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IN THE MATTER OF: THE COBBLESTONE GROUP, LLC LOU-ANN SMITH * * * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER |
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, Cobblestone Group is a Connecticut limited liability company that is currently licensed as a mortgage broker under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes;
WHEREAS, on November 1, 2010, Cobblestone Group requested renewal of its mortgage broker license in Connecticut on the Nationwide Mortgage Licensing System and Registry (“NMLS”), which request is currently pending;
WHEREAS, Smith is an individual who is currently licensed as a mortgage loan originator under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes and is a member of Cobblestone Group;
WHEREAS, on November 1, 2010, Smith requested renewal of her mortgage loan originator license in Connecticut on NMLS, which request is currently pending;
WHEREAS, on January 27, 2010, the Commissioner, through the Consumer Credit Division of the Department of Banking, conducted an examination pursuant to Section 36a-17 of the Connecticut General Statutes and Section 36a-498f of the 2010 Supplement to the General Statutes into the activities of Cobblestone Group and conducted an investigation pursuant to Section 36a-17 of the Connecticut General Statutes and Section 36a-498f of the 2010 Supplement to the General Statutes into the activities of Smith to determine if either of them had violated, were violating or were about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner;
WHEREAS, as a result of such examination and investigation, the Commissioner alleges that during the period of October 2006 through December 2007, Smith originated four (4) mortgage loans. In connection with such mortgage loans, Smith, using her personal funds, provided loans to the borrowers to use as down payments on residential property, which private loans were listed as assets on subsequent mortgage loan applications submitted by the borrowers. Such mortgage applications were forwarded to lenders by Cobblestone, causing Cobblestone and Smith to thereby misrepresent, conceal, suppress, intentionally omit or otherwise intentionally fail to disclose material particulars to mortgage lenders entitled to such information;
WHEREAS, of the four (4) mortgage loans described above, Cobblestone Group and Smith reported two such loans to the Commissioner;
WHEREAS, as a result of such examination and investigation, the Commissioner alleges that Cobblestone Group, through Smith, during the period of October 2006 through December 2007, misrepresented the material particulars of mortgage loan transactions to lenders that were entitled to such information, within the meaning of Sections 36a-494(a)(1) and 36a-494(b) of the then applicable General Statutes, respectively;
WHEREAS, the Commissioner believes that such allegation against Cobblestone Group would support initiation of enforcement proceedings against Cobblestone Group, including proceedings to revoke and refuse to renew Cobblestone Group’s license pursuant to Section 36a-494(a)(1) and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes, issue a cease and desist order against Cobblestone Group pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation on Cobblestone Group pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes;
WHEREAS, as a result of such examination and investigation, the Commissioner also alleges that Smith’s conduct, as set forth herein, during the period of October 2006 through December 2007, constitutes a basis for the Commissioner to conclude that Smith failed to demonstrate character and general fitness so as to warrant belief that granting Smith a mortgage loan originator license would have been in the public interest and consistent with the purposes of Sections 36a-485 to 36a-498a, inclusive, and Sections 36a-760a to 36a-760h, inclusive, of the then applicable Connecticut General Statutes;
WHEREAS, the Commissioner believes that such allegation against Smith would support initiation of enforcement proceedings against Smith, including proceedings to revoke and refuse to renew Smith’s mortgage loan originator license pursuant to Section 36a-494(a)(2) and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes, issue a cease and desist order against Smith pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation on Smith pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes;
WHEREAS, initiation of such enforcement proceedings against Cobblestone Group and Smith 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, the Commissioner, Cobblestone Group and Smith acknowledge the possible consequences of formal administrative proceedings, and Cobblestone Group and Smith voluntarily agree to consent to the entry of the sanctions described below without admitting or denying any allegation contained herein and solely for the purpose of obviating the need for further formal administrative proceedings concerning the allegations contained herein;
WHEREAS, Cobblestone Group and Smith acknowledge that this Consent Order is a public record and, notwithstanding the foregoing paragraph, constitutes a finding by the Commissioner that Cobblestone Group and Smith have been involved in violations of a financial services-related regulation or statute required to be disclosed in response to regulatory disclosure questions on the MU1 Form, MU2 Form or MU4 Form on NMLS, as such forms are applicable;
WHEREAS, Cobblestone Group herein represents to the Commissioner that it has reviewed and updated its internal policies, procedures and controls for assessing whether mortgage loan applications taken by its mortgage loan originators contain misrepresentations or otherwise conceal, suppress, intentionally omit or otherwise intentionally fail to disclose any of the material particulars of any residential mortgage loan transaction to anyone entitled to such information within the meaning Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes;
WHEREAS, Smith herein represents to the Commissioner that she has released her liens on the residential properties on which she provided personal loans, as set forth herein;
AND WHEREAS, Cobblestone Group and Smith, through their execution of this Consent Order, voluntarily agree to waive each of their procedural rights, including a right to notice and an opportunity for hearing as it pertains to the allegations set forth herein, and voluntarily waive each of their rights to seek judicial review or otherwise challenge or contest the validity of this Consent Order.
CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Cobblestone Group and Smith, through their execution of this Consent Order, consent to the Commissioner’s entry of a Consent Order imposing the following sanctions upon Cobblestone Group and Smith, jointly and severally:
| 1. | No later than the date this Consent Order is executed by Cobblestone Group and Smith, Cobblestone Group and/or Smith shall remit to the Department of Banking by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, the sum of Ten Thousand Dollars ($10,000) as a civil penalty. |
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No later than one (1) year following the date this Consent Order is executed by Smith, Smith shall take an ethics course pertaining to mortgage origination and shall provide proof to the Commissioner that she has passed such course.
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CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Sanctions set forth above be and are hereby entered; |
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Upon issuance of this Consent Order by the Commissioner, this matter will be resolved and the Commissioner will not take any future enforcement action against Cobblestone Group and Smith based upon the allegations contained herein; provided that issuance of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against Cobblestone Group and Smith 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 Cobblestone Group or Smith and reflected herein is subsequently discovered to be untrue; |
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So long as this Consent Order is promptly disclosed by Cobblestone Group and Smith on NMLS, nothing in the issuance of this Consent Order shall adversely affect the ability of Cobblestone Group or Smith to apply for or obtain licenses or renewal licenses under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes; and |
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This Consent Order shall become final when issued.
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Issued at Hartford, Connecticut
this 14th day of October 2011. ________/s/_________
Howard F. Pitkin
Banking Commissioner
I, Lou-Ann Smith, state on behalf of The Cobblestone Group, LLC d/b/a HamiltonLadd, that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of The Cobblestone Group, LLC d/b/a HamiltonLadd; that The Cobblestone Group, LLC d/b/a HamiltonLadd agrees freely and without threat or coercion of any kind to comply with the sanctions entered herein; and that The Cobblestone Group, LLC d/b/a HamiltonLadd voluntarily agrees to enter this Consent Order, expressly waiving the procedural rights set forth herein as to the matters described herein.
By: ________/s/_________
Name:
Title: Principal
The Cobblestone Group, LLC
d/b/a HamiltonLadd
State of: CT
County of: Fairfield
On this the 30 day of September 2011, before me, Lauretta Clanflone, the undersigned officer, personally appeared Lou-Ann Smith who acknowledged herself to be the Principal of The Cobblestone Group, LLC d/b/a HamiltonLadd, a member managed/manager managed limited liability company, and that she as such Principal, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by herself as Principal.
In witness whereof I hereunto set my hand.
________/s/_________
Notary Public
Date Commission Expires: 11-30-2012
I, Lou-Ann Smith, 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 terms and conditions stated herein; and that I consent to the issuance of this Consent Order, expressly waiving any right to a hearing on the matters described herein.
________/s/_________
Name: Lou-Ann Smith
State of: CT
County of: Fairfield
On this the 30 day of September 2011, before me, Lauretta Clanflone, the undersigned officer, personally appeared Lou-Ann Smith, 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.
________/s/_________
Notary Public
Date Commission Expires: 11-30-2012