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The Commissioner of Banks ("Commissioner") having determined that FIRST CALL MORTGAGE COMPANY, INC., ("First Call Mortgage" or the "Corporation"), located at 200 Brickstone Square, Suite 303, Andover, 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, 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 ("Temporary Order") pursuant to General Laws chapter 255E, section 7(b).
FINDINGS OF FACT
A. Unfair and/or Deceptive Business Practices
Misleading Representations of a Prospective Borrower's Income
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.
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.
B. Misrepresentation to the Division's Examiners
...Please send an email clarifying whether your company brokers and/or closes reverse mortgages...Please note that mortgage lenders wishing to close or fund reverse mortgages must submit a reverse mortgage program to the Commissioner of Banks for review and be approved prior to offering such a program. This is a requirement for all institutions and companies that wish to offer reverse mortgages, regardless of whether they are licensed or exempt from licensing under the provisions of M.G.L. c. 255E, Section 2, (i.e. a bank, credit union, etc.). The program must include all information requested in the following statutes: M.G.L. c.183, Section 67 and M.G.L. c. 167E, Section 7. Please submit your loan documentation along with your reverse mortgage program....
C. Violation of Massachusetts Reverse Mortgage Statutory Requirements
Making Reverse Mortgage Loans without Approval
Failure to Demonstrate Compliance with Massachusetts Borrower Protections in Reverse Mortgage Transactions
The commissioner shall not approve a program for reverse mortgage loans which does not include the following:-
(2) an applicant for the loan shall not be bound for 7 days after his acceptance, in writing, of the lender's written commitment to make the loan.
Failure to Document a Prospective Borrower's Completion of Mandatory Counseling with an Approved Agency
A bank shall not make a reverse mortgage loan as provided in this section until it has received a notice, in writing, that the prospective borrower has completed a reverse mortgage counseling program which has been approved by the executive office of elder affairs and which shall include instruction on reverse mortgage loans. The counseling program shall include, but is not limited to...
D. Issuance of Mortgage Loan Rate Lock Agreements
It is a prohibited act or practice for a mortgage broker to issue a mortgage loan rate lock commitment on its own behalf or on behalf of a mortgage lender, or to imply to a consumer that it can lock a rate on behalf of the consumer. Nothing herein shall be construed to prohibit a mortgage broker from taking a rate lock commitment fee for transmittal to a mortgage lender prior to the issuance by the mortgage lender of a commitment or approval, provided that prior to the taking of a rate lock commitment fee:
(a) the mortgage broker provides the consumer with a mortgage loan rate lock commitment from the mortgage lender which intends to make the loan, which conforms with the requirements of 209 CMR 42.11A; and
(b) the rate lock commitment fee is made payable by the consumer to the mortgage lender which intends to make the loan. 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".
E. 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.
F. Failure to Provide the Division Required Notice of Significant Events
Failure to Provide Notice of Change in Ownership
15 days prior to any proposed change in control in the ownership of a Licensee, or among the officers, partners or directors of a Licensee, a notice shall forthwith be filed with the Commissioner who may thereupon cause such investigation to be made as he deems necessary, as if it were a new license. In the case of a corporation, control is defined as a change of ownership by a person or group acting in concert to acquire ten percent of the stock, or the ability of a person or group acting in concert to elect a majority of the directors or otherwise effect a change in policy of the corporation.
G. Failure to Properly Maintain Books and Records
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...
(b) The 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; a copy of the settlement statement; an account of fees received in connection with the loan; correspondence; papers or records relating to the loan; and such other documents as the Commissioner may require.
H. Misleading Statements
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.
CONCLUSIONS OF LAW
ORDER TO CEASE AND DESIST
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 24th day of September, 2008
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts