COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
Docket No. 2010-197
In the Matter of
THE MORTGAGE GROUP, LTD.
Fall River, Massachusetts
Mortgage Broker License No(s). MB4627 et al.
WHEREAS, THE MORTGAGE GROUP, LTD., Fall River, Massachusetts ("Mortgage Group" 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 April 21 2010, 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, Mortgage Group agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of Mortgage Group was conducted pursuant to General Laws chapter 255E, section 8, as of December 11, 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 broker in the Commonwealth; and
WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of Mortgage Group as of December 11, 2008 (the "2008 examination/inspection") 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 Massachusetts.
NOW COME the parties in the above-captioned matter, the Division and Mortgage Group, and stipulate and agree as follows:
- Mortgage Group shall establish, implement, and maintain policies and procedures to ensure that all individuals who engage in the activities of a 'Mortgage Loan Originator,' as that term is defined under General Laws chapter 255F, section 1, on behalf of the Corporation are duly licensed as a mortgage loan originator under General Laws chapter 255F and properly sponsored by Mortgage Group through the Nationwide Mortgage Licensing System (NMLS).
- Mortgage Group shall establish, implement and maintain policies and procedures to ensure that the Corporation maintains all books records, and files, including any loan-related documents or disclosures generated and/or maintained electronically, in a manner sufficient to evidence compliance with the mortgage loan originator licensing requirements set forth in General Laws chapter 255F and the Division's regulation 209 CMR 41.00, et seq.
- Mortgage Group shall ensure that each mortgage loan originator operating on behalf of the Corporation completes and signs the mortgage loan application taken by such individual and accurately documents the initial date on which the application was taken.
- Mortgage Group shall ensure that the file management and reporting system utilized by Mortgage Group is capable of compiling and generating a loan application list that accurately reflects all information relative to each mortgage loan application and records the name of the licensed mortgage loan originator who originated the loan application.
- Notwithstanding Mortgage Group's use of electronic record-keeping systems, the Corporation shall also retain in paper format all books, records, files, correspondence, disclosures, and documentation relating to each Massachusetts residential mortgage loan originated by the Corporation.
- Mortgage Group agrees to submit a payment in the amount of one hundred thousand dollars ($100,000.00) in satisfaction of an administrative penalty collected in consideration of the following: the Corporation's conducting business with mortgage loan originators who either did not hold an active mortgage loan originator license and/or were not sponsored by the Corporation; and for the Corporation's failure to maintain its books, records, and files in a manner that would enable the Division to verify compliance with the mortgage loan originator licensing requirements set forth in General Laws chapter 255F and the Division's regulation 209 CMR 41.00, et seq. The administrative penalty shall be satisfied as follows:
- Ten thousand dollars ($10,000.00) shall be due and payable immediately upon Mortgage Group's execution of the Consent Agreement;
- A payment of fifteen thousand dollars ($15,000.00) shall be due and payable upon the last day of each calendar quarter following the effective date of this Consent Order, beginning with the calendar quarter ending June 30, 2010, until the administrative penalty set forth in this Section is satisfied in full; and
- Mortgage Group shall remit payment(s) pursuant to this Section of the Consent Order for the amount then due, payable to the "Commonwealth of Massachusetts," to the Office of the Commissioner of Banks, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
- Mortgage Group shall establish, implement, and maintain procedures to ensure that the Corporation refrains from collecting compensation from consumers in consideration of services which the Corporation, as a mortgage broker, is prohibited from performing in a mortgage loan transaction.
- Mortgage Group shall reimburse the consumers identified in the Report for the amounts collected as fees for which no services were provided by the Corporation. The amount of such reimbursements shall equal the total amount of the unearned fees collected.
- Mortgage Group shall establish, implement, and maintain procedures to ensure that all broker fees, loan fees, points, or similar fees collected by the Corporation in a mortgage transaction involving residential property are not charged to consumers except to the extent that such fees or points have been properly disclosed to the consumers by the Corporation, in writing, prior to the closing of the mortgage loan in accordance with Massachusetts General Laws chapter 183, section 63.
- Mortgage Group shall reimburse the consumer identified in the Report for the amount collected as a loan origination fee at settlement that had not been disclosed to the consumer, in writing, prior to loan closing. The amount of such reimbursement shall equal the difference between the actual charges assessed to the consumer and the amount disclosed in writing for such fee prior to loan closing.
- With Mortgage Group's written response to the findings presented in the Report, which is to be submitted to the Commissioner pursuant to Section 13(a) of this Consent Order, the Corporation shall submit evidence of the reimbursements issued pursuant to Sections 4 and 5 of the Consent Order. Evidence of the reimbursements shall include the consumers' names, the dates the loans closed, the check numbers, the amount of the reimbursements, and certified mail receipts to illustrate the consumers' receipt of the reimbursements.
- Mortgage Group shall revise its "Borrower's Certification and Authorization" form to eliminate any representation or statement that could be considered false, misleading, or have the tendency to be misleading, including, but not limited to, any representation that the Corporation, a licensed mortgage broker, is approving or funding the loan.
- Mortgage Group shall establish, implement, and maintain procedures to ensure that 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.
- Mortgage Group shall at all time conduct business exclusively under the business name stated on its mortgage broker license as issued by the Commissioner. Having obtained a mortgage broker license from the Commissioner to conduct business in Massachusetts as "The Mortgage Group, Ltd." the Corporation shall conduct business in Massachusetts exclusively under that name. The Corporation shall necessarily review and revise its written forms and disclosures to ensure that the Corporation is identified in a manner consistent with the name stated on its mortgage broker license as issued by the Commissioner.
- Mortgage Group shall establish, implement, and maintain procedures to ensure that all consumers receive a loan origination and compensation agreement in accordance with the provisions of the Division's regulation 209 CMR 42.16. The loan origination and compensation agreement must be properly signed and dated by both the consumer and the Corporation, and a completed copy shall be retained in the Corporation's books and records, as provided in 209 CMR 42.09(1)(b).
- Mortgage Group shall establish, implement, and maintain procedures to ensure that the Corporation accurately discloses yield spread premiums on the Good Faith Estimate, in accordance with the provisions of Real Estate Settlement Procedures Act (RESPA) implementing regulation 24 CFR 3500.
- Mortgage Group 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 procedures implemented pursuant to this Section of the Consent Order shall necessarily ensure that all loan applications and disclosures are properly dated and that the Corporation retains evidence sufficient to allow the Division to determine whether time-sensitive documents are being provided to consumers within the mandated timing requirements.
- The procedures implemented pursuant to this Section of the Consent Order shall necessarily require that Mortgage Group retain complete loan files, including without limitation, documentation reflecting each loan application outcome.
- Mortgage Group shall comply with all laws and regulations applicable to his conducting the business of a 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 ten (10) days of the effective date of this Consent Order, all violations and areas of concern addressed in the Report.
- Within thirty (30) days of the effective date of this Consent Order, 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 Mortgage Group 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 Consent Order.
- Within thirty (30) days from the effective date of this Consent Order, Mortgage Group 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 broker in Massachusetts and (b) the provisions of this Consent Order. Such quality control standards shall be designed to prevent the recurrence of the violations addressed in the Report; and
- Mortgage Group 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.
- On the thirtieth (30th) day after the end of each calendar quarter following the date of this Consent Order, Mortgage Group 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 Consent Order and the results thereof; and
- Written findings prepared by Mortgage Group 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 Mortgage Group's compliance condition in Massachusetts and the results thereof.
- The reporting requirement to the Division referenced in Section 14 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.
- Nothing in this Consent Order shall be construed as permitting Mortgage Group to violate any law, rule, regulation, or regulatory bulletin to which Mortgage Group 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 Mortgage Group's mortgage broker license under General Laws chapter 255E, section 6, while this Consent Order is in effect.
- This Consent Order and the Consent Agreement shall constitute a full and complete resolution of all matters between the parties hereto as of the date of execution of this Consent Order, including, but not limited to, any and all items or areas of concern covered by the Division's examination/inspection of Mortgage Group commencing as of December 11, 2008, the Report issued pursuant thereto, and meetings between the parties resulting in the execution of this Consent Order. Any future examination/inspection of the Mortgage Group by the Division shall be prospective from the date of execution of this Consent Order, provided however, that the Division may conduct transactional reviews of residential mortgage loan transactions originated by Mortgage Group in the interim since the 2008 examination/inspection was conducted to evaluate Mortgage Group's compliance with the consumer protection laws and regulations governing residential mortgage loan transactions in the Commonwealth and may direct Mortgage Group, as necessary, to undertake corrective action to address any identified violations thereof. There are no other agreements, promises, representations, or warranties other than those set forth in this Consent Order and the Consent Agreement.
- 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, any provisions of this Consent Order shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 21st day of April, 2010
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts