COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
Docket No. 2009-168
In the Matter of
OLDE TOWNE MORTGAGE COMPANY, INC.
Mortgage Broker License No. MB4129
WHEREAS, OLDE TOWNE MORTGAGE COMPANY, INC., Andover, Massachusetts ("Olde Towne 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 7, 2010, 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, Olde Towne Mortgage agrees to the issuance of this CONSENT ORDER ("Order") by the Commissioner of Banks ("Commissioner");
WHEREAS, an examination/inspection of Olde Towne Mortgage was conducted pursuant to General Laws chapter 255E, section 8, as of February 12, 2009, 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 Olde Towne Mortgage as of February 12, 2009 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.
NOW COME the parties in the above-captioned matter, the Division and Olde Towne Mortgage, and stipulate and agree as follows:
- Olde Towne Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation refrains from collecting compensation from consumers in consideration of services which the Corporation, as a mortgage broker, is prohibited from performing in a mortgage loan transaction.
- Olde Towne Mortgage shall reimburse the consumer identified in the Report for the amount collected as a "completion cert fee." The amount of the reimbursement shall equal the total amount of the "completion cert fee."
- With Olde Towne Mortgage's written response to the findings presented in the Report, which is to be submitted to the Commissioner pursuant to Section 12 of this Order, the Corporation shall submit evidence of the reimbursement issued pursuant to this Section of the 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 sufficient evidence to illustrate the consumer's receipt of the reimbursement.
- Olde Towne Mortgage shall establish, implement, and maintain quality control procedures to ensure that loan applications, disclosure forms, and other documents submitted to mortgage lenders in connection with residential mortgage loans are accurately completed and signed by the appropriate parties. Such quality control procedures shall address proper application completion, income/asset verification and due diligence procedures.
- Olde Towne Mortgage shall at all times conduct business exclusively under the business name stated on its mortgage broker license as issued by the Commissioner. Having obtained a mortgage broker license from the Commissioner to conduct business in Massachusetts as "Olde Towne Mortgage Company, Inc.," the Corporation shall conduct business in Massachusetts exclusively under that name. The Corporation shall necessarily review and revise its written forms and disclosures to ensure that the Corporation is identified in a manner consistent with the name stated on its mortgage broker license as issued by the Commissioner.
- Olde Towne Mortgage shall establish, implement, and maintain procedures to ensure that the Corporation accurately discloses yield spread premiums on the Good Faith Estimate, in accordance with the provisions of Real Estate Settlement Procedures Act (RESPA) implementing regulation 24 CFR 3500.
- Olde Towne Mortgage shall establish, implement, and maintain procedures to ensure that 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 shall be retained in the Corporation's books and records, as provided in 209 CMR 42.09(1)(b).
- Olde Towne 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, including but not limited to, pre-approval letters and Truth in Lending disclosures.
- The provisions of this Section of the Order shall necessarily prohibit Olde Towne Mortgage from issuing the "Massachusetts Net Tangible Benefit Disclosure and Acknowledgement" form or any other such 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, Olde Towne 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.
- The Corporation shall issue a written notification to each mortgage lender who has received the "Massachusetts Net Tangible Benefit Disclosure and Acknowledgement" form 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.
- Olde Towne Mortgage shall establish, implement and maintain policies and 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 Division's regulations 209 CMR 42.09 and 209 CMR 48.03.
- The Corporation shall retain for a minimum of three years all correspondence and records relating to each loan, including but not limited to: all documents related to income/asset verification; signed loan application forms; credit reports; appraisals; lender documentation, including underwriting guidelines; employment verification documentation; and all required disclosure forms.
- The Corporation shall properly document the initial date of application and ensure 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.
- Olde Towne Mortgage shall establish, implement and maintain procedures to ensure that the Credit Score Disclosure is provided to consumers in accordance with the requirements of the Fair Credit Reporting Act, Section 609(g). For each consumer loan file, a completed copy of the Credit Score Disclosure shall be retained in the Corporation's books and records as evidence of compliance.
- Olde Towne Mortgage shall establish, implement, and maintain procedures to ensure that all consumers receive a Notice of Privacy Policies and Practices 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 shall be retained in the Corporation's books and records as evidence of compliance.
- Olde Towne Mortgage shall revise all advertisements and brochures to eliminate any representations or statements 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 authorized to pre-approve or fund loans.
- Olde Towne Mortgage shall review and revise all advertisements, including but not limited to the Corporation's brochures and website, and implement corrective action to ensure that the Corporation's license type and number are disclosed in all such advertisements in accordance with the Division's regulation 209 CMR 42.15 and the Attorney General's regulation 940 CMR 8.04(2).
- Olde Towne 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 thirty (30) days of receipt of the Report, all violations and areas of concern addressed in the Report.
- Within thirty (30) days of Olde Towne Mortgage' 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 Olde Towne 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 Order;
- Within thirty (30) days from the effective date of this Order, Olde Towne Mortgage 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 Order. Such quality control standards shall be designed to prevent the recurrence of the violations addressed in the Report; and
- Olde Towne 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 Order.
- On the thirtieth (30 th) day after the end of each calendar quarter following the date of this Order, Olde Towne Mortgage shall furnish written progress reports to the Division, which shall address and include the following:
- A description of the form, content, and manner of any actions taken to address each Section of this Order and the results thereof; and
- Written findings prepared by Olde Towne Mortgage detailing a review of management's and staff persons' adherence to the policies, programs, and procedures adopted pursuant to this 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 Olde Towne Mortgage' compliance condition in Massachusetts and the results thereof.
- The reporting requirement to the Division referenced in Section 13 of this 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 Order from the Commissioner.
- Nothing in this Order shall be construed as permitting Olde Towne Mortgage to violate any law, rule, regulation, or regulatory bulletin to which Olde Towne Mortgage is subject.
- In consideration of the foregoing Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Olde Towne Mortgage's mortgage broker license under General Laws chapter 255E, section 6, while this Order is in effect.
- Failure to comply with the terms of this 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.
- This Order shall become effective immediately upon the date of its issuance.
- The provisions of this Order shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this Order shall have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
- This Order and the Consent Agreement are the complete documents representing the resolution of this matter. There are no other agreements between the Division and Olde Towne Mortgage.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 7th day of January, 2010
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts