By the Division of Banks
COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
Docket No. 2010-328
In the Matter of
GUARDIAN FIRST FUNDING GROUP, LLC
New York, New York
Mortgage Broker License No(s). MB3748 et al.
WHEREAS, GUARDIAN FIRST FUNDING GROUP, LLC, New York, New York ("Guardian First Funding" or the "Company"), a licensed 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 December 16, 2011, 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, Guardian First Funding agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of Guardian First Funding was conducted pursuant to General Laws chapter 255E, section 8, as of June 12, 2009, to assess the Company’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;
WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division’s examination/inspection of Guardian First 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 mortgage broker in Massachusetts;
WHEREAS, the findings of the Report allege that Guardian First Funding allowed individuals to conduct the mortgage business on its behalf who were not licensed as mortgage loan originators in accordance with Massachusetts General Laws chapter 255F, and whereas, without any requirement or obligation to do so, Guardian First Funding agreed to satisfy any outstanding administrative penalties assessed against the identified individuals; and
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 Guardian First Funding, and stipulate and agree as follows:
- Guardian First Funding shall cease conducting business with any individuals who engage in the activities of a Mortgage Loan Originator, as that term is defined under Massachusetts General Laws chapter 255F, section 1, regarding residential property located in Massachusetts, who are not duly licensed as a mortgage loan originators under M.G.L. chapter 255F and properly sponsored by Guardian First Funding through the Nationwide Mortgage Licensing System (NMLS).
- The parties acknowledge that Guardian First Funding has submitted a payment totaling twelve thousand dollars ($12,000.00) in satisfaction of an administrative penalty collected in consideration of the Division’s findings alleging that the Company conducted mortgage business in Massachusetts with and through unlicensed mortgage loan originators. The sum of the administrative penalty paid by the Company represented the combination of a six thousand dollar ($6,000.00) payment in partial satisfaction of a fourteen thousand dollar ($14,000.00) penalty assessed against Guardian First Funding and a penalty, in aggregate, of six thousand dollars ($6,000.00) assessed against the individual mortgage loan originators which Guardian First Funding agreed to satisfy on the individuals’ behalf.
- Guardian First Financial agrees to submit a payment of eight thousand dollars ($8,000.00) in satisfaction of the portion of the above-referenced administrative penalty that remains outstanding. Guardian First Funding 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, Attention: Mortgage Broker Exam Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
- Guardian First Funding shall establish, implement and maintain policies and procedures to ensure that that Company refrains from requiring or permitting consumers to sign blank or partially completed mortgage loan documents.
- Guardian First Funding shall establish, implement, and maintain procedures to ensure that the Company fully complies with the Division’s regulation 209 CMR 42.12A(9) and the Attorney General’s regulation 940 CMR 8.06(1) concerning restrictions and prohibitions imposed upon mortgage brokers who make false promises to influence, persuade, or induce a consumer. Procedures shall necessarily include reviewing and revising as necessary all documentation provided to consumers in order to ensure compliance.
- Procedures implemented pursuant to this Section of the Consent Order shall necessarily ensure that Guardian First Funding desists from providing consumers with any written documentation, or oral representations or assurances, that state, suggest, or infer that Guardian First Funding is locking an interest rate on behalf of the consumer for residential property in Massachusetts.
- Guardian First Funding shall establish, implement, and maintain procedures to ensure that the Company refrains from providing any consumer 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.
- The provisions of this Section of the Consent Order shall necessarily prohibit Guardian First Funding from issuing loan commitments or statements of reasons of credit denial, termination, or change.
- Guardian First Funding shall establish, implement and maintain procedures to ensure that the Licensee notifies the Division, in writing, within the required timeframe, of the occurrence of any significant event in accordance with 209 CMR 42.12. Compliance with this section of the Consent Order shall also require that Guardian First Funding update disclosures in its record in the Nationwide Mortgage Licensing System, as necessary, to reflect the occurrence of any such significant event.
- Guardian First Funding 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. For each consumer loan file, a completed copy of the loan origination and compensation agreement shall be retained in the Company’s books and records, as provided in 209 CMR 42.09(1)(b).
- Guardian First Funding shall revise its "Borrower’s Certification and Authorization" form and its "Credit Authorization" form to eliminate any representations or statements that could be considered false, misleading, or have the tendency to be misleading, including, but not limited to, any representation that the Company, a licensed mortgage broker, is approving or funding the loan.
- Guardian First Funding shall establish, implement, and maintain procedures to ensure that the Company discloses its license type and number, in writing, at the time a fee is paid or a mortgage loan application is accepted.
- Guardian First Funding shall establish, implement, and maintain procedures to ensure that all consumers receive a Notice of Privacy Policies and Practices in accordance with, and in the form required by, the Federal Trade Commission’s Regulation 16 CFR 313. For each consumer loan file, a copy of the Notice of Privacy Policies and Practices shall be retained in the Company’s books and records as evidence of compliance.
- Guardian First Funding shall establish, implement, and maintain procedures to ensure that the Company accurately discloses on the Good Faith Estimate any fee or payment received by the Company from either the lender or the borrower arising from the initial funding transaction, including a yield spread premium, in accordance with the provisions of Real Estate Settlement Procedures Act (RESPA) implementing regulation 24 CFR 3500.
- Guardian First Funding shall comply with all laws and regulations applicable to its 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 thirty days of receipt of the Report, all violations and areas of concern addressed in the Report.
- Within thirty days of Guardian First Funding’s receipt of the Report, the Company 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 Guardian First Funding 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 days of the effective date of this Consent Order, Guardian First Funding 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 broker in Massachusetts, and (ii) the provisions of this Consent Order; and
- Guardian First Funding 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 day after the end of each calendar quarter following the date of this Consent Order, Guardian First Funding 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 Guardian First Funding 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 Guardian First Funding’s compliance condition in Massachusetts, and the results thereof.
- The reporting requirement to the Division referenced in Section 12 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 Guardian First Funding to violate any law, rule, regulation, or regulatory bulletin to which Guardian First Funding 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 Guardian First Funding’s mortgage broker licenses under Massachusetts General Laws chapter 255E, section 6, while this Consent Order is in effect.
- Failure to comply with the terms of this Consent Order shall 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.
- 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.
- Guardian First Funding 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 shall be authorized to submit a claim for such amounts against the mortgage broker Massachusetts surety bond maintained by Guardian First Funding pursuant to the Division’s regulation 209 CMR 42.06(2)(a).
- This Consent Order and the Consent Agreement are the complete documents that represent the resolution of this matter. There are no other agreements, promises, representations, or warranties other than those set forth in this Consent Order and the Consent Agreement.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:
Dated at Boston, Massachusetts, this 16th day of December, 2011
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts