Consent Order  Network Capital Funding Corp. and Tri Minh Nguyen, Individually

Date:	06/13/2013
Organization:	Division of Banks
Docket Number:	2013-021
Location:	Irvine, CA

Network Capital Funding Corp. and Tri Minh Nguyen, Individually, Irvine, CA - Consent Order

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE COMPANY AND
MORTGAGE LOAN
ORIGINATOR LICENSING
Docket No. 2013-021

CONSENT ORDER

In the Matter of

NETWORK CAPITAL FUNDING CORPORATION
Irvine, California

Mortgage Company License No. MC11712

and

TRI MINH NGUYEN, Individually

Mortgage Loan Originator License No. MLO12417

WHEREAS, NETWORK CAPITAL FUNDING CORPORATION, Irvine, California (Network Capital or Corporation), a licensed mortgage lender and mortgage broker under Massachusetts General Laws chapter 255E, section 2, and TRI MINH NGUYEN, Chief Executive Officer of Network Capital and a licensed mortgage loan originator under Massachusetts General Laws chapter 255F, have entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (Consent Agreement) with representatives of the Division of Banks (Division) dated June 13, 2013, 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, mortgage broker, and mortgage loan originator, Network Capital and Tri Minh Nguyen agree to the issuance of this CONSENT ORDER (Consent Order) by the Commissioner of Banks (Commissioner);

WHEREAS, an examination of Network Capital was conducted pursuant to General Laws chapter 255E, section 8, as of August 11, 2011 to assess the Corporation's level of compliance with applicable Massachusetts and federal statutes, rules and regulations governing the conduct of those engaged in the business of a mortgage lender and mortgage broker in the Commonwealth;

WHEREAS, Network Capital cooperated fully with the Division in voluntarily producing information and responding to questions relevant to Network Capital’s mortgage loan origination activity;

WHEREAS, the Report of Examination (Report) issued pursuant to the Division's examination of Network Capital alleged non-compliance in 2010-11 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;

WHEREAS, with its preliminary response to the Report, Network Capital provided the Division with evidence that since the Division’s examination, it has adopted and implemented various policies and procedures pertaining to licensed mortgage loan origination, loan funding, record keeping, mortgage loan rate locks, loan denials, call reports, borrower correspondence, and disclosures;

WHEREAS, according to its preliminary response, Network Capital ceased operating as a mortgage broker prior to the Division’s examination;

WHEREAS, on April 23, 2013, Network Capital submitted a request to surrender its mortgage broker license through the Nationwide Multi-State Licensing System & Registry (NMLS);

WHEREAS, upon the execution of this Consent Order, the Division will accept Network Capital’s request to surrender and will update Network Capital’s mortgage broker license status to "terminated – surrendered/cancelled"; 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, Network Capital, and Tri Minh Nguyen, and stipulate and agree as follows:

1. Network Capital has established, implemented, enhanced, and will continue to maintain policies and procedures to ensure that all individuals engaging in mortgage loan originator activity with whom the Corporation conducts business are duly licensed as mortgage loan originators under Massachusetts General Laws chapter 255F, and properly sponsored through the NMLS by Network Capital.
   1. Network Capital agrees to submit a payment in the amount of twenty-eight thousand dollars ($28,000.00) in satisfaction of an administrative penalty collected in consideration of the Corporation allegedly conducting business with employees who did not hold an active mortgage loan originator license when acting on behalf of Corporation;
   2. Tri Minh Nguyen agrees to submit a payment of ten thousand dollars ($10,000.00) in satisfaction of an administrative penalty collected in consideration of his originating mortgage loans on behalf of the Corporation when he was not actively licensed as a mortgage loan originator in Massachusetts; and
   3. Payments in full of the amounts indicated above, payable to the "Commonwealth of Massachusetts," must be submitted with the executed copy of the Consent Agreement, to the Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
2. Network Capital must maintain policies and procedures to accurately identify when enough information has been received by the Corporation to constitute a mortgage loan application and ensure that only licensed mortgage loan originators are permitted to originate residential mortgage loan applications and/or negotiate rates and terms on behalf of the Corporation.
3. Network Capital must maintain policies and procedures to ensure that, when acting in the capacity of a mortgage lender, the Corporation timely funds all mortgage loans in accordance with the Division's regulation 209 CMR 42.12A(16).
4. Network Capital must maintain policies and procedures to ensure that all loan files in the Corporation's books and records are maintained 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.
   1. Procedures adopted and implemented by the Corporation must ensure that Network Capital retains complete loan files, including without limitation, initial mortgage loan applications and all required disclosures.
   2. Procedures adopted and implemented by the Corporation shall necessarily require that the Corporation properly identifies and documents the initial date of application and ensures that all disclosures are properly dated and maintained in a manner that will allow the Division to determine whether time-sensitive documents are being provided to consumers within the mandated timing requirements.
5. Network Capital must maintain policies and procedures to ensure that the Corporation is in compliance with the Division's regulation 209 CMR 53.00 et seq. regarding determination and documentation of a borrower's interest when refinancing a home loan that was consummated within 60 months prior to the Corporation's receipt of an application for a new home loan. Such procedures shall ensure that in any transaction in which Network Capital is performing in a mortgage lender capacity, the burden is upon Network Capital, exclusively, to determine that the refinancing is in the borrower's interest.
   1. Compliance with this Section of the Consent Order shall necessarily require that Network Capital completes a worksheet or other document indicating how the Corporation determined that a refinance loan was in the borrower's interest. Such document shall include all the information required under 209 CMR 53.07 and the language contained therein shall 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. Network Capital has provided the Division with a copy of this worksheet that is now being used in making this determination.
6. Network Capital must maintain policies and procedures to ensure that, when acting in the capacity of a mortgage lender, the Corporation provides to consumers all of the information that is required pursuant to the Division's regulation 209 CMR 42.11A(4) prior to taking a rate lock commitment fee or otherwise offering or entering a mortgage loan rate lock commitment.
7. Network Capital must maintain policies and procedures to ensure that, when 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 in accordance with Massachusetts General Laws chapter 167, section 14A. For each consumer loan file, a completed copy of the Mortgage Review Board Disclosure Form shall be retained in the Corporation's books and records as evidence of compliance.
8. Network Capital must maintain policies and procedures to ensure that the Corporation completes and submits NMLS Mortgage Call Reports within 45 days of the last day of each calendar quarter in accordance with prescribed filing deadlines and instructions.
9. Network Capital must comply with all laws and regulations applicable to its conducting the business of a mortgage lender, 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 all violations and areas of concern addressed in the Report, which Network Capital has done by way of its preliminary response submitted to the Division.
   1. Network Capital has submitted its written response to the Commissioner that addresses each of the violations and areas of concern specified in the Report. The written response describes the revised policies and procedures adopted by Network Capital 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, Network Capital must 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 lender in Massachusetts, and (ii) the provisions of this Consent Order; and
   3. Network Capital must 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.
10. On the thirtieth day after the end of each calendar quarter following the date of this Consent Order, Network Capital 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; and
    2. Written findings prepared by Network Capital 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 Network Capital's compliance condition in Massachusetts, and the results thereof.
11. The reporting requirement to the Division referenced in Section 10 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.
12. Nothing in this Consent Order shall be construed as permitting Network Capital or Tri Minh Nguyen to violate any law, rule, regulation, or regulatory bulletin to which Network Capital and Tri Minh Nguyen are subject.
13. In consideration of the foregoing Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend revokeNetwork Capital's mortgage company license(s) under Massachusetts General Laws chapter 255E, section 6 or Tri Minh Nguyen's mortgage loan originator license, while this Consent Order is in effect.
14. Failure to comply with the terms of this Consent Order shall constitute grounds for license suspension and/or revocation, or other formal regulatory actions pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
15. This Consent Order shall become effective immediately upon the date of its issuance.
16. Network Capital agrees that, in the event that the Corporation and/or Tri Minh Nguyen fail 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 Network Capital pursuant to the Division's regulation 209 CMR 42.03(2)(a) and 209 CMR 42.06(2)(a).
17. 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.
18. 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, Network Capital, and Tri Minh Nguyen.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS:

Dated at Boston, Massachusetts, this 13th day of June, 2013

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