By the Division of Banks
COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
Docket No. 2015-07
In the Matter of
DIRECT FINANCE CORP.
Mortgage Broker License No. MB1535
WHEREAS, DIRECT FINANCE CORP., Norwell, Massachusetts, (Direct Finance or the Corporation), a licensed mortgage broker 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 June 2, 2015, 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 broker, Direct Finance agrees to the issuance of this CONSENT ORDER (Consent Order) by the Commissioner of Banks (Commissioner);
WHEREAS, on November 30, 2012 the Commissioner and Direct Finance entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER, Docket No. 2012-029 (2012 Consent Order) for the purpose of settling the matters raised during a 2012 Examination of Direct Finance’s books and records;
WHEREAS, an examination of Direct Finance was conducted pursuant to General Laws chapter 255E, section 8, as of August 18, 2014 to assess the Corporation’s level of compliance with applicable Massachusetts and federal statutes, rules and regulations governing the conduct of those engaged in the business of a mortgage broker in the Commonwealth, as well as to assess the Corporation’s compliance with the 2012 Consent Order;
WHEREAS, the Report of Examination (the Report) issued pursuant to the Division’s examination of Direct Finance 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 broker in the Commonwealth;
WHEREAS, the parties now seek to resolve by mutual agreement, the matters identified in the Report; and
WHEREAS, by mutual agreement of the Corporation and the Division, the 2012 Consent Order is hereby superseded and replaced by this Consent Order.
NOW COME the parties in the above-captioned matter, the Division and Direct Finance, and stipulate and agree as follows:
- Direct Finance must establish and implement procedures to properly maintain all loan files in the Corporation’s books and records, in accordance with the record keeping requirements specified by the Division’s regulations 209 CMR 42.09.
- Direct Finance must submit a payment of one thousand dollars ($1,000.00) in satisfaction of an administrative penalty collected in consideration of the Corporation’s failure to properly retain files in accordance with 209 CMR 42.09. Direct Finance shall remit payment in full with the executed copy of the Consent Agreement, payable to the “Commonwealth of Massachusetts.”
- Direct Finance must establish a separate trust account at a federally insured bank that meets all the requirements of the Division’s regulation 209 CMR 42.11, and must thereafter deposit into such account all application fees, appraisal fees, and all other prepaid loan fees which the Corporation may accept in any residential mortgage loan transaction in Massachusetts.
- Direct Finance must ensure that it fully implements its anti-money laundering (AML) program and retains evidence of such implementation including, but not limited to: a copy of the Corporation’s risk assessment of its products and services; evidence of appropriate on-going employee training; and copies of independent testing reports of the AML program.
- Direct Finance must establish, implement, and maintain procedures to ensure that, in reverse mortgage transactions, the “Opt-In Form” is provided only after the consumer has completed the required reverse mortgage counseling and the written certification of completion of the counseling has been provided to the Corporation.
- Direct Finance must address all matters requiring attention set forth in the Report within the time frames contained therein. Direct Finance must also implement all corrective actions described in the Report that are not specifically addressed by the provisions of this Consent Order.
- Direct Finance must establish, implement, and maintain procedures and policies to ensure that all applicable personnel 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.
- On the thirtieth (30th) day after the end of each calendar quarter following the date of this Consent Order, Direct Finance must furnish written progress reports to the Division, which shall address and include the following:
- 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
- Written findings prepared by Direct Finance detailing a review of management’s and staff members’ 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 Direct Finance’s compliance condition in Massachusetts and the results thereof.
- The reporting requirement to the Division referenced in Section 7 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.
- Direct Finance agrees that, in the event that the Corporation fails to submit the payments set forth in this Consent Order in the amounts specified herein and in accordance with applicable deadlines, the Division shall be authorized to submit a claim for such amounts against the mortgage broker Massachusetts surety bond maintained by Direct Finance pursuant to the Division’s regulation 209 CMR 42.06(2)(a).
- Nothing in this Consent Order shall be construed as permitting Direct Finance to violate any law, rule, regulation, or regulatory bulletin to which the Corporation is subject.
- In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Direct Finance’s mortgage broker license under Massachusetts General Laws chapter 255E, section 6, while this Consent Order is in effect, but subject to the provisions of Section 12.
- 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.
- This Consent Order shall become effective immediately upon the date of its issuance.
- The provisions of this Consent 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 Consent Order.
- This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements between the Division and Direct Finance.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 2nd day of June, 2015
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts