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Samuel V. Cino Jr. d/b/a PMG Mortgage - Settlement Agreement

State of New York Banking Department


In the Matter of

 Samuel V. Cino Jr. d/b/a PMG Mortgage

A Registered Mortgage Broker Pursuant to
Article XII-D of the New York Banking Law

SETTLEMENT AGREEMENT


This Settlement Agreement ("Agreement") is made and entered into by and between Samuel V. Cino Jr. d/b/a PMG Mortgage (“PMG Mortgage”) and the State of New York Banking Department (“Banking Department”), collectively (“the Settling Parties”), evidencing an agreement between the Settling Parties to resolve, without a hearing, the violations cited herein by PMG Mortgage of Part 38 of the General Regulations of the Banking Board, 3 N.Y.C.R.R. Part 38,  and Section 226.24 of Regulation Z of the Truth in Lending Act, 12 C.F.R. Section 226.24, upon and subject to the terms and conditions hereof.

I. RECITALS

  1. PMG Mortgage, headquartered at 2136 Five Mile Line Road, Penfield, New York, 14526-2211, was granted a registration by the Banking Department on July 30, 1996 to engage in the business of a mortgage broker pursuant to Article XII-D of the New York Banking Law (“Banking Law”).
  2. Section 44 of the Banking Law provides, in part, that the New York Superintendent of Banks (“Superintendent”) may, in a proceeding after notice and a hearing, require a registered mortgage broker to pay to the people of this State a penalty for a violation of the Banking Law and any regulation promulgated thereunder. 
  3. Part 38 Section 38.8 of the General Regulations of the Banking Board, provides that a mortgage broker may be subject to disciplinary action by the Banking Department for, among other things, violations of Article 12-D of the Banking Law, the regulations promulgated thereunder, or violations of state or federal law indicating that the entity is unfit to engage in the business of a mortgage broker.
  4. On March 9 and 16, 2007, PMG Mortgage mailed solicitations to more than 11,000 homeowners.  A copy of the solicitation is annexed as Exhibit A.
  5. The solicitation represents directly and by implication that it is being sent on behalf of Flagstar Bank, the original underwriter of the homeowner’s mortgage. 
  6. In fact, the solicitation was sent by PMG Mortgage.  However, the name PMG Mortgage is disclosed only in very small print at the bottom of the solicitation.  PMG’s address is not disclosed at all.
  7. The solicitation further represents that the rate on the homeowner’s adjustable rate mortgage had “already increased” or “will increase in the near future” and that the homeowner’s rate “will increase every six months thereafter to a point where [the homeowner’s] current monthly payment could increase by as much as $500 or more.”  The solicitation additionally creates the impression that every homeowner is guaranteed a new loan at 5.875% provided the homeowner responds within 5 business days.  Thus, the solicitation states “you are approved” for a new loan “at 5.875% if you respond within 5 business days of receiving this letter.”  The solicitation states no other grounds for approval.
  8. In fact, not every homeowner who received the solicitation had a loan with a rate that was scheduled to increase every six months.  In addition, not every homeowner who received the solicitation was eligible for a new loan at 5.875%.
  9. The solicitation also fails to disclose clearly and conspicuously the advertised rate as an annual percentage rate (“APR”) in violation of Regulation Z under the Truth in Lending Act, Section 226.24(b), which provides: “If an advertisement states a rate of finance charge, it shall state the rate as an “annual percentage rate,” using that term. If the annual percentage rate may be increased after consummation, the advertisement shall state that fact.  The advertisement shall not state any other rate, except that a simple annual rate or periodic rate that is applied to an unpaid balance may be stated in conjunction with, but no more conspicuously than, the annual percentage rate.”
  10. The solicitation also creates the impression that it is being sent by a party that funds mortgage loans.  As a mortgage broker, PMG cannot fund loans but must arrange loans through third-party providers.  The solicitation fails to disclose this fact.
  11. The solicitation also represents that the borrower will receive $1,000.00 off closing costs when completing a loan.  However, this advertised discount is illusory as the broker does not have fixed closing costs.
  12. By virtue of the foregoing, the solicitation violates the General Regulations of the Banking Board Part 38.2 in the following ways:
    1. The solicitation violates Part 38.2(b) which provides that any advertisement by a mortgage broker must indicate the name of the entity and a street address of any one of its offices.
    2. The solicitation violates Part 38.2(d) which provides that no advertisement by a mortgage broker shall contain language which indicates or suggests that the mortgage broker will fund a mortgage loan and which requires advertisements by mortgage brokers to disclose that the broker arranges mortgage loans with third-party providers.
    3. The solicitation violates Part 38.2(e) which provides that no mortgage broker shall fraudulently or deceitfully advertise a mortgage loan, or misrepresent the terms, conditions or charges incident to a mortgage loan in any advertisement therefor. 

 

II. SETTLEMENT TERMS AND CONDITIONS

PMG Mortgage is willing to resolve the violations cited herein by entering into this Agreement and freely and voluntarily waives its right to a hearing under Banking Law Section 595 on such violations. Therefore, in consideration of the promises and covenants set forth herein, the Settling Parties agree, as follows:

  1. PMG Mortgage agrees to take all necessary steps to ensure its compliance with all applicable federal and state laws, regulations, and supervisory requirements relating to its mortgage business, including, but not limited to:
    1. Complying with the requirements of the Federal Truth-In-Lending Act and Regulation Z , Fair Credit Reporting Act and regulations thereto, Article 12-D of the Banking Law and Part 38 of the General Regulations of the Banking Board; and
    2. ensuring that its advertisements do not mislead consumers as to the identify of the party offering credit, PMG’s ability to fund loans, closing costs or the terms and conditions of credit being offered; and
    3.  clearly identifying itself by name and street address on any advertisement for credit;
    4. clearly disclosing that it arranges mortgage loans with third-party providers; and
  2. PMG Mortgage agrees to develop appropriate written advertisement policies and procedures designed to ensure compliance with all applicable federal and state laws, regulations, supervisory requirements and guidances.   The policies and procedures shall, at a minimum: (i) designate an individual responsible for monitoring compliance with all applicable federal and state laws, regulations, supervisory requirements and the Guidance Letters; and (ii) establish a training program to ensure that PMG Mortgage and its employees involved in preparing or approving advertisements understand all applicable federal and state laws, regulations, supervisory requirements and the Guidance Letters
  3. Within ninety (90) days from the effective date of this Agreement, PMG Mortgage agrees to submit a draft of its advertisement policies and procedures to the Banking Department.
  4. Within one hundred twenty (120) days from the effective date of this Agreement, PMG Mortgage agrees to submit a copy of its final advertisement policies and procedures to the Banking Department together with a letter from an authorized officer of PMG Mortgage indicating his/her approval of such policies and procedures.  PMG Mortgage further agrees to provide copies of all advertisements run by it for the twelve (12) month period following the effective date of this Agreement.
  5. PMG agrees to pay a fine of $ 8,000 payable in 12  monthly installments as follows:
    • $850 upon execution of this Agreement
    • $650 on or before 15th day of each month for the remaining eleven months  

PMG further agrees that such payment will be made in immediately available funds in accordance with Banking Department payment instructions. 

III. MISCELLANEOUS TERMS AND CONDITIONS

  1. The Settling Parties acknowledge that PMG Mortgage’s failure to  comply with any of the settlement terms and conditions of this Agreement may result in the Banking Department taking action to revoke PMG Mortgage’s registration to engage in the business of a mortgage broker under Article 12-D of the Banking Law. 
  2. The Settling Parties acknowledge that entering into this Agreement shall not bar, estop, or otherwise prevent the Superintendent, or any state, federal or local agency or department or any prosecutorial authority from taking any other action affecting PMG Mortgage, any of its current or former owners, officers, directors, employees, or insiders, or their successors or assigns with respect to the violations cited herein, or any other matter whether related or not to such violations.   
  3. This Agreement may not be altered, modified or changed unless in writing signed by the Superintendent or his designee.
  4. This Agreement shall be enforceable and remain in effect unless stayed or terminated in writing by the Superintendent or his designee.
  5. This effective date of this Agreement is the date on which it is executed by the Deputy Superintendent of Banks for Mortgage Banking.
  6. All written communications to the Banking Department regarding this Agreement should be sent as follows.

Attention:
Rholda L. Ricketts
Deputy Superintendent of Banks
Mortgage Banking Division
State of New York Banking Department
One State Street,
New York, New York 10004

  1. All written communications to PMG Mortgage regarding this Agreement should be sent as follows.  

Attention:
Mr. Samuel Cino Jr.
PMG Mortgage 
2136 Five Mile Line Road
Penfield, New York 14526

  1. This Agreement is not confidential; therefore it is available to the public.  

WHEREFORE, the Settling Parties hereto have caused this Agreement to be executed.

By:_____________________
Samuel V. Cino Jr. d/b/a
PMG Mortgage
Dated:                                         

By:                                               
Rholda L. Ricketts
Deputy Superintendent of Banks
State of New York Banking Department
Dated:                                         

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