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This Order was terminated pursuant to a Consent Order on June 13, 2011.
COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MORTGAGE LENDER AND
Docket No. 2010-001
FINDINGS OF FACT AND
TEMPORARY ORDER TO
CEASE AND DESIST
In the Matter of
FIRST OHIO BANC & LENDING, INC.
Mortgage Company License No.: MC3973
The Commissioner of Banks ("Commissioner") having determined that FIRST OHIO BANC & LENDING, INC., ("First Ohio Banc" or the "Corporation"), located at 6100 Rockside Woods Boulevard, Independence, Ohio, 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) and chapter 255F, section 11(a).
FINDINGS OF FACT
A. 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. 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.
C. Conducting Residential Mortgage Loan Business in Massachusetts with Unlicensed Mortgage Loan Originators
No individual shall act as a mortgage loan originator with respect to any dwelling unless such person has first obtained a mortgage loan originator license from the commissioner or is exempt from the licensure requirement . . . No person shall knowingly employ or retain a mortgage loan originator unless the mortgage loan originator is licensed under this chapter or is exempt from the licensure requirement.
The commissioner may suspend, revoke or refuse to renew the license of the entity employing any licensed mortgage originator upon finding that: (i) the entity knew or reasonably should have known that the mortgage loan originator violated this chapter or any rule or regulation promulgated hereunder, or any other law applicable to the conduct of its business; (ii) the entity knew of any fact or condition which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license; or (iii) the mortgage loan originator committed any fraud, misappropriated funds or misrepresented any of the material particulars of a mortgage loan transaction approved by the entity.
It is a prohibited act or practice for a mortgage broker or a mortgage lender to conduct business with an individual who should be licensed as a mortgage loan originator under M.G.L. c. 255F, and who the mortgage broker or mortgage lender knows or should know is an unlicensed mortgage loan originator.
D. Engaging in the Mortgage Lender and Mortgage Broker Business in Massachusetts from Unlicensed Locations
Each [mortgage broker/mortgage lender] license shall state the address at which the business is to be conducted and shall state the name of the licensee. If a licensee intends to carry on such business at any place in addition to the address on the license, he shall so notify the commissioner, in writing, at least 30 days prior thereto.
A Licensee who intends to carry on its business at any location in addition to the address on its original license shall notify the Commissioner, in writing, at least 30 days prior to the opening of the branch location. Such notice shall contain the address of any such place and such other information as the Commissioner may require.
E. Excessive Late Charges
A mortgagee, assignee or holder of a mortgage note secured by a first or subordinate lien on a dwelling house of 4 or less separate households or on a residential condominium unit occupied or to be occupied in whole or in part by the mortgagor shall not require the mortgagor to pay a penalty or late charge for any payment paid within 15 days or in the case of a bi-weekly mortgage payment, paid within 10 days, from the date the payment is due.
In no event, in assessing a penalty because of the delinquency in making all or any part of a periodic payment under a mortgage note, shall the penalty or late charge exceed 3 per cent of the amount of principal and interest overdue, and in calculating the penalty or late charge, any amount of the periodic payment representing estimated tax payments required by the terms of the mortgage note or deed shall not be included.
F. Failure to Provide Consumers with Accurate Variable Rate Loan Program Disclosure
The maximum interest rate and payment for a $10,000 loan originated at the initial interest rate (index value plus margin, adjusted by the amount of any discount or premium) in effect as of an identified month and year for the loan program disclosure assuming the maximum periodic increases in rates and payments under the program; and the initial interest rate and payment for that loan and a statement that the periodic payment may increase or decrease substantially depending on changes in the rate.
G. Understated Finance Charges
The annual percentage rate applicable to any extension of consumer credit shall be determined in accordance with the regulations of the commissioner.
In a transaction secured by real property or a dwelling, the disclosed finance charge and other disclosures affected by the disclosed finance charge (including the amount financed and the annual percentage rate) shall be treated as accurate if the amount disclosed as the finance charge:
1. is understated by no more than $100; or
2. is greater than the amount required to be disclosed.
H. Failure to Provide Required Statements and Information
Every application for a mortgage loan on 1-to-4- family residential property and occupied or to be occupied in whole or in part by the obligor on the mortgage debt shall be made on a printed form which shall contain the following 2 statements in type of at least 2 points larger than the other type used on the application:
A printed copy of the above statements and information shall be given to the mortgagor at the time of making the application.
I. Failure to Disclose License Type and Number
A Licensee shall disclose the type and number of its license(s) to all clients and/or residential mortgage loan applicants in writing at the time a fee is paid or a mortgage loan application is accepted. 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.
J. Failure to Provide Required Notices
Any applicant whose residential mortgage loan application is denied by any mortgagee making five or more mortgage loans in any calendar year on residential property located in the commonwealth of four units or less and occupied in whole or in part by the mortgagor shall be instructed by the mortgagee, in writing, at the time of denial of his right to appeal any such denial to the appropriate mortgage review board.
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.
K. Loan Origination and Compensation Agreement
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.
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.
L. Providing Mortgage Lender Disclosures to Consumers when Acting in the Capacity of a Mortgage Broker
M. 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.
N. 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".
O. Other Violations
CONCLUSIONS OF LAW
ORDER TO CEASE AND DESIST
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 29th day of April, 2010
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts