The Massachusetts Division of Banks issued ""87 cease-and-desist orders"":http://www.mass.gov/xpageID=ocaterminal&L=6&L0=Home&L1=Business&L2=Banking+Industry+Services&L3=Banking+Legal+Resources&L4=Enforcement+Actions&L5=2009+Enforcement+Actions&sid=Eoca&b=terminalcontent&f=dob_mortg06042009&csid=Eoca against licensed mortgage lenders and brokers in the state last week. The regulator cited failure to provide required financial information, including failure to post a bond, as the reason for the closures.
Five of the 87 companies provided the agency with satisfactory evidence that they have a bond the very same day the orders were issued. These companies include: Approved Home Mortgage, JP Mortgage Group, Mason Mortgage, Multi-State Mortgage, and Slade Mortgage Group. The division said it will release these companies from the order and they will be allowed to continue to conduct business in Massachusetts.
The other 82 cease-and-desist orders prohibit the companies from accepting any new mortgage applications and mandate they place all pending applications with a qualified lender or broker at no expense to the consumer.
In 2007, the division amended its regulations regarding the licensing of mortgage brokers and lenders upon recommendations made by the ""Mortgage Summit Working Groups"":http://www.mass.gov/Eoca/docs/dob/Mortgage_Summit_Final_20070409.pdf, an organization comprised of representatives from the state government, the mortgage industry, and non-profits, convened by the regulator to address the foreclosure crisis in Massachusetts.
The ""new regulations"":http://www.mass.gov/xpageID=ocaterminal&L=6&L0=Home&L1=Business&L2=Banking+Industry+Services&L3=Banking+Legal+Resources&L4=Laws+%26+Regulations&L5=Division+of+Banks+Regulations&sid=Eoca&b=terminalcontent&f=dob_209cmr42&csid=Eoca require mortgage brokers in the state to submit a bond in the amount of $75,000 and to submit financial statements annually that have been either audited or reviewed. Mortgage lenders are required to submit a bond ranging from $100,000 to $500,000 and to file audited financial statements each year. The Massachusetts Division of Banks provided a transition for existing licensees until December 31, 2008, to allow companies time to obtain the necessary bond.
Each of the 87 companies cited last week was required to submit their financial statements and evidence of a bond to the division no later than March 31, 2009. The regulator said even after the March deadline, it gave the companies extended opportunities to comply. Before last week's closures, there were 824 mortgage lender and broker licensees in the state.
According to Massachusetts' Commissioner of Banks Steven L. Antonakes, the companies closed last week have had ample time to secure and submit the required bond. He said their failure to do so may be an indication of the underlying weakness of the company.
""However, given the current state of the mortgage industry, I expect that the unresponsiveness of these companies is a result of their winding down their operations or having already closed,"" Antonakes said. ""In any event, the division will not tolerate any licensee that has willfully failed to comply with these requirements.""
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