Temporary Order to Cease and Desist Lucner Charles, dba Mass Financial Mortgage Company

Date:	11/05/2007
Organization:	Division of Banks
Docket Number:	2007-033
Location:	Mattapan, MA

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Lucner Charles, d/b/a Mass Financial Mortgage Company, Mattapan, MA - Temporary Order to Cease and Desist

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2007-033

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST &
ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING

In the Matter of
LUCNER CHARLES d/b/a MASS FINANCIAL
MORTGAGE COMPANY
Mattapan, Massachusetts

Mortgage Broker License No(s). MB2239 et al.

The Commissioner of Banks ("Commissioner") having determined that LUCNER CHARLES d/b/a MASS FINANCIAL MORTGAGE COMPANY ("Lucner Charles" or Mass Financial Mortgage"), located at 1601 Blue Hill Avenue, Mattapan, Massachusetts 02126 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 & 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 and 7(b).

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

A. REGULATORY BACKGROUND AND FINDINGS OF FACT

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.
Lucner Charles is, and at all relevant times has been, an individual engaged in the business of a mortgage broker in the Commonwealth with an office located at 1601 Blue Hill Avenue, Mattapan, Massachusetts.
Lucner Charles 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 a mortgage broker license number MB2239 to Lucner Charles to engage in the business of a mortgage broker at 1601 Blue Hill Avenue, Mattapan, Massachusetts on April 18, 2001.
Lucner Charles maintains an additional license for an office location at 100 Main Street, Brockton, Massachusetts. According to records maintained on file with the Division, the Commissioner issued a mortgage broker license, license number MB3309, to Lucner Charles for that location on February 13, 2004.
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 laws, rules, regulations, and regulatory bulletins applicable to the conduct of the business of a mortgage broker.
The 2004 Examination/Inspection
On January 30, 2004, the Division commenced an examination/inspection of the books, accounts, papers, records, and files maintained by Lucner Charles to evaluate Mass Financial Mortgage Company's compliance with the laws, regulations, and regulatory bulletins applicable to the conduct of a mortgage broker business in Massachusetts (the "2004 examination/inspection").
On or about October 28, 2005, based upon information obtained by the Division during the examination/inspection and information submitted by Lucner Charles in response to the 2004 Report, the Division issued an ORDER TO SHOW CAUSE AND NOTICE OF RIGHT TO A HEARING ("ORDER AND NOTICE"), Docket No. 2005-023, against Lucner Charles. The ORDER AND NOTICE set forth the deficiencies, unsatisfactory conditions, and violations of applicable laws and regulations alleged in the Report and in the materials submitted by Lucner Charles in response to the findings of the Report.
On December 9, 2005, Lucner Charles filed an Answer to the ORDER AND NOTICE with the Division whereby Lucner Charles contested the Division's findings and the alleged violations of law contained in the ORDER AND NOTICE.
On March 30, 2007, for the purpose of settlement, the Commissioner and Lucner Charles entered into a Memorandum of Understanding ("Memorandum") to address the matters raised by the findings in the 2004 report. The Memorandum is incorporated herein by reference.
The 2007 Examination/Inspection
On October 15, 2007, pursuant to the authority granted under Massachusetts
General Laws chapter 255E, section 8, the Division commenced an examination/inspection (the "2007 examination/inspection") of the books, accounts, papers, records, and files maintained by Lucner Charles to evaluate his compliance with: (1) the laws, regulations, and regulatory bulletins applicable to the conduct of the mortgage broker business in Massachusetts and (2) the provisions of the Memorandum.
The Division requested that Lucner Charles provide for inspection every loan file maintained for mortgage loans originated during the period of March 1, 2003 through October 15, 2007. In response to the request, Lucner Charles provided four consumer loan files for mortgage loans which were originated during 2006.
Lucner Charles identified the four consumer loan files as the only complete closed files retained by Mass Financial Mortgage.
The Division's Report of Examination/Inspection (the "Report"), which was issued to Lucner Charles on the effective date of this ORDER, presented the findings of the 2007 examination/inspection and alleged significant failures to comply with (1) 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 and (2) the provisions of the Memorandum.
(i) Substantial Non-Compliance with the Terms of a Memorandum of Understanding
Section IX of the Memorandum states:
Failure to comply with the provisions of this MEMORANDUM, as determined by the Commissioner, shall constitute grounds for license revocation or other regulatory action under General Laws chapter 255E, section 6 and the Division's regulation, 209 CMR 42.00, et seq.
Books and records reviewed by the Division's examiners during the 2007 examination/inspection indicate that Lucner Charles engaged in the following acts or practices that were in violation of the Memorandum.
(a) Failure to Properly Disclose Points and Fees
Section I of the Memorandum states:
Lucner Charles shall immediately establish, implement, and maintain procedures to ensure that all broker fees, loan fees, points, or similar fees collected by the Company as compensation for administrative costs incurred in originating the mortgage loan are not charged to consumers except to the extent that such fees or points have been properly disclosed to the consumers by Mass Financial Mortgage, in writing, prior to the closing of the mortgage loan in accordance with Massachusetts General Laws chapter 183, section 63. While this MEMORANDUM is in effect, compliance with this Section shall require that all broker fees, loan fees, points, or similar fees collected by the Company as compensation for administrative costs incurred in originating the mortgage loan be disclosed to the consumer, in writing, at least seventy two (72) hours prior to the closing of the mortgage loan.
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. . . A mortgagor shall not be obligated to pay fees or points which have not been previously disclosed as required herein.
Lucner Charles' books and records reviewed during the 2007 examination/inspection indicate that processing fees, application fees, and origination fees (collectively, "broker fees") were collected from borrowers at the loan closing, as identified in the Report, in amounts which were not accurately disclosed to the borrowers, in writing, to the extent charged at closing, if at all.
Books and records reviewed by the Division's examiners during the 2007 examination/inspection illustrate that Lucner Charles failed to implement adequate procedures, as required by the Memorandum, that would ensure that all broker fees, loan fees, points, or similar fees collected as compensation for administrative costs incurred in originating the mortgage loan were not charged to consumers except to the extent that such fees or points had been properly disclosed to the consumers, in writing, prior to the closing of the mortgage loan.
(b) Frustrating the Division's Efforts to Conduct the Mandated Examination/Inspection
Section II of the Memorandum states, in part:
In not less than thirty (30) days and not more than one hundred eighty (180) days from the effective date of this MEMORANDUM, the Division shall conduct an examination/inspection of Mass Financial Mortgage, at Mass Financial Mortgage's expense, which shall include, but not be limited to, a review of all Massachusetts residential mortgage loans originated by Mass Financial Mortgage since March 1, 2003 in order to identify any mortgage loan transactions in which the amount paid by the consumer as an origination fee, mortgage broker fee, or similar fee, as recorded on the settlement agreement, exceeded the amount disclosed to the consumer, in writing, for such fees prior to the date on which the loan closing occurred. It being understood that any violations of General Laws chapter 183, section 63 relative to the charging of points and fees may require Lucner Charles to reimburse consumers for any undisclosed, or underdisclosed, points and fees charged by Lucner Charles.
At the commencement of the 2007 examination/inspection, the Division's examiners requested that every loan file as of March 1, 2003 be made available for inspection in accordance with Section II of the Memorandum.
In response to the Division's request for loan files, Lucner Charles informed the Division's examiner that he had destroyed all consumer loan files which he had originated during the entire period of March 1, 2003 through December 31, 2005.
In response to the Division's request for loan files, Lucner Charles produced only four of the sixteen loan files reported in his annual report, referenced below in subpart (c), to the Division as having been originated in 2006. Moreover, such files did not contain all papers or records relating to the loans, as further described in Section (I)(A)(i)(d) of this Order.
By failing to properly retain his books and records as required, Lucner Charles prevented the Division from conducting a complete review of Mass Financial Mortgage's loan files since March 1, 2003, as agreed upon pursuant to the terms of Section II of the Memorandum. Therefore, the Division was unable to identify any mortgage loan transactions in which the amount paid by the consumer as an origination fee, mortgage broker fee, or similar fee, as recorded on the settlement agreement, exceeded the amount disclosed to the consumer, in writing, for such fees prior to the date on which the loan closing occurred. By destroying records, which prevented the Division from identifying any instances of undisclosed or underdisclosed fees, Lucner Charles frustrated the Division's attempts to ensure that consumer(s) are properly reimbursed for the difference between the actual charge assessed to the consumer(s) as a loan fee, mortgage broker fee, processing fee, or similar fee and the amount disclosed in writing for such fees prior to closing.
(c) Failure to Submit Required Reports
Section III(b) of the Memorandum states, in part:
On the thirtieth (30 ^th) day after the end of each calendar quarter following the date of this MEMORANDUM, beginning with the calendar quarter ending March 31, 2007, Mass Financial Mortgage shall submit to the Commissioner quarterly financial statements, prepared in accordance with generally accepted accounting principles, for such calendar quarter.
The Division's records indicate that Lucner Charles failed to submit the required quarterly financial statements for the calendar quarter ended June 30, 2007.
Section III(c) of the Memorandum states:
Nothing contained in this Section of this MEMORANDUM is intended to modify, limit, or otherwise release the duties and obligations imposed upon Mass Financial Mortgage to file with the Commissioner, on or before April 15 ^th of each calendar year, any reports required under Massachusetts General Laws chapter 255E, section 8.
Massachusetts General Laws chapter 255E, section 8 states, in part:
Each licensee shall annually, on or before the fifteenth day of April, file a report with the commissioner containing such information as said commissioner may require concerning the business and operations during the preceding calendar year at each licensed place of business conducted by a licensee in the commonwealth.
The Division's records indicate that Lucner Charles submitted his annual report on May 8, 2007, after the filing deadline specified in M.G.L. c. 255E, section 8 and the Memorandum.
Section XI of the Memorandum states,
On the thirtieth (30 ^th) day after the end of each calendar quarter following the date of this MEMORANDUM, beginning with the calendar quarter ended March 31, 2007, Mass Financial Mortgage shall furnish written progress reports to the Division, detailing the form, content and manner of any actions taken to address each Section of this MEMORANDUM, and shall describe, in detail, any other consumer compliance initiatives instituted during the calendar quarter to improve the compliance position of Mass Financial Mortgage, and the results thereof. Each progress report submitted to the Division pursuant to this Section of the MEMORANDUM shall be reviewed and signed by a duly authorized senior officer of Mass Financial Mortgage.
The Division's records indicate that Lucner Charles also failed to submit a progress report for the quarter ended June 30, 2007.
(d) Failure to Properly Maintain and Provide Access to Books and Records
Section IV of the Memorandum states, in part:
Within thirty (30) days from the effective date of this MEMORANDUM, Mass Financial Mortgage shall establish, implement, and maintain written policies and procedures to ensure that Mass Financial Mortgage maintains all books, records, and accounts in accordance with the requirements of Massachusetts General Laws chapter 255E, section 8 and the Division's regulation 209 CMR 42.09. The policies and procedures are to include but are not limited to:

(b) Implementing procedures to ensure the full cooperation of all Mass Financial Mortgage employees with the Division during all future examinations of Mass Financial Mortgage which shall necessarily provide for complete and timely access to its books, records, accounts, and any other additional, relevant materials pursuant to the provisions of Massachusetts General Laws chapter 255E, section 8.
The Division's regulation 209 CMR 42.09(1)(b) 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.

(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.
At the commencement of the 2007 examination/inspection, the Division's examiners requested that every loan file as of March 1, 2003 be made available for inspection in accordance with Section II of the Memorandum which states, "[T]he Division shall conduct an examination/inspection of Mass Financial Mortgage . . . which shall include, but not be limited to, a review of all Massachusetts residential mortgage loans originated by Mass Financial Mortgage since March 1, 2003."
As set forth above, Lucner Charles informed the Division's examiner that he had destroyed all consumer loan files which he had originated during the entire period of March 1, 2003 through December 31, 2005.
As referenced above, Lucner Charles identified the four consumer loan files which were provided during the 2007 examination/inspection as the only complete closed files that he had retained.
The loan files submitted by Lucner Charles, in addition to missing twelve previously reported originated loans, did not contain all papers or records relating to the loans, as required under 209 CMR 42.09(1)(b). Specifically, Lucner Charles failed to retain completed loan applications in any of the four available loan files. In addition, one loan file did not contain a copy of the final HUD-1 settlement statement, as specifically identified in the Report.
As further described in Section (I)(A)(i)(d) of this Order, Lucner Charles' failure to properly maintain and provide access to books and records prevented the Division from conducting a complete review of the Licensee's loan files since March 1, 2003, as agreed upon pursuant to Section II of the Memorandum.
(e) Conducting Mortgage Broker Business Using an Unauthorized Name
Section V of the Memorandum states, in part:
Mass Financial Mortgage, when performing in the capacity of a mortgage broker in Massachusetts, shall at all times conduct business exclusively under the business name stated on its mortgage broker license as issued by the Commissioner.
Massachusetts General Laws chapter 255E, section 5 states, in part:
[A]ny such business shall at all times be conducted in the name of the licensee as it appears on the license.
Lucner Charles is currently licensed to conduct his mortgage broker business in Massachusetts as "Lucner Charles d/b/a Mass Financial Mortgage Company." However, documents contained in the four loan files reviewed during the 2007 examination/inspection revealed that Lucner Charles identified himself as "Mass Financial Mortgage Corp."
(f) Failure to Properly Complete Good Faith Estimates
Section VI of the Memorandum states:
Mass Financial Mortgage shall revise its procedures to ensure that all Good Faith Estimates provided to consumers are completed in accordance with, and within the time period specified, by the provisions of the Real Estate Settlement Procedures Act, 24 CFR Part 3500.7.
The Real Estate Settlement Procedures Act ("RESPA") regulation 24 CFR 3500.7(b) states, 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 based on his or her knowledge of the range of costs.
Books and records reviewed during the 2007 examination/inspection revealed that Lucner Charles failed to provide good faith estimates within the mandated timing requirement in two of the loan files reviewed, as specifically identified in the Report.
The RESPA regulation 24 CMR 3500.7, Appendix C, footnote 1 states, in part:
If the disclosure is being made by a mortgage broker who is not an exclusive agent of the lender, the lender's name will not appear at the top of the form, but the following legend must appear:

This Good Faith Estimate is being provided by ________, a mortgage broker, and no lender has yet been obtained.
Books and records reviewed during the 2007 examination/inspection revealed that the good faith estimates provided by Lucner Charles failed to include the "broker legend," as required.
The RESPA regulation 24 CMR 3500.7, Appendix B section 13 states, in part:
Any . . .fee or payment received by the mortgage broker from either the lender or the borrower arising from the initial funding transaction, including a servicing release premium or yield spread premium, is to be noted on the Good Faith Estimate and listed in the 800 series of the Settlement Statement.
Books and records reviewed during the 2007 examination/inspection revealed that, in one of the loan files reviewed, Lucner Charles failed to disclose the yield spread premium paid at closing on the good faith estimate provided to the borrower(s), as specifically identified in the Report.
(g) Failure to Remit Full Payment of Administrative Penalty
Section IX of the Memorandum states, in part:
In consideration of the activities identified by the Division and detailed in the Report, Mass Financial Mortgage agrees to the following:

(a) Mass Financial Mortgage agrees to submit a payment in the amount of ten thousand dollars ($10,000.00) in satisfaction of an administrative penalty. The administrative penalty shall be satisfied as follows:
1. Three thousand, four hundred dollars ($3,400.00) shall be due and payable upon the execution of this MEMORANDUM;
2. Three thousand, three hundred dollars ($3,300.00) shall be due and payable within ninety (90) days of the effective date of this MEMORANDUM; and
3. Three thousand, three hundred dollars ($3,300.00) shall be due and payable within one hundred and fifty (150) days of the effective date of this MEMORANDUM.
To date, Lucner Charles has failed to submit the installment payments described in Section IX(a)(ii) and Section IX(a)(iii) of the Memorandum. During the 2007 examination/inspection Lucner Charles confirmed that he had failed to remit such payments, which amount to nine thousand six hundred dollars ($9,600.00) in total.
(h) Failure to Implement and Maintain Required Revised Procedures
Section X(c) of the Memorandum states:
Lucner Charles shall establish, implement, and maintain internal controls and loan review procedures to monitor Mass Financial Mortgage's compliance with (i) the revised policies and procedures implemented pursuant to the provisions of this MEMORANDUM and (ii) the relevant statutes, rules and regulations applicable to licensed mortgage brokers in Massachusetts. Such procedures and policies shall be designed to: (i) prevent the recurrence of the violations addressed in the Report and (ii) ensure that Lucner Charles books, records, and accounts relating to the mortgage broker business are maintained in accordance with the record keeping requirements of 209 CMR 42.09 and 209 CMR 48.00 et seq. and available for the Division's inspection
As set forth herein in Paragraphs 6 through 50, Lucner Charles failed to adequately correct the violations identified in the 2004 examination/inspection, failed to adequately implement and maintain revised policies and procedures, and failed to adequately monitor Mass Financial Mortgage's activities to prevent the recurrence of the previous violations.
(ii.) Additional Compliance Violations

(a) Failure to Disclose Criminal Charges in a License Renewal Application
On April 13, 2007 the Division received Lucner Charles' 2007 Mortgage Broker License Renewal Application ("License Renewal Application"), and a signed Criminal Offender Record Information Request Form signed by and for Mr. Charles, authorizing the Division to access his criminal record information ("CORI"), as required pursuant to the Division's licensing requirements.
Question 4(B) of the License Renewal Application, signed under the pains and penalties of perjury by Mr. Charles, asked the following question: "In the past twelve months, has the licensee, or any control affiliate or control person: (1) been convicted of or plead guilty or nolo contender ("no contest") in a domestic, foreign, or military court to a misdemeanor involving: financial services or a financial services-related business; any fraud, false statements, or omissions; any theft or wrongful taking of property; bribery; perjury; forgery; counterfeiting; extortion; or a conspiracy to commit an of these offenses? (2) been charged with a misdemeanor specified in 4(B)(1)?" The answer to the question provided by Lucner Charles was "No."
The Division received the CORI results from the Criminal History Systems Board ("CHSB"), and it was determined that the question referenced in Paragraph 54 of this Order may not have been answered truthfully, as the CORI indicated that Mr. Charles had been charged with four counts of Larceny by Check. The CORI indicated that Mr. Charles was arraigned for such charges on October 27, 2006 and the charges appeared to be pending as of the date the CORI was generated.
On September 7, 2007, the Division mailed Mr. Charles a letter requesting more information regarding the information revealed on the CORI and advising him of his rights under the CHSB's regulations, including the opportunity to challenge the accuracy or relevance of the information revealed in the CORI. The Division requested that Mr. Charles respond to the letter within ten days and noted that failure to timely respond may result in an adverse decision on Lucner Charles' Renewal Application.
On September 24, 2007, after discussions with Mr. Charles' counsel, the Division mailed Mr. Charles a letter extending the deadline in which to file a written response to the Division's September 7, 2007 letter until October 17, 2007.
To date, the Division has not received the information requested in Paragraph 56 of this ORDER.
(b) Deceptive Practices
During the 2007 examination/inspection, the Division's examiners discovered that financial statements purportedly compiled by a certified public accountant and submitted by Lucner Charles during the 2007 annual license renewal process, in conjunction with Lucner Charles' year-end 2006 annual report to the Division, contained identical asset and income figures as those financial statements compiled by the same certified public accountant and reported in Lucner Charles' year-end 2005 annual report.
Upon closer inspection of the aforementioned financial statements, the examiners determined that the year listed on the "2006" financial statements appeared to have been altered. Specifically, the number "6" appears in a different size and font and the document shows evidence of deliberate manipulation. Such evidence suggests that Lucner Charles submitted the 2005 financial statements during the 2007 license renewal process and altered the "2005" on the document to appear as "2006."
During the 2007 examination/inspection, Lucner Charles provided an unaudited balance sheet and income statement as of October 1, 2007, and the year ended December 31, 2006, as prepared by Lucner Charles' business consultant.
The financial statements referenced in Paragraph 61 included information that indicates that Mass Financial Mortgage's net income had decreased from $122,899 as reported in the Lucner Charles' year-end 2005 financial statements, to $21,398, from gross revenues of $42,358, down from $592,770 in 2005.
Based upon the information contained in Paragraphs 59 through 62, it appears that Lucner Charles may have submitted false financial statements during the 2007 annual license renewal process relative to Lucner Charles' year-end 2006 annual report.
(c) Misleading Representations
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.
Books and records reviewed during the 2007 examination revealed that Lucner Charles 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 would present the appearance that Lucner Charles, a mortgage broker, was approving or funding a loan.
The Division's examiners found that Lucner Charles use of misleading language in the Borrower's Certification and Authorization Form had been identified by the Division of Banks during a previous examination of Lucner Charles and was intended to be addressed and corrected by the terms of the Memorandum.
(d) Failure to Properly Complete and Timely Provide the Attorney General's Mortgage Broker Disclosure Form
The Attorney General's Regulation 940 CMR 8.05(1) states, in part:
It is an unfair or deceptive act or practice for a mortgage broker to fail to provide the . . . Attorney General's Mortgage Broker Disclosure Form (the "Form"). This Form shall be completed with as much information as is available at the time the Form must be provided pursuant to 940 CMR 8.05(5).
Books and records reviewed during the 2007 examination/inspection revealed that, in all loan files reviewed, Lucner Charles failed to complete the Form with all available information.
The Division's examiners found that Lucner Charles' failure to properly complete the Form had been identified by the Division of Banks during a previous examination of Lucner Charles and was intended to be addressed and corrected by the terms of the Memorandum.
The Attorney General's Regulation 940 CMR 8.05(5) states, in part:
It is an unfair of deceptive act or practice for a mortgage broker to fail to provide or mail to the borrower legible copies of the . . .disclosures described in 940 CMR 8.05(1) . . ., no later than three business days after the earliest of the following events:
1. the acceptance by the broker of an oral or written application for a mortgage loan;
2. any communication which leads the broker to incur any expenses on behalf of the borrower; or
3. entering into any oral or written agreement by the mortgage broker and the borrower.
Books and records reviewed during the 2007 examination/inspection revealed that, in two of the loan files reviewed, Lucner Charles failed to provide the Form within the mandated timing requirement, as specifically described in the Report.
(e) Failure to Retain the Loan Origination and Compensation Agreement
The Division's Regulation 209 CMR 42.12A(5) states:
It is a prohibited act or practice of 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.
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.
Books and records reviewed during the 2007 examination/inspection revealed that Lucner Charles failed to retain evidence of having provided the Loan Origination and Compensation Agreement ("LOCA").
Because Lucner Charles failed to retain evidence of having provided the LOCA, the Division's examiners were unable to determine if Lucner Charles had provided the LOCA in accordance with the provisions of 209 CMR 42.12A(5).
(f) Failure to Notify the Division of the Closing and Relocation of Licensed Office Locations
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.
During the 2007 examination/inspection the Division's examiners discovered that Lucner Charles' operations at Mass Financial Mortgage's Brockton office location had ceased as of 2003. Lucner Charles failed to provide the required written notice to the Division that the location had ceased operations.
During the 2007 examination/inspection, the Division's examiners discovered that Lucner Charles' main office location in Mattapan had been closed as of "mid-2006." Lucner Charles failed to provide the required written notice to the Division that such location has ceased operations.
B. CONCLUSIONS OF LAW
Based upon the information contained in Paragraphs 1 through 78, Lucner Charles has failed to demonstrate the character, reputation, integrity, and general fitness that would warrant the belief that the 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 regulation 209 CMR 42.06(2)(c).
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, Lucner Charles has violated Massachusetts General Laws chapter 183, section 63 and the Memorandum.
By destroying all books and records associated with mortgage loans originated between March 1, 2003 and December 31, 2005, Lucner Charles prevented the Division from conducting a review of a mortgage loan portfolio which had exhibited a pattern or practice of reimbursable violations during a prior examination/inspection. Under these circumstances, the destruction of his books and records was in violation of: the Division's regulations 209 CMR 48.03 and 209 CMR 42.09(1); Massachusetts General Laws chapter 255E, section 4 and the Division's regulation 209 CMR 42.06(2)(c); and the Memorandum.
By falsely representing to the Division, through the license renewal application, that he had not been charged with a misdemeanor specified therein in Question 4(B)(1) during the relevant time, Lucner Charles has failed to demonstrate the character, reputation, integrity, and general fitness that would warrant the belief that the 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 regulation 209 CMR 42.06(2)(c).
By altering financial statements submitted to the Division with his 2006 annual report, Lucner Charles has failed to demonstrate the character, reputation, integrity, and general fitness that would warrant the belief that the 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 regulation 209 CMR 42.06(2)(c).
Based upon the information contained in Paragraphs 1 through 78, by conducting business using a name other than that which is stated on his mortgage broker license, Lucner Charles has violated Massachusetts General Laws Chapter 255E, section 5.
Based upon the information contained in Paragraphs 1 through 78, by failing to properly complete the Good Faith Estimate disclosure and failing to provide it within the mandated timing requirements, Lucner Charles has violated the RESPA regulation 24 CFR 3500 and the Memorandum.
Based upon the information contained in Paragraphs 1 through 78, by providing mortgage loan applicants with a Borrower's Certification and Authorization Form that contains language that presents the appearance that Lucner Charles is approving or funding a loan, Lucner Charles has violated the Attorney General's regulation 940 CMR 8.06(1).
Based upon the information contained in Paragraphs 1 through 78, by failing to provide mortgage loan applicants with the Attorney General's Mortgage Broker Disclosure Form in accordance with, and in the form specified by, the Attorney General's regulations and failing to provide the Form within the mandated timing requirements, Lucner Charles has violated the Attorney General's regulation 940 CMR 8.05(1) and 8.05(5).
Based upon the information contained in Paragraphs 1 through 78, by failing to retain all copies of the Loan Origination and Compensation Agreement provided to consumers, Lucner Charles has violated the Division's regulation 209 CMR 42.12A(5) and 209 CMR 42.09(1)(b).
Based upon the information contained in Paragraphs 1 through 78, by failing to notify the Division of any change or closing of a Massachusetts office location, Lucner Charles has violated the Division's regulation 209 CMR 42.13(2).
Based upon the information contained in Paragraphs 1 through 78, the Commissioner has determined that:
1. Lucner Charles has engaged in, is engaging in, or is about to engage in, acts or practices which warrant the belief that Mass Financial Mortgage 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
2. The public interest will be irreparably harmed by delay in issuing an Order to cease and desist to Lucner Charles.
Based upon the information contained in Paragraphs 1 through 78, had the facts and conditions found therein existed at the time of Lucner Charles's original mortgage broker license application, the Commissioner would have been warranted in refusing to issue such license. Further, the facts and conditions set forth in paragraphs 1 through 78 present sufficient grounds for the revocation of Lucner Charles's mortgage broker license pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulation at 209 CMR 42.07(2)(b).
C. ORDER TO CEASE AND DESIST

After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
ORDERED that Lucner Charles and any and all employees and independent contractors operating on behalf of Lucner Charles, and their successors or assigns, shall immediately cease engaging in the activities of a mortgage broker, as those activities are 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 ORDER. Therefore, Lucner Charles is ordered to immediately cease soliciting or accepting, either directly or indirectly, any residential mortgage loan applications from consumers for residential property located in Massachusetts.
IT IS FURTHER ORDERED that Lucner Charles 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.
IT IS FURTHER ORDERED that Lucner Charles 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 its pending Massachusetts residential mortgage loan applications. Lucner Charles shall obtain the prior approval of the Commissioner before placing such applications to the qualified broker(s) or lender(s).
IT IS FURTHER ORDERED that Lucner Charles shall submit to the Commissioner a detailed record, prepared as of the date of submission, of all of the Mass Financial 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 the Mass Financial Mortgage's open application list, including but not necessarily limited to, the following:
All information on file as of the date of submission regarding Lucner Charles's open application list including but not limited to, the following: The names of all individuals from whom Lucner Charles 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 or lender with whom the applicants' application was placed. The latter list should include telephone numbers of contact persons familiar with the Mass Financial Mortgage's submitted loans.
IT IS FURTHER ORDERED that Lucner Charles shall immediately secure all pending residential mortgage loan application files and shall make such files, in their entirety, available to the Commissioner upon request.
IT IS FURTHER ORDERED that within thirty (30) days from the effective date of this ORDER, Lucner Charles shall reimburse the consumer(s) identified in the Report the difference between the actual charge assessed to the consumer(s) as a loan fee, mortgage broker fee, processing fee, or similar fee and the amount disclosed in writing for such fees prior to closing.
IT IS FURTHER ORDERED that within thirty five (35) days of the effective date of this ORDER, Lucner Charles shall submit to the Division evidence of the reimbursements issued to consumer(s) pursuant to Paragraph 97 of this ORDER, including the consumers' names, the dates the loans closed, check numbers, and the amount of the reimbursements.
IT IS FURTHER ORDERED that, in consideration of Lucner Charles' destruction of his books and records in violation of Massachusetts General Laws chapter 255E, section 4 and 209 CMR 48.03 and 209 CMR 42.09(1), within ten (10) days of the effective date of this ORDER, Lucner Charles shall contact each of the lenders with whom he placed mortgage loan applications during the period of March 1, 2003 and December 31, 2006 in order to obtain all of the books, records, documents, accounts, papers, and correspondence associated with each of the loans and to reconstruct each of the loan files to their original condition prior to their destruction by Lucner Charles.
1. Within forty-five (45) days of the effective date of this ORDER, Lucner Charles shall submit to the Division all of the books, records, documents, accounts, papers, and correspondence obtained from the mortgage lender(s) in order to permit the Division to conduct the file review required by Section II of the Memorandum;
2. The Division shall conduct an examination/inspection, at Lucner Charles' expense, which shall include, but not be limited to, a review of all Massachusetts residential mortgage loans originated by Lucner Charles since March 1, 2003 in order to identify any mortgage loan transactions in which the amount paid by the consumer as an origination fee, mortgage broker fee, or similar fee, as recorded on the settlement agreement, exceeded the amount disclosed to the consumer, in writing, for such fees prior to the date on which the loan closing occurred; and
3. It being understood that any violations of General Laws chapter 183, section 63 relative to the charging of points and fees will require Lucner Charles to reimburse consumers for any undisclosed, or underdisclosed, points and fees charged by Lucner Charles.
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.
IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such ORDER shall become permanent and final only upon receipt of a written request for such a hearing from Lucner Charles within twenty (20) days of the effective date of this ORDER. If no hearing is requested within this twenty (20) day period, this ORDER shall become permanent and final until it is modified or vacated by the Commissioner.
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 Lucner Charles:
The Division hereby re-alleges and incorporates by reference the Findings of Fact presented in Paragraphs 1 through 78 of the ORDER as though fully set forth.
The Division hereby re-alleges and incorporates by reference the Conclusions of Law presented in Paragraphs 79 through 91 of the ORDER as though individually set forth as separate Charges providing the basis of this ORDER TO SHOW CAUSE.
B. PRAYER FOR RELIEF
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 Lucner Charles for each Charge set forth in this ORDER TO SHOW CAUSE;

(2.) For a final Agency decision revoking Lucner Charles's mortgage broker licenses, numbers MB2239 and MB3309 to conduct business as a mortgage broker in Massachusetts;

(3.) For a final Agency decision prohibiting Lucner Charles from applying for a mortgage lender or mortgage broker license under Massachusetts General Laws chapter 255E, section 2, or for any other license from the Commissioner, for a period of forty-eight (48) months from the effective date of the final Agency decision;

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

(5.) For such additional equitable relief as the Presiding Officer may deem just and proper including, without limitation, an order directing Lucner Charles to issue the reimbursements as set forth in the ORDER.

C. NOTICE OF RIGHT TO A HEARING
Lucner Charles or his authorized representative is required to file an Answer or otherwise respond to the Charges contained in this ORDER TO SHOW CAUSE within twenty-one (21) days of its effective date, pursuant to the Standard Adjudicatory Rules of Practice and Procedure, 801 CMR. 1.01 (6)(e). If Lucner Charles fails to response to this ORDER TO SHOW CAUSE 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 Lucner Charles in the matter of the revocation of his mortgage broker license(s). 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
You are further advised that Lucner Charles 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 Lucner Charles, 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 CMR 1.01 and 1.03.
Lucner Charles or his 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 Division's office. If you elect to undertake such an examination, please contact Prosecuting Counsel at (617) 956-1552 in advance to schedule a time that is mutually convenient.

Dated at Boston, Massachusetts, this 5th day of November, 2007.

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

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