By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2011-022

CONSENT ORDER

In the Matter of
Elder Lending Solutions, Inc., d/b/a Promise Lenders
Holliston, Massachusetts

Mortgage Broker License No.: MB2132



WHEREAS, Elder Lending Solutions, Inc., d/b/a Promise Lenders, Holliston, Massachusetts ("Elder Lending Solutions" 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 August 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, Elder Lending Solutions agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of Elder Lending Solutions was conducted pursuant to General Laws chapter 255E, section 8, as of September 30, 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 of Elder Lending Solutions 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; and

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

ORDER


NOW COME the parties in the above-captioned matter, the Division and Elder Lending Solutions, and stipulate and agree as follows:


  1. With the Corporation's written response to the Report, Elder Lending Solutions shall submit: updated financial statements, including a balance sheet and interim income statement prepared as of April 30, 2011; and a written profit plan, consisting of goals and strategies for providing the foundation for improved profitability.


    1. The written profit plan shall include, at a minimum:


      1. identification of the major areas in, and means by which, management shall seek to improve Elder Lending Solutions' operating performance and enhance capital formation;

      2. realistic and comprehensive budgets;

      3. a budget review process to monitor the income and expenses of Elder Lending Solutions to compare actual figures with budgetary projections;

      4. a description of the operating assumptions that form the basis for, and adequately support, major projected income and expense components; and

      5. a statement of the Board of Directors' commitment to the continued maintenance of acceptable levels of liquidity and capital.

    2. Performance under the written profit plan shall be reported to the Division and submitted with the quarterly progress reports prepared pursuant to Section 12 of the Consent Order. Each report submitted to the Division pursuant to this Subsection of the Consent Order shall include updated financial statements prepared as of the last day of the calendar quarter, including a balance sheet and statement of income and expense which have been signed by a duly authorized officer of Elder Lending Solutions with sufficient knowledge to attest to the information reported in the financial statements.

  2. Elder Lending Solutions shall establish, implement and maintain policies and procedures to ensure that the Corporation complies with all reverse mortgage program requirements in accordance with General Laws Chapter 167E, sections 7 and 7A and the guidance outlined in Regulatory Bulletin 5.1-106, which clarifies how licensed mortgage brokers and mortgage lenders can offer reverse mortgage products in a way that addresses the unique consumer protection concerns raised by reverse mortgage products.

  3. Elder Lending Solutions shall establish, implement, and maintain policies and procedures to ensure compliance with HUD's policy and guidance relative to the Home Equity Conversion Mortgage ("HECM") program outlined in HUD's Handbook 4335.1 and the mortgagee letters periodically issued by HUD which update the policies in the HUD Handbook. It being understood that Elder Lending Solution shall not steer, direct, recommend or otherwise encourage prospective reverse mortgage borrowers to seek the services of any one particular counselor or counseling agency. It being understood that Elder Lending Solutions shall not coach or advise any prospective borrower on the content or subject matter discussed during the counseling session.

  4. Elder Lending Solutions shall revise its practices and procedures to ensure that all advertising materials including the Corporation's webpage do not contain any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading.


    1. Elder Lending Solutions shall establish, implement, and maintain a system of internal controls to monitor the Corporation's compliance with the laws and regulations applicable to soliciting and 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 8.04;

    2. Elder Lending Solutions shall establish, implement, and maintain policies and procedures to ensure that all advertisements including the Corporation's website 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 any advertisement to ensure that targeted advertisements are appropriate;

    3. A copy of each solicitation and/or advertisement used by Elder Lending Solutions shall be retained in the Corporation's books and records, and such records shall be made available to the Division during its examinations/inspections of the Corporation.

  5. Elder Lending Solutions agrees to submit a payment of five thousand dollars ($5,000.00), in satisfaction of an administrative penalty collected in consideration of the advertising/marketing practices engaged in by Elder Lending Solutions in promoting reverse mortgage programs for prospective borrowers. The administrative penalty shall be satisfied as follows:


    1. Two thousand five hundred dollars ($2,500.00) shall be due and payable immediately upon execution of this Consent Order;

    2. Two thousand five hundred dollars ($2,500.00) shall be due and payable no later than December 31, 2011; and

    3. Elder Lending Solutions shall remit payment in the amounts indicated above payable to the "Massachusetts Office of Consumer Affairs Expendable Trust" with the executed copy of the Consent Agreement, to the Office of the Commissioner of Banks, Attention: Mortgage Broker Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118-6400.

  6. Elder Lending Solutions shall establish, implement, and maintain procedures to ensure that in instances where the Corporation provides a Good Faith Estimate (GFE) to consumers, the Corporation shall provide the GFE not later than three (3) business days after receipt of either an application or information sufficient to complete an application, in accordance with the Real Estate Settlement Procedures Act implementing regulation 24 CFR 3500.7(b).

  7. Elder Lending Solutions shall revise its "Borrowers' Certification and Authorization" form to eliminate any representation or statement that could be considered false, misleading, or have the tendency to be misleading, including, but not limited to, any representation that the Corporation is approving or funding the loan when it is acting in the capacity of a mortgage broker.

  8. Elder Lending Solutions shall establish, implement, and maintain procedures to ensure that all consumers receive a Notice of Privacy Policies and Practices disclosure 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 disclosure shall be retained in the Corporation's books and records as evidence of compliance.

  9. Elder Lending Solutions 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.

  10. Elder Lending Solutions shall review and revise all advertisements, and implement corrective action to ensure that the Corporation's and licensed loan originators' license type and number are disclosed in all advertisements in accordance with the Division's regulation 209 CMR 42.15, 209 CMR 41.12(2) and the Attorney General's regulation 940 CMR 8.04(2).

  11. Elder Lending Solutions 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 twenty (20) days of receipt of the Report, all violations and areas of concern addressed in the Report.


    1. Within twenty (20) days of Elder Lending Solutions' 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 Elder Lending Solutions 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, Elder Lending Solutions shall establish, implement, and maintain quality control standards which provide for a loan review process to assess the Corporation's compliance with: (a) 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 (b) 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. Elder Lending Solutions 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.

  12. On the thirtieth (30th) day after the end of each calendar quarter following the date of this Consent Order, Elder Lending Solutions 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 Elder Lending Solutions 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 Elder Lending Solutions' compliance condition in Massachusetts and the results thereof.

  13. The reporting requirement to the Division referenced in Section 12 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.

  14. Elder Lending Solutions agrees that, in the event that the Corporation fails to submit the payments set forth in this Consent Order in the amounts specified herein and in accordance with the applicable deadlines, the Division shall be authorized to submit a claim for such amounts against the mortgage broker Massachusetts surety bond maintained by Elder Lending Solutions pursuant to the Division's regulations 209 CMR 42.06(2)(a).

  15. Nothing in this Consent Order shall be construed as permitting Elder Lending Solutions to violateany law, rule, regulation, or regulatory bulletin to which Elder Lending Solutions is subject.

  16. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Elder Lending Solutions' mortgage broker licenses under General Laws chapter 255E, section 6, while this Consent Order is in effect.

  17. 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.

  18. This Consent Order shall become effective immediately upon the date of its issuance.

  19. 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 Consent Order of a court of competent jurisdiction.

  20. This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements, promises, representations, or warranties between the Division and Elder Lending Solutions.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

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

By:
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts