By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2010-229

CONSENT ORDER

In the Matter of
NATIONAL CAPITAL MORTGAGE, INC.,
F/K/A POLONEZ CAPITAL MORTGAGE, INC.
Quincy, Massachusetts

Mortgage Broker License No. MB4160


 

WHEREAS, NATIONAL CAPITAL MORTGAGE, INC., F/K/A POLONEZ CAPITAL MORTGAGE, INC., Quincy, Massachusetts ("National Capital Mortgage" or the "Corporation"), a licensed mortgage broker under Massachusetts General Laws chapter 255E, section 2, has been advised of its right to Notice and Hearing pursuant to General Laws chapter 255E, section 7(a), and having waived those rights, 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 2, 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, National Capital Mortgage agrees to the issuance of this CONSENT ORDER ("ORDER") by the Commissioner of Banks ("Commissioner");


WHEREAS, an examination/inspection of National Capital Mortgage was conducted pursuant to General Laws chapter 255E, section 8, as of April 8, 2009, 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; and


WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of National Capital Mortgage as of April 8, 2009 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.

ORDER



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


  1. National Capital Mortgage shall establish, implement and maintain policies and procedures to ensure that any loan fees, mortgage broker fees, application fees, processing fees, or similar fees collected as compensation for administrative costs incurred in originating the mortgage loan are not charged to consumers except to the extent that such fees or points have been properly disclosed to the consumer, in writing, prior to the closing of the mortgage loan.


    1. National Capital Mortgage shall reimburse the consumer identified in the Report for the amounts collected as a broker fee, loan fee, points or similar fee at settlement that had not been disclosed to the consumer, in writing, prior to loan closing. The amount of such reimbursement shall equal the difference between the actual charges assessed to the consumer and the amount disclosed in writing for such fees prior to loan closing; and

    2. With National Capital Mortgage's written response to the findings presented in the Report, which is to be submitted to the Commissioner pursuant to Section 9(a) of this Consent Order, the Corporation shall submit evidence of the reimbursement issued pursuant to this Section of the Consent Order. Evidence of the reimbursement shall include the consumer's name, the date the loan closed, the check number, the amount of the reimbursement, and a certified mail receipt to illustrate the consumer's receipt of the reimbursement.

  2. National Capital Mortgage shall establish, implement, and maintain quality control procedures regarding the placement of loan applications into alternative documentation loan programs (stated income; no income, no asset verification; no income verification; no ratio loans; low and no documentation loans; etc.) to ensure proper application completion procedures; verification and due diligence procedures; and books and records retention in compliance with applicable state and federal laws, regulations, and regulatory bulletins governing the conduct and operation of those engaged in the business of a mortgage broker in Massachusetts.


    1. Compliance with this Section of the Order shall require that National Capital Mortgage review the Division's Regulatory Bulletin 5.1-103: Guidance on Non-Traditional Mortgage Product Risks, the Division's September 2006 Industry Letter, and the Division's Regulatory Bulletin 5.1-104: Statement on Subprime Mortgage Lending and implement appropriate procedures to ensure compliance therewith;

    2. Provide for a loan review process to assess the compliance of National Capital Mortgage, and all applicable employees, staff, and independent contractors who operate on behalf of the Corporation, with: (1) the statutes, regulations, regulatory bulletins, and other relevant provisions of law applicable to those engaged in the business of a mortgage broker in Massachusetts and (2) the provisions of this Consent Order;

    3. Ensure that National Capital Mortgage's compliance program is managed by a qualified manager who shall have responsibility for all consumer compliance and related matters, including, but not limited to, monitoring the Corporation's compliance and ensuring that corrective action is taken to address all alleged violations and areas of concern previously identified by the Division; and

    4. Provide adequate training to applicable staff persons, conducted by qualified and trained personnel, which includes, but is not limited to, proper instruction, adequate supervision and ongoing training to ensure proper implementation and execution of the revised policies and procedures implemented pursuant to this Consent Order.

  3. National Capital Mortgage shall immediately desist from providing consumers with any oral representations or assurances, or any written documentation that states, suggests, or infers that the Corporation is locking an interest rate on behalf of the consumer for residential property in Massachusetts. The provisions of this Section of the Consent Order shall necessarily prohibit National Capital Mortgage from collecting Rate Lock Fees from consumers in consideration of services which the Corporation, as a mortgage broker, is prohibited from performing in a mortgage loan transaction. National Capital Mortgage shall review and revise as necessary all documentation provided to consumers, in order to ensure compliance with the provisions of the Division's regulation 209 CMR 42.12A(3).

  4. Within thirty (30) days from the receipt of the Report, National Capital Mortgage shall submit to the Division a written profit plan consisting of goals and strategies for improving the Corporation's 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 the Corporation's operating performance and enhance capital formation;

      2. realistic and comprehensive budgets;

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

      4. 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. erformance under the written profit plan shall be reported to the Division and submitted with quarterly progress reports prepared pursuant to Section 11 of the Consent Order.

  5. National Capital Mortgage shall establish and maintain a separate trust account at a federally insured bank and will thereafter deposit into such account all application fees, appraisal fees, and all other prepaid loan fees which the Corporation may accept in any residential mortgage loan transaction in Massachusetts. The provisions of this Section shall necessarily ensure that National Capital Mortgage shall establish, implement, and maintain procedures to ensure that all client funds are maintained in accordance with the provisions of the Division's regulation 209 CMR 42.11 and that such account is routinely monitored and reconciled on a monthly basis.

  6. National Capital Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation refrains from providing consumers 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.

  7. National Capital Mortgage shall establish and implement procedures to maintain all loan files 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. Such procedures shall necessarily 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.

  8. National Capital Mortgage shall review and revise all advertisements, including but not limited to the Corporation's brochures and website, and implement corrective action to ensure that the Corporation's license type and number are disclosed in all such advertisements in accordance with the Division's regulation 209 CMR 42.15 and the Attorney General's regulation 940 CMR 8.04(2).

  9. National Capital Mortgage shall comply with all laws and regulations applicable to his 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 (30) days of receipt of the Report, all violations and areas of concern addressed in the Report.


    1. Within thirty (30) days of National Capital 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 National Capital 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 (30) days from the effective date of this Consent Order, National Capital Mortgage 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. National Capital 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.

  10. On the thirtieth (30th) day after the end of each calendar quarter following the date of this Consent Order, National Capital 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 National Capital 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 National Capital Mortgage's compliance condition in Massachusetts and the results thereof.

  11. The reporting requirement to the Division referenced in Section 10 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.

  12. Within thirty (30) days of receipt of the relevant invoice from the Division, National Capital Mortgage shall submit payment in full for the amount owed for the costs of the Division's 2009 examination/inspection. The payment shall be made payable to the "Commonwealth of Massachusetts" and mailed to Division of Banks, Commonwealth of Massachusetts, P.O. Box 3952, Boston, Massachusetts 02241-3952.

  13. Nothing in this Consent Order shall be construed as permitting National Capital Mortgage to violate any law, rule, regulation, or regulatory bulletin to which National Capital Mortgage is subject.

  14. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke National Capital Mortgage's mortgage broker license under General Laws chapter 255E, section 6, while this Consent Order is in effect.

  15. 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.


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

  17. The provisions of this Order shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this Order shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.

  18. This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements, promises or warranties, between the parties other than those set forth in the Consent Order and Consent Agreement, which eliminate and supersede all prior formal or informal regulatory actions entered between the parties.

 

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:


Dated at Boston, Massachusetts, this 2nd day of May, 2011






By: David J. Cotney
Commissioner of Banks


THIS CONSENT ORDER WAS TERMINATED ON MARCH 9, 2017.