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State of California – Department of Business Oversight
MARY ANN SMITH
Deputy Commissioner
SEAN M. ROONEY
Assistant Chief Counsel
JUDY L. HARTLEY (State Bar No. 110628)
Senior Counsel
Department of Business Oversight
th
320 West 4 Street, Ste. 750
Los Angeles, California 90013-2344
Telephone: (213) 576-7604
Facsimile: (213) 576-7181
Attorneys for Complainant
BEFORE THE DEPARTMENT OF BUSINESS OVERSIGHT
OF THE STATE OF CALIFORNIA
In the Matter of:
THE COMMISSIONER OF BUSINESS
OVERSIGHT,
Complainant,
v.
GMH MORTGAGE SERVICES LLC doing
business as BESTRATEUSA,
Respondent.
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CRMLA License No.: 413-1180
ACCUSATION
The Complainant is informed and believes, and based upon such information and belief,
alleges and charges Respondent as follows:
I
Introduction
1. GMH Mortgage Services LLC dba BestRateUSA (“GMH”) is licensed by the
Commissioner of Business Oversight ("Commissioner" or "Complainant") as a residential mortgage
lender pursuant to the California Residential Mortgage Lending Act ("CRMLA") (Fin. Code §50000
et seq.). GMH has its principal place of business located at 625 West Ridge Pike, Building C, Suite
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State of California – Department of Business Oversight
100, Conshohocken, Pennsylvania 19428. GMH employs mortgage loan originators in its CRMLA
business.
II
Unlicensed Servicing
2. Pursuant to Financial Code section 50002 of the CRMLA, it is illegal to engage in the
business of servicing residential mortgage loans without first obtaining a license from the
Commissioner.
3. Financial Code section 50003, subdivision (g) defines “Engage in the business” as:
“The dissemination to the public, or any part of the public, by means of written,
printed, or electronic communication or any communication by means of recorded
telephone messages or spoken on radio, television, or similar communications
media, of any information relating to the making of residential mortgage loans,
the servicing of residential mortgage loans, or both. ‘Engage in the business’
also means, without limitation, making residential mortgage loans or servicing
residential mortgage loans, or both”. (Emphasis added)
4. Financial Code section 50003, subdivision (q) defines “mortgage servicer” or
“residential mortgage loan servicer” as:
“a person that (1) is an approved servicer for the Federal Housing Administration,
Veterans Administration, Farmers Home Administration, Government National
Mortgage Association, Federal national Mortgage Association, or Federal Home
Loan Mortgage Corporation, and directly services or offers to service mortgage
loans.” (Emphasis added).
5. Financial Code section 50003, subdivision (x) defines “service” or “servicing” as:
“receiving more than three instalment payments of principal, interest, or other
amounts held in escrow, pursuant to the terms of a mortgage loan and performing
services by a licensee relating to that receipt or the enforcement of its receipt, on
behalf of the holder of the note evidencing the loan.”
6. On or about December 28, 2015, the Commissioner, by and through staff,
commenced a regulatory examination of the books and records of GMH under the CRMLA
(“regulatory examination”). The regulatory examination disclosed that GMH was engaged in the
business of servicing residential mortgage loans without a license in violation Financial Code section
50002.
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State of California – Department of Business Oversight
7. The regulatory examination disclosed a subservicing agreement entered into between
GMH and Provident Funding (“Provident”) on December 13, 2012 wherein Provident would service
mortgage loans in which GMH was the owner of the servicing rights.
8. On or about April 12, 2016, the Department of Business Oversight (“Department”)
notified GMH through the Nationwide Mortgage Licensing System (“NMLS”) that it was engaging
in the business of residential mortgage loan servicing without a license by posting a license item.
The license item notified GMH that it needed to identify the authority under which it was conducting
servicing activity.
9. On or about June 29, 2016, GMH applied to add residential mortgage loan servicing
authority to its CRMLA license by submitting a California Residential Mortgage Lending Act
Amendment to the Commissioner.
10. The residential mortgage loan application of GMH was incomplete, so on or about
July 14, 2016, GMH was notified through NMLS by posting a license item that the documents
submitted did not include compliance with the California Homeowners Bill of Rights. Despite
numerous communications between the parties since July 2016, GMH has yet to provide the
Commissioner with a loss mitigation policy that meets the requirements of the California
Homeowners Bill of Rights (Assembly Bill 278 (2012)). Accordingly, the Commissioner has not yet
approved the residential mortgage loan servicing application of GMH.
11. A review of the Report of Principal Amount of Loans Originated and Aggregate
Amount of Loans Serviced (“Loan Report”) filed by GMH with the Commissioner and the Mortgage
Call Reports (“MCR”) filed by GMH in NMLS, discloses continuous servicing activity in 2015 and
into 2016. However, documents obtained during the regulatory examination disclose that GMH may
have been engaged in the business of servicing back in 2014. The MCR’s filed by GMH in NMLS
disclose loans serviced in California for the period ended December 31, 2015 numbering 123 with a
total unpaid principal balance of $33,427,217.00. Those numbers jumped to 170 with an unpaid
principal balance of $44,217,422.00 as of June 30, 2016.
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III
Penalty Statute
12. Financial Code section 50513 provides in pertinent part:
(a) The commissioner may do one or more of the following:
(4) Impose fines on a mortgage loan originator or any residential mortgage
lender or servicer licensee employing a mortgage loan originator pursuant
to subdivisions (b), (c), and (d).
(b) The commissioner may impose a civil penalty on a mortgage loan originator
or any residential mortgage lender or servicer licensee employing a mortgage
loan originator, if the commissioner finds, on the record after notice and
opportunity for hearing, that the mortgage loan originator or any residential
mortgage lender or servicer licensee employing a mortgage loan originator
has violated or failed to comply with any requirement of this division or any
regulation prescribed by the commissioner under this division or order issued
under authority of this division.
(c) The maximum amount of penalty for each act or omission described in
subdivision (b) shall be twenty-five thousand dollars ($25,000).
(d) Each violation or failure to comply with any directive or order of the
commissioner is a separate and distinct violation or failure.
IV
Conclusion
13. The Commissioner finds that, by reason of the foregoing, GMH has violated
Financial Code section 50002, and based thereon, grounds exist to assess penalties against GMH
pursuant to Financial Code section 50513, subdivision (b).
V
Prayer
WHEREFORE, IT IS PRAYED that:
Pursuant to the Financial Code section 50513, subdivision (b), penalties be levied against
GMH for at least 170 violations of Financial Code section 50002, engaging in unlicensed
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State of California – Department of Business Oversight
servicing activities, according to proof, but in an amount of at least $500.00 per violation.
Dated: November 14, 2016
Los Angeles, California
JAN LYNN OWEN
Commissioner of Business Oversight
_____________________________
Judy L. Hartley
Senior Counsel
Enforcement Division
By
