By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER
MORTGAGE BROKER AND
MORTGAGE LOAN ORIGINATOR
LICENSING

CEASE DIRECTIVE

In the Matter of
Lender 411, LLC

Orange, California


The Commissioner of Banks ("Commissioner") is charged with the administration of Massachusetts General Laws chapter 255E, and applicable regulations found at 209 CMR 42.00 et seq., relating to the licensing of mortgage lenders and mortgage brokers; and Massachusetts General Laws chapter 255F and applicable regulations found at 209 CMR 41.00 et seq., relating to the licensing of mortgage loan originators.

Pursuant to the authority granted by Massachusetts General Laws chapter 255E, the Commissioner has investigated the activities of LENDER 411, LLC ("Lender 411") located at 5334 East Chapman Avenue, Suite 100, Orange, California, to determine if Lender 411 has engaged in the business of, or is about to engage in, acts or practices constituting violations of Massachusetts General Laws chapter 255E and Massachusetts General Laws chapter 255F. Based upon such investigation, the Massachusetts Division of Banks ("Division") hereby issues the following CEASE DIRECTIVE ("Cease Directive") as a result of the findings alleged herein.

A. FINDINGS OF FACT

  1. Massachusetts General Laws chapter 255E, section 2 relative to the licensing requirements for entities engaged in the business of a mortgage lender and/or mortgage broker states in part:
  2. No person shall act as a mortgage broker or mortgage lender with respect to residential property unless first obtaining a license from the commissioner.

  3. Massachusetts General Laws chapter 255E, section 1 defines a mortgage broker as:
  4. any person who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly negotiates, places, assists in placement, finds or offers to negotiate, place, assist in placement or find mortgage loans on residential property for others.

  5. Massachusetts General Laws chapter 255F section 2 relative to the licensing requirements for mortgage loan originators states:
  6. Section 2. (a) No individual shall act as a mortgage loan originator with respect to any dwelling unless such person has first obtained a mortgage loan originator license from the commissioner or is exempt from the licensure requirement under subsection (b). No person shall knowingly employ or retain a mortgage loan originator unless the mortgage loan originator is licensed under this chapter or is exempt from the licensure requirement under subsection (b). Each licensed mortgage loan originator shall register with the Nationwide Mortgage Licensing System and Registry and shall maintain a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry.

  7. Massachusetts General Laws chapter 93A, section 2(a) states:
  8. Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

  9. On or about June 6, 2011, the Division reviewed the following website: www.lender411.com which contains links to nine pages.
  10. The website maintained by Lender 411 contains information about mortgage products available nationally and also contains information about reverse mortgages in Massachusetts. Lender 411's "Massachusetts Reverse Mortgage" page contains both information about reverse mortgages in Massachusetts and also provides consumers with a list of "Reverse Mortgage Lenders" in Massachusetts.
  11. The Division's review of the "Massachusetts Reverse Mortgage" webpage revealed that it contains inaccurate and misleading information regarding reverse mortgage loans, including but not limited to the following statements; "Reverse mortgages are very simple to obtain and don't have to be paid back until you move out of the home or pass away, and this makes them highly advantageous to seniors who qualify"; "You won't lose your home through a reverse mortgage. Your lender does not ever gain ownership". The website failed to indicate that a lender could in fact "gain ownership" if there was a default of a particular loan term including but not limited a consumer's failure to pay both property taxes and homeowner's insurance.
  12. The webpage "Rate Quote" directs the consumer to complete certain information to get a quote for a reverse mortgage in Massachusetts, including but not limited to; a prospective borrower's estimated home value, mortgage balance, birth date, spouse's birth date, property address and e-mail. Each of the items requested by Lender 411 is necessary to complete a reverse mortgage loan application.
  13. After submitting the information, the prospective borrower is contacted by a Massachusetts lender affiliated and endorsed by Lender 411 through its website.
  14. The Division's records indicate that Lender 411 is not licensed to do business as a mortgage broker in the Commonwealth of Massachusetts.
  15. Massachusetts General Laws chapter 167E, section 7 states in part;
  16. A bank may make or acquire a reverse mortgage loan, pursuant to a program for reverse mortgage loans which has been submitted to and approved by the commissioner…

  17. Massachusetts General Laws chapter 167E, section 7 ("section 7") is made applicable to all mortgagees making reverse mortgage loans in the Commonwealth by General Laws chapter 183, section 67. Said section 7 requires Massachusetts state-chartered banks and all other mortgagees including federally-chartered banks and credit unions intending to make reverse mortgage loans to submit for the Division's approval a program, which meets specific criteria set forth in section 7.
  18. On the "Find a Lender" webpage, after selecting a reverse mortgage as the type of loan the prospective borrower is interested in, and entering a Massachusetts zip code, the prospective borrower is directed to a listing of Massachusetts lenders.
  19. The Division's records indicate that several Massachusetts reverse mortgage lenders listed on www.lender411.com and those lenders that respond to an inquiry submitted on the "Rate Quote" webpage as referenced in Paragraph 9 are not licensed or approved to make or acquire reverse mortgage loans in the state of Massachusetts.
  20. As of the date of this Cease Directive, the website maintained by Lender 411 endorses certain Massachusetts reverse mortgage lenders that are not authorized to conduct the mortgage business in Massachusetts as they do not maintain an active mortgage lender or mortgage broker license pursuant to the requirements of Massachusetts General Laws chapter 255E.
  21. As of the date of this Cease Directive, the website maintained by Lender 411 directs Massachusetts consumers to contact a particular mortgage loan originator at each of the "approved reverse mortgage lenders." A review of the licensing status of at least one of the mortgage loan originator's identified and endorsed by Lender 411 revealed that he is not authorized to act in the capacity of a mortgage loan originator as he is not appropriately licensed pursuant to the requirements of Massachusetts General Laws chapter 255F.
  22. As of the date of this Cease Directive, the website maintained by Lender 411 continues to be operational.
  23. B. CEASE DIRECTIVE

  24. Lender 411, and any and all officers, members, managers, employees, independent contractors, or agents, operating on behalf of Lender 411, and their successors or assigns, shall immediately cease engaging in the activities of: (a) a mortgage broker, as those activities are defined under Massachusetts General Laws chapter 255E, section 1; and (b) a mortgage loan originator, as those activities are defined under Massachusetts General Laws chapter 255F, section 1, relative to any residential property in Massachusetts. Therefore, Lender 411 is ordered to immediately cease soliciting or accepting, either directly or indirectly, any personal information, contact information or applications from prospective borrowers for property located in Massachusetts until such time that Lender 411 has obtained a license to conduct business in the Commonwealth pursuant to General Laws chapter 255E, section 2.
  25. Lender 411 shall immediately cease providing Massachusetts consumers information regarding reverse mortgage products.
  26. Lender 411 shall immediate cease directing Massachusetts consumers to mortgage lenders, mortgage brokers and/or mortgage loan originators that are not appropriately licensed in the Commonwealth.
  27. Within five (5) days of the effective date of this Cease Directive, Lender 411 shall submit to the Commissioner:
  28. A detailed record, prepared as of the date of submission, of all contact and borrower property information obtained from Massachusetts consumers including but not limited to all pending applications for reverse mortgage loans for Massachusetts consumers. The records to be produced shall include the consumers' names, addresses and the dollar amount of each reverse mortgage loan.

  29. Lender 411 must submit a response within five (5) days of receipt of this Cease Directive. The response must indicate whether Lender 411 will seek to be licensed as mortgage broker. The response submitted must also include a signed copy of the enclosed affidavit, attesting that Lender 411 will immediately cease from engaging in any unlicensed or unauthorized mortgage brokering activity including any use of advertising or soliciting information from prospective borrowers in Massachusetts until such time as a license and/or approval to engage in such activities is issued by the Commissioner.

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