DOB: Newtown Mortgage, LLC d/b/a Newtown Financial, Order of Summary Suspension, Notice of Intent to Revoke Mortgage Broker License, Issue Order to Cease and Desist

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IN THE MATTER OF:

NEWTOWN MORTGAGE, LLC
d/b/a NEWTOWN FINANCIAL

    ("Respondent")


 

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ORDER OF SUMMARY SUSPENSION

NOTICE OF INTENT TO REVOKE
MORTGAGE BROKER LICENSE

NOTICE OF INTENT TO ISSUE
ORDER TO CEASE AND DESIST

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”.
 
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-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.  If the commissioner finds that public health, safety or welfare imperatively requires emergency action, and incorporates a finding to that effect in the notice, the commissioner may order summary suspension of a license in accordance with subsection (c) of section 4-182 and require the licensee to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section, pending proceedings for . . . revocation . . . .
(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-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, . . . 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 . . . 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-492(a) of the 2008 Supplement to the General Statutes, as amended by Public Acts 07-156 and 08-176, provides, in pertinent part, that:
No . . . mortgage broker license, and no renewal thereof, shall be granted unless the applicant has filed a bond with the commissioner written by a surety authorized to write such bonds in this state, in the sum of forty thousand dollars . . . .  Any borrower or prospective borrower who may be damaged by failure to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a borrower or prospective borrower to a licensee, may proceed on such bond against the principal or surety thereon, or both, to recover damages. . . .  The bond shall run concurrently with the period of the license granted to the applicant, and the aggregate liability under the bond shall not exceed the penal sum of the bond.
Section 36a-492(b) of the 2008 Supplement to the General Statutes, as amended by Public Act 08-176, provides that:
The surety company shall have the right to cancel the bond at any time by a written notice to the licensee stating the date cancellation shall take effect.  Such notice shall be sent by certified mail to the licensee at least thirty days prior to the date of cancellation.  A surety bond shall not be cancelled unless the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation.
Section 4-182(c) of the Connecticut General Statutes provides, pertinent part, that:
If the agency finds that public health, safety or welfare imperatively requires emergency action, and incorporates a finding to that effect in its order, summary suspension of a license may be ordered pending proceedings for revocation or other action.  These proceedings shall be promptly instituted and determined.
 
II.  MATTERS ASSERTED

1.
Respondent is a Connecticut limited liability company with an office at 25 Church Hill Road, Newtown, Connecticut (“Newtown Office”).
2.
Since October 1, 2006, Respondent has been licensed to act as a first mortgage broker in Connecticut from the Newtown Office pursuant to Section 36a-489 of the Connecticut General Statutes.  Such license expires on September 30, 2008.
3.
Since October 1, 2006, Respondent has been licensed to act as a secondary mortgage broker in Connecticut from the Newtown Office pursuant to Section 36a-513 of the Connecticut General Statutes.  Such license expires on September 30, 2008.
4. On and after July 1, 2008, pursuant to Section 39 of Public Act 08-176, Respondent’s first and secondary mortgage broker licenses are deemed to be a mortgage broker license; and, pursuant to Section 45 of Public Act 08-176, the expiration date of any mortgage broker license that expires on September 30, 2008, was extended to the close of business on December 31, 2008.
5. On July 31, 2008, the Commissioner received notice from Hartford Fire Insurance Company that surety bond number 40BSBDN5249 issued on behalf of Respondent with respect to its mortgage broker license for the Newtown Office would be cancelled, effective on September 7, 2008.
6.
On August 1, 2008, pursuant to Section 4-182(c) of the Connecticut General Statutes, the Division sent a letter to Respondent giving Respondent an opportunity to show compliance with all lawful requirements for retention of its mortgage broker license in Connecticut.
7.
To date, Respondent has failed to file a new surety bond or a replacement surety bond with the Commissioner.
 

III.  STATUTORY BASIS FOR REVOCATION OF MORTGAGE
BROKER LICENSE AND ORDER TO CEASE AND DESIST

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 broker license or take any other action, in accordance with the provisions of section 36a-51 . . . if the commissioner finds that the licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has . . . (C) violated any of the provisions of this title . . . .

Respondent’s failure to maintain a surety bond that runs concurrently with the period of its mortgage broker license, as more fully described in paragraphs 2 through 7, inclusive, of the Matters Asserted, is a violation of Section 36a-492(a) of the 2008 Supplement to the General Statutes, as amended, which constitutes grounds for the Commissioner to revoke Respondent’s license to act as a mortgage broker in Connecticut from the Newtown Office 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 a basis to issue an order to cease and desist pursuant to Section 36a-52(a) of the 2008 Supplement to the General Statutes.


IV.  ORDER OF SUMMARY SUSPENSION,
NOTICE OF INTENT TO REVOKE MORTGAGE BROKER LICENSE,
NOTICE OF INTENT TO ISSUE ORDER TO CEASE AND DESIST
AND NOTICE OF RIGHT TO HEARING

WHEREAS, the Commissioner has reason to believe that Respondent has engaged in acts or conduct which constitutes sufficient grounds for the Commissioner to revoke its license to act as a mortgage broker in Connecticut from the Newtown Office 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 a 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 WHEREAS, the Commissioner finds that public safety and welfare imperatively require emergency action to summarily suspend Respondent’s license to act as a mortgage broker in Connecticut from the Newtown Office in that due to Respondent’s failure to maintain its surety bond, any borrower or prospective borrower who may be damaged by Respondent’s failure to perform any written agreements or commitments, or Respondent’s wrongful conversion of funds paid by a borrower or prospective borrower to Respondent, will not be able to proceed on such surety bond to recover damages.
 
NOW THEREFORE, pursuant to the authority granted in Section 4-182(c) of the Connecticut General Statutes, the Commissioner ORDERS that the license of Newtown Mortgage, LLC d/b/a Newtown Financial to act as a mortgage broker in Connecticut from 25 Church Hill Road, Newtown, Connecticut, be and is hereby SUMMARILY SUSPENDED pending proceedings for revocation.
 
FURTHER, notice is hereby given to Respondent that the Commissioner intends to REVOKE Respondent’s license to act as a mortgage broker in Connecticut from the Newtown Office, and issue an order requiring Respondent to CEASE AND DESIST from violating Section 36a-492(a) of the 2008 Supplement to the General Statutes, as amended, subject to its 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 Order of Summary Suspension, Notice of Intent to Revoke Mortgage Broker License, Notice of Intent to Issue Order to Cease and Desist 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.  This Order of Summary Suspension, Notice of Intent to Revoke Mortgage Broker License, Notice of Intent to Issue Order to Cease and Desist 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 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 16, 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 Respondent does not request a hearing within the time prescribed, the Commissioner will issue an order revoking Respondent’s license to act as a mortgage broker in Connecticut from 25 Church Hill Road, Newtown, Connecticut, and issue an order that Respondent cease and desist from violating Section 36a-492(a) of the 2008 Supplement to the General Statutes, as amended.



So Ordered at Hartford, Connecticut
this 29th day of October 2008.                  ________/s/_________
                                                            Howard F. Pitkin
                                                            Banking Commissioner

 

CERTIFICATION

I hereby certify that on this 30th day of October 2008, the foregoing Order of Summary Suspension, Notice of Intent to Revoke Mortgage Broker License, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing was sent by registered mail, return receipt requested, to Newtown Mortgage, LLC d/b/a Newtown Financial, 25 Church Hill Road, Newtown, Connecticut 06470, registered mail no. RB028035367US.

 

                                                            ________/s/_________
                                                            Doniel Kitt
                                                            Prosecuting Attorney



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