DOB: Discount Mortgage America, LLC, Settlement Agreement

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IN THE MATTER OF:

DISCOUNT MORTGAGE AMERICA, LLC

    ("Discount 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 of the Connecticut General Statutes, “Mortgage Lenders, Correspondent Lenders, Brokers and Loan Originators”;
 
WHEREAS, Discount Mortgage is a Connecticut limited liability company that had an office at 550 East Main Street, #28, Branford, Connecticut (“Branford Office”);
 
WHEREAS, since October 1, 2006, Discount Mortgage’s Branford Office was licensed by the Commissioner as a first and secondary mortgage broker in Connecticut under Sections 36a-489 and 36a-513 of the then applicable Connecticut General Statutes;
 
WHEREAS, in June 2008, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Division”), conducted an examination pursuant to Section 36a-17 of the Connecticut General Statutes into the activities of Discount 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 the Division’s examination, the Commissioner alleges that Discount Mortgage employed or retained, during the period of March 2007 through December 2007, one (1) individual as an originator without registering such individual, in violation Sections 36a-486(b) and 36a-511(b) of the then applicable Connecticut General Statutes;
 
WHEREAS, the Commissioner believes that such allegation would support initiation of enforcement proceedings against Discount Mortgage, including proceedings to revoke and/or refuse to renew Discount Mortgage’s mortgage broker license pursuant to Sections 36a-494(a) and 36a-51 of the Connecticut General Statutes, issue a cease and desist order against Discount Mortgage pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation on Discount Mortgage pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, on and after July 1, 2008, pursuant to Section 36a-534b(b)(3) of the Connecticut General Statutes, Discount Mortgage’s first and secondary mortgage broker licenses are deemed to be a mortgage broker license; and, pursuant to Section 36a-491(a)(1) of the Connecticut General Statutes, the expiration date of any mortgage broker license that was due to expire on September 30, 2008, was extended to the close of business on December 31, 2008;
 
WHEREAS, the Commissioner, through the Division, also conducted an investigation pursuant to Section 36a-17 of the Connecticut General Statutes into the activities of Discount Mortgage to determine if it had violated, was violating or was about to violate the provisions of then Connecticut General Statutes within the jurisdiction of the Commissioner;
 
WHEREAS, as a result of the Division’s investigation of Discount Mortgage, on December 15, 2008, the Commissioner issued an 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 (collectively “Notice”) setting forth an allegation that Discount Mortgage failed to maintain a surety bond in violation of Section 36a-492(a) of the 2008 Supplement to the General Statues, as amended by Public Acts 07-156 and 08-176, which Notice is incorporated herein by reference;
 
WHEREAS, on December 16, 2008, the Notice was sent by registered mail, return receipt requested, to Discount Mortgage (Registered Mail No. RB028035234US);
 
WHEREAS, the Notice provided Discount Mortgage with the opportunity for a hearing and stated that the Commissioner would issue an order revoking Discount Mortgage’s license to act as a mortgage broker in Connecticut from the Branford Office, and issue an order that Discount Mortgage cease and desist from violating Section 36a-492(a) of the 2008 Supplement to the General Statutes, as amended, if a hearing was not requested within 14 days of its receipt;
 
WHEREAS, on January 6, 2009, the Notice was returned to the Department marked “Returned To Sender - Unclaimed”;
 
WHEREAS, Section 36a-51(a) of the 2008 Supplement to the General Statutes provides, in pertinent part, that “[t]he notice shall be deemed received by the licensee on the earlier of the date of actual receipt or seven days after mailing or sending”;
 
WHEREAS, Section 36a-52(a) of the 2008 Supplement to the General Statutes provides, in pertinent part, that “[t]he notice shall be deemed received by the person on the earlier of the date of actual receipt, or seven days after mailing or sending”;
 
WHEREAS, Discount Mortgage failed to request a hearing within the prescribed time period;
 
WHEREAS, the Commissioner believes that the unregistered originator allegation arising from the June 2008 examination would support initiation of enforcement proceedings against Discount Mortgage, including proceedings to issue a cease and desist order against Discount Mortgage pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation on Discount 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 Discount Mortgage acknowledge the possible consequences of formal administrative proceedings;
 
WHEREAS, Discount 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 concerning the unregistered originator and failure to maintain a surety bond described above;
 
WHEREAS, Discount Mortgage herein represents to the Commissioner that it has not done any business in Connecticut since November 17, 2008;
 
WHEREAS, in connection with this settlement, Discount Mortgage was provided the option to pay a civil penalty in the amount of One Thousand Dollars ($1,000) in settlement of the allegation concerning the unregistered originator;
 
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, Discount Mortgage was provided an alternative option to make a voluntary contribution in the amount of One Thousand Dollars ($1,000) to the State Regulatory Registry LLC (“SRR”), a wholly-owned subsidiary of CSBS, to support NMLS&R;
 
WHEREAS, Discount Mortgage elected to make a voluntary contribution to SRR in lieu of a civil penalty;
 
AND WHEREAS, Discount 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 Discount Mortgage enter into this Settlement Agreement as follows:

1. Prior to the date this Settlement Agreement is executed by the Commissioner, Discount Mortgage will surrender its mortgage broker license No. 15251, and cease acting as a mortgage broker in Connecticut from 550 East Main Street, #28, Branford, Connecticut.
2.
No later than the date this Settlement Agreement is executed by Discount Mortgage, Discount Mortgage shall make a voluntary contribution by cashier’s check, certified check or money order in the amount of One Thousand Dollars ($1,000) to SRR to support NMLS&R;
3. Upon entry of this Settlement Agreement, the matters concerning the unregistered originator and the failure to maintain a surety bond will be resolved and the Commissioner will not take any future enforcement action against Discount 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 Discount Mortgage based on the allegations contained herein if any representations made by Discount Mortgage in this Settlement Agreement are subsequently discovered to be untrue or if Discount Mortgage is not fully complying with any term or condition stated herein;
4. Nothing in the entry of this Settlement Agreement shall adversely affect the ability of Discount Mortgage to apply for or obtain licenses or renewal licenses in the future under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes, and to apply for or obtain licensure of its mortgage loan originators in the future from the Commissioner;
5. Notwithstanding paragraph 3 herein, execution of this Settlement Agreement is without prejudice to the right of the Commissioner to take enforcement action against Discount Mortgage to enforce this Settlement Agreement if the Commissioner determines that Discount 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 12th day of May 2009.        

________/s/_________
Howard F. Pitkin
Banking Commissioner


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

                                          By:  ________/s/_________
                                                 Name:  
                                                 Title:  
                                                 Discount Mortgage America, LLC

State of:  Connecticut

County of:  New Haven


On this the 8th day of May 2009, before me, J. Kevin Maloney, the undersigned officer, personally appeared Paolo Romanacci who acknowledged himself to be the Owner of Discount Mortgage America, LLC, a member managed/manager managed limited liability company, and that he, as such Paolo Romanacci, 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 Owner.

In witness whereof I hereunto set my hand.

                                        ________/s/_________
                                        Notary Public
                                        Date Commission Expires:  1/31/2013


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