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COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
Docket No. 2009-004
FINDINGS OF FACT AND TEMPORARY
ORDER TO CEASE AND DESIST
In the Matter of
MORTGAGE FUNDING CORP.
Mortgage Broker License No. MB5024
The Commissioner of Banks ("Commissioner") having determined that MORTGAGE FUNDING CORP., ("Mortgage Funding" or the "Corporation"), located at 15 Columbia Road, Unit 9, Pembroke, 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
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.
(a). 131073805 and 301494675-4; (b). 3015337219; (c). 0001259377 and 0001259396; (d). 149879727 and 149879927; (e). 3500012254; and (f). 301530217. The examiners' specific findings are fully described in the Report and are incorporated herein by reference.
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. Providing Mortgage Lender Disclosures to Consumers
D. 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.
E. Refinancing in the Borrower's Interest
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.
F. Engaging in Prohibited Advertising Practices
It is an unfair or deceptive act or practice for a mortgage broker or lender to make any representation or statement of fact in an advertisement if the representation or statement is false or misleading or has the tendency or capacity to be misleading, or if the mortgage broker or lender does not have sufficient information upon which a reasonable belief in the truth of the representation or statement could be based.
No advertisement by a mortgage broker in any media shall contain language which indicates or suggests that the mortgage broker will fund or approve a mortgage loan or guarantee any rate.
(4) It is an unfair or deceptive act or practice for a mortgage broker or lender to engage in bait advertising or to misrepresent (directly or by failure to adequately disclose) the terms, conditions or charges incident to the mortgage loan being advertised in any advertisement. Violation of 940 CMR 8.04(4) shall include, but not be limited to:
(d) the advertisement through terms such as "bad credit no problem" or words of similar import or that an applicant will have unqualified access to credit without clearly and conspicuously disclosing the material limitations on the availability of credit that may exist, such as:
CONCLUSIONS OF LAW
ORDER TO CEASE AND DESIST
All information on file as of the date of submission regarding Mortgage Funding's open application list as a mortgage broker, including but not limited to, the following: The names of all individuals from whom Mortgage Funding 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.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 27th day of March, 2009
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts
This Order was terminated pursuant to a Consent Order on September 22, 2009.