By the Division of Banks


COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2012-006

CONSENT ORDER

In the Matter of
CAPITAL INVESTMENT & LOAN, LLC

Hingham, Massachusetts

Mortgage Broker License No. MB24792


WHEREAS, CAPITAL INVESTMENT & LOAN, LLC, Hingham, Massachusetts ("Capital Investment" or the "Company"), 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 1, 2012, 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, Capital Investment agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of Capital Investment was conducted pursuant to General Laws chapter 255E, section 8, as of June 27, 2011 to assess the Company’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 Capital Investment 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 Capital Investment, and stipulate and agree as follows:

  1. Capital Investment shall establish, implement, and maintain procedures to ensure that all broker fees, loan fees, points, or similar fees collected by the Company in a mortgage transaction involving residential property in the Commonwealth are not charged to consumers except to the extent that such fees or points have been properly disclosed to the consumers by the Company, in writing, prior to the closing of the mortgage loan in accordance with Massachusetts General Laws chapter 183, section 63.
    1. The Company shall reimburse the consumers identified in the Report for the amounts collected as loan fees at settlement that had not been disclosed to the consumers, in writing, prior to loan closing. The amount of such reimbursements shall equal the difference between the actual charges assessed to the consumers and the amount disclosed in writing for such fee prior to loan closing. With its written response to the Report, the Company shall submit evidence of all reimbursements issued pursuant to this Section of the 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.
  2. Capital Investment shall establish, implement, and maintain procedures to ensure that the Company refrains from collecting compensation from consumers (i) in consideration of services which the Company, 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 Company.
    1. The Company shall reimburse the consumer identified in the Report for the full amount collected as an underwriting fee. With its written response to the Report, the Company 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 certified mail receipt to illustrate the consumers’ receipt of the reimbursements.
  3. Capital Investment shall establish, implement and maintain procedures to ensure that all mortgage loan originators with whom the Company conducts business are duly licensed as mortgage loan originators under Massachusetts General Laws chapter 255F, and properly sponsored through the Nationwide Mortgage Licensing System (NMLS) by Capital Investment.
    1. Capital Investment agrees to pay thirty thousand dollars ($30,000.00) in satisfaction of an agreed upon administrative penalty collected in consideration of the Company’s conducting business with mortgage loan originators who did not hold an active Massachusetts mortgage loan originator license and/or were not properly sponsored by Capital Investment. The administrative penalty shall be satisfied as follows:
      1. Ten thousand dollars ($10,000.00) shall be due and payable immediately upon the execution of this Consent Order; and
      2. A payment of five thousand dollars ($5,000.000) shall be due and payable upon the last day of each calendar month, beginning with the calendar month ending May 31, 2012, until the administrative penalty set forth in Paragraph 3(a) is satisfied in full.
    2. Capital Investment shall remit payment in full of the amount indicated above, payable 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 Street, 10th Floor, Boston, Massachusetts 02118.
  4. Capital Investment shall establish, implement, and maintain procedures to ensure that the Company refrains from asking, permitting, or requiring consumers to sign blank or incomplete mortgage loan documents.
  5. Within twenty (20) days of the receipt of the Report, Capital Investment shall upload to the NMLS updated financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP), including a balance sheet and interim income statement prepared as of October 31, 2011.
    1. On the thirtieth day after the end of each calendar quarter following the date of this Consent Order, Capital Investment shall upload to the NMLS updated financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) and signed and dated by a duly authorized officer of Capital Investment with sufficient knowledge to attest to the information reported in the financial statements. Each such filing submitted to the Division 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.
  6. With its written response to the Report, Capital Investment shall submit 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 Capital Investment’s operating performance and enhance capital formation;
      2. realistic and comprehensive budgets;
      3. a budget review process to monitor the income and expenses of Capital Investment 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 managing member’s 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 13 of the Consent Order.
  7. Capital Investment 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 Company, a licensed mortgage broker, is approving or funding the loan.
  8. Capital Investment shall establish, implement, and maintain procedures to ensure that all consumers receive a loan origination and compensation agreement in accordance with the provisions of the Division’s regulation 209 CMR 42.16. For each consumer loan file, a completed copy of the loan origination and compensation agreement shall be retained in the Company’s books and records, as provided in 209 CMR 42.09(1)(b).
  9. Capital Investment shall establish, implement, and maintain procedures to ensure that the Company 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.
  10. Capital Investment shall establish, implement and maintain procedures to ensure that the Company maintains and uses all loan documents in the Company’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 Company 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.
  11. Capital Investment shall establish, implement, and maintain procedures to ensure that that each licensed mortgage loan originator operating on behalf of the Company discloses his/her license number on all residential mortgage loan application forms, as required pursuant to the Division’s regulation 209 CMR 41.12(2).
  12. Capital Investment 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 20 days of receipt of the Report, all violations and areas of concern addressed in the Report.
    1. Within 20 days of Capital Investment’s receipt of the Report, the Company 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 Capital Investment 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, Capital Investment shall establish, implement, and maintain quality control standards which provide for a loan review process to assess the Company’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. Capital Investment 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.
  13. On the thirtieth day after the end of each calendar quarter following the date of this Consent Order, Capital Investment 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 Capital Investment 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 Capital Investment’s compliance condition in Massachusetts, and the results thereof.
  14. The reporting requirement to the Division referenced in Section 13 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.
  15. Nothing in this Consent Order shall be construed as permitting Capital Investment to violate any law, rule, regulation, or regulatory bulletin to which Capital Investment 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 Capital Investment’s mortgage company license(s) under Massachusetts General Laws chapter 255E, section 6, while this Consent Order is in effect.
  17. Capital Investment agrees that, in the event that the Company 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 against the mortgage broker Massachusetts surety bond maintained by Capital Investment pursuant to the Division’s regulation 209 CMR 42.06(2)(a).
  18. 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.
  19. This Consent Order shall become effective immediately upon the date of its issuance.
  20. 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.

This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements between the Division and Capital Investment.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 1st day of May, 2012

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

THIS CONSENT ORDER WAS TERMINATED PURSUANT TO A CONSENT ORDER DATED DECEMBER 18, 2014, DOCKET #2014-018.