Related to:
Consent Order

Consent Order First World Mortgage Corporation

Date: 01/06/2011
Organization: Division of Banks
Docket Number: 2010-376
Location: West Hartford, CT

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2010-376

CONSENT ORDER

In the Matter of
FIRST WORLD MORTGAGE CORPORATION

West Hartford, Connecticut

Mortgage Broker License No. MB1120

WHEREAS, FIRST WORLD MORTGAGE CORPORATION, West Hartford, Connecticut ("First World Mortgage" or the "Corporation"), 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 January 6, 2011, 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, First World Mortgage agrees to the issuance of this CONSENT ORDER ("Consent Order") by the Commissioner of Banks ("Commissioner");

WHEREAS, an examination/inspection of First World Mortgage was commenced pursuant to General Laws chapter 255E, section 8, as of December 26, 2008, 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 broker in the Commonwealth; and

WHEREAS, the Report of Examination/Inspection (the "Report") issued pursuant to the Division’s examination/inspection of First World Mortgage as of December 26, 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 First World Mortgage, and stipulate and agree as follows:

  1. First World Mortgage shall establish, implement and maintain procedures to ensure that the Corporation maintains and uses all loan documents 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 Massachusetts General Laws, chapter 255E, section 8, and the Division’s regulations 209 CMR 42.09 and 209 CMR 48.03.
    1. First World Mortgage shall establish and implement procedures to ensure that the Corporation is capable of compiling and generating an accurate loan application list of pending and closed residential mortgage loans processed by the Corporation. The loan list so generated shall contain information including, but not limited to, the date of application, loan amount requested, property address, loan program requested, application status, the name of the licensed mortgage loan originator, and the name of lender.
    2. First World Mortgage shall establish, implement, and maintain procedures to ensure the full cooperation of First World Mortgage employees with the Division during all future examinations of the Corporation, which shall necessarily provide for complete and timely access to its books, records, accounts, and any other additional, relevant materials, as required pursuant to the provisions of Massachusetts General Laws chapter 255E, section 8.
  2. The Licensee shall submit a payment of five thousand dollars ($5,000) in satisfaction of an administrative penalty collected in consideration of First World Mortgage’s failure to properly retain documents and records as required by 209 CMR 42.09. First World Mortgage 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, Attention: Mortgage Broker Exam Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118-2218. The Division shall remit the payment for deposit into the General Fund of the Commonwealth.
  3. First World Mortgage shall establish, implement, and maintain quality control procedures regarding the placement of loan applications into alternative documentation loan programs (stated income; no income, no asset verification; no income verification; no ratio loans; low and no documentation loans; etc.) to ensure proper application completion procedures; verification and due diligence procedures; and books and records retention in compliance with applicable state and federal laws, regulations, and regulatory bulletins governing the conduct and operation of those engaged in the business of a mortgage broker in Massachusetts.
    1. Compliance with this Section of the Consent Order shall require that First World Mortgage review the Division’s Regulatory Bulletin 5.1-103: Guidance on Non-Traditional Mortgage Product Risks, the Division’s September 2006 Industry Letter, and the Division’s Regulatory Bulletin 5.1-104: Statement on Subprime Mortgage Lending and implement appropriate procedures to ensure compliance therewith.
  4. First World Mortgage shall establish, implement, and maintain procedures to ensure that all broker fees, loan fees, points, or similar fees collected by the Corporation as compensation for administrative costs incurred in originating the mortgage loan are not charged to consumers except to the extent that such 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 shall reimburse the consumer identified in the Report for the full amount collected as a loan origination fee at settlement that had not been disclosed to the consumer, in writing, prior to loan closing. With its written response to the Report, the Corporation shall submit evidence of the reimbursement issued pursuant to this Section of the Consent Order. Evidence of the reimbursement shall 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.
  5. First World Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation refrains from collecting compensation from consumers (i) in consideration of services which the Corporation, as a mortgage broker, is prohibited from performing in a mortgage loan transaction or (ii) where no, or only a nominal, service is provided by the Corporation.
    1. The Corporation shall reimburse the consumers identified in the Report from whom a discount fee, commitment fee and rate lock extension were collected; and
    2. The Corporation shall conduct a review of all Massachusetts residential mortgage loans processed by the Corporation since December 26, 2005, and shall reimburse all consumers from whom any unearned fees were collected (i) in consideration of services which the Corporation, as a mortgage broker, is prohibited from performing in a mortgage loan transaction or (ii) where no, or only a nominal, service was provided by the Corporation. The amount of such reimbursements shall equal the total amount of the unearned fees collected; and
    3. With its written response to the Report, the Corporation shall submit evidence of all reimbursements issued pursuant to this Section of the Consent Order. Evidence of the reimbursements shall include the consumers’ names, the dates the loans closed, the check numbers, the amount of the reimbursements, and certified mail receipts to illustrate the consumers’ receipt of the reimbursements.
  6. First World Mortgage shall establish, implement, and maintain procedures to ensure that 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.
    1. The provisions of this Section of the Consent Order shall necessarily prohibit First World Mortgage from issuing the "Massachusetts Compliance Worksheet on Borrower’s Interest" or any other such similar documentation indicating that a home loan is in a borrower’s interest pursuant to the Division’s regulation 209 CMR 53.07. It is understood that when the Corporation brokers a loan subject to the Division’s regulations regarding a lender’s determination and documentation of borrower’s interest, First World Mortgage is not permitted to make an affirmative determination that a home loan is in the borrower's interest nor assign the responsibility for making this determination to the borrower. However, the Corporation may request information from a borrower on behalf of the lender or transmit information to the borrower on behalf of the lender.
    2. The Corporation shall issue a written notification to each mortgage lender who has received the "Massachusetts Compliance Worksheet on Borrower’s Interest" from the Corporation. Said written notification shall be in conformance with the requirements set forth in the Report. The Corporation shall retain a copy of each notification in the Corporation’s books and records until such time as the Division conducts its next Examination/Inspection.
  7. First World Mortgage shall 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, a licensed mortgage broker, is approving or funding the loan.
  8. First World Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation refrains from providing out-of-state disclosures to consumers in a Massachusetts residential mortgage loan transaction.
  9. First World Mortgage shall revise its website to include the Corporation’s license type and number, in accordance with the Division’s regulation 209 CMR 42.15 and the Attorney General’s regulation 940 CMR 8.04(2).
  10. First World 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 First World Mortgage’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 First World 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, First World Mortgage 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 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
    3. First World 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 Consent Order.
  11. On the thirtieth (30th) day after the end of each calendar quarter following the date of this Consent Order, First World 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 Consent Order and the results thereof; and
    2. Written findings prepared by First World 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 First World Mortgage’s compliance condition in Massachusetts and the results thereof.
  12. The reporting requirement to the Division referenced in Section 11 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.
  13. First World Mortgage agrees that, in the event that the Corporation fails to submit any payment(s) 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 amount(s) against the mortgage broker Massachusetts surety bond maintained by First Ohio pursuant to the Division’s regulations 209 CMR 42.06(2)(a).
  14. Nothing in this Consent Order shall be construed as permitting First World Mortgage to violate any law, rule, regulation, or regulatory bulletin to which First World Mortgage is subject.
  15. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke First World Mortgage’s mortgage broker license(s) under General Laws chapter 255E, section 6, while this Consent Order is in effect.
  16. 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.
  17. This Consent Order shall become effective immediately upon the date of its issuance.
  18. 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.
  19. 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 First World Mortgage.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 6th day of January, 2011

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

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