COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
Docket No. 2009-144
In the Matter of
PEOPLE'S CHOICE MORTGAGE, INC.
Mortgage Company License No.: MC4459
WHEREAS, PEOPLE'S CHOICE MORTGAGE, INC., Randolph, Massachusetts ("People's Choice" or the "Corporation"), a licensed mortgage lender and 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 December 17, 2009, 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, People's Choice agrees to the issuance of this CONSENT ORDER ("Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of People's Choice was conducted pursuant to General Laws chapter 255E, section 8, as of October 28, 2008, 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 People's Choice as of October 28, 2008 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.
NOW COME the parties in the above-captioned matter, the Division and People's Choice, and stipulate and agree as follows:
- People's Choice shall establish, implement and maintain procedures to ensure that the Corporation maintains and uses all loan documents in the Corporation's books and records in a manner sufficient to evidence compliance with applicable state and federal statutes and regulations, in accordance with the record keeping requirements specified by the Division's regulations 209 CMR 42.09 and 209 CMR 48.03.
- The Corporation shall retain for a minimum of three years all correspondence and records relating to each loan, including but not limited to: all documents related to income/asset verification; signed loan application forms; credit reports; appraisals; underwriting information; employment verification documentation; and all required disclosure forms.
- The Corporation shall properly document the initial date of application and ensures that all disclosures are properly dated and maintained in a manner that will allow the Commissioner to determine whether time-sensitive documents are being provided to consumers within the mandated timing requirements.
- People's Choice shall establish, implement, and maintain procedures to ensure that the Corporation refrains from employing or retaining any individuals who engage in loan originator activity regarding residential property located in Massachusetts who are not duly licensed as mortgage loan originators under M.G.L. chapter 255F.
- People's Choice agrees to submit a payment in the amount of six thousand dollars ($6,000.00) in satisfaction of an agreed upon administrative penalty collected in consideration of the Corporation's conducting business with unlicensed mortgage loan originators. People's Choice shall 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 Office of the Commissioner of Banks, One South Station, 3rd Floor, Boston, Massachusetts 02110. The Division shall remit the payment for deposit into the General Fund of the Commonwealth.
- People's Choice shall establish, implement, and maintain quality control procedures regarding the placement of loan applications into alternative documentation loan programs (stated income; no income, no asset verification; no income verification; no ratio loans; low and no documentation loans; etc.) to ensure proper application completion procedures; verification and due diligence procedures; and books and records retention in compliance with applicable state and federal laws, regulations, and regulatory bulletins governing the conduct and operation of those engaged in the business of a mortgage lender and mortgage broker in Massachusetts.
- Compliance with this Section of the Order shall require that People's Choice review the Division's Regulatory Bulletin 5.1-103: Guidance on Non-Traditional Mortgage Product Risks, the Division's September 2006 Industry Letter, and the Division's Regulatory Bulletin 5.1-104: Statement on Subprime Mortgage Lending and implement appropriate procedures to ensure compliance therewith.
- People's Choice shall establish, implement, and maintain procedures to ensure that, when the Corporation is acting in the capacity of a mortgage broker, the Corporation refrains from providing consumers with any disclosure which, pursuant to the applicable statute, regulation, or regulatory bulletin, is intended to be issued exclusively by the lender or creditor in the residential mortgage loan transaction.
- People's Choice shall establish, implement, and maintain procedures to ensure that the Corporation timely files all statements and reports required by the Commissioner, including but not limited to, quarterly and annual reports.
- People's Choice shall establish, implement, and maintain procedures to ensure that the Corporation accurately discloses its license type and number to all consumers, in writing, at the time a fee is paid or a mortgage loan application is accepted, as required under the Division's regulation 209 CMR 42.15.
- People's Choice shall establish, implement, and maintain procedures to ensure that all consumers receive a loan origination and compensation agreement that strictly conforms to the content and format as set forth in the Division's regulation 209 CMR 42.16 and includes signatures and dates entered by the consumer and by the Corporation. For each consumer loan file, a completed copy of the loan origination and compensation agreement shall be retained in the Corporation's books and records, as provided in 209 CMR 42.09(1)(b).
- People's Choice shall establish, implement and maintain procedures to ensure that the Credit Score Disclosure is provided to consumers in accordance with the requirements of the Fair Credit Reporting Act, Section 609(g). For each consumer loan file, a completed copy of the Credit Score Disclosure shall be retained in the Corporation's books and records as evidence of compliance.
- People's Choice shall comply with all laws and regulations applicable to his conducting the business of a mortgage lender and mortgage broker, 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. Such obligations shall necessarily include the duty to address and correct, within thirty (30) days of receipt of the Report, all violations and areas of concern addressed in the Report.
- Within thirty (30) days of People's Choice's receipt of the Report, the Corporation shall submit to the Commissioner a written response that addresses each of the violations and areas of concern specified in the Report. The written response shall describe the revised policies and procedures adopted by People's Choice to implement all corrective actions set forth in: (i) the "Examiner's Comments and Conclusions" section of the Report and (ii) the provisions of this Order.
- Within thirty (30) days from the effective date of this Order, People's Choice 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 and mortgage broker in Massachusetts and (b) the provisions of this Order. Such quality control standards shall be designed to prevent the recurrence of the violations addressed in the Report; and
- People's Choice 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 Order.
- On the thirtieth (30 th) day after the end of each calendar quarter following the date of this Order, People's Choice shall 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 Order and the results thereof; and
- Written findings prepared by People's Choice 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 People's Choice's compliance condition in Massachusetts and the results thereof.
- The reporting requirement to the Division referenced in Section 9 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.
- Nothing in this Order shall be construed as permitting People's Choice to violate any law, rule, regulation, or regulatory bulletin to which People's Choice is subject.
- In consideration of the foregoing Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke People's Choice's mortgage lender and mortgage broker licenses under General Laws chapter 255E, section 6, while this Order is in effect.
- 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.
- This Order shall become effective immediately upon the date of its issuance.
- The provisions of this Order shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this Order shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
- 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 People's Choice.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 17th day of December, 2009
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts