MORTGAGE AMERICA HOME LOANS, INC.
The Commissioner of Banks ("Commissioner") having determined that MORTGAGE AMERICA HOME LOANS, INC.,("Mortgage America" or the "Corporation"), located at 1 Hunting Lane, Lynnfield, Massachusetts and LISA M. CENCA, ("Lisa Cenca") have engaged in, or are engaging in, or are about to engage in, acts or practices constituting violations of Massachusetts General Laws chapters 255E and 255F, and applicable regulations found at 209 CMR 42.00 and 209 CMR 41.00 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 11(a).
The Division of Banks ("Division"), through the Commissioner, has jurisdiction over the licensing and regulation of those engaged in the business of a mortgage broker pursuant to Massachusetts General Laws chapter 255E, section 2 and Massachusetts General Laws chapter 255E, section 8; and of those engaged in the business of a mortgage loan originator pursuant to Massachusetts General Laws chapter 255F.
Mortgage America is, and at all relevant times, has been a company conducting business in the Commonwealth of Massachusetts. Mortgage America's main office at 1 Hunting Lane, Lynnfield, Massachusetts.
Mortgage America was licensed by the Commissioner as a mortgage broker under Massachusetts General Laws chapter 255E, section 2. According to records maintained on file with the Division, the Commissioner initially issued a mortgage broker license, license number MB4907 to Mortgage America to engage in the business of a mortgage broker on or about July 27, 2007. License number MB4907 authorized Mortgage America to conduct the mortgage broker business from the Corporation's main office located at 1 Hunting Lane, Lynnfield, Massachusetts.
Lisa Cenca is, and at all relevant times has been, the President and 100% owner of Mortgage America. Anthony Cenca is and at all relevant times has been the manager of Mortgage America.
Lisa Cenca is licensed by the Commissioner as a mortgage loan originator under Massachusetts General Laws chapter 255F, section 2. According to the Division's records, the Commissioner initially issued a mortgage loan originator license, license number MLO31841, to Lisa Cenca to engage in the business of a mortgage loan originator on or about October 15, 2008.
The Division's records indicate that Anthony Cenca is not licensed as a mortgage loan originator in Massachusetts and is not authorized to conduct business under General Laws chapter 255F.
On or about April 15, 2010, the Division received an inquiry from a Massachusetts consumer regarding concerns related to unlicensed mortgage loan originator activity at Mortgage America.
On May 5, 2010 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 Mortgage America to evaluate the Corporation's compliance with the laws, regulations, and regulatory bulletins applicable to the conduct of a mortgage broker business in Massachusetts and to investigate the concerns that were raised by the inquiry received by the Division and referenced in Paragraph 8 of this Temporary Order (the "2010 examination/inspection").
The Division's Report of Examination/Inspection on Consumer Compliance (the "Report"), which was issued to Mortgage America on the effective date of this Temporary Order, presented the findings of the 2010 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 broker in Massachusetts.
No individual shall act as a mortgage loan originator with respect to any dwelling unless such person has first obtained a mortgage loan originator license from the commissioner or is exempt from the licensure requirement . . . No person shall knowingly employ or retain a mortgage loan originator unless the mortgage loan originator is licensed under this chapter or is exempt from the licensure requirement.
On or about April 15, 2010, the Division received an inquiry from a Massachusetts consumer regarding the licensing status of Anthony Cenca and his authorization to conduct business as a mortgage loan originator in the Commonwealth. In response to the inquiry, the Division notified the Massachusetts consumer that Anthony Cenca was not licensed as a mortgage loan originator in the Commonwealth and therefore was not authorized to engage in mortgage loan originator activity in the Commonwealth.
The Massachusetts consumer subsequently forwarded certain information to the Division that indicated that Anthony Cenca was engaging in unlicensed mortgage loan originator activity. The Division's review of the information, specifically e-mail correspondence ("Correspondence") between the consumer and Anthony Cenca, indicated that Anthony Cenca was utilizing Lisa Cenca's license number to originate mortgage loans in the Commonwealth. A review of the Correspondence revealed that upon an inquiry by the consumer of the license status of Anthony Cenca, Mr. Cenca responded by stating that Lisa Cenca was his wife and when loan originator licensing requirements became effective, both Anthony Cenca and his wife, Lisa thought it would be financially conducive to share one loan originator license between the two parties.
Books and records reviewed by the Division's examiners during the 2010 examination/inspection revealed that in at least one loan file reviewed, Anthony Cenca was initially identified as the interviewer on a Uniform Residential Loan Application Form ("1003 Form"). A review of the 1003 Form revealed that Anthony Cenca's name was subsequently removed via ink and Lisa Cenca's name was substituted on the 1003 Form as the interviewer.
In response to the concerns raised in Paragraphs 14 and 15, the Division's Consumer Assistant Unit contacted a sample of consumers to determine the mortgage loan originator with whom the consumer's had interacted with. The Division's discussions with at least two Massachusetts consumers revealed that each applicant identified Anthony Cenca as the individual who had taken the information necessary to complete the 1003 Form and further indicated that Mr. Cenca was the individual with whom the consumers maintained contact with throughout the application process.1 Effective July 1, 2008 until July 31, 2009, M.G.L. chapter 255F, section 2 stated: "No person shall act as a mortgage loan originator unless such person has first obtained a mortgage loan originator license from the commissioner. An entity shall not knowingly employ or retain a mortgage loan originator unless the mortgage loan originator is licensed under this chapter."
The 2010 examination/inspection revealed that Mortgage America manipulated mortgage loan related documents by using "correction fluid" to alter information related to the loan process. Specifically, a review of the Appraisal Notification and Acknowledgement Disclosure ("Appraisal Disclosure") provided to consumers during the loan application process revealed that Mortgage America altered the Appraisal Disclosure after it was provided to consumers.
The Appraisal Disclosure provided to consumers notified mortgage loan applicants of their right to either receive and review a copy of the appraisal report at least three days prior to settlement or in the alternative to waive their right to review the appraisal report three days prior to settlement. The Home Valuation Code of Conduct requires entities to provide consumers with the Appraisal Disclosure.
Books and records reviewed by the Division's examiners revealed that in at least five loan files reviewed, Mortgage America used "white out" to alter the form after the applicant had signed the Appraisal Disclosure as fully described in the Report.
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.
Books and records reviewed by the Division's examiners revealed that Mortgage America failed to retain complete loan files for loan files that were requested by the Division's examiners.
Books and records reviewed by the Division's examiners during the 2010 examination/inspection indicated that Mortgage America failed to retain sufficient documentation to enable the Division's examiners to determine whether the Corporation was complying with the provisions of M.G.L. chapter 255E and applicable state and federal laws and regulations. Specifically, the Corporation engaged in a pattern or practice of failing to retain copies of credit reports, appraisals, underwriting conditions, employment verification documentation, 1003 Forms, closing documents, and/or required disclosure forms, as further described in the Report.
Each licensee shall annually, on or before a date determined by the commissioner, file a report with the commissioner containing such information as said commissioner may require concerning the business and operations conducted by the licensee in the commonwealth during the preceding calendar year. A licensee neglecting to file such report or failing to amend the same within fifteen days of notice from said commissioner directing the same shall, unless such neglect or failure is due to justifiable cause and not due to wilful [sic] neglect, pay to the commonwealth fifty dollars for each day during which such neglect or failure continues.
By March 31, each Licensee shall file an annual report with the Commissioner in such form as the Commissioner shall prescribe for the preceding calendar year. The annual report shall be in writing, subscribed by the Licensee under the pains and penalty of perjury.
On or about February 5, 2010, Mortgage America submitted the Corporation's annual report to the Division. The annual report indicated that the Corporation had originated fifteen (15) mortgage loans from January 1, 2009 through December 31, 2009. During the 2010 examination/inspection, Mortgage America provided the Division's examiners with a closed loan list that indicated that the Corporation had originated twenty-four (24) mortgage loans during the same period.
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.
Books and records reviewed by the Division's examiners during the 2010 examination/inspection indicate that in at least one loan file reviewed, Mortgage America collected broker fees at the loan closing in amounts which the Corporation's books and records failed to document had been fully and accurately disclosed to a consumer, in writing, in the amounts charged at closing, if at all, as more fully described in the Report.
A Licensee shall also disclose the type and number of its license(s) in all advertisements.
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.
Mortgage America did not disclose the Corporation's license type and number in on its website, www.mortgageamerica.org as required pursuant to 940 CMR 8.04(2).
Mortgage America's website advertised interest rates and/or loan terms without including the statement, "We arrange but do not make loans" as required pursuant to 209 CMR 42.12A(4).
In addition to the violations specifically set forth in this Temporary Order, a Report of Examination/Inspection prepared as of May 5, 2010 and to be provided to Mortgage America in conjunction with the issuance of this Temporary Order, describes other violations observed during the 2010 examination/inspection.
Based upon the information contained in Paragraphs 1 through 36, Mortgage America has failed to demonstrate and maintain the character, reputation, integrity, and general fitness such as to command the confidence of the community and to warrant a determination that it will operate honestly, fairly, soundly and efficiently in the public interest, as a mortgage broker in violation of Massachusetts General Laws chapter 255E, section 4 and the Division's regulation 209 CMR 42.06(2)(c).
Based upon the information contained in Paragraphs 1 through 36, Lisa Cenca, President and sole owner of Mortgage America has failed to demonstrate and maintain the character, reputation, integrity, and general fitness such as to command the confidence of the community and to warrant a determination that she will operate honestly, fairly, soundly and efficiently in the public interest, as a mortgage loan originator in violation of Massachusetts General Laws chapter 255F, section 4 and the Division's regulation 209 CMR 41.04(2)(d).
Based upon the information contained in Paragraphs 1 through 36, by failing to implement, or causing to be implemented, internal controls in her capacity as the sole owner and President of Mortgage America, that would prevent employees under her supervision from engaging in residential mortgage business without a mortgage loan originator license as required under M.G.L. chapter 255F, Mortgage America and Lisa Cenca violated M.G.L, chapter 255F, section 2(a) and the Division's regulation 209 CMR 42.12A(17).
Based upon the information contained in Paragraphs 1 through 36, by modifying and altering loan documents prepared for consumers, Lisa Cenca in her capacity as the sole owner and President of Mortgage America, has engaged in unfair and deceptive business practices in violation of Massachusetts General Laws chapter 93A, section 2(a) and the Attorney General's regulation 940 CMR 8.06(1).
Based upon the information contained in Paragraphs 1 through 36, by failing to keep and use its books, records and accounts in a manner which would allow the Commissioner to determine whether the Corporation is complying with the provisions of M.G.L. c. 255E and applicable state and federal laws and regulations, Mortgage America has violated the Division's regulation 209 CMR 209 42.09(1).
Based upon the information contained in Paragraphs 1 through 36, by misrepresenting information reflected on the Annual Report submitted to the Division, Mortgage America has violated Massachusetts General Laws chapter 255E, section 8 and the Division's regulation 209 CMR 42.10.
Based upon the information contained in Paragraphs 1 through 36, by charging loan fees, points, or similar fees in residential mortgage loan transactions in the Commonwealth, without disclosing such fees or points to the mortgagor, in writing, prior to the closing of the loan, Mortgage America has violated Massachusetts General Laws chapter 183, section 63.
Based upon the information contained in Paragraphs 1 through 36, by failing to disclose and/or inaccurately disclosing the Corporation's license type and number on its website, Mortgage America has violated the Division's regulation 209 CMR 42.15 and the Attorney General's regulation 940 CMR 8.04(2).
Based upon the information contained in Paragraphs 1 through 36, by advertising interest rates and/or loan terms on the Corporation's website without including the statement, "We arrange but do not make loans," Mortgage America has violated the Division's regulation 209 CMR 42.12A(4).
The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST to Mortgage America and Lisa Cenca.
Based upon the information contained in Paragraphs 1 through 36, had the facts and conditions found therein existed at the time of Mortgage America's original 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 36 present sufficient grounds for the revocation of Mortgage America's mortgage broker licenses pursuant to Massachusetts General Laws chapter 255E, section 6 and the Division's regulations at, 42.07(2)(b), and 42.12A(20).
Based upon the information contained in Paragraphs 1 through 36, had the facts and conditions found therein existed at the time of Lisa Cenca's original mortgage loan originator 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 36 present sufficient grounds for the revocation of Lisa Cenca's mortgage loan originator license pursuant to Massachusetts General Laws chapter 255F, section 4 and the Division's regulation 209 CMR 41.05.
ORDERED that Mortgage America and any and all officers, members, managers, employees, independent contractors, or agents, operating on behalf of Mortgage America, and their successors or assigns, shall immediately cease engaging in the activities of: (a) a 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, Mortgage America 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.
IT IS FURTHER ORDERED that Lisa Cenca shall immediately cease engaging in the activities of a mortgage loan originator, as those activities are defined under Massachusetts General Laws chapter 255F, section 1, relative to any residential property in Massachusetts. Therefore, Lisa Cenca is ordered to immediately cease soliciting, accepting, or further originating, either directly or indirectly, any residential mortgage loan applications from consumers for residential property located in Massachusetts.
IT IS FURTHER ORDERED Mortgage America, 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.
IT IS FURTHER ORDERED that Mortgage America 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. Mortgage America shall obtain the prior approval of the Commissioner before placing such applications to the qualified broker(s) or lender(s).
All information on file as of the date of submission regarding Mortgage America's open application list as a mortgage broker, including but not limited to, the following: The names of all individuals from whom Mortgage America 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 Company's submitted loans.
Mortgage America shall immediately secure all pending residential mortgage loan application files and, to the extent that any original documents must be forwarded to the relevant mortgage lender(s) and or mortgage broker(s) pursuant to Paragraph 53 of this Temporary Order, a copy of such document, correspondence, or paper relating to the mortgage loan shall be retained in Mortgage America's books and records and shall be available to the Commissioner, in their entirety, upon request.
IT IS FURTHER ORDERED that, within twenty (20) days of the effective date of this Temporary Order, Mortgage America shall submit a payment of two thousand ($2,000) dollars in satisfaction of a civil assessment collected in consideration of the Corporation's conducting business with an unlicensed mortgage loan originator. Such civil assessment is imposed pursuant to Massachusetts General Laws chapter 255F, section 11(b). The Corporation shall remit payment pursuant to this Paragraph of the Temporary 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.
IT IS FURTHER ORDERED that Mortgage America shall submit payment of all costs associated with the examination/inspection of the aforementioned matter as set forth in the relevant invoice issued to Mortgage America. The payment shall be made payable to the "Commonwealth of Massachusetts" and mailed to Division of Banks, Commonwealth of Massachusetts, 1000 Washington Street, 10th Floor, Boston Massachusetts 02118-6400 within 30 days of receipt of the invoice.
IT IS FURTHER ORDERED that the civil assessment imposed on Mortgage America as referenced in this Temporary Order are subject to review as provided in Massachusetts General Laws chapter 30A. Accordingly, Mortgage America may request a hearing to contest said civil assessment and administrative penalty. Such request for a hearing must be filed in writing within 30 days of Mortgage America's receipt of this Temporary Order. If the Corporation fails to request a hearing within the prescribed time frame pursuant to this Paragraph, the aforementioned civil assessment and 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 Temporary Order shall become permanent and final only upon receipt of a written request for such a hearing from Mortgage America and Lisa Cenca 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.