COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MORTGAGE LENDER AND
LOAN SERVICER REGISTRATION
Docket No. 2010-387
In the Matter of
CLEARPOINT FUNDING, INC.
f/k/a VIRGIN MONEY USA, INC.
Mortgage Company License Nos. MC5204 et al.
Third Party Loan Servicer Registration No. LS0030
WHEREAS, CLEARPOINT FUNDING, INC. f/k/a VIRGIN MONEY USA, INC., Waltham, Massachusetts ("ClearPoint Funding" or the "Corporation"), a licensed mortgage lender and mortgage broker under Massachusetts General Laws chapter 255E, section 2 and registered third-party loan servicer under Massachusetts General Laws, chapter 93 section 24A, 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 September 1, 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 lender and mortgage broker, ClearPoint Funding agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of ClearPoint Funding was conducted pursuant to General Laws chapter 255E, section 8, as of May 14, 2009, 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 ClearPoint Funding as of May 14, 2009 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.
NOW COME the parties in the above-captioned matter, the Division and ClearPoint Funding, and stipulate and agree as follows:
- ClearPoint Funding 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 Board of Governors of the Federal Reserve System, 12 C.F.R. Part 203 ("Regulation C"). Such procedures shall necessarily require that the Corporation implement internal controls to ensure that, for all HMDA reportable loan applications, ClearPoint Funding accurately compiles and records all required data in the Corporation's HMDA Loan Application Register ("LAR").
- Within thirty (30) days of the effective date of this Consent Order, ClearPoint Funding shall review for accuracy the HMDA data collected for all Massachusetts residential mortgage loans originated during calendar year 2008, and shall petition the Federal Reserve Board to permit a re-filing of corrected information of all erroneous and/or incomplete data previously submitted on the LAR.
- ClearPoint Funding shall establish, implement, and maintain 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 ClearPoint Funding pursuant to this Section of the Consent Order.
- Within thirty (30) days of the effective date of this Consent Order, ClearPoint Funding shall prepare and submit to the Division a written report detailing the HMDA data that the Corporation petitioned to re-file pursuant to Section 1(a) of this Consent Order.
- ClearPoint Funding agrees to submit a payment in the amount of twenty-five thousand dollars ($25,000.00) 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. ClearPoint Funding 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 Office of the Commissioner of Banks, 1000 Washington Street, 10 th Floor, Boston, Massachusetts 02118. The Division shall remit the payment for deposit into the General Fund of the Commonwealth.
- Within thirty (30) days from the receipt of the Report, ClearPoint Funding shall submit: updated financial statements, including a balance sheet and interim income statement as of April 30, 2010; and a written profit plan, consisting of goals and strategies for providing the foundation for improved profitability.
- The written profit plan shall include, at a minimum:
- identification of the major areas in, and means by which, management shall seek to improve ClearPoint Funding's operating performance and enhance capital formation;
- realistic and comprehensive budgets;
- a budget review process to monitor the income and expenses of ClearPoint Funding to compare actual figures with budgetary projections;
- a description of the operating assumptions that form the basis for, and adequately support, major projected income and expense components; and
- a statement of the Board of Directors' commitment to the continued maintenance of acceptable levels of liquidity and capital.
- Performance under the written profit plan shall be reported to the Division and submitted with the quarterly progress reports prepared pursuant to Section 9 of the Consent Order. Each report submitted to the Division pursuant to this Subsection of the Consent Order 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.
- ClearPoint Funding shall establish, implement, and maintain procedures to ensure compliance with the Equal Credit Opportunity Act, 15 U.S.C. 1691 et seq., as implemented by Regulations of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 202 ("Regulation B"). Such procedures shall require that the Corporation implement internal controls to ensure that ClearPoint Funding properly notifies applicants of adverse actions taken on applications, in compliance with Section 202.9(a)(2) of Regulation B. Such internal controls shall necessarily ensure that the Corporation provides such applicants with all the information that is required under to Section 202.9(a)(2).
- ClearPoint Funding shall establish, implement, and maintain procedures to ensure that, when operating in the capacity of a mortgage broker, the Corporation 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.
- ClearPoint Funding shall establish, implement, and maintain procedures to ensure that, when operating in the capacity of a mortgage broker, ClearPoint Funding ceases from identifying itself as a mortgage lender or creditor on disclosure forms provided to consumers.
- ClearPoint Funding shall establish, implement, and maintain procedures to ensure that that Corporation discloses its license type and number to applicants in writing at the time a fee is paid or a mortgage loan application is accepted, in accordance with the Division's regulation 209 CMR 42.15.
- ClearPoint Funding shall review and revise as necessary all direct mail advertisements to ensure that the Corporation's license type and number are disclosed therein, in accordance with the Division's regulation 209 CMR 42.15 and the Attorney General's regulation 940 CMR 8.04(2).
- ClearPoint Funding 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 thirty (20) days of receipt of the Report, all violations and areas of concern addressed in the Report.
- Within twenty (20) days of ClearPoint Funding'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 ClearPoint Funding 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;
- Within twenty (20) days from the effective date of this Consent Order, ClearPoint Funding shall 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 Order. Such quality control standards shall be designed to prevent the recurrence of the violations addressed in the Report; and
- ClearPoint Funding 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.
- On the thirtieth (30 th) day after the end of each calendar quarter following the date of this Consent Order, ClearPoint Funding shall furnish written progress reports to the Division, which shall address and include the following:
- 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
- Written findings prepared by ClearPoint Funding 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 ClearPoint Funding's compliance condition in Massachusetts and the results thereof.
- The reporting requirement to the Division referenced in Section 9 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.
- Nothing in this Consent Order shall be construed as permitting ClearPoint Funding to violate any law, rule, regulation, or regulatory bulletin to which ClearPoint Funding is subject.
- In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke ClearPoint Funding's mortgage lender and mortgage broker licenses under General Laws chapter 255E, section 6, while this Consent Order is in effect.
- Failure to comply with the terms of this Consent Order 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.
- This Consent Order shall become effective immediately upon the date of its issuance.
- 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 Consent Order of a court of competent jurisdiction.
- 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 ClearPoint Funding.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 1st day of September, 2010
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts