Walpole-based mortgage lender Mortgage Master is going to bat against the Massachusetts Division of Banks in defense of loan originators the company says are being unfairly portrayed as scofflaws, rather than unwitting victims of administrative errors.
Mortgage Master itself must pay $585,000 for a number of licensing problems, most notably for employing 71 unlicensed originators across its national offices. Of those 71, 14 Massachusetts-based officers’ license lapses are detailed in fresh filings from the division, including information on the thousands of dollars individually assessed against many of them.
It’s an oversight the company blames on itself, not the officers. Nevertheless, those individuals’ names are now emblazoned on the Massachusetts Division of Banks’ website in perpetuity, potentially damaging hard-earned professional reputations.
‘It’s Not Right’
The officers in question aren’t amateurs and were never reckless, said Mortgage Master President Paul Anastos. Rather than with the individual loan officers, Anastos said, the problem was with a compliance officer who didn’t properly file paperwork and is no longer with the company. Although the officers never admit wrongdoing in the filings, Anastos told Banker & Tradesman these postings could be a blot on their reputations.
“They’re very good loan officers,” he said, adding that most had 10 to 15 years’ experience in the industry. “It may damage them, and it’s not right, because these are people that have done a good job.”
Anastos said he understood that the DOB has a tough job to do, but is frustrated with the enforcement actions. No customers were harmed, and Mortgage Master has never been accused of fraud and never been forced to buy back a loan, he said. Still, the administrative problems have drawn huge fines and brought negative attention to the company.
Although the filings state that thousands of dollars are “assessed against” each originator, Anastos said those fines are included in Mortgage Master’s original $585,000 fine, and will be paid in full by the company.
Fines and enforcement actions have exploded in number and severity over the past few years as new regulations have come into effect and information-sharing between regulators has grown. But some question whether, in its fight to stamp out bad actors, the DOB has become too draconian.
Attorney Stanley V. Ragalevsky, partner with the Boston office of K&L Gates, said that he believes the division is coming down too hard on good companies like Mortgage Master.
The licensing statute in question was new to the state at the time, Ragalevsky argued, and the compliance officer made a mistake that has disproportionately hurt the company.
“I have great regard for the Division of Banks, but this is basically a case of an administrative snafu, not a case of willful noncompliance with a statute,” he said.
Rules Are Rules
But David Cotney, the division’s COO, said although he acknowledged the business is tougher now than in previous years, professionals simply had to adjust to the raised requirements.
“The statute is pretty clear. You can’t operate without a license, whether you’ve been in the business for five months or five years,” Cotney said. “We don’t think it’s harsh to take people out who are operating outside the bounds of the licensing scheme.”
The state’s licensing requirements kicked in on July 1, 2008, but the enforcement filings indicate that the 14 Massachusetts originators in question didn’t have their applications in order by that time, or failed to eventually get licensed. In several cases, the division has no record of a license application being filed at all.
Each loan made during a license lapse accounts for a $1,000 fine, and the fines for the individual Mortgage Master originators range between $1,000 and $38,000. The total comes to $130,000, and Cotney confirmed that Mortgage Master, not the originators, has agreed to pay the fines.
