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Temporary Order to Cease and Desist

Temporary Order to Cease and Desist  INSTAFI.COM

Date: 12/23/2003
Organization: Division of Banks
Docket Number: 2003-039
Location: Irvine, CA
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INSTAFI.COM, Irvine, CA - Temporary Order to Cease and Desist

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2003-039

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST

In the Matter of
INSTAFI.COM
Irvine, California

Mortgage Lender and Mortgage Broker
License No. MC2158 and MC3119

The Commissioner of Banks ("Commissioner") having determined that INSTAFI.COM ("Instafi.com"), located at 2600 Michaelson Drive, Suite 300, Irvine, California has engaged, 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 ("TEMPORARY ORDER") pursuant to General Laws chapter 255E, section 7(b).

FINDINGS OF FACT

  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 lender or a mortgage broker, or both, pursuant to Massachusetts General Laws chapter 255E, section 2.

  2. Instafi.com is, and at all relevant times has been, organized under the laws of the State of California. Instafi.com is located at 2600 Michaelson Drive, Suite 300, Irvine, California, according to records submitted by Instafi.com and maintained on file with the Division.

  3. Instafi.com is licensed by the Commissioner as a mortgage lender and as a mortgage broker as required by General Laws chapter 255E, section 2. Instafi.com holds mortgage lender and mortgage broker license numbers MC2158 and MC3119 which are set to expire on May 31, 2004.

  4. On or about December 22, 2003, the Division received a copy of an Internet news article which reported that Instafi.com had gone out of business. Comments offered by a representative of Instafi.com's management, which were also included in the article, confirmed that Instafi.com was ceasing operations and that a reduced staff had been retained to dissolve the business.

  5. The Internet news article further reported that several hundred pending applications, initially accepted by Instafi.com, had been transferred to another California-based mortgage lender company, similarly licensed in the Commonwealth of Massachusetts as a mortgage lender.

  6. A representative of the Division, during the course of his official duties, was able to confirm with a representative of the mortgage lender licensee referenced above in Section 5, that approximately five of the mortgage loan applications which the licensee had received from Instafi.com related to residential property located in Massachusetts.

  7. As of the effective date of this TEMPORARY ORDER, the Division had not received from Instafi.com any written or verbal notification that Instafi.com intended to close its business at either of the two licensed locations maintained by Instafi.com.

  8. As of the effective date of this TEMPORARY ORDER, the Division had not received from Instafi.com any written or verbal notification of a change in the officers or directors of Instafi.com.

CONCLUSIONS OF LAW

  1. Based upon the information contained in paragraphs 1 through 8, Instafi.com failed to provide the Commissioner with prior written notice of the closing for mortgage lender or mortgage broker activity of either of the licensed locations maintained by Instafi.com in violation of Massachusetts General Laws chapter 255E, section 5.

  2. Based upon the information contained in paragraphs 1 through 8, the Commissioner has reason to believe that Instafi.com has conducted, or is conducting, its business in an unsafe and unsound manner in violation of the Division's regulation 209 CMR 42.04(2)(b)(3) and 209 CMR 42.07(2)(b)(3).

  3. Based upon the information contained in paragraphs 1 through 8, the Commissioner has reason to believe that:

    1. Instafi.com has engaged in, or is about to engage in, acts or practices which warrant the belief that Instafi.com is not operating honestly, fairly, soundly and efficiently in the public interest in violation of standards governing the licensing and conduct of a mortgage lender or mortgage broker, or both, including, but not limited to, the provisions under General Laws chapter 255E, section 4, and the Division's regulations at 209 CMR 42.00 et seq.

    2. The public interest will be irreparably harmed by delay in issuing a TEMPORARY ORDER TO CEASE AND DESIST to Instafi.com.

ORDER TO CEASE AND DESIST

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

  2. ORDERED that Instafi.com, its officers, directors, employees, and their successors or assigns, shall immediately cease engaging in the activities of a mortgage broker, as defined under Massachusetts General Laws chapter 255E, section 1, relative to any residential property in Massachusetts, not otherwise expressly permitted by the terms of this TEMPORARY ORDER. Therefore, Instafi.com is ordered to immediately cease soliciting or accepting residential mortgage loan applications from consumers for residential property located in Massachusetts.

  3. IT IS FURTHER ORDERED that Instafi.com, its officers, directors, employees, and their successors or assigns, shall immediately cease engaging in the activities of a mortgage lender, as defined under Massachusetts General Laws chapter 255E, section 1, relative to any residential property in Massachusetts, not otherwise expressly permitted by the terms of this TEMPORARY ORDER.

  4. IT IS FURTHER ORDERED that Instafi.com shall immediately place any fees previously collected from Massachusetts consumers relative to any pending mortgage loan applications in a separate escrow account maintained at a federally insured bank.

  5. IT IS FURTHER ORDERED that Instafi.com shall place its entire open application list to a qualified lender with no loss to applicants. The open application list to be placed with a qualified lender shall include all transactions in which Instafi.com was performing in the capacity of either a mortgage broker or a mortgage lender. Instafi.com shall obtain the prior approval of the Commissioner before placing any such additional applications, not previously transferred, to the qualified lender.

  6. IT IS FURTHER ORDERED that Instafi.com shall submit to the Commissioner a detailed record of all of the Instafi.com'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 TEMPORARY ORDER and shall include all information on file, regarding Instafi.com's open application list, including but not necessarily limited to, the following:

    The names of all individuals from whom Instafi.com 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); scheduled closing dates; an indication of whether Instafi.com was performing in the capacity of a mortgage broker or a mortgage lender in the transaction; and a list of applicable wholesale lenders. The latter list should include telephone numbers of contact persons familiar with Instafi.com's submitted loans.

  7. IT IS FURTHER ORDERED that Instafi.com shall submit to the Commissioner Instafi.com's year-to-date balance sheet and statement of income and expense. The balance sheet should indicate Instafi.com's cash position at each of its depository banks as well as the corresponding bank account numbers. The balance sheet and statement of income and expense shall be signed and dated by an authorized officer of Instafi.com under the pains and penalties of perjury to certify that the information reported is true and accurate and prepared in accordance with generally accepted accounting principles.

  8. IT IS FURTHER ORDERED that this TEMPORARY 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 Massachusetts General Laws chapter 30A. Provided, however, that the provisions of this TEMPORARY ORDER shall not limit, estop, or otherwise prevent the Division, or any federal or state agency or department, from taking any other action affecting Instafi.com or any of its officers and directors, or their successors or assigns.

  9. IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such TEMPORARY ORDER shall become permanent and final only upon receipt of a written request for such a hearing from Instafi.com within twenty (20) days of the effective date of this TEMPORARY ORDER. If no hearing is requested within this twenty (20) day period, this TEMPORARY ORDER shall become permanent and final until it is modified or vacated by the Commissioner.

By ORDER AND direction of the Commissioner of Banks.

Dated at Boston, Massachusetts, this 23rd day of December, 2003.

By: Thomas J. Curry
Commissioner of Banks
Commonwealth of Massachusetts

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