Consent Order  Direct Finance Corp.

Date:	11/30/2012
Organization:	Division of Banks
Docket Number:	2012-029
Location:	Norwell, MA

Direct Finance Corp., Norwell, MA - Consent Order

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2012-029

CONSENT ORDER

In the Matter of 
DIRECT FINANCE CORP
Mortgage Broker License No(s).: MB1535 et al.

WHEREAS, DIRECT FINANCE CORP., Norwell, Massachusetts ("Direct Finance" or the "Corporation"), a licensed mortgage broker under Massachusetts General Laws chapter 255E, section 2, has entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (Consent Agreement) with representatives of the Division of Banks (Division) dated November 30, 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 broker, Direct Finance agrees to the issuance of this CONSENT ORDER (Consent Order) by the Commissioner of Banks (Commissioner);

WHEREAS, as a result of the findings from the examination conducted by the Division as of February 19, 2009 Direct Finance and the Commissioner entered into a Memorandum of Understanding (the 2009 Memorandum);

WHEREAS, a subsequent examination of Direct Finance was conducted pursuant to General Laws chapter 255E, section 8, as of April 17, 2012, to assess the Corporation's level of compliance with applicable Massachusetts and federal statutes and regulations governing the conduct of those engaged in the business of a mortgage broker in the Commonwealth, as well as to assess the Corporation's compliance with the 2009 Memorandum;

WHEREAS, the Report of Examination/Inspection (the Report) issued pursuant to the Division's 2012 examination of Direct Finance 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, as well as alleged non-compliance with the 2009 Memorandum;

WHEREAS, by mutual agreement of the Corporation and the Division, the 2009 Memorandum is hereby superseded and replaced by this Consent Order; and

WHEREAS, the parties now seek to resolve by mutual agreement, the matters identified in the Report.
 

ORDER

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

1. Direct Finance must establish, implement, and maintain revised policies and procedures that will ensure adequate supervision and monitoring of all personnel acting on Direct Finance's behalf, including, but not limited to, supervision and oversight of all activity conducted by personnel at Massachusetts licensed branch locations and/or off-site. Such procedures must ensure that personnel are complying with all policies, programs, and procedures adopted pursuant to the provisions of this Consent Order.
    
2. Direct Finance must 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 Nationwide Multi-State Licensing System & Registry (NMLS) by Direct Finance.
    
   1. Direct Finance agrees to submit a payment in the amount of twenty two thousand dollars ($22,000.00) in satisfaction of an administrative penalty collected in consideration of this settlement of the Division's findings that the Corporation conducted 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. Direct Finance 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 Division of Banks, Attn: Mortgage Broker Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
       
3. Direct Finance must establish and implement procedures to maintain all loan files in the Corporation'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 require that the Corporation properly documents the initial date of application and ensures that all disclosures are properly dated and maintained in a manner that will allow the Commissioner to determine whether time-sensitive documents are being provided to consumers within the mandated timing requirements.
    
4. Direct Finance must establish, implement, and maintain procedures to ensure that the Corporation refrains from providing any consumer 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 including, without limitation, the disclosures identified in the Report.
    
   1. The provisions of this Section of the Memorandum shall necessarily prohibit Direct Finance from issuing statements of reasons of credit denial, termination, or change.
       
5. Direct Finance must establish, implement, and maintain procedures to ensure that all consumers receive a loan origination and compensation agreement that strictly conforms to the content and format as set forth in the Division's regulation 209 CMR 42.16 and that the Corporation accurately discloses its Massachusetts mortgage broker license therein. For each consumer loan file, a completed copy of the loan origination and compensation agreement must be retained in the Corporation's books and records, as provided in 209 CMR 42.09(1)(b).
    
6. Direct Finance must revise its website(s) to ensure that the Corporation accurately discloses its license type and number therein in accordance with the Division's regulation 209 CMR 42.15 and the Attorney General's regulation 940 CMR 8.04(2).
    
7. Direct Finance must comply with all laws and regulations applicable to its 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 20 days of receipt of the Report, all violations and areas of concern addressed in the Report.
   
    
   1. Within 20 days of Direct Finance'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 Direct Finance 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.
       
   2. Within thirty days of the effective date of this Consent Order, Direct Finance shall establish, implement, and maintain quality control standards which provide for a loan review process to assess the Corporation's compliance with: (i) 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 (ii) the provisions of this Consent Order; and
       
   3. Direct Finance 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.
       
8. On the thirtieth day after the end of each calendar quarter following the date of this Consent Order, Direct Finance 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 Order and the results thereof; and
       
   2. Written findings prepared by Direct Finance 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 Direct Finance's compliance condition in Massachusetts, and the results thereof.
       
9. The reporting requirement to the Division referenced in Section 8 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.
    
10. Nothing in this Consent Order shall be construed as permitting Direct Finance to violate any law, rule, regulation, or regulatory bulletin to which Direct Finance is subject.
     
11. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Direct Finance's mortgage broker license(s) under Massachusetts General Laws chapter 255E, section 6, while this Consent Order is in effect.
     
12. Direct Finance agrees that, if it fails to comply with the terms of this Consent Order, as determined by the Commissioner, the Division may institute proceedings for license revocation or other regulatory action under General Laws chapter 255E, section 6 and the Division's regulation, 209 CMR 42.00, et seq.
     
13. This Consent Order shall become effective immediately upon the date of its issuance.
     
14. Direct Finance agrees that, in the event that the Corporation fails to submit the payment set forth in this Consent Order in the amount specified herein and in accordance with the applicable deadlines, the Division shall be authorized to submit a claim for such amount against the mortgage broker Massachusetts surety bond maintained by Direct Finance pursuant to the Division's regulation 209 42.06(2)(a).
     
15. 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 order of a court of competent jurisdiction.
     
16. 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 Direct Finance.
     
17. For good cause shown, the Division may extend any of the deadlines set forth in the provisions of this Consent Order upon written request by Direct Finance that describes the reason(s) in support of any extension.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this day of November 30, 2012.

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

THIS CONSENT ORDER WAS TERMINATED PURSUANT TO A CONSENT ORDER DATED JUNE 2, 2015, DOCKET NO. 2015-07.