The State Organization Index provides an alphabetical listing of government organizations, including commissions, departments, and bureaus.
Top-requested sites to log in to services provided by the state
TO: The Chief Executive Officer of Each Licensed Mortgage Broker, Mortgage Lender and Each State-Chartered Financial Institution
SUBJECT: Recent Enforcement Actions and Violations
Recent regulatory action taken by the Division which has been well chronicled in the media and violations found by examination personnel during recent on-site examinations necessitate this industry letter reminding entities of required lending practices as well as the entities' responsibility for their mortgage employees and those individuals acting under their direction. Entities and particularly licensed mortgage brokers and lenders are again warned that it is their license as well as the management of the entity that is at risk of severe regulatory action provided in statute for the practices of any individual acting under their license or charter. The Division will not tolerate and will take immediate action against an entity which allows or is complicit in allowing inaccurate or unreliable if not fraudulent information and documents to be placed into the mortgage system.
Many but not all of the most egregious violations have involved reduced documentation loans. Such mortgage loans have existed for many years and typically do not require the verification of a borrower's income. (For the purpose of this letter, reduced documentation mortgage loans include stated income loans, NINA (no income, no asset) information loans, NIV (no income verification) loans, no ratio loans, and low and no documentation loans.) In the past, these loans were limited in their availability and utilized primarily by certain consumers who, among other things, had excellent credit histories, could make sizable downpayments and had other assets. Over the last few years, with the continued development of the subprime market, reduced documentation mortgage loans are being more frequently marketed to individuals that marginally qualify for mortgage credit and do not have other mitigating factors as described above.
With homeownership becoming increasingly difficult, especially for first time buyers, the mortgage lending industry has responded by offering a broader array of loan products. However, such products must be coupled with the basic tenets of a legal transaction and sound underwriting practices. For any mortgage product, prudent underwriting necessitates that the level of documentation required be commensurate with the risk profile of the borrower and a common sense analysis of the information provided. If concerns arise, due diligence dictates that additional documentation be obtained. Entities:
The Division, through its examination force as well as its investigation of consumer complaints, will continue to take immediate and severe action against an entity for any mortgage loan transaction including a reduced documentation loan upon finding or obtaining any evidence:
The Division cannot over emphasize the seriousness of the matters discussed herein or the recent regulatory action taken. Violations of law have the effect of undermining the entire mortgage industry including all constituent parties. These practices can:
The severity of the violations and enforcement actions taken significantly call into question the existing statutory framework's lack of licensing mortgage loan officers and mortgage loan originators in the Commonwealth.
Moreover, such practices necessitate that the Division implement other measures to address these matters. You will be informed of those additional actions.
Should you have any questions with regard to this letter, please feel free to contact Chief Risk Officer John M. Prendergast at 617-956-1534.
Very truly yours,
Steven L. Antonakes
Commissioner of Banks