COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
In the Matter of
LENDMARK MORTGAGE CORPORATION
Mortgage Broker License No. MB5222
WHEREAS, LENDMARK MORTGAGE CORPORATION, Framingham, Massachusetts ("Lendmark" or the "Corporation"), 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 August 8, 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, Lendmark agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of Lendmark was conducted pursuant to General Laws chapter 255E, section 8, as of May 3, 2010, 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;
WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of Lendmark 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; 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 Lendmark, and stipulate and agree as follows:
- Lendmark shall establish, implement, and maintain quality control procedures governing the placement of loan applications into alternative documentation loan programs (including, but not limited to, stated income; no income, no asset verification; no income verification; no ratio loans; low and no documentation loans; etc.) to ensure accurate 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 broker in Massachusetts.
- Compliance with this Section of the Consent Order shall require that Lendmark 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 procedures to ensure Lendmark's compliance therewith.
- Lendmark shall establish, implement, and maintain policies and procedures to ensure that the Corporation refrains from taking loan applications for Massachusetts consumers from mortgage loan originators, or otherwise employing or utilizing the services of mortgage loan originators, unless such individuals are licensed in Massachusetts as mortgage loan originators and properly sponsored by Lendmark through the Nationwide Mortgage Licensing System (NMLS). Compliance with this Section of the Consent Order shall require that Lendmark ensures that all mortgage loan originators are properly sponsored by Lendmark prior to conducting business on behalf of the Corporation.
- Lendmark shall establish, implement and maintain policies and procedures to ensure that that Corporation refrains from requiring or permitting consumers to sign blank or partially completed mortgage loan documents.
- With the Corporation's written response to the Report, Lendmark shall submit: updated financial statements, including a balance sheet and interim income statement prepared as of October 31, 2010; and a written profit plan, consisting of goals and strategies for providing the foundation for improved profitability.
- The written profit plan shall include, at a minimum:
- identification of the major areas in, and means by which, management shall seek to improve Lendmark's operating performance and enhance capital formation;
- realistic and comprehensive budgets;
- a budget review process to monitor the income and expenses of Lendmark to compare actual figures with budgetary projections;
- a description of the operating assumptions that form the basis for, and adequately support, major projected income and expense components; and
- a statement of the Board of Directors' commitment to the continued maintenance of acceptable levels of liquidity and capital.
- Performance under the written profit plan shall be reported to the Division and submitted with the quarterly progress reports prepared pursuant to Section 14 of the Consent Order. Each report submitted to the Division pursuant to this Subsection of the Consent Order shall include updated financial statements prepared as of the last day of the calendar quarter, including a balance sheet and statement of income and expense which have been signed by a duly authorized officer of Lendmark with sufficient knowledge to attest to the information reported in the financial statements.
- The written profit plan shall include, at a minimum:
- Lendmark shall establish, implement, and maintain revised procedures to ensure that the Corporation refrains from collecting compensation from consumers (i) in consideration of services which the Corporation, as a mortgage broker, is prohibited from performing in a mortgage loan transaction or (ii) where no, or only a nominal, service is provided by the Corporation.
- Lendmark shall reimburse the consumer identified in the Report for the full amount of the loan discount fee that was collected by the Corporation. With its written response to the Report, the Corporation shall submit evidence of the reimbursement issued pursuant to this Section of the Consent Order. Evidence of the reimbursement shall include the consumer's name, the date the loan closed, the check number, the amount of the reimbursement, and a certified mail receipt to illustrate the consumer's receipt of the reimbursement.
- Lendmark 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 in the Commonwealth 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.
- The Corporation shall reimburse the consumers identified in the Report for the amounts collected as a processing fee, loan origination fee, or similar fee at settlement that had not been disclosed to the consumers, in writing, prior to loan closing. The amount of such reimbursements shall equal the difference between the actual charges assessed to the consumers and the amount disclosed in writing for such fee prior to loan closing. With its written response to the Report, the Corporation shall submit evidence of all reimbursements issued pursuant to this Section 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.
- Lendmark shall establish and implement procedures to maintain all loan files 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. Such procedures shall necessarily require that the Corporation properly documents 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.
- Lendmark shall establish, implement, and maintain procedures to ensure that the Corporation 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.
- Lendmark 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. 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).
- Lendmark shall establish, implement and maintain procedures to ensure that the Credit Score Disclosure provided to consumers complies with the requirements of the Fair Credit Reporting Act, Section 609(g)(1). 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.
- Lendmark shall establish, implement, and maintain procedures to ensure that that each licensed mortgage loan originator operating on behalf of the Corporation discloses his/her license number to all clients and/or residential mortgage loan applicants in writing at the time a fee is paid or a mortgage loan application is accepted, pursuant to the Division's regulation 209 CMR 41.12(1).
- Lendmark shall review and revise its website as follows:
- Lendmark shall ensure that the Corporation discloses its correct mortgage broker license type and number, in accordance with the Division's regulation 209 CMR 42.15 and the Attorney General's regulation 940 CMR 8.04(2).
- Lendmark shall 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 Corporation, a licensed mortgage broker, is approving or funding the loan.
- Lendmark 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 Lendmark'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 Lendmark 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, Lendmark shall establish, implement, and maintain quality control standards which provide for a loan review process to assess the Corporation'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
- Lendmark 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, Lendmark 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 Lendmark 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 Lendmark'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 Lendmark to violate any law, rule, regulation, or regulatory bulletin to which Lendmark 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 Lendmark's mortgage broker license 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.
- 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 8th day of August, 2011
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts