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IN THE MATTER OF: PATRIOT FINANCIAL, INC ("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 Section 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 . . . 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 . . . 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, regulations, rules 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 . . . 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 . . . 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, . . . 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 . . . 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 or of regulations adopted by the agency 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 Washington corporation with an office at 1135 Kildaire Farm Road, Suite 220-2, Cary, North Carolina. | ||||||||
| 2. | On December 13, 2015, Respondent requested renewal of its mortgage broker license on the Nationwide Multistate Licensing System and Registry (“NMLS”) for the January 1, 2016 through December 31, 2016 licensing period (“2016 Licensing Period”). | ||||||||
| 3. |
On January 22, 2016, in connection with an investigation of Respondent’s renewal application and an investigation into Respondent’s mortgage call report (“MCR”) filings required by Section 36a-534b(c) of the Connecticut General Statutes, four deficiencies were posted by the Division to Respondent’s NMLS account relating to Respondent’s various MCR filings, as follows:
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| 4. |
When a deficiency is posted to an NMLS account, NMLS automatically generates an e-mail that is sent to the licensee indicating that a license item has posted to the account. | ||||||||
| 5. | As of May 20, 2016, there was no response from Respondent to the posted deficiencies. | ||||||||
| 6. | On May 20, 2016, the Division posted an additional deficiency to Respondent’s account as follows: “[a]ll outstanding deficiencies for the 2016 renewal must be addressed by 6/3/2016. . . .” | ||||||||
| 7. | As of June 3, 2016, there was no response from Respondent to the posted deficiencies. | ||||||||
| 8. | On June 6, 2016, the Division contacted Respondent’s President by telephone, and left a voicemail asking for a return call. | ||||||||
| 9. | Respondent did not return the telephone call described in paragraph 8 above. | ||||||||
| 10. | On June 21, 2016, the Division sent Respondent a letter by certified mail (Certified Mail No. 70151730000224115285) that identified the outstanding deficiencies, set forth statutory authority to revoke or refuse to renew Respondent’s license, and provided Respondent with an opportunity to show compliance with all lawful requirements for the retention of its license (“Compliance Letter”). | ||||||||
| 11. | The Compliance Letter required a written response from Respondent by July 5, 2016. | ||||||||
| 12. | The Compliance Letter was received by Respondent on June 27, 2016. | ||||||||
| 13. | No written response was received by the Division by July 5, 2016. | ||||||||
| 14. | On August 10, 2016, Respondent contacted the Division by e-mail with questions regarding the deficiencies described in paragraph 3 above and submitted revised MCRs. | ||||||||
| 15. | Based on the correspondence with Respondent and the revised MCR filings described in paragraph 14 above, the Division cleared the deficiencies noted in subparagraphs (a), (b) and (c) of paragraph 3 above. | ||||||||
| 16. | To date, the deficiency described in paragraph 3(d) above has not been satisfied as it relates to the number of loans in line AC900. |
III. STATUTORY BASIS FOR REFUSAL TO RENEW MORTGAGE BROKER
LICENSE, 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 broker 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 . . . 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 broker unless the commissioner, at a minimum, finds that: . . . (C) the applicant demonstrates that the financial responsibility, character and general fitness of the applicant . . . 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;
(2)(A) The minimum standards for license renewal for a . . . mortgage broker 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 broker failing to satisfy the minimum standards for license renewal shall expire. . . .
Section 36a-17 of the Connecticut General Statutes provides, in pertinent part, that:
(d) Any person who is the subject of any . . . investigation . . . shall make its records available to the commissioner in readable form; . . . provide copies or computer printouts of records when so requested . . . and otherwise cooperate with the commissioner. . . .
(f) As used in this section, “records” includes, but is not limited to, books, papers, correspondence, memoranda, agreements, diaries, logs, notes, ledgers, journals, visual, audio, magnetic or electronic recordings, computer printouts and software, and any other documents.
Section 36a-498f(b) of the Connecticut General Statutes provides, in pertinent part, that:
Each licensee, individual or person subject to sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b shall make or compile reports or prepare other information as directed by the commissioner in order to carry out the purposes of this section including accounting compilations, information lists and data concerning loan transactions in a format prescribed by the commissioner or such other information the commissioner deems necessary to carry out the purposes of this section.
| 1. | Respondent’s failure to timely respond to all of the Division’s posted deficiencies and to provide corrected MCRs in connection with the Division’s investigation, as described more fully in paragraphs 1 through 16, inclusive, of the Matters Asserted, constitutes a failure to cooperate with the Commissioner, in violation of Section 36a-17(d) of the Connecticut General Statutes, and a failure to prepare other information as directed by the Commissioner, in violation of Section 36a-498f(b) of the Connecticut General Statutes. Such violations constitute sufficient grounds to refuse to renew Respondent’s license to act as a mortgage broker in Connecticut for the 2016 Licensing Period under 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. Such failure by Respondent also constitutes sufficient grounds to refuse to renew Respondent’s mortgage broker license pursuant to Section 36a-489(a)(2)(A) of the Connecticut General Statutes, which would cause such license to expire pursuant to Section 36a-489(a)(2)(B) of the Connecticut General Statutes. |
| 2. | Respondent’s failure to timely respond to all of the Division’s posted deficiencies and to provide corrected MCRs in connection with the Division’s investigation, as described more fully in paragraphs 1 through 16, inclusive, of the Matters Asserted, constitutes a failure to cooperate with the Commissioner, in violation of Section 36a-17(d) of the Connecticut General Statutes and a failure to prepare other information as directed by the Commissioner, in violation of Section 36a-498f(b) of the Connecticut General Statutes. Such violations form 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. |
| 3. | Respondent’s failure to timely respond to all of the Division’s posted deficiencies and to provide corrected MCRs in connection with the Division’s investigation, as described more fully in paragraphs 1 through 16, inclusive, of the Matters Asserted, renders the Commissioner to be unable to find that Respondent demonstrates character and general fitness such as to command the confidence of the community and to warrant a determination that Respondent will cooperate 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 broker 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 license 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 license renewal, which constitutes sufficient grounds to refuse to renew Respondent’s license pursuant to Section 36a-489(a)(2)(A) of the Connecticut General Statutes. |
IV. NOTICE OF INTENT NOT TO RENEW MORTGAGE BROKER LICENSE,
NOTICE OF INTENT TO IMPOSE A CIVIL PENALTY
AND NOTICE OF RIGHT TO HEARING
NOW THEREFORE, notice is hereby given to Respondent that the Commissioner intends to REFUSE TO RENEW Respondent’s license to act as a mortgage broker in Connecticut, issue an order requiring Respondent to CEASE AND DESIST from violating Sections 36a-17(d) and 36a-498f(b) of the Connecticut General Statutes, 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 Broker 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 Broker 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 November 17, 2016, 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 broker license in Connecticut for the reasons set forth herein, and such order shall cause Respondent’s mortgage broker license in Connecticut to be deemed EXPIRED. The Commissioner will further issue an order that Respondent cease and desist from violating Sections 36a-17(d) and 36a-498f(b) of the Connecticut General Statutes and may order that the maximum civil penalty be imposed upon Respondent.
Dated at Hartford, Connecticut
this 26th day of September 2016. ________/s/_________
Jorge L. Perez
Banking Commissioner
CERTIFICATION
I hereby certify that on this 27th day of September 2016, I caused to be mailed by certified mail, return receipt requested, the foregoing Notice of Intent Not to Renew Mortgage Broker 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 Patriot Financial Inc, Attention: Matthew Hess, President, 1135 Kildaire Farm Road, Suite 220-2, Cary, North Carolina 27511, certified mail no. 70123050000069998454; and to Patriot Financial Inc, Attention: Matthew Hess, President, 304 Feldon River Court, Apex, North Carolina 27539, certified mail no. 70123050000069998379.
________/s/_________
Amy Grillo
Secretary