By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2011-019

TEMPORARY
ORDER TO CEASE AND DESIST

AND

NOTICE OF ADMINISTRATIVE
PENALTY

In the Matter of
VILLAGE CAPITAL AND INVESMENT, LLC
D/B/A VILLAGE HOME MORTGAGE

Mount Laurel, New Jersey

Mortgage Company License No(s): MC3317


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 and its implementing regulation at 209 CMR 42.00 et seq.
  2. Village Home Mortgage is, and at all relevant times, has been a foreign Company 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 MC3317 to Village Home Mortgage to engage in the business of a mortgage lender and mortgage broker on or about October 27, 2006. License number MC3317 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 MC3317-001 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 July 20, 2010 the Division issued a TEMPORARY ORDER TO CEASE AND DESIST and NOTICE OF ADMINISTRATIVE PENALTY, Docket No. 2010-249 (the " 2010 Order"), against Village Home Mortgage based upon information reflected in a consumer solicitation received by Massachusetts consumers from Village Home Mortgage. The 2010 Order became permanent on August 9, 2010.

    A. Substantial Non-Compliance with the Terms of the Order

  6. The provisions of the 2010 Order required Village Home Mortgage to cease mailing Massachusetts consumers any solicitations that contained any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading including solicitations that had the tendency to make false promises to influence, persuade or induce a consumer to sign a mortgage loan application.
  7. Paragraph 22 of the 2010 Order also required Village Home Mortgage pay an administrative penalty in the amount of ten thousand ($10,000) dollars as a result of the Company's violations of Massachusetts Law. Village Home Mortgage complied with the provisions of Paragraph 22 of the 2010 Order, however remains in substantial non-compliance with the remaining provisions of the 2010 Order issued by the Division.
  8. Paragraph 20 of the 2010 Order states:

    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 or influence, persuade or induce a consumer to sign a mortgage loan application.
  9. 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 a sign a mortgage loan application or mortgage loan documents

  10. 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.

  11. The Attorney General's regulation 940 CMR 8.06(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 if the representation or statement is false or misleading or has the tendency or capacity to be misleading.

  12. Between February 18, 2011 and February 24, 2011, the Division was forwarded copies of two solicitations ("Solicitations") received by Massachusetts consumers from Village Home Mortgage. Copies of the Solicitations are attached as Exhibit 1 pdf format of villageexhibit1.pdf
and Exhibit 2 pdf format of villageexhibit2.pdf
.
  13. The Solicitation attached as Exhibit 1 pdf format of villageexhibit1.pdf
appeared to have been mailed by the Massachusetts Housing Finance Agency as it was marked as "RE: Massachusetts Hsng F," and stated that the consumer's mortgage with the Massachusetts Housing Finance had "gone under review."
  14. The Solicitation was mailed from the "Loan Reduction Department" of the Company and contained a reference to a customer reference number. The body of the Solicitation notified the consumer that their loan had gone under review by Village Home Mortgage's loan restructuring team. The Solicitation advised the consumer that the review could "enable the consumer to restructure their mortgage into a new fixed mortgage with a lower monthly payment and/or additional cash out."
  15. The Solicitation stated that if the consumer restructured their loan within a certain time frame, the consumer would be able to "skip one possibly two mortgage payments, as part of the restructuring process" a statement that was both inaccurate and misleading. The Solicitation advised the consumer to call Village Home Mortgage at a specific number to "begin the restructure process."
  16. Language indicating that Village Home Mortgage was not affiliated with the Massachusetts Housing Finance Agency was included in the Solicitation, notwithstanding the representations identified above which indicated that the Solicitation had been forwarded by the consumer's current mortgage lender. However, such language was in a font size that was significantly smaller than that in the body of the Solicitation and was located in a non-prominent location at the bottom of the Solicitation.
  17. The Solicitation attached as Exhibit 2 pdf format of villageexhibit2.pdf
contained language that was substantially similar to that in Exhibit 1 pdf format of villageexhibit1.pdf
, but did not include a reference to the consumer's mortgage lender. The Solicitation also advised the consumer that their loan had "gone under review" and the consumer would be able to skip one or two mortgage payments.

    B. Failure to Implement and Maintain Required Revised Procedures

  18. Paragraph 27 of the 2010 Order states:

    Village Home Mortgage shall revise its advertising practices and procedures to ensure that all solicitations and advertising materials used by the Company do not contain any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading;

  19. Paragraph 28 of the 2010 Order states:

    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;

  20. Paragraph 29 of the 2010 Order states:

    Village Home Mortgage shall implement, establish and maintain a system of internal controls to monitor the Company'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;

  21. Paragraph 30 of the 2010 Order states:

    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.

  22. A review of the Solicitations distributed by Village Home Mortgage revealed that the Company failed to comply with all fourthree provisions of the 2010 Order referenced above.

    C. Failure to Disclose Correct License Number

  23. The Division's regulation 209 CMR 42.15 states in part;

    A Licensee shall also disclose the type and number of its license(s) in all advertisements.

  24. The Solicitations forwarded to Massachusetts consumers and referenced in Paragraph 12 of this Temporary Order failed to disclose the Company's current license number. On or around October 29, 2010, the Division's licensing department notified all Licensees of the adoption of a new licensing scheme system which would change Licensees current license number. The correspondence notified all Licensee's that on December 31, 2010, Massachusetts mortgage lender and mortgage broker license numbers which were currently in effect would no longer be valid, and as of January 1, 2011, the Company's Nationwide Mortgage Licensing System ("NMLS") identification numbers would serve as the Company's license number.
  25. In the Solicitations referenced in Paragraph 12, Village Home Mortgage's mortgage company current license number was not identified on the Solicitation. The Company identified license numbers that were valid prior to the changes that were incorporated as of January 1, 2011.
  26. As of the date of this Temporary Order, the Company's website at www.villagehomemortgage.com also makes reference to an incorrect mortgage company license number.

    CONCLUSIONS OF LAW

  27. Based on the information contained in Paragraphs 1 through 26, Village Home Mortgage has failed to demonstrate the character, reputation, integrity, and general fitness that would warrant the belief that the 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).
  28. Based upon the information contained in Paragraphs 1 through 26, by mailing Massachusetts consumers multiple Solicitations that contained 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 the consumer's mortgage lender, and asserting that the consumer was eligible for a mortgage consolidation through a lower monthly payment, a new fixed mortgage, and that the consumer could skip two monthly payments, which Village Home Mortgage did not have sufficient information upon which a reasonable belief in the truth of that representation could be based, 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).
  29. Based upon the information contained in Paragraphs 1 through 26, by mailing Massachusetts consumers a Solicitation that made false promises to influence, persuade or induce a consumer to sign a mortgage loan application, including references the consumer's eligibility for a new fixed rate mortgage, lower monthly payments, and eligibility to skip 2 monthly payments, Village Home Mortgage violated the Division's regulation 209 CMR 42.12A(9).
  30. Based on the information contained in Paragraphs 1 through 26, by failing to ensure that the advertising materials and solicitations mailed by the Company to Massachusetts consumers did not contain any representations that could be false, misleading or have the tendency or capacity to be misleading, Village Home Mortgage violated paragraphs 27 and 28 of the 2010 Order.
  31. Based on the information contained in Paragraphs 1 through 26, by failing to establish, implement and maintain a system of internal controls to monitor the Company's compliance with the laws and regulations applicable to advertising practices, Village Home Mortgage violated paragraph 29 of the 2010 Order.
  32. Based on the information contained in Paragraphs 1 through 26, by failing to establish, implement and maintain policies and procedures to ensure that all advertisements were thoroughly reviewed by senior management prior to publication and distribution to consumers Village Home Mortgage violated paragraph 30 of the 2010 Order.
  33. Based on the information contained in Paragraphs 1 through 26, by mailing Massachusetts consumers Solicitations that failed to disclose the proper license number held by Village Home Mortgage has violated the Division's regulation 209 CMR 42.15.
  34. Based upon the information contained in Paragraphs 1 through 26, 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

  35. After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
  36. 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 containing false or misleading language or language that had the tendency to be false or misleading; and
    2. Solicitations that have the tendency to make false promises to influence, persuade or induce a consumer to sign a mortgage loan application including references to the consumer's eligibility for a new fixed rate mortgage, lower monthly payments, and eligibility to skip 2 monthly payments.
  37. 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 Solicitations. The records to be produced shall include the consumers' names and addresses.
  38. IT IS FURTHER ORDERED that within twenty (20) days of the effective date of this Order, Village Home Mortgage shall submit a payment of forty thousand dollars ($40,000.00), in satisfaction of an administrative penalty collected in consideration of the Company's engaging in deceptive and prohibited advertising. Such administrative penalty is imposed pursuant to Massachusetts General Laws chapter 255E, section 11. The Company shall remit payment pursuant to this Paragraph of the Order for the amounts due, payable to the "Massachusetts Office of Consumer Affairs Expendable Trust" to the Office of the Commissioner of Banks, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118-6400.
  39. The administrative penalty imposed on Village Home Mortgage 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 Company 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.
  40. 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.
  41. 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.
  42. IT IS FURTHER ORDERED that a copy of each advertisement used by Village Home Mortgage shall be retained in the Company's books and records and shall be made available to the Division at its examinations/inspections of the Village Home Mortgage.

    GENERAL PROVISIONS

  43. Village Home Mortgage shall revise its advertising practices and procedures to ensure that all solicitations and advertising materials used by the Company do not contain any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading.
  44. 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.
  45. Village Home Mortgage shall implement, establish and maintain a system of internal controls to monitor the Company'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.
  46. 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 25th day of May, 2011

David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts

This Order was terminated pursuant to a Consent Order on July 18, 2011.