Consent Order  Freedom Mortgage Corporation

Date:	09/21/2016
Organization:	Division of Banks
Docket Number:	2016-004
Location:	Mount Laurel, NJ

Commonwealth of Massachusetts
Suffolk, SS.
Commissioner of Banks
Mortgage Lender Licensing
Docket Number 2016-004

In the matter of
Freedom Mortgage Corporation
Mt. Laurel, New Jersey
Mortgage Company License Number MC2767

WHEREAS, FREEDOM MORTGAGE CORPORATION, Mt. Laurel, New Jersey (Freedom 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, enters into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (Consent Agreement) with representatives of the Division of Banks (Division) dated
September 21, 2016, 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 Massachusetts or federal laws and regulations governing the conduct and operation of a mortgage lender and mortgage broker, Freedom Mortgage agrees to the issuance of this CONSENT ORDER (Consent Order) by the Commissioner of Banks (Commissioner);

WHEREAS, as of October 20, 2015, the Division commenced a Mortgage Lender Community Investment examination and a Compliance examination (2015 Examination) of Freedom Mortgage pursuant to General Laws chapter 255E, section 8, to assess the Corporations’s level of compliance with applicable Massachusetts and federal statutes and regulations governing the conduct of those engaged in the business of a mortgage lender and mortgage broker in the Commonwealth;

WHEREAS, the Report of Examination (Report) issued pursuant to the Division’s 2015 Examination of Freedom Mortgage as of October 20, 2015, alleged non-compliance with applicable Massachusetts and federal statutes, rules, and regulations governing the conduct and licensing of those engaged in the business of a mortgage lender, mortgage broker, and mortgage loan servicer, in Massachusetts; 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 Freedom Mortgage, and stipulate and agree as follows:

1. Freedom Mortgage agrees to submit a payment in the amount of two million dollars ($2,000,000.00) in satisfaction of an administrative penalty.  Upon execution of this Consent Agreement, Freedom Mortgage shall remit payment in full of the amount indicated above, payable to the “Commonwealth of Massachusetts” with “Division of Banks Mortgage Loan Settlement Trust” in the memo line to the Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10^th Floor, Boston, Massachusetts 02118.
2. Within forty five (45) days of the effective date of this Consent Order, Freedom Mortgage shall submit an internal control plan (Plan) to the Division which sets forth at a minimum policies and procedures to:
   1. Ensure that Freedom Mortgage’s compliance department is managed by qualified managers who shall have responsibility for all consumer compliance and related matters, including, but not limited to, monitoring the Corporation's compliance and ensuring that corrective action is taken to address all compliance violations set forth in the Report;
   2. Provide for adequate training to applicable staff persons, conducted by qualified and trained personnel, which includes, but is not limited to, proper instruction, adequate supervision and ongoing training to ensure proper implementation and execution of the new or revised policies and procedures implemented pursuant to this Consent Order;
   3. Identify the type and number of senior management and officer personnel necessary to manage adequately and supervise properly the Corporation's business activity and the compliance department; ensure that each individual identified possesses the ability, experience, and other qualifications necessary to competently perform present and anticipated duties and follow and enforce Freedom Mortgage’s revised policies and procedures and administer the Plan adopted pursuant to this Consent Order; and confirm the level of staffing needed to conduct competently the Corporation's operations affecting Massachusetts consumers;
   4. Develop, implement, and maintain policies and procedures to ensure Freedom Mortgage does not engage in any unlicensed activity for any business activity regulated by the Division, prior to obtaining the appropriate approval from the Commissioner of Banks; and
   5. Develop and implement additional internal controls over its mortgage lender, mortgage broker, and mortgage servicing business, including revising its policies and procedures to comply with applicable Massachusetts and federal laws, regulations, and regulatory bulletins.
3. Within thirty (30) days of the effective date of this Consent Order, Freedom Mortgage shall identify an independent auditing firm (Auditing Firm) which, at Freedom Mortgage’s expense, will conduct a review of the Corporation’s Massachusetts mortgage loan servicing portfolio from and after July 1, 2014. Freedom Mortgage shall obtain  prior written approval from the Division of the Auditing Firm  proposed by the  Corporation  for such engagement before such engagement  and review is initiated (the date such approval is issued referred to hereinafter as the “Approval  Date”).  Within thirty (30) days of the Approval Date, Freedom Mortgage shall engage the Auditing Firm and the Auditing Firm’s review shall commence (such commencement date referred to hereinafter as the “Review Commencement Date”).
   1. The scope of the Auditing Firm’s review shall include, but shall not be limited to, the following: assessing compliance with Massachusetts and federal laws and regulations including, without limitation,  the adequacy of borrower verification and due diligence procedures; and assessing the adequacy of Freedom Mortgage’s policies, procedures and internal controls relative to Freedom Mortgage’s Massachusetts mortgage loan servicing portfolio, with respect to each of the above requirements.
   2. The Auditing Firm shall prepare and submit to the Division and Freedom Mortgage a written report detailing the auditor’s findings (Audit Report) within ninety (90) days of the Review Commencement Date. 
   3. The Auditing Firm shall continue to review loan transactions for a period of time of twenty four (24) months from the Review Commencement Date.  The Auditing Firm’s engagement letter shall set forth a reasonable and acceptable sampling procedure which will be applied to complete the review for the referenced review period; it being understood that the Auditing Firm shall agree to prepare and submit a quarterly report to the Division and Freedom Mortgage describing any violations of law observed during the preceding quarter.
   4. Freedom Mortgage may submit a written request to the Division to amend the provisions of Section 3(c) of this Consent Order no earlier than twelve (12) months after the Review Commencement Date, based on the findings of the Audit Report completed pursuant to Section 3(b) and the quarterly reports submitted pursuant to Section 3(c).  The Division shall have sole discretion, based on its review of such request, to determine whether to modify the review provided for in Section 3(c) in whole or in part.
4. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall establish, implement, and maintain  policies and procedures to ensure that the Corporation does not collect or assess late charges in excess of the amounts permitted under Massachusetts General Laws chapter 183, section 59 and Massachusetts General Laws chapter 140 section 114B; or in excess of the maximum amount set forth in the loan agreement, if such amount is less than the maximum allowed under Massachusetts law.
   1. Within thirty (30) days of the effective date of this Consent Order, Freedom Mortgage shall reimburse the consumers referenced in the Report for the late charges that were collected or assessed in excess of the amount permitted under Massachusetts law; or in excess of the amount set forth in the loan agreement, if less than the maximum allowed under Massachusetts law;
   2. Within sixty (60) days of the effective date of this Consent Order, Freedom Mortgage shall conduct a review of all Massachusetts loans closed or serviced by the Corporation from January 1, 2013 through the effective date of this Consent Order. Freedom Mortgage shall identify and reimburse all Massachusetts consumers from whom the Corporation collected, or who were assessed, late charges in excess of the amount permitted under Massachusetts law, or in excess of the amount set forth in the loan agreement, if less than the maximum allowed under Massachusetts law;
   3. Within ninety (90) days of the effective date of this Consent Order, Freedom Mortgage shall submit to the Division evidence of all consumer reimbursements issued under Section 4(a) and Section 4(b), in the manner described in the Report and this Section ;
   4. Any reimbursement payments mailed to a borrower shall be mailed to the borrower’s last known address in the Corporation’s records or, if the address is invalid, to the address set forth for such borrower in the U. S. Postal Service national change of address database (NCOA Database);
5. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall establish, implement, and maintain new or revised policies and 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 by Freedom Mortgage through the Nationwide Mortgage Licensing System and Registry (NMLS).  Freedom Mortgage shall submit a payment in the amount of six thousand dollars ($6,000.00) in satisfaction of an administrative penalty collected in consideration of the Corporation’s conducting business with a mortgage loan originator who did not hold an active mortgage loan originator license.   Upon execution of this Consent Agreement, Freedom Mortgage shall remit payment in full of the amount indicated above, payable to the “Commonwealth of Massachusetts,” to the Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
6. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall establish and maintain appropriate new or revised policies and procedures for the monitoring and oversight of its settlement agents and/or closing attorneys to ensure that no duplicate discharge/release recording fees are collected from Massachusetts borrowers, and shall thereafter fully implement such policies and procedures.
   1. Freedom Mortgage shall reimburse the borrowers identified in the Report for the duplicate discharge/release fees that Freedom Mortgage or Freedom Mortgage’s settlement agents and/or closing attorneys collected and retained. Freedom Mortgage shall provide evidence to the Division of the refunds paid to the consumers, in the manner described in the Report.
   2. Within ninety (90) days of the effective date of this Consent Order, Freedom Mortgage shall submit to the Division evidence of all consumer reimbursements issued under Section 6(a) of this Consent Order in the manner described in the Report and in this Section which may also include servicing system print screens evidencing reimbursement to the borrower.
   3. Any reimbursement payments mailed to a borrower shall be mailed to the borrower’s last known address in the Corporation’s records or, if the address is invalid, to the address set forth for such borrower in the NCOA Database.
7. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall revise its anti-money laundering (AML) program to incorporate all required elements set forth in the Financial Crimes Enforcement Network’s (FinCEN) regulation 31 CFR 1029.210; and the Corporation shall ensure that the AML program is fully implemented in accordance with its provisions.
8. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall establish and maintain new or revised policies and procedures to comply with the attorney representation disclosure requirements specified in Massachusetts General Laws chapter 184, section 17B, and thereafter shall fully implement such policies and procedures.
9. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall establish, implement, and maintain new or revised policies and procedures to ensure that the Corporation is in compliance with the Division’s regulation at 209 CMR 53.00 et seq., regarding determination and documentation of a borrower’s interest when refinancing a home loan consummated within sixty (60) months of the Corporation’s receipt of an application for the loan.  Such policies and procedures  shall ensure that the burden is upon Freedom Mortgage, exclusively, to determine that refinancing is in the borrower’s interest.
   1. Freedom Mortgage shall ensure that the worksheet or other document used for the purpose of indicating that a refinance loan is in the borrower’s interest shall be completed by the Corporation and does not, in any manner, shift the burden to the borrower to determine and to demonstrate that the home loan is in the borrower’s interest.
10. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall establish and maintain new or revised policies and procedures to ensure that the Corporation discloses its license type and number to all Massachusetts residential mortgage loan applicants in writing at the time a fee is paid or a mortgage loan application is accepted pursuant to the Division’s regulation 209 CMR 42.15, and shall thereafter fully implement such policies and procedures.
11. Freedom Mortgage shall establish, implement, and maintain policies and procedures to ensure that the Corporation accurately completes and discloses all information required in the Corporation’s NMLS filings, including but not limited to disclosure of any affiliates/subsidiaries.
12. Freedom Mortgage shall establish, implement, and maintain policies and procedures to ensure that the Corporation notifies the Division, in writing, within one business day of receiving notification of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action by any other regulatory authority against the Corporation in accordance with the Division’s regulation 209 CMR 42.12(1)(c). Compliance with this Section of the Consent Order also requires Freedom Mortgage to update the regulatory action section of the NMLS.
13. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall establish and maintain new or revised policies and procedures to ensure the timely submission of all reports required by law within their required filing timeframes, which include but are not limited to the NMLS Mortgage Call Reports and the Annual Report to the Commissioner, and shall thereafter fully implement such policies and procedures.
14. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall establish and maintain new or revised policies and procedures to ensure that the Corporation’s advertisements, including its website are in compliance with Massachusetts laws and regulations, and shall thereafter fully implement such policies and procedures.
    1. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall review and revise its website to ensure that the Corporation updates information regarding the Corporation’s fair lending policy, including but not limited to, accurately disclosing all information relative to protected classes in accordance with Massachusetts General Laws chapter 151B, section 4(3B).
15. Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage shall review and revise all advertisements as necessary to ensure that the Corporation discloses its license type and number in compliance with the Division’s regulation 209 CMR 42.15. Within ninety (90) days after the execution of this Consent Order, Freedom Mortgage shall establish and maintain new or revised policies and procedures to satisfy the community development requirements of the Division’s regulations at 209 CMR 54.00 et seq., and shall thereafter fully implement such policies and procedures.  Community development activities shall be verifiable, tracked, and appropriately documented.
16. Within ninety (90) days after the execution of this Consent Order, Freedom Mortgage shall enhance its policies and procedures to ensure that the Corporation complies with fair lending laws and regulations, including but not limited to the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. section 2801 et seq., as implemented by the Consumer Financial Protection Bureau’s (CFPB) regulation 12 C.F.R. Part 1003 (Regulation C); and the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., as implemented by the CFPB’s regulation 12 C.F.R. 1002 (Regulation B), and shall thereafter fully implement such policies and procedures. Such policies must be designed to require that all relevant training provided to employees is tracked and documented.
17. Freedom 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 mortgage broker Massachusetts surety bonds maintained by Freedom Mortgage pursuant to the Division's regulation at 209 CMR 42.03(2)(a) and 209 CMR 42.06(2)(a).
18. Freedom Mortgage must address all Matters Requiring Attention set forth in the Report within the time frames contained therein, unless a different time frame is set forth in this Consent Order.  Within sixty (60) days after the execution of this Consent Order, Freedom Mortgage must also implement all corrective actions described in the Report that are not specifically addressed by this Consent Order.

(a)     Freedom Mortgage must establish, implement, and maintain policies and procedures to ensure that all applicable personnel receive adequate instruction and ongoing, periodic training to ensure proper implementation and execution of the revised policies and procedures implemented pursuant to this Consent Order.

19. On or before the thirtieth (30th) day after the end of each calendar quarter following the date of this Consent Order, Freedom Mortgage must 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;
    2. Written findings prepared by Freedom Mortgage detailing a review of management’s and staff members’ adherence to the policies and procedures adopted pursuant to this Consent Order and to applicable statutes, regulations, and rules; and
    3. A description of any operational changes implemented during such quarter intended to improve Freedom Mortgage’s compliance condition in Massachusetts and the results thereof.
20. The reporting requirement to the Division referenced in the preceding Section 19 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 by the Commissioner.
21. All information submitted to the Division pursuant to the provisions of this Agreement and Order, including all reports prepared by the Auditing Firm, shall be considered Examination-related material and considered and treated as confidential by the Division.
22. Nothing in this Consent Order shall be construed as permitting Freedom Mortgage to violate any law, rule, regulation, or regulatory bulletin to which the Corporation is subject.
23. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to the above referenced matters, including suspension or revocation of Freedom Mortgage’s mortgage lender and mortgage broker license under Massachusetts General Laws chapter 255E, section 6, (but still subject to the provisions of section 8), while this Consent Order is in effect.
24. 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.
25. This Consent Order shall become effective immediately upon the date of its issuance.
26. The provisions of this Consent Order shall remain effective and enforceable except to the extent that, and until such time as the Commissioner or a court of competent jurisdiction modifies, terminates, suspends, or sets aside any provision of this Consent Order.
27. 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 Freedom Mortgage.

 

By order and direction of the Commissioner of Banks:
Dated at Boston, Massachusetts, this 21^st  day of September, 2016.

By:

David J. Cotney
Commissioner of Banks

 

THIS CONSENT ORDER WAS SUPERSEDED AND REPLACED BY CONSENT ORDER OF JULY 30, 2020.