DOB: Fairfield Financial Mortgage Group, Inc., Notice of Intent to Revoke Mortgage Lender License, Issue Order to Cease and Desist, Impose Civil Penalty

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IN THE MATTER OF:

FAIRFIELD FINANCIAL
MORTGAGE GROUP, INC.

    ("Respondent")




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NOTICE OF INTENT TO REVOKE
MORTGAGE LENDER LICENSE

NOTICE OF INTENT TO ISSUE
ORDER TO CEASE AND DESIST

NOTICE OF INTENT TO IMPOSE
CIVIL PENALTY

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-534a, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Brokers and Originators” (“Act”).
 
Pursuant to the authority granted by Section 36a-17 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:
The commissioner, in the commissioner’s discretion, may 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-494(a)(1) of the 2008 Supplement to the General Statutes, as amended by Public Acts 07-91, 07-156 and 08-176, provides, in pertinent part, that:
The commissioner may . . . revoke . . . any . . . mortgage correspondent lender . . . license . . . in accordance with the provisions of section 36a-51 . . . .
Section 36a-51 of the 2008 Supplement to the General Statutes provides, in pertinent part, that:
(a)  The commissioner may . . . revoke . . . 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 . . . 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 . . . revoke . . . 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 . . . revocation . . . .  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 . . . revoke . . . the license.  No such license shall be . . . revoked except in accordance with the provisions of chapter 54.
Section 36a-494(b) of the 2008 Supplement to the General Statutes, as amended by Public Acts 07-91, 07-156 and 08-176, provides, in pertinent part, that:
Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 36a-485 to 36a-498a, inclusive, . . . the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52 . . . .
Section 36a-52(a) of the 2008 Supplement to the 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, or any . . . order . . . issued thereunder, 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 . . . or orders 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-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, or any. . . order . . . issued thereunder, 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 . . . or orders 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 within fourteen days of 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 . . . or order, 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.


II.  MATTERS ASSERTED
1.
Respondent is a corporation with its principal office at 2 National Place, Danbury, Connecticut.
2.
From October 1, 2006 to June 30, 2008, Respondent was licensed as a first mortgage lender/broker and a secondary mortgage lender/broker, which licenses, pursuant to Section 39 of Public Act 08-176, are deemed to be a mortgage lender license on and after July 1, 2008.
3.
On June 5, 2007, Respondent entered into a Settlement Agreement with the Commissioner wherein Respondent agreed to retain an independent, unaffiliated third-party auditor or compliance firm to conduct two semi-annual reviews of Respondent’s compliance with a loan policy that Respondent agreed to establish and implement, and to provide a written report of the findings of such review to the Division.  The Settlement Agreement states that “a violation of this Settlement Agreement shall be deemed to be a violation of an order of the Commissioner”.
4.
From February 15 to February 26, 2008, the Division conducted an examination of Respondent and found, among other things, that Respondent failed to comply with the provision of the Settlement Agreement described in paragraph 3.
5. On June 5, 2008, the Division sent Respondent a letter enclosing the Report of Examination and a bill for the examination; asking that appropriate corrective action be taken by Respondent and that a report of the actions taken be provided to the Division; and, pursuant to Section 4-182(c) of the Connecticut General Statutes, giving Respondent the opportunity to show compliance with all lawful requirements for retention of its license.
6.
In Respondent’s most recent renewal application dated August 24, 2006 (“Renewal Application”), in response to a question asking whether Respondent had ever been a defendant in any litigation filed in connection with the consumer credit business, Respondent indicated that it had not, when, in fact, Respondent was a defendant in two actions filed in connection with such business.
7.
Subsequent to the filing of the Renewal Application, Respondent was a defendant in eight lawsuits filed in connection with the consumer credit business.  Respondent failed to notify the Department regarding the filing of such lawsuits.
8. On September 5, 2008, the Division sent Respondent a letter concerning the misstatement on the Renewal Application described in paragraph 6 and the lawsuits described in paragraph 7, and pursuant to Section 4-182(c) of the Connecticut General Statutes, giving Respondent the opportunity to show compliance with all lawful requirements for retention of its license.
9.
As of the date of this Notice, Respondent has failed to respond to the letters sent by the Division or pay the cost of the examination.
 
 
III.  STATUTORY BASIS FOR REVOCATION OF MORTGAGE
LENDER LICENSE, ORDER TO CEASE AND DESIST
AND IMPOSITION OF CIVIL PENALTY
 
Section 36a-494(a)(1) of the 2008 Supplement to the General Statutes, as amended, provides, in pertinent part, that:
The commissioner may . . . revoke . . . any mortgage lender . . . license . . . if the commissioner finds that the licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following:  (A) Made any material misstatement in the application; . . . [or] (C) violated any of the provisions of this title . . . or any other law or regulation applicable to the conduct of its business . . . .
Sec. 36a-53a of the Connecticut General Statutes provides that:
No person shall make or cause to be made orally or in any document filed with the commissioner or in any proceeding, investigation or examination under this title, any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect.
Prior to July 1, 2008, Section 36a-490(b) of the 2008 Supplement to the General Statutes provided, in pertinent part, that: 
The licensee shall promptly notify the commissioner, in writing, of any other change in the information provided in the application for license or most recent renewal of such license.
Section 36a-65(c)(6) of the Connecticut General Statutes, as amended by Public Act 08-176, provides, in pertinent part, that:
A licensee under section 36a-489 . . . shall pay to the commissioner the actual cost of any examination of the licensee, as such cost is determined by the commissioner.
1.
Respondent’s failure to comply with the Settlement Agreement, as more fully described in paragraphs 3 and 4 of the Matters Asserted, forms the basis to issue an order to cease and desist against Respondent pursuant to Section 36a-52(a) of the 2008 Supplement to the General Statutes, and to impose a civil penalty against Respondent pursuant to 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.  The Commissioner intends to impose a maximum civil penalty upon Respondent not to exceed One Hundred Thousand Dollars ($100,000), subject to its right to a hearing on the allegations set forth above.
2.
Respondent’s response to the question concerning litigation in its Renewal Application, as more fully described in paragraph 6 of the Matters Asserted, constitutes a material misstatement in the application and the making of a statement that is false in a material respect in a document filed with the Commissioner in violation of Section 36a-53a of the Connecticut General Statutes.  Such conduct constitutes grounds to revoke Respondent’s mortgage lender license pursuant to Sections 36a-494(a)(1)(A) and 36a-494(a)(1)(C) of the 2008 Supplement to the General Statutes, as amended, respectively, and Section 36a-51 of the 2008 Supplement to the General Statutes; and forms the basis to issue an order to cease and desist against Respondent pursuant to Section 36a-494(b) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-52(a) of the 2008 Supplement to the General Statutes; and to impose a civil penalty pursuant to Section 36a-494(b) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-50(a) of the Connecticut General Statutes for one violation.  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.  The Commissioner intends to impose a maximum civil penalty upon Respondent not to exceed One Hundred Thousand Dollars ($100,000), subject to Respondent’s right to a hearing on the allegation set forth above.
3. Respondent’s failure to notify the Commissioner of the eight lawsuits filed against Respondent subsequent to the filing of the Renewal Application, as more fully described in paragraph 7 of the Matters Asserted, constitutes a violation of Section 36a-490(b) of the 2008 Supplement to the General Statutes prior to July 1, 2008.  Such violation constitutes grounds to revoke Respondent’s mortgage lender license pursuant to Sections 36a-494(a)(1)(A) and 36a-494(a)(1)(C) of the 2008 Supplement to the General Statutes, as amended, respectively, and Section 36a-51 of the 2008 Supplement to the General Statutes; and forms the basis to issue an order to cease and desist against Respondent pursuant to Section 36a-494(b) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-52(a) of the 2008 Supplement to the General Statutes; and to impose a civil penalty pursuant to Section 36a-494(b) of the 2008 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes for one violation.  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.  The Commissioner intends to impose a maximum civil penalty upon Respondent not to exceed One Hundred Thousand Dollars ($100,000), subject to Respondent’s right to a hearing on the allegation set forth above.
4.
Respondent’s failure to pay the cost of an examination, as more fully described in paragraphs 5 and 9 of the Matters Asserted, constitutes a violation of Section 36a-65(c)(6) of the Connecticut General Statutes, as amended.  Such violation constitutes grounds to revoke Respondent’s mortgage lender license pursuant to Section 36a-494(a)(1)(C) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-51 of the 2008 Supplement to the General Statutes; and forms the basis to issue an order to cease and desist against Respondent pursuant to Section 36a-494(b) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-52(a) of the 2008 Supplement to the General Statutes; and to impose a civil penalty pursuant to Section 36a-494(b) of the 2008 Supplement to the General Statutes, as amended, and Section 36a-50(a) of the Connecticut General Statutes for one violation.  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.  The Commissioner intends to impose a maximum civil penalty upon Respondent not to exceed One Hundred Thousand Dollars ($100,000), subject to Respondent’s right to a hearing on the allegation set forth above.
 
 
IV.  NOTICE OF INTENT TO REVOKE MORTGAGE
LENDER LICENSE, NOTICE OF INTENT TO ISSUE ORDER TO
CEASE AND DESIST, NOTICE OF INTENT TO IMPOSE CIVIL PENALTY
AND NOTICE OF RIGHT TO HEARING
 
WHEREAS, the Commissioner has reason to believe that Respondent has engaged in certain conduct and violated Section 36a-53a of the Connecticut General Statutes, Section 36a-490(b) of the 2008 Supplement to the General Statutes prior to July 1, 2008, and Section 36a-65(c)(6) of the Connecticut General Statutes, as amended, which constitutes grounds to revoke Respondent’s mortgage lender license pursuant to Sections 36a-494(a)(1)(A) and 36a-494(a)(1)(C) of the 2008 Supplement to the General Statutes, as amended, respectively, and Section 36a-51 of the 2008 Supplement to the General Statutes; and forms the basis to issue an order to cease and desist against Respondent pursuant to Section 36a-52(a) of the 2008 Supplement to the General Statutes; and to impose a civil penalty against Respondent pursuant to Section 36a-50(a) of the Connecticut General Statutes.
 
NOW THEREFORE, notice is hereby given to Respondent that the Commissioner intends to REVOKE Respondent’s license to engage in the business of a mortgage lender in Connecticut, issue an order requiring Respondent to CEASE AND DESIST from violating Section 36a-53a of the Connecticut General Statutes, Section 36a-490(b) of the 2008 Supplement to the General Statutes, as amended, prior to July 1, 2008, and Section 36a-65(c)(6) of the Connecticut General Statutes, as amended, 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, Legal Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following its receipt of this Notice of Intent to Revoke Mortgage Lender 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 Sections 36a-51 and 36a-52(a) of the 2008 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes.  This Notice of Intent to Revoke Mortgage Lender 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.  The enclosed Appearance and Request for Hearing Form must be completed and mailed 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 hearing 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 December 2, 2008, at 9 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 a hearing is not requested by Respondent within the time prescribed, the Commissioner will issue an order revoking Respondent’s license to engage in the business of a mortgage lender and an order that Respondent cease and desist from violating Section 36a-53a of the Connecticut General Statutes, Section 36a-490(b) of the 2008 Supplement to the General Statutes, as amended, prior to July 1, 2008, and Section 36a-65(c)(6) of the Connecticut General Statutes, as amended, and may order that the maximum civil penalty of Four Hundred Thousand Dollars ($400,000) be imposed upon Respondent.
 
 
 
So ordered at Hartford, Connecticut
this 20th day of October 2008.           ________/s/_________
                                                    Howard F. Pitkin
                                                    Banking Commissioner
 
 
 
CERTIFICATION
 
I hereby certify that on this 20th day of October 2008, the foregoing Notice of Intent to Revoke Mortgage Lender License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing was sent by registered mail, return receipt requested, to Fairfield Financial Mortgage Group, Inc., 2 National Place, Danbury, Connecticut 06810, registered mail no. RB028035305US.
 
 
                                                   ________/s/_________
                                                   Nirja Savill
                                                   Prosecuting Attorney
 

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