By the Division of Banks
COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MORTGAGE LENDER AND
Docket No. 2012-034
In the Matter of
MORTGAGE FINANCIAL, INC.
Mortgage Company License No(s). MC2644 et al
WHEREAS, MORTGAGE FINANCIAL, INC., Tewksbury, Massachusetts ("Mortgage Financial" or the "Corporation"), a licensed mortgage lender and 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 November 29, 2012, 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 lender and mortgage broker, Mortgage Financial agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of Mortgage Financial was conducted pursuant to General Laws chapter 255E, section 8, as of November 16, 2011, to assess the Corporation's level of compliance with applicable Massachusetts and federal statutes and regulations governing the conduct of those engaged in the business of a mortgage lender and mortgage broker in the Commonwealth;
WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division's examination/inspection of Mortgage Financial 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;
WHEREAS, the parties now seek to resolve by mutual agreement, the matters identified in the Report.
1. Mortgage Financial shall establish, implement and maintain procedures to ensure that all mortgage loan originators with whom the Corporation conducts business are duly licensed as mortgage loan originators under Massachusetts General Laws chapter 255F, and properly sponsored through the Nationwide Multi-State Mortgage Licensing System & Registry (NMLS) by Mortgage Financial.
(a) Mortgage Financial agrees to submit a payment in the amount of twenty-eight thousand five hundred dollars ($28,500.00) in satisfaction of an administrative penalty collected in consideration of the Corporation's conducting business with mortgage loan originators who did not hold an active mortgage loan originator license or who were actively sponsored by another mortgage entity when acting on behalf of Corporation. Mortgage Financial 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 Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
2. Mortgage Financial shall establish, implement, and maintain policies and procedures to ensure that the Corporation refrains from engaging directly or indirectly in the business of a mortgage lender and/or mortgage broker for residential property located in Massachusetts from any location, whether within or without the Commonwealth, for which the Corporation has not previously obtained a license from the Commissioner for such location in accordance with Massachusetts General Laws chapter 255E, section 2.
(a) Mortgage Financial agrees to submit a payment in the amount of five hundred dollars ($500.00) in satisfaction of an administrative penalty collected in consideration of the Corporation's engaging in mortgage lender activity at an unlicensed location. Mortgage Financial 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 Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
3. Mortgage Financial shall establish, implement, and maintain procedures to ensure compliance with the loan reporting requirements set forth in the Home Mortgage Disclosure Act ("HMDA"), 12 U.S.C. section 2801 et seq., as implemented by Regulations of the Consumer Financial Protection Bureau, 12 C.F.R. Part 1003 ("Regulation C"). Such procedures shall necessarily require that the Corporation implement internal controls to ensure that, for all HMDA reportable loan applications, Mortgage Financial accurately compiles and records all required data in the Corporation's HMDA Loan Application Register ("LAR").
(a) Mortgage Financial shall establish, implement, maintain, and periodically update internal controls operating policies and training procedures to ensure that all applicable personnel possess a comprehensive understanding of the HMDA reporting requirements under Regulation C. Such training shall necessarily ensure the proper implementation and execution of the revised practices and procedures adopted by Mortgage Financial pursuant to this Section of the Consent Order.
4. Mortgage Financial shall establish, implement, and maintain procedures to ensure that all Truth-In-Lending disclosures issued by the Corporation contain the language required under the Division's regulation 209 CMR 32.19(1)(d).
5. Mortgage Financial shall comply with all laws and regulations applicable to its 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 20 days of receipt of the Report, all violations and areas of concern addressed in the Report.
(a) Within 20 days of Mortgage Financial'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 Mortgage Financial 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.
(b) Within thirty days of the effective date of this Consent Order, Mortgage Financial 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 lender and mortgage broker in Massachusetts, and (ii) the provisions of this Consent Order; and
(c) Mortgage Financial 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.
6. On the thirtieth day after the end of each calendar quarter following the date of this Consent Order, Mortgage Financial shall furnish written progress reports to the Division, which shall address and include the following:
(a) 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
(b) Written findings prepared by Mortgage Financial 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 Financial's compliance condition in Massachusetts, and the results thereof.
7. The reporting requirement to the Division referenced in Section 6 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.
8. Nothing in this Consent Order shall be construed as permitting Mortgage Financial to violate any law, rule, regulation, or regulatory bulletin to which Mortgage Financial is subject.
9. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Mortgage Financial's mortgage company license(s) under Massachusetts General Laws chapter 255E, section 6, while this Consent Order is in effect.
10. Failure to materially 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.
11. This Consent Order shall become effective immediately upon the date of its issuance.
12. Mortgage Financial agrees that, in the event that the Corporation 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 lender and/or mortgage broker Massachusetts surety bonds maintained by Mortgage Financial pursuant to the Division's regulation 209 CMR 42.03(2)(a) and 209 42.06(2)(a).
13. 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.
14. 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 Mortgage Financial.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:
Dated at Boston, Massachusetts, this day of November 29, 2012.
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts