DOB: Action Mortgage-SumSusp-TempCD-Rev-RefRen-NOI CD-CP

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IN THE MATTER OF:

ACTION MORTGAGE CORP.
("Action Mortgage")

NATHAN M. RUSSO
("Russo")

    (collectively "Respondents")

 

 

 


 

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ORDER OF SUMMARY SUSPENSION

TEMPORARY ORDER TO
CEASE AND DESIST

NOTICE OF INTENT TO REVOKE
AND REFUSE TO RENEW
MORTGAGE 
BROKER LICENSE

NOTICE OF INTENT TO REVOKE
MORTGAGE LOAN ORIGINATOR
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-534c, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Correspondent Lenders, Brokers and Loan 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 Respondents to determine if they have violated, are violating or are 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, in pertinent part, that:
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 2010 Supplement to General Statutes provides, in pertinent part, that:
(a)  The commissioner may . . . revoke or refuse to renew 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 or refusal to renew.
(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 or refuse to renew 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 or refusal to renew.  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 or refuse to renew the license.  No such license shall be . . . revoked except in accordance with the provisions of chapter 54.
Section 36a-52 of the Connecticut General Statutes provides, in pertinent part, that:
(a)  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.
(b)  If the commissioner finds that the public welfare requires immediate action, the commissioner may incorporate a finding to that effect in the notice sent in accordance with subsection (a) of this section and issue a temporary order requiring the person to cease and desist from the activity which constitutes such alleged violation and to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section.  Such temporary order shall become effective on receipt and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in the notice.
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, . . . 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 . . . 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, . . . 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.
Section 4-182 of the Connecticut General Statutes provides, in pertinent part, that:
(b)  When a licensee has made timely and sufficient application for the renewal of a license or a new license with reference to any activity of a continuing nature, the existing license shall not expire until the application has been finally determined by the agency . . . .
(c)  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.
Action Mortgage is a Rhode Island corporation with its main office at 1120 Park Avenue, Cranston, Rhode Island.
2.
On November 24, 2009, Action Mortgage requested renewal of its Connecticut mortgage broker license on the Nationwide Mortgage Licensing System.
3.
Russo is an individual whose address last known to the Commissioner is 3 Wagon Trail, Johnston, Rhode Island.
4.
At all times relevant hereto, Russo was Vice President and a direct owner of Action Mortgage.
5. On June 14, 2010, Russo was licensed as a mortgage loan originator with Action Mortgage.
6.
On June 15, 2010, a Criminal Complaint was filed in the United States District Court for the District of Connecticut (Case No. 3:10-mj-00097-EBB), charging that Russo, among others, conspired to defraud the United States in connection with mortgages insured by the Federal Housing Administration (“FHA”), in violation of 18 U.S.C. 371, and conspired to commit wire fraud in violation of 18 U.S.C. 1349 (“Criminal Complaint”).
7.
On June 22, 2010, a Superseding Indictment was filed in the United States District Court for the District of Connecticut, in which the Grand Jury charged that beginning in at least February 2007 through May 2010, Russo, among others, conspired to defraud the United States by impairing, impeding, obstructing and defeating, through deceitful and dishonest means, the governmental functions of the Department of Housing and Urban Development and the FHA in connection with mortgage loan insurance issued by the FHA in violation of 18 U.S.C. 371; committed wire fraud in violation of 18 U.S.C. 1343; and knowingly and willfully made and caused to be made materially false, fictitious and fraudulent statements and representations involving FHA-insured mortgage loans in violation of 18 U.S.C. 1001.
8. On June 21, 2010, the State of Rhode Island and Providence Plantations, Department of Business Regulation, issued an Emergency Order In the Matter Of Action Mortgage suspending its loan broker license in Rhode Island based upon the filing of the Criminal Complaint (“Action Mortgage Order”).
9. On June 21, 2010, the State of Rhode Island and Providence Plantations, Department of Business Regulation issued an Emergency Order In the Matter of:  Nathan M. Russo suspending his mortgage loan originator license in Rhode Island based upon the filing of the Criminal Complaint (“Russo Order”).
10. To date, neither Action Mortgage nor Russo has informed the Commissioner of the Criminal Complaint, Indictment, Action Mortgage Order or Russo Order.

 
III.  STATUTORY BASIS FOR REVOCATION AND REFUSAL TO RENEW
MORTGAGE BROKER LICENSE, REVOCATION OF MORTGAGE LOAN
ORIGINATOR LICENSE, ORDER TO CEASE AND DESIST
AND IMPOSITION OF CIVIL PENALTY
 
Section 36a-485(4) of the 2010 Supplement to the General Statutes provides that:
“Control person” means an individual that directly or indirectly exercises control over another person.  Any person that (A) is a director, general partner or executive officer; [or] (B) directly or indirectly has the right to vote ten per cent or more of a class of any voting security or has the power to sell or direct the sale of ten per cent or more of any class of voting securities . . . is presumed to be a control person.  For purposes of this subdivision, “control” means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract or otherwise[.]
Section 36a-489(a) of the 2010 Supplement to the General Statutes provides, in pertinent part, that:
(1)  The commissioner shall not issue an initial license for a . . . mortgage broker unless the commissioner, at a minimum, finds that:  . . . (C) the applicant demonstrates that the financial responsibility, character and general fitness of the applicant, the control persons of the applicant and the qualified individual or branch manager having supervisory authority over the office for which the license is sought are such as to command the confidence of the community and to warrant a determination that the applicant will operate honestly, fairly and efficiently within the purposes of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b . . . .  If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial.
(2) (A)  The minimum standards for license renewal for a . . . mortgage broker shall include the following:  (i) The applicant continues to meet the minimum standards under subdivision (1) of this subsection . . . .
(B)  The license of a . . . mortgage broker failing to satisfy the minimum standards for license renewal shall expire. . . .
Section 36a-489(b)(1)  of the 2010 Supplement to the General Statutes provides, in pertinent part, that:
The commissioner shall not issue an initial license for a mortgage loan originator unless the commissioner, at a minimum, finds that the applicant has:  . . . (C) demonstrated financial responsibility, character and general fitness so as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly and efficiently within the purpose of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b . . . .  If the commissioner denies an application for a mortgage loan originator license, the commissioner shall notify the applicant and may notify the sponsor or any other person the commissioner deems appropriate of the denial and the reasons for such denial.
Section 36a-490(c) of the 2010 Supplement to the General Statutes provides, in pertinent part, that:
The . . . mortgage broker licensee shall promptly file with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, of the occurrence of any of the following developments: . . .
(2)  Filing of a criminal indictment against the licensee in any way related to the lending or brokerage activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any of the licensee’s officers, directors, members, partners or shareholders owning ten per cent or more of the outstanding stock;
(3)  Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action by any governmental agency against the licensee and the reasons therefore[.]
Section 36a-490(d) of the 2010 Supplement to the General Statutes provides, in pertinent part, that:
Each mortgage loan originator licensee shall promptly file with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, of the occurrence of any of the following developments: . . .
(2)  Filing of a criminal indictment against the mortgage loan originator licensee[.]
Section 36a-490(e) of the 2010 Supplement to the General Statutes, as amended by Public Act 10-32, provides, in pertinent part, that:
Each . . . mortgage broker and mortgage loan originator license shall remain in force and effect until it has been surrendered, revoked or suspended, or until it expires or is no longer effective, in accordance with the provisions of this title.
Section 36a-494 of the 2010 Supplement to the General Statutes provides, in pertinent part, that:
(a)(1)  The commissioner may . . . revoke or refuse to renew any . . . mortgage broker license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, or if the commissioner finds that the licensee, any control person of the licensee, the qualified individual or branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following:  . . . (C) violated any of the provisions of this title . . . .
(2)  The commissioner may . . . revoke . . . any mortgage loan originator license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, or if the commissioner finds that the licensee . . . has violated any of the provisions of this title . . . .
(b)  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-498f, inclusive, 36a-534a and 36a-534b, . . . the commissioner may take action against such person . . . in accordance with sections 36a-50 and 36a-52.
1. The filing of the Criminal Complaint and Indictment against Russo, as more fully described in paragraphs 6 and 7 of the Matters Asserted, constitutes a basis for the Commissioner to conclude that a control person of Action Mortgage fails to demonstrate that the financial responsibility, character and general fitness of such control person are such as to command the confidence of the community and to warrant a determination that Action Mortgage will operate honestly, fairly and efficiently within the purposes of Sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b of the Connecticut General Statutes.  Such failure constitutes grounds for the Commissioner to deny an application for a mortgage broker license under Section 36a-489(a)(1)(C) of the 2010 Supplement to the General Statutes, which would be sufficient grounds for the Commissioner to revoke and refuse to renew Action Mortgage’s license to act as a mortgage broker in Connecticut pursuant to Section 36a-494(a)(1) and subsections (a) and (b) of Section 36a-51 of the 2010 Supplement to the General Statutes.  Such failure also causes Action Mortgage to fail to meet minimum standards for renewal under Section 36a-489(a)(2)(A) of the 2010 Supplement to the General Statutes, which shall cause such license to expire.
2.
The filing of the Criminal Complaint and Indictment against Russo, as more fully described in paragraphs 6 and 7 of the Matters Asserted, constitutes a basis for the Commissioner to conclude that Russo fails to demonstrate that the financial responsibility, character and general fitness of Russo are such as to command the confidence of the community and to warrant a determination that Russo will operate honestly, fairly and efficiently within the purposes of Sections 36a-485 to 36a-498f, inclusive, and 36a-534a and 36a-534b of the Connecticut General Statutes.  Such failure constitutes grounds for the Commissioner to deny Russo’s application for a mortgage loan originator license pursuant to Sections 36a-489(a)(1) and 36a-489(a)(1)(C) of the 2010 Supplement to the General Statutes, which constitutes sufficient grounds for the Commissioner to revoke Russo’s mortgage loan originator license in Connecticut pursuant to Section 36a-494(a)(2) and subsections (a) and (b) of Section 36a-51 of the 2010 Supplement to the General Statutes.
3.
The issuance of the Action Mortgage Order and Russo Order, as more fully described in paragraphs 8 and 9 of the Matters Asserted, constitutes a basis for the Commissioner to conclude that Action Mortgage fails to demonstrate that the financial responsibility, character and general fitness of Action Mortgage are such as to command the confidence of the community and to warrant a determination that Action Mortgage will operate honestly, fairly and efficiently within the purposes of Sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b of the Connecticut General Statutes.  Such failure constitutes sufficient grounds for the Commissioner to deny an application for a mortgage broker license under Section 36a-489(a)(1)(C) of the 2010 Supplement to the General Statutes, which would be sufficient grounds for the Commissioner to revoke and refuse to renew Action Mortgage’s license to act as a mortgage broker in Connecticut pursuant to Section 36a-494(a)(1) and subsections (a) and (b) of Section 36a-51 of the 2010 Supplement to the General Statutes.  Such failure also causes Action Mortgage to fail to meet minimum standards for renewal under Section 36a-489(a)(2)(A) of the 2010 Supplement to the General Statutes, which shall cause such license to expire.
4. Action Mortgage’s failure to inform the Commissioner of the Criminal Complaint, Indictment, Action Mortgage Order and Russo Order, as more fully described in paragraph 10 of the Matters Asserted, constitutes a violation of Sections 36a-490(c)(2) and 36a-490(c)(3) of the 2010 Supplement to the General Statutes.  Such violation constitutes sufficient grounds for the Commissioner to revoke and refuse to renew Action Mortgage’s license to act as a mortgage broker in Connecticut pursuant to Sections 36a-494(a)(1) and 36a-494(a)(1)(C) and subsections (a) and (b) of Section 36a-51 of the 2010 Supplement to the General Statutes, and forms the basis to issue an order to cease and desist pursuant to Section 36a-494(b) of the 2010 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Section 36a-494(b) of the 2010 Supplement to the General Statutes and 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 Action Mortgage in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.  The Commissioner intends to impose a civil penalty upon Action Mortgage not to exceed Ten Thousand Dollars ($10,000), subject to Action Mortgage’s right to a hearing on the allegations set forth above.
5. Russo’s failure to inform the Commissioner of the Criminal Complaint, Indictment and Russo Order, as more fully described in paragraph 10 of the Matters Asserted, constitutes a violation of Section 36a-490(d)(2) of the 2010 Supplement to the General Statutes.  Such violation constitutes sufficient grounds for the Commissioner to revoke Russo’s mortgage loan originator license in Connecticut pursuant to Section 36a-494(a)(2) and subsections (a) and (b) of Section 36a-51 of the 2010 Supplement to the General Statutes, and forms the basis to issue an order to cease and desist pursuant to Sections 36a-494(b) of the 2010 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Section 36a-494(b) of the 2010 Supplement to the General Statutes and 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 Russo in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.  The Commissioner intends to impose a civil penalty upon Russo not to exceed Fifteen Thousand Dollars ($15,000), subject to Russo’s right to a hearing on the allegations set forth above.

 
IV.  FINDINGS AND STATUTORY BASIS FOR TEMPORARY ORDER
TO CEASE AND DESIST AND ORDER OF SUMMARY SUSPENSION
 
The Commissioner finds that public welfare requires immediate action to issue a temporary order requiring Action Mortgage to cease and desist from violating Sections 36a-490(c)(2) and 36a-490(c)(3) of the 2010 Supplement to the General Statutes, pursuant to Section 36a-52(b) of the Connecticut General Statutes, in that Action Mortgage’s failure to inform the Commissioner of the Criminal Complaint, Indictment, Action Mortgage Order and Russo Order fails to demonstrate that its business is being operated soundly and efficiently, in the public interest and consistent with the purposes of Sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b of the Connecticut General Statutes, and therefore adversely effects the public.
 
The Commissioner finds that public safety and welfare imperatively require emergency action to summarily suspend Russo’s license to act as a mortgage loan originator in Connecticut pursuant to Section 4-182(c) of the Connecticut General Statutes in that due to the issuance of the Criminal Complaint, Indictment and Russo Order, the underlying basis for such Criminal Complaint, Indictment and Russo Order and Russo’s failure to inform the Commissioner of same, fails to demonstrate that the financial responsibility, character and general fitness of Russo are such as to command the confidence of the community and to determine that Russo will operate honestly, fairly and efficiently within the purposes of Sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b of the Connecticut General Statutes, and therefore adversely effects the public.
 

V.  ORDER OF SUMMARY SUSPENSION, TEMPORARY ORDER TO
CEASE AND DESIST, NOTICE OF INTENT TO REVOKE AND REFUSE TO RENEW
MORTGAGE BROKER LICENSE, NOTICE OF INTENT TO REVOKE MORTGAGE LOAN ORIGINATOR 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 Action Mortgage has engaged in acts or conduct which constitutes sufficient grounds for the Commissioner to revoke and refuse to renew Action Mortgage’s license to act as a mortgage broker in Connecticut pursuant to Sections 36a-494(a)(1) and 36a-494(a)(1)(C) and subsections (a) and (b) of Section 36a-51 of the 2010 Supplement to the General Statutes, and forms a basis to issue an order to cease and desist against Action Mortgage pursuant to Section 36a-494(b) of the 2010 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes and to impose a civil penalty upon Action Mortgage pursuant to Section 36a-494(b) of the 2010 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, the Commissioner has reason to believe that Russo has engaged in acts or conduct which constitutes sufficient grounds for the Commissioner to revoke Russo’s mortgage loan originator license in Connecticut pursuant to Section 36a-494(a)(2) and subsections (a) and (b) of Section 36a-51 of the 2010 Supplement to the General Statutes, and forms a basis to issue an order to cease and desist against Russo pursuant to Section 36a-494(b) of the 2010 Supplement to the General Statutes and Section 36a-52(a) of the Connecticut General Statutes and to impose a civil penalty upon Russo pursuant to Section 36a-494(b) of the 2010 Supplement to the General Statutes and Section 36a-50(a) of the Connecticut General Statutes;
 
AND WHEREAS, the Commissioner has made the findings required under Sections 36a-52(b) and 4-182(c) of the Connecticut General Statutes.
 
THE COMMISSIONER THEREFORE ORDERS, pursuant to the authority granted in Section 4-182(c) of the Connecticut General Statutes, that the license of Nathan M. Russo to act as a mortgage loan originator in Connecticut be and is hereby SUMMARILY SUSPENDED pending proceedings for revocation.
 
THE COMMISSIONER FURTHER ORDERS, pursuant to the authority granted in Section 36a-52(b) of the Connecticut General Statutes, that Action Mortgage Corp. immediately CEASE AND DESIST from further violations of Sections 36a-490(c)(2) and 36a-490(c)(3) of the 2010 Supplement to the General Statutes.  This Temporary Order shall become effective upon receipt by Action Mortgage and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the Matters Asserted in this Temporary Order.
 
THE COMMISSIONER FURTHER ORDERS, pursuant to the authority granted in Section 36a-52(b) of the Connecticut General Statutes, that:
 
1.
Upon the effective date of this Temporary Order, Action Mortgage, and any and all officers, members, managers, qualified individuals or branch managers with supervisory authority at any office of Action Mortgage, employees, independent contractors or agents operating on behalf of Action Mortgage and their successors or assigns, shall immediately cease and desist from accepting applications and soliciting or advertising for its broker business in Connecticut or to Connecticut consumers.
2.
Action Mortgage submit to Alan J. Cicchetti, Deputy Commissioner, by e-mail at alan.cicchetti@ct.gov, within the time frames specified below, a detailed record, prepared as of the date of submission, of all of Action Mortgage’s pending residential mortgage loan applications on property located in Connecticut.

(a)
As soon as possible, but not later than five (5) days after the effective date of this Temporary Order, all information on file as of the date of submission regarding Action Mortgage’s pipeline of pending mortgage loan applications.  Such information shall include, but not limited to, the following:

(i)
the names of all individuals from whom Action Mortgage has accepted an application for a residential mortgage loan and the loan number;
(ii)
the applicants’ addresses and telephone numbers;
(iii)
the amount of all prepaid loan fees submitted by each applicant;
(iv)
rate lock status;
(v) the amount of each loan;
(vi)
application status (i.e., filed, submitted to lenders, cleared to close, etc.);
(vii)
loan terms, if approved;
(viii) scheduled closing dates; the loan purpose (i.e., purchase or refinance); and
(ix) identification of the applicable lender with whom each application will be placed; and
(b)
On each Friday, by 5 p.m. Eastern Standard Time after the effective date of this Temporary Order, an updated, written status report of the mortgage loan applications identified above under paragraph 2(a).  The status report shall include the categories of information required under paragraph 2(a), and shall indicate the final disposition of each loan application and include the final terms under which each approved loan is closed.  The reporting requirement shall continue until each of the approved applications is funded by Action Mortgage, placed with another mortgage broker or mortgage lender or withdrawn by the applicant(s).
3.
Action Mortgage shall immediately place any fees previously collected from Connecticut consumers relative to any pending mortgage loan applications in a separate escrow account maintained at a federally-insured bank located in Connecticut.  Not later than five (5) days after the effective date of this Temporary Order, Action Mortgage shall provide the Commissioner with proof that the fees have been placed in an escrow account maintained at a federally-insured bank.  Such proof shall be submitted to Alan J. Cicchetti, Deputy Commissioner, by e-mail at alan.cicchetti@ct.gov.
4.
Action Mortgage shall immediately place with one or more qualified lender(s) or broker(s) as appropriate, based on the status of the application and with no loss to applicants, the following:  (a) Connecticut residential mortgage loans which were closed by Action Mortgage; and (b) Action Mortgage’s entire pending application list of Connecticut residential mortgage loans.  “No loss to the applicant” shall mean that any loan that may have been closed by Action Mortgage and remains unfunded, as well as any pending application which has been approved by Action Mortgage but has not yet closed, shall be placed with a lender willing to fund or close the mortgage loan under the same terms and conditions extended by Action Mortgage.  In the event that no such placement can be made, Action Mortgage shall either independently fund the mortgage loan under the same terms and conditions extended by Action Mortgage, or buy down the mortgage loan offered by the lender so that the applicant does not incur a loss as a result of such placement.  Action Mortgage shall obtain the prior approval of the Commissioner before placing such applications with the qualified lender(s) or broker(s).
5. Action Mortgage shall immediately secure all pending Connecticut mortgage loan application files and, to the extent that any original documents are forwarded to the relevant lender or broker, a copy of such document, correspondence or paper relating to the mortgage loan shall be retained in Action Mortgage’s books and records, and shall be available in their entirety to the Division, immediately upon request on the date and time specified by the Division.  Action Mortgage shall provide the Division with the name and telephone numbers of the keeper of the records.  Such information shall be submitted to Alan J. Cicchetti, Deputy Commissioner, by e-mail at alan.cicchetti@ct.gov.
6.
Action Mortgage shall not pay or declare any dividend, salary or bonus, nor otherwise authorize any other material distribution of Action Mortgage’s assets to any officer, director or owner of Action Mortgage without the prior written approval of the Commissioner.  Upon the effective date of this Order, Action Mortgage shall implement or revise its practices and procedures, as necessary, to ensure that Action Mortgage’s financial books and records are accurately maintained, in a manner illustrating compliance with the provisions of this paragraph, and available for review by the Division’s examiners upon request.
7.
Upon the effective date of this Order, Action Mortgage shall provide to the Commissioner contact information for an employee of Action Mortgage that Division employees may contact with questions as well as contact information for an employee of Action Mortgage that consumers and mortgage brokers may contact with questions.  Such contact information shall be submitted to Alan J. Cicchetti, Deputy Commissioner, by e-mail at alan.cicchetti@ct.gov.
8. Nothing in this Order shall prevent Action Mortgage from selling or assigning a residential mortgage loan to another entity, servicing closed mortgage loans or engaging in other activity not prohibited by Sections 36a-485 to 36a-498c, inclusive, 36a-534a and 36a-534b of the Connecticut General Statutes or this Temporary Order.
9.
Action Mortgage submit to Alan J. Cicchetti, Deputy Commissioner, by e-mail at alan.cicchetti@ct.gov on or before August 17, 2010, a written confirmation that Action Mortgage has informed all its mortgage loan originators of this Temporary Order.
 
FURTHER, notice is hereby given to Action Mortgage that the Commissioner intends to REVOKE and REFUSE TO RENEW Action Mortgage’s license to act as a mortgage broker in Connecticut, issue an order requiring Action Mortgage to CEASE AND DESIST from violating Sections 36a-490(c)(2) and 36a-490(c)(3) of the 2010 Supplement to the General Statutes, and impose a CIVIL PENALTY upon Action Mortgage as set forth herein, subject to Action Mortgage’s right to a hearing on the allegations set forth above.
 
FURTHER, notice is hereby given to Russo that the Commissioner intends to REVOKE Russo’s mortgage loan originator license in Connecticut, issue an order requiring Russo to CEASE AND DESIST from violating Section 36a-490(d)(2) of the 2010 Supplement to the General Statutes, and impose a CIVIL PENALTY upon Russo as set forth herein, subject to Russo’s right to a hearing on the allegations set forth above.
 
A hearing will be granted to Respondents if a written request for a hearing is received by the Department of Banking, Consumer Credit Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following each Respondent’s receipt of this Order of Summary Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke and Refuse to Renew Mortgage Broker License, Notice of Intent to Revoke Mortgage Loan Originator 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 Section 36a-51 of the 2010 Supplement to the General Statutes and Sections 36a-52(a) and 36a-50(a) of the Connecticut General Statutes.  This Order of Summary Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke and Refuse to Renew Mortgage Broker License, Notice of Intent to Revoke Mortgage Loan Originator 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 any 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 presiding 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 September 28, 2010, at 10 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 Respondents fail to appear at the requested hearing.  At such hearing, Respondents 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 Action Mortgage does not request a hearing within the time prescribed, the Commissioner will issue an order revoking and refusing to renew Action Mortgage’s license to act as a mortgage broker in Connecticut, which order shall cause Action Mortgage’s mortgage broker license in Connecticut to be deemed EXPIRED, and issue an order that Action Mortgage cease and desist from violating Sections 36a-490(c)(2) and 36a-490(c)(3) of the 2010 Supplement to the General Statutes, and may order a civil penalty not to exceed Ten Thousand Dollars ($10,000) be imposed upon Action Mortgage.
 
If Russo does not request a hearing within the time prescribed, the Commissioner will issue an order revoking Russo’s mortgage loan originator license in Connecticut and issue an order that Russo cease and desist from violating Section 36a-490(d)(2) of the 2010 Supplement to the General Statutes, and may order a civil penalty not to exceed Fifteen Thousand Dollars ($15,000) be imposed upon Russo.
 
 
So ordered at Hartford, Connecticut
this 3rd day of August 2010.              ________/s/_________
                                                    Howard F. Pitkin
                                                    Banking Commissioner
 
 
CERTIFICATION
 
I hereby certify that on this 3rd day of August 2010, the foregoing Order of Summary Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke and Refuse to Renew Mortgage Broker License, Notice of Intent to Revoke Mortgage Loan Originator 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 Action Mortgage Corp. Attention:  William A. Plante, President, 1120 Park Avenue, Cranston, Rhode Island 02910, registered mail no. RB028037252US; and Nathan M. Russo, 3 Wagon Trail, Johnston, Rhode Island 02919, registered mail no. RB028037266US.
 
 
                                                   ________/s/_________
                                                   Doniel Kitt
                                                   Prosecuting Attorney
 

Administrative Orders and Settlements