By the Division of Banks


COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2010-239

CONSENT ORDER

In the Matter of
VILLAGE MORTGAGE COMPANY
Torrington, Connecticut

Mortgage Lender License Nos. ML6331 et al.


WHEREAS, VILLAGE MORTGAGE COMPANY formerly known as VILLAGE MORTGAGE COMPANY d/b/a MORTGAGE FAX, Torrington, Connecticut ("Village Mortgage" or the "Corporation"), a licensed mortgage lender 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 January 3, 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, Village Mortgage agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, Village Mortgage was previously also licensed as a mortgage broker in Massachusetts; such mortgage broker license expired as of January 1, 2012; and

WHEREAS, an examination/inspection of Village Mortgage was conducted pursuant to General Laws chapter 255E, section 8, as of November 4, 2009 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; and

WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division’s examination/inspection of Village Mortgage as of November 4, 2009 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 Village Mortgage, and stipulate and agree as follows:

  1. Village Mortgage 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 12 C.F.R. Part 1003 ("Regulation C"). Such procedures shall necessarily require that the Corporation implement internal controls to ensure that, for all HMDA reportable loan applications, Village Mortgage accurately compiles and records all required data in the Corporation’s HMDA Loan Application Register ("LAR").
    1. Village Mortgage shall establish, implement, and 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 Village Mortgage pursuant to this Section of the Consent Order.
    2. Village Mortgage has submitted a payment in the amount of twenty-five thousand dollars ($25,000.00) in satisfaction of an administrative penalty collected in consideration of the Corporation’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.
  2. Village Mortgage shall 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 loans 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.
  3. Village Mortgage shall establish, implement and maintain procedures to ensure that the Corporation does not contract for, or impose, late charges that are in excess of the amount permitted under Massachusetts General Laws chapter 183, section 59. Village Mortgage shall review and revise, as necessary, all documentation containing provisions referencing late payment charges to ensure that such provisions are in compliance with Massachusetts General Laws chapter 183, section 59.
  4. Village Mortgage shall establish, implement, and maintain policies and procedures to ensure that the Corporation is in compliance with the Division’s regulation 209 CMR 53.00 et seq. regarding determination and documentation of a borrower’s interest when refinancing a home loan that was consummated within 60 months prior to the Corporation’s receipt of an application for a new home loan. Such procedures shall ensure that the burden is upon Village Mortgage, exclusively, to determine that the refinancing is in the borrower’s interest.
    1. Compliance with this Section of the Consent Order shall necessarily require that Village Mortgage establish, implement and maintain procedures to ensure that the Corporation completes a worksheet or other document indicating how the Corporation determined that a refinance loan was in the borrower’s interest. Such document shall include all the information required under 209 CMR 53.07 and the language contained therein shall not in any manner shift the burden to the borrower to determine and to demonstrate that the home loan is in the borrower’s interest.
  5. Village Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation timely provides to all consumers applying for a variable rate mortgage loan, the variable rate loan program disclosures required under the Division’s regulation 209 CMR 32.19(2). Village Mortgage shall also ensure that such disclosures accurately represent the terms of the variable rate loan program and disclose the correct index or formula used in making adjustments.
  6. Village Mortgage shall establish, implement and maintain procedures to ensure that the Corporation prepares HUD-1 settlement statements in accordance with the instructions set forth in the Real Estate Settlement Procedures Act (RESPA) regulation 12 CFR 1024.
  7. Village Mortgage shall establish, implement and maintain procedures to ensure that all applicants whose residential mortgage loan application is denied receive a Mortgage Review Board Disclosure Form notifying them that they may appeal such denial to the review board in accordance with Massachusetts General Laws chapter 167, section 14A. For each consumer loan file, a completed copy of the Mortgage Review Board Disclosure Form shall be retained in the Corporation’s books and records as evidence of compliance.
  8. Village Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation discloses its license type and number to all clients in writing at the time a fee is paid or a mortgage loan application is accepted.
  9. Village Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation timely files Annual Reports and Quarterly Reports with the Commissioner.
  10. Village Mortgage shall establish, implement, and maintain procedures to ensure that all financial statements submitted to the Division for review are prepared in accordance with generally accepted accounting principles ("GAAP"). Village Mortgage shall also ensure that all such financial statements contain accurate and consistent accounting data.
  11. Village Mortgage shall comply with all laws and regulations applicable to its conducting the business of a mortgage lender, 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.
    1. Within thirty (30) days from the effective date of this Consent Order, Village Mortgage shall establish, implement, and maintain quality control standards which provide for a loan review process to assess the Corporation’s compliance with: (a) the statutes, rules, regulations, regulatory bulletins, and other relevant provisions of law applicable to those engaged in the business of a mortgage lender in Massachusetts and (b) the provisions of this Consent Order. Such quality control standards shall be designed to prevent the recurrence of the violations addressed in the Report; and
    2. Village Mortgage 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 Consent Order.
  12. On the thirtieth (30th) day after the end of each calendar quarter following the date of this Consent Order, Village Mortgage 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 Consent Order and the results thereof; and
    2. Written findings prepared by Village 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 Village Mortgage’s compliance condition in Massachusetts and the results thereof.
  13. The reporting requirement to the Division referenced in Section 12 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.
  14. Nothing in this Consent Order shall be construed as permitting Village Mortgage to violate any law, rule, regulation, or regulatory bulletin to which Village Mortgage is subject.
  15. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Village Mortgage’s mortgage lender license under General Laws chapter 255E, section 6, while this Consent Order is in effect.
  16. Failure to comply with the terms of this Consent 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.
  17. This Consent Order shall become effective immediately upon the date of its issuance.
  18. 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 Consent Order of a court of competent jurisdiction.
  19. 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 Village Mortgage.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 3rd day of January, 2013

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