By the Division of Banks


COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER
LICENSING
Docket No. 2008-021-CO

CONSENT ORDER

In the Matter of

SUN WEST MORTGAGE COMPANY, INC.
Cerritos, California

Mortgage Lender License No.: ML3212


WHEREAS, Sun West Mortgage Company, Inc., Cerritos, California (Sun West Mortgage or the Corporation), 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  December 17, 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, Sun West Mortgage agrees to the issuance of this CONSENT ORDER (Consent Order) by the Commissioner of Banks (Commissioner);

WHEREAS, pursuant to General Laws chapter 255E, section (7)(b), the Commissioner issued a FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST, Docket No. 2008-021 (Temporary Order), against Sun West Mortgage on September 24, 2008, based upon the written findings of the Division’s examination of Sun West Mortgage as of June 11, 2008, (the Findings) which alleged Sun West Mortgage’s failure to demonstrate and maintain the character, reputation, integrity, and general fitness that would warrant the belief that its mortgage lender business would be operated honestly, fairly, and soundly in the public interest in accordance with General laws chapter 255E, section 4 and the Division's regulation 209 CMR42.03(2)(c);

WHEREAS, Sun West Mortgage cooperated with the Division in voluntarily producing information, and responding to questions in order to resolve this matter, and conferring with the Division’s representatives through the Corporation’s counsel;

WHEREAS, the parties now seek to resolve by mutual agreement, the matters identified in the Temporary Order;

WHEREAS, without this Consent Order constituting an admission by Sun West Mortgage of any allegations made or implied by the provisions of the Temporary Order; solely for the purpose of settlement of all alleged violations without protracted administrative proceedings and judicial review, Sun West Mortgage hereby waives its right to complete the hearing process relative to this proceeding and affirms that it is willing to take all necessary action as set forth in this Consent Order; and

WHEREAS, in recognition of the Division and Sun West Mortgage having reached the following mutual agreement under this Consent Order to fully resolve the matters raised by the Temporary Order, the Commissioner has terminated the Temporary Order on this 17th day of   December, 2013.

ORDER

 

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

  1. Sun West Mortgage and any and all officers, directors, managers, employees, independent contractors, or agents, operating on behalf of Sun West Mortgage, have ceased engaging in the activity of a mortgage lender, mortgage broker, and mortgage loan originator in Massachusetts, as those terms are defined under General Laws chapter 255E, section 1 and General Laws chapter 255F, section 1, respectively.
  2. Immediately upon the execution of this Consent Agreement, the Division will update Sun West Mortgage’s licensing status in Massachusetts in the Nationwide Mortgage Licensing System (NMLS) to "Terminated- Surrendered/Cancelled."
  3. To the extent that Sun West Mortgage wishes to engage in the business of a licensed mortgage lender and/or mortgage broker, Sun West Mortgage shall be required to submit a completed application to obtain the relevant license from the Commissioner.  Unless the Commissioner, in his sole discretion, agrees to accept such an application earlier, Sun West Mortgage agrees not to submit such an application until at least twenty four (24) months have elapsed following the effective date of this Consent Order.
    1. It being understood that in the event that Sun West Mortgage wishes to make reverse mortgage loans in the Commonwealth, the Corporation will be permitted to submit a separate application to the Commissioner, for approval of the Corporation’s reverse mortgage program no sooner than twenty four (24) months after the effective date of this Consent Order.   Such filing shall meet the requirements as set forth in General Laws chapter 167E, section 7 and 7A.  It being further understood that the sixty (60) day period preceding the expiration of the 24 month prohibition above will be to permit the processing of the reverse mortgage approval request and that no such approval shall occur prior to an approval of a mortgage lender license application under General Laws chapter 255E, section 4.
    2. The Commissioner shall have all of the discretion set forth within General Laws chapter 255E, section 4 and the Division's regulation 209 CMR 42.00 et seq. in determining whether to issue a license to Sun West Mortgage to conduct the licensed business, provided however, that any such application shall not be denied solely on the basis of the Temporary Order.
  4. In determining whether Sun West Mortgage has satisfactorily demonstrated that it meets or exceeds the minimum standards for holding a mortgage lender and/or mortgage broker license, the Commissioner will consider whether Sun West Mortgage has successfully developed and implemented revised internal policies and quality control procedures as set forth in this Consent Order and as specifically enumerated in Paragraph 5 of this Consent Order.
  5. In order for the Commissioner to find that Sun West Mortgage meets the licensing standards applicable to mortgage lender and/or mortgage broker applicants, Sun West Mortgage must demonstrate to the Division's satisfaction that it has successfully developed and implemented effective internal controls and taken the affirmative measures described below.  In order that the Commissioner may evaluate the measures implemented by Sun West Mortgage, the Corporation agrees that the Division shall have the full authority to conduct an examination/inspection of Sun West Mortgage’s books, records, accounts, procedures, and policies, and/or consult with other state banking regulators to evaluate the Corporation’s performance in other states, so that a finding on such license application can be made.  Notwithstanding Sun West Mortgage’s unlicensed status at the time of the examination/inspection, it is understood that such examination/inspection shall be conducted under the provisions set forth in General Laws chapter 255E, section 8.  
    1. Sun West Mortgage agrees to draft or revise, as applicable, a written compliance program designed to maintain compliance by Sun West Mortgage with all state and federal laws and regulations governing the conduct and operation of a mortgage lender and/or mortgage broker in the Commonwealth of Massachusetts.  The compliance program, at a minimum, shall:
      1. Provide for a loan review process to assess the compliance of Sun West Mortgage, and all applicable employees, staff, and independent contractors who operate on behalf of the Corporation, with (1) the statutes, regulations, regulatory bulletins, and other relevant provisions of law applicable to those engaged in the business of a mortgage lender and/or mortgage broker in Massachusetts (2) the statutes, regulations, and other relevant provisions of law applicable to those making reverse mortgage loans in Massachusetts; and (3) the provisions of this Consent Order;
      2.  Ensure that Sun West Mortgage's compliance program is managed by a qualified manager who shall have responsibility for all consumer compliance and related matters, including, but not limited to, monitoring the Corporation's compliance and ensuring that corrective action is taken to address all alleged violations and areas of concern previously identified by the Division; and
      3. Provide adequate training to applicable staff persons, conducted by qualified and trained personnel, which includes, but is not limited to, proper instruction, adequate supervision and ongoing training to ensure proper implementation and execution of the revised policies and procedures implemented pursuant to this Consent Order.
    2. Sun West Mortgage agrees to establish, implement, and maintain written policies and procedures to ensure that the Corporation maintains all books, records, and accounts in accordance with the requirements of General Laws chapter 255E, section 8 and the Division's regulation 209 CMR 42.09.  The policies and procedures are to include but are not limited to:
      1. Implementing procedures to ensure that Sun West Mortgage maintains copies of all records relating to Massachusetts residential loans.  Such procedures shall ensure that the Corporation retains the entire loan file relative to each mortgage loan, including all documentation provided to reverse mortgage applicants in accordance with General Laws chapter 167E, section 7.
      2. Providing that Sun West Mortgage conducts on-going, periodic reviews of document filing and retention procedures, and its compliance thereto, to ensure its books, records, and accounts are maintained in a manner sufficient to evidence compliance with applicable federal and state laws, rules and regulations; and
      3. Providing that all applicable staff of Sun West Mortgage with form completion and/or document filing and retention responsibilities, receive adequate training to ensure proper implementation and execution of the revised policies and procedures adopted by the Corporation under this Paragraph of the Consent Order.
    3. Sun West Mortgage agrees to establish, implement, and maintain written policies and procedures to ensure that the Corporation shall retain sufficient evidence to demonstrate that reverse mortgage applicants are afforded a seven day cooling off period subsequent to the borrower’s written acceptance of the Corporation's commitment to make the reverse mortgage in accordance with the requirements of General Laws chapter 167E, section 7(d)(2). 
    4. Sun West Mortgage agrees to establish, implement, and maintain written policies and procedures to ensure that the Corporation shall retain sufficient evidence to demonstrate that reverse mortgage borrowers complete a mandatory counseling program and that the program has been approved by the Executive Office of Elder Affairs, in accordance with the requirements of Massachusetts General Laws chapter 167E, section 7(e).   
    5. Sun West Mortgage agrees to establish, implement and maintain written policies and procedures to provide for a review of the Corporation’s advertising practices and procedures to ensure that all solicitations, advertising materials, and any websites maintained by the Corporation, do not contain any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading, including but not limited to representations about the Corporation’s license status in Massachusetts.  The policies and procedures are to include at a minimum:
      1. Establishing, implementing and maintaining a system of internal controls to monitor the Corporation’s compliance with the laws and regulations applicable to advertising practices including, but not limited to Massachusetts General Laws chapter 140D, the Division's regulations 209 CMR 32.00 et seq. and 209 CMR 42.00 et seq.,; 209 CMR 41.00 et seq.; and the Office of the Attorney General's regulation 940 CMR 8.04; and
      2. Establishing, implementing and maintaining policies and procedures to ensure that all advertisements including the Corporation’s websites are thoroughly reviewed by senior management prior to publication or distribution to consumers.
    6. Sun West Mortgage agrees to establish and implement 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 broker and/or mortgage lender in Massachusetts and (ii) the provisions of this Consent Order.  Such quality control standards shall be designed to prevent the recurrence of the violations and areas of concern presented in the Findings.
  6. Within ninety (90) days of the effective date of this Consent Order, the Corporation agrees to submit to the Commissioner a written report, accompanied by an executed Secretary's Certificate to reflect that the Corporation's Board of Directors has reviewed such report, which addresses:  
    1. the identification of the type and number of senior management and officer personnel necessary to manage adequately and supervise properly the Corporation's mortgage lender and/or broker activity;
    2. a statement that each individual identified pursuant to subparagraph (a) of this Paragraph of the Consent Order possesses the ability, experience, and other qualifications necessary to perform competently present and anticipated duties, to follow and enforce the Corporation's revised policies and procedures adopted pursuant to this Consent Order, and to comply with the provisions of this Consent Order; and
    3. A determination of the level of staffing needed to conduct competently the Corporation's operations affecting Massachusetts consumers.
  7. Sun West Mortgage agrees to reimburse the Massachusetts consumers involved in the reverse mortgage transactions identified below for all compensatory fees collected by either Sun West Mortgage or the mortgage brokers (Brokers) who placed the reverse mortgage loan applications with Sun West Mortgage.  The loan transactions include Loan No(s).: 107082041000, 1071020274000, 107089018000, 107123005000, 107124033000, 107242051000, 107261012000, 108025069000, 108067109000, 108057041000, 108056143000 and 108075002000.
    1. Such reimbursements shall equal the total compensation received by Sun West Mortgage and the Broker which shall include any origination, application, or processing fees, and any other similar fees (fees).  
    2. Within sixty (60) days of the effective date of this Consent Order, Sun West Mortgage agrees to submit evidence of all reimbursements issued to consumers pursuant to this Paragraph of the Consent Order, including the consumers' names, the dates the loans closed, check numbers, the amount of the reimbursements, and sufficient evidence to illustrate the consumers' receipt of the reimbursements.
  8. Sun West Mortgage agrees to submit a payment of twelve thousand dollars ($12,000.00) in satisfaction of an administrative penalty collected in consideration of Sun West Mortgage making reverse mortgage loans in the Commonwealth without approval.  Sun West Mortgage shall remit payment in full, payable to the “Commonwealth of Massachusetts,” with the executed copy of the Consent Order, to the Office of the Commissioner of Banks, 1000 Washington Street, 10th Floor, Boston, MA 02118.  The Division shall remit the payment for deposit into the General Fund of the Commonwealth.
  9. The provisions of this Consent Order shall not limit, estop, or otherwise prevent the Division, or any state agency or department, from taking any other action affecting Sun West Mortgage, its officers, directors, employees, successors and assigns, and those persons in active participation with it, directly or indirectly, acting individually or through any corporate or other entity, with respect to matters not addressed in the Temporary Order or this Consent Order.
  10. This Consent Order shall become effective immediately upon the date of its issuance.
  11. The provisions of this Consent Order shall be binding upon Sun West Mortgage and its officers and directors, and their successors or assigns.
  12. It is agreed that no action to enforce this Consent Order in the Superior Court will be taken by the Commissioner except after notice to Sun West Mortgage and unless Sun West Mortgage, or its officers and/or directors, or their successors or assigns, have violated, or is about to violate, any provision of the Consent Order.
  13. In accordance with the terms of the Consent Agreement entered by Sun West Mortgage and the Commissioner, Sun West Mortgage has waived all rights of appeal that it may have.
  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 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, promises, representations, or warranties other than those set forth in this Consent Order and the Consent Agreement.

 

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 17th day of December, 2013

David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts