DOB: Norwich Commercial Group, Inc. - Joint CO & Stipulation




STATE OF CONNECTICUT
DEPARTMENT OF BANKING

COMMONWEALTH OF MASSACHUSETTS
DIVISION OF BANKS
Docket No. 2014-009

JOINT CONSENT ORDER
______________________________________________________________
In the Matter of:

NORWICH COMMERCIAL GROUP, INC.
d/b/a NORCOM MORTGAGE and d/b/a MORTGAGE FORCE
AVON, CONNECTICUT
NMLS #71655

Connecticut Mortgage Lender License No. 1223
Massachusetts Mortgage Lender License No. ML71655, et al.
______________________________________________________________

On October 16, 2013, an examination of Norwich Commercial Group, Inc. d/b/a Norcom Mortgage and d/b/a Mortgage Force (“Norwich Commercial” or “Licensee”) was conducted by the State of Connecticut Department of Banking (“Connecticut Department”) and the Commonwealth of Massachusetts Division of Banks (“Massachusetts Division”) (collectively, “Regulators”), to assess the Licensee’s level of compliance with applicable statutes and regulations, as well as federal regulations applicable to mortgage lenders (“Joint Examination”).  The Joint Examination also included a detailed review of the Memorandum Of Understanding (“Memorandum”) entered into between the Massachusetts Commissioner of Banks and Norwich Commercial on May 16, 2013, to assess the Licensee’s compliance with the provisions of the Memorandum.

The Regulators issued a Joint Examination Report (“Report”) that alleged substantial non-compliance with the Memorandum and with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a mortgage lender in Connecticut and Massachusetts.

The Commissioners of the Connecticut Department and the Massachusetts Division hereby issue, pursuant to Part IV of Chapter 664a, Part I of Chapter 668 and Chapter 54 of the Connecticut General Statutes and Article 2 of Title 36a of the Regulations of Connecticut State Agencies and Massachusetts General Laws chapter 255E, respectively, this JOINT CONSENT ORDER (“Joint Consent Order”).


JURISDICTION

The Connecticut Department licenses Norwich Commercial as a mortgage lender under Part I of Chapter 668 of the Connecticut General Statutes.  The Massachusetts Division licenses Norwich Commercial as a mortgage lender under Massachusetts General Laws, chapter 255E and 209 CMR 42.00 et seq.

Norwich Commercial, by and through its duly elected and acting Board of Directors (“Board”), has executed a STIPULATION AND CONSENT TO THE ISSUANCE OF A JOINT CONSENT ORDER (“Stipulation and Consent Agreement”), dated June 30, 2014, that has been accepted by the Regulators, and is incorporated herein by reference.  With the Stipulation and Consent Agreement, Norwich Commercial has consented, without admitting or denying the findings of fact or conclusions of law herein, to the issuance of this Joint Consent Order by the Regulators, and has waived all rights as set forth therein.

Having determined that any requirements for issuance of any order under Part IV of Chapter 664a, Part I of Chapter 668 and Chapter 54 of the Connecticut General Statutes and Article 2 of Title 36a of the Regulations of Connecticut State Agencies and Massachusetts General Laws chapter 255E, have been satisfied, the Connecticut Department and the Massachusetts Division hereby jointly issue the following:

JOINT CONSENT ORDER

1.Norwich Commercial must address and correct all Matters Requiring Attention described in the Report in accordance with the due dates set forth in the Report.
2.Norwich Commercial must address and correct all other corrective action described in the Report no later than thirty (30) days after the Licensee’s execution of the Stipulation and Consent Agreement.
3.Norwich Commercial must strengthen its Compliance Department to assure that it is capable of overseeing the activities of an institution of this size and complexity.  Management shall conduct a written review of the Compliance Department and its processes to assure that it has the requisite personnel and resources to achieve and maintain compliance with applicable statutes and regulations and address the findings and recommendations in the Report.  The review shall specifically address the appropriate level and expertise of personnel required to properly staff the Compliance Department.  Additionally, the review shall address oversight of the Licensee’s branch locations.  Management shall formulate an action plan and timeline for implementing any changes required by the aforementioned review.  The Licensee must submit the review, action plan and timeline regarding these requirements to the Regulators no later than sixty (60) days after its execution of the Stipulation and Consent Agreement.
4.
Norwich Commercial must establish and implement procedures to maintain all loan files in the Licensee’s books and records in a manner sufficient to evidence compliance with applicable state and federal statutes and regulations, and in accordance with the record keeping requirements set forth in Section 36a-493 of the Connecticut General Statutes and the Massachusetts Division’s regulations, 209 CMR 42.09 and 209 CMR 48.03.
(a) Norwich Commercial must establish, implement, and maintain procedures to ensure that the Licensee is capable of compiling and generating an accurate and complete loan list upon request from the Regulators that correctly reflects all loan applications originated by the Licensee.  Procedures implemented pursuant to paragraph (4) shall also require that personnel at each branch office location are able to provide accurate records to the Regulators upon request.

(b) Norwich Commercial must implement procedures to ensure that all reports which are completed by the Licensee and submitted to the Regulators, are accurate and reliable accounts of the reported conditions and/or transactions.

(c) Norwich Commercial must establish, implement and maintain procedures to ensure that the Licensee retains complete loan files, including without limitation, documentation reflecting each loan application’s outcome.
5.
Norwich Commercial must establish, implement, and maintain appropriate policies and procedures for the monitoring and oversight of its settlement agents and/or closing attorneys to ensure that no duplicate discharge/release recording fees are collected from Massachusetts or Connecticut borrowers.
(a) Norwich Commercial must reimburse the borrowers identified in the Report for any duplicate discharge/release fees that were collected.  With its response to the Report, Norwich Commercial shall submit to the Massachusetts Division evidence of the reimbursements/refunds issued pursuant to this subparagraph (a) of paragraph (5).  Evidence shall include the consumers’ names, the amounts of the reimbursements, the dates of the reimbursements, copies of the refund checks, and copies of certified mail receipts to illustrate the borrowers’ receipt of the reimbursements, as appropriate.

(b) Norwich Commercial shall conduct a review of all Massachusetts residential refinance mortgage loans closed since October 16, 2010, to identify transactions in which the borrower was charged duplicate discharge/release fees.  Norwich Commercial shall investigate the loan transactions so identified to determine whether the discharge/release was performed by the Licensee’s closing attorney or by the prior lien holder and, in cases where the closing attorney did not perform the service, to determine whether the full discharge/release fee amount listed on the settlement statement was promptly refunded to the borrower.  With its response to the Report, Norwich Commercial shall submit to the Massachusetts Division a description of the methodology used to complete the portfolio review.
(c) If the investigation of the loan files referenced above identifies cases where appropriate refunds were not issued to the borrower by Norwich Commercial’s closing attorney or settlement agent, Norwich Commercial shall reimburse the affected borrowers for the duplicate fee.  Norwich Commercial shall submit to the Massachusetts Division the results of the portfolio review and any reimbursements issued pursuant to this subparagraph (c) of paragraph (5) within thirty (30) days of the Licensee’s execution of the Stipulation and Consent Agreement.
6.
Norwich Commercial must enhance its procedures to ensure that all mortgage loan originators with, or through, whom the Licensee conducts business are duly licensed as mortgage loan originators as required by Part I of Chapter 668 of the Connecticut General Statutes and Massachusetts General Laws chapter 255F, as appropriate.
(a) Norwich Commercial shall submit a payment in the amount of two thousand dollars ($2,000.00) to the Massachusetts Division in satisfaction of an administrative penalty collected in consideration of the Licensee conducting business with a mortgage loan originator who did not hold an active mortgage loan originator license.  Norwich Commercial shall remit payment in full of the amount indicated above, payable to the “Commonwealth of Massachusetts,” with the executed copy of the Stipulation and Consent Agreement, to the Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.

(b) Norwich Commercial shall submit a payment in the amount of six thousand dollars ($6,000.00) to the Connecticut Department as a civil penalty collected in consideration of the Licensee conducting business with a mortgage loan originator who did not hold an active mortgage loan originator license.  Norwich Commercial shall remit payment in full of the amount indicated above, in the form of a cashier’s check, certified check or money order made payable to the “Treasurer, State of Connecticut,” with the executed copy of the Stipulation and Consent Agreement, and sent to State of Connecticut, Department of Banking, Attn: Carmine Costa, Director, Consumer Credit Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800.
7.On or before the thirtieth day after it executes the Stipulation and Consent Agreement, Norwich Commercial must establish, implement, and maintain quality control standards which provide for an in-house audit process for all Connecticut and Massachusetts loan files to assess the Licensee’s compliance with:  (i) the statutes, rules, regulations, regulatory bulletins, and other relevant provisions of law applicable to those engaged in the business of a mortgage lender in Connecticut and Massachusetts, and (ii) the provisions of this Joint Consent Order.  Such quality control standards must be designed to prevent the recurrence of the violations addressed in the Report.
8.
Norwich Commercial must establish, implement and maintain procedures to ensure compliance with the loan reporting requirements set forth in the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. §2801 et seq., as implemented by 12 C.F.R. Part 1003 (Regulation C).  Such procedures shall require the Licensee to implement internal controls to ensure that, for all HMDA reportable loan applications, Norwich Commercial accurately compiles and records all required data in the Licensee’s HMDA Loan Application Register (LAR).
(a) Within thirty (30) days of its execution of the Stipulation and Consent Agreement, Norwich Commercial shall review for accuracy the HMDA data collected for all Massachusetts residential mortgage loans originated during calendar year 2012, and shall re-file corrected information of all erroneous and/or incomplete data previously submitted on the LAR.  Norwich Commercial shall provide the Massachusetts Division with evidence of the resubmission.

(b) Norwich Commercial shall establish, implement, and maintain operating policies and training procedures to ensure that all applicable personnel possess a comprehensive understanding of the HMDA reporting requirements under Regulation C.  Such training shall necessarily ensure the proper implementation and execution of the revised practices and procedures adopted by Norwich Commercial pursuant to this paragraph (8).

(c) Norwich Commercial shall submit to the Massachusetts Division a payment in the amount of twenty-five thousand dollars ($25,000.00) in satisfaction of an administrative penalty collected in consideration of the Licensee’s failure to comply with the statutes, rules and regulations governing the conduct of those engaged in the business of a mortgage lender in Massachusetts.  Norwich Commercial shall remit payment in full of the amount indicated above, payable to the “Commonwealth of Massachusetts,” with the executed copy of the Stipulation and Consent Agreement, to the Division of Banks, Attn: Mortgage Lender Examination Unit, 1000 Washington Street, 10th Floor, Boston, Massachusetts 02118.
9.Norwich Commercial must establish, implement, and maintain procedures and policies to ensure that all applicable staff persons receive adequate instruction and ongoing, periodic training to ensure proper implementation and execution of the revised practices and procedures implemented pursuant to any and all paragraphs of this Joint Consent Order.
10.
On or before the thirtieth day after the end of each calendar quarter following the effective date of this Joint Consent Order, Norwich Commercial must furnish written progress reports to the Regulators, which must address and include the following:
(a) A description of the form, content, and manner of any actions taken to address each paragraph of this Joint Consent Order and the results thereof; and

(b) Written findings prepared by Norwich Commercial detailing a review of management’s and staff persons’ adherence to the policies, programs, and procedures adopted pursuant to this Joint Consent Order and to applicable statutes, regulations, and rules, as well as a description of any operational changes implemented during such quarter which are intended to improve Norwich Commercial’s compliance condition in Connecticut and Massachusetts, and the results thereof; and

(c) The reporting requirement to the Regulators referenced in this paragraph 10 shall remain in effect and shall not be amended or rescinded without the prior written modification, termination, or suspension of the applicable provision of this Joint Consent Order from the Connecticut Department and the Massachusetts Division.
11.The provisions of this Joint Consent Order shall become effective and public immediately upon the date of its issuance, and this Joint Consent Order shall be reported by Norwich Commercial on the Nationwide Mortgage Licensing System and Registry as required.
12.In consideration of the foregoing Joint Consent Order, the Connecticut Department agrees not to pursue formal measures to suspend, revoke or refuse to renew Norwich Commercial’s mortgage lender license(s) under Part IV of Chapter 664a and Part I of Chapter 668 of the Connecticut General Statutes based on the matters contained in the Report while this Joint Consent Order is in effect, but subject to paragraph 14 below.
13.
In consideration of the foregoing Joint Consent Order, the Massachusetts Division agrees not to pursue formal measures to suspend or revoke Norwich Commercial’s mortgage lender license(s) under Massachusetts General Laws chapter 255E, section 6, based on the matters contained in the Report while this Joint Consent Order is in effect, but subject to paragraph 14 below.
14. Failure to comply with the terms of this Joint Consent Order shall constitute grounds for license suspension and/or revocation or other formal regulatory actions by the Regulators based on the matters contained in the Report and/or violations of this Joint Consent Order, pursuant to applicable provisions of Connecticut or Massachusetts law.
15.
It is understood that, in the event that the Licensee fails to submit the payments set forth in this Joint Consent Order in the amounts specified herein and in accordance with applicable examination invoices, the Regulators shall be authorized to submit claims for such amounts against the mortgage lender surety bonds maintained by Norwich Commercial pursuant to Section 36a-492 of the Connecticut General Statutes and the Massachusetts Division’s regulations 209 CMR 42.03(2)(a).
16.The provisions of this Joint Consent Order shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this Joint Consent Order shall have been modified, terminated, suspended, or set aside in writing by the Connecticut Department or the Massachusetts Division.

The provisions of this Joint Consent Order shall be enforceable by either the Connecticut Department or the Massachusetts Division.
Issued this 1st day of July, 2014.

                                                    STATE OF CONNECTICUT
                                                    DEPARTMENT OF BANKING

                                                      By:   __________/s/__________
                                                              Howard F. Pitkin
                                                              Banking Commissioner



Issued this 1st day of July, 2014.

                                                     COMMONWEALTH OF MASSACHUSETTS
                                                     DIVISION OF BANKS


                                              By:  _________/s/__________
                                                     David J. Cotney
                                                     Commissioner of Banks



STATE OF CONNECTICUT
DEPARTMENT OF BANKING

COMMONWEALTH OF MASSACHUSETTS
DIVISION OF BANKS
Docket No. 2014-009


STIPULATION AND CONSENT TO THE ISSUANCE OF A
JOINT CONSENT ORDER

__________________________________________________________
In the Matter of:
NORWICH COMMERCIAL GROUP, INC.
d/b/a NORCOM MORTGAGE and d/b/a MORTGAGE FORCE
AVON, CONNECTICUT
NMLS # 71655

Connecticut Mortgage Lender License No. 1223
Massachusetts Mortgage Lender License No. ML71655, et al.
__________________________________________________________


Subject to the acceptance of this STIPULATION AND CONSENT TO THE ISSUANCE OF A JOINT CONSENT ORDER (“Stipulation and Consent Agreement”) by the State of Connecticut Department of Banking (“Connecticut Department”) and the Commonwealth of Massachusetts Division of Banks (“Massachusetts Division”) (collectively, “Regulators”), Norwich Commercial Group, Inc. d/b/a Norcom Mortgage and d/b/a Mortgage Force (“Norwich Commercial” or “Licensee”), located in Avon, Connecticut, hereby stipulates, without admitting or denying any findings of fact or violations of law, to the issuance of the JOINT CONSENT ORDER (“Joint Consent Order”) by the Regulators in the form submitted to Norwich Commercial on this date.

Norwich Commercial stipulates and agrees that such Joint Consent Order shall be deemed to be a final order pursuant to applicable state statutory provisions, and that said Joint Consent Order shall become effective immediately upon its issuance by the Regulators and fully enforceable by either the Connecticut Department or the Massachusetts Division pursuant to its provisions.

Norwich Commercial hereby represents and certifies that Philip DeFronzo, President of Norwich Commercial, is duly authorized to enter into this Consent Agreement on behalf of Norwich Commercial, in the form submitted to the Licensee on this date.

Norwich Commercial hereby, with respect to the matters addressed in the Joint Consent Order, waives its right to:

(i)    Any rights to further notice or to a hearing pursuant to statutory and regulatory provisions
       governing administrative proceedings;
(ii)   All defenses to the issuance of the Joint Consent Order;
(iii)  The filing of proposed findings of fact and conclusions of law;
(iv)  A written decision of the Regulators;
(v)   Exceptions and briefs with respect to such written decision; and
(vi)  Judicial review of this Stipulation and Consent Agreement and the Joint Consent Order
       under applicable Connecticut or Massachusetts law.

Agreed to this 30 day of June, 2014.

                                                       Norwich Commercial Group, Inc.
                                                       d/b/a Norcom Mortgage and
                                                       d/b/a Mortgage Force


                                                By:  ____________/s/____________
                                                       Philip DeFronzo
                                                       President


State of:  Connecticut

County of:  Hartford


On this the 30th day of June 2014, before me William Lavigne, the undersigned officer, personally appeared Philip DeFronzo who acknowledged himself to be the President of Norwich Commercial Group, Inc. d/b/a Norcom Mortgage and d/b/a Mortgage Force, a Connecticut corporation, and that he, as such President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as President.

In witness whereof I hereunto set my hand.



                                                       ____________/s/____________
                                                       Notary Public
                                                       Date Commission Expires:  1-31-2015

Agreed to this 1st day of July, 2014.

                                                       STATE OF CONNECTICUT
                                                       DEPARTMENT OF BANKING


                                                By:  ___________/s/_____________
                                                       Howard F. Pitkin
                                                       Banking Commissioner


 Agreed to this 1st day of July, 2014.

                                                       COMMONWEALTH OF MASSACHUSETTS
                                                       DIVISION OF BANKS


                                                 By:  ___________/s/____________
                                                        David J. Cotney
                                                        Commissioner of Banks

 




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