DOB: Aegis Wholesale Corporation, Settlement Agreement

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IN THE MATTER OF:

AEGIS WHOLESALE
CORPORATION

    ("Aegis")

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SETTLEMENT AGREEMENT

WHEREAS, on August 8, 2007, the Banking Commissioner (“Commissioner”), acting pursuant to Sections 36a-52, 36a-51(a), 36a-494 and 36a-517 of the Connecticut General Statutes, as amended by Public Act 07-91, and Sections 4-182(c) and 36a-50(a) of the Connecticut General Statutes, issued a Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Revoke First and Secondary Mortgage Lender/Broker Licenses, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (collectively “Order”) against Aegis, which Order is incorporated herein by reference;
 
WHEREAS, the Order alleges that Aegis failed to close at least one loan to be secured by a first mortgage on real property located in Connecticut and at least 616 loans to be secured by a first or secondary mortgage on real property located in states other than Connecticut, for which it had issued commitments;
 
WHEREAS, the Order alleges that during the period from August 6, 2007, to the date of issuance of the Order, Aegis failed to fund two first mortgage loans secured by mortgages on real property located in Connecticut that had been executed between July 31, 2007 to August 2, 2007, in violation of Section 36a-758 of the Connecticut General Statutes;
 
WHEREAS, on August 13, 2007, Aegis received the Order;
 
WHEREAS, on August 3, 2007, Aegis recognized certain warehouse funding issues and the potential reduction of its warehouse lines, and in an effort to avoid committing to consumer loans that it would not be able to close or fund, immediately ceased accepting new loan applications;
 
WHEREAS, on August 6, 2007, Aegis foresaw that it would not be able to fund some or all of the loans remaining in its pipeline, and began efforts to transfer the loans to other lenders that could process the loans successfully;
 
WHEREAS, on August 6, 2007, Aegis alerted the Commissioner to its change in status;
 
WHEREAS, thereafter Aegis responded promptly to the Department of Banking’s requests for information regarding this matter, and otherwise cooperated fully with the Commissioner;
 
WHEREAS, on August 13, 2007, Aegis filed a voluntary petition for relief under chapter 11 of Title 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101 through 1532, in the United States Bankruptcy Court for the District of Delaware (“Bankruptcy Court”), in a case captioned In re:  Aegis Mortgage Corporation, et. al., Case No. 07-11119 (BLS) (“Bankruptcy Proceeding”);
 
WHEREAS, Aegis has surrendered each of its 11 licenses (Nos. 18711, 11534, 19145, 18660, 17394, 11533, 15056, 17486, 13494, 17820, 18845) as a first mortgage lender/broker under Part I(A) of Chapter 668 of the Connecticut General Statutes, and each of its 11 licenses (Nos. 18712, 11520, 19146, 18661, 17395, 11521, 15057, 17487, 13495, 17821, 18846) as a secondary mortgage lender/broker under Part I(B) of Chapter 668 of the Connecticut General Statutes;
 
WHEREAS, on October 10, 2007, Aegis requested a hearing on the Order, which hearing is currently scheduled to commence on March 18, 2008;
 
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 agreed settlement, unless precluded by law;
 
WHEREAS, Aegis and the Commissioner now desire to resolve the matters alleged in the Order;
 
WHEREAS, with respect to the allegations contained in the Order, and subject to the approval of the Bankruptcy Court, Aegis agrees to waive any rights to a hearing pursuant to Sections 36a-52 and 36a-51 of the Connecticut General Statutes, as amended, and Section 36a-50(a) of the Connecticut General Statutes; proceedings before a presiding officer; a proposed final decision by a presiding officer; a final decision by the Commissioner; all post-hearing procedures; and waives the right to seek judicial review or otherwise challenge or contest the validity of this Settlement Agreement;
 
WHEREAS, upon the entry of this Settlement Agreement and approval by the Bankruptcy Court, this matter will be resolved and the Commissioner will not take any future enforcement action against Aegis based upon the allegations contained in the Order;
 
AND WHEREAS, Aegis, through its execution of this Settlement Agreement, acknowledges the allegations of the Commissioner in the Order, without admitting or denying them.
 
NOW THEREFORE, the Commissioner and Aegis enter into this Settlement Agreement as follows:

1. Aegis shall pay the Department of Banking Ten Thousand Dollars ($10,000) as reimbursement for investigative costs and, with respect to payment thereof, the Commissioner shall have an allowed claim in the sum of Ten Thousand Dollars ($10,000), which claim shall be subordinate in priority and payment to the allowed claims of Aegis’ general unsecured creditors in the Bankruptcy Proceeding, and shall be paid in accordance with the Bankruptcy Code, Rules of Bankruptcy Procedure, Local Rules of Bankruptcy Procedure and Order of the Bankruptcy Court;
2. Entry of this Settlement Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Aegis based upon a violation of this Settlement Agreement or the matters underlying its entry without approval of the Bankruptcy Court, if the Commissioner determines that compliance with the terms herein is not being observed or if any representations made by Aegis and reflected herein are subsequently discovered to be untrue;
3. In the event that the Bankruptcy Court fails to approve this Settlement Agreement, nothing herein shall be construed as a waiver by Aegis of its right to pursue administrative remedies in any proceedings commenced by the Commissioner, including any and all rights to an administrative hearing, as well as any and all rights to appeal such administrative proceedings;
4. In the event that the Bankruptcy Court fails to approve this Settlement Agreement, the Commissioner shall retain the right to take all enforcement actions the Commissioner considers appropriate;
5. This Settlement Agreement shall not preclude either party from asserting any rights or pursuing any remedies in the event that the Commissioner commences any proceedings against Aegis for acts or omissions not specifically addressed in this Settlement Agreement, or for acts and omissions that do not arise from the facts or transactions addressed herein; and
6. This Settlement Agreement shall become final upon approval of the Bankruptcy Court.

IN WITNESS WHEREOF, the parties 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 2nd day of January 2008.        

________/s/_________
Howard F. Pitkin
Banking Commissioner


I, Michael C. Balog, state on behalf of Aegis Wholesale Corporation 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 Aegis Wholesale Corporation; and that Aegis Wholesale Corporation agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.

                                           By:  ________/s/_________
                                                 Michael C. Balog
                                                 Executive Vice President
                                                 Aegis Wholesale Corporation

State of:  Texas

County of:  Harris


On this the 21st day of December 2007, before me, _______________________, the undersigned officer, personally appeared Michael C. Balog, who acknowledged himself to be the Executive Vice President of Aegis Wholesale Corporation, a corporation, and that he, as such Executive Vice President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as Executive Vice President.

In witness whereof I hereunto set my hand.

                                                 ________/s/_________
                                                 Notary Public
                                                 Date Commission Expires:  7-26-09


Administrative Orders and Settlements