By the Division of Banks


COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2013-036

CONSENT ORDER

In the Matter of

TERRACE MORTGAGE COMPANY d/b/a
BRIGHTPATH MORTGAGE

Atlanta, Georgia
Mortgage Company License No. MC7101


WHEREAS, TERRACE MORTGAGE COMPANY d/b/a BRIGHTPATH MORTGAGE (Terrace Mortgage or the Corporation), a licensed mortgage lender and mortgage broker under Massachusetts General Laws chapter 255E, has been advised of its right to Notice and Hearing pursuant to Massachusetts General Laws chapter 30A, section 10, 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 November 19, 2013, whereby, solely for the purpose of settling this matter, Terrace Mortgage agrees to the issuance of this CONSENT ORDER (Consent Order) by the Commissioner of Banks (Commissioner);

WHEREAS, the Division of Banks (Division) has jurisdiction over the licensing and regulation of persons and entities engaged in the business of a mortgage lender and mortgage broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.

WHEREAS, the Division has jurisdiction over the licensing and regulation of persons engaged in the business of a mortgage loan originator in Massachusetts pursuant to Massachusetts General Laws chapter 255F, section 2;

WHEREAS, Terrace Mortgage is licensed by the Commissioner as a mortgage lender and mortgage broker under Massachusetts General Laws chapter 255E, section 2.  According to records maintained on file with the Division and in the Nationwide Multi-State Licensing System & Registry (NMLS), the Commissioner initially issued a mortgage lender license to Terrace Mortgage to engage in the business of a mortgage lender on or about February 17, 2006 with license number ML2975.  The Division’s records indicate that the Commissioner issued a mortgage broker license to Terrace Mortgage to engage in the business of a mortgage broker on or about January 16, 2013 and, on that date, the Corporation was issued a mortgage lender and mortgage broker license with license number MC1710;

WHEREAS, on November 11, 2013, Terrace Mortgage filed through the NMLS financial quarterly financial statements for the third quarter of 2013.   The financial statements indicated a net worth of ($1,765,651.88);

WHEREAS, on November 15, 2013, Terrace Mortgage filed through the NMLS audited year-end financial statements for the period ending May 31, 2013 which identified a net worth of  ($1,657,566);

WHEREAS, The auditor’s notes accompanying the audited year-end financial statements indicated that during the year ended May 31, 2013,  a warehouse line of credit facility notified the Corporation that it was in technical default on this line of credit, which

prevented the Corporation from accessing the line;

WHEREAS, the Division’s regulations 209 CMR 42.03(2)(a) and 209 CMR 42.08A require that mortgage lenders demonstrate and maintain a net worth of not less than $200,000 as a requirement for continued licensure in the Commonwealth;

WHEREAS, failure to maintain minimum net worth may constitute grounds for license suspension or revocation under M.G.L. c. 255E, section 6;

WHEREAS, the Division has serious concerns that Terrace Mortgage’s negative net worth position has jeopardized the Corporation’s access to warehouse lines of credit and/or other funding sources and, therefore, may negatively impact the Corporation’s ability to continue as a going concern and to fund mortgage loans for Massachusetts borrowers;      

WHEREAS, on November 15, 2013, the Corporation participated in an informal teleconference with representatives of the Division to discuss the Division’s concerns regarding this matter;

WHEREAS, on November 15, 2013, the Corporation submitted a letter to the Division via e-mail in which the Corporation agreed that Terrace Mortgage should surrender its Massachusetts licenses due to its current financial condition;

WHEREAS, the parties now seek to resolve by mutual agreement, the issues identified above.

 

ORDER

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

  1. Terrace Mortgage agrees to immediately surrender its Massachusetts mortgage lender and mortgage broker licenses by submitting a "Request to Surrender" to the Division through the NMLS.
  2. Immediately upon the execution of this Consent Order, Terrace Mortgage and any and all officers, directors, or managers or their successors or assigns operating on behalf of Terrace Mortgage will cease engaging in the activity of a mortgage lender or mortgage broker in Massachusetts, as those terms are defined under General Laws chapter 255E, section.
  3. Terrace Mortgage agrees to continue processing all Massachusetts loan applications that are currently in the Corporation’s pipeline in accordance with any written terms and/or rate locks that have been extended by the Corporation.  Terrace Mortgage agrees to fund or close all approved Massachusetts loans with no loss to applicants. 
  4. Terrace Mortgage will refrain from submitting an application to obtain a mortgage lender and/or mortgage broker license from the Division for a period of thirty-six (36) months from the execution of this Consent Order. 
  5. To the extent that Terrace Mortgage or any of its officers or directors, or managers or their successors or assigns, wishes to resume business as a mortgage lender and/or mortgage broker at the expiration of the 36-month term as set forth above, Terrace Mortgage shall be required to submit a completed application to obtain the relevant license(s) from the Division. The Division 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 Terrace Mortgage or any of its officers or directors, or managers or their successors or assigns to conduct the licensed business provided however, that any such application shall not be denied on the basis of this Consent Order.
  6. The provisions of this Consent Order shall not limit, estop, or otherwise prevent any other state agency or department, other than the Division or the Commissioner or his designee, from taking any other action affecting Terrace Mortgage and/or any of its officers, directors, or managers.
  7. This Consent Order shall become effective immediately upon the date of its issuance. 
  8. The provisions of this Consent Order shall be binding upon Terrace Mortgage and its directors, officers, managers, and their successors and assigns.
  9. 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.
  10. 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, which replaces and supersedes any prior agreements between Terrace Mortgage and the Commissioner.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 19th day of November, 2013

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