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IN THE MATTER OF: APPROVED FUNDING CORP. ("Respondent")
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NOTICE OF INTENT NOT TO NOTICE OF INTENT TO ISSUE NOTICE OF INTENT TO IMPOSE AND NOTICE OF RIGHT TO HEARING |
I. LEGAL AUTHORITY AND JURISDICTION
The Banking Commissioner (“Commissioner”) is charged with the administration of Part I of Chapter 668, Sections 36a-485 to 36a-534c, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Correspondent Lenders, Brokers and Loan Originators”.
Pursuant to the authority granted by Sections 36a-17 and 36a-498f of the Connecticut General Statutes, the Commissioner, through the Consumer Credit Division (“Division”) of the Department of Banking, has investigated the activities of Respondent to determine if it has violated, is violating or is about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner.
Section 36a-17(a) of the Connecticut General Statutes provides, in pertinent part, that:
The commissioner, in the commissioner’s discretion, may, subject to the provisions of section 36a-21 and the Freedom of Information Act, as defined in section 1-200, (1) make such public or private investigations or examinations within or outside this state, concerning any person subject to the jurisdiction of the commissioner, as the commissioner deems necessary to carry out the duties of the commissioner . . . .
Section 36a-498f(a) of the Connecticut General Statutes provides, in pertinent part, that:
In addition to any authority provided under this title, the Banking Commissioner shall have the authority to conduct investigations and examinations as follows:
(1) For purposes of . . . license renewal . . . or general or specific inquiry or investigation to determine compliance with sections 36a-485 to 36a 498f, inclusive, 36a 534a and 36a-534b, the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to: . . . (c) any other documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence.
Section 36a-52(a) of the Connecticut General Statutes provides, in pertinent part, that:
Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of the general statutes within the jurisdiction of the commissioner, or any . . . order . . . issued thereunder, the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the person on the earlier of the date of actual receipt, or seven days after mailing or sending. Any such notice shall include: (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the general statutes . . . or orders alleged to have been violated; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that such person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice. If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice, unless the person fails to appear at the hearing. After the hearing, the commissioner shall determine whether an order to cease and desist should be issued against the person named in the notice. If the person does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner shall issue an order to cease and desist against the person. No such order shall be issued except in accordance with the provisions of chapter 54.
Section 36a-51 of the Connecticut General Statutes provides, in pertinent part, that:
(a) The commissioner may . . . refuse to renew any license issued by the commissioner under any provision of the general statutes by sending a notice to the licensee by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the licensee on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the general statutes . . . or orders involved; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that the licensee may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice. . . .
(b) If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless the licensee fails to appear at the hearing. After the hearing, the commissioner shall . . . refuse to renew the license for any reason set forth in the applicable licensing provisions of the general statutes if the commissioner finds sufficient grounds exist for such . . . refusal to renew. If the licensee does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner shall . . . refuse to renew the license. No such license shall be suspended or revoked except in accordance with the provisions of chapter 54.
Section 36a-50(a) of the Connecticut General Statutes provides, in pertinent part, that:
(1) Whenever the commissioner finds as the result of an investigation that any person has violated any provision of the general statutes within the jurisdiction of the commissioner, or any . . . order . . . issued thereunder, the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the person on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (A) A statement of the time, place, and nature of the hearing; (B) a statement of the legal authority and jurisdiction under which the hearing is to be held; (C) a reference to the particular sections of the general statutes . . . or orders alleged to have been violated; (D) a short and plain statement of the matters asserted; (E) the maximum penalty that may be imposed for such violation; and (F) a statement indicating that such person may file a written request for a hearing on the matters asserted not later than fourteen days after receipt of the notice.
(2) If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless such person fails to appear at the hearing. After the hearing, if the commissioner finds that the person has violated any such provision . . . or order, the commissioner may, in the commissioner’s discretion and in addition to any other remedy authorized by law, order that a civil penalty not exceeding one hundred thousand dollars per violation be imposed upon such person. If such person does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner may, as the facts require, order that a civil penalty not exceeding one hundred thousand dollars per violation be imposed upon such person.
(3) Each action undertaken by the commissioner under this subsection shall be in accordance with the provisions of chapter 54.
Section 4-182 of the Connecticut General Statutes provides, in pertinent part, that:
(b) When a licensee has made timely and sufficient application for the renewal of a license . . . , the existing license shall not expire until the application has been finally determined by the agency . . . .
(c) No revocation, suspension, annulment or withdrawal of any license is lawful unless, prior to the institution of agency proceedings, the agency gave notice by mail to the licensee of facts or conduct which warrant the intended action and the specific provisions of the general statutes . . . that authorize such intended action, and the licensee was given an opportunity to show compliance with all lawful requirements for the retention of the license.
II. MATTERS ASSERTED
| 1. | Respondent is a New York corporation. |
| 2. | Respondent was licensed by the Commissioner through the Nationwide Multistate Licensing System and Registry (“System”) to act as a mortgage lender in Connecticut from its main office located at 41 Grand Avenue, Suite 200, River Edge, New Jersey, for the January 1 to December 31, 2015 licensing period, and has requested renewal of such license for the January 1 to December 31, 2016 licensing period. |
| 3. | The System required Respondent to file, among other things, certain Mortgage Call Reports (“MCRs”), one of which was due on March 30, 2016 (“Standard Financial Condition – 2015”). |
| 4. |
When a licensee fails to file MCRs, the System automatically generates and posts a license item to the licensee’s account, and automatically generates an e-mail that is sent to the licensee indicating that a license item has posted to the account. |
| 5. | On March 31, 2016, the System posted a license item to Respondent’s account for failure to file the Standard Financial Condition – 2015 MCR described in paragraph 3 above, and Respondent was notified of the license item by the System via e-mail as described in paragraph 4 above. |
| 6. | On July 15, 2013, Respondent entered into a Consent Order with the Commissioner resolving allegations that it failed to file multiple MCRs (“2013 Consent Order”). |
| 7. | In the 2013 Consent Order, Respondent admitted it had not filed the MCRs at issue on their respective due dates, and Respondent represented to the Commissioner that it had, “reviewed and updated its internal policies, procedures and controls for timely and accurately filing reports with the Commissioner through NMLS . . . ”. |
| 8. | The 2013 Consent Order provided, among other things, “[i]n the future, . . . [Respondent] shall file timely and accurately all required reports on NMLS . . . in connection with its current and any future license issued to . . . [Respondent]”. |
| 9. | The 2013 Consent Order also provided, among other things, “[u]pon issuance of this Consent Order by the Commissioner, this matter will be resolved and the Commissioner will not take any future enforcement action against . . . [Respondent] based on the allegation set forth . . . herein; provided that issuance of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against . . . [Respondent] based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed or if any representation made by . . . [Respondent] and reflected herein is subsequently discovered to be untrue”. |
| 10. | On September 25, 2014, Respondent entered into a Consent Order with the Commissioner resolving allegations that it again failed to file an MCR, in violation of applicable law and in violation of the 2013 Consent Order (“2014 Consent Order”). |
| 11. | In the 2014 Consent Order, Respondent admitted it had not filed the MCR at issue on its due date and provided the Commissioner with information pertaining to extenuating circumstances. Respondent again represented to the Commissioner in the 2014 Consent Order that it had, “reviewed and updated its internal policies, procedures and controls for timely and accurately filing reports with the Commissioner through NMLS . . .”. |
| 12. | The 2014 Consent Order provided, among other things, “[i]n the future, . . . [Respondent] shall timely and accurately file all required reports on NMLS . . . in connection with its current and any future license issued to . . . [Respondent]”. |
| 13. | The 2014 Consent Order also provided, among other things, “[u]pon issuance of this Consent Order by the Commissioner, this matter will be resolved and the Commissioner will not take any future enforcement action against . . . [Respondent] based on the allegations set forth . . . herein; provided that issuance of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against . . . [Respondent] based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed or if any representation made by . . . [Respondent] and reflected herein is subsequently discovered to be untrue”. |
| 14. | The 2014 Consent Order also provided, “[i]t is expressly understood and agreed that the subsequent failure by . . . [Respondent] to timely file . . . any required MCR in any of the next three (3) licensing periods during which time . . . [Respondent] is licensed, may, in addition to any other remedy available to the Commissioner, form a basis for the Commissioner to revoke or refuse to renew the license of . . . [Respondent] in Connecticut”. |
| 15. | On May 13, 2016, the Division sent a letter to Respondent via certified mail (Certified Mail No. 70151730000224115520) (“Compliance Letter”) that, among other things, notified Respondent that it had failed to file the MCR set forth in paragraph 3 above, in violation of Section 36a-534b(c)(3) of the Connecticut General Statutes and in violation of the 2013 Consent Order and the 2014 Consent Order and indicated the Commissioner’s intent to revoke or refuse to renew Respondent’s license in the event that a sufficient written response was not provided by May 31, 2016. |
| 16. | On May 13, 2016, Respondent filed the missing MCR described in paragraph 3 above. |
| 17. | On May 31, 2016, the Division received Respondent’s written response. |
| 18. | Respondent’s written response did not offer any explanation of any kind regarding Respondent’s failure to timely file its Standard Financial Condition – 2015 MCR described in the Compliance Letter and as set forth in paragraphs 1 through 17, inclusive, herein. |
III. STATUTORY BASIS TO NOT RENEW MORTGAGE LENDER LICENSE AND FOR
ORDER TO CEASE AND DESIST AND IMPOSITION OF CIVIL PENALTY
Section 36a-494 of the 2016 Supplement to the General Statutes provides, in pertinent part, that:
(a)(1) The commissioner may. . . refuse to renew any mortgage lender . . . license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, or if the commissioner finds that the licensee, any control person of the licensee, the qualified individual or branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following: . . . (C) violated any of the provisions of this title . . . .
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any of the provisions of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, . . . the commissioner may take action against such person . . . in accordance with sections 36a-50 and 36a-52.
Section 36a-489(a) of the Connecticut General Statutes provides, in pertinent part, that:
(1) The commissioner shall not issue an initial license for a mortgage lender . . . unless the commissioner, at a minimum, finds that: . . . (C) the applicant demonstrates that the . . . character and general fitness of the applicant, the control persons of the applicant and the qualified individual or branch manager having supervisory authority over the office for which the license is sought are such as to command the confidence of the community and to warrant a determination that the applicant will operate honestly, fairly and efficiently within the purposes of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b . . . . If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial.
(2) (A) The minimum standards for license renewal for a mortgage lender . . . shall include the following: (i) The applicant continues to meet the minimum standards under subdivision (1) of this subsection . . . .
(B) The license of a mortgage lender . . . failing to satisfy the minimum standards for license renewal shall expire. . . .
Section 36a-534b(c)(3) of the Connecticut General Statutes provides, in pertinent part, that:
Each mortgage lender . . . licensee . . . shall timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.
| 1. | Respondent’s failure to file the Standard Financial Condition – 2015 MCR when it was due, as more fully described in paragraphs 3 through 5, inclusive, and 15 through 18, inclusive, of the Matters Asserted, constitutes a violation of Section 36a 534b(c)(3) of the Connecticut General Statutes, which constitutes sufficient grounds to refuse to renew Respondent’s license pursuant to Section 36a 494(a)(1)(C) of the 2016 Supplement to the General Statutes and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes and forms the basis to issue an order to cease and desist pursuant to Section 36a 494(b) of the 2016 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Section 36a-494(b) of the 2016 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Respondent in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. |
| 2. | Respondent’s failure to file the Standard Financial Condition – 2015 MCR when it was due, as more fully described in paragraphs 3 through 5, inclusive, and 15 through 18, inclusive, of the Matters Asserted, after it executed the 2013 Consent Order and the 2014 Consent Order described in paragraphs 6 through 14, inclusive, of the Matters Asserted, constitutes violations of orders of the Commissioner. Such violations form the basis to issue an order to cease and desist pursuant to Section 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Section 36a-50(a) of the Connecticut General Statutes. Section 36a 50(a) of the Connecticut General Statues authorizes the Commissioner to impose a civil penalty upon Respondent in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. |
| 3. | Respondent’s failure to file the Standard Financial Condition – 2015 MCR when it was due, as more fully described in paragraphs 3 through 5, inclusive, and 15 through 18, inclusive, of the Matters Asserted, after it executed the 2013 Consent Order and the 2014 Consent Order described in paragraphs 6 through 14, inclusive, of the Matters Asserted, renders the Commissioner to be unable to find that Respondent demonstrates the character and general fitness such as to command the confidence of the community and to warrant a determination that Respondent will operate honestly, fairly and efficiently within the purposes of Sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a 534b of the Connecticut General Statutes. Such failure would be sufficient grounds for the Commissioner to deny an application for a mortgage lender license pursuant to Section 36a-489(a)(1)(C) of the Connecticut General Statutes, and would be sufficient grounds for the Commissioner to refuse to renew Respondent’s mortgage lender license in Connecticut pursuant to Section 36a-494(a)(1) of the 2016 Supplement to the General Statutes and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes. Such failure also causes Respondent to fail to meet minimum standards for renewal under Section 36a 489(a)(2) of the Connecticut General Statutes, which shall cause such license to expire. |
| 4. | Respondent’s failure to file the Standard Financial Condition – 2015 MCR when it was due, as more fully described in paragraphs 3 through 5, inclusive, and 15 through 18, inclusive, of the Matters Asserted, after it executed the 2013 Consent Order and the 2014 Consent Order described in paragraphs 6 through 14, inclusive, of the Matters Asserted, forms the basis to revive allegations made by the Commissioner in the 2013 Consent Order and the 2014 Consent Order relating to Respondent’s failure to file prior MCRs, which allegations were admitted by Respondent, and forms the basis to issue an order to cease and desist pursuant to Section 36a-494(b) of the 2016 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Section 36a-494(b) of the 2016 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Respondent in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation. |
IV. NOTICE OF INTENT NOT TO RENEW MORTGAGE LENDER LICENSE, NOTICE OF
INTENT TO ISSUE ORDER TO CEASE AND DESIST, NOTICE OF INTENT
TO IMPOSE CIVIL PENALTY AND NOTICE OF RIGHT TO HEARING
WHEREAS, the Commissioner has reason to believe that Respondent has engaged in acts or conduct which constitutes sufficient grounds for the Commissioner to refuse to renew Respondent’s mortgage lender license in Connecticut for the 2016 licensing period pursuant to Sections 36a 494(a)(1) and 36a-494(a)(1)(C) of the 2016 Supplement to the General Statutes and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes, and forms the basis to issue an order to cease and desist against Respondent pursuant to Section 36a-494(b) of the 2016 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Section 36a-494(b) of the 2016 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes.
NOW THEREFORE, notice is hereby given to Respondent that the Commissioner intends to REFUSE TO RENEW Respondent’s mortgage lender license in Connecticut, issue an order requiring Respondent to CEASE AND DESIST from violating Section 36a-534b(c)(3) of the Connecticut General Statutes and from violating orders of the Commissioner, and to impose a CIVIL PENALTY upon Respondent as set forth herein, subject to Respondent’s right to a hearing on the allegations set forth above.
A hearing will be granted to Respondent if a written request for a hearing is received by the Department of Banking, Consumer Credit Division, 260 Constitution Plaza, Hartford, Connecticut 06103 1800 within fourteen (14) days following its receipt of this Notice of Intent Not to Renew Mortgage Lender License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing as set forth in subsections (a) and (b) of Section 36a-51 and Sections 36a-52(a) and 36a-50(a) of the Connecticut General Statutes. This Notice of Intent Not to Renew Mortgage Lender License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing shall be deemed received on the earlier of the date of actual receipt, or seven days after mailing or sending. To request a hearing, complete and return the enclosed Appearance and Request for Hearing Form to the above address. If Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a presiding officer and sets the date of the hearing in accordance with Section 4-177 of the Connecticut General Statutes and Section 36a 1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on January 4, 2017, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
The hearing will be held in accordance with the provisions of Chapter 54 of the Connecticut General Statutes, unless Respondent fails to appear at the requested hearing. At such hearing, Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
If Respondent does not request a hearing within the time prescribed or fails to appear at any such hearing, the allegations herein will be deemed admitted. Accordingly, the Commissioner will issue an order refusing to renew Respondent’s mortgage lender license in Connecticut for the reasons set forth herein, and such order shall cause Respondent’s mortgage lender license in Connecticut to be deemed EXPIRED. The Commissioner will further issue an order that Respondent cease and desist from violating Section 36a-534b(c)(3) of the Connecticut General Statutes and from violating orders of the Commissioner and may order that the maximum civil penalty be imposed upon Respondent.
Dated at Hartford, Connecticut
this 9th day of November 2016. ________/s/_________
Jorge L. Perez
Banking Commissioner
CERTIFICATION
I hereby certify that on this 9th day of November 2016, I caused to be mailed by certified mail, return receipt requested, the foregoing Notice of Intent Not to Renew Mortgage Lender License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing to Approved Funding Corp., Attention: Shmuel Shayowitz, President, 41 Grand Avenue, Suite 200, River Edge, New Jersey 07661, certified mail no. 70151520000018249399; and to Approved Funding Corp., Attention: Elliot Rosenfeld, Director of Finance, 41 Grand Avenue, Suite 200, River Edge, New Jersey 07661, certified mail no. 70151520000018249450.
________/s/_________
Amy Grillo
Secretary