Division of Banks Orders Massachusetts-Based Mortgage Lender to Accurately Report Mortgage Loan Data
BOSTON – The Office of Consumer Affairs and Business Regulation announced today that the Division of Banks (Division) ordered Mortgage Master, Inc. (Mortgage Master) to immediately correct its procedures and fix the substantial number of data errors found in its required reports to regulators under the federal Home Mortgage Disclosure Act (HDMA). Under the terms of the order, Mortgage Master is required to pay a $50,000 administrative fine to the Commonwealth.
“This required loan information provides an important measurement of how well a company is meeting the lending needs of communities and its residents,” said Consumer Affairs and Business Regulation Undersecretary Barbara Anthony. “Without accurate reporting, it is difficult to determine if a lender is consistently considering a borrower’s application or if a potential homeowner has been discriminated against.”
The HMDA, passed by Congress in 1975, requires the filing of loan related data to help determine if financial institutions are adequately serving the mortgage lending needs of their communities. This data also serves as a useful tool to identify possible discriminatory lending patterns. Regulators review HMDA data to assess compliance programs at banks and credit unions as well as non-bank companies.
“If a company files inaccurate information, it does not provide a complete picture for regulators to assess whether or not the company is meeting fair lending requirements,” said Commissioner of Banks David Cotney. “These Administrative actions demonstrate the seriousness of Mortgage Master repeated data oversights, which ultimately impact the integrity and usefulness of residential mortgage information for the public.”
The Consumer Financial Protection Bureau (CFPB), a federal consumer protection agency whose supervisory authority includes non-bank mortgage companies as well as banks and credit unions with assets over $10 billion, recently took similar action against Mortgage Master. The CFPB conducted a simultaneous examination of the company, finding significant errors with its HMDA data. The Division and the CFPB are both requiring Mortgage Master to obtain an independent review of its HMDA data program and develop a comprehensive plan to ensure accuracy and prevent future errors. Mortgage Master is also being required by the Division and the CFPB to correct and resubmit its HMDA data.
Mortgage Master has been licensed by the Division since 1992 and has various locations across the Commonwealth as well as in 21 other states including California, Connecticut, Illinois, New Hampshire, New Jersey, New York, Pennsylvania, Maryland, Rhode Island and the District of Columbia. According to the most recent HMDA data released by the Federal Reserve Board, Mortgage Master is one of the state’s largest lenders with over 12,000 in annual residential mortgage applications.
In 2010, Mortgage Master entered into a settlement agreement with the Division to address consumer protection violations, including unlicensed loan originator activity and doing business from unlicensed locations. This most recent action replaces the 2010 agreement and is the result of a follow-up examination conducted by the Division. As part of the previous settlement, Mortgage Master had agreed to establish, implement, and enhance its HMDA oversight and data verification procedures because its errors exceeded acceptable limits. This latest review of the Company’s HMDA data continued to show high rates of errors, despite minor improvements made by the Company since 2010.
The Division of Banks is an agency within the Office of Consumer Affairs and Business Regulation and oversees state-chartered banks and credit unions, check sellers, debt collectors, foreign transmittal agencies, mortgage lenders and brokers.
The Office of Consumer Affairs and Business Regulation is committed to protecting consumers through consumer advocacy and education, and also works to ensure that the businesses its agencies regulate treat all Massachusetts consumers fairly. Follow the Office at its blog, on Facebook and Twitter, @Mass_Consumer.