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COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MORTGAGE LENDER AND
Docket No. 2009-003
FINDINGS OF FACT AND TEMPORARY
ORDER TO CEASE AND DESIST
In the Matter of
MORTGAGE ASSOCIATES, INC.
North Dartmouth, Massachusetts
Mortgage Company License No(s). MC0112
MC2336, MC4785 and MC5244
The Commissioner of Banks ("Commissioner") having determined that MORTGAGE ASSOCIATES, INC., ("Mortgage Associates" or the "Corporation"), located at 125 Faunce Corner Road, Unit C, North Dartmouth, 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 or Deceptive Acts and Practices
a. Misleading Representations of a Prospective Borrower's 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. Alteration and/or Manipulation of Mortgage Loan Documents
It is a prohibited act or practice for a mortgage broker or mortgage lender to sign a consumer's name to a mortgage loan application or mortgage loan documents on behalf of a consumer.
c. Misrepresentation of the Applicant's Residency Status
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. Failure to Maintain Net Worth Requirements
(2)(a)... An Applicant shall demonstrate and maintain:
1. a net worth of not less than $100,000; or
2. a combination of a net worth of not less than $ 25,000 and a bond of up to $ 75,000 in such form and with such sureties as may be approved by the Commissioner, provided such net worth and bond in the aggregate equal or exceed $ 100,000.
D. 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.
E. 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.
F. Failure to Properly Maintain Books and Records
A licensee shall keep and use such business records in such form and at such location as said commissioner shall, by regulation, determine, which shall enable said commissioner to determine whether such licensee is complying with the provisions of this chapter and any rules or regulations promulgated hereunder by said commissioner and any other law, rule or regulation applicable to the conduct of the business for which it is licensed under this chapter.
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.
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.
G. 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.
H. Failure to Properly Complete Good Faith Estimates
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 HUD-1 Settlement Statement.
I. Failure to Provide the Division Required Notice of Significant Events
a. Failure to Provide Notice of Change in Net Worth
A Licensee shall notify the Commissioner immediately, and in writing within one business day, of the occurrence of ... (k) Any change to net worth resulting from market valuation or future loss liability or any other change which causes the net worth of the licensee to fall below the requirements of 209 CMR 42.03, 209 CMR 42.06, 209 CMR 42.08A, and 209 CMR 42.11A(1)(a).
b. 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.
J. 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 January, 2009
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts