By the Division of Banks


COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2011-021

CONSENT ORDER

In the Matter of
NEW ENGLAND REGIONAL MORTGAGE CORPORATION
Salem, New Hampshire

Mortgage Company License Nos. MC2813 et al.


WHEREAS, NEW ENGLAND REGIONAL MORTGAGE CORPORATION, Salem, New Hampshire ("New England Regional Mortgage" or the "Corporation"), a licensed mortgage lender and 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 January 26, 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 lender and mortgage broker, New England Regional Mortgage agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, on March 4, 2010, as result of findings from an examination/inspection conducted by the Division of Banks ("Division") as of December 11, 2008, New England Regional Mortgage and the Commissioner entered into a Consent Order ("2010 Consent Order");

WHEREAS, another examination/inspection of New England Regional Mortgage was conducted pursuant to General Laws chapter 255E, section 8, as of November 22, 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 and mortgage broker in the Commonwealth, as well as to assess the Corporation’s compliance with the 2010 Consent Order;

WHEREAS, the Division issued a Report of Examination/Inspection (the "Report") detailing the findings of the 2010 examination/inspection;

WHEREAS, the Division has considered the findings presented in the Report and has determined that the Corporation is not in full compliance with the provisions of the 2010 Consent Order;

WHEREAS, the parties now seek to resolve by mutual agreement, the matters identified in the Report; and

WHEREAS, by mutual agreement of the Corporation and the Division, the 2010 Consent Order is hereby superseded and replaced by this Consent Order.

ORDER

NOW COME the parties in the above-captioned matter, the Division and New England Regional Mortgage, and stipulate and agree as follows:

  1. New England Regional Mortgage shall establish, implement, and maintain policies and procedures to ensure that the Corporation notifies the Division in writing, of the occurrence of any significant event(s) in accordance with the Division’s regulation 209 CMR 42.12, including, but not limited to, any security breach of personal information. It being understood that New England Regional Mortgage shall notify the Division of a security breach within two (2) business days of when the Corporation has reason to know of a security breach or that the personal information of a consumer was acquired or used by an unauthorized person for an unauthorized purpose.
    1. The written notification to the Division shall include but not be limited to the following:
      1. A detailed description of the nature and circumstances of the breach of security or unauthorized acquisition of personal information;
      2. The number of consumers affected as of the time of the notification;
      3. The steps already taken relative to the incident;
      4. Any steps intended to be taken relative to the incident subsequent to notification; and
      5. Information regarding whether law enforcement is engaged in investigating the incident.
    2. New England Regional Mortgage shall ensure all other government agencies to whom notice is required, are notified of any security breach in accordance with the requirements of General Laws chapter 93H.
    3. New England Regional Mortgage agrees to submit a payment in the amount of ten thousand dollars ($10,000.00) in satisfaction of an administrative penalty collected in consideration of New England Regional Mortgage’s failure to properly report, and respond to, a security breach. The administrative penalty shall be satisfied as follows:
      1. Two thousand dollars ($2,000.00) shall be due and payable immediately upon execution of this Consent Order; and
      2. A payment of two thousand dollars ($2,000.00) shall be due and payable by the 1st day of each subsequent month continuing for an additional four months until the penalty of ten thousand dollars ($10,000.00) has been paid in full; and
    4. New England Regional Mortgage shall remit the payment in the amounts indicated above, payable to the "Commonwealth of Massachusetts," to the Office of the Commissioner of Banks, Attn.: Mortgage Lender Examination Section, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118. The Division shall remit the payment for deposit into the General Fund of the Commonwealth.
  2. New England Regional Mortgage shall further enhance its current procedures to ensure compliance with the loan reporting requirements set forth in the Home Mortgage Disclosure Act ("HMDA"), 12 U.S.C. section 2801 et seq., as implemented by Regulations of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 203 ("Regulation C"). Such procedures shall necessarily require that the Corporation implement internal controls to ensure that, for all HMDA reportable loan applications, New England Regional Mortgage accurately compiles and records all required data in the Corporation’s HMDA Loan Application Register ("LAR").
    1. New England Regional Mortgage shall further enhance its current operating policies and training procedures to ensure that all applicable personnel possess a comprehensive understanding of the HMDA reporting requirements under Regulation C. Such training shall necessarily ensure the proper implementation and execution of the revised practices and procedures adopted by New England Regional Mortgage pursuant to this Section of the Consent Order.
  3. New England Regional Mortgage shall further enhance its current policies and procedures to ensure that the Corporation is in compliance with the Division’s regulation 209 CMR 53.00 et seq. regarding determination and documentation of a borrower’s interest when refinancing a home loan that was consummated within 60 months prior to the Corporation’s receipt of an application for a new home loan. Such procedures shall ensure that in any transaction in which New England Regional Mortgage is performing in a mortgage lender capacity, the burden is upon New England Regional Mortgage, exclusively, to determine that the refinancing is in the borrower’s interest.
    1. Compliance with this Section of the Consent Order shall necessarily require that New England Regional Mortgage further enhance its current procedures to ensure that the Corporation completes a worksheet or other document indicating how the Corporation determined that a refinance loan was in the borrower’s interest. Such document shall include all the information required under 209 CMR 53.07 and the language contained therein shall not in any manner shift the burden to the borrower to determine and to demonstrate that the home loan is in the borrower’s interest.
  4. New England Regional Mortgage shall establish, implement and maintain procedures to ensure that the Corporation discloses its license type and number to applicants in writing, at the time a fee is paid or a mortgage loan application is accepted, in accordance with the Division’s regulation 209 CMR 42.15.
  5. New England Regional Mortgage shall establish, implement, and maintain procedures to ensure that when the Corporation is acting in the capacity of a mortgage lender, New England Regional Mortgage refrains from providing consumers with the Loan Origination and Compensation Agreement (LOCA), as the LOCA is to be issued exclusively by the mortgage broker in the residential mortgage loan transaction.
  6. New England Regional Mortgage shall comply with all laws and regulations applicable to its conducting the business of a mortgage lender and 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 twenty (20) days of receipt of the Report, all violations and areas of concern addressed in the Report.
    1. Within twenty (20) days of New England Regional 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 New England Regional 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 twenty (20) days from the effective date of this Consent Order, New England Regional 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 lender and 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. New England Regional 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.
  7. On the thirtieth (30th) day after the end of each calendar quarter following the date of this Consent Order, New England Regional 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 New England Regional 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 New England Regional Mortgage’s compliance condition in Massachusetts and the results thereof.
  8. The reporting requirement to the Division referenced in Section 7 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.
  9. New England Regional Mortgage agrees that, in the event that the Corporation 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 mortgage lender and mortgage broker Massachusetts surety bond maintained by New England Regional Mortgage pursuant to the Division's regulations 209 CMR 42.03(2)(a) and 209 CMR 42.06(2)(a).
  10. Nothing in this Consent Order shall be construed as permitting New England Regional Mortgage to violate any law, rule, regulation, or regulatory bulletin to which New England Regional Mortgage is subject.
  11. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke New England Regional Mortgage’s mortgage lender and mortgage broker licenses under General Laws chapter 255E, section 6, while this Consent Order is in effect.
  12. 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.
  13. This Consent Order shall become effective immediately upon the date of its issuance.
  14. 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.
  15. 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 New England Regional Mortgage.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 26th day of January, 2012

By:
David J. Cotney
Commissioner of Banks

THIS CONSENT ORDER WAS TERMINATED ON JANUARY 18, 2017.