By the Division of Banks


COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER LICENSING
Docket No. 2013-022

CONSENT ORDER

In the Matter of

MORTGAGE MASTER, INC.
WALPOLE, MASSACHUSETTS

Mortgage Company License No. MC4251 et al.


WHEREAS, MORTGAGE MASTER, INC., (Mortgage Master or the Corporation), a licensed mortgage lender and mortgage broker under Massachusetts General Laws chapter 225E, 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 October 9, 2013 (Effective Date), 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, Mortgage Master agrees to the issuance of this CONSENT ORDER (Order) by the Commissioner of Banks (Commissioner);

WHEREAS, the Division licenses Mortgage Master as a mortgage lender and mortgage broker under Massachusetts General Laws, chapter 255E and 209 CMR 42.00 et seq.

WHEREAS, on February 15, 2011 the Division conducted a Mortgage Lender Community Investment examination and a Compliance examination/inspection of Mortgage Master pursuant to General Laws chapter 255E, section 8, 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 Settlement Agreement.

WHEREAS, the Report of Examination/Inspection (the Report) issued pursuant to the Division's February 15, 2011 examination/inspection noted progress in satisfying the provisions of the 2010 Settlement Agreement.

WHEREAS, a Consumer Protection Visitation (the Visitation) of Mortgage Master, Inc. was conducted as of July 31, 2012 by the Division, concurrently with the Consumer Financial Protection Bureau (CFPB), to evaluate the Corporation's progress in addressing and correcting violations of the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. section 2801 et seq., as implemented by the CFPB, 12 C.F.R. Part 1003 (Regulation C) and the Disclosure of Consumer Credit Costs and Terms, the Division's regulation 209 CMR 32.00 et seq.

WHEREAS, by mutual agreement of the Corporation and the Division, the 2010 Settlement Agreement is hereby superseded and replaced by this Order.

Findings of Fact and Conclusions of Law

Based on information collected through the Division's examination and supervision of Mortgage Master's compliance with HMDA, including review of Mortgage Master's processes for managing compliance with HMDA and completion of a data integrity review of Mortgage Master's HMDA data, the Division finds the following:

  1. In February 2009, the Division reviewed Mortgage Master's 2007 HMDA Loan Application Register (LAR) and found that Mortgage Master's HMDA error rates exceeded applicable resubmission thresholds.  In June 2010, the Division and Mortgage Master reached a settlement agreement requiring that Mortgage Master (1) establish, implement, enhance, and continue to maintain procedures and internal controls to ensure compliance with HMDA's loan reporting requirements; (2) review, correct, and re-file all errors within its 2007 HMDA-LAR for mortgage loans and applications in Massachusetts; (3) establish, implement, and maintain operating policies and training procedures to ensure that personnel understand HMDA's reporting requirements; (4) prepare and submit a written report to the Division describing the HMDA data that were re-filed; and (5) pay a $25,000 administrative penalty.
  2. In February 2011, the Division reviewed the data integrity of Mortgage Master's 2009 and 2010 HMDA-LARs and found that Mortgage Master's HMDA error rates exceeded applicable resubmission thresholds.
  3. A visitation was conducted as of July 31, 2012 by the Division, concurrently with the CFPB, to evaluate the Corporation's progress in addressing and correcting Mortgage Master's 2010 and 2011 HMDA-LARs errors and confirmed that Mortgage Master's HMDA error rates continued to exceed applicable resubmission thresholds.
  4. While Mortgage Master maintained a HMDA compliance management system, the system did not maintain procedures “reasonably adapted to avoid such errors,” 12 C.F.R. § 1003.6(b), in its HMDA-LAR.
  5. Mortgage Master's HMDA data submissions for the calendar year of 2011 violated HMDA, 12 U.S.C. §§ 2803-04, and Regulation C, 12 C.F.R. § 1003.4.

Order

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

  1. Within 60 days from the Effective Date, Mortgage Master shall submit to the Division written evidence confirming that Mortgage Master has reviewed, fully corrected, and resubmitted its 2011 HMDA data to the Board of Governors of the Federal Reserve System, which collects HMDA data on behalf of the CFPB.
    1. Mortgage Master agrees to submit a payment of fifty thousand dollars ($50,000.00) in satisfaction of an administrative penalty collected in consideration of the Division's findings alleging that the Corporation failed to comply with Regulation C.
    2. Mortgage Master agrees to 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.
  2. Within 30 days of the Effective Date, Mortgage Master shall retain one or more independent consultants, with specialized experience in HMDA compliance, not subject to any conflict of interest, and acceptable to the Division, to conduct a review of Mortgage Master's program to manage compliance with HMDA.
    1. The review shall include all systems, programs, policies, and procedures to ensure the accuracy of, and to prevent, identify, and correct errors in, HMDA data.
    2. Within 60 days of the Effective Date, the independent consultant shall submit to Mortgage Master/the Executive Officers a written report detailing the findings of the review (Consultant Report).
  3. Within 60 days of receiving the Consultant Report, Mortgage Master shall submit to the Division for review and non-objection a comprehensive written compliance plan designed to ensure that the Corporation is in compliance with HMDA, has in place a compliance management system that ensures the accuracy of HMDA data, and prevents, identifies, and corrects any errors in the HMDA data (Compliance Plan). The Division shall have the discretion to make a determination of non-objection to the Compliance Plan or direct the Corporation to revise it. In the event the Division directs the Corporation to revise the Compliance Plan, the Corporation shall make revisions and resubmit the Compliance Plan to the Division within 30 days. Upon notification that the Division has made a determination of non-objection to the Compliance Plan, the Corporation shall implement and adhere to the steps, recommendations, deadlines, and timeframes set forth in the Compliance Plan.
  4. The Compliance Plan shall include, at a minimum:
    1. Detailed steps for addressing each action required by this Order;
    2. Detailed steps to be taken by the Corporation's directors, officers, employees, and agents to:
      1. Develop and implement a HMDA Compliance Management System including policies, procedures, and internal controls to ensure compliance with the data collection and reporting requirements set forth in HMDA and Regulation C, including quarterly reviews of HMDA reporting requirements as outlined in 12 C.F.R. §1003.4(a);
      2. Develop and implement a Compliance Program to regularly test HMDA data integrity; and
      3. Develop and implement any necessary improvements to the Corporation's operating policies and training procedures to ensure that personnel understand HMDA standards and reporting requirements.
    3. A copy of the Consultant Report and detailed steps to be taken by the Corporation's directors, officers, employees, and agents to:
      1. Correct any deficiencies identified in the Consultant Report; and
      2. Implement any recommendations or explain why a particular recommendation is not being implemented.
    4. Specific timeframes and deadlines for implementation of the steps described above.
  5. Within 120 days of the Effective Date, and on or before the thirtieth day after the end of each calendar quarter following the effective date of this Order for one year, unless such period is extended by the Division, the Corporation shall submit to the Division a true and accurate written Compliance Progress Report, which has been approved by the Executive Officers, and which shall at a minimum:
    1. Separately list each action required by the Compliance Plan and this Consent Order; and,
    2. Describe the status of each action, including the action(s) taken or to be taken to comply with each action listed pursuant to subparagraph (a).
  6. Mortgage Master must establish, implement, and maintain procedures to correctly report withdrawals and denials as well as Government Monitoring information, under HMDA.
    1. Mortgage Master must implement internal controls to ensure that applications are only deemed withdrawn when they are expressly withdrawn by the applicant.
    2. Mortgage Master must implement internal controls to ensure that the Corporation reports the proper Government Monitoring information.
  7. Mortgage Master will continue to comply with all laws and regulations applicable to its conducting the business of a mortgage lender and mortgage broker.  Such obligations included addressing and correcting all alleged violations and areas of concern addressed in the Report and Visitation.
    1. Mortgage Master has established 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 Order.  Such quality control standards must be maintained to prevent the recurrence of the violations addressed in the Report and Visitation and ensure a satisfactory compliance posture; and
    2. Mortgage Master will 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 Order.
  8. Except as set forth in Paragraph 10, the provisions of this Order shall not bar, estop, or otherwise prevent the Division, or any other federal or state agency or department from taking any other action against Mortgage Master.
  9. The provisions of this Order shall become effective and public immediately upon the date of its issuance.
  10. In consideration of the foregoing Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Mortgage Master's mortgage company license(s) under Massachusetts General Laws chapter 255E, section 6.
  11. Failure to comply with the terms of this Order shall constitute grounds for license suspension and/or revocation by the Division, or other formal regulatory actions, pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
  12. The provisions of this Order shall remain effective and enforceable except to the extent that any provisions of this Order shall have been modified, terminated, suspended, or set aside in writing by the Division.  The Division agrees to conduct an examination/inspection to evaluate Mortgage Master’s progress in satisfying the provisions of this Order no sooner than twelve months and no later than eighteen months from the Effective Date of this Order.  If the findings of this examination/inspection warrant, the Division will terminate this Order.
  13. The provisions of this Order shall be enforceable by the Division.
  14. 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 Mortgage Master.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 9th day of October, 2013

By: David J. Cotney
Commissioner of Banks