Temporary Order to Cease and Desist  Nationwide Equities Corporation

Date:	05/12/2009
Organization:	Division of Banks
Docket Number:	2009-010
Location:	Mahwah, NJ

Nationwide Equities Corporation, Mahwah, NJ - Temporary Order to Cease and Desist

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
MORTGAGE LENDER AND
MORTGAGE BROKER
LICENSING
Docket No. 2009-010

FINDINGS OF FACT AND TEMPORARY
ORDER TO CEASE AND DESIST

In the Matter of
NATIONWIDE EQUITIES CORPORATION
Mahwah, New Jersey

Mortgage Company License No(s). MC3776

The Commissioner of Banks ("Commissioner") having determined that NATIONWIDE EQUITIES CORPORATION ("Nationwide Equities" or the "Corporation"), located at One International Boulevard, Mahwah, New Jersey 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) and chapter 255F, section 8(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 lender and mortgage broker in Massachusetts pursuant to Massachusetts General Laws chapter 255E, section 2.
2. The Division, through the Commissioner, also has jurisdiction over the licensing and regulation of persons engaged in the business of a mortgage loan originator in Massachusetts pursuant to Massachusetts General Laws chapter 255F, section 2.
3. Nationwide Equities is, and at all relevant times, has been a foreign corporation conducting business in the Commonwealth of Massachusetts. Nationwide Equities' main office is located at One International Boulevard, Mahwah, New Jersey.
4. Nationwide Equities is licensed by the Commissioner as a mortgage lender and mortgage broker under Massachusetts General Laws chapter 255E, section 2. According to records maintained on file with the Division, the Commissioner initially issued mortgage broker license number MB3451 to Nationwide Equities to engage in the business of a mortgage broker at 1972 Massachusetts Avenue, Cambridge, Massachusetts on or about June 4, 2004. On or about February 25, 2005, Nationwide Equities surrendered license number MB3451 and was thereafter issued mortgage lender and mortgage broker license numbers MC3776 and MC2793 to engage in the mortgage company business from the Corporation's main office located at One International Boulevard, Mahwah, New Jersey and an additional location at 1224 Dorchester Avenue, Dorchester, Massachusetts, respectively.
5. Mortgage lenders and 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 lenders and 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 law, rule, or regulation applicable to the conduct of the business of a mortgage lender and mortgage broker.
6. On or about July 22, 2008, pursuant to Massachusetts General Laws chapter 255E, section 8, the Division commenced an examination/inspection of the books, accounts, papers, records, and files maintained by Nationwide Equities to evaluate the Corporation's compliance with the laws, regulations, and regulatory bulletins applicable to the conduct of a mortgage lender and mortgage broker business in Massachusetts (the "2008 examination/inspection").
7. The Division's Report of Examination/Inspection on Consumer Compliance (the "Report"), which was issued to Nationwide Equities on the effective date of this Temporary Order, presented the findings of the 2008 examination/inspection and alleged significant failures to comply with applicable state and federal laws, rules, regulations, and regulatory bulletins governing the conduct of those engaged in the business of a mortgage lender and mortgage broker in Massachusetts.

   A. Unfair or Deceptive Acts and Practices

   (1.) Misrepresentation of the Applicant's Residency Status

8. Massachusetts General Laws chapter 93A, section 2(a) states:

   Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

9. 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.

10. In defining a principal dwelling in the commentary to section 226.2(a)(24) of the Federal Reserve Board's Official Staff Commentary on Regulation Z, the Commentary states in part, "A consumer can only have one principal dwelling at a time."
11. The Division's 2008 examination/inspection revealed that Nationwide Equities concealed and/or misrepresented information relating to the occupancy status of multiple properties for which Nationwide Equities sought residential mortgage loans on behalf of Massachusetts applicants. Books and records reviewed by the Division's examiners revealed that Nationwide Equities, in multiple transactions in which it acted in the capacity of a mortgage broker, prepared and submitted, simultaneously, purchase money mortgage loan applications for multiple properties on behalf of an individual borrower, with each application indicating that the subject property was to be used as the borrower's primary residence. Examples include but are not limited to the following:
    1. Loans "A", "B", "C" and "D":
       1. Four purchase money loan applications, prepared on September 24, 2007 by Nationwide Equities on behalf of an individual applicant indicated that the applicant was to purchase four condominium units each of which were part of one condominium project. Each purchase money loan application indicated that the condominium unit was to be the applicant's primary residence.
       2. Each purchase money loan application was submitted to the lenders and the settlement dates reflected on the HUD settlement statement for three of the four loans was on October 30, 2007. The settlement date for the fourth unit was listed as October 31, 2007.
12. Books and records reviewed by the Division's examiners further revealed that the branch manager of Nationwide Equities' Dorchester location was specifically prohibited by the lender in the transaction described above from adding his name to the title of at least one of the four units. A review of e-mail correspondence sent from the lender to the Nationwide Equities branch manager revealed that a representative of the lender had e-mailed the Nationwide Equities branch manager correspondence that stated, in part, that, "you will not be able to add your name to title." However, a subsequent review of registry records revealed that a deed transferring title from the borrower to both the borrower and the Nationwide Equities branch manager was recorded immediately after the recording of the mortgage deed reflecting only the borrower as the title holder. During a discussion with a representative of the lender, the Division's examiners were informed that the loan would not have closed had the lender been aware that the Nationwide Equities branch manager's name was to be included on property title.

    (b) Loan No.(s): 1764663230; 3015412384; and 9999080365:

    1. A review of these three loan files each originated on behalf of one borrower by Nationwide Equities revealed that, three purchase money loan applications were taken on behalf of one borrower for three separate properties on the same date. A review of the loan applications, submitted to three lenders, indicated that each subject property was to be the borrower's primary residence.
    2. A review of two of the three loan files revealed that the borrower purchased two condominium units each of which was part of one condominium project. Each purchase money loan application indicated that the unit was to be the borrower's primary residence.
    3. The settlement dates of the three loans were on February 1, 2008, February 5, 2008, and April 14, 2008, respectively.
13. The examiners' detailed findings relating to these loans are more fully described in the Report and are incorporated herein by reference.

    (2.) Misrepresentation of a Prospective Borrower's Income, Asset and Employment Information

14. The Division's regulation 209 CMR 42.12A(8), effective as of September, 8, 2006, states:

    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.

15. Massachusetts General Laws chapter 93A, section 2(a) states:

    Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

16. 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.

17. The Attorney General's regulation 940 CMR 8.06(15) states, in part

    It is an unfair or deceptive act or practice for a mortgage broker to arrange or mortgage lender to make a mortgage loan unless the mortgage broker or lender, based on information known at the time the loan is made, reasonably believes at the time the loan is expected to be made that the borrower will be able to repay the loan based upon a consideration of the borrower's income, assets, obligations, employment status, credit history, and financial resources, not limited to the borrower's equity in the dwelling which secures repayment of the loan.

18. On September 4, 2008, during an interview with the branch manager of Nationwide Equities Dorchester location, the Division's examiners were informed by the branch manager that it was common practice for Nationwide Equities to:

    [C]onsider multiple incomes of non-borrower individuals living in a household in order to qualify applicant(s) for a loan program that the borrower(s) would not otherwise qualify for due to insufficient or low income levels. Aggregated income [would be] reflected on the Form 1003, as [the] base income of the applicant(s). [The branch manager] cited as an example a bus/train operator whose salary level may not qualify him/her for a particular loan program. In order to get approval for the loan application, [the Branch Manager] would first check with salary.com for a maximum salary payable to that position. Based on this information, [the branch manager would] then formulate the household income of the people living with the applicant(s) to meet the lenders' income level requirement. The loan application [would] then [be] processed based on this information.

19. Taken as true, the description provided above by the branch manager of the Dorchester, Massachusetts location of the practices and procedures engaged in on behalf of Nationwide Equities appears to constitute an admission by the branch manager that Nationwide Equities engaged in the act or practice of falsifying and/or misrepresenting income information on mortgage loan application(s) in order to qualify the applicant(s) for a loan amount which the applicant(s) did not have the ability to repay.
20. Books and records reviewed during the 2008 examination/inspection revealed that Nationwide Equities, when acting in the capacity of a mortgage broker, had completed and submitted to lenders several Uniform Residential Loan Applications ("1003 Form") in which the applicants' financial and employment information, including but not limited to, applicants' base employment income, assets, liability and the total number of years an applicant had been employed, differed significantly from the financial and employment information reflected on other pertinent documentation, including, but not limited to loan applications completed concurrently on behalf of the same borrower by Nationwide Equities for loan applications submitted to separate lenders. Examples include, but are not limited to, the following:
    1. Loan No.(s): 9999080365; 3015412384; and 1764663230:
       1. A purchase money loan application prepared by Nationwide Equities on January 6, 2008 for a loan that ultimately closed on February 1, 2008, indicated that the applicant earned approximately $6,200 monthly or $74,400 annually. The loan application reflected the applicant's total liquid assets as $480,103. (Loan number: 9999080365);
       2. A purchase money loan application also prepared by Nationwide Equities on January 6, 2008 for a loan ultimately closed on February 5, 2008, indicated that the same applicant earned approximately $4,615.38 monthly or $55,384.56 annually. The loan application now reported the applicant's total liquid assets, on the same date, as $453,408. (Loan number: 3015412384);
       3. A purchase money loan application also prepared by Nationwide Equities on January 6, 2008 for a loan that ultimately closed on April 14, 2008, indicated that the same applicant earned approximately $5,230.77 monthly or $62,769.24 annually. The loan application now reported the same applicant's total liquid assets as $520,652. (Loan number: 1764663230).
    2. Loan No.(s): 3013911841-031; and 0762046340:
       1. A first mortgage loan application prepared by Nationwide Equities for a loan that ultimately closed on June 29, 2007, indicated that the applicant had been employed with one company for 20 years and that the applicant had a credit card balance for one account in the amount of $2,000;
       2. A simultaneous second mortgage loan application prepared by Nationwide Equities for a loan ultimately closed on the same date on June 29, 2007 indicated that the same applicant had been employed with one company for 5 years, and that the applicant's credit card balance for the same account reflected on the first mortgage loan application was now reported in the amount of $8,958;
       3. A review of the of the first mortgage loan application retained in the loan file maintained by Nationwide Equities revealed that the years of employment had been manipulated from 10 years to 20 years.
21. Nationwide Equities knew or should have known that the above referenced income, asset, and employment information would be relied upon in underwriting the mortgage loan by the mortgage lender or financial institution to which the mortgage loan applications were brokered by Nationwide Equities.

    B. Engaging in the Mortgage Lender and Mortgage Broker Business in Massachusetts from Unlicensed Locations

22. Massachusetts General Laws chapter 255E, section 2 states in part:

    No person shall act as a mortgage broker or mortgage lender with respect to residential property unless first obtaining a license from the commissioner; provided, however, that any person who is employed by or associated with a licensed mortgage broker or mortgage lender in the capacity of a mortgage broker or mortgage lender under the direction of said licensed mortgage broker or mortgage lender shall not be required to obtain such license.

23. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicate that, beginning on a date that is unknown to the Division and continuing at least until the date of the 2008 examination/inspection, Nationwide Equities conducted its mortgage lender and mortgage broker business at two office locations, for which Nationwide Equities failed to provide prior notice to the Commissioner, submit a license application, or receive approval from the Commissioner to engage in the mortgage lender and mortgage broker business from such locations.
24. Nationwide Equities conducted the mortgage lender and mortgage broker business at two locations in Everett, Massachusetts and Trenton, New Jersey, respectively, beginning on a date that is unknown to the Division, but continuing at least until the date of the 2008 examination/inspection..
25. Books and records reviewed by the Division's examiners during the 2008 examination/inspection further indicate that, from approximately November, 5, 2005, and continuing at least until the date of the 2008 examination/inspection, Nationwide Equities conducted its mortgage lender and mortgage broker business at an office located at 1972 Massachusetts Avenue, Cambridge, Massachusetts ("Cambridge location").
26. The Division's records indicate that although Nationwide Equities had previously held a mortgage broker license for the Cambridge location from June 4, 2004 until surrendering the license prior to its expiration on May 31, 2005, the branch license for such location was not maintained for the period beginning November 5, 2005 referenced above.

    C. Failure to Maintain Required Surety Bonds

27. The Division's regulation 209 CMR 42.03(2)(a)2 requires all licensed mortgage lenders to maintain a surety bond of no less than $100,000 to a maximum of $500,000 as determined by the Commissioner by December 31, 2008.
28. The Division's regulation 209 CMR 42.03(2)(a)2 states in part:

    (a). An Applicant shall demonstrate and maintain (2) a bond in a sum to be based on the amount of the Applicant's aggregate mortgage loans, as determined by the Commissioner, but in no event shall the sum of the bond be less than $100,000, up to a maximum of $500,000.

29. Based upon information and belief, Nationwide Equities failed to meet the aforementioned requirement as of the date of this Temporary Order.
30. The Division's regulation 209 CMR 42.06(2)(a)2 requires all licensed mortgage brokers to maintain a surety bond of no less than $75,000 by December 31, 2008.
31. The Division's regulation 209 CMR 42.06 (2)(a)2 states in part:

    (a). An Applicant shall demonstrate and maintain (2) a bond of $75,000 in such form and with such sureties as may be approved by the Commissioner.

32. Based upon information and belief, Nationwide Equities failed to meet the aforementioned requirement as of the date of this Temporary Order.

    D. Conducting Business Under an Unlicensed Name

33. Massachusetts General Laws chapter 255E, section 5 states:

    Each license shall state the address at which the business is to be conducted and shall state the name of the licensee. If a licensee intends to carry on such business at any place in addition to the address on the license, he shall so notify the commissioner, in writing, at least 30 days prior thereto... Such notice shall contain the address of any such additional location and such other information as the commissioner may require; provided, however, that any such business shall at all times be conducted in the name of the licensee as it appears on the license.

34. The Division's records indicate that Nationwide Equities is currently licensed as Nationwide Equities Corporation.
35. Books and records reviewed by the Division's examiners during the 2008 examination/inspection revealed that Nationwide Equities provided at least one borrower correspondence that indicated that the licensed business was being conducted by Magee Mortgage Group, LLC. Specifically, records reviewed by the Division's examiners indicate that the one borrower was issued a letter of confirmation by Magee Mortgage Group, LLC.

    E. Failure to Properly Maintain Books and Records

    (1.) Failure to Maintain Adequate Records

36. Massachusetts General Laws chapter 255E, section 8 states in part:

    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.

37. Books and records reviewed by the Division's examiners during the 2008 examination/inspection revealed that Nationwide Equities provided several loan lists to the Division's examiners during the course of the 2008 examination/inspection that reflected conflicting information. Specifically, the Division's examiners were provided with at least three loan lists by the Corporation, that each reflected varying numbers of loans originated by Nationwide Equities. In addition, the Division's examiners determined that the information reflected on the loan lists provided by Nationwide Equities for 2006 was contradictory to an annual report filed previously by Nationwide Equities with the Division.
38. A review of the 2006 annual report filed by Nationwide Equities indicated that the Corporation had originated 49 loans. However, loan lists provided by the Corporation to the Division's examiners on August 11, 2008 and August 12, 2008 indicated that Nationwide Equities had originated 12 and 16 loans respectively. A review of Nationwide Equities' electronic database revealed that only 15 loan files were available for review.
39. On September 15, 2008 in response to a 72-hour Demand Notice issued by the Division ordering the production of selected books and records, Nationwide Equities provided a loan list that reflected 49 originations, however Nationwide Equities failed to provide all of the 49 loan files to the Division's examiners for review.

    (2.) Failure to File Required Reports in a Timely Manner

40. The Division regulation 209 CMR 42.09(4) states:

    In addition to the reports required by law, a Licensee shall make such other statements and reports to the Commissioner as he or she may require from time to time. The Commissioner may require regular quarterly reports and may furnish blank forms for all such statements or reports, required by 209 CMR 42.09.

41. A review of the reports filed by Nationwide Equities revealed that the Corporation consistently failed to file the Corporation's quarterly reports in a timely fashion. Specifically, Nationwide Equities filed the quarterly reports for quarters ending September 30, 2007, June 30, 2008 and March 30, 2008 on August 21, 2008 subsequent to the Division's request.

    (3.) Failure to Maintain Books and Records in a Manner to Demonstrate Compliance

42. The Division's regulation 209 CMR 42.09(1) 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.

43. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicated that Nationwide Equities, when acting in the capacity of a mortgage broker, failed to retain sufficient documentation to enable the Division's examiners to determine whether the Corporation was complying with certain laws and regulations governing mortgage brokers in Massachusetts. Specifically, a review of several full documentation loan files revealed that Nationwide Equities failed to retain sufficient documents necessary to ensure the validity of income and asset information reflected on the loan applications submitted to mortgage lenders for approval.

    F. Loan Origination and Compensation Agreement

44. The Division's regulation 209 CMR 42.12A(5) states in part:

    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.

45. 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.

46. Books and records reviewed by the Division's examiners during the 2008 examination/inspection revealed that Nationwide Equities when acting in the capacity of a mortgage broker, failed to retain evidence of having provided the Loan Origination and Compensation Agreements in all files reviewed.

    G. Providing Mortgage Lender Disclosures to Consumers When Acting in the Capacity of a Mortgage Broker

47. Books and records reviewed by the Division's examiners during the 2008 examination/inspection indicate that Nationwide Equities, when acting in the capacity of a mortgage broker, routinely provided several mortgage lender disclosures to consumers. The mortgage lender disclosures include, but are not limited to, Equal Credit Opportunity Notices, Affidavit of Occupancy Notices and Approval Letters.

    H. Engaging in Prohibited Advertising Practices

48. The Division's regulation 209 CMR 42.15 states in part:

    A Licensee shall disclose the type and number of its license(s) in all advertisements.

49. The Attorney General's regulation 940 CMR 8.04(2) states, in part:

    It is an unfair or deceptive act or practice for a mortgage broker or lender to advertise without clearly and conspicuously disclosing its business name, the words "broker" or "lender", as applicable, and the license number.

50. A review of Nationwide Equities website revealed that Corporation failed to disclose its license type and number as required pursuant to the Division's regulation at 209 CMR 42.15 and the Attorney General's regulation at 940 CMR 8.04(2).

    I. Failure to Provide Required Notices

51. Massachusetts General Laws chapter 167, section 14A states:

    Any applicant whose residential mortgage loan application is denied by any mortgagee making five or more mortgage loans in any calendar year on residential property located in the commonwealth of four units or less and occupied in whole or in part by the mortgagor shall be instructed by the mortgagee, in writing, at the time of denial of his right to appeal any such denial to the appropriate mortgage review board.

52. The Division's regulation 209 CMR 42.12A(12) states:

    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.

53. Books and records reviewed by the Division's examiners revealed that Nationwide Equities when acting in the capacity of a mortgage lender, failed to retain evidence of having provided the Mortgage Review Board Notice in at least ten loan files reviewed.

    J. Misleading Statements

54. 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.

55. Books and records reviewed during the 2008 examination/inspection revealed that Nationwide Equities, when acting in the capacity of a mortgage broker, 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 suggests that Nationwide Equities, while acting as the mortgage broker in the transaction, was approving or funding the mortgage loan which, if true, would exceed the authority of the mortgage broker in the transaction.

    K. Failure to Properly Complete Good Faith Estimates

56. The Real Estate Settlement Procedures Act ("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 HUD-1 Settlement Statement.

57. Books and records reviewed during the 2008 examination/inspection revealed that, in all loan files reviewed, Nationwide Equities failed to disclose the yield spread premium in a dollar amount or dollar range on the good faith estimate provided to the borrower(s), as specifically identified in the Report.

    L. Other Violations

58. In addition to the violations specifically set forth in this Temporary Order, a Report of Examination/Inspection on Consumer Compliance prepared as of July 22, 2008 and to be provided to Nationwide Equities in conjunction with the issuance of this Temporary Order, describes other violations and areas of concern observed during the 2008 examination/inspection.

    CONCLUSIONS OF LAW

59. Based upon the information contained in Paragraphs 1 through 58, Nationwide Equities has failed to demonstrate and maintain the character, reputation, integrity, and general fitness that would warrant the belief that the mortgage lender and mortgage broker 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 regulations 209 CMR 42.03(2)(c) and 209 CMR 42.06(2)(c).
60. Based upon the information contained in Paragraphs 1 through 58, by misrepresenting applicant's residency status prior to submitting loan documents to the mortgage lender, Nationwide Equities has violated the Massachusetts General Laws chapter 93A, section 2(a) and the Office of the Attorney General's implementing regulation 940 CMR 8.06(1).
61. Based upon the information contained in Paragraphs 1 through 58, by altering loan application information and/or documentation relating to the applicants' income, and asset and employment information related to the loan approval process, Nationwide Equities has engaged in acts or practices in violation of the Division's regulation 209 CMR 42.12A(8), Massachusetts General Laws chapter 93A, section 2(a) and the Office of the Attorney General's implementing regulations 940 CMR 8.06(1) and 940 CMR 8.06(15).
62. Based upon the information contained in Paragraphs 1 through 58, by engaging in the business of a mortgage lender and mortgage broker through a network of unlicensed locations, Nationwide Equities violated Massachusetts General Laws chapter 255E, section 2 and the Division's regulation 209 CMR 42.00 et seq.
63. Based upon the information contained in Paragraphs 1 through 58, by failing to obtain and maintain a mortgage lender surety bond on or before January 1, 2009, Nationwide Equities violated the Division's regulation 209 CMR 42.03(2)(a)2.
64. Based upon the information contained in Paragraphs 1 through 58, by failing to maintain a mortgage broker surety bond of $75,000 on or before January 1, 2009, Nationwide Equities violated the Division's regulation 209 CMR 42.06(2)(a)2.
65. Based upon the information contained in Paragraphs 1 through 58, by conducting the mortgage lender and mortgage broker business under a name that the Corporation was not licensed under, Nationwide Equities violated Massachusetts General Laws chapter 255E, section 5.
66. Based upon the information contained in Paragraphs 1 through 58, by failing to keep and use its books and records in a manner which would allow the Commissioner to determine whether the Corporation was complying with applicable state and federal laws and regulations, Nationwide Equities has violated Massachusetts General Laws chapter 255E, section 8 and the Division's regulation 209 CMR 42.09(1).
67. Based upon the information contained in Paragraphs 1 through 58, by failing to timely file reports required by the Commissioner, Nationwide Equities has violated the Division's regulation 209 CMR 42.09(4).
68. Based upon the information contained in Paragraphs 1 through 58, by failing to retain papers and records relating to originated loan applications, Nationwide Equities has failed to properly maintain books and records in violation of the Division's regulation 209 CMR 42.09(1)(b).
69. Based upon the information contained in Paragraphs 1 through 58, by failing to retain all copies of the Loan Origination and Compensation Agreement provided to consumers when acting in the capacity of a mortgage broker, Nationwide Equities has violated the Division's regulation 209 CMR 42.12A(5) and 209 CMR 42.09(1)(b).
70. Based upon the information contained in Paragraphs 1 through 58, by providing disclosures to consumers that only lenders are authorized to provide when acting in the capacity of a mortgage broker, Nationwide Equities has exceeded its authority in violation of Massachusetts General Laws chapter 255E, section 2.
71. Based upon the information contained in Paragraphs 1 through 58, by failing to disclose the Corporation's license type and number on the Corporation's website, Nationwide Equities has violated the Division's regulation 209 CMR 42.15 and the Office of the Attorney General's implementing regulation 940 CMR 8.04(2).
72. Based upon the information contained in Paragraphs 1 through 58, by failing to provide consumers with the Mortgage Review Board Notice, Nationwide Equities violated Massachusetts General Laws chapter 167, section 14A and the Division's regulation 209 CMR 42.12A(12).
73. Based upon the information contained in Paragraphs 1 through 58, by providing disclosures to consumers that contained language that was false or misleading or had the tendency or capacity to be false or misleading, when acting in the capacity of a mortgage broker, Nationwide Equities is in violation of the Attorney General's regulation 940 CMR 8.06(1).
74. Based upon the information contained in Paragraphs 1 through 58, by failing to properly complete the Good Faith Estimate disclosure when acting in the capacity of a mortgage broker, Nationwide Equities has violated the RESPA regulation 24 CFR 3500 et seq.
75. Based upon the information contained in Paragraphs 1 through 58, the Commissioner has determined that:
    1. Nationwide Equities 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 lender and 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 Nationwide Equities.
76. Based upon the information contained in Paragraphs 1 through 58, had the facts and conditions found therein existed at the time of Nationwide Equities' original mortgage lender and 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 58 present sufficient grounds for the revocation of Nationwide Equities' mortgage lender and mortgage broker licenses pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulation at 209 CMR 42.04(2)(b), 42.07(2)(b), and 42.12A(19).

    ORDER TO CEASE AND DESIST

77. After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
78. ORDERED that Nationwide Equities and any and all officers, members, managers, employees, independent contractors, or agents, operating on behalf of Nationwide Equities, and their successors or assigns, shall immediately cease engaging in the activities of: (a) a mortgage lender and mortgage broker, as those activities are defined under Massachusetts General Laws chapter 255E, section 1, and (b) a mortgage loan originator, as those activities are defined under Massachusetts General Laws chapter 255F, section 1, relative to any residential property in Massachusetts, not otherwise expressly permitted by the terms of this Temporary Order. Therefore, Nationwide Equities 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.
79. IT IS FURTHER ORDERED that Nationwide Equities, 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.
80. IT IS FURTHER ORDERED that Nationwide Equities 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. It being understood that "no loss to the applicant" shall mean that any loan which may have been closed by Nationwide Equities and remains unfunded, as well as any pending application which has been approved by the Corporation but has not yet closed, shall be placed to a lender willing to fund, or close, the mortgage loan under the same terms and conditions extended by Nationwide Equities. In the event that no such placement can be made, Nationwide Equities shall either independently fund the mortgage loan under such terms and conditions or buy down the mortgage loan offered by the lender so that the applicant does not incur a loss as a result of such placement. Nationwide Equities shall obtain the prior approval of the Commissioner before placing such applications to the qualified lender(s) or broker(s) as appropriate.
81. IT IS FURTHER ORDERED that as soon as possible, but in no event later than two days after the effective date of this Temporary Order, Nationwide Equities shall submit the following information in writing to the Commissioner:
    1. A detailed record of all pending residential mortgage loan applications, from both the Corporation's lending and its brokering operations, which shall include, but is not limited to, the following: customer name, address, telephone number; all prepaid loan fees submitted by the customer; amount of loan; application status (i.e. filed, submitted to lenders); scheduled closing date; rate lock status; the location of all original open application files; and a list of applicable wholesale lenders. The latter list should include telephone numbers of contact persons familiar with Nationwide Equities' submitted loans.
82. IT IS FURTHER ORDERED that Nationwide Equities shall immediately secure all pending mortgage loan application files and, to the extent that any original documents must be forwarded to the relevant mortgage lender or mortgage broker pursuant to Paragraph 79 of this Temporary Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in Nationwide Equities' books and records and shall be available to the Commissioner, in their entirety, immediately upon request on the date and time specified by the Commissioner.
83. 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 Massachusetts General Laws chapter 30A.
84. IT IS FURTHER ORDERED that this Temporary Order shall not be construed as approving any act, practice, or conduct not specifically set forth herein which was, is, or may be in violation of relevant state or federal laws and regulations. The findings, conclusions, and required action set forth in this Temporary Order are in addition to, and not in lieu of, any findings, conclusions, and corrective action which may be set forth in the Report.
85. 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 Nationwide Equities 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 12th day of May, 2009

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

This Order was terminated pursuant to a Consent Order on July 15, 2009.