Consent Order  Drew Mortgage Associates, Inc.

Date:	01/20/2012
Organization:	Division of Banks
Docket Number:	2011-015
Location:	Shrewsbury, MA

Drew Mortgage Associates, Inc., Shrewsbury, MA - Consent Order

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2011-015

CONSENT ORDER

In the Matter of
DREW MORTGAGE ASSOCIATES, INC.
Shrewsbury, MA

Mortgage Company License No. MC2856

WHEREAS, DREW MORTGAGE ASSOCIATES, INC., ("Drew Mortgage" 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 ORDER ("Consent Agreement") with representatives of the Division of Banks ("Division") dated January 20, 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, Drew Mortgage agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of Drew Mortgage was conducted pursuant to General Laws chapter 255E, section 8, as of August 11, 2010, 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 Drew Mortgage as of August 11, 2010 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.

ORDER

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

1. Drew Mortgage will prevent any individual from engaging in the activities of a Mortgage Loan Originator, as that term is defined under Massachusetts General Laws chapter 255F, section 1, on Drew Mortgage’s behalf who is not duly licensed as a mortgage loan originator under M.G.L. chapter 255F and properly sponsored by Drew Mortgage through the Nationwide Mortgage Licensing System ("NMLS").
   1. Drew Mortgage must establish, implement and maintain procedures to ensure that all mortgage loan originators with whom the Corporation conducts business are properly licensed as mortgage loan originators under Massachusetts General Laws chapter 255F, and properly sponsored through the Nationwide Mortgage Licensing System by Drew Mortgage.
   2. Drew Mortgage agrees to submit a payment in the amount of thirty six thousand dollars ($36,000.00) in satisfaction of an administrative penalty collected in consideration of the Corporation’s conducting business with mortgage loan originators who either did not hold an active mortgage loan originator license or were not sponsored by the Corporation. The administrative penalty shall be satisfied as follows:
   3. Seven thousand two hundred dollars ($7,200.00) shall be due and payable immediately upon Drew Mortgage’s execution of the Consent Agreement;
   4. A payment of seven thousand two hundred dollars ($7,200.00) shall be due and payable by the last day of each subsequent month continuing for an additional four months until the penalty of thirty six thousand dollars ($36,000.00) has been paid in full; and
   5. Drew Mortgage shall remit payment(s) pursuant to this Section of the Consent Order for the amount then due, payable to the "Commonwealth of Massachusetts," to the Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118-6400.
2. Drew Mortgage must establish, implement, and maintain procedures to ensure that all loan fees, points, or similar fees collected by the Corporation in a mortgage transaction involving residential property located in the Commonwealth are not charged to consumers except to the extent that such loan fees or points have been properly disclosed to the consumers by the Corporation, in writing, prior to the closing of the mortgage loan in accordance with Massachusetts General Laws chapter 183, section 63.
   1. The Corporation must reimburse the consumer identified in the Report for the amount collected as an escrow waiver fee at settlement that had not been disclosed to the consumer, in writing, prior to loan closing. The amount of such reimbursement must equal the difference between the actual charge assessed to the consumer and the amount disclosed in writing for such fee prior to loan closing; and
   2. With the executed copy of the Consent Agreement, the Corporation must submit evidence of the reimbursement issued pursuant to this Section of the Consent Order. Evidence of the reimbursement must include the consumer’s name, the date the loan closed, the check number, the amount of the reimbursement, and certified mail receipt to illustrate the consumer’s receipt of the reimbursement.
3. Drew Mortgage must establish, implement, and maintain procedures to ensure that the Corporation refrains from collecting compensation from consumers (i) in consideration of services which the Corporation, when acting as a mortgage broker, is prohibited from performing in a mortgage loan transaction or (ii) where no or only nominal service is provided by the Corporation.
   1. The Corporation must reimburse the consumer identified in the Report from whom a escrow waiver fee was collected; and
   2. With the executed copy of the Consent Agreement, the Corporation must submit evidence of the reimbursement issued pursuant to this Section of the Consent Order. Evidence of the reimbursement must include the consumer’s name, the date the loan closed, the check number, the amount of the reimbursement, and a certified mail receipt to illustrate the consumer’s receipt of the reimbursement.
4. Drew Mortgage must cease engaging directly or indirectly in the business of a mortgage lender or 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, section 2.
   1. Drew Mortgage agrees to submit a payment in the amount of five hundred dollars ($500.00) in satisfaction of an administrative penalty collected in consideration of the Corporation’s originating one residential mortgage loan at an unlicensed location. Drew Mortgage must remit payment in full of the amount indicated above, along with the executed copy of the Consent Agreement, payable to the "Commonwealth of Massachusetts," to the Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington St., 10^th Floor, Boston, Massachusetts 02118-6400.
5. With its written response to the Report, Drew Mortgage shall submit: updated financial statements, including a balance sheet and interim income statement prepared as of February 28, 2011, and 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 Drew Mortgage’s operating performance and enhance capital formation;
      2. realistic and comprehensive budgets;
      3. a budget review process to monitor the income and expenses of Drew Mortgage 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 Directors’ 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 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 which have been signed by a duly authorized officer of Drew Mortgage with sufficient knowledge to attest to the information reported in the financial statements.
6. Drew Mortgage must establish and implement procedures to ensure that within forty-five (45) days after the end of each calendar quarter following the effective date of this Consent Order, the Corporation timely files its completed quarterly NMLS Call Report.
7. Drew Mortgage must establish, implement, and maintain procedures to ensure that, when the Corporation is acting in the capacity of a mortgage lender, all applicants whose residential mortgage loan applications are denied receive a Mortgage Review Board Disclosure Form notifying them that they may appeal such denial to the review board, pursuant to Massachusetts General Laws chapter 167, section 14A. For each consumer loan file, the Corporation must retain a completed copy of the Mortgage Review Board Disclosure Form in its books and records as evidence of compliance.
8. Drew Mortgage must 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 must necessarily require that the Corporation implement internal controls to ensure that, for all HMDA reportable loan applications, Drew Mortgage accurately compiles and records all required data in the Corporation’s HMDA Loan Application Register ("LAR").
   1. Drew Mortgage must 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 must necessarily ensure the proper implementation and execution of the revised practices and procedures adopted by Drew Mortgage pursuant to this Section of the Consent Order.
9. Drew Mortgage must establish, implement, and maintain procedures to ensure that all consumers receive a Notice of Privacy Policies and Practices disclosure in accordance with, and in the form required by, the Federal Trade Commission’s Regulation 16 CFR 313. For each consumer loan file, a copy of the Notice of Privacy Policies and Practices disclosure must be retained in the Corporation’s books and records as evidence of compliance.
10. Drew Mortgage must establish, implement, and maintain procedures to ensure that, when the Corporation is acting in the capacity of a mortgage broker, all consumers receive a loan origination and compensation agreement in accordance with the provisions of the Division’s regulation 209 CMR 42.16. 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).
11. Drew Mortgage must establish, implement, and maintain procedures to ensure that, when acting 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.
12. Drew Mortgage must revise its "Borrowers’ Certification and Authorization" form to eliminate any representation or statement that could be considered false, misleading, or have the tendency to be misleading, including, but not limited to, any representation that the Corporation is approving or funding the loan when it is acting in the capacity of a mortgage broker.
13. Drew Mortgage must review and revise as necessary all advertisements, including but not limited to electronic signage, to ensure that, where applicable, all such advertisements include the additional disclosures required under the Division’s regulations 209 CMR 32.24(4).
14. Drew Mortgage must review and revise all advertisements, and implement corrective action to ensure that the Corporation’s license type and number are disclosed in all advertisements in accordance with the Division’s regulation 209 CMR 42.15 and the Attorney General’s regulation 940 CMR 8.04(2).
15. Drew Mortgage must 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 twenty (20) days of receipt of the Report, all violations and areas of concern addressed in the Report.
    1. Within twenty (20) days of Drew Mortgage’s receipt of the Report, the Corporation must submit to the Commissioner a written response that addresses each of the violations and areas of concern specified in the Report. The written response must describe the revised policies and procedures adopted by Drew 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 Consent Order;
    2. Within thirty (30) days from the effective date of this Consent Order, Drew Mortgage must 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 must be designed to prevent the recurrence of the violations addressed in the Report; and
    3. Drew Mortgage must 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.
16. On the thirtieth (30^th) day after the end of each calendar quarter following the date of this Consent Order, Drew Mortgage must furnish written progress reports to the Division, which must 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 Drew Mortgage 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 Drew Mortgage’s compliance condition in Massachusetts and the results thereof.
17. The reporting requirement to the Division referenced in Section 15 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.
18. Drew Mortgage agrees that, in the event that the Corporation fails to submit the payments set forth in this Consent Order 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 Drew Mortgage pursuant to the Division’s regulations 209 CMR 42.03(2)(a) and 209 CMR 42.06(2)(a).
19. Nothing in this Consent Order shall be construed as permitting Drew Mortgage to violate any law, rule, regulation, or regulatory bulletin to which Drew Mortgage is subject.
20. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Drew Mortgage’s mortgage lender and mortgage broker licenses under General Laws chapter 255E, section 6, while this Consent Order is in effect.
21. 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.
22. This Consent Order shall become effective immediately upon the date of its issuance.
23. 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.
24. This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements, promises, representations, or warranties between the Division and Drew Mortgage.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 20th day of January, 2012

By:
David J. Cotney
Commissioner of Banks