DOB: American Home Mortgage Servicing, Inc., Settlement Agreement

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IN THE MATTER OF:

AMERICAN HOME MORTGAGE
SERVICING, INC.

    ("AHMS")

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SETTLEMENT AGREEMENT 

WHEREAS, on August 29, 2007, the Banking Commissioner (“Commissioner”), acting pursuant to Sections 36a-52(a), 36a-716(a) and 36a-718 of the Connecticut General Statutes, issued a Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing (collectively “Notice”) against AHMS, which Notice is incorporated herein by reference;
 
WHEREAS, the Notice alleges that AHMS, a mortgage servicing company within the meaning of Section 36a-715(2) of the Connecticut General Statutes, failed to pay the taxes of at least 38 mortgagors in violation of Section 36a-716(a) of the Connecticut General Statutes;
 
WHEREAS, on August 6, 2007, AHMS filed a Chapter 11 Voluntary Petition in the United States Bankruptcy Court for the District of Delaware (“Bankruptcy Court”) (Bankruptcy Petition # 07-11050) (“Bankruptcy Proceeding”).  The Chapter 11 case filed by AHMS has been consolidated for procedural purposes only and is being jointly administered under In re American Home Mortgage Holdings, Inc., a Delaware corporation, et al., Case No. 07-11047 (CSS);
 
WHEREAS, on August 29, 2007, the Notice was sent by facsimile and registered mail, return receipt requested, to AHMS (Registered Mail No. RB028034260US)
 
WHEREAS, on August 29, 2007, AHMS received the Notice;
 
WHEREAS, on August 29, 2007, AHMS requested a hearing on the Notice, which hearing is currently scheduled to commence on January 31, 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, AHMS and the Commissioner now desire to resolve the matters alleged in the Notice;
 
WHEREAS, with respect to the allegations contained in the Notice, AHMS agrees to waive any rights to a hearing pursuant to Section 36a-52(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 AHMS based upon the allegations contained in the Notice;
 
AND WHEREAS, AHMS, through its execution of this Settlement Agreement, acknowledges the allegations of the Commissioner in the Notice, without admitting or denying them.
 
NOW THEREFORE, the Commissioner and AHMS enter into this Settlement Agreement as follows:

1. AHMS shall cease and desist from violating Section 36a-716(a) of the Connecticut General Statutes;
2. The Commissioner shall have an allowed claim in the sum of Fifteen Thousand Dollars ($15,000) as reimbursement for investigative costs, which claim shall be subordinate in priority and payment to the allowed claims of AHMS’ general unsecured creditors in the Bankruptcy Proceeding, and which claim shall be paid in accordance with the Bankruptcy Code, Rules of Bankruptcy Procedure, Local Rules of Bankruptcy Procedure and Order of the Bankruptcy Court confirming a plan of reorganization, or liquidation and from no other source other than distributions under such plan;
3. Entry of this Settlement Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against AHMS based upon a violation of this Settlement Agreement or the matters underlying its entry in accordance with applicable bankruptcy law if the Commissioner determines that compliance with the terms herein is not being observed or if any representations made by AHMS and reflected herein are subsequently discovered to be untrue;
4. In the event that the Bankruptcy Court fails to approve this Settlement Agreement, the parties shall revert to their pre-settlement positions and nothing herein shall be deemed a waiver of either parties’ rights and defenses relating hereto;
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 AHMS 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 14th day of February 2008.        

________/s/_________
Howard F. Pitkin
Banking Commissioner


I, Alan B. Horn, state on behalf of American Home Mortgage Servicing, Inc., 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 American Home Mortgage Servicing, Inc.; and that American Home Mortgage Servicing, Inc., agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.

       

                                          By:  ________/s/_________
                                                 Name:  Alan B. Horn
                                                 Title:  Executive Vice President
                                                          and General Counsel
                                                 American Home Mortgage Servicing, Inc.

State of:  New York

County of:  Suffolk


On this the 5 day of February 2008, before me, Arlene Parks, the undersigned officer, personally appeared Alan B. Horn, who acknowledged himself to be the Executive Vice President and General Counsel of American Home Mortgage Servicing, Inc., a corporation, and that he, as such Executive Vice President and General Counsel, 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 and General Counsel.

In witness whereof I hereunto set my hand.


                                                 ________/s/_________
                                                 Notary Public
                                                 Date Commission Expires:  June 4, 2008


Administrative Orders and Settlements