DOB: Allied Home Mortgage Corporation - Temp CD-NOI CD

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IN THE MATTER OF:

ALLIED HOME MORTGAGE
CORPORATION
NMLS # 2268

    ("Respondent")

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TEMPORARY ORDER TO
CEASE AND DESIST

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-534c, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Correspondent Lenders, Brokers and Loan Originators”.
 
Pursuant to the authority granted by Sections 36a-17 and 36a-498f 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-498f(a)(1) of the Connecticut General Statutes provides, in pertinent part, that:

(a)  In addition to any authority provided under this title, the Banking Commissioner shall have the authority to conduct investigations and examinations as follows:

(1)  For purposes of . . . general or specific inquiry or investigation to determine compliance with sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to: . . . (C) any other documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence.

Section 36a-498f(b) of the Connecticut General Statutes provides:

Each licensee, individual or person subject to sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b shall make or compile reports or prepare other information as directed by the commissioner in order to carry out the purposes of this section including accounting compilations, information lists and data concerning loan transactions in a format prescribed by the commissioner or such other information the commissioner deems necessary to carry out the purposes of this section.

Section 36a-498f(f) of the Connecticut General Statutes provides:

No licensee, individual or person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy or secrete any books, records, computer records or other information.

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.


II.  MATTERS ASSERTED

1.
Respondent is a Texas corporation with its main office at 6110 Pinemont Drive, Suite 220, Houston, Texas.
2.
Respondent currently holds mortgage lender licenses in Connecticut for branches located at 171 East Main Street, Waterbury, Connecticut, and 647 Oaklawn Avenue, 1st Floor, Cranston, Rhode Island, under Part I of Chapter 668 of the Connecticut General Statutes.
3.
On November 1, 2011, the Mortgagee Review Board of the U.S. Department of Housing and Urban Development suspended the ability of Respondent to originate and underwrite new mortgages insured by the Federal Housing Administration.
4.
On November 1, 2011, the Government National Mortgage Association suspended Respondent’s ability to issue securities in its Mortgage-Backed Securities program.
5.
On November 7, 2011, the Department received notice that Respondent’s warehouse lines of credit had been frozen.
 

III.  STATUTORY BASIS FOR ORDER TO CEASE AND DESIST

Section 36a-494(b) of the Connecticut General Statutes provides, in pertinent part, that:

Whenever it appears to the commissioner that . . . any licensee has failed to perform any agreement with a borrower, . . . the commissioner may take action against such person or licensee in accordance with . . . [section] . . . 36a-52.

Respondent’s lack of access to funds, as more fully described in paragraphs 3 through 5, inclusive, of the Matters Asserted, renders it incapable of performing agreements with borrowers as provided in Section 36a-494(b) of the Connecticut General Statutes.  Such inability forms a basis to issue an order to cease and desist against Respondent pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes.


IV.  FINDING AND STATUTORY BASIS FOR
TEMPORARY ORDER TO CEASE AND DESIST

The Commissioner finds that public welfare requires immediate action to issue a temporary order requiring Respondent to take or refrain from taking such action as, in the opinion of the Commissioner, pursuant to Section 36a-52(b) of the Connecticut General Statutes, will effectuate the purposes of Section 36a-52(b) to mitigate potential harm to Connecticut residents due to Respondent’s acts or conduct that would lead to its failure to perform any agreement with borrowers.


V.  TEMPORARY ORDER TO CEASE AND DESIST, 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 may be about to engage in acts or conduct which forms a basis to issue an order to cease and desist against Respondent pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes.
 
THE COMMISSIONER THEREFORE ORDERS, pursuant to the authority granted in Sections 36a-52(b) and 36a-498f(b) of the Connecticut General Statutes, that:

1.
Upon the effective date of this Temporary Order, Allied Home Mortgage Corporation, and any and all officers, members, managers, qualified individuals or branch managers with supervisory authority at any office of Allied Home Mortgage Corporation, employees, independent contractors or agents operating on behalf of Allied Home Mortgage Corporation and their successors or assigns, shall immediately cease and desist from accepting applications and soliciting or advertising for its wholesale or retail businesses in Connecticut or to Connecticut consumers.
2.
Allied Home Mortgage Corporation shall secure funding of pending applications through alternative means, at the terms and conditions agreed upon, through mortgage lenders, mortgage correspondent lenders or mortgage brokers licensed pursuant to Section 36a-489 of the Connecticut General Statutes, as amended by Public Act 11-216, or through persons exempt from licensure pursuant to Section 36a-487(a)(1) of the Connecticut General Statutes, as amended by Public Act 11-216, and it shall reimburse each Connecticut borrower for any additional costs incurred in transferring the applications to such lenders, brokers or exempt persons.
3.
Allied Home Mortgage Corporation submit to Carmine Costa, Director, Consumer Credit Division, by e-mail at carmine.costa@ct.gov, within the time frames specified below, a detailed record, prepared as of the date of submission, the following:
 
(a)
As soon as possible, but not later than five (5) days after the effective date of this Temporary Order, all information on file regarding Allied Home Mortgage Corporation’s pipeline of pending mortgage loan applications in Connecticut.  Such information shall include, but not be limited to, the following:
 
(i)
the names of all individuals from whom Allied Home Mortgage Corporation has accepted an application for a residential mortgage loan and the dates of each such application;
(ii)
the applicants’ addresses and telephone numbers;
(iii)
the loan number;
(iv)
the amount of all prepaid loan fees submitted by the customer;
(v)
rate lock status;
(vi) the amount of each loan;
(vii) application status (i.e., filed, submitted to lenders, cleared to close, etc.);
(viii) loan terms, if approved;
(ix) scheduled closing dates;
(x) the loan purpose (i.e., purchase or refinance); and
(xi) identification of the applicable lender with whom each application will be placed; and
(b) Daily, 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 3(a).  The status report shall include the categories of information required under paragraph 3(a), and shall indicate the final disposition of each loan application.  The reporting requirement shall continue until each of the approved applications is funded in accordance with the HUD-1 settlement statements and agreements Respondent entered into with borrowers.
4. Upon the effective date of this Temporary Order, Respondent shall provide to the Commissioner contact information for an employee of Respondent that Department of Banking employees may contact with questions as well as contact information for an employee of Respondent that consumers and mortgage brokers may contact with questions.  Such contact information shall be submitted to Carmine Costa, Director, Consumer Credit Division, by e-mail at carmine.costa@ct.gov.
5.
Nothing in this Temporary Order shall prevent Respondent 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-534c, inclusive, of the Connecticut General Statutes or this Temporary Order.

FURTHER, notice is hereby given to Respondent that the Commissioner intends to issue an order requiring Respondent to CEASE AND DESIST from engaging in such acts or conduct that would lead to Respondent’s failure to perform any agreement with borrowers, subject to Respondent’s 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, Consumer Credit Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following its receipt of this Temporary Order to Cease and Desist, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing as set forth in subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes and Sections 36a-52(a) and 36a-50(a) of the Connecticut General Statutes.  This Temporary Order to Cease and Desist, 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 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 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 January 10, 2012, 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 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 that Respondent cease and desist from engaging in such acts or conduct that would lead to Respondent’s failure to perform any agreement with borrowers.


So ordered at Hartford, Connecticut
this 8th of November 2011.                           ________/s/_________
                                                               Howard F. Pitkin
                                                               Banking Commissioner


CERTIFICATION

I hereby certify that on this 8th day of November 2011, the foregoing Temporary Order to Cease and Desist, 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 Allied Home Mortgage Corporation, Attention:  Shirley Haynes, Licensing Manager, 6110 Pinemont Drive, Suite 220, Houston, Texas 77092, registered mail no. RA878574689US; and via facsimile to 713-684-0797.

                                                              ________/s/_________
                                                              Doniel Kitt
                                                              Prosecuting Attorney


Administrative Orders and Settlements