DOB: Countrywide Home Loans, Inc. and Countrywide Home Loans, Inc. d/b/a America's Wholesale Lender, Settlement Agreement

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IN THE MATTER OF:

COUNTRYWIDE HOME LOANS,
INC.

COUNTRYWIDE HOME LOANS,
INC. d/b/a AMERICA'S WHOLESALE
LENDER

    (collectively "Countrywide")

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SETTLEMENT AGREEMENT


WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Part I of Chapter 668, Sections 36a-485 to 36a-534a, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Brokers and Originators”;

WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Division”), conducted an examination and investigation pursuant to Section 36a-17 of the Connecticut General Statutes into the activities of Countrywide to determine if it had violated, was violating or was about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner;

WHEREAS, Countrywide Home Loans, Inc., is a corporation that is currently licensed as a first mortgage lender/broker under Part I(A) of Chapter 668 of the Connecticut General Statutes, “Nondepository First Mortgage Lenders, Brokers and Originators”, and as a secondary mortgage lender/broker under Part I(B) of Chapter 668 of the Connecticut General Statutes, “Secondary Mortgage Lenders, Brokers and Originators”;
 
WHEREAS, Countrywide Home Loans, Inc. d/b/a America’s Wholesale Lender is a corporation that is currently licensed as a first mortgage lender/broker under Part I(A) of Chapter 668 of the Connecticut General Statutes, “Nondepository First Mortgage Lenders, Brokers and Originators”, and as a secondary mortgage lender/broker under Part I(B) of Chapter 668 of the Connecticut General Statutes, “Secondary Mortgage Lenders, Brokers and Originators”;
 
WHEREAS, as a result of the examination and investigation, the Commissioner alleges that from October 1, 2001 through August 31, 2005, in violation of Section 36a-498a of the Connecticut General Statutes, Countrywide Home Loans, Inc., when making at least 362 first mortgage loans, imposed prepaid finance charges that exceeded in the aggregate the greater of five percent of the principal loan amount or $2,000;
 
WHEREAS, as a result of the examination and investigation, the Commissioner alleges that from October 1, 2001 through August 31, 2005, in violation of Section 36a-486(b) or 36a-511(b) of the Connecticut General Statutes, Countrywide Home Loans, Inc., employed or retained at least 147 originators without first registering such originators under Part I of Chapter 668, Sections 36a-485 to 36a-534a, inclusive, of the Connecticut General Statutes;
 
WHEREAS, as a result of the examination and investigation, the Commissioner alleges that from October 1, 2001 through August 31, 2005, in violation of Section 36a-498a of the Connecticut General Statutes, Countrywide Home Loans, Inc. d/b/a America’s Wholesale Lender, when making at least 111 first mortgage loans, imposed prepaid finance charges that exceeded in the aggregate the greater of five percent of the principal loan amount or $2,000;
 
WHEREAS, the Commissioner believes that the Commissioner’s allegations support the initiation of enforcement proceedings against Countrywide, including proceedings to revoke the licenses of Countrywide pursuant to Sections 36a-     494(a), 36a-517(a) and 36a-51 of the Connecticut General Statutes, issue a cease and desist order against Countrywide pursuant to Sections 36a-494(b), 36a-517(b) and 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty of up to $100,000 per violation on Countrywide pursuant to Sections 36a-494(b), 36a-517(b) and 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, Section 4-177(c) of the Connecticut General Statutes states, in pertinent part, that “[u]nless precluded by law, a contested case may be resolved by . . . agreed settlement”;
 
WHEREAS, Section 36a-1-55(a) of the Regulations of Connecticut State Agencies states, in pertinent part, that “[p]ursuant to subsection (c) of section 4-177 of the Connecticut General Statutes, unless precluded by law, any contested case may be resolved by . . . agreed settlement”;

WHEREAS, Countrywide has assured the Commissioner that it is committed to ensuring full compliance with Sections 36a-486(b), 36a-498a and 36a-511(b) of the Connecticut General Statutes, and all other applicable laws;

WHEREAS, Countrywide has taken the following steps voluntarily:

1. All of the 473 overcharged loan accounts were refunded the total of the excess prepaid finance charge paid, as well as interest collected on the overcharges and an amount for lost use of the funds paid;
2. Various communications were sent to update loan origination personnel to remind them of the requirement of compliance with the prepaid finance charge limitation;
3. The Connecticut prepaid finance worksheet, utilized by loan originators to ensure that applicable loan prepaid finance charges do not exceed the five percent limitation prior to loan closing, was revised to better account for multiple refinances;
4. The prepaid finance worksheet was programmed in Countrywide’s proprietary loan origination system to ensure that loan funding cannot take place if prepaid finance charges exceed the five percent limitation;
5. Countrywide has conducted training with regional and branch personnel to review the Connecticut prepaid finance worksheet;
6. Countrywide has instituted a monthly post-funding self-assessment of loans originated to ensure compliance and immediate corrective action has been taken upon discovery of any prepaid finance charge deviations from the five percent limitation;
7. Countrywide has instituted monthly exception reports to identify any unregistered loan originators; and
8. Countrywide has instituted procedures to prohibit unregistered loan originators from receiving compensation.

WHEREAS, on December 4, 2006, representatives of Countrywide met with members of the Division to review the loan originator registration process and the legal requirements of Section 36a-498a of the Connecticut General Statutes;

WHEREAS, on December 22, 2006, Countrywide Financial Corporation, the parent holding company of Countrywide, on its own behalf and for the benefit of its subsidiaries including Countrywide, and Neighborhood Reinvestment Corporation d/b/a NeighborWorks America (“NeighborWorks”) entered into a Contribution Agreement in which Countrywide Financial Corporation agreed to make a contribution to NeighborWorks in the amount of $100,000 for the provision of homeownership assistance in Connecticut;
 
WHEREAS, on February 12, 2007, Countrywide Financial Corporation made a contribution to NeighborWorks in the amount of $100,000 pursuant to the Contribution Agreement;
 
WHEREAS, Countrywide agrees to voluntarily enter into this Settlement Agreement without admitting or denying any allegations set forth herein, and solely for the purposes of obviating the need for formal administrative proceedings concerning the allegations described above;
 
WHEREAS, Countrywide, through its execution of this Settlement Agreement, voluntarily agrees to waive any rights to a hearing upon the allegations contained in this Settlement Agreement, and waives the right to seek judicial review or otherwise challenge or contest the validity of this Settlement Agreement;
 
AND WHEREAS, upon the entry of this Settlement Agreement, this matter will be resolved and the Commissioner will not take any future enforcement action against Countrywide based upon the allegations contained herein.
 
NOW THEREFORE, the Commissioner and Countrywide enter into this Settlement Agreement as follows:

1. No later than the date this Settlement Agreement is executed by Countrywide, Countrywide shall remit to the Department of Banking, by wire transfer, the sum of Four Hundred One Thousand Seven Hundred Fifty Dollars ($401,750) as a civil penalty;
2. Countrywide shall cease and desist from engaging in acts in violation of Sections 36a-486(b), 36a-498a and 36a-511(b) of the Connecticut General Statutes;
3. Countrywide shall enforce the Contribution Agreement and its Addendum A to ensure that NeighborWorks uses the $100,000 for the provision of homeownership assistance in Connecticut;
4. Nothing in this Settlement Agreement shall adversely affect the ability of Countrywide to apply for or obtain licenses or renewal of licenses under Part I of Chapter 668, Sections 36a-485 to 36a-534a, inclusive, of the Connecticut General Statutes, and to apply for or obtain registration of its originators from the Commissioner; and
5. Notwithstanding anything to the contrary in this Settlement Agreement, execution of this Settlement Agreement is without prejudice to the right of the Commissioner to take enforcement action against Countrywide to enforce this Settlement Agreement if the Commissioner determines that Countrywide is not fully complying with any term or condition stated herein or if any representations made by Countrywide and reflected herein are subsequently discovered to be untrue.  For purposes of this paragraph, a violation of this Settlement Agreement shall be deemed to be a violation of an order of the Commissioner.

IN WITNESS WHEREOF, the parties hereto have caused this Settlement Agreement to be executed by each of them or their duly authorized representatives on the dates hereinafter subscribed.



Dated at Hartford, Connecticut
this 10th day of April 2007.                ________/s/_________
                                                    Howard F. Pitkin
                                                    Banking Commissioner


 

I, Andrew Gissinger III, state on behalf of Countrywide Home Loans, Inc. and Countrywide Home Loans, Inc. d/b/a America’s Wholesale Lender, that I have read the foregoing Settlement Agreement; that I know and fully understand its contents; that I am authorized to execute this Settlement Agreement on behalf of Countrywide Home Loans, Inc. and Countrywide Home Loans, Inc. d/b/a America’s Wholesale Lender; that Countrywide Home Loans, Inc. and Countrywide Home Loans, Inc. d/b/a America’s Wholesale Lender agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Countrywide Home Loans, Inc. and Countrywide Home Loans, Inc. d/b/a America’s Wholesale Lender voluntarily agree to enter into this Settlement Agreement, expressly waiving any right to a hearing on the matters described herein.


 By: ________/s/_________
      Andrew Gissinger III, President and
      Chief Operating Officer
      Countrywide Home Loans, Inc. and Countrywide
      Home Loans, Inc. d/b/a America’s Wholesale Lender

 State of:  California

 County of:  Los Angeles

 On this the 6th day of April 2007, before me, Marci Caren Reardon, the undersigned officer, personally appeared Andrew Gissinger III, who acknowledged himself to be the President and Chief Operating Officer of Countrywide Home Loans, Inc., a corporation, and Countrywide Home Loans, Inc. d/b/a America’s Wholesale Lender, a corporation, and that he, as such President and Chief Operating Officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of Countrywide Home Loans, Inc. and Countrywide Home Loans, Inc. d/b/a America’s Wholesale Lender as President and Chief Operating Officer.

 In witness whereof I hereunto set my hand.

________/s/_________
Notary Public
Date Commission Expires:  5/16/2009


Administrative Orders and Settlements