Temporary Order to Cease and Desist  Metropolitan Capital Consultants, Inc., d/b/a Metropolis Funding

Date:	09/18/2007
Organization:	Division of Banks
Docket Number:	2007-026
Location:	Babylon, NY

Metropolitan Capital Consultants, Inc., d/b/a Metropolis Funding, Babylon, NY - Temporary Order to Cease and Desist

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE BROKER
LICENSING
Docket No. 2007-026

FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST

In the Matter of
METROPOLITAN CAPITAL CONSULTANTS, INC.
d/b/a METROPOLIS FUNDING
Babylon, New York

Mortgage Broker License No. MB2906

The Commissioner of Banks ("Commissioner") having determined that METROPOLITAN CAPITAL CONSULTANTS, INC., d/b/a METROPOLIS FUNDING ("Metropolitan Capital" or the "Corporation"), located at 63 West Main Street, Babylon, New York 11702 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

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. Metropolitan Capital 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 to Metropolitan Capital to engage in the business of a mortgage broker in Massachusetts on or about December 6, 2002.
3. Metropolitan Capital is, and at all relevant times, has been a foreign corporation conducting business in the Commonwealth of Massachusetts. Metropolitan Capital's main office is located at 63 West Main Street, Babylon, New York.
4. Massachusetts General Laws chapter 255E, section 8 states, in part, that:

   Each licensee shall, when directed by said commissioner, permit said commissioner or his duly authorized representative to inspect its relevant records and evidence of compliance with the provisions of this chapter or any rule or regulation issued hereunder and with any other law, rule or regulation applicable to the conduct of the business for which it is licensed under this chapter . . . . For the purposes of such inspection, said commissioner or his representative shall have access to the offices and place of business, books, accounts, papers, records and files of all such licensees.

5. The Division's regulation governing the maintenance of books and records, at 209 CMR 48.04 states, in part:

   "Each Licensee shall keep and use its books, records, and accounts within the Commonwealth, except, however, that with the prior approval by the Commissioner of a written plan, a Licensee may keep such books, records, and accounts at a location, or locations, outside of the Commonwealth. Such written plan shall contain:
   
   (1) an agreement to provide access, within 72 hours of an official request, to any requested books, records, and accounts to a suitable and mutually agreed upon location within the Commonwealth for the purpose of examination…"

6. Pursuant to the Division's regulation 209 CMR 48.04, the Commissioner approved Metropolitan Capital's out-of-state record keeping plan, allowing the Corporation to maintain its books and records at its main office in Babylon, New York.
7. The out-of-state record keeping plan referenced in Paragraph 6 of this Temporary Order provides that, in response to a request from the Division, Metropolitan Capital shall send requested books, records and accounts to the Division's offices in the Commonwealth for the Division's examination/inspection purposes.
8. On Monday, July 16, 2007, pursuant to Massachusetts General Laws chapter 255E, section 8, the Division requested access to Metropolitan Capital's books and records for the purpose of assessing the Corporation's level of compliance with applicable Massachusetts statutes and the Division's regulations governing the conduct of those engaged in the business of a mortgage broker in the Commonwealth.
9. On July 16, 2007, the Division's examiner e-mailed Metropolitan Capital a "first-day letter" to an e-mail address provided by the Corporation to the Division and maintained in the Division's records. In addition, the Division's examiner left a voicemail message on the Corporation's general voicemail to notify Metropolitan Capital that an examination had been scheduled and to alert the Corporation that the aforementioned e-mail had been sent. The "first day letter" required that the requested information be made available to the Division no later than two weeks from the date of the letter. The records requested included, but were not limited to:
   1. Current balance sheet and income and expense statement for the interim period from the last fiscal year end through present;
   2. Reconcilement(s) for all cash accounts, including the operating account;
   3. Reconcilement(s) for all customer escrow accounts;
   4. Aggregate dollar balance of all customer rate lock commitment fees and deferred origination fees held;
   5. Most recent internal audit report;
   6. Officer's questionnaire; and
   7. Loan list for all activity as of the date of the last examination/inspection.
10. On, Thursday, July 19, 2007, the Division's examiner sent out a second e-mail reminding the Corporation that the information requested in Paragraph 9 of this Temporary Order would be due within two weeks.
11. As of Tuesday, July 24, 2007, the Corporation had failed to respond to the Division's requests for information. On July 24, 2007 the Division's examiner contacted Mr. Michael Gross, a representative of Metropolitan Capital via telephone to reiterate the Division's requests for records. Mr. Gross informed the Division's examiner that the Corporation did not usually check the e-mail account to which the original e-mail had been sent. As a result, the Division's examiner e-mailed the information requested in Paragraph 9 of this Temporary Order, including the "first day letter," to Mr. Gross's personal e-mail and noted that the Corporation should forward a loan list "as soon as possible," so that the examination could commence.
12. On Friday, July 27, 2007, the Division's examiner e-mailed Mr. Gross once again and requested the loan list, and reminded Mr. Gross that all information requested in Paragraph 9 of this Temporary Order would be due at the latest, on Monday, July 30, 2007.
13. On Friday, July 27, 2007, Mr. Gross replied to the Division's examiner's e-mail of July 27th and requested some additional time to submit all required information to the Division. Mr. Gross stated that he would have "the loan list … returned by Monday [Monday July, 30, 2007] before noon."
14. On Friday, July 27, 2007, the Division's examiner's contacted Mr. Gross via telephone and stated that if Mr. Gross submitted the files by Monday, July 30, 2007, that would be satisfactory.
15. On Tuesday, July 31, 2007, the Division's examiner e-mailed Mr. Gross to remind him that at the very least, the Division would need a loan list by the end of the day, and noted that the Division had received none of the information that Mr. Gross had stated he would forward to the Division as referenced in Paragraph 13 of this Temporary Order.
16. On Tuesday, July 31, 2007, in response to the e-mail sent by the Division's examiner, Mr. Gross forwarded a loan list with Massachusetts loans originated since the Corporation's most recent examination. The list did not contain all the information requested in the Division's July 27, 2007 e-mail. Specifically the loan list did not include loan numbers, commissions received, lender/investor information, identification of originators, application documentation program (stated, full, limited, etc.), application information, including receipt date, status, decision date, action taken, etc. Mr. Gross noted in his e-mail that he was "working on a new report."
17. On Tuesday, July 31, 2007, after reviewing the loan list provided by Mr. Gross, the Division requested approximately fifteen (15) loan files for review. Mr. Gross e-mailed the Division on Tuesday, July 31, 2007 indicating that the "files [were to be copied] and sent via UPS ASAP."
18. On Monday, August 6, 2007, the Division's examiner sent Mr. Gross an e-mail requesting the files that were to be sent pursuant to the Division's requests referenced in Paragraphs 9 and 14 of this Temporary Order.
19. On Tuesday, August 7, 2007, at approximately 7:28 p.m. EST, Mr. Gross e-mailed the Division's examiner and noted that he was "making copies [of the files] as quickly as possible." The e-mail further stated that Mr. Gross would "make sure the files arrived [sic] by weeks end."
20. On Thursday, August 23, 2007, as a result of the events referenced in Paragraphs 6 through 19 of this Temporary Order, the Division renewed its request via a letter sent by certified mail and facsimile to the Corporation's office of record. The request required Metropolitan Capital to submit the records by no later than 72 hours after receipt of the letter. The Division's letter also stated that failure to submit the requested documents presents sufficient grounds for the assessment of a penalty of $5,000 for each day that such records have not been provided after the expiration of the 72 hour period, up to a maximum of $100,000, pursuant to M.G.L. c. 255E, section 11. The USPS tracking records obtained by the Division indicate that the letter was delivered on August 29, 2007 at 12:23 p.m.
21. The Division's regulation at 209 CMR 48.06(2) states, in part, that:

    Failure of a Licensee to keep its books and records in accordance with 209 CMR 48.00 et seq. may result in suspension or revocation of the license under the authority contained in the specific statute applicable to the Licensee.

22. As of the effective date of this TEMPORARY ORDER, all of the documents requested by the Division, as referenced in Paragraphs 9 and 17 of this Order, have not been provided to the Division.

    CONCLUSIONS OF LAW

23. Based upon the information contained in Paragraphs 1 through 22, Metropolitan Capital 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).
24. Based upon the information contained in Paragraphs 1 through 22, Metropolitan Capital repeatedly failed to provide the Division's representatives with access to Metropolitan Capital's books, accounts, records and files to permit an inspection of such records, in violation of Massachusetts General Laws chapter 255E, section 8.
25. Based upon the information contained in Paragraphs 1 through 22, Metropolitan Capital repeatedly failed to provide the Division's representatives with access to Metropolitan Capital's books, accounts, records and files to permit an inspection in violation of the Division's regulation 209 CMR 48.04(1), which requires that such records be provided within 72 hours of an official request and in violation of Metropolitan Capital's out-of-state record keeping plan approved pursuant thereto.
26. Based upon the information contained in Paragraphs 1 through 22, the Commissioner has determined that:
    1. Metropolitan Capital has engaged in, is engaging in, or is about to engage in, acts or practices which warrant the belief that it 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 Metropolitan Capital.
27. Based upon the information contained in Paragraphs 1 through 22, had the facts and conditions found therein existed at the time of Metropolitan Capital'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 22 present sufficient grounds for the revocation of Metropolitan Capital'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).

    ORDER TO CEASE AND DESIST

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

28. ORDERED that Metropolitan Capital and any and all officers, directors, employees, independent contractors, or agents operating on behalf of Metropolitan Capital, 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 Temporary Order. Therefore, Metropolitan Capital 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.
29. IT IS FURTHER ORDERED that Metropolitan Capital, 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.
30. IT IS FURTHER ORDERED that Metropolitan Capital 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. Metropolitan Capital shall obtain the prior approval of the Commissioner before placing such applications to the qualified broker(s) or lender(s).
31. IT IS FURTHER ORDERED that Metropolitan Capital shall submit to the Commissioner a detailed record, prepared as of the date of submission, of all of the Corporation'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 the Corporation's open application list, including but not necessarily limited to, the following:

    All information on file as of the date of submission regarding Metropolitan Capital's open application list as a mortgage broker, including but not limited to, the following: The names of all individuals from whom Metropolitan Capital 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 Corporation's submitted loans.

32. Metropolitan Capital shall immediately secure all pending residential mortgage loan application files and, to the extent that any original documents must be forwarded to the relevant mortgage lender(s) and or mortgage broker(s) pursuant to Paragraph 30 of this Temporary Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in Metropolitan Capital's books and records and shall be available to the Commissioner, in their entirety, upon request.
33. 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 General Laws chapter 30A.
34. 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 Metropolitan Capital 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 18th day of September, 2007.

By: Steven L. Antonakes
Commissioner of Banks