By the Division of Banks
COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
Docket No. 2011-013
In the Matter of
Homeowners Mortgage of America, Inc., d/b/a
Foundation Financial Group
Mortgage Lender License No.: ML112057
WHEREAS HOMEOWNERS MORTGAGE OF AMERICA, INC., D/B/A FOUNDATION FINANCIAL GROUP ("Foundation Financial Group" or the "Corporation"), with its main business office located at 100 Galleria Parkway, Atlanta, Georgia, 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 June 29, 2012, whereby, solely for the purpose of settling this matter, Foundation Financial Group agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of Foundation Financial Group was conducted pursuant to General Laws chapter 255E, section 8, as of April 15, 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 lender in the Commonwealth; and
WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division’s examination/inspection of Foundation Financial Group as of April 15, 2010, alleged non-compliance with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a mortgage lender in Massachusetts.
NOW COME the parties in the above-captioned matter, the Division and Foundation Financial Group, and stipulate and agree as follows:
- Foundation Financial Group shall establish, implement and maintain policies and procedures to ensure that all applicants who apply for a mortgage loan identified as a high cost home loan receive the appropriate disclosures and counseling for high cost home loans pursuant to the provisions of General Laws chapter 183C and the Division’s regulation 209 CMR 32.32.
- Foundation Financial Group has submitted evidence of corrective action for the relevant mortgage loans identified as high cost home loans in the Report of Examination issued to the Corporation.
- Foundation Financial Group shall submit a payment of six thousand dollars ($6,000) to support the consumer education efforts of the Office of Consumer Affairs and Business Regulation, in satisfaction of an administrative penalty collected in consideration of Foundation Financial Group’s failure to comply with the provision’s of General Laws chapter 183C and the Division’s regulation 209 CMR 32.32. Foundation Financial Group shall remit payment in full of the amount 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 Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118-6400.
- Foundation Financial Group has engaged an independent auditing firm ("Auditing Firm") to conduct a review of residential mortgage loans originated by Foundation Financial Group from February 6, 2009 through the date that the Auditing Firm commences its review, not including loans previously reviewed by the Division. The Auditing Firm’s review shall commence within sixty (60) days of the effective date of this Consent Order and shall continue through December 2013.
- The Auditing Firm shall identify any consumers who did not receive the disclosures and/or counseling pursuant to the provisions of General Laws chapter 183C and the Division’s regulation 209 CMR 32.32 for any high cost home loan originated by the Corporation.
- Foundation Financial Group shall ensure that the Corporation implements the appropriate corrective action for any consumer identified pursuant to the Auditing Firm’s review who did not receive the appropriate disclosures and/or counseling pursuant to the provisions of General Laws chapter 183C and the Division’s regulation 209 CMR 32.32.
- The Corporation shall submit evidence of the corrective action of any violation identified by the Auditing Firm during the review referenced in Section 2(a) of this Consent Order. Evidence of the corrective action shall include the consumer’s name, the date the loan closed, the check number, the dollar amount of the reimbursement, and certified mail receipt to illustrate the consumer’s receipt of the check.
- The Auditing Firm shall submit to the Commissioner a written report detailing the auditor’s findings within ninety (90) days of the effective date of this Consent Order.
- The Auditing Firm shall prepare and submit monthly reports to the Commissioner through December 2013 describing any violations of the provisions of General Laws chapter 183C and the Division’s regulation 209 CMR 32.32. The Auditing firm’s monthly report submitted to the Division shall describe any violations of law identified during the preceding month and shall identify any consumers who did not receive disclosures and/or counseling pursuant to the provisions of General Laws chapter 183C and the Division’s regulation 209 CMR 32.32.
- It is understood that this Section will require that the Auditing Firm review each mortgage loan application originated by Foundation Financial Group to identify any high cost home loan originated by the Corporation.
- Foundation Financial Group shall establish, implement, and maintain procedures to ensure that all applicants whose residential mortgage loan applications are denied receive a Mortgage Review Board Disclosure Form notifying them that they may appeal such denial to the review board, pursuant to Massachusetts General Laws chapter 167, section 14A. For each consumer loan file, the Corporation shall retain a completed copy of the Mortgage Review Board Disclosure Form in its books and records as evidence of compliance.
- Foundation Financial Group 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 in a residential mortgage loan transaction and ensure 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.
- Foundation Financial Group shall comply with all laws and regulations applicable to its conducting the business of a mortgage lender, 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.
- The written responses submitted by Foundation Financial Group have been accepted by the Division and they describe the revised policies and procedures adopted by Foundation Financial Group 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;
- Within twenty (20) days from the effective date of this Consent Order, Foundation Financial Group 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 lender 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
- Foundation Financial Group 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.
- On the thirtieth (30th) day after the end of each calendar quarter following the date of this Consent Order, Foundation Financial Group shall furnish written progress reports to the Division, which shall address and include the following:
- 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
- Written findings prepared by Foundation Financial Group 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 operational changes implemented, if any, during such quarter which are intended to improve Foundation Financial Group’s compliance condition in Massachusetts and the results thereof.
- The reporting requirement to the Division referenced in Section 6 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.
- Nothing in this Consent Order shall be construed as permitting Foundation Financial Group to violate any law, rule, regulation, or regulatory bulletin to which Foundation Financial Group is subject.
- In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Foundation Financial Group’s mortgage lender license under General Laws chapter 255E, section 6, while this Consent Order is in effect.
- 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.
- This Consent Order shall become effective immediately upon the date of its issuance.
- 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.
- 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 Foundation Financial Group.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:
Dated at Boston, Massachusetts, this 29th day of June, 2012
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts