By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2010-385

CONSENT ORDER

In the Matter of
BARTON MORTGAGE CORPORATION

Portland, Maine

Mortgage Broker License No. MB5251


WHEREAS, BARTON MORTGAGE CORPORATION, Portland, Maine ("Barton Mortgage" or the "Corporation"), a licensed mortgage broker under Massachusetts General Laws chapter 255E, section 2, has entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER ("Consent Agreement") with representatives of the Division of Banks ("Division") dated May 23, 2011, 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, Barton Mortgage agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of Barton Mortgage was conducted pursuant to General Laws chapter 255E, section 8, as of April 13, 2010 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;

WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection detailing the findings of the 2010 examination/inspection 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.

WHEREAS, the parties now seek to resolve by mutual agreement, the matters identified in the Report.

NOW COME the parties in the above-captioned matter, the Division and Barton Mortgage, and stipulate and agree as follows:

  1. Barton Mortgage shall establish and implement procedures to ensure that the Corporation maintains and uses 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 the Division's regulations 209 CMR 42.09 and 209 CMR 48.03.
    1. Procedures implemented pursuant to this Section of the Consent Order shall ensure that the Corporation is capable of compiling and generating an accurate and complete loan list upon request from the Division that correctly reflects all loan applications originated by the Corporation.
    2. Procedures implemented pursuant to this Section of the Consent Order shall ensure that any reports which are completed and submitted to the Division are an accurate and reliable account of the reported conditions and/or transactions.
    3. Procedures implemented pursuant to this Section of the Consent Order shall require that the Corporation properly documents the initial date of application and ensures 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.
    4. Barton Mortgage shall submit payment of five hundred dollars ($500.00) in satisfaction of an administrative penalty collected in consideration of the Corporation's failure to maintain its books and records as required pursuant to General Laws chapter 255E and the Division's regulations 209 CMR 42.00, et seq. and 209 CMR 48.00 et seq. Barton Mortgage shall remit payment in full of the amount indicated to the "Commonwealth of Massachusetts," with the executed copy of the Consent Agreement, to the Office of the Commissioner of Banks, Attn: Mortgage Broker Examination Unit, 1000 Washington St., 10 th Floor, Boston, Massachusetts 02118. The Division shall then remit the payment for deposit into the General Fund of the Commonwealth.
  2. Barton Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation refrains from collecting compensation from consumers (i) in consideration of services which the Corporation, as a mortgage broker, is prohibited from performing in a mortgage loan transaction or (ii) where no, or only a nominal, service is provided by the Corporation.
    1. The Corporation shall reimburse the consumers identified in the Report from whom underwriting fees were collected.
    2. The Corporation shall conduct a review of all Massachusetts residential mortgage loan applications originated by Barton Mortgage since April 13, 2007 and shall identify all consumers from whom any discount fees, lender loan fees, underwriting fees, extension fees, or other similar fees were collected: (i) in consideration of services which Barton Mortgage, as a mortgage broker, is prohibited from performing in a mortgage loan transaction; or (ii) where no, or only a nominal, service was provided by Barton Mortgage. Barton Mortgage agrees to reimburse each identified consumer the total amount of the unearned fee collected; and
    3. The Corporation shall prepare a report of all of the consumers, and the corresponding reimbursement amounts, identified pursuant to its review and submit a copy of the report to the Division with the Corporation's written response to the Report pursuant to Section 14(a) of this Consent Order. Barton Mortgage shall submit to the Division evidence of all reimbursements issued pursuant to Section 2 of this Consent Order. Evidence of the reimbursements shall include the consumers' names, the dates the loans closed, the check numbers, the amount of the reimbursements, and certified mail receipts to illustrate the consumers' receipt of the reimbursements.
  3. Barton Mortgage shall establish, implement, and maintain procedures to ensure that all broker fees, application fees, points, or similar fees collected by the Corporation in a mortgage transaction involving residential property located in the Commonwealth are not charged to consumers except to the extent that such fees have been properly disclosed to the consumers by the Corporation, in writing, prior to the closing of the mortgage loan in accordance with Massachusetts General Laws chapter 183, section 63.
    1. The Corporation shall reimburse the consumers identified in the Report for the full amounts collected as loan fees at settlement that had not been disclosed to the consumers, in writing, prior to loan closing.
    2. The Corporation shall conduct a review of all Massachusetts residential mortgage loan applications originated by Barton Mortgage since April 13, 2007 and identify all consumers to whom any broker fee, loan fee, point, or similar fee collected as compensation for administrative costs of origination was charged by Barton Mortgage where the amount charged for such fee or point was not previously disclosed in full to the consumer, as a broker fee, loan fee, points, or similar fee, in writing, prior to the closing of the loan. Barton Mortgage agrees to reimburse each identified consumer an amount equal to the difference between the actual charges assessed to the individual consumer and the amount disclosed in writing prior to loan closing; and
    3. The Corporation shall prepare a report of all of the consumers, and the corresponding reimbursement amounts, identified pursuant to its review and submit a copy of the report to the Division with the Corporation's written response to the Report pursuant to Section 14(a) of this Consent Order. Barton Mortgage shall submit to the Division evidence of all reimbursements issued pursuant to Section 2 of this Consent Order. Evidence of the reimbursements shall include the consumers' names, the dates the loans closed, the check numbers, the amount of the reimbursements, and certified mail receipts to illustrate the consumers' receipt of the reimbursements.
  4. Barton Mortgage shall establish, implement and maintain procedures to ensure that the Corporation does not contract for or impose late charges that are in excess of the amount permitted under Massachusetts General Laws chapter 183, section 59. Barton Mortgage shall review and revise as necessary all documentation containing provisions referencing late payment charges to ensure that such provisions are in compliance with Massachusetts General Laws chapter 183, section 59.
    1. Barton Mortgage will conduct a review of all Massachusetts loans closed since April 13, 2007 and determine whether late charges were assessed by the Corporation or by the entities to whom the notes were sold (the Assignees), and shall reimburse all consumers from whom a late charge was collected that was in excess of three percent of the amount of principal and interest overdue. The amount of such reimbursements shall equal the amounts collected as late charges that were in excess of the amount allowed by with Massachusetts General Laws chapter 183, section 59. Evidence of any reimbursements will be submitted to the Division stating the consumer's name, the date of the loan and loan number, the amount reimbursed, the check number, and certified mail receipts to illustrate the consumers' receipt of the reimbursements.
  5. Barton Mortgage shall revise its "Borrower's Certification and Authorization" form 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.
  6. Barton Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation refrains from providing any consumer 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; including, without limitation, the disclosures identified in the Report.
  7. Barton Mortgage shall establish, implement, and maintain procedures to ensure that all consumers receive a Notice of Privacy Policies and Practices in accordance with, and in the form required by, 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.
  8. Barton Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation refrains from providing out-of-state disclosures to consumers in a Massachusetts residential mortgage loan transaction.
  9. Barton Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation accurately discloses on the Good Faith Estimate any fee or payment received by the Corporation from either the lender or the borrower arising from the initial funding transaction, including a yield spread premium, in accordance with the provisions of Real Estate Settlement Procedures Act (RESPA) implementing regulation 24 CFR 3500.
  10. Barton Mortgage shall revise all of the Corporation's websites to ensure that the Corporation's license type and number are disclosed therein in accordance with the Division's regulation 209 CMR 42.15 and the Attorney General's regulation 940 CMR 8.04(2).
  11. Barton Mortgage shall review and revise the Corporation's websites 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.
  12. Barton Mortgage shall review and revise as necessary the Corporation's websites to ensure that, where applicable, the additional disclosures required under the Division's regulation 209 CMR 42.12A(4) are included.
  13. Barton Mortgage 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.
  14. Barton Mortgage shall comply with all laws and regulations applicable to its 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 days of receipt of the Report, all violations and areas of concern addressed in the Report.
    1. Within thirty days of Barton Mortgage'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 Barton Mortgage 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 days of the effective date of this Consent Order, Barton Mortgage 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; and
    3. Barton Mortgage 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.
  15. On the thirtieth day after the end of each calendar quarter following the date of this Consent Order, Barton Mortgage 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 Barton Mortgage 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 Barton Mortgage's compliance condition in Massachusetts, and the results thereof.
  16. The reporting requirement to the Division referenced in Section 15 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.
  17. Nothing in this Consent Order shall be construed as permitting Barton Mortgage to violate any law, rule, regulation, or regulatory bulletin to which Barton Mortgage is subject.
  18. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Barton Mortgage's mortgage broker license under Massachusetts General Laws chapter 255E, section 6, while this Consent Order is in effect.
  19. Failure to comply with the terms of this Consent Order shall constitute grounds for license suspension and/or revocation, or other formal regulatory actions pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
  20. This Consent Order shall become effective immediately upon the date of its issuance.
  21. 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.
  22. This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. The Consent Order and Consent Agreement supercede and replace any other agreements between the Division and Barton Mortgage.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 23rd day of May, 2011

David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts