DOB: Capital Mortgage Associates, LLC, Settlement Agreement

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IN THE MATTER OF:

CAPITAL MORTGAGE
ASSOCIATES, LLC

    ("Capital Mortgage")

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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-534c, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Correspondent Lenders, Brokers and Loan Originators”;
 
WHEREAS, Capital Mortgage is a limited liability company that was licensed by the Commissioner as a mortgage correspondent lender under Part I of Chapter 668, Sections 36a-485 et seq. of the Connecticut General Statutes;
 
WHEREAS, in July 2008, the Commissioner, through the Consumer Credit Division of the Department of Banking, conducted an examination pursuant to Section 36a-17 of the Connecticut General Statutes into the activities of Capital Mortgage 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, as a result of such examination, the Commissioner alleges that Capital Mortgage employed or retained, during the period of May 4, 2006 through April 9, 2008, at least seven (7) individuals as loan originators without registering them, in violation of Sections 36a-486(b) and 36a-511(b) of the then applicable Connecticut General Statutes;
 
WHEREAS, the Commissioner believes that the unregistered loan originator allegations would support initiation of enforcement proceedings against Capital Mortgage, including proceedings to issue a cease and desist order against Capital Mortgage pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation on Capital Mortgage pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes;
 
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, both the Commissioner and Capital Mortgage acknowledge the possible consequences of formal administrative proceedings;
 
WHEREAS, Capital Mortgage 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, Capital Mortgage herein represents to the Commissioner that it is presently not in business; 
 
WHEREAS, prior to ceasing business, Capital Mortgage reviewed and updated its internal policies, procedures and controls for assessing whether an individual engaged in mortgage-related activity with Capital Mortgage required licensure from the Commissioner under Part I of Chapter 668, including but not limited to, licensure as an originator under Section 36a-486(b) of the Connecticut General Statutes;
 
WHEREAS, Capital Mortgage herein represents to the Commissioner that that the individuals alleged to be unregistered loan originators in violation of Sections 36a-486(b) and 36a-511(b) of the Connecticut General Statutes during the period of May 4, 2006 through April 9, 2008, are no longer engaged in any mortgage-related activity with Capital Mortgage that would require such individuals to be so licensed, as Capital Mortgage is no longer in business; 
 
WHEREAS, in connection with this settlement, Capital Mortgage was provided the option to pay a civil penalty in the amount of Seven Thousand Dollars ($7,000) in settlement of the allegations contained herein;
 
WHEREAS, the State of Connecticut is a participant in the Nationwide Mortgage Licensing System and Registry (“NMLS&R”), jointly developed by the Conference of State Bank Supervisors (“CSBS”) and the American Association of Residential Mortgage Regulators to establish a unified and modern system of mortgage licensing and registration, and is committed to the success of NMLS&R;
 
WHEREAS, in connection with this settlement, Capital Mortgage was provided an alternative option to make a voluntary contribution in the amount of Seven Thousand Dollars ($7,000) to the State Regulatory Registry LLC (“SRR”), a wholly-owned subsidiary of CSBS, to support NMLS&R;
 
WHEREAS, Capital Mortgage elected to make a voluntary contribution to SRR in lieu of a civil penalty;
 
AND WHEREAS, Capital Mortgage, 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;
 
NOW THEREFORE, the Commissioner and Capital Mortgage enter into this Settlement Agreement as follows:

1. No later than the date this Settlement Agreement is executed by Capital Mortgage, Capital Mortgage shall make a voluntary contribution by cashier’s check, certified check or money order in the amount of Seven Thousand Dollars ($7,000) to SRR to support NMLS&R;
2. Upon entry of this Settlement Agreement, this matter will be resolved and the Commissioner will not take any future enforcement action against Capital Mortgage based upon the allegations contained herein; provided that entry of this Settlement Agreement is without prejudice to the right of the Commissioner to take enforcement action against Capital Mortgage based on the allegations contained herein if any representations made by Capital Mortgage in this Settlement Agreement are subsequently discovered to be untrue or if Capital Mortgage is not fully complying with any term or condition stated herein;
3. Nothing in the entry of this Settlement Agreement shall adversely affect the ability of Capital Mortgage to apply for or obtain licenses or renewal licenses under Part I of Chapter 668, of the Connecticut General Statutes, and to apply for or obtain licensure of its originators from the Commissioner in the future; and
4. Notwithstanding paragraph 2 herein, execution of this Settlement Agreement is without prejudice to the right of the Commissioner to take enforcement action against Capital Mortgage to enforce this Settlement Agreement if the Commissioner determines that Capital Mortgage is not fully complying with any term or condition stated herein.  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 24th day of March 2009.              ________/s/_________
                                                     Howard F. Pitkin
                                                     Banking Commissioner



I, Steven Kroop, state on behalf of Capital Mortgage Associates, LLC, 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 Capital Mortgage Associates, LLC; that Capital Mortgage Associates, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Capital Mortgage Associates, LLC voluntarily agrees to enter into this Settlement Agreement, expressly waiving any right to a hearing on the matters described herein.                                        

                                            By:  ________/s/_________
                                                   Name:  Steven Kroop
                                                   Title:  Managing Member
                                                   Capital Mortgage Associates, LLC


State of:  CT

County of:  New Haven

On this the 19 day of March 2009, before me, Mary V. Clark, the undersigned officer, personally appeared Steven Kroop who acknowledged himself to be the Managing Member of Capital Mortgage Associates, LLC, a member managed/manager managed limited liability company, and that he, as such Managing Member being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as Managing Member.

In witness whereof I hereunto set my hand.


                                         ________/s/_________
                                         Notary Public   Mary V. Clark
                                         Date Commission Expires:  4/30/09


Administrative Orders and Settlements