A. Findings of Fact
- The Division, through the Commissioner has jurisdiction over the licensing and regulation of persons and entities engaged in the business of debt collection in Massachusetts pursuant to Massachusetts General Laws chapter 93, section 24A.
- First American Trust is, and at all relevant times has been a foreign company conducting business in Massachusetts, with a main address of 1055 Parsippany Boulevard, Parsippany, New Jersey.
- Ira Bailey and Peter Stern are and at all relevant times have been the managers of First American Trust.
- Massachusetts General Laws Chapter 93, section 24A, relative to the licensing requirements for entities engaged in debt collection states, in part:
No person shall directly or indirectly engage in the commonwealth in the business of a debt collector, or engage in the commonwealth in soliciting the right to collect or receive payment for another of an account, bill or other indebtedness, or advertise for or solicit in print the right to collect or receive payment for another of an account, bill or other indebtedness, without first obtaining from the commissioner a license to carry on the business, nor unless the person or the person for whom he or it may be acting as agent has on file with the state treasurer a good and sufficient bond.
- The definition of debt collector includes “any person who buys or acquires debt that is in default at the time of purchase or acquisition and who seeks to collect such debt directly.” 209 CMR 18.02
- It is the Division’s longstanding position that “entities purchasing debt in default at the time of purchase, commonly referred to as ‘debt buyers’, must be licensed as debt collectors.” Division Opinion issued October 13, 2006, attached as Exhibit A.
- On March 18, 2019, the Division’s Consumer Assistance Unit received a consumer complaint against First American Trust regarding the Company’s alleged unlicensed debt collection activities in Massachusetts.
- The Division’s review of the consumer complaint indicates that from at least November 2019, First American Trust contacted a Massachusetts consumer in order to collect payment on a delinquent debt.
- The Division’s review of the consumer complaint indicates that First American Trust held itself out as a debt collector, including by providing the consumer with correspondence stating that “First American Trust, LLC is a debt collector; all information will be used for that purpose.”
- First American Trust filed a Foreign Limited Partnership Application for Registration with the Massachusetts Secretary of State which describes “underperforming mortgages” as the general character of the business in Massachusetts.
- The Division’s review of the Massachusetts Registry of Deeds indicates that First American Trust is actively engaging in the business of acquiring delinquent mortgage debt.
- According to the Division’s records and NMLS, as of the date of this Directive, First American Trust does not have a license in Massachusetts to engage in the business of a debt collector.
B. Conclusions of Law
- 13. Based on the information detailed in paragraphs 2 through 10 of this Directive, the Division has reason to believe that First American Trust is engaging in unlicensed debt collection activity in Massachusetts, in violation of General Laws chapter 93, section 24 through 28.
C. Cease Directive
- 14. First American Trust shall immediately cease from collecting debt on any accounts until such time that First American Trust has obtained a license to conduct business as a debt collector in the Commonwealth pursuant to General Laws 93, section 24A.
15. First American Trust is ordered to immediately cease collecting on any consumer collection accounts from debtors located within Massachusetts, to cease soliciting the right to collect or receive payment for another of an account, bill or other indebtedness, or advertise for or solicit in print the right to collect or receive payment for another of an account.
16. First American Trust must submit a response within five (5) days of receipt of this Directive. The response submitted by First American Trust must also include a signed copy of the enclosed affidavit, attesting that First American Trust will immediately cease from engaging in the business of a debt collector in Massachusetts.
17. First American Trust shall within five (5) days of the effective date of this Directive provide the Division with a complete record, including a verification of receipt, of all funds collected on behalf of clients from January 1, 2018 through the effective date of this Directive.
18. First American Trust shall, within five (5) days of the effective date of this Directive, provide the Division with a record of all clients and/or creditors and a detailed record of all accounts held for collection by First American Trust on behalf of such clients.
D. Notice of Right of Hearing
First American Trust has the right to request a hearing to contest the charges described herein. In order to request a hearing First American Trust or its authorized representative is required to file a notice of claim for an Adjudicatory Proceeding within thirty (30) days of the effective date of this Cease Directive, pursuant to the Standard Adjudicatory Rules of Practices and Procedures, 801 CMR 1.01(6)(b) and (c). If requested, the hearing would be conducted according to General Laws, chapter 30A, sections 10 and 11, and the Standard Adjudicatory Rules of Practice and Procedure, 801 CMR 1.01 and 1.03. If First American Trust does not file a notice of claim for an Adjudicatory Proceeding within thirty (30) days of the effective date of this Cease Directive, the Company will permanently lose the right to contest the charges described herein.
By delegated authority from the Commissioner of Banks:
Dated at Boston, Massachusetts, this 23rd day of April, 2019.
Cynthia A. Begin
Chief Risk Officer
Massachusetts Division of Banks