Temporary Order to Cease and Desist  Farkhanda Tarar Shah

Date:	06/08/2009
Organization:	Division of Banks
Docket Number:	2009-008-OTSC
Location:	Somerville, MA

Farkhanda Tarar Shah, d/b/a Eastern Mortgage, Somerville, MA - Temporary Order to Cease and Desist & Order to Show Cause

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2009-008-OTSC

FINDINGS OF FACT AND TEMPORARY
ORDER TO CEASE AND DESIST &
ORDER TO SHOW CAUSE

In the Matter of
FARKHANDA TARAR SHAH
d/b/a EASTERN MORTGAGE
Somerville, Massachusetts

Mortgage Broker License No. MB4194

The Commissioner of Banks ("Commissioner") having determined that FARKHANDA TARAR SHAH d/b/a EASTERN MORTGAGE, ("Farkhanda Shah" or "Eastern Mortgage"), with her main business office located at 367 Broadway, Somerville, Massachusetts, has engaged in, or is engaged in, or is about to engage in, acts or practices constituting violations of Massachusetts General Laws chapter 255E and applicable regulations found at 209 CMR 42.00 et seq., hereby issues the following FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST & ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING (collectively referred to as the "Order") pursuant to General Laws chapter 255E sections 6, 7(b), and 12 and General Laws chapter 255F section 12.

I. FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST

A. FINDINGS OF FACT AND REGULATORY BACKGROUND

1. The Division of Banks ("Division"), through the Commissioner, has jurisdiction over the licensing and regulation of persons and entities engaged in the business of a mortgage broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.
2. Farkhanda Shah is, and at all relevant times has been, an individual engaged in the business of a mortgage broker in the Commonwealth. Farkhanda Shah's main office is currently located at 367 Broadway, Somerville, Massachusetts.
3. Farkhanda Shah is licensed by the Commissioner as a mortgage broker under Massachusetts General Laws chapter 255E, section 2. According to records maintained on file with the Division, the Commissioner initially issued mortgage broker license number MB4194 to Farkhanda Shah on or about December 7, 2005.
4. Mortgage brokers in Massachusetts are licensed and regulated under Massachusetts General Laws chapter 255E, which is administered and enforced by the Commissioner. Pursuant to Massachusetts General Laws chapter 255E, section 8, the Division is authorized to inspect the books, accounts, papers, records, and files of mortgage brokers transacting business in Massachusetts to determine compliance with the provisions of Massachusetts General Laws chapter 255E or any rule, or regulation issued thereunder, and with any law, rule, or regulation applicable to the conduct of the business of a mortgage broker.
5. On or about April 22, 2008, pursuant to the authority granted under Massachusetts General Laws chapter 255E, section 8, the Division commenced an examination/inspection of the books, accounts, papers, records, and files maintained by Farkhanda Shah to evaluate Eastern Mortgage's compliance with the laws, regulations, and regulatory bulletins applicable to the conduct of a mortgage broker business in Massachusetts (the "2008 examination/inspection").
6. The Division's Report of Examination/Inspection issued pursuant to the 2008 examination/inspection (the "Report") and provided to Farkhanda Shah on February 3, 2009, alleged significant failures to comply with applicable state and federal laws, rules, regulations, and regulatory bulletins governing the conduct of those engaged in the business of a mortgage broker in Massachusetts. The findings and conclusions of the Report are incorporated herein in their entirety by reference.

   (i) Unfair or Deceptive Acts or Practices - Misrepresentation of Applicants' Residency Status

7. Massachusetts General Laws chapter 93A, section 2(a) states:

   Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

8. The Attorney General's regulation 940 CMR 8.06(1) states, in part:

   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.

9. The Federal Reserve Board's Truth in Lending Official Staff Commentary to Regulation Z ("Staff Commentary") addresses the definition of "residential mortgage transaction" as set forth in section 226.2(a)(24) of Regulation Z. The definition of "residential mortgage transaction" contains the term, "principal dwelling." The Staff Commentary clarifies that, "[a] consumer can only have one principal dwelling at a time."
10. The Division's regulation 209 CMR 32.27 states, in pertinent part:

    Compliance with any provisions of the Federal Truth in Lending Act, the Board's Regulation Z, and the Official Staff Commentary, which does not conflict with M.G.L. c. 140D, 209 CMR 32.00 or an advisory ruling of the Commissioner, shall be deemed to be in compliance with M.G.L. c. 140D.

11. The Staff Commentary referenced in Paragraph 9 does not conflict with Massachusetts General Laws c. 140D, 209 CMR 32.00, or an advisory ruling of the Commissioner and is applicable in the Commonwealth.
12. Books and records reviewed during the 2008 examination/inspection indicated that Farkhanda Shah concealed and/or misrepresented information relating to the occupancy of subject properties in mortgage loan applications.
13. During the period from December 19, 2005 until June 9, 2006, Farkhanda Shah submitted seven (7) purchase money mortgage loan applications on behalf of a single borrower. Each of the seven applications indicated that the subject property was to be used as the borrower's primary residence. The settlement dates for the mortgage loans are as follows: December 19, 2005; January 6, 2006; February 10, 2006; February 12, 2006; February 21, 2006; May 31, 2006; and June 9, 2006. The examiners' specific findings are more fully described in the Report and are incorporated herein by reference.
14. Books and records reviewed by the Division's examiners revealed that Farkhanda Shah submitted to separate lenders, refinance mortgage loan applications for two properties on behalf of a single borrower with each application indicating that the subject property was to be used as the borrower's primary residence. One application was taken on April 16, 2006 with a settlement date of June 7, 2006, while the other application was taken on June 5, 2006 with a settlement date of June 27, 2006. Therefore, both loans were in a pending status with Farkhanda Shah at the same time. The examiners' specific findings are more fully described in the Report and are incorporated herein by reference.
15. Farkhanda Shah knew or should have known that the information relating to the purpose of the loans in the mortgage loan applications set forth in Paragraphs 13 and 14 were inaccurate and knew or should have known that such information would have been relied upon in underwriting the mortgage loan by the mortgage lender or financial institution to which the mortgage loan applications were brokered by Farkhanda Shah.

    (ii) Undisclosed Fees

16. Massachusetts General Laws chapter 183, section 63 states, in part:

    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.

17. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicate, as more fully described in the Report, that Farkhanda Shah engaged in a pattern or practice of understatements or omissions of the fees charged to consumers by Eastern Mortgage.
18. Eastern Mortgage's books and records indicate that processing fees, origination fees, loan fees, or similar fees (collectively, "broker fees") were collected at the loan closing in amounts which Eastern Mortgage's books and records failed to illustrate had been fully and accurately disclosed to consumers, in writing, to the extent charged at closing, if at all, as more fully described in the Report.
19. Pursuant to the findings of the Report, the Division required that Farkhanda Shah reimburse the consumers identified in the Report for the amounts collected as a broker fee, loan fee, points or similar fee at settlement that had not been disclosed to the consumers, in writing, prior to loan closing. Farkhanda Shah was also required to conduct a portfolio review of all Massachusetts residential mortgage loans closed since December 7, 2005 and make all necessary reimbursements to borrowers for loan fees collected at closing that had not been previously disclosed by Farkhanda Shah. Farkhanda Shah was required to submit evidence of such reimbursements within thirty (30) days of receipt of the Report, which was issued on February 3, 2009.
20. To date, Farkhanda Shah has failed to submit evidence of the required reimbursements referenced in Paragraph 19. Upon information and belief, Farkhanda Shah is unable or unwilling to make the required reimbursements.

    (iii) Unearned Fee

21. The Real Estate Settlement Procedures Act, ("RESPA") implementing regulation, 24 CFR 3500.14(c) states, in part:

    No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed. A charge by a person for which no or nominal services are performed or for which duplicative fees are charged is an unearned fee and violates this section.

22. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicate that Farkhanda Shah charged a consumer a "final inspection fee" for which no service was rendered by Eastern Mortgage.
23. Pursuant to the findings of the Report, the Division required that Farkhanda Shah reimburse the consumer identified in the Report for the full amount collected as a "final inspection fee." Farkhanda Shah was required to submit evidence of such reimbursement within thirty (30) days of receipt of the Report.
24. To date, Farkhanda Shah has failed to submit evidence of the required reimbursement referenced in Paragraph 23. Upon information and belief, Farkhanda Shah is unable or unwilling to make the required reimbursement.

    (iv) Engaging Unauthorized Individuals to Originate Mortgage Loans on behalf of Farkhanda Shah in Massachusetts

25. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicate that Farkhanda Shah accepted applications from unlicensed individuals who were acting in the capacity of mortgage brokers as independent contractors.
26. By prior published opinions, the Division had set forth the standards which an unlicensed individual must satisfy, in advance, when seeking to operate in the capacity of a mortgage broker who is associated with and under the direction of a licensed mortgage broker under General Laws chapter 255E, section 2. (Through the enactment of SECTION 15 of Chapter 206 of the Acts of 2007, which added Chapter 255F to the General Laws of Massachusetts, the Commonwealth introduced the license requirement for individuals engaged in the activity of a "mortgage loan originator" as that term is defined in section 1 of said Chapter 255F. Consequently, the Division's published opinions referenced in Section I(A)(iv) of this Order became moot as of the effective date the statute, July 1, 2008. However, the referenced opinions were valid and enforceable at the time of the 2008 examination/inspection.)
27. Pursuant to the Division's advisory Opinion 97-222, dated December 19, 1997, among others, the Division established that exemption from licensure for individuals working under the direction of a licensed mortgage broker or mortgage lender is available only to individuals and not to a corporate entity. The relationship between the lender/broker licensee and the individual must be exclusive and the individual must execute an Exemption Affidavit to that effect. The licensee must execute a Statement of Accountability for all activities of the individual associated with it. The individual seeking the exemption must be primarily engaged in the activity it is seeking to perform under the direction of a licensed mortgage broker.
28. The Division's published Opinion 97-061 further stated that "this exemption would be effective provided that the Licensee completes and files with the Division a Statement of Accountability agreeing to take responsibility for the exempt individual's activities and the individual seeking the exemption completes and files the required Exemption Affidavit."
29. Books and records reviewed by the Division's examiners during the 2008 examination/inspection revealed that at least four individuals received compensation from Farkhanda Shah for engaging in mortgage broker activity on her behalf in the capacity of independent contractors. Books and records reviewed by the Division's examiners also indicated that such individuals were not engaged in the activity of a mortgage broker as their primary occupation and, therefore, they did not satisfy the qualifying standards for unlicensed individuals acting in the capacity of mortgage brokers associated with and under direction of a licensed mortgage broker or mortgage lender as set forth by the relevant opinions published by the Division. Moreover, Farkhanda Shah did not file with the Division the required Exemption Affidavits and Statements of Accountability for any of the independent contractors who were operating on behalf of Eastern Mortgage.

    (v) Loan Origination and Compensation Agreement

30. The Division's regulation 209 CMR 42.12A(5) states in part:

    It is a prohibited act or practice for a mortgage broker to fail to provide to the consumer at the time of application the loan origination and compensation agreement required under 209 CMR 42.16. The content of the agreement shall strictly conform to 209 CMR 42.16 and include signatures and dates by the consumer(s) and the mortgage broker.

31. The Division's regulation 209 CMR 42.09(1)(b) states, in part:

    Each mortgage broker . . . shall retain for a minimum of three years after a mortgage loan is made the following: the original loan origination and compensation agreement as set out in 209 CMR 42.16.

32. Books and records reviewed by the Division's examiners during the 2008 examination/inspection revealed that Farkhanda Shah consistently failed to retain evidence of having provided the Loan Origination and Compensation Agreements. This practice was observed in all loan files reviewed during the 2008 examination/inspection.

    (vi) Providing Mortgage Lender Disclosures to Consumers

33. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicate that Farkhanda Shah routinely provided consumers with several disclosures which are intended to be provided by the mortgage lender in the transaction, including but not limited to, Equal Credit Opportunity Notices, Truth in Lending Disclosures, and Notices to Applicant of Right to Receive Copy of Appraisals, as further described in the Report. Such activity was in excess of Farkhanda Shah's authority as a mortgage broker, pursuant to Massachusetts General Laws chapter 255E, section 2.

    (vii) Good Faith Estimate

34. At the time of the 2008 examination/inspection, the Real Estate Settlement Procedures Act ("RESPA") regulation 24 CFR 3500.7(b) stated, in part:

    In the event an application is received by a mortgage broker who is not an exclusive agent of the lender, the mortgage broker must provide a good faith estimate within three days of receiving a loan application

35. The Division's regulation 209 CMR 42.09(1)(b) states, in part:

    Each mortgage broker . . . shall retain for a minimum of three years after a mortgage loan is made the following . . . correspondence; papers or records relating to the loan; and such other documents as the Commissioner may require.

36. Books and records reviewed during the 2008 examination/inspection revealed that, in several loan files reviewed, Farkhanda Shah failed to retain evidence of having provided the Good Faith Estimate, as further described in the Report.

    (viii) Failure to Provide Fair Credit Reporting Act Disclosure

37. The Division's regulation 209 CMR 42.12A(12) states:

    "It is a prohibited act or practice for a mortgage broker or mortgage lender to engage in a pattern or practice of failing to make any disclosure to a consumer required by and at the time specified by any applicable state or federal law, regulation or directive."

38. Books and records reviewed by the Division's examiners during the 2008 examination/inspection revealed that Farkhanda Shah consistently failed to retain evidence of having provided applicants with the credit score disclosure required under Section 609(g) of the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003 [15 U.S.C. § 1681g(g)]. This practice was observed in all loan files reviewed during the Examination/Inspection.

    (ix) Use of Misleading Information in Documents Provided to Consumers

39. The Attorney General's regulation 940 CMR 8.06(1) states, in part:

    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.

40. Books and records reviewed during the 2008 examination revealed that Farkhanda Shah routinely provided applicants with a Borrower's Certification and Authorization Form that contained language that was false or misleading or had the tendency or capacity to be false or misleading. Specifically, the Borrower's Certification and Authorization Form contained language which presented the appearance that Farkhanda Shah was approving or funding the mortgage loan, as specifically described in the Report.

    (x) Failure to Properly Use and Maintain Books and Records

41. Massachusetts General Laws chapter 255E, section 8 states in part:

    A licensee shall keep and use such business records in such form and at such location as said commissioner shall, by regulation, determine, which shall enable said commissioner to determine whether such licensee is complying with the provisions of this chapter and any rules or regulations promulgated hereunder by said commissioner and any other law, rule or regulation applicable to the conduct of the business for which it is licensed under this chapter.

42. The Division's regulation 209 CMR 42.09(1) states:

    Each Licensee shall keep and use its books, records and accounts in a manner which will allow the Commissioner to determine whether the Licensee is complying with the provisions of M.G.L. c. 255E and applicable state and federal laws and regulations. Each Licensee shall comply with the provisions of 209 CMR 48.00...

43. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicated that Farkhanda Shah retained several loan files that did not contain dated mortgage loan applications. By failing to document the date of application, Farkhanda Shah failed to retain sufficient documentation to enable the Division's examiners to determine whether Eastern Mortgage was complying with the timing requirements in which certain disclosures must be provided to consumers.

    (xi) Failure to Notify the Division of the Closing and Relocation of Licensed Office Location

44. The Division's Regulation 209 CMR 42.13(2) states:

    Licensees shall provide thirty days prior written notice of any change or closing of a Massachusetts location to the Commissioner and shall contain such other information as the Commissioner may require.

45. Books and records reviewed during the 2008 examination/inspection revealed that Farkhanda Shah failed to provide thirty days prior notice of the relocation of Eastern Mortgage's main office from Peabody, Massachusetts to Somerville, Massachusetts. Specifically, books and records indicated that Eastern Mortgage was conducting mortgage broker activity from the Somerville location starting in March, 2006 but notification of the office relocation was not received by the Division until August 8, 2006.

    (xii) Failure to Respond to the Division

46. On February 3, 2009, Farkhanda Shah appeared at the Division's Boston office for an informal conference to discuss the Division's findings, as set forth in the Report. At that time the Report was provided to Farkhanda Shah. During the informal conference the Division notified her that, as a result of the numerous compliance violations cited in the Report, the Division would be requiring a Consent Order ("Consent Order"). The Division also informed Farkhanda Shah that a detailed written response to each of the matters addressed in the Report would be required, including evidence of consumer reimbursements, within thirty (30) days of her receipt of the Report.
47. To date, Farkhanda Shah has failed to submit the required detailed written response to the Report.

    B. CONCLUSIONS OF LAW

48. Based upon the information contained in Paragraphs 1 through 47, Farkhanda Shah has failed to demonstrate and maintain the character, reputation, integrity, and general fitness that would warrant the belief that the mortgage broker business will be operated honestly, fairly, and soundly in the public interest in violation of Massachusetts General Laws chapter 255E, section 4 and the Division's regulations 209 CMR 42.06(2)(c).
49. Based upon the information contained in Paragraphs 1 through 47, by misrepresenting applicants' residency status in the preparation and submission of loan-related documents to the applicable mortgage lender(s), Farkhanda Shah has violated Massachusetts General Laws chapter 93A, section 2(a) and the Office of the Attorney General's implementing regulation 940 CMR 8.06(1).
50. Based upon the information contained in Paragraphs 1 through 47, by charging loan fees, points, or similar fees in mortgage transactions involving residential property located in the Commonwealth, of four or less units and occupied in whole or in part by the mortgagor, without disclosing such fees or points to the mortgagor prior to the closing of the loan, Farkhanda Shah has violated Massachusetts General Laws chapter 183, section 63.
51. Based upon the information contained in Paragraphs 1 through 47, by charging a fee for which no service was rendered by Farkhanda Shah in a mortgage transaction involving residential property located in the Commonwealth, Farkhanda Shah has violated the Real Estate Settlement Procedures Act and its implementing regulation, 24 CFR 3500.14(c).
52. Based upon the information contained in Paragraphs 1 through 47, Farkhanda Shah has accepted residential mortgage loan applications for property located in Massachusetts from individuals engaging in the activity of a mortgage broker who failed to qualify for an exemption from licensure as set forth by the Division by prior published opinions, including without limitation Opinions 97-061 and 97-222 in violation of General Laws chapter 255E, section 2.
53. Based upon the information contained in Paragraphs 1 through 47, by failing to retain copies of the Loan Origination and Compensation Agreement provided to consumers, Farkhanda Shah has violated the Division's regulation 209 CMR 42.12A(5) and 209 CMR 42.09(1)(b).
54. Based upon the information contained in Paragraphs 1 through 47, by providing disclosures to consumers that only lenders are authorized to provide, Farkhanda Shah has exceeded her authority as a mortgage broker in violation of Massachusetts General Laws chapter 255E, section 2.
55. Based upon the information contained in Paragraphs 1 through 47, by failing to retain copies of the completed Good Faith Estimate disclosures, Farkhanda Shah has violated the RESPA regulation 24 CFR 3500 and the Division's regulation 209 CMR 42.09(1)(b).
56. Based upon the information contained in Paragraphs 1 through 47, by failing to retain copies of the credit score disclosure required under Section 609(g) of the fair Credit Reporting Act. Farkhanda Shah has violated 15 U.S.C. § 1681g(g) and the Division's regulation 209 CMR 42.12A(12).
57. Based upon the information contained in Paragraphs 1 through 47, by providing disclosures to consumers that contained language that was false or misleading or had the tendency or capacity to be false or misleading, Farkhanda Shah is in violation of the Attorney General's regulation 940 CMR 8.06(1).
58. Based upon the information contained in Paragraphs 1 through 47, by failing to keep and use her books and records in a manner which would allow the Commissioner to determine whether Eastern Mortgage was complying with applicable state and federal laws and regulations, Farkhanda Shah has violated General Laws chapter 255E, section 8 and the Division's regulations 209 CMR 48.03 and 209 CMR 42.09(1).
59. Based upon the information contained in Paragraphs 1 through 47, by failing to notify the Commissioner, in writing, at least thirty days prior to the change or closing of a Massachusetts office location, Farkhanda Shah has violated the Division's regulation 209 CMR 42.13(2).
60. Based upon the information contained in Paragraphs 1 through 47, by failing to submit a written response to the Report, as was required by the Division, and failing to make required consumer reimbursements, Farkhanda Shah has failed to demonstrate and maintain the character and fitness requirements of Massachusetts General Laws chapter 255E, section 4 and the Division's regulations 209 CMR 42.06(2)(c).
61. Based upon the information contained in Paragraphs 1 through 47, had the foregoing existed at the time of Farkhanda Shah's original mortgage broker license application, such conditions would have warranted a denial by the Commissioner of the license application and are grounds for the suspension or revocation of Farkhanda Shah's mortgage broker license number MB4194 pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulation at 209 CMR 42.07(2)(b), and 42.12A(19).
62. Based upon the information contained in Paragraphs 1 through 47, the Commissioner has determined that:

    (a) Farkhanda Shah has engaged in, or is about to engage in, acts or practices which warrant the belief that Farkhanda Shah is not operating honestly, fairly, soundly and efficiently in the public interest in violation of standards governing the licensing and conduct of a mortgage broker including, but not limited to, the provisions of the Division's regulations at 209 CMR 42.00 et seq.; and

    (b)The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Farkhanda Shah.

    C. ORDER TO CEASE AND DESIST

    After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:

63. ORDERED that Farkhanda Shah shall immediately cease engaging in the activities of: (a) a mortgage broker, as those activities are defined under Massachusetts General Laws chapter 255E, section 1, and (b) a mortgage loan originator, as those activities are defined under Massachusetts General Laws chapter 255F, section 1, relative to any residential property in Massachusetts, not otherwise expressly permitted by the terms of this Order.
64. IT IS FURTHER ORDERED, that Farkhanda Shah shall immediately place any fees previously collected from Massachusetts consumers, relative to any pending mortgage loan applications accepted into a separate escrow account, designated for such purpose and maintained at a federally insured bank.
65. IT IS FURTHER ORDERED that Farkhanda Shah shall immediately place with one or more qualified broker(s) or lender(s), as appropriate based on the status of the application and with no loss to applicants, all of her pending Massachusetts residential mortgage loan applications. Farkhanda Shah shall obtain the prior approval of the Commissioner before placing such applications to the qualified broker(s) or lender(s).
66. IT IS FURTHER ORDERED that Farkhanda Shah shall submit to the Commissioner a detailed record, prepared as of the date of submission, of all of Eastern Mortgage's pending residential mortgage loan applications on property located in Massachusetts. The records to be produced shall be submitted to the Commissioner within five (5) days of the effective date of this Order and shall include all information on file, regarding Eastern Mortgage's open application list, including but not necessarily limited to, the following:

    All information on file as of the date of submission regarding Farkhanda Shah's open application list, including but not limited to, the following: The names of all individuals from whom Farkhanda Shah has accepted an application for a residential mortgage loan; the applicants' addresses and telephone numbers; the amount of all prepaid loan fees submitted by the customer; the amount of each loan; application status (i.e. filed, submitted to lenders, cleared to close, etc.); scheduled closing dates; rate lock status; and a list identifying the applicable broker(s) or lender(s) with whom the applicants' application was placed. The latter list should include telephone numbers of contact persons familiar with Eastern Mortgage's submitted loans.

67. IT IS FURTHER ORDERED that Farkhanda Shah shall immediately secure all pending residential mortgage loan application files and shall make such files, in their entirety, available to the Commissioner upon request.
68. IT IS FURTHER ORDERED that within thirty (30) days of the effective date of this Order, Eastern Mortgage shall cause to be made a review of all Massachusetts residential mortgage loans originated by Eastern Mortgage since December 7, 2005 and shall identify all mortgage loan transactions in which the amount actually paid by the consumer as a loan fee, mortgage broker fee, application fee, or similar fee, as recorded on the settlement agreement, exceeded the amount disclosed to the consumer, in writing, for such fees prior to closing;
    1. In each mortgage loan transaction identified pursuant to Paragraph 68, Farkhanda Shah shall reimburse the consumer the difference between the actual charge assessed to the individual consumer as a loan fee, mortgage broker fee, processing fee, or similar fee and the amount disclosed in writing for such fees prior to closing;
    2. Within thirty (30) days of the effective date of this Order, Farkhanda Shah shall submit to the Commissioner a list of all borrowers identified pursuant to the above described review of residential mortgage loan transactions to whom a reimbursement is owed by Eastern Mortgage in accordance with this Paragraph of the Order; and
    3. Within sixty (60) days of the effective date of this Order, Farkhanda Shah shall submit evidence of all reimbursements issued to consumers pursuant to this Paragraph of the Order, including the consumers' names, the dates the loans closed, check numbers, the amount of the reimbursements, and sufficient evidence to illustrate the consumers' receipt of the reimbursements.
69. IT IS FURTHER ORDERED that within thirty (30) days of the effective date of this Order, Farkhanda Shah shall reimburse the consumer identified in the Report from whom a final inspection fee was collected. Farkhanda Shah shall reimburse the consumer for the total amount of the final inspection fee. Farkhanda Shah shall submit to the Division evidence of the reimbursement issued pursuant to this Paragraph, including the consumer's name, the date the loan closed, check number(s), and amount of the reimbursement(s).
70. IT IS FURTHER ORDERED that this Order shall not be construed as approving any act, practice, or conduct not specifically set forth herein which was, is, or may be in violation of relevant state or federal laws and regulations. The findings, conclusions, and required action set forth in this Order are in addition to, and not in lieu of, any findings, conclusions, and corrective action which may be set forth in the Report, prepared by the Division of Banks pursuant to the 2008 examination/inspection.
71. IT IS FURTHER ORDERED that this Order shall become effective immediately and shall remain in effect unless set aside, limited, or suspended by the Commissioner or upon court order after review under General Laws chapter 30A.

    II. ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING

    A. VIOLATIONS

    NOW, THEREFORE, based upon the Findings of Fact set forth above, the Division hereby sets forth the following Charges against Farkhanda Shah:

72. The Division hereby re-alleges and incorporates by reference the Findings of Fact presented in Paragraphs 1 through 47 of the Order as though fully set forth.
73. The Division hereby re-alleges and incorporates by reference the Conclusions of Law presented in Paragraphs 48 through 62 of the Order as though individually set forth as separate Charges providing the basis of this Order to Show Cause.

    B. ORDER TO SHOW CAUSE

74. WHEREAS, finding it necessary and appropriate and in the public interest, and consistent with the purposes of the laws governing licensed mortgage brokers and loan originators in the Commonwealth;
75. WHEREAS, Pursuant to General Laws chapter 255E, section 12, the Commissioner may issue a written notice of intention to prohibit a person from any further participation, in any manner, in the conduct of the affairs of a mortgage lender or mortgage broker in Massachusetts or to prohibit the person from being employed by, an agent of, or operating on behalf of a licensee under this chapter or any other business which requires a license from the Commissioner;
76. WHEREAS, Pursuant to General Laws chapter 255F, section 12, the Commissioner may issue a written notice of intention to prohibit a person from any further participation, in any manner, in the conduct of the affairs of a mortgage loan originator in Massachusetts or to prohibit the person from being employed by, an agent of, or operating on behalf of a licensee under this chapter or any other business which requires a license from the Commissioner; and
77. WHEREAS, finding that the Charges set forth above, if found to be true and correct, form the legal basis for the action sought to be taken under General Laws chapter 255E, section 6, General Laws chapter 255E, section 12, and General Laws chapter 255F, section 12.
78. IT IS HEREBY ORDERED that Farkhanda Shah shall show cause why her mortgage broker license, MB 4194 should not be revoked pursuant to General Laws chapter 255E, section 6.
79. IT IS FURTHER ORDERED that Farkhanda Shah shall show cause why she should not be prohibited from any further participation, in any manner, in the conduct of the affairs of a mortgage lender, mortgage broker, or as a mortgage loan originator in Massachusetts or to prohibit her from being employed by, an agent of, or operating on behalf of a licensee under chapter 255E or 255F or any other business which requires a license from the Commissioner.

    C. PRAYER FOR RELIEF

80. WHEREFORE, the Division, by and through the Commissioner , prays for a final decision as follows:

    (1.) For a final Agency decision in favor of the Division and against Farkhanda Shah for each Charge set forth in this Order;

    (2.) For a final Agency decision revoking Farkhanda Shah's mortgage broker license, number MB4194 to conduct business as a mortgage broker in Massachusetts;

    (3.) For a final Agency decision prohibiting Farkhanda Shah from applying for or obtaining a mortgage lender, mortgage broker license, or mortgage loan originator license under Massachusetts General Laws chapter 255E, section 2 and Massachusetts General Laws chapter 255F, section 2, or for any other license from the Commissioner, for a period of 36 months from the effective date of the final Agency decision;

    (4.) For a final Agency decision prohibiting Farkhanda Shah from any further participation, in any manner, in the conduct of the affairs of a mortgage lender, mortgage broker, or mortgage loan originator in Massachusetts or to prohibit her from being employed by, an agent of, or operating on behalf of a licensee under Massachusetts General Laws chapter 255E or any other business which requires a license from the Commissioner;

    (5.) For costs and fees of the Division's investigation of this matter; and

    (6.) For such additional equitable relief as the Presiding Officer may deem just and proper including, without limitation, an order directing Farkhanda Shah to issue the monetary reimbursements as set forth in the Order.

    D. NOTICE OF RIGHT TO A HEARING

81. Farkhanda Shah or its authorized representative is required to file an Answer or otherwise respond to the Charges contained in this Order within twenty-one (21) days of its effective date, pursuant to the Standard Adjudicatory Rules of Practice and Procedure, 801 C.M.R. 1.01 (6)(e). If Farkhanda Shah fails to respond to this Order within the twenty-one (21) day period, the Temporary Order to Cease and Desist shall become permanent and final until it is modified or vacated by the Commissioner. Failure to file an Answer may also result in a default judgment against Farkhanda Shah in the matter of the revocation of her mortgage broker license and the issuance of an Order of Prohibition. The Answer, and any subsequent filings that are made in conjunction with this proceeding, shall be directed to the Division, with a copy to Prosecuting Counsel.

    All papers filed with the Division shall be addressed to the attention of:

    Administrative Hearings Officer
    Division of Banks
    One South Station, 3 ^rd Floor
    Boston, Massachusetts 02110
    
    Prosecuting Counsel for this matter is:
    Valerie M. Carbone, Esq.
    Division of Banks
    One South Station, 3 ^rd Floor
    Boston, Massachusetts 02110

82. You are further advised that Farkhanda Shah has the right to be represented by counsel or other representative, to call and examine witnesses, to introduce exhibits, to cross-examine witnesses who testify against Farkhanda Shah, and to present oral argument. The hearing will be held at a date and time to be determined and will be conducted according to Massachusetts General Laws, chapter 30A, sections 10 and 11, and the Standard Adjudicatory Rules of Practice and Procedure, 801 C.M.R. 1.01 and 1.03.
83. Farkhanda Shah or her representative may examine any and all Division records relative to this case prior to the date of the hearing, during normal business hours, at the office of the Prosecuting Counsel. If you elect to undertake such an examination, please contact the Prosecuting Counsel at [phone] in advance to schedule a time that is mutually convenient.

 

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 8th day of June, 2009

By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts