InfoBytes Blog
New York DFS Requires Mortgage Originator to Surrender License for Exam Cheating Scheme
On November 19, the New York DFS announced a consent order with a nonbank mortgage originator to resolve allegations that its employees engaged in a scheme to cheat on state-required continuing education courses and exams. Specifically, the DFS alleged that at least 20 Mortgage Loan Originators (MLOs), including the Chief Executive Officer and former Chief Operating Officer, encouraged compliance staff to take required continuing education courses and exams on their behalf. Furthermore, the MLOs “shared information acquired during licensing exams with . . . senior management, despite the fundamental obligation of test-takers to preserve the confidentiality of all such information.” The DFS’s examination of the mortgage originator revealed additional state banking law violations, including (i) failing to provide mandatory disclosures on more than 100 subprime loans; (ii) misstating applicable late fees on at least three loans; (iii) failing to maintain the minimum line of credit; and (iv) underreporting its total New York revenue in its 2010 and 2011 Volume of Operations Report. The settlement requires the mortgage originator to immediately surrender its mortgage banker’s license and its status as an exempt mortgage servicer in New York, and pay a civil money penalty in the amount of $1 million.