By the Division of Banks
COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MORTGAGE LENDER AND MORTGAGE BROKER
Docket No. 2013-033
In the Matter of
Foothill Ranch, California
Mortgage Company License No. MC174457
WHEREAS, LOANDEPOT.COM, LLC, Foothill Ranch, California (loanDepot or the Company), a licensed mortgage lender and mortgage broker under Massachusetts General Laws chapter 255E, section 2, has entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER( Consent Agreement) with representatives of the Division of Banks (Division) dated April 15, 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 and mortgage broker, loanDepot agrees to the issuance of this CONSENT ORDER (Consent Order) by the Commissioner of Banks (Commissioner);
WHEREAS, an examination of loanDepot was conducted pursuant to General Laws chapter 255E, section 8, as of October 29, 2012 to assess the Company’s level of compliance with applicable Massachusetts and federal statutes and 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 (Report) issued pursuant to the Division’s examination of loanDepot as of October 29, 2012 alleged non-compliance with applicable Massachusetts and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a mortgage lender and mortgage broker in Massachusetts.
WHEREAS, the parties now seek to resolve by mutual agreement, the matters identified in the Report.
NOW COME the parties in the above-captioned matter, the Division and loanDepot, and stipulate and agree as follows:
1. loanDepot must enhance, 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 the Company to improve internal controls to ensure that, for all HMDA reportable loan applications, loanDepot accurately compiles and records all required data for such loans in the Company’s HMDA Loan Application Register (LAR). loanDepot has notified the Division that its previous procedures have been enhanced to ensure that HMDA data is compiled and reported accurately.
(a) Within forty-five days of the effective date of this Consent Order loanDepot shall review for accuracy and completeness the HMDA data collected for all Massachusetts loanDepot loans originated during the calendar years 2012 and 2013 and shall re-file, as necessary, with the appropriate federal authority corrected information of all erroneous and, or incomplete HMDA data previously submitted on the LAR for the respective years.
(b) Within forty-five days of the effective date of this Consent Order, loanDepot must prepare and submit to the Division a written report detailing the HMDA data that was re-filed by the Company pursuant to Section 1(a) of this Consent Order.
(c) loanDepot must establish, implement and maintain, and periodically update 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 must ensure the proper implementation and execution of the revised practices and procedures adopted by loanDepot pursuant to this Section of the Consent Order.
(d) loanDepot 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. loanDepot 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, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
2. loanDepot must continue to implement and maintain policies and procedures to ensure that, in a refinance mortgage transaction, loan proceeds are made available to the borrower on the business day following the expiration of the rescission period.
(a) loanDepot has conducted a review of all Massachusetts loans closed from January 1, 2011 to March 25, 2014 and identified cases where borrowers were charged per diem interest during the period between the funding date noted on the HUD-1 that was signed at closing and the date the funds were disbursed to the borrowers. loanDepot has made representation that it has reimbursed all borrowers for the full amount of interest collected during that period. loanDepot must submit to the Division evidence of such reimbursements, including the consumer’s name, the date of the loan and loan number, the amount reimbursed, the check number and certified mail receipts to illustrate the consumers’ receipt of the reimbursements.
3. loanDepot must enhance, improve, and maintain policies and procedures to ensure that the Company 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 Company’s receipt of an application for a new home loan. Such procedures shall ensure that in any transaction in which loanDepot is performing in a mortgage lender capacity, the burden is upon loanDepot, exclusively, to determine that the refinancing is in the borrower’s interest.
4. loanDepot 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 Company, and the name, address, and license number of the mortgage loan originator who acted on behalf of the mortgage broker, as required pursuant to M.G.L. c. 183, Section 6D. loanDepot has informed the Division that it is no longer in the wholesale market and if it ever engages in wholesale lending in the future, loanDepot will be sure to meet the requirements of M.G.L. c. 183, Section 6D.
5. loanDepot must establish, implement, and maintain procedures to ensure that each mortgage loan applicant whose loan application is denied by the Company is provided, in writing, at the time of denial with a notice of his/her right to appeal the denial to the appropriate mortgage review board, pursuant to Massachusetts General Laws chapter 167, section 14A. For each consumer loan file, a completed copy of the disclosure form must be retained in the Company’s books and records, as evidence of compliance.
6. loanDepot must establish, implement, and maintain procedures to ensure that all client funds are maintained and monitored in the Company’s trust account in accordance with the provisions of the Divisions regulation 209 CMR 42.11. Such procedures must ensure that any offsets be accounted for through written documentation evidencing the amount of offset.
7. loanDepot 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 HUD-1 Settlement Statements are signed by all parties at closing and that loan funds are timely disbursed in accordance with funding dates set forth therein. loanDepot has informed the Division that it has established policies and procedures to guarantee the monitoring and oversight of its settlement agents and/or closing attorneys.
8. loanDepot must address and correct all violations and areas of concern addressed in the Report.
(a) Within thirty (30) days of the effective date of this Consent Order, loanDepot shall establish, implement, and maintain quality control standards which provide for a loan review process to assess the Company’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 lender and mortgage broker in Massachusetts, and (ii) the provisions of this Consent Order; and
(b) loanDepot 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.
9. On or before the thirtieth day after the end of each calendar quarter following the date of this Consent Order, loanDepot shall furnish written progress reports to the Division, which shall address and include the following:
(a) 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
(b) Written findings prepared by loanDepot 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 loanDepot’s compliance condition in Massachusetts, and the results thereof.
10. The reporting requirement to the Division referenced in Section 9 of this Consent Order will remain in effect and will not be amended or rescinded without the prior written modification, termination, or suspension of the applicable provision of this Consent Order from the Commissioner.
11. Nothing in this Consent Order will be construed as permitting loanDepot to violate any law, rule, regulation, or regulatory bulletin to which loanDepot is subject.
12. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke loanDepot’s mortgage lender and mortgage broker licenses under Massachusetts General Laws chapter 255E, section 6, while this Consent Order is in effect.
13. Failure to comply with the terms of this Consent Orderwill constitute grounds for license suspension and/or revocation, or other formal regulatory actions pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
14. This Consent Order will become effective immediately upon the date of its issuance.
15. loanDepot agrees that, in the event that the Company fails to submit the payments set forth in this Consent Order in the amounts specified herein and in accordance with the applicable deadlines, the Division will be authorized to submit a claim for such amounts against the mortgage lender and/or mortgage broker Massachusetts surety bonds maintained by loanDepot pursuant to the Division’s regulation 209 CMR 42.03(2)(a) and 209 42.06(2)(a).
16. The provisions of this Consent Order will remain effective and enforceable except to the extent that, and until such time as, any provision of this Consent Order be modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
17. 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 loanDepot.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:
Dated at Boston, Massachusetts, this 15th day of April, 2014.
David J. Cotney
Commissioner of Banks