WHEREAS, 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”;

WHEREAS, Karat is an individual who was registered as an originator for a period of time ending in April 2005, and who was licensed as a mortgage loan originator from December 17, 2008 through December 31, 2009;

WHEREAS, in connection with his registration and license, Karat was at no time sponsored by a company called Nations Funding Source (“Nations Funding”);

WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking, investigated the activities of Karat pursuant to Sections 36a-17(a) and 36a-498f(a) of the Connecticut General Statutes to determine if he had violated, was violating or was about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner;

WHEREAS, as a result of such investigation, on January 19, 2011, the Commissioner, acting pursuant to Sections 36a-494(b), 36a-52(a) and 36a-50(a) of the Connecticut General Statutes, issued a Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (collectively “Notice”) against Karat and several other respondents, which Notice is incorporated herein by reference;

WHEREAS, the Notice alleges, with regard to Karat, that Karat was identified as the interviewer on behalf of Nations Funding on several Uniform Residential Loan Applications taken on five (5) applications between May and December 2008 and, by so doing, Karat acted as an unregistered originator or an unlicensed mortgage loan originator in connection with those loans in violation of Section 36a-486(b) of the then applicable Connecticut General Statutes;

WHEREAS, the Notice was mailed on January 20, 2011, to Karat by registered mail, return receipt requested (Registered Mail No. RB028037694US);

WHEREAS, Karat received the Notice sent by registered mail on January 21, 2011;

WHEREAS, on February 7, 2011, the Department received an Appearance and Request for Hearing form from Karat dated January 31, 2011, requesting a hearing on the Notice, which hearing is currently scheduled for August 17, 2011;

WHEREAS, Karat has fully cooperated with the Commissioner with respect to efforts to resolve the allegations set forth in the Notice and set forth herein;

WHEREAS, Karat represents to the Commissioner that he was not the interviewer on the residential mortgage loans identified in the Notice and that the signatures on the documents were not his signatures;

WHEREAS, as a result of subsequent investigation by the Commissioner, the Commissioner alleges that Karat acted as an unlicensed mortgage broker with respect to approximately seven (7) residential mortgage loans made by Nations Funding during the 2008 timeframe, in violation of Section 36a-486(a) of the then applicable Connecticut General Statutes;

WHEREAS, such additional allegations would support initiation of further administrative proceedings against Karat, including proceedings to cease and desist pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation on Karat pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes;

WHEREAS, such additional enforcement proceedings would constitute a contested case within the meaning of Section 4-166(2) of the Connecticut General Statutes;

WHEREAS, Section 4-177(c) of the Connecticut General Statutes and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;

WHEREAS, Karat herein represents to the Commissioner that he:  has not otherwise acted as a mortgage broker without the required license; since the expiration of his mortgage loan originator license, has not engaged in the business of a mortgage loan originator; and will not act as a mortgage broker or engage in the business of a mortgage loan originator in the future without first obtaining and maintaining the required license under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes;

WHEREAS, both the Commissioner and Karat acknowledge the possible consequences of formal administrative proceedings, and Karat voluntarily agrees to consent to the entry of the sanction described below without admitting or denying the additional allegation set forth herein and solely for the purpose of obviating the need for further formal administrative proceedings concerning the allegations contained in the Notice and set forth herein;

WHEREAS, Karat acknowledges that this Consent Order is a public record and, notwithstanding the foregoing paragraph, constitutes a finding by the Commissioner that Karat has been involved in a violation of a financial services-related regulation or statute required to be disclosed in response to regulatory disclosure questions on the MU2 Form or MU4 Form on the Nationwide Mortgage Licensing System and Registry (“NMLS”), as such forms may be applicable;

WHEREAS, Karat agrees that the Notice may be used in construing the terms of this Consent Order, and agrees to the language in this Consent Order;

AND WHEREAS, Karat, through his execution of this Consent Order, voluntarily agrees to waive his procedural rights, including a right to a hearing as it pertains to the allegations contained in the Notice and set forth herein, and including a right to notice and an opportunity for hearing as it pertains to the additional allegations set forth herein, and voluntarily waives his right to seek judicial review or otherwise challenge or contest the validity of this Consent Order.

CONSENT TO ENTRY OF SANCTION

WHEREAS, Karat, through his execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing the following sanction:

CONSENT ORDER

NOW THEREFORE, the Commissioner enters the following:

Dated at Hartford, Connecticut
this 8th day of Sept 2011.                 ________/s/_________
                                                     Howard F. Pitkin
                                                     Banking Commissioner

I, David Karat, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the sanction entered and terms and conditions ordered herein; and that I voluntarily agree to enter into this Consent Order, expressly waiving the procedural rights set forth herein as to the matters described herein.                                          

State of:  Connecticut

County of:  Hartford

On this the 22 day of August 2011, before me, Elizabeth S. Goulet, the undersigned officer, personally appeared David Karat, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained.

In witness whereof I hereunto set my hand.

Administrative Orders and Settlements