By the Division of Banks


 

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MOTOR VEHICLE SALES
FINANCE COMPANY
LICENSING
Docket No. 2016-009

CONSENT ORDER

In the Matter of

NEW CITY FUNDING CORP.
Stony Point, New York

Motor Vehicle Sales Finance
Company License No. MV-0601


WHEREAS, NEW CITY FUNDING CORP., Stony Point, New York (New City Funding or the Corporation), a licensed motor vehicle sales finance company under Massachusetts General Laws chapter 255B, section 2 and 209 CMR 20.00 et seq. 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 March 24, 2017, 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 motor vehicle sales finance company, New City Funding agrees to the issuance of this CONSENT ORDER (Order) by the Commissioner of Banks (Commissioner);

WHEREAS, an examination of New City Funding was conducted pursuant to General Laws chapter 255B, section 3 as of September 15, 2015 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 motor vehicle sales finance company in the Commonwealth;

WHEREAS, the Report of Examination (the Report) issued pursuant to the Division’s examination of New City Funding alleged substantial non-compliance with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a motor vehicle sales finance company in the Commonwealth; and

WHEREAS, the parties now seek to resolve by mutual agreement, the matters identified in the Report.

ORDER

NOW COME the parties in the above-captioned matter, the Division and New City Funding, and stipulate and agree as follows:

  1. New City Funding shall refrain from utilizing starter interrupt devices to automatically disable vehicles prior to the expiration of the borrower’s right to cure period set forth in General Laws chapter 255B, section 20A. 
    1. New City Funding shall maintain procedures to ensure that the Corporation complies with all provisions of General Laws chapter 255B, section 20A governing a borrower’s right to cure a default before a creditor can take action against a buyer or proceed against collateral.
    2. Beginning December 9, 2016, New City Funding took steps to voluntarily stop using the devices for any new transactions in Massachusetts, which was implemented fully by December 12, 2016.
    3. New City Funding shall take steps to ensure no vehicle for any existing customer is disabled without providing notice of the right to cure and/or prior to the expiration of the statutory cure period.
    4. New City Funding agrees to submit a payment in the amount of ninety thousand dollars ($90,000.00) in satisfaction of an administrative penalty collected in consideration of the serious nature of the Corporation’s alleged violations of General Laws chapter 255B, section 20A by its improper use of starter interrupt devices.
    5. Payment in full of the amount indicated above, payable to the “Commonwealth of Massachusetts,” must be submitted with the executed copy of the Consent Agreement, to the Division of Banks, Attention: Non-Depository Supervision Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
  1. New City Funding shall refrain from  assessing interest and/or late fees after the date of repossession on Massachusetts accounts on which a repossession of the collateral has been executed, pursuant to Massachusetts General Laws chapter 255B, section 20B.
    1. New City Funding must establish, implement and maintain procedures to ensure that it does not assess or collect interest or fees after the date of repossession.
    2. New City Funding must conduct a review of all Massachusetts accounts subject to repossession since January 27, 2011, the date of last examination, to identify all repossession accounts assessed interest or fees after the date of the repossession.  The Corporation must refund each debtor that had interest or fees assessed and collected after the date of repossession. 
    3. New City Funding must submit to the Division documentation of the review performed on its accounts and evidence of all reimbursements issued pursuant to this Section of the Consent Order. 
      1. Evidence of any such reimbursements or credits must include, at minimum: the name of the borrower; the account number; the date of repossession; the total amount of interest assessed after default; the total amount of fees assessed after default; the date each fee was assessed; the date each fee was collected; the date of any refund issued in accordance with this Order; and the check number and the dollar amount of each refund. 
      2. New City Funding must maintain sufficient information evidencing the refunds in the Corporation’s books and records for review by the Division at its next examination.
  1. New City Funding shall maintain procedures and monitor transaction activity to ensure that a deficiency balance, if any, is calculated by deducting the fair market value of the collateral from the unpaid balance due pursuant to M.G.L chapter 255B, section 20B.
    1. New City Funding must conduct a review of all repossessions conducted on Massachusetts accounts since the date of the prior examination on January 27, 2011.  The Corporation must recalculate the deficiency balance on each account by deducting the fair market value from the unpaid balance at the time of repossession.  New City Funding must refund any consumers who have paid more than the balance owed after properly calculating the deficiency balance in accordance with General Laws chapter 255B, section 20B. 
    2. New City Funding must submit to the Division documentation of the review performed on its accounts and evidence of all reimbursements issued pursuant to this Section of the Consent Order. 
      1. Evidence of any such reimbursements or credits must include, at minimum: the borrowers’ names, account numbers, the date the vehicle was repossessed, the unpaid balance at the time of repossession, the total amount collected from the consumer after repossession, the date of any refund issued, and the check number and the dollar amount of each refund made.
      1. New City Funding must maintain sufficient information evidencing the refunds in the Corporation’s books and records for review by the Division at its next examination.
  2. New City Funding shall refrain from pursuing collection of deficiency balances of accounts where the unpaid balance was $2,000 or less at the time of default pursuant to General laws chapter 255B, section 20B and will maintain records of compliance with same. 
  3. New City Funding shall maintain policies and procedures to adequately oversee dealer origination practices and ensure all retail installment contracts are accurate and complete at acquisition with no blank spaces.
  4. New City Funding shall maintain an effective compliance management system including but not limited to adequate oversight of the Corporation’s compliance program by the board and senior management with sufficient resources dedicated to the administration of the compliance program.  The compliance program must include adequate policies and procedures, effective internal monitoring on an ongoing basis, sufficient training to ensure management and employees are familiar with statutory and regulatory requirements.  An effective compliance management system must also include periodic independent testing of New City Funding’s programs and operations with sufficient scope and depth to determine whether the Corporation is operating in compliance with applicable consumer protection requirements.  The compliance management system must incorporate compliance with Massachusetts specific consumer protection requirements.
  5. New City Funding must address all matters requiring attention set forth in the Report within the time frames contained therein.  New City Funding must also adopt and implement any corrective actions discussed in the Report that are not specifically addressed by the provisions of this Order.
  6. By the thirtieth (30th) day after the end of each calendar quarter following the effective date of this Order, New City Funding must furnish written progress reports to the Division, which 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 New City Funding detailing a review of management’s and staff persons’ 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 New City Funding’s compliance condition in Massachusetts, and the results thereof.
  1. The reporting requirement to the Division referenced in Section 8 of this Order will remain in effect and must not be amended or rescinded without the prior written modification, termination, or suspension of the applicable provision of this Order from the Commissioner.
  2. The provisions of this Order shall not limit, estop, or otherwise prevent the Division, or any other state agency or department, from taking any other action affecting New City Funding, its successors or assigns, if New City Funding fails to fully and promptly comply with the above provisions.
  3. Nothing in this Order will be construed as permitting New City Funding to violate any law, rule, regulation, or regulatory bulletin to which the Corporation is subject.
  4. In consideration of the foregoing Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke New City Funding’s motor vehicle sales finance company license under General Laws chapter 255B, section 8, while this Order is in effect.
  5. Failure to comply with the terms of this Order will constitute grounds for license suspension and/or revocation pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
  6. This Order will become effective immediately upon the date of its issuance. 
  7. The provisions of this Order are binding upon New City Funding, its owner, officers and directors, and their successors and assigns.
  8. The provisions of this Order will remain effective and enforceable except to the extent that, and until such time as, any provisions of this Order will have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
  9. This Order and the Consent Agreement are the complete documents representing the resolution of this matter and shall supersede and replace all previous agreements between the Division and New City Funding.  There are no other agreements between the Division and New City Funding.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 24th day of March, 2017