Date: | 01/03/2022 |
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Organization: | Division of Banks |
WHEREAS, Michael Rakeman (“Respondent”) is engaged in the activity of a mortgage loan originator and assigned an NMLS identifier number of 40481.
WHEREAS, the States, Commonwealths, and/or Territories of Arizona, California-DFPI, Connecticut, District of Columbia, Illinois, Indiana-DFI, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Jersey, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina-BFI, Texas-SML, Washington, and Wisconsin (individually, a “Participating State,” and collectively, the “Participating States”) have each agreed, through its respective state mortgage regulatory agency, to negotiate and enter into this Settlement Agreement and Consent Order (hereinafter referred to as the “Agreement” or “Order”).
WHEREAS, the state mortgage regulators of the Participating States (hereinafter referred to individually as a “State Mortgage Regulator,” and collectively as the “State Mortgage Regulators”) are respective members of the Conference of State Bank Supervisors (“CSBS”) and the American Association of Residential Mortgage Regulators (“AARMR”) and have agreed to address enforcement concerns with Respondent in a collective and coordinated manner, pursuant to their respective statutory authorities, and in accordance with the protocols established by the CSBS/AARMR Nationwide Cooperative Protocol for Mortgage Supervision as well as the Nationwide Cooperative Agreement for Mortgage Supervision (collectively, the “CSBS/AARMR Protocol and Agreement”). The State Mortgage Regulators and Respondent are collectively referred to herein as the (“Parties”).
WHEREAS, Respondent is licensed as a mortgage loan originator under the respective laws of each Participating State, or, where applicable, has obtained an endorsement from a Participating State to engage in loan origination activity as part of Respondent’s pre-existing authority to engage in regulated activity under a different licensing regime (“MLO Activity Endorsement”).
WHEREAS, the State Regulatory Registry LLC (“SRR”), a wholly owned subsidiary of CSBS, owns and operates the Nationwide Multistate Licensing System & Registry (“NMLS”). SRR administers pre-licensure (“PE”) and continuing education (“CE”) and Uniform State Test protocols. Title V of Public Law 110-289, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the “SAFE Act”), requires that state-licensed mortgage loan originators (“MLOs”) complete PE prior to initial licensure and annual CE thereafter. In order to meet PE requirements contemplated under the SAFE Act, state-licensed MLOs must complete 20 hours of NMLS–approved education. In order to meet CE requirements contemplated under the SAFE Act, state-licensed MLOs must complete eight hours of NMLS approved education.
WHEREAS, the Mortgage Testing and Education Board (“MTEB”), which was created by SRR, has approved “Administrative Action Procedures for S.A.F.E. Testing and Education Requirements” and NMLS-Approved course providers (“AAP”), which extends administrative authority to the MTEB to investigate alleged violations of the NMLS Rules of Conduct (“ROC”). The AAP also extends administrative authority to the MTEB/SRR to investigate alleged violations of the NMLS Standards of Conduct (“SOC”), which apply to all NMLS-Approved course providers.
WHEREAS, in late 2020, MTEB obtained information concerning suspicious activity and that information identified a possible MLO education cheating scheme coordinated by and implemented through Danny Yen, d/b/a Real Estate Educational Services, an NMLS-Approved course provider that is assigned an NMLS-Approved course provider identifier number of 1405046 (“REES”). Based on that information, and pursuant to the AAP, the Investigative Review Committee (“IRC”) approved opening and pursuing an investigation into this matter.
WHEREAS, SRR’s IRC issued a memorandum report on its investigation into the REES coordinated MLO education fraud scheme. The IRC found that REES fraudulently provided course credit to MLOs who had never attended and completed REES’s eight-hour in-person CE course in Westminster, California (the “In-person Education Scheme”). The IRC also found that REES helped MLOs cheat on online PE and/or CE courses by taking those courses on behalf of those MLOs (the “Online Education Scheme”). In each of the schemes orchestrated by REES, the MLOs accepted credit for SAFE-Act-required education courses that they had either not taken or completed on their own behalf in violation of the ROC, and state and federal law (collectively, the “MLO Education Schemes”).
WHEREAS, based on the initial findings of the IRC, pursuant to the CSBS/AARMR Protocol and Agreement this matter was referred from the IRC for further investigation and possible enforcement action, and to which the CSBS Non-Depository Supervisory Committee authorized the creation of a regulator taskforce to coordinate the multi-state investigation and enforcement activity in this matter (“REES Regulatory Taskforce”). Specifically, the REES Regulatory Taskforce adopted the work of the IRC investigation and engaged in additional investigatory work that included a demand from Respondent for a statement in writing under oath as to all the facts and circumstances concerning the MLO Education Schemes coordinated by and implemented through REES. WHEREAS, as a result of the REES Regulatory Taskforce investigation as it pertains to Respondent, the following relevant facts and determinations were made, including, but not limited to:
1) That Respondent admitted being a knowing and active participant in the MLO Education Schemes coordinated by and implemented through REES;
2) That Respondent in fact had PE and/or CE requirements completed by REES on Respondent’s behalf in violation of federal and state law. Specifically, that Respondent had 42 PE and/or CE completed by REES on Respondent’s behalf under the In-person Education Scheme and 26 PE and/or CE completed by REES on Respondent’s behalf under the Online Education Scheme;
3) That by participating in the MLO Education Scheme coordinated by and implemented through REES, Respondent had in fact violated the ROC; and
4) That by participating in the MLO Education Scheme coordinated by and implemented through REES, Respondent violated state and federal laws concerning competing certain PE and/or CE requirements as a mandatory qualification for licensure.
WHEREAS, Respondent enters into this Agreement solely for the purpose of resolving disputes with the State Mortgage Regulators, including concerning the conduct described in this Agreement, and does not admit to or deny any wrongdoing, allegations or implications of fact and does not admit to or deny any violations of applicable laws, regulations and/or rules governing the conduct described herein. Respondent acknowledges that the State Mortgage Regulators have and maintain jurisdiction over the underlying dispute, including all matters referred to in these recitals, and therefore have the authority to fully resolve the matter.
WHEREAS, Respondent represents to the State Mortgage Regulators that Respondent will comply with Respondent’s obligations under this Agreement, and that Respondent will hereafter continue to comply with all regulatory requirements imposed by each State Mortgage Regulator.
WHEREAS, Respondent acknowledges that the State Mortgage Regulators are relying, in part, upon Respondent’s representations and warranties stated herein in making their determinations in this matter. Respondent further acknowledges that this Agreement may be revoked and the State Mortgage Regulators may pursue any and all remedies available under the law against Respondent if the State Mortgage Regulators later find that Respondent knowingly or willfully withheld information from the State Mortgage Regulators.
WHEREAS, the State Mortgage Regulators have legal authority to initiate administrative actions based on the conduct identified by the REES Regulatory Taskforce investigation as described in herein.
WHEREAS, the intention of the State Mortgage Regulators in effecting this settlement is to fully resolve the violations and misconduct described herein pertaining to Respondent’s participation in the MLO Education Scheme coordinated by and implemented through REES. The State Mortgage Regulators reserve all of their rights, duties, and authority to enforce all statutes, rules, and regulations under their respective jurisdictions against Respondent regarding any mortgage loan origination activities outside the scope of this Agreement. Additionally, a State Mortgage Regulator may consider this Agreement and the facts set forth herein in connection with, and in deciding, any action, or proceeding under the jurisdiction of that State Mortgage Regulator, if the basis of such action, or proceeding is not a direct result of the specific activity identified herein; and that this Agreement may, if relevant to such action or proceeding, be admitted into evidence in any matter before a State Mortgage Regulator.
WHEREAS, Respondent hereby knowingly, willingly, voluntarily, and irrevocably consents to the entry of this Order, which is being entered pursuant to the authority vested in each State Mortgage Regulator and agrees that Respondent understands all of the terms and conditions contained herein. Respondent acknowledges that Respondent has full knowledge of Respondent’s rights to notice and a hearing pursuant to the laws of the respective Participating States. By voluntarily entering into this Agreement, Respondent waives any right to notice and a hearing, and review of such hearing, and also herein waives all rights to any other judicial appeal concerning the terms, conditions, and related obligations set forth in this Agreement. Respondent further acknowledges that Respondent has had an opportunity to consult with independent legal counsel in connection with Respondent’s waiver of rights and with the negotiation and execution of this Agreement, and that Respondent has either consulted with independent legal counsel or has knowingly elected not to do so.
NOW, THEREFORE, this Agreement having been negotiated by the Parties in order to resolve the issues identified herein, without incurring the costs, inconvenience and delays associated with protracted administrative and judicial proceedings, it is by the State Mortgage Regulators listed below hereby ORDERED: