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COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MORTGAGE BROKER AND
Docket No. 2009-001
FINDINGS OF FACT AND TEMPORARY
ORDER TO CEASE AND DESIST
In the Matter of
BAY MORTGAGE SERVICES, INC.
Mortgage Company License No. MC1419
The Commissioner of Banks ("Commissioner") having determined that BAY MORTGAGE SERVICES, INC., ("Bay Mortgage" or the "Corporation"), located at 2277 State Road, Plymouth, Massachusetts, has engaged in, or is engaging in, or is about to engage in, acts or practices constituting violations of Massachusetts General Laws chapter 255E, the Division's regulations found at 209 CMR 42.00 et seq., and other statutes and regulations applicable to the mortgage business, hereby issues the following FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST ("Temporary Order") pursuant to General Laws chapter 255E, section 7(b).
FINDINGS OF FACT
A. Failure to Meet Net Worth Requirements
(2)(a)... An Applicant shall demonstrate and maintain:
1. a net worth of not less than $100,000; or
2. a combination of a net worth of not less than $ 25,000 and a bond of up to $ 75,000 in such form and with such sureties as may be approved by the Commissioner, provided such net worth and bond in the aggregate equal or exceed $ 100,000.
B. Unfair or Deceptive Acts and Practicesa. False and/or Misleading Representations of Prospective Borrowers' Income
It is a prohibited act or practice for a mortgage broker of mortgage lender to falsify income or asset information on a mortgage loan application or mortgage loan documents.
Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.
It is an unfair or deceptive act or practice for a mortgage broker or lender to make any representation or statement of fact if the representation or statement is false or misleading or has the tendency or capacity to be misleading.
b. Alteration and/or Manipulation of Mortgage Loan Documents
c. Signing of Blank or Incomplete Disclosures
It is a prohibited act or practice for a mortgage broker or mortgage lender to have a consumer sign a blank or incomplete mortgage loan application or mortgage loan documents.
C. Undisclosed Fees
A mortgagee, or a mortgage lender or mortgage broker as defined in section one of chapter two hundred and fifty-five E, shall not charge a loan fee, finder's fee, points, so-called, or similar fees in a mortgage transaction involving residential property located in the commonwealth of four or less units and occupied in whole or in part by the mortgagor, except to the extent that such fees or points have been previously disclosed to the mortgagor in writing, which disclosure may be in the form required by section seventeen D of chapter one hundred and eighty-four, or such other form which discloses said fees or points. A mortgagor shall not be obligated to pay fees or points which have not been previously disclosed as required herein.
D. Providing Mortgage Lender Disclosures to Consumers when Acting in the Capacity of a Mortgage Broker
A lender shall not knowingly make a home loan if the home loan pays off all or part of an existing home loan that was consummated within the prior 60 months or other debt of the borrower, unless the refinancing is in the borrower's interest. The "borrower's interest" shall be narrowly construed, and the burden is upon the lender to determine that the refinancing is in the borrower's interest.
A lender may request that a borrower acknowledge receipt of such a worksheet or other documentation; provided, however, a lender shall not shift the burden to the borrower to demonstrate that a home loan is in the borrowers' interest.
E. Misrepresentations to the Division
F. Interest Rate Lock Commitments
(b) ...A mortgage broker may only take a rate lock commitment fee for transmittal to the mortgage lender which intends to make the loan. Nothing herein shall prohibit a mortgage broker from negotiating the terms or conditions of a mortgage loan, including the interest rate, on behalf of a consumer. A mortgage broker may also use such forms or other evidence as desired to allow a consumer to indicate a preference to enter into a mortgage rate lock commitment with a mortgage lender. However, any such forms or evidence must clearly and conspicuously contain the following statement: "This is a request, not a commitment, to lock your interest rate with a mortgage lender".
G. Engaging in Prohibited Advertising Practices
A Licensee shall also disclose the type and number of its license(s) in all advertisements.
It is an unfair or deceptive act or practice for a mortgage broker or lender to advertise without clearly and conspicuously disclosing its business name, the words "broker" or "lender", as applicable, and the license number.
H. Failure to Provide Notification of Regulatory Action
A Licensee shall notify the Commissioner immediately, and in writing within one business day, of the occurrence of any of the following significant developments: . . . (c) [R]eceiving notification of the institution of . . . cease and desist, suspension or revocation procedures, or other formal or informal regulatory action, in any state against the Licensee, and the reasons thereof.
CONCLUSIONS OF LAW
ORDER TO CEASE AND DESIST
After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 14th day of January, 2009
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts