DOB: Siwell, Inc. - NOI Not To Renew

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IN THE MATTER OF:

SIWELL, INC.
d/b/a CAPITAL MORTGAGE
SERVICES OF TEXAS
NMLS # 149169

    ("Respondent")

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NOTICE OF INTENT NOT TO RENEW
MORTGAGE LENDER LICENSE

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 continues to meet the minimum standards for renewal of its mortgage lender license for the 2016 licensing period.

Section 36a-17(a) of the Connecticut General Statutes provides, in pertinent part, that:

The commissioner, in the commissioner’s discretion, may, subject to the provisions of section 36a-21 and the Freedom of Information Act, as defined in section 1-200, (1) 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) of the Connecticut General Statutes provides, in pertinent part, that:

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 . . . license renewal . . . or 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:  (A) Criminal, civil and administrative history information; (B) personal history and experience information including independent credit reports obtained from a consumer reporting agency described in Section 603(p) of the federal Fair Credit Reporting Act, 15 USC 1681a; and (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-51 of the Connecticut General Statutes provides, in pertinent part, that:

(a)  The commissioner may . . . 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, regulations, rules or orders 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. . . .

(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 . . . 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 . . . 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 . . . refuse to renew the license.  No such license shall be suspended or revoked except 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 . . . the existing license shall not expire until the application has been finally determined by the agency . . . .

(c)  No revocation . . . of any license is lawful unless, prior to the institution of agency proceedings, the agency gave notice by mail to the licensee of facts or conduct which warrant the intended action and the specific provisions of the general statutes or of regulations adopted by the agency that authorize such intended action, and the licensee was given an opportunity to show compliance with all lawful requirements for the retention of the license. . . .


II.  MATTERS ASSERTED

1.Respondent is a Texas corporation with an office at 4212 50th Street, Lubbock, Texas (“Main Office”). 
2.Respondent first applied for licensure to engage in the business of making Connecticut residential mortgage loans in Connecticut under Part I of Chapter 668, Sections 36a-485 to 36a-534c, inclusive, of the Connecticut General Statutes by application submitted through the Nationwide Mortgage Licensing System and Registry (“NMLS”) on December 23, 2014.
3.Applicants for mortgage lender licensure must identify, among other things, a qualified individual (“QI”) at the applicant’s main office who meets the qualifications for that position as specified by statute.
4.
In connection with the Division’s review of Respondent’s initial application, as more fully described in paragraph 2 above, four (4) deficiencies were posted to Respondent’s NMLS account during January 2015, identifying issues with the qualifications of the various individuals that Respondent proposed to serve as QI for the Main Office.  Among the issues noted in the deficiencies were that the individuals proposed were not meeting the statutory requirements that a QI be a Connecticut licensed mortgage loan originator demonstrating three years of experience in the origination, processing or underwriting of residential mortgage loans within the last five years, or the supervision of such activities.
5.When deficiencies are posted to NMLS, an e-mail is automatically generated by NMLS and transmitted to the account holder notifying it of an open license item.
6.By May 7, 2015, issues surrounding the suitability of Respondent’s proposed QI were satisfactorily resolved, as were other outstanding issues relating to Respondent’s qualifications for mortgage lender licensure, and Respondent was licensed by the Commissioner via NMLS to engage in the business of making residential mortgage loans in Connecticut at its Main Office.
7.On June 13, 2015, Respondent amended its record on NMLS to remove the individual designated as the QI for Connecticut at the Main Office.
8.On June 15, 2015, the Division posted the following deficiency to Respondent’s NMLS account:  “It appears the currently recognized qualifying individual is no longer employed with the company.  Please amend the MU1 form to recognize a new qualifying individual and provide a work experience form for this individual . . . .  This item must be addressed by 6/29/2015. . . ”.
9.The deficiency described in paragraph 8 above was the subject of an e-mail sent to Respondent generated by NMLS as more fully described in paragraph 5 above.
10.By e-mail dated June 17, 2015, Respondent proposed an individual for the QI position who had been proposed in connection with the application for initial licensure.  That same day, Respondent was advised by the Division by e-mail that the QI proposed was previously determined by the Division to not satisfy the requirements for the QI position in connection with Respondent’s application for licensure because the individual was not licensed as a mortgage loan originator in Connecticut.
11.On June 19, 2015, Respondent e-mailed the Division and indicated that it would update its record to reflect yet another individual for the QI position, that such individual was “in the process of applying for his CT MLO license”, and that a work experience form would be provided to the Division once completed.
12.On June 19, 2015, Respondent amended its MU1 form to designate the individual referenced in paragraph 11 above as the QI for Connecticut at the Main Office.
13.On June 30, 2015, the Division sent a letter via certified mail (Certified Mail No. 70143490000235259954) (“Compliance Letter”) to Respondent, which was received by Respondent on July 6, 2015.
14.The Compliance Letter set forth all of the statutory requirements for the QI position as proscribed by Section 36a-488(a)(1) of the Connecticut General Statutes, and provided Respondent with the “opportunity to show compliance with all lawful requirements for the retention of the mortgage lender license for the . . . [Main Office] by responding to the Division in writing by July 14, 2015.  If no written response is received by that date of if the Commissioner finds any such response to be insufficient, the Commissioner may issue a notice of intent to revoke and/or refuse to renew the company’s license in this state or may initiate additional proceedings as he deems appropriate and as authorized by Section 36a-494 of the Connecticut General Statutes”.  (Emphasis in original.)
15.The Compliance Letter also described surrender procedures available to Respondent if it did not wish to maintain its license.
16.As of August 21, 2015, no work experience form had been provided for the individual described in paragraphs 11 and 12 above, and a deficiency was posted to Respondent’s account, stating, “[p]lease provide work experiences form or resume for the qualifying individual”.
17.The deficiency described in paragraph 16 above was the subject of an e-mail sent to Respondent generated by NMLS as more fully described in paragraph 5 above.
18,On August 21, 2015, the individual described in paragraphs 11 and 12 above became licensed as a mortgage loan originator in Connecticut, and on the same day, Respondent e-mailed the Division attaching the requested work experience form.
19.The work experience form indicated that the individual described in paragraphs 11 and 12 above had been working in mortgage loan origination since May 1, 2014.  No other experience of any kind was identified.
20.By e-mail dated August 21, 2015, the Division indicated that “[t]he attached work experience is not sufficient.  Please provide resume or work experience that clearly lists all positions (titles), describes the work duties that the individual personally performed for at least past five years”.
21.On September 18, 2015, a revised work experience form was submitted, identifying work experience for the individual described in paragraphs 11 and 12 above since 2011. 
22.The revised work experience form did not demonstrate any additional mortgage origination experience beyond that described in paragraph 19 above. 
23.On December 1, 2015, Respondent requested renewal of its mortgage lender license in Connecticut for the 2016 licensing period (“Renewal Application”).
24.On December 9, 2015, Respondent inquired about the status of deficiencies remaining outstanding on its account.
25.The Division responded by e-mail (including a link to statutory requirements for the QI position) indicating that the designated QI did not demonstrate the statutory experience requirements.
26.
On December 10, 2015, the Division posted the following deficiency: 
Per the resume provided, it does not appear that the qualifying individual meets the experience requirements as required by the Connecticut General Statutes.  The qualifying individual is required to demonstrate three years of experience in the last five years in the origination, processing, or underwriting of residential mortgage loans, or the supervision of such activities.  Please choose a new qualifying individual who meets all of the requirements, is a CT MLO, and provide an experience form for this individual. . . .
27.On December 31, 2015, the Division responded to a question posed by Respondent about its ability to continue to originate loans while the Renewal Application was pending, noting again that the designated QI did not meet statutory requirements necessary for approval of the Renewal Application.
28.On December 31, 2015, Respondent indicated it would be designating another individual to serve as the QI for Connecticut at the Main Office.
29.By e-mail dated January 5, 2016, the Division requested a work experience form for the individual referenced in paragraph 28 above.
30.As of the date of this Notice, the individual referenced in paragraph 28 above has withdrawn her application for licensure as a mortgage loan originator in Connecticut.
31.Moreover, as of the date of this Notice, no update has been made to Respondent’s MU1 form to designate any individual as QI for Connecticut at the Main Office other than the individual referenced in paragraphs 11 and 12 above. 
32.As of the date of this Notice, Respondent's Renewal Application remains pending.
33.As of the date of this Notice, no request to surrender the license has been filed by Respondent on NMLS.


III.  STATUTORY BASIS NOT TO RENEW MORTGAGE LENDER LICENSE

Section 36a-494(a)(1) of the 2016 Supplement to the General Statutes provides, in pertinent part, that:

The commissioner may . . . refuse to renew any mortgage lender . . . 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 . . . .

Section 36a-489(a) of the Connecticut General Statutes provides, in pertinent part, that:

(1)  The commissioner shall not issue an initial license for a mortgage lender . . . unless the commissioner, at a minimum, finds that:  (A) The applicant meets the requirements of subsection (a) of section 36a 488 . . . .  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 lender . . . 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 lender . . . failing to satisfy the minimum standards for license renewal shall expire.

Section 36a-488 of the Connecticut General Statutes provides, in pertinent part, that:

(a)(1)  The commissioner shall not issue a mortgage lender license . . . to any person unless such person meets the following . . . experience requirements, as applicable:  . . . (B) a mortgage lender . . . shall have, at the main office for which the license is sought, a qualified individual . . . (i) who have supervisory authority over the lending or brokerage activities, (ii) who have at least three years’ experience in the mortgage business within the five years immediately preceding the date of the application for the license, (iii) who, effective April 1, 2010, have completed the prelicensing education requirement described in section 36a-489a and passed a written test that meets the test requirement described in section 36a-489a, and (iv) who, effective November 1, 2012, are licensed as a mortgage loan originator under section 36a-489.  As used in this subdivision, “experience in the mortgage business” means paid experience in the origination, processing or underwriting of residential mortgage loans, the marketing of such loans in the secondary market or in the supervision of such activities, or any other relevant experience as determined by the commissioner. . . .

(b)  . . .  The applicant shall, at a minimum, furnish to the system information concerning . . . the qualified individual . . . including personal history and experience in a form prescribed by the system . . . .  The following supplementary information shall be filed directly with the commissioner:  . . . (2) evidence that the qualified individual . . . meets the experience required by subsection (a) of this section . . . .  For the purpose of this subsection, evidence of experience of the qualified individual . . . shall include:  (A) A statement specifying the duties and responsibilities of such person’s employment, the term of employment, including month and year, and the name, address and telephone number of a supervisor, employer or, if self-employed, a business reference; and (B) if required by the commissioner, copies of W-2 forms, 1099 tax forms or, if self-employed, 1120 corporate tax returns, signed letters from the employer on the employer’s letterhead verifying such person’s duties and responsibilities and term of employment including month and year, and if such person is unable to provide such letters, other proof satisfactory to the commissioner that such person meets the experience requirement.  The commissioner may conduct a criminal history records check of . . . the qualified individual . . . and require the applicant to submit the fingerprints of such persons and authorization of such persons for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as part of the application.

Respondent’s failure to have a designated QI for Connecticut at its Main Office who has the required experience, as more fully described in paragraphs 1 to 33, inclusive, of the Matters Asserted, would be sufficient grounds for the Commissioner to deny an application for a mortgage lender license under Section 36a-489(a)(1)(A) of the Connecticut General Statutes, and would be sufficient grounds for the Commissioner to refuse to renew Respondent’s mortgage lender license in this state pursuant to Section 36a-494(a)(1) of the 2016 Supplement to the General Statutes, and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes.  Such failure to have a QI who has the required experience also causes Respondent to fail to meet minimum standards for renewal under Section 36a 489(a)(2)(A) of the Connecticut General Statutes, which shall cause such license to expire.


IV.  NOTICE OF INTENT NOT TO RENEW MORTGAGE LENDER
LICENSE AND NOTICE OF RIGHT TO HEARING

WHEREAS, the Commissioner has reason to believe that Respondent has failed to demonstrate the minimum requirements to maintain its mortgage lender license, which constitutes sufficient grounds for the Commissioner to refuse to renew Respondent’s license to engage in the business of making residential mortgage loans in Connecticut for the 2016 licensing period under Section 36a-494(a)(1) of the Connecticut General Statutes, as amended, and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes.
 
NOW THEREFORE, notice is hereby given to Respondent that the Commissioner intends to REFUSE TO RENEW Respondent’s license to engage in the business of making residential mortgage loans in Connecticut, subject to Respondent’s right to a hearing on the allegation 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 Respondent’s receipt of this Notice of Intent Not to Renew Mortgage Lender License and Notice of Right to Hearing as set forth in subsections (a) and (b) of Section 36a-50(a) of the Connecticut General Statutes.  This Notice of Intent Not to Renew Mortgage Lender License 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.  To request a hearing, complete and return the enclosed Appearance and Request for Hearing Form 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 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 May 3, 2016 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 or fails to appear at any such hearing, the allegation herein will be deemed admitted.  Accordingly, the Commissioner will issue an order refusing to renew Respondent’s mortgage lender license in Connecticut for the reasons set forth herein, and such order shall cause Respondent’s mortgage lender license in Connecticut to be deemed EXPIRED. 
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Dated at Hartford, Connecticut
this 22nd day of March 2016.            ________/s/_________
                                                      Jorge L. Perez
                                                      Banking Commissioner



CERTIFICATION

I hereby certify that on this 23rd day of March 2016, I caused to be mailed by certified mail, return receipt requested, the foregoing Notice of Intent Not to Renew Mortgage Lender License and Notice of Right to Hearing to Siwell, Inc. d/b/a Capital Mortgage Services of Texas, Attention:  Robert Lombardi, Compliance Analyst, 4212 50th Street, Lubbock, Texas 79413, certified mail no. 70133020000042267773; and Siwell, Inc. d/b/a Capital Mortgage Services of Texas, Attention:  Royce Lewis, Chief Executive Officer, 4212 50th Street, Lubbock, Texas 79413, certified mail no. 70142120000036974053.

                                                    ________/s/_________
                                                    Amy Grillo
                                                    Secretary 


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