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COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MORTGAGE BROKER LICENSING
Docket No. 2003-022
FINDINGS OF FACT AND TEMPORARY ORDER TO CEASE AND DESIST
In the Matter of
MORTGAGE ONE FINANCIAL CORP.
Mortgage Broker License No. MB0624
The Commissioner of Banks ("Commissioner") having determined that MORTGAGE ONE FINANCIAL CORP. ("Mortgage One" or the "Corporation"), located at 1408 Providence Highway, Norwood, Massachusetts 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
The Division of Banks ("Division"), through the Commissioner, has jurisdiction over the licensing and regulation of persons engaged in the business of a mortgage broker pursuant to Massachusetts General Laws chapter 255E, section 2.
Mortgage One is, and at all relevant times has been, a corporation organized under the laws of the Commonwealth of Massachusetts. Mortgage One is located at 1408 Providence Highway, Norwood, Massachusetts, 02062, according to records submitted by Mortgage One and maintained on file with the Division.
Mortgage One is licensed by the Commissioner as a mortgage broker as required by General Laws chapter 255E, section 2. Mortgage One holds mortgage broker license number MB0624 which is set to expire on May 31, 2004.
On or about June 17, 2003, Mortgage One issued correspondence to two Massachusetts consumers, Andrew Klane and Suzanne Klane (collectively, "the borrower"), requesting that the borrower complete the enclosed mortgage loan application for a residential property located in Massachusetts and provide additional borrower information to be reviewed with the application. A copy of the correspondence received by the borrower from Mortgage One is attached as Exhibit A.
The June 17, 2003 correspondence stated, in part, that "[Y]our current rate is 5.25, 30 fixed term, and is currently Locked." The letter further requested that the consumer sign and return all forms therein enclosed. The Division has obtained information that the borrower submitted the completed mortgage loan application and additional materials to Mortgage One as requested.
As of the effective date of this TEMPORARY ORDER, Mortgage One has not placed the borrower's application with a qualified lender under the loan terms and conditions contained in the correspondence referenced above in paragraph 4.
Massachusetts General Laws chapter 255E, section 1 defines a mortgage broker as, "any person who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly negotiates, places, assists in placement, finds or offers to negotiate, place, assist in placement or find mortgage loans on residential property for others."
Massachusetts General Laws chapter 255E, section 2 prohibits anyone from engaging in the activity of mortgage lender, unless otherwise exempted by the statute, without obtaining a license from the Commissioner.
The Division's regulation 209 CMR 42.11A defines the activity of entering or issuing a rate lock commitment as within the exclusive authority of the mortgage lender in a residential mortgage loan transaction.
CONCLUSIONS OF LAW
Based upon the information contained in paragraphs 1 through 9, Mortgage One has unlawfully engaged in the activity of a mortgage lender without a license from the Commissioner.
Based upon the information contained in paragraphs 1 through 9, Mortgage One has misrepresented material facts or made false promises likely to influence, persuade, or induce a consumer to complete a mortgage loan application.
Based upon the information contained in paragraphs 1 through 9, the Commissioner has determined that:
Mortgage One has engaged, or is about to engage in, acts or practices which warrant the belief that the Corporation 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.
The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Mortgage One.
ORDER TO CEASE AND DESIST
After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
ORDERED that Mortgage One shall immediately cease engaging in the activity of a mortgage broker on residential property in Massachusetts, not otherwise permitted by the terms of this TEMPORARY ORDER. Therefore, Mortgage One is ordered to immediately cease soliciting or accepting residential mortgage loan applications from consumers for residential property located in Massachusetts.
IT IS FURTHER ORDERED that Mortgage One shall immediately place any fees previously collected from Massachusetts consumers relative to any pending mortgage loan application in a separate escrow account maintained at a federally insured bank.
IT IS FURTHER ORDERED that Mortgage One shall immediately cease from directly or indirectly collecting any funds from consumers in consideration of a rate lock agreement relative to any residential property located in Massachusetts after the effective date of this TEMPORARY ORDER.
IT IS FURTHER ORDERED that Mortgage One shall place its entire open application list to a qualified lender with no loss to applicants. Mortgage One shall obtain the prior approval of the Commissioner before placing such applications to the qualified lender.
IT IS FURTHER ORDERED that Mortgage One shall immediately freeze all assets of the Corporation and shall not transfer any assets of the Corporation without the prior approval of the Commissioner, nor otherwise make unavailable, any assets of the Corporation or take any action intended to diminish the value of such assets, subsequent to the effective date of this TEMPORARY ORDER.
IT IS FURTHER ORDERED that Mortgage One shall immediately secure all pending mortgage loan application files and shall make such files, in their entirety, available to the Commissioner upon request.
IT IS FURTHER ORDERED that Mortgage One shall be liable for any additional costs incurred by Massachusetts consumers as a result of the Corporation's failure to place the consumers' applications with a qualified lender under the terms contained in a correspondence similar in substance or form to the letter provided to the consumer referenced above in paragraph 4.
IT IS FURTHER ORDERED that Mortgage One shall, within five (5) days of the effective date of this TEMPORARY ORDER, provide the Division with a complete record, including a verification of receipt, of all funds collected from consumers in consideration of entering a rate lock agreement with such borrowers for any pending mortgage loan applications as of the effective date of this TEMPORARY ORDER.
IT IS FURTHER ORDERED that Mortgage One shall submit to the Commissioner a detailed record 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 Mortgage One's open application list, including but not necessarily limited to, the following:
The names of all individuals from whom Mortgage One has either solicited or 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); and scheduled closing dates.
IT IS FURTHER ORDERED that Mortgage One shall submit to the Commissioner a detailed record of all mortgage lenders and financial institutions to whom Mortgage One has placed mortgage loan applications which are currently pending as of the effective date of this TEMPORARY ORDER. Such records shall also necessarily indicate any mortgage lender or financial institution to which Mortgage One had previously attempted to place a mortgage loan application which Mortgage One has subsequently either withdrawn or had returned from such mortgage lender or financial institution and which remains pending as of the effective date of this TEMPORARY ORDER.
IT IS FURTHER ORDERED that this TEMPORARY ORDER TO CEASE AND DESIST 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 TEMPORARY ORDER shall become permanent and final only upon receipt of a written request for such a hearing from the Corporation 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 29th day of August, 2003.
By: Thomas J. Curry
Commissioner of Banks
Commonwealth of Massachusetts