DOB: Quinstreet Media, Inc. - NOI Not to Renew

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IN THE MATTER OF:

QUINSTREET MEDIA, INC.
NMLS # 2547

    ("Respondent")

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NOTICE OF INTENT NOT TO RENEW
MORTGAGE BROKER 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 broker 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 California corporation with an office at 950 Tower Lane, 6th Floor, Foster City, California (“Main Office”). 
2.Respondent was licensed by the Commissioner through the Nationwide Mortgage Licensing System and Registry (“NMLS”) to act as a mortgage broker in Connecticut under Part I of Chapter 668, Sections 36a-485 to 36a-534c, inclusive, of the Connecticut General Statutes for the January 1 to December 31, 2015 licensing period, and has requested renewal of its license on NMLS for the January 1 to December 31, 2016 licensing period (“2016 Licensing Period”).
3.Among other things, a licensed mortgage broker in Connecticut is statutorily required to have a qualified individual (“QI”) at its main office, and the QI must meet certain statutory qualifications to hold such position.
4.
On July 14, 2015, the Division posted a deficiency to Respondent’s NMLS account that stated, “[i]t 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 via email to . . . .  Please address this item by 7/28/2015.  Questions pertaining to this deficiency may be directed to . . . ”.
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.As of August 4, 2015, no response had been received by Respondent in any form, and no change to the designated QI had been made to the MU1 Form.
7.On August 4, 2015, the Division sent a letter to Respondent by certified mail (Certified Mail No. 70143490000235262541) (“Compliance Letter”).
8.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, indicated that Respondent’s designated QI was no longer employed by Respondent and that no new QI designation had been made, and provided Respondent with the “opportunity to show compliance with all lawful requirements for the retention of the mortgage broker license for the . . . [Main Office] by responding to the Division in writing by August 20, 2015.  If no written response is received by that date or 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.)
9.The Compliance Letter also described surrender procedures available to Respondent if it did not wish to maintain its license.
10.The letter was mailed to Respondent's Main Office addressed to the individual identified as Respondent's primary company contact on the MU1 Form, which individual is also identified as Respondent's Secretary and Director of Regulatory Compliance.
11.On September 8, 2015, the Compliance Letter was returned to the Division marked “Return to Sender – Insufficient Address – Unable to Forward”.
12.Information on the Compliance Letter envelope and on the online tracking records of the United States Postal Service indicate that multiple delivery attempts were made but that the Compliance Letter was “Unclaimed/Max Hold Time Expired” and was ultimately returned to sender.
13.On September 8, 2015, the Division discussed with Respondent by telephone the outstanding deficiencies.
14.In the interim, Respondent designated a new QI on August 5, 2015, with an effective date of August 6, 2015.  No work experience form was provided.
15.The individual Respondent designated as the new QI as noted in paragraph 14 was not licensed as a Connecticut mortgage loan originator as of August 5, 2015, nor did he have an application for such licensure pending at that time or at any time thereafter.
16.In addition, the QI designated by Respondent as more fully described in paragraph 14 resided in North Carolina and the Main Office is in California.
17.Over the next several weeks, there was correspondence between the Division, Respondent and a law firm authorized to handle licensing issues on behalf of Respondent relating to qualification issues for the individual proposed for the QI position, as described in paragraphs 14 to 16, inclusive, and the various requirements for individuals in such positions.
18,On September 11, 2015, the Division was notified by the law firm that Respondent would be designating a new individual for the QI position at the Main Office.  The law firm noted that the new QI had, among other things, “3 years of mortgage experience and 100% physical presence at the main office” and was in the process of completing Connecticut education requirements so that he could file an application for the required Connecticut mortgage loan originator license.
19.On September 18, 2015, the MU1 Form was amended to formally designate the individual described in paragraph 18 as the new QI.
20.The individual’s work experience form indicates that the individual’s last five years has been in the direction and management of mortgage lead generation activities.
21.The individual described in paragraphs 18 and 19 was not licensed as a Connecticut mortgage loan originator, nor has any application for such licensure ever been received. 
22.On December 10, 2015, the Division advised Respondent, through the law firm, that the individual described in paragraphs 18 and 19 did not meet the statutory requirements for the QI position.  
23.
A deficiency was posted to Respondent’s NMLS account on December 10, 2015 as follows:
The person listed as the qualifying individual does not meet the requirements as noted in the Connecticut General Statutes.  The qualifying individual is required to be a CT MLO.  This individual also does not meet the experience requirement to be the qualifying individual.  Experience of 3 years out of the last 5 years in the origination, processing, or underwriting of residential mortgage loans or the supervision of such activities is required. . . . 
24.The deficiency was the subject of an e-mail automatically generated by NMLS as more fully described in paragraph 5.
25.The individual described in paragraphs 18 to 21, inclusive, remains designated as the QI on Respondent’s MU1 Form.
26.Respondent has not filed a request to surrender its mortgage broker license in Connecticut as of the date of this Notice.


III.  STATUTORY BASIS NOT TO RENEW MORTGAGE BROKER 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 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 . . . .

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 broker 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 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-488 of the Connecticut General Statutes provides, in pertinent part, that:

(a)(1)  The commissioner shall not issue . . . a mortgage broker license to any person unless such person meets the following . . . experience requirements . . . (B) a . . . mortgage broker 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 and the required mortgage loan originator license, as more fully described in paragraphs 1 through 26, inclusive, of the Matters Asserted, would be sufficient grounds for the Commissioner to deny an application for a mortgage broker 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 broker 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 and mortgage loan originator license 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
BROKER 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 broker license, which constitutes sufficient grounds for the Commissioner to refuse to renew Respondent’s license to act as a mortgage broker in Connecticut for the 2016 Licensing Period under 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.

NOW THEREFORE, notice is hereby given to Respondent that the Commissioner intends to REFUSE TO RENEW Respondent’s license to act as a mortgage broker in Connecticut 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 Respondent’s receipt of this Notice of Intent Not to Renew Mortgage Broker License and Notice of Right to Hearing as set forth in subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes.  This Notice of Intent Not to Renew Mortgage Broker 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 26, 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 allegations herein will be deemed admitted.  Accordingly, the Commissioner will issue an order refusing to renew Respondent’s mortgage broker license in Connecticut for the reasons set forth herein, and such order shall cause Respondent’s mortgage broker license in Connecticut to be deemed EXPIRED.

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Dated at Hartford, Connecticut
this 11th day of April 2016.               ________/s/_________
                                                      Jorge L. Perez
                                                      Banking Commissioner



CERTIFICATION

I hereby certify that on this 13th day of April 2016, I caused to be mailed by certified mail, return receipt requested, the foregoing Notice of Intent Not to Renew Mortgage Broker License and Notice of Right to Hearing to QuinStreet Media, Inc., Attention:  Martin Collins, Secretary / Director of Regulatory Compliance, 950 Tower Lane, 6th Floor, Foster City, California 94404, certified mail no. 70142120000036974091; and to Corporation Service Company, registered agent for QuinStreet Media, Inc., 50 Weston Street, Hartford, Connecticut 06120-1537, certified mail no. 70142120000036974237.

                                                    ________/s/_________
                                                    Amy Grillo
                                                    Secretary 


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