By the Division of Banks


COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2012-002

CONSENT ORDER

In the Matter of
SIERRA PACIFIC MORTGAGE COMPANY, INC.

Folsom, California

Mortgage Company License No(s). MC1788 et al.


WHEREAS, SIERRA PACIFIC MORTGAGE COMPANY, INC., Folsom, California ("Sierra Pacific Mortgage" or the "Corporation"), a licensed mortgage lender and 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 April 18, 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, Sierra Pacific Mortgage agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, on August 23, 2010, as a result of findings from a Mortgage Lender Community Investment examination conducted by the Division as of February 15, 2010, Sierra Pacific Mortgage and the Commissioner entered into a Consent Order ("2010 Consent Order");

WHEREAS, a subsequent examination/inspection of Sierra Pacific Mortgage was conducted pursuant to General Laws chapter 255E, section 8, as of October 20, 2011, to assess the Corporation’s level of compliance with applicable Massachusetts and federal statutes and 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 Report of Examination/Inspection (the "Report") issued pursuant to the Division’s 2011 examination/inspection of Sierra Pacific Mortgage 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 lender and mortgage broker in Massachusetts;

WHEREAS, by mutual agreement of the Corporation and the Division, the 2010 Consent Order is hereby superseded and replaced by this Consent Order; and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 Sierra Pacific Mortgage, and stipulate and agree as follows:

  1. Sierra Pacific Mortgage must establish, implement, and maintain procedures to ensure that all loan fees, points, or similar fees collected by the Corporation in a mortgage transaction involving residential property located in the Commonwealth are not charged to consumers except to the extent that such loan fees or points have been properly disclosed to the consumers by the Corporation, in writing, prior to the closing of the mortgage loan in accordance with Massachusetts General Laws chapter 183, section 63.
    1. The Corporation must reimburse the consumers identified in the Report for the amount collected as an administration fee at settlement that had not been disclosed to the consumers, in writing, prior to loan closing. The amount of such reimbursement must equal the difference between the actual charge assessed to the consumers and the amount disclosed in writing for such fee prior to loan closing; and
    2. With the executed copy of the Consent Agreement, the Corporation must submit evidence of the reimbursements issued pursuant to this Section of the Consent Order. Evidence of the reimbursements must include the consumers’ names, the dates the loans closed, the check numbers, the amounts of the reimbursements, and certified mail receipt to illustrate the consumers’ receipt of the reimbursements.
  2. Sierra Pacific Mortgage must establish, implement and maintain procedures to ensure that all mortgage loan originators with whom the Corporation 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 Sierra Pacific Mortgage or by the licensed mortgage broker, as appropriate.
    1. Sierra Pacific Mortgage agrees to submit a payment in the amount of seventeen thousand dollars ($17,000.00) in satisfaction of an administrative penalty collected in consideration of the Corporation’s conducting business with mortgage loan originators who did not hold an active mortgage loan originator license or who were actively sponsored by another mortgage entity when acting on behalf of Corporation. Sierra Pacific Mortgage 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 Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
  3. Sierra Pacific Mortgagee must establish, implement, and maintain policies and procedures to ensure that the Corporation refrains from engaging directly or indirectly in the business of a mortgage lender and/or mortgage broker for residential property located in Massachusetts from any location, whether within or without the Commonwealth, for which the Corporation has not previously obtained a license from the Commissioner for such location in accordance with Massachusetts General Laws chapter 255E, section 2.
    1. Sierra Pacific Mortgage agrees to submit a payment in the amount of one thousand five hundred dollars ($1,500.00) in satisfaction of an administrative penalty collected in consideration of the Corporation’s engaging in mortgage lender and/or broker activity at unlicensed locations. Sierra Pacific Mortgage 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 Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
  4. Sierra Pacific Mortgage must establish, implement, and maintain procedures to ensure that every residential mortgage presented for record contains the accurate name, address, and license number of the mortgage loan originator responsible for originating the mortgage loan and, in cases where a mortgage broker is involved, shall also contain the name, address, and license number of the mortgage broker responsible for placing the mortgage loan with the Corporation, as required pursuant to M.G.L. c. 183, Section 6D.
  5. Sierra Pacific Mortgage must establish, implement, and maintain procedures to ensure that the Corporation refrains from providing out-of-state disclosures to consumers in a Massachusetts residential mortgage loan transaction.
  6. Sierra Pacific Mortgage must establish, implement, and maintain procedures to ensure that the Corporation provides the disclosure required under M.G.L. chapter 184, section 17B at the time a consumer applies for a loan. Said disclosure shall strictly conform to the content and format as set forth in the statute.
  7. Sierra Pacific Mortgage must establish, implement, and maintain procedures to ensure that the Corporation discloses its license type and license number to all clients and/or residential mortgage loan applicants in writing at the time a fee is paid or a mortgage loan application is accepted.
  8. Sierra Pacific Mortgage must establish, implement, and maintain procedures to ensure that, when it is operating in the capacity of a mortgage broker, 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 Corporation’s books and records, as provided in 209 CMR 42.09(1)(b).
  9. Sierra Pacific Mortgage must establish, implement, and maintain procedures to ensure that, when operating in the capacity of a mortgage broker, 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.
  10. Sierra Pacific Mortgage must revise its "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 Corporation, when acting in the capacity of a mortgage broker, is approving or funding the loan.
  11. Sierra Pacific Mortgage must establish, implement, and maintain procedures to ensure that all consumers receive a Notice of Privacy Policies and Practices in accordance with, and in the form required by, the Federal Trade Commission’s Regulation 16 CFR 313. For each consumer loan file, a copy of the Notice of Privacy Policies and Practices shall be retained in the Corporation’s books and records as evidence of compliance.
  12. Sierra Pacific Mortgage must 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 20 days of receipt of the Report, all violations and areas of concern addressed in the Report.
    1. Within 20 days of Sierra Pacific Mortgage’s receipt of the Report, the Corporation must 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 Sierra Pacific 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 days of the effective date of this Consent Order, Sierra Pacific Mortgage must establish, implement, and maintain quality control standards which provide for a loan review process to assess the Corporation’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 lender and mortgage broker in Massachusetts, and (ii) the provisions of this Consent Order; and
    3. Sierra Pacific Mortgage must 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, Sierra Pacific Mortgage must 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 Sierra Pacific 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 Sierra Pacific Mortgage’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 Sierra Pacific Mortgage to violate any law, rule, regulation, or regulatory bulletin to which Sierra Pacific Mortgage 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 Sierra Pacific Mortgage’s mortgage company license(s) under Massachusetts General Laws chapter 255E, section 6, while this Consent Order is in effect.
  17. 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.
  18. This Consent Order shall become effective immediately upon the date of its issuance.
  19. Sierra Pacific 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/or mortgage broker Massachusetts surety bonds maintained by Sierra Pacific Mortgage pursuant to the Division’s regulation 209 CMR 42.03(2)(a) and 209 42.06(2)(a).
  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.
  21. 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 Sierra Pacific Mortgage.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 18th day of April, 2012

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