COMMONWEALTH OF MASSACHUSETTS
COMMISSIONER OF BANKS
MORTGAGE LENDER AND
Docket No. 2010-327
ORDER TO CEASE AND DESIST
NOTICE OF ADMINISTRATIVE
In the Matter of
SHAMROCK FINANCIAL CORPORATION
Providence, Rhode Island
Mortgage Company License No: MC3303
The Commissioner of Banks ("Commissioner") having determined that SHAMROCK FINANCIAL CORPORATION, ("Shamrock Financial" or the "Corporation") located at 75 Newman Avenue, East Providence, Rhode Island, 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 TEMPORARY ORDER TO CEASE AND DESIST AND NOTICE OF ADMINISTRATIVE PENALTY ("Order") pursuant to General Laws chapter 255E, section 7(b) and General Laws chapter 255E, section 11.
FINDINGS OF FACT
- 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.
- Shamrock Financial is, and at all relevant times, has been a foreign corporation conducting business in the Commonwealth of Massachusetts. Shamrock Financial's main office is located at 75 Newman Avenue, East Providence, Rhode Island.
- Shamrock Financial 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 MB0153 to Shamrock Financial to engage in the business of a mortgage broker on or about April 28, 1994. The Division's records indicate that Shamrock Financial was subsequently issued a mortgage lender and mortgage broker license number MC3303 which became effective on or about October 2, 2002.
- On or about July 15, 2010, the Division was forwarded a copy of a solicitation ("Solicitation") received by a Massachusetts consumer from Shamrock Financial. A copy of the Solicitation is attached as Exhibit 1.
- 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.
- The Attorney General's regulation 940 CMR 8.06(1) states:
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.
- The Division's Regulation 209 CMR 42.12A(9) states:
It is a prohibited act or practice for a mortgage broker or mortgage lender to make false promises to influence, persuade, or induce a consumer to a sign a mortgage loan application or mortgage loan documents.
- The Solicitation, marked "NOTICE - Essex County Resident" was forwarded from a "Lynn Service Center" and contained the consumer's property information. The body of the Solicitation notified the consumer that "due to changes in Shamrock Financial's mortgage policy guidelines," there was a new program available to the consumer as an Essex County resident. The Solicitation stated that the property information was obtained from public county records, contained a file number, and notified the consumer of their eligibility for a mortgage payment reduction available only to Essex County residents. The bottom of the notice contained a statement that all programs follow Federal Fair Housing regulations, and was accompanied by the corresponding federal "Equal Housing Lender" logo.
- The body of the Solicitation notified the consumer that Shamrock Financial could not process the consumer's new payment until they called the Corporation. The Solicitation also notified the consumer that they would have to call before a certain date to "confirm [their] mortgage payment reduction so that [their] lower payment could be processed," a statement that could lead the consumer to believe that the Solicitation was being forwarded by their current mortgage holder and they had automatically qualified for a lower monthly mortgage payment.
- The language and references in the notice collectively create the appearance that the Solicitation was issued by a government agency. Language indicating that the offer was being made by Shamrock Financial and not a government agency was included in the Solicitation. However, such language was in font size that was significantly smaller than that of the body of the Solicitation and was located in a non prominent location at the bottom of the Solicitation.
- The notice instructed the consumer to call a designated telephone number in order to "confirm" their mortgage payment reduction, also instructing the consumer to have their "file number" ready when they called. Language at the bottom of the notice disclosed that eligibility was subject to underwriting guidelines, that minimum and maximum loan amounts apply, that other restriction may apply, and that as a result of refinancing, total finance charges may be higher over the life of the loan. However, this language was in a font size that was significantly smaller than that in the body of the Solicitation and was located on a non-prominent location at the bottom of the Solicitation.
- Based on the Division's records, Shamrock Financial is not a government agency.
CONCLUSIONS OF LAW
- Based upon the information contained in Paragraphs 1 through 12, Shamrock Financial 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).
- Based upon the information contained in Paragraphs 1 through 12, by mailing Massachusetts consumers a Solicitation containing false or misleading language or language that had the tendency to be false or misleading, including language that could lead the reader to believe that the Solicitation was issued by a government agency, and indicating that the consumer was eligible for a mortgage payment reduction, which Shamrock Financial did not have sufficient information upon which a reasonable belief in the truth of that representation could be based, Shamrock Financial has violated Massachusetts General Laws chapter 93A, section 2(a), and the Office of the Attorney General's implementing regulation 940 CMR 8.06(1).
- Based upon the information contained in Paragraphs 1 through 12, by mailing Massachusetts consumers a Solicitation that made false promises to influence, persuade or induce a consumer to sign a mortgage loan application, including references that the consumer's eligibility for a mortgage payment reduction was available only to residents of their county, which the consumer was informed could be obtained by just calling to confirm, Shamrock Financial violated the Division's regulation 209 CMR 42.12A(9).
- Based upon the information contained in Paragraphs 1 through 12, the Commissioner has determined that:
Shamrock Financial has engaged in, is engaging in, or is about to engage in, acts or practices which warrant the belief that the public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Shamrock Financial.
ORDER TO CEASE AND DESIST AND NOTICE OF ADMINISTRATIVE PENALTY
- After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:
- ORDERED that Shamrock Financial shall cease mailing any Solicitations to Massachusetts consumers that contain any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading including but not limited to:
- Solicitations that contain language that could lead the reader to believe that the Solicitation is being issued by a government agency; and
- Solicitations that have the tendency to make false promises to influence persuade or induce a consumer to sign a mortgage loan application including references to the consumer's eligibility for a mortgage payment reduction available upon telephone confirmation.
- IT IS FURTHER ORDERED that within five (5) days of the effective date of this Order, Shamrock Financial shall submit to the Commissioner a detailed record, prepared as of the date of submission, of all Massachusetts consumers to whom the Corporation distributed the Solicitation. The records to be produced shall include the consumers' names and addresses.
- IT IS FURTHER ORDERED that within twenty (20) days of the effective date of this Order, Shamrock Financial shall submit a payment of ten thousand dollars ($10,000.00) in satisfaction of an administrative penalty collected in consideration of the Corporation's engaging in deceptive advertising as evidenced by the Solicitation. Such administrative penalty is imposed pursuant to Massachusetts General Laws chapter 255E, section 11. The Corporation shall remit payment pursuant to this Paragraph of the Order for the amounts due, payable to the "Commonwealth of Massachusetts," to the Office of the Commissioner of Banks, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118-6400. The Division shall remit the payment for deposit into the General Fund of the Commonwealth. The administrative penalty imposed on Shamrock Financial as referenced in this Order is subject to review as provided in Massachusetts General Laws chapter 30A. Accordingly, Shamrock Financial may request a hearing to contest said administrative penalty. Such request for a hearing must be filed in writing within 20 days of Shamrock Financial's receipt of this Order. If the Corporation fails to request a hearing within the prescribed time frame pursuant to this Paragraph, the aforementioned administrative penalty shall be deemed final and binding and shall be due and owing to the Commonwealth.
- IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such Order shall become permanent and final only upon receipt of a written request for such a hearing from Shamrock Financial within twenty (20) days of the effective date of this Order. If no hearing is requested within this twenty (20) day period, this Order shall become permanent and final until it is modified or vacated by the Commissioner.
- IT IS FURTHER ORDERED that this 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.
- IT IS FURTHER ORDERED that Shamrock Financial shall review and revise, as necessary, the Corporation's policies and procedures to ensure that individuals performing on behalf of the Corporation neither act, nor represent themselves, as a government entity; and
- IT IS FURTHER ORDERED that a copy of each advertisement used by Shamrock Financial shall be retained in the Corporation's books and records and shall be made available to the Division at its examinations/inspections of Shamrock Financial.
- Shamrock Financial shall revise its advertising practices and procedures to ensure that all solicitations and advertising materials used by the Corporation do not contain any representations or statements that could be considered false, misleading, or have the tendency or capacity to be misleading.
- Shamrock Financial shall take all necessary steps to ensure that the Solicitation or any similar solicitation is not published or distributed to consumers in Massachusetts.
- Shamrock Financial shall implement, establish and maintain a system of internal controls to monitor the Corporation's compliance with the laws and regulations applicable to advertising practices including, but not limited to, the Division's regulations 209 CMR 42.12A, the Office of the Attorney General's regulation 940 CMR 8.00 et seq.
- Shamrock Financial shall establish, implement and maintain policies and procedures to ensure that all advertisements are thoroughly reviewed by senior management prior to publication or distribution to consumers. Such procedures shall include a review of the criteria utilized to generate mailing lists to ensure that targeted solicitations are appropriate for the consumers to whom such solicitations are distributed.
BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.
Dated at Boston, Massachusetts, this 15th day of October, 2010
By: Steven L. Antonakes
Commissioner of Banks
Commonwealth of Massachusetts