By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2010-249

FINDINGS OF FACT AND
TEMPORARY ORDER TO
CEASE AND DESIST

AND
NOTICE OF ADMINISTRATIVE
PENALTY


In the Matter of
VILLAGE CAPITAL AND INVESTMENT, LLC
D/B/A VILLAGE HOME MORTGAGE
Mortgage Company License No(s): MC4562 and MC5375


The Commissioner of Banks ("Commissioner") having determined that VILLAGE CAPITAL AND INVESTMENT, LLC D/B/A VILLAGE HOME MORTGAGE., ("Village Home Mortgage" or the "Company"), located at 700 East Gate Drive, Suite 400, Mount Laurel, New Jersey, 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. Village Home Mortgage is, and at all relevant times, has been a foreign corporation conducting business in the Commonwealth of Massachusetts. Village Home Mortgage's main office is located at 700 East Gate Drive, Suite 400, Mount Laurel, New Jersey.
  3. Village Home Mortgage 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 MC4562 to Village Home Mortgage to engage in the business of a mortgage lender and mortgage broker on or about October 27, 2006. License number MC4562 authorized Village Home Mortgage to conduct the mortgage company business from the Company's main office located at 700 East Gate Drive, Suite 400, Mount Laurel, New Jersey.
  4. Village Home Mortgage maintains an additional office location from which the Company conducts its mortgage lender and mortgage broker business. According to records maintained on file with the Division, Village Home Mortgage currently possesses an additional mortgage company license, License number MC5375 which authorizes Village Home Mortgage to conduct the mortgage company business from a location operated at 271 Waverly Oaks Road, Suite 100, Waltham, Massachusetts.
  5. On or about May 28, 2010, the Division was forwarded a copy of a solicitation ("Solicitation") received by a Massachusetts consumer from Village Home Mortgage. A copy of the solicitation is attached as Exhibit 1 pdf format of villagecapandinv07202010exhibit1.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 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.

  9. The envelope that the Solicitation was mailed in, was designed to give the impression that it had been mailed by a Government Agency and was marked as "U.S. Government Homeowner Relief Program."
  10. The Solicitation appeared to be a check in the amount of two hundred eighty thousand ($280,000) dollars payable to the Massachusetts consumer. The check contained an "Approval ID" number that stated " This U.S. Government Relief Program enables you to refinance up to 97.75% of your home's value." The Solicitation notified the consumer that due to the passage of recent legislation passed by the U.S. Government, the Consumer could be eligible to refinance their mortgage loan with "NO OUT OF POCKET COSTS," and further indicated that the new mortgage would be a "U.S. Government backed loan."
  11. The Solicitation also notified the consumer that as of March 4, 2009, "The Making Homes Affordable" program was released by the Treasury Department and furthermore the program specifically assisted consumers who were unable to lower their monthly payments, however, the language in the Solicitation did not indicate if the particular program that was being marketed to consumers, was directly related to "The Making Home Affordable Program," or if the Solicitation was marketing other program types that may have been available.
  12. The body of the Solicitation identified a table that was labeled as "Homeowner Relief," and identified two types of mortgage loans that the consumer could qualify for, a 30 year fixed program with a rate of 4.75% and a 15 year fixed program for 4.5%. Additionally, the Solicitation advised consumers that the approval would expire on July 1, 2010 and advised consumer to contact a loan specialist with the Approval ID number.
  13. The Solicitation contained no language that indicated that the offer was not being offered by a government agency.
  14. Based on the Division's records, Village Home Mortgage is not a government agency.

    CONCLUSIONS OF LAW

  15. Based upon the information contained in Paragraphs 1 through 14, Village Home Mortgage 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).
  16. Based upon the information contained in Paragraphs 1 through 14, 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, Village Home 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).
  17. Based upon the information contained in Paragraphs 1 through 14, by mailing Massachusetts consumers a Solicitation that appeared to make false promises to influence, persuade or induce a consumer to sign a mortgage loan application including indications that the mortgage loan would have "NO OUT OF POCKET COSTS" with no additional information including but not limited to factors such as the cost of third party fees such as Appraisals and settlement services fees and further references about programs offered through the "The Making Home Affordable Program," that the borrower may not have qualified for, Village Home Mortgage violated the Division's regulation 209 CMR 42.12A(9).
  18. Based upon the information contained in Paragraphs 1 through 14, the Commissioner has determined that:
    1. Village Home 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 Village Home Mortgage.

    ORDER TO CEASE AND DESIST AND NOTICE OF ADMINISTRATIVE PENALTY

  19. After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
  20. ORDERED that Village Home Mortgage shall cease mailing 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 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.
  21. IT IS FURTHER ORDERED that within five (5) days of the effective date of this Order, Village Home 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.
  22. IT IS FURTHER ORDERED that within twenty (20) days of the effective date of this Order, Village Home Mortgage 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 amount 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 Village Home Mortgage as referenced in this Order is subject to review as provided in Massachusetts General Laws chapter 30A. Accordingly, Village Home Mortgage may request a hearing to contest said administrative penalty. Such request for a hearing must be filed in writing within 20 days of Village Home Mortgage'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.
  23. 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 Village Home 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.
  24. 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.
  25. IT IS FURTHER ORDERED that Village Home Mortgage 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
  26. IT IS FURTHER ORDERED that a copy of each advertisement used by Village Home Mortgage shall be retained in the Corporation's books and records and shall be made available to the Division at its examinations/inspections of the Village Home Mortgage.

    GENERAL PROVISIONS

  27. Village Home Mortgage 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.
  28. Village Home Mortgage shall take all necessary steps to ensure that the Solicitation or any similar solicitation is not published or distributed to consumers in Massachusetts.
  29. Village Home Mortgage 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 Massachusetts General Laws chapter 140D, the Division's regulations 209 CMR 32.00 et seq. and 209 CMR 42.12A; and the Office of the Attorney General's regulation 940 CMR 8.00 et seq.
  30. Village Home 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 20th day of July, 2010

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