COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2013-024

CONSENT ORDER

In the Matter of
Prospect Mortgage, LLC
Sherman Oaks California
Mortgage Company License No. MC3296

WHEREAS, PROSPECT MORTGAGE, LLC Sherman Oaks California, (“Prospect” or the “Company”), 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 October 9, 2013, 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, Prospect agrees to the issuance of this CONSENT ORDER (“Order”) by the Commissioner of Banks (“Commissioner”);

WHEREAS, a Mortgage Lender Community Investment examination was conducted pursuant to General Laws chapter 255E, section 8, as of April 27, 2010, 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 lender in the Commonwealth; and

WHEREAS, the Report of Examination (the “Report”) issued pursuant to the Division’s examination of Prospect as of April 27, 2010 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.

ORDER

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

  1. Prospect shall establish, implement and  maintain 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 Consumer Financial Protection Bureau, 12 C.F.R. Part 1003 (“Regulation C”).  Such procedures shall necessarily require that the Company implement internal controls to ensure that, for all HMDA reportable loan applications, Prospect accurately compiles and records all required data in the Company’s HMDA Loan Application Register (“LAR”).  Prospect has advised the Division that Prospect has already resubmitted its 2010 and 2011 HMDA LARs, and has begun work to remediate past issues with its HMDA collection and reporting.
    1. Prospect has established, implemented, and will maintain 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 Prospect pursuant to this Section of the Order.
    2. Within thirty (30) days of the effective date of this Order, Prospect shall prepare and submit to the Division a written report detailing the policies, procedures and training enhancements employed and in the process of being employed to ensure HMDA data is recorded accurately; and
    3. Prospect agrees to submit a payment in the amount of twenty-five thousand dollars ($25,000.00) in satisfaction of an administrative penalty collected in consideration of the Company’s failure to comply with the statutes, rules and regulations governing the conduct of those engaged in the business of a mortgage lender in Massachusetts.  Prospect shall remit payment in full of the amount indicated above, payable to the “Commonwealth of Massachusetts,” with the executed copy of the Consent, to the Office of the Commissioner of Banks, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.  The Division shall remit the payment for deposit into the General Fund of the Commonwealth.
  2. 2.         Prospect shall establish, implement and maintain policies and procedures to ensure that Prospect maintains all books, records, and accounts in accordance with the requirements of Massachusetts General Laws chapter 255E and the Division’s regulation 209 CMR 42.09 and 209 CMR 48.00 and the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. section 1601 et seq., as implemented by Regulations of the CFPB, 12 C.F.R. Part 1002 (“Regulation B”).  The procedures implemented to address this Section of the Order shall necessarily ensure that Prospect retains its books and records in a manner which will allow the Commissioner to determine whether the Company is complying with all applicable state and federal laws and regulations governing the conduct of mortgage brokers and mortgage lenders.

    Prospect agrees to submit a payment of one thousand dollars ($1,000.00) in satisfaction of administrative penalties collected in consideration of the Company’s failure to maintain books and records in accordance with the Division’s regulations 209 CMR 42.09 and 209 CMR 48.03.  Prospect shall remit payment in full of the administrative penalty referenced in this Section of the Order, payable to the “Commonwealth of Massachusetts,” with the executed copy of the Consent Agreement to the Office of the Commissioner of Banks, 1000 Washington Street, Boston, Massachusetts 02118.  The Division shall remit the payment for deposit into the General Fund of the Commonwealth.

    3.      Prospect has established, implemented and will maintain procedures to ensure compliance with the provisions of the requirements set forth in Regulation B.  Such procedures shall necessarily require that the Company implement internal controls to ensure that Prospect collects and records the proper Government Monitoring information on all applications or properly records that the information was not provided.

    4.      Prospect shall comply with all laws and regulations applicable to 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 all violations and areas of concern addressed in the Report.

    1. Prospect 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 Order.

    5.      On the thirtieth (30th) day after the end of each calendar quarter following the date of this Order, beginning with the calendar quarter ending September 30, 2013, Prospect 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 Order and the results thereof; and
    2. Written findings prepared by Prospect detailing a review of management’s and staff persons’ adherence to the policies, programs, and procedures adopted pursuant to this 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 Prospect’s compliance condition in Massachusetts and the results thereof.

    6.      The reporting requirement to the Division referenced in Section 5 of this 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 Order from the Commissioner.

    7.      Nothing in this Order shall be construed as permitting Prospect to violate any law, rule, regulation, or regulatory bulletin to which the Company is subject.

    8.      In consideration of the foregoing Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Prospect’s mortgage lender and mortgage broker licenses under Massachusetts General Laws chapter 255E, section 6, while this Order is in effect.

    9.      Failure to comply with the terms of this 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.

    10.    This Order shall become effective immediately upon the date of its issuance.

    11.    The provisions of this Order shall remain effective and enforceable except to the extent that, and until such time as the Commissioner or a court of competent jurisdiction modifies, terminates, suspends, or sets aside any provision of this Order.

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


     

    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
    Commonwealth of Massachusetts