By the Division of Banks


COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER
LICENSING
Docket No. 2013-034

CONSENT ORDER

In the Matter of
American Financial Resources, Inc.
Parsippany, New Jersey

Mortgage Company License No(s). ML2826


WHEREAS, AMERICAN FINANCIAL RESOURCES, INC. Parsippany, New Jersey, (American Financial Resources or 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 7, 2014, 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, American Financial Resources agrees to the issuance of this CONSENT ORDER (Order) by the Commissioner of Banks (Commissioner);

WHEREAS, an examination was conducted pursuant to General Laws chapter 255E, section 8, as of February 7, 2013 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 in the Commonwealth; and

WHEREAS, the Report of Examination (Report) issued pursuant to the Division’s examination of American Financial Resources as of February 7, 2013 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 in Massachusetts.

ORDER

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

  1. American Financial Resources must 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 require that the Corporation implement internal controls to ensure that, for all HMDA reportable loan applications, American Financial Resources accurately compiles and records all required data in the Corporation’s HMDA Loan Application Register (LAR). 
    1. American Financial Resources must 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 American Financial Resources pursuant to this Section of the Order.
    2. Within thirty (30) days of the effective date of this Order, American Financial Resources must prepare and submit to the Division a written report detailing the policies, procedures and training enhancements that have been implemented to ensure HMDA data is recorded accurately; and
    3. American Financial Resources 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 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.  American Financial Resources must 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, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.  The Division will remit the payment for deposit into the General Fund of the Commonwealth.
  2. American Financial Resources must establish, implement, and maintain appropriate policies and procedures for the monitoring and oversight of its settlement agents and/or closing attorneys to ensure that no duplicate discharge/release recording fees are collected from Massachusetts borrowers.
    1. American Financial Resources must reimburse borrowers identified in the Report for the duplicate discharge/release recording fees that were collected.  The amount of the reimbursements shall equal the amount of the duplicative discharge/release fee collected by American Financial Resources when American Financial Resources’ closing attorney did not pay the discharge/release fee on behalf of the consumers and did not reimburse the consumers for duplicative discharge/release fees collected.  In instances where the borrowers identified in the Report were previously issued a refund of the duplicate fee, American Financial Resources will submit evidence of such. 
    2. With its response to the Report, American Financial Resources agrees to submit evidence of the reimbursements/refunds issued pursuant to this Section of the Order. Evidence shall include the consumers’ names, the amounts of the reimbursements, the dates of the reimbursements, copies of the refund checks, and copies of certified mail receipts to illustrate the borrowers’ receipt of the reimbursements, as appropriate.
  3. American Financial Resources must establish, implement, and maintain 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 American Financial Resources, exclusively, to determine that the refinancing is in the borrower’s interest.
    1. American Financial Resources must ensure that the worksheet or other document indicating that a refinance loan is in the borrower’s interest is completed by the Corporation and does 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.
  4. American Financial Resources must establish, implement, and maintain procedures to ensure that every residential mortgage presented for record in which a mortgage broker is involved contains the name, address, and license number of the mortgage broker responsible for placing the mortgage loan with the Corporation, and the name, address, and license number of the mortgage loan originator who acted on behalf of the mortgage broker, as required pursuant to General Laws chapter 183, section 6D.
  5. American Financial Resources must 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 applicants of their right to appeal such denial to the appropriate 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 must be retained in the Corporation’s books and records as evidence of compliance.
  6. American Financial Resources must address and correct all violations and areas of concern addressed in the Report.
    1. American Financial Resources must 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.
  7. On the thirtieth (30th) day after the end of each calendar quarter following the date of this Order, American Financial Resources must 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 American Financial Resources detailing a review of management’s and staff members’ 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 American Financial Resources’ compliance condition in Massachusetts and the results thereof.
  8. The reporting requirement to the Division referenced in Section 7 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.
  9. American Financial Resources agrees that, in the event that the Corporation fails to submit the payments set forth in this Order in the amounts specified herein and in accordance with the applicable deadlines, the Division shall be authorized to submit a claim for such amounts against the mortgage lender Massachusetts surety bond maintained by American Financial Resources pursuant to the Division’s regulations 209 CMR 42.03(2)(a).
  10. Nothing in this Order shall be construed as permitting American Financial Resources to violate any law, rule, regulation, or regulatory bulletin to which the Corporation is subject.
  11. In consideration of the foregoing Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke American Financial Resources’ mortgage lender license under Massachusetts General Laws chapter 255E, section 6, while this Order is in effect.
  12. 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.
  13. This Order shall become effective immediately upon the date of its issuance.
  14. 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.
  15. 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 American Financial Resources.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 7th day of January, 2014

David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts