Consent Agreement  SecurityNational Mortgage Co.

Date:	10/31/2012
Organization:	Division of Banks
Docket Number:	2012-011
Location:	Salt Lake City, UT

Security National Mortgage Co., Salt Lake City, UT - Consent Agreement

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2012-011

CONSENT AGREEMENT

In the Matter of
SECURITY NATIONAL MORTGAGE COMPANY
Salt Lake City, Utah

Mortgage Company License No. MC3116

WHEREAS, SECURITYNATIONAL MORTGAGE COMPANY, ("SecurityNational" or the "Corporation"), a licensed mortgage lender and 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 AGREEMENT("Stipulation") with representatives of the Division of Banks ("Division") dated October 31, 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, SecurityNational agrees to the issuance of this CONSENT AGREEMENT("Consent Agreement") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of SecurityNational was conducted pursuant to General Laws chapter 255E, section 8, as of November 28, 2011, 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 lender and mortgage broker in the Commonwealth; and

WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division’s examination/inspection of SecurityNational as of November 28, 2011 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.

AGREEMENT

NOW COME the parties in the above-captioned matter, the Division and SecurityNational, and stipulate and agree as follows:

1. Within twenty (20) days of the Effective Date of this Consent Agreement, SecurityNational shall submit to the Division, a detailed summary of information regarding the mortgage loans and the respective loan balances for aging mortgage loans maintained in SecurityNational’s portfolio.
   1. The information submitted to the Division shall include at a minimum, the number of mortgage loans and the loan balances for aging mortgage loans that are:
      1. Between 0 – 30 days (current),
      2. Between 30 – 60 days
      3. Between 60 – 90 days
      4. Over 90 days; and
      5. In foreclosure.
   2. SecurityNational shall prepare and submit progress reports containing the information requested in Section 1(a) with the quarterly progress reports prepared pursuant to Section 12 of this Consent Agreement. Each report submitted to the Division pursuant to this Subsection of the Consent Agreement shall have been signed by a duly authorized officer of SecurityNational with sufficient knowledge to attest to the information contained in the report.
2. Within twenty (20) days of the Effective Date of this Consent Agreement, SecurityNational shall upload to the Nationwide Mortgage Licensing System and Registry (NMLS) updated financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP), including a balance sheet and interim income statement prepared as of March 31, 2012.
   1. On the thirtieth day after the end of each calendar quarter following the date of this Consent Agreement, SecurityNational shall upload to the NMLS updated financial statements prepared in accordance with GAAP and signed and dated by a duly authorized officer of SecurityNational with sufficient knowledge to attest to the information reported in the financial statements.
   2. Each such filing submitted to the Division 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.
3. Within twenty (20) days of the Effective Date of this Consent Agreement, SecurityNational shall submit a written profit plan, consisting of goals and strategies for providing the foundation for improved profitability.
   1. The written profit plan shall include, at a minimum:
      1. identification of the major areas in, and means by which, management shall seek to improve SecurityNational’s operating performance and enhance capital formation;
      2. realistic and comprehensive budgets;
      3. a budget review process to monitor the income and expenses of SecurityNational to compare actual figures with budgetary projections;
      4. a description of the operating assumptions that form the basis for, and adequately support, major projected income and expense components; and
      5. a statement of the Board of Director’s commitment to the continued maintenance of acceptable levels of liquidity and capital.
   2. Performance under the written profit plan shall be reported to the Division and submitted with the quarterly progress reports prepared pursuant to Section 12 of the Consent Agreement.
4. SecurityNational shall review and thereafter revise or 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 NMLS by SecurityNational or by the licensed mortgage broker, as appropriate.
   1. SecurityNational agrees to submit a payment in the amount of five thousand dollars ($5,000.00) 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. SecurityNational shall remit payment in full of the amount indicated above, payable to the "Commonwealth of Massachusetts" with the executed copy of the Stipulation, to the Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10^th Floor, Boston, Massachusetts 02118.
5. SecurityNational shall review and thereafter revise or establish, implement and maintain policies and procedures to ensure that all staff, including management and personnel at the Corporation’s Massachusetts licensed branch locations are adequately supervised and adhere to all to applicable statutes, regulations, rules applicable to mortgage lenders and mortgage brokers. The provisions of this Section shall require SecurityNational to ensure that staff are complying with all policies, programs, and procedures adopted pursuant to the provisions of this Consent Agreement.
6. SecurityNational shall review and thereafter revise or 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, sections 2 and 5.
   1. SecurityNational agrees to submit a payment in the amount of ten thousand dollars ($10,000.00) in satisfaction of an administrative penalty collected in consideration of the Corporation’s engaging in mortgage lender and/or broker activity at unlicensed locations. SecurityNational shall remit payment in full of the amount indicated above, payable to the "Commonwealth of Massachusetts," with the executed copy of the Stipulation to the Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10^th Floor, Boston, Massachusetts 02118.
7. SecurityNational shall review and thereafter revise or 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 administered by the Consumer Financial Protection Bureau, 12 C.F.R. Part 1003 ("Regulation C"). Such procedures shall require the Corporation to implement internal controls to ensure that SecurityNational accurately determines if a loan is reportable pursuant to the requirements of Regulation C and accurately compiles and records all required data in the Corporation’s HMDA Loan Application Register ("LAR") if a loan is deemed to be reportable.
   1. Within forty five (45) days of the effective date of this Consent Agreement, SecurityNational shall review for accuracy and completeness the HMDA data collected for all Massachusetts residential mortgage loans originated during calendar years 2009, 2010 and 2011 and shall attempt to re-file with the appropriate federal authority corrected information of all erroneous and/or incomplete HMDA data previously submitted on the LAR for those years.
   2. SecurityNational shall review and thereafter revise or establish, implement, and maintain procedures to identify and address any reporting errors and retain records demonstrating that the Corporation’s findings and corrective action taken are effective.
   3. SecurityNational shall review and thereafter revise or establish, implement, maintain, and periodically update 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 SecurityNational pursuant to this Section of the Consent Agreement.
   4. SecurityNational agrees to submit a payment in the amount of twelve thousand five thousand dollars ($12,500.00) in satisfaction of an administrative penalty collected in consideration of the Corporation’s failure to comply with the statutes, rules and regulations governing the conduct of those engaged in the business of a mortgage lender in Massachusetts. SecurityNational shall remit payment in full of the amount indicated above, payable to the "Commonwealth of Massachusetts," with the executed copy of the Stipulation, to the Office of the Commissioner of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
8. SecurityNational shall review and thereafter revise or establish implement and maintain procedures to ensure that within forty-five (45) days after the end of each calendar quarter following the effective date of this Consent Agreement, the Corporation timely files its completed quarterly NMLS Call Report.
9. SecurityNational shall review and revise all advertisements, including all websites and implement corrective action to ensure that the Corporation's and licensed loan originators' license type and number are disclosed in all advertisements in accordance with the Division's regulation 209 CMR 42.15, 209 CMR 41.12(2) and the Attorney General's regulation 940 CMR 8.04(2).
10. SecurityNational shall review and revise all advertisements, including the Corporation’s websites to eliminate any representations or statements that could be considered false, misleading, or have the tendency to be misleading.
11. SecurityNational 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 all violations and areas of concern addressed in the Report.
    1. Within twenty (20) days of the Effective Date of this Consent Agreement, 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 SecurityNational 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 Agreement;
    2. Within thirty (30) days from the effective date of this Consent Agreement, SecurityNational shall review and thereafter revise or establish, implement, and maintain quality control standards which provide for a loan review process to assess the Corporation’s compliance with: (a) 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 (b) the provisions of this Consent Agreement. Such quality control standards shall be designed to prevent the recurrence of the violations addressed in the Report; and
    3. SecurityNational shall review and thereafter revise or 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 Agreement.
12. On or before the thirtieth (30^th) day after the end of each calendar quarter following the date of this Consent Agreement, SecurityNational shall furnish written progress reports to the Division, which shall address and include the following:
    1. A description of the form, content, and manner of any actions taken to address each Section of this Consent Agreement and the results thereof; and
    2. Written findings prepared by SecurityNational detailing a review of management and staff persons’ adherence to the policies, programs, and procedures adopted pursuant to this Consent Agreement 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 SecurityNational’s compliance condition in Massachusetts and the results thereof.
13. The reporting requirement to the Division referenced in Section 12 of this Consent Agreement 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 Agreement from the Commissioner.
14. SecurityNational agrees that, in the event that the Corporation fails to submit the payments set forth in this Consent Agreement 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 SecurityNational pursuant to the Division’s regulations 209 CMR 42.03(2)(a) and 209 CMR 42.06(2)(a).
15. Nothing in this Consent Agreement shall be construed as permitting SecurityNational to violate any law, rule, regulation, or regulatory bulletin to which SecurityNational is subject.
16. In consideration of the foregoing Consent Agreement, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke SecurityNational’s mortgage lender and mortgage broker licenses under General Laws chapter 255E, section 6, while this Consent Agreement is in effect.
17. Failure to comply with the terms of this Consent Agreement 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.
18. This Consent Agreement shall become effective immediately upon the date of its issuance.
19. The provisions of this Consent Agreement shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this Consent Agreement shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an Consent Agreement of a court of competent jurisdiction.
20. This Consent Agreement and Stipulation are the complete documents representing the resolution of this matter. There are no other agreements, promises, representations, or warranties between the Division and SecurityNational.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 31st day of October, 2012

By:
David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts