administrative penalty is imposed pursuant to Massachusetts General Laws chapter 255E, section 11. The Corporation 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. The administrative penalty imposed on NFM as referenced in this Order are subject to review as provided in Massachusetts General Laws chapter 30A. Accordingly, NFM may request a hearing to contest said administrative penalty. Such request for a hearing must be filed in writing within 20 days of NFM's receipt of this Order. If the Corporation 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.
  22. 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 NFM 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.
  23. 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.
  24. IT IS FURTHER ORDERED that NFM shall review and revise, as necessary, the Corporation's policies and procedures to ensure that individuals performing on behalf of the Corporation neither act, nor represent themselves, as a government entity; and
  25. IT IS FURTHER ORDERED that a copy of each advertisement used by NFM shall be retained in the Corporation's books and records and shall be made available to the Division at its examinations/inspections of the NFM.

    GENERAL PROVISIONS

  26. NFM shall revise its advertising practices and procedures to ensure that all solicitations and advertising materials used by the Corporation do not contain any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading.
  27. NFM shall take all necessary steps to ensure that the Solicitation or any similar solicitation is not published or distributed to consumers in Massachusetts.
  28. NFM shall implement, establish and maintain a system of internal controls to monitor the Corporation'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.
  29. NFM 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 20th day of July, 2010

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

This Order was terminated pursuant to a Consent Order on September 9, 2010.