On January 26, 2023, the Massachusetts Division of Banks (DOB) entered into a consent order with a California-based mortgage lender. According to the DOB, the company, which was licensed as a mortgage lender in Massachusetts, had allowed a separate company to use its government issued mortgage license number, which could mislead consumers into thinking the two companies were not separate and distinct in violation of regulation 940 Code of Massachusetts Regulations (C.M.R) 8.06(1)'s ban on unfair or deceptive practices in advertising.
Massachusetts requires mortgage lenders to be licensed by the DOB, where they are issued an individual mortgage lender license. The DOB alleged that the mortgage lender entered into an agreement in October 2019 that allowed the separate entity to display its brand alongside the mortgage lender's license number on certain webpages and marketing materials. The DOB further alleged that those advertisements were misleading or had the ability or capacity to mislead consumers into thinking that the mortgage lender and the separate entity were not separate and distinct companies, which is a violation of 940 C.M.R 8.06(1) and allegedly facilitates unlicensed mortgage lender and mortgage broker activity.
Pursuant to the consent order the mortgage lender agreed to pay a $25,000 administrative penalty, and will restrain from future facilitation of unlicensed mortgage lending or brokerage activity.
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