COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
Docket No. 2009-134
In the Matter of
MONOMOY MANAGEMENT LIMITED d/b/a
CAPE COD NATIONAL MORTGAGE
New Bedford, Massachusetts
Mortgage Broker License Nos. MB1161, et al.
WHEREAS, MONOMOY MANAGEMENT LIMITED d/b/a CAPE COD NATIONAL MORTGAGE, New Bedford, Massachusetts ("Monomoy Management" 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 February 23, 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, Monomoy Management agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of Monomoy Management was conducted pursuant to General Laws chapter 255E, section 8, as of February 25, 2009, 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 Monomoy Management as of February 25, 2009 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 Monomoy Management, and stipulate and agree as follows:
- Monomoy Management shall establish, implement and maintain policies and 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; lender documentation, including underwriting guidelines; employment verification documentation; and all required disclosure forms.
- The Corporation shall properly document the initial date of application and ensure 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.
- Monomoy Management shall establish, implement, and maintain procedures to ensure that all broker fees, loan fees, points, or similar fees collected by the Corporation as compensation for administrative costs incurred in originating the mortgage loan 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 broker fee, loan fee, points 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.
- Within thirty (30) days of the effective date of this Consent Order, the Corporation shall conduct a review of all Massachusetts residential mortgage loans processed by the Corporation since February 25, 2006, and shall reimburse all consumers from whom any broker fee, loan fee, points, or similar fee collected as compensation for administrative costs of origination was charged by the Corporation where the amount charged for such fee or point was not previously disclosed to the consumer, as a broker fee, loan fee, points, or similar fee, in writing, prior to the closing of the loan. The amount of such reimbursements shall equal the difference between the actual charges assessed to the individual consumer and the amount disclosed in writing prior to loan closing.
- Within sixty (60) days of the effective date of this Consent Order, 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.
- Within thirty (30) days from the receipt of the Report, Monomoy Management shall submit to the Division: updated financial statements, including a balance sheet and interim income statement as of September 30, 2010; and a written profit plan consisting of goals and strategies for improving the Corporation's 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 the Corporation's operating performance and enhance capital formation;
- realistic and comprehensive budgets;
- a budget review process to monitor the income and expenses of the Corporation 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 board of directors' commitment to the continued maintenance of acceptable levels of liquidity and capital.
- Monomoy Management 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.
- Monomoy Management shall review and revise as necessary all advertisements to ensure that all advertisements that contain the triggering language referenced in the Attorney General's regulation 940 CMR 8.04(4) include the required disclosure language, in compliance with the regulation.
- Monomoy Management will review and revise as necessary all advertisements that include interest rates and/or loan terms, to ensure that such advertisements contain the statement, "We arrange but do not make loans," as required pursuant to 209 CMR 42.12A(4).
- Monomoy Management shall comply with all laws and regulations applicable to 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 (30) days of receipt of the Report, all violations and areas of concern addressed in the Report.
- Within thirty (30) days of Monomoy Management'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 Monomoy Management 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, Monomoy Management 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. Such quality control standards shall be designed to prevent the recurrence of the violations addressed in the Report; and
- Monomoy Management 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 (30 th) day after the end of each calendar quarter following the date of this Consent Order, Monomoy Management 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 Monomoy Management 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 Monomoy Management's compliance condition in Massachusetts and the results thereof.
- The reporting requirement to the Division referenced in Section 8 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 Monomoy Management to violate any law, rule, regulation, or regulatory bulletin to which Monomoy Management 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 Monomoy Management's mortgage broker license under 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 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.
- This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements between the Division and Monomoy Management.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 23rd day of February, 2011
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts