By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2010-329

TEMPORARY
ORDER TO CEASE AND DESIST

AND

NOTICE OF ADMINISTRATIVE
PENALTY

In the Matter of
Universal Mortgage Group, LLC
Boston, Massachusetts

Mortgage Broker License No. MB3794


The Commissioner of Banks ("Commissioner") having determined that UNIVERSAL MORTGAGE, LLC ("Universal Mortgage" or the "Company") located at 516 E 2 nd Street, Suite 3, Boston, Massachusetts, 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. Universal Mortgage is, and at all relevant times, has been a limited liability company conducting business in the Commonwealth of Massachusetts. Universal Mortgage's main office is located at 516 E 2 nd Street, Suite 3 in Boston, Massachusetts.
  3. Universal 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 initially issued a mortgage broker license number MB3794 to Universal Mortgage to engage in the business of a mortgage broker on or about February 7, 2005. License number MB3794 authorized Universal Mortgage to conduct its mortgage broker business from the Company's main office located at 516 E 2 nd Street, Suite 3 in Boston, Massachusetts.
  4. Mortgage brokers in Massachusetts are licensed and regulated under Massachusetts General Laws chapter 255E, which is administered and enforced by the Commissioner. Pursuant to Massachusetts General Laws chapter 255E, section 8, the Division is authorized to inspect the books, accounts, papers, records, and files of mortgage lenders and mortgage brokers transacting business in Massachusetts to determine compliance with the provisions of Massachusetts General Laws chapter 255E or any rule, or regulation issued thereunder, and with any law, rule, or regulation applicable to the conduct of the business of a mortgage lender and mortgage broker.
  5. On July 28, 2010, pursuant to Massachusetts General Laws chapter 255E, section 8, the Division commenced an examination/inspection of the books, accounts, papers, records, and files maintained by Universal Mortgage to evaluate the Company's compliance with the laws, regulations, and regulatory bulletins applicable to the conduct of a mortgage broker business in Massachusetts (the "2010 examination/inspection").
  6. During the 2010 examination/inspection, the Division's examiners requested copies of all advertising related materials that had been sent to Massachusetts consumers. In response to this request, Universal Mortgage provided copies of its advertising materials and solicitations ("Solicitations"). Copies of the Solicitations are attached as Exhibit 1, Exhibit 2, Exhibit 3, and Exhibit 4 and incorporated herein.

    Misleading and Deceptive Advertising Practices

  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, 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 if the representation or statement is false or misleading or has the tendency or capacity to be misleading.

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

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

  10. The Division's regulation 209 CMR 42.12A(4) states:

    It is a prohibited act or practice for a mortgage broker to advertise any interest rate or loan term described in 209 CMR 32.24(3)(a) in any media without the following statement: "We arrange but do not make loans". No advertisement by a mortgage broker in any media shall contain language which indicates or suggests that the mortgage broker will fund or approve a mortgage loan or guarantee any rate.

  11. The Division's review of the Solicitations provided by Universal Mortgage during the 2010 examination/inspection revealed that the Solicitations included several references which were misleading and deceptive, including references that gave the appearance that Universal Mortgage was a licensed as a mortgage lender in the Commonwealth. The Solicitations also included certain references which collectively created an appearance that they were issued by a government agency.
  12. A review of the Solicitations indicate that one solicitation appeared to have been forwarded to consumers that would have qualified for a reverse mortgage and a review of the solicitation indicated that it was sent from Universal Mortgage's "ADMINISTRATIVE OFFICES", located in Ellicott City, Maryland. The solicitation was identified as a "Notice of 2009 Funding Increase for Seniors." (Exhibit 1) pdf format of umgexhibits10072010.pdf
.
  13. A review of the Division's records indicate that Universal Mortgage does maintain a license for a location in Ellicott City, Maryland.
  14. The solicitation also included a pre-qualification number and the body of this solicitation indicated that the consumer had been "pre-selected" to participate in a "government backed program", with consumer funds "available now." The solicitation identified a specific monthly disbursement amount, as well as a lump sum draw and credit amount that the consumer would be entitled to receive. This solicitation failed to note that the proceeds that were set forth would be affected by an appraisal of the property as well as ancillary costs associated with obtaining a reverse mortgage including closing costs, mortgage insurance premiums and monthly servicing fees. (Exhibit 1).
  15. The solicitation further noted that the consumer would have to contact an "authorized lender" by August 31, 2009 in order to receive additional information and identified Universal Mortgage as the authorized lender above the Company's toll free number which was designated as the contact number. (Exhibit 1) pdf format of umgexhibits10072010.pdf
.
  16. The solicitation indicated that the consumer could receive a monthly disbursement in the amount of $2,193.00 with a loan amount of $385,798.77. The maximum lending limit was identified as $625,000.00. This solicitation did not include the statement, "We arrange but do not make loans" as required pursuant to 209 CMR 42.12A(4). (Exhibit 1) pdf format of umgexhibits10072010.pdf
.
  17. A second solicitation reviewed by the Division contained a header that stated "Stop Foreclosure *No Mortgage Payments* You Still Own Your Home." The body of the solicitation gave the appearance that consumers who obtained a reverse mortgage would have no mortgage payments and would own their home without having to make any payments, statements which are both inaccurate and misleading as reverse mortgage borrowers are required to make real estate tax and hazard insurance payments unless such payments are escrowed. (Exhibit 2) pdf format of umgexhibits10072010.pdf
.
  18. A third solicitation reviewed referenced a Federal Housing Authority program allowing for a "cash-out up to 95%" and identified a phone number for a consumer to call by a specific date to get a free consultation. The body of the solicitation indicated that based on information gathered from credit reporting agencies and well as a review of the consumer's financial situation, the consumer had been pre-selected to refinance with a "FIXED RATE" mortgage with a rate of 5.5%. The solicitation contained an Equal Housing Lending Logo and specified a new monthly payment of $1,198.00 based upon an estimated loan balance of $210,960.00. This solicitation did not include the statement, "We arrange but do not make loans" as required pursuant to 209 CMR 42.12A(4). (Exhibit 3) pdf format of umgexhibits10072010.pdf
.
  19. At least two Solicitations, contained references that gave the impression that Universal Mortgage was licensed as a mortgage lender by including statements that encouraged consumers to call an "authorized lender" incorporated the Equal Housing Lending Logo on the solicitations forwarded to Massachusetts consumers. Universal Mortgage is not licensed by the Commissioner to conduct business as a mortgage lender in Massachusetts pursuant to General Laws chapter 255E, section 2 and the Division's regulation 209 42.00 et seq. (Exhibit 1, and Exhibit 3) pdf format of umgexhibits10072010.pdf
.
  20. A fourth solicitation reviewed was marked as a "Form 009 Payment Reduction Notification" and stated that the identified consumer was pre-qualified for a mortgage loan in the amount of $218,149.00 at a fixed rate of 4.25%, and a monthly payment of about $1,073.00. This solicitation did not include the statement, "We arrange but do not make loans" as required pursuant to 209 CMR 42.12A(4). (Exhibit 4) pdf format of umgexhibits10072010.pdf
.
  21. Two of the four Solicitations stated that if the consumer restructured their loan within the specified time period, the consumer would be able to avoid making mortgage payments for two months, a statement that was both inaccurate and misleading. (Exhibit 3 and Exhibit 4) pdf format of umgexhibits10072010.pdf
.
  22. Three of the four Solicitations reviewed imposed a time-frame in which the consumer was required to respond to the offer which created the impression that the consumer would be required to take prompt action in order to benefit from the respective "programs" offered by each solicitation. (Exhibit 1, Exhibit 3 and Exhibit 4).
  23. Language indicating that the offer was not being offered by a government agency was included in at least one Solicitation reviewed, 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 these solicitations and was located in a non-prominent location at the bottom of the solicitations. (Exhibit 1) pdf format of umgexhibits10072010.pdf
.
  24. Based on the Division's records, Universal Mortgage is not affiliated with any government agency.

    CONCLUSIONS OF LAW

  25. Based upon the information contained in Paragraphs 1 through 24, Universal 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).
  26. Based upon the information contained in Paragraphs 1 through 24, by mailing Massachusetts consumers multiple Solicitations 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, Universal 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).
  27. Based upon the information contained in Paragraphs 1 through 24, by mailing Massachusetts consumers Solicitations containing language that gave the impression that Universal Mortgage was authorized to operate as a licensed mortgage lender in Massachusetts, the Company violated Massachusetts General Laws chapter 255E, section 2 and the Attorney General's regulation 940 CMR 8.04(1).
  28. Based upon the information contained in Paragraphs 1 through 24, 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 specific monthly and lump sum payments that do not take into account the appraisal of the property and other ancillary costs associated with obtaining a reverse mortgage loan, and by imposing a time-frame in which consumers were required to respond to the offer, Universal Mortgage violated the Division's regulation 209 CMR 42.12A(9)
  29. Based upon the information contained in Paragraphs 1 through 24, by mailing Massachusetts consumers a Solicitation referencing loan terms without including the statement, "We arrange but do not make loans," Universal Mortgage has violated the Division's regulation 209 CMR 42.12A(4).
  30. Based upon the information contained in Paragraphs 1 through 24, the Commissioner has determined that:

    Universal 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 Universal Mortgage.

    ORDER TO CEASE AND DESIST AND NOTICE OF ADMINISTRATIVE PENALTY

  31. After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
  32. ORDERED that Universal Mortgage shall cease mailing the Solicitations identified as Exhibits 1, 2, 3, 4 and 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 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;
    2. Solicitations 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 licensed mortgage lender;
    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/or eligibility to skip 2 monthly payments.
  33. IT IS FURTHER ORDERED that within five (5) days of the effective date of this Order, Universal 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.
  34. IT IS FURTHER ORDERED that within twenty (20) days of the effective date of this Order, Universal 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 and prohibited 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.
  35. The administrative penalty imposed on Universal Mortgage is subject to review as provided in Massachusetts General Laws chapter 30A. Accordingly, Universal Mortgage may request a hearing to contest said administrative penalty. Such request for a hearing must be filed in writing within 20 days of Universal 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.
  36. 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 Universal 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.
  37. 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.
  38. IT IS FURTHER ORDERED that Universal 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
  39. IT IS FURTHER ORDERED that a copy of each advertisement used by Universal Mortgage shall be retained in the Company's books and records and shall be made available to the Division at its examinations/inspections of Universal Mortgage.

    GENERAL PROVISIONS

  40. Universal 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.
  41. Universal Mortgage shall take all necessary steps to ensure that the Solicitations or any similar solicitation is not published or distributed to consumers in Massachusetts.
  42. Universal 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.
  43. Universal 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 7TH day of October, 2010

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

This Order was terminated pursuant to a Consent Order on March 14, 2011.