The Massachusetts Division of Banks (DOB) has issued cease and desist orders to 87 mortgage brokers and lenders doing business in Massachusetts for failing to provide proper financial documentation to the DOB or an inability to secure newly required $75,000 surety bonds for their businesses.

Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association (MMBA), said many of the companies on the DOB’s list were already out of business, or if not, would have been shortly. For a couple of cases, there may have been a communication breakdown between a national company and its local representative.

Regardless, Cuff said the DOB did everything it could to keep these brokers and lenders compliant.

"The DOB has bent over backwards to make all the surety bonding information and annual report information available to these companies," Cuff said. "Somehow they either fell through the cracks, or these companies are not in business."

Not all 87 companies ordered to cease business are based in Massachusetts, though many are. Some were based as far away as California, with several New England companies mixed in.

Capitol Mortgage Co. in Reading landed on the list, but the company’s president said he had his surety bond ready and on time – he just failed to send in the correct documentation.

"I’m looking at [my surety bond] right here," Richard Northrup told Banker & Tradesman when reached by phone this afternoon. Northrup said he planned to rectify the situation immediately. The Division of Banks’ press release on the matter listed five other companies initially ordered to cease and desist that had already proved they met the requirements. The order has since been lifted for those five companies, the DOB said.

Other companies won’t be so lucky, according to Northrup. Many mortgage brokers and lenders have recently been unable to get surety bonds because bonding insurance companies have tightened their standards and many brokers and lenders don’t make the cut.

When asked if companies that couldn’t afford surety bonds were healthy enough to be in the mortgage business to begin with, Cuff said: "No, not by today’s standards."

Banker & Tradesman attempted to get in touch with several businesses affected by the order, but found a number had non-working phone numbers, indicating many companies were likely no longer in business.

Affected companies were ordered by the DOB to stop accepting new mortgage applications, and to complete any pending mortgages free of charge.