Consent Order  Brownstone Mortgage, LLC dba Brownstone Mortgage and Real Estate Centers

Date:	08/19/2010
Organization:	Division of Banks
Docket Number:	2010-354
Location:	Wenham, MA

Brownstone Mortgage, LLC dba Brownstone Mortgage and Real Estate Centers, Wenham, MA - Consent Order

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2010-354

CONSENT ORDER

In the Matter of
BROWNSTONE MORTGAGE, LLC d/b/a
BROWNSTONE MORTGAGE AND REAL ESTATE CENTERS

Wenham, Massachusetts

WHEREAS, BROWNSTONE MORTGAGE, LLC dba BROWNSTONE MORTGAGE AND REAL ESTATE CENTERS, Wenham, Massachusetts ("Brownstone Mortgage" or the "Company"), 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 August 19th, 2010, 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, Brownstone Mortgage agrees to the issuance of this CONSENT ORDER ("Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of Brownstone Mortgage was conducted pursuant to General Laws chapter 255E, section 8, as of November 24, 2008, to assess the Company'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 Brownstone Mortgage as of November 24, 2008 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.

ORDER

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

1. Brownstone Mortgage shall cease engaging directly or indirectly in the business of a mortgage broker for residential property located in Massachusetts from any location, whether within or without the Commonwealth, for which the Company has not previously obtained a license from the Commissioner for such location in accordance with Massachusetts General Laws chapter 255E, section 2.
   1. Brownstone Mortgage 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 Company's engaging in mortgage broker activity at an unlicensed location.
   2. Brownstone Mortgage, and its owners, agree to remit payment in full of the amount indicated above, payable to the "Commonwealth of Massachusetts," within two hundred and seventy (270) days of the effective date of this Order, to the Office of the Commissioner of Banks, Attn: Mortgage Broker Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118. The Division shall remit the payment for deposit into the General Fund of the Commonwealth.
2. Brownstone Mortgage shall cease conducting business with any individuals who engage in the activities of a Massachusetts Loan Originator, as that term is defined under Massachusetts General Laws chapter 255F,section 1, regarding residential property located in Massachusetts who are not duly licensed as a mortgage loan originators under M.G.L. chapter 255F.
   1. Brownstone Mortgage, and its owners, agree to submit a payment totaling eighteen thousand dollars ($18,000.00) in satisfaction of an administrative penalty collected in consideration of the Company's conducting business with unlicensed mortgage loan originators. The administrative penalty shall be satisfied as follows:
      1. A payment of nine thousand dollars ($9,000.00) shall be due and payable within ninety (90) days of the effective date of this Order; and
      2. A payment of nine thousand dollars ($9,000.00) shall be due and payable within one hundred and eighty (180) days of the effective date of this Order.
   2. Brownstone Mortgage shall remit payment(s) in full of the amounts indicated above, payable to the "Commonwealth of Massachusetts," to the Office of the Commissioner of Banks, Attn: Mortgage Broker Examination Unit/MLO Licensing, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
3. Brownstone Mortgage shall cease brokering any reverse mortgage loans on residential property in Massachusetts unless the lender making the reverse mortgage loan has obtained prior approval of the reverse mortgage program pursuant to M.G.L. chapter 167E, section 7 and M.G.L. chapter 183, section 67. Compliance with this Section of the Order shall necessarily require that Brownstone Mortgage establish, implement, and maintain procedures to ensure that the Company refrains from brokering reverse mortgage loans without previously determining that the mortgage lender, and the applicable reverse mortgage loan program have been approved by the Division.
   1. Brownstone Mortgage shall reimburse the consumers identified in the Report the compensation received by the Licensee for the loans.
   2. Within seven (7) days of the effective date of this Consent Order, the Company shall submit evidence of the reimbursements issued pursuant to this Section of the Order to the Office of the Commissioner of Banks, Attn: Mortgage Broker Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118. Evidence of the reimbursement shall include the consumers' names, the date the loans closed, the check numbers, the amount of the reimbursements, and sufficient evidence to illustrate the consumers' receipt of the reimbursements.
4. Brownstone Mortgage shall establish, implement, and maintain procedures to ensure that the Company refrains from collecting compensation from consumers in consideration of services which the Company, as a mortgage broker, is prohibited from performing in a mortgage loan transaction.
   1. Brownstone Mortgage shall reimburse the consumer identified in the Report for the amount collected as a loan discount fee. The amount of such reimbursement shall equal the total amount of the loan discount fee collected.
   2. With Brownstone Mortgage's written response to the findings presented in the Report, which is to be submitted to the Commissioner pursuant to Section 9(a) of this Order, the Company shall submit evidence of the reimbursement issued pursuant to this Section of the Order. Evidence of the reimbursement shall include the consumer's name, the date the loans closed, the check number, the amount of the reimbursement, and sufficient evidence to illustrate the consumer's receipt of the reimbursement.
5. Brownstone Mortgage shall establish, implement and maintain procedures to ensure that the Company notifies the Division, in writing, within one business day, of the occurrence of any significant events, including but not limited to the institution of formal or informal regulatory action, in any state against the Company, in accordance with 209 CMR 42.12(1)(c). The requirements of this section of the Order shall also necessarily require Brownstone Mortgage to update its disclosures in the National Mortgage Licensing System, as necessary, to reflect the occurrence of any such significant event.
6. Brownstone Mortgage shall establish, implement, and maintain procedures to ensure that the Company 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.
7. Brownstone Mortgage shall establish, implement and maintain procedures to ensure that the Company maintains and uses all loan documents in the Company'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. Such procedures shall necessarily ensure that all loan applications and disclosures are properly dated and that the Company retains evidence sufficient to allow the Commissioner to determine whether time-sensitive documents are being provided to consumers within the mandated timing requirements.
8. Brownstone Mortgage shall establish, implement, and maintain procedures to ensure that, in instances where the Company provides a Good Faith Estimate (GFE) to consumers, the Company shall provide the GFE not later than three (3) business d ays after receipt of either an application or information sufficient to complete an application, in accordance with the Real Estate Settlement Procedures Act implementing regulation 24 CFR 3500.7(b).
9. Brownstone Mortgage shall comply with all laws and regulations applicable to his 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 twenty (20) days of receipt of the Report, all violations and areas of concern addressed in the Report.
   1. Within twenty (20) days of Brownstone Mortgage's receipt of the Report, the Company 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 Brownstone Mortgage 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 Order.
   2. Within thirty (30) days from the effective date of this Order, Brownstone Mortgage shall establish, implement, and maintain quality control standards which provide for a loan review process to assess the Company'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 broker in Massachusetts and (b) the provisions of this Order. Such quality control standards shall be designed to prevent the recurrence of the violations addressed in the Report; and
   3. Brownstone Mortgage 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 Order.
10. On the thirtieth (30th) day after the end of each calendar quarter following the date of this Order, Brownstone Mortgage 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 Order and the results thereof; and
    2. Written findings prepared by Brownstone Mortgage detailing a review of management's and staff persons' adherence to the policies, programs, and procedures adopted pursuant to this 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 Brownstone Mortgage's compliance condition in Massachusetts and the results thereof.
11. The reporting requirement to the Division referenced in Section 10 of this 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 Order from the Commissioner.
12. Nothing in this Order shall be construed as permitting Brownstone Mortgage to violate any law, rule, regulation, or regulatory bulletin to which Brownstone Mortgage is subject.
13. In consideration of the foregoing Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Brownstone Mortgage's mortgage broker license under General Laws chapter 255E, section 6, while this Order is in effect.
14. Failure to comply with the terms of this Order shall constitute grounds for license suspension and/or revocation, or other formal regulatory action against Brownstone Mortgage and/or its owners pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
15. This Order shall become effective immediately upon the date of its issuance.
16. The provisions of this Order shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this Order shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
17. This Consent Order and the Consent Agreement are the complete documents that represent the resolution of this matter. There are no other agreements, promises, representations, or warranties other than those set forth in this Consent Order and the Consent Agreement.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 19th day of August, 2010

By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts