2022 Massachusetts ANNUAL REPORT Division of Banks 1 mass.gov/dob OCABR The Office of Consumer Affairs and Business Regulation Table of Contents Accomplishments ............................................................................................................................ 3 2022 Division of Banks (Division) Year in Review ........................................................................... 5 Annual Enforcement ..................................................................................................................... 12 Agency Strategic Goals................................................................................................................. 15 Non-Depository Institution Supervision ......................................................................................... 16 Mortgage Supervision........................................................................................................ 17 Consumer Finance/Money Services Business Activity....................................................... 17 Depository Institution Supervision ................................................................................................. 20 Bank Summary: Balance Sheet and Income Statement .................................................... 21 Credit Union Summary: Balance Sheet and Income Statement ......................................... 24 Consumer Protection and Outreach .............................................................................................. 27 Consumer Assistance and Enforcement and Investigation ............................................................ 28 Foreclosure Prevention Grant Initiative ......................................................................................... 29 Community Reinvestment Act ....................................................................................................... 30 Cyber/IT/Fintech ........................................................................................................................... 31 Legal Unit...................................................................................................................................... 32 Major Depository Corporate Transactions ......................................................................... 33 Legislative Summary ......................................................................................................... 36 Regulations ....................................................................................................................... 38 Regulatory Bulletins........................................................................................................... 39 Banks, Credit Unions, and Licensees: ...................................................................................... 39 Banks and Credit Unions: .......................................................................................................... 39 Credit Unions: ............................................................................................................................. 40 Staff List ........................................................................................................................................ 42 Appendix I: Cooperative Banks ..................................................................................................... 43 Appendix II: Savings Banks........................................................................................................... 80 Appendix III: Limited Purpose Trust Companies.......................................................................... 156 Appendix IV: Trust Companies .................................................................................................... 159 This annual report has been developed in accordance with Massachusetts General Laws chapter 167, §13. As we look back on the year 2022, I recall the concluding sentence from this very report a year ago: “emerging economic and ongoing industry pressures including inflation, emerging technologies, cybersecurity risks are likely to dominate regulatory conversations and examinations for the foreseeable future; at present the Division and our regulated entities remain well positioned Letter from and well managed for the challenges ahead.” In an environment where competition and margins were already compressed, the financial industry and Commissioner consumers at large faced rising interest rates to levels last seen before the 2008 global financial crisis on back of the Federal Reserve aggressive Gallagher monetary policy tightening cycle. While economists and analysts will debate the pace, speed, and peak of the rate environment, I am happy to report that the strength of the financial industry operating is Massachusetts indeed reflects that our regulated entities remain well positioned and well managed. This annual report highlights that the Division’s body of work in 2022 is notably accomplished, but we note that our supervision efforts and the vigilance of the industry remain paramount to face certain challenges looming ahead. As we entered the early months of 2023 facing economic uncertainty and recessionary pressures, the U.S. banking industry reckoned with the harsh reality of three large bank failures. Post-action and post-mortem reports underscore the importance of fundamental risk management principles, and we at the Division have been trumpeting this message as a reminder to all our regulated entities. Technology and social media have introduced new considerations for the speed of a liquidity event—boards and management teams that adapt while adhering to safety & soundness principles will be best positioned. The high-profile bank failures in early 2023 are a reminder that financial regulatory agencies, including the Division of Banks, play an important oversight role and must be sufficiently and adequately resourced. The Division anticipated the evolving risks of large bank supervision, emerging technologies, evolving financial industry, etc., and had the foresight to request additional resources. The Division is anticipating an increase in our FY24 budget appropriation which is currently pending in conference. As the Division of Banks assesses the industry we regulate to cover our full operating costs, we want to communicate to our regulated entities the importance of the additional funding Sincerely, which will further enhance staffing resources as we strive to meet our mission of ensuring a ensure a sound, competitive, and accessible financial services Mary L. Gallagher environment throughout the Commonwealth. Commissioner While the Division continues to actively monitor economic pressures on the Division of Banks banking industry, ensuring our examination work remains focused in the areas of risk management and consumer protection compliance, we also are devoting attention to the continued growth of products and services offered by non-bank entities in the mortgage, consumer finance, and money service businesses. As a reminder, these areas are not regulated by any federal body—the supervision is done by the state banking departments around the country. We at the Division are active participants with our fellow-state counterparts to leverage resources in the area of non-bank supervision. Effectively, our “networked supervision” effort looks to unify state financial regulators to conduct licensing and examination work for large companies operating nationwide. We have been doing this successfully for several years in the mortgage space, and we are increasingly collaborating in the area of money transmission. Unfortunately, Massachusetts money transmission authority is significantly outdated compared with the rest of the country, such that we are limited in our ability to participate in networked supervision efforts, and worse, we are limited in our ability to afford Massachusetts residents with adequate consumer protections for the common activity of peer-to-peer payments on popular mobile apps. The Division continues to support legislation to modernize Massachusetts money transmission statute (H.1106) which is consistent with a model law already enacted in many states, and we remain hopeful for passage in the 193rd General Court! 2 2022 ANNUAL REPORT Accomplishments Licenses issued or renewed by the Division to 20,087 mortgage companies, mortgage loan originators, money services businesses, debt collectors, loan servicers, and consumer finance companies. Consumers receiving reimbursements totaling 37,828 $2.8 million from complaint resolution or Division enforcement actions. Total number of completed bank, credit union, licensee, and other approval requests (655) and 662 total number of legal opinions (7) issued. Total number of examination reports mailed to depository (76) & non-depository (283) 359 institutions. Foreclosure delay requests received by the 113 Division, of which 76 were granted. 3 MASSACHUSETTS DIVISION OF BANKS Formal & informal regulatory orders issued by the 61 Division. Total number of major corporate transactions 16 consummated involving banks & credit unions. 51 The Division's Legal Unit processed 51 bank and credit union branch office notices/applications in 2022. The Division hosted 4 webcasts on its DOB connects 4 platform. Topics included compliance concerns and perspectives, cannabis and regulatory considerations, and general financial matters. Division employees achieved a total of 5 new 5 certifications in 2022 and completed, on average, 40 hours of training. In 2022, the Division filled 13 positions including 3 13 management positions, 8 Bank Examiners, 1 Licensing Examiner, and 1 Office Support Specialist. 4 2022 ANNUAL REPORT 2022 Division of Banks (Division) Year in Review First Quarter January In January, the 2022 Chapter 206 Grant Program application review process began with 21 staff members on 4 teams. A total of 24 grant applications were reviewed. On January 3, the Division entered into multiple Consent Orders against Mortgage Loan Originators Chad Baker, Michael Rakeman, and Kevin Heckemeyer related to a multi- state action over violations of SAFE Act education requirements. On January 4, the Division issued a Temporary Cease and Desist Order against Mutual of Omaha, Inc. for alleged unfair or deceptive advertising practices. On January 10, the Division entered into a Consent Order with First American National, LLC, First American Funding, LLC, B&B Funding, LLC, and Coastal Financial, LLC to resolve allegations of engaging in the business of a debt collector without the requisite license. On January 18, the Division of Banks, in partnership with 44 state financial agencies, reached settlements with more than 400 mortgage loan originators nationwide who deceptively claimed to have completed annual continuing education for the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) as required under state and federal law. February In February, the Joint Financial Services Committee favorably reported the Domestic Money Transmission bill as House 4550. The Financial Services Committee also favorably reported House 1167 regarding uniform enforcement and confidentiality provisions. On February 2, the Division entered into a Settlement Agreement and Consent Order with Danny Yen d/b/a Real Estate Educational Services, Wendy Yen, and Dat Yen a/k/a Pat Yen to cease involvement in education courses related to a multi-state action for MLO licensure schemes. A DOB connects program was held on February 3, titled “Home Mortgage Disclosure Act (HMDA): Top Regulatory Finds and Best Practices”. The webcast featured conversations with Division examiners from both the depository and non-depository units who discussed top HMDA examination findings and best practices for HMDA compliance. The webcast can be accessed here and the handout can be found here. On February 7, the Division entered into a Consent Order with Mutual of Omaha Mortgage, Inc. to resolve allegations of alleged unfair or deceptive advertising practices. This consent order supersedes and replaces the 1/4/2022 Temporary Cease and Desist Order. On February 8, Consumer Protection Examiners Sales and Williams participated in a panel discussion on HMDA and examination trends at the MA Mortgage Bankers Association (MMBA) meeting. On February 16, Deputy Commissioner of Community Protection and Outreach Rivera participated in a panel discussion on non-sufficient funds fees at the MA Bankers Association (MBA) CEO Roundtable on Representment Practices and Non-Sufficient Funds Fees. 5 MASSACHUSETTS DIVISION OF BANKS On February 22, Counsel Carbone participated in a panel discussion on Mortgage Business Specific Requirements in the Modernized NMLS at the annual NMLS Training and Conference. On February 23, the Division of Banks, the State Treasurer’s Office of Economic Empowerment, and the Office of Consumer Affairs and Business Regulation announced the opening of the application process for the 2022 round of Operation Money Wise grants. On February 23, Director Chase participated in a panel discussion on Nonbank Cybersecurity: The Latest Threats and Regulatory Responses at the annual NMLS Training and Conference. The Division released the 2021 Annual Enforcement Report. March On March 2, the Division issued Opinion 21-009 relative to licensing requirements for digital currency trading and custody services and certain liquidity services. On March 4, the Division approved Needham Bank’s purchase of cannabis-related business and money service business customers of Eastern Bank. On March 7, the Division issued a follow up Industry Letter to provide guidance to mortgage servicers as consumers exit pandemic-related forbearances. On March 9, the Division entered into a Consent Order with Cross Country Mortgage, LLC to resolve allegations of alleged unfair or deceptive advertising practices. This consent order supersedes and replaces the 11/30/2021 Temporary Cease and Desist Order. On March 9, the Division entered into a Settlement Agreement with Andrew Marquis to resolve allegations of alleged unfair or deceptive advertising practices. This consent order supersedes and replaces the 11/30/2021 Temporary Cease and Desist Order. On March 15, the Division of Banks awarded over $2.5 million in grants to 24 organizations in support of first-time homeownership education programs and foreclosure prevention counseling centers throughout the Commonwealth through the Chapter 206 grant program. On March 16, The Division held a public hearing on proposed amendments to 209 CMR 42.00: The Licensing of Mortgage Lenders and Mortgage Brokers. On March 24, IT/Cyber/Fintech Examiner Whitten provided a cybersecurity update at the New England Adjustment Managers Association (NEAMA) annual seminar. On March 25, the Division approved the merger of Revere Municipal Employees Federal Credit Union (Revere Municipal) into St. Jean’s Credit Union. On March 25, Chief Director Weydt spoke on current hot topics in the consumer protection space, including general DOB examination practices in a remote environment, representment, CRA qualified CD activity, and recent compliance areas with violations at the Eastern Massachusetts Compliance Forum. On March 25, the Division issued an Industry Letter to provide guidance and clarification of the Division’s policy as it relates to the evaluation of licensees’ financial responsibility as part of the Massachusetts annual license renewal process. On March 30, Director Chase moderated the “Cross-Communication and Collaboration during a Significant Cybersecurity Event” session at the CRMWG TTX meeting. 6