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IH Financial Licenses, Inc. and ITC Financial Licenses, Inc.

Order
Monday, July 9, 2012
Docket No. 12-027-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/12-027-B_20150312091827.pdf
Docket No. 12-027-B

In Re: IH Financial Licenses, Inc. and ITC Financial Licenses, Inc., Respondents


STIPULATION AND CONSENT ORDER

Allegations

1. Pursuant to 8 V.S.A. Chapters 1 and 79, the Commissioner of the Vermont Department of Financial Regulation is charged with administering and enforcing Vermont law as it pertains to money transmitters in the State of Vermont.

2. IH Financial Licenses, Inc. ("IHFL") is a South Dakota corporation with a principal place of business at 250 Williams Street, Atlanta, GA.

3. ITC Financial Licenses, Inc. ("ITC") is a South Dakota corporation with a principal place of business at 5617 Princeton Avenue, Columbus, GA.

4. IHFL and ITC are affiliated corporations and both are indirect wholly owned subsidiaries of InComm Holdings, Inc. ("InComm").

5. IHFL and ITC have represented that collectively they are licensed as money transmitters in 45 states and that they offer open loop prepaid cards in those states where they are licensed or are otherwise authorized to offer open loop prepaid cards.

6. At all relevant times neither IHFL nor ITC was licensed as a money transmitter in Vermont.

7. Open loop cards were sold or offered for sale in Vermont under one or more programs managed by IHFL or ITC.

8. On February 22, 2011, the Department had a telephone conversation with representatives of IHFL, ITC, and InComm regarding the sale of prepaid open loop cards in Vermont without a license. IHFL and ITC represented that the open loop cards were inadvertently distributed in Vermont by retailers that serve as authorized agents for IHFL and ITC in multiple jurisdictions. IHFL and ITC represented to the Department that all open loop prepaid cards would be removed from Vermont locations, that policies and procedures would be put in place to prevent the sale of open loop cards in Vermont, and that the companies would not sell open loop prepaid cards in Vermont until they were in compliance with Vermont law.

9. The policies and procedures that IHLF and ITC put in place were not completely effective to prevent the sale of open loop prepaid cards in Vermont.

10. During a series of on-site visits to Vermont retail stores in October 2011, the Department found several locations where IHFL or ITC open loop prepaid cards were offered for sale.

11. IHFL and ITC have since discovered and reported to the Department that despite their policies and procedures, certain authorized agents that operate their own distribution centers continued to distribute IHFL and ITC open loop cards in Vermont.

12. IHFL and ITC have represented to the Department that they have reviewed and revised their policies and procedures to prevent their prepaid open loop cards from being sold in Vermont.

13. At all times IHFL and ITC have cooperated with the Department.

14. The parties wish to resolve this matter without administrative or judicial proceedings.

15. IHFL, ITC, and the Department expressly agree to enter into this Stipulation and Consent Order in full and complete resolution of the alleged violations described herein.

Stipulation and Agreement

IHFL, ITC, and the Department hereby stipulate and agree as follows:

16. IHFL and ITC do not dispute that there is a factual basis for the Department's allegations in this Stipulation and Consent Order.

17. IHFL and ITC shall pay an administrative penalty to the Department in the total amount of $25,000.00, which payment shall be made on or before July 23, 2012. IHFL and ITC shall be jointly and severally liable for payment of the $25,000.00 administrative penalty.

18. Going forward, neither IHFL nor ITC shall sell open loop prepaid cards in Vermont without a Vermont money transmitter license.

19. IHFL and ITC shall adopt policies and procedures to insure that open loop prepaid cards are either not sold in Vermont or are sold in Vermont in full compliance with 8 V.S.A. Chapter 79.

20. The Department shall retain continuing jurisdiction in this matter until IHFL and ITC have complied with the terms and conditions of this Stipulation and Order.

21. This Stipulation and Order shall not prevent any person from pursuing any claim he or she may have against IHFL or ITC, nor shall it be understood as determining whether any such claim may or may not exist in law or equity.

22. Nothing contained in this Stipulation and Order shall restrain or limit the Department in responding to and addressing any actual complaint filed with the Department involving IHFL or ITC and the Department reserves the right to pursue restitution in connection with any complaint filed with the Department.

23. IHFL and ITC knowingly and voluntarily waive any right they may have to judicial review by any court of these matters by way of suit, appeal, or extraordinary relief resulting from entry or enforcement of this Stipulation and Order.

ORDER

NOW THEREFORE, IT IS HEREBY ORDERED THAT:

24. IHFL and ITC shall comply with all agreements, stipulations, and undertakings as recited above.

25. IHFL and ITC, jointly and severally, shall pay an administrative penalty to the Department in the total amount of $25,000.00, which payment shall be made on or before July 23, 2012. IHFL and ITC shall be jointly and severally liable for payment of the $25,000.00 administrative penalty.

26. This Order shall not prevent any person from pursuing any claim he or she may have against IHFL or ITC.

27. Nothing contained in this Order shall restrain the Department from responding to and addressing any complaint involving IHFL or ITC filed with the Department or shall preclude the Department from pursuing any other violation of law.

28. This Order shall not be construed as an adjudication of any violation of any Vermont law or federal law, except as specifically set forth herein.

Amended Order Removing The Directors, Officers and Committee Members of Border Lodge Credit Union

Order
Friday, December 21, 2012
Docket No. 12-050-B (Amended)
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/12-050-B-Amended_20150312092047.pdf
 

DOCKET NO. 12-050-B

IN RE: BORDER LODGE CREDIT UNION

AMENDED ORDER REMOVING THE DIRECTORS, OFFICERS AND COMMITTEE MEMBERS OF BORDER LODGE CREDIT UNION

Pursuant to 8 V.S.A. § 3070l(a)(5). this order removes all directors, officers, and committee members of Border Lodge Credit Union ("Border Lodge"). This Order is amended to correct the service list, and specifically the service address of Mr. Laurie McMullen.

Background

On November 30, 2012, the Commissioner seized Border Lodge with an Ex Parte Order for Conservatorship and Order for Related Matters, ("Conservatorship Order''), pursuant to 8 V.S.A. § 36103(a)(l) and (5). The Commissioner found that there was an immediate threat to the assets and depositors of Border Lodge, and took possession and control of the business and all assets of Border Lodge. Pursuant to 8 V.S.A. § 36103(f), the Commissioner, as conservator. assumed all the powers of the members, directors, officers, and committees of Border Lodge. In addition, the National Credit Union Administration Board, ("NCUA'') was appointed liquidating agent of Border Lodge.

Pursuant to 8 V.S.A. § 30701(a)(5), the Commissioner may remove any person who knowingly: violates this title or a lawful regulation or order issued under it; engaged in or participated in any materially unsafe or unsound practice in connection with a credit union; or engaged in any act, omission, or practice which is a breach of fiduciary duty to the credit union.

The Commissioner's Letter and Notice of Proposed Order dated September 25, 2012 ("Commissioner's Letter") received by Ms. Debra Kinney and the directors of Border Lodge stated that there were concerns about unsafe or unsound practices in connection with Border Lodge. The Commissioner's Letter also notified Ms. Kinney and the directors of Border Lodge that the credit union had failed to provide monthly account reconciliation reports as required under Vermont law. Despite these warnings, no corrective action was taken on behalf of Border Lodge.

Notice of Hearing Rights

Pursuant to 8 V.S.A. § 3070l(c) and (d), any party served in this matter has 30 days to request that the Commissioner hold a hearing. A sen·ice list is attached to this order. If no hearing is requested, this order becomes final at the end of the 30 day period. The hearing on this order shall be private unless the Commissioner determines that a public hearing is necessary to protect the public interest.

ORDER

It is therefore ORDERED that:

1. The following persons are removed as directors and/or officers of Border Lodge: Terrence Decker, Elizabeth Graves, Debra Kinney, James Kinney, Kenneth LaPlume, Laurie McMullen and Linda Montague.

2. All committee members and committees of Border Lodge are removed and terminated.

3. If no hearing is requested, this removal order shall become final and effective within 30 days of service of this order.

4. All other terms and conditions of the Conservatorship Order remain unchanged and in full force and effect, including the authority of the NCUA as liquidating agent.

Border Lodge Credit Union

Order
Thursday, November 29, 2012
Docket No. 12-050-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/12-050-B_20150312091924.pdf
DOCKET NO. 12-050-B

IN RE: BORDER LODGE CREDIT UNION

 

EX PARTE ORDER FOR CONSERVATORSHIP AND ORDER FOR RELATED MATTERS

The Commissioner of the Department of Financial Regulation (the "Commissioner") pursuant to 8 V.S.A. § 36103(a), issues this ex parte order to appoint himself conservator of Border Lodge Credit Union located at 138 Beauchesne Street, Derby Line, Vermont 05830 ("Border Lodge") and to take possession and control of the business and assets of Border Lodge.

Pursuant to 8 V.S.A. § 36103(a)(l) and (5), the Commissioner has determined that such action is necessary to conserve the assets and protect the interests of the members of Border Lodge and that there is concealment of the books, papers, records, or assets of Border Lodge.1 The Commissioner further finds that there is an immediate threat to the assets of Border Lodge.

ORDER

It is therefore ORDERED that:

1. This order is effective as of 12:01 a.m., November 30, 2012.

2. The Commissioner is conservator of Border Lodge, and immediately takes possession and control of the business and all assets of Border Lodge, pursuant to 8 V.S.A. § 36103(a).

3. All directors, officers and committees of Border Lodge are relieved of all duties and authority in regards to Border Lodge. Pursuant to 8 V.S.A. § 36103(f), the Commissioner, as conservator, has all the powers of the members, the directors, the officers, and the committees of Border Lodge and may conserve the assets in the manner and to the extent he authorizes.

4. In accordance with 8 V .S.A. § 36103(f), Ms. Debra Kinney is relieved of all her duties and authority in regards to Border Lodge. Ms. Kinney no longer has any authority, including signature authority, over any accounts, papers or other documents which may be executed on behalf of Border Lodge.

5. Border Lodge is closed pursuant to 8 V .S.A. §§ 30303 and 36103(f)-(g).

6. The Commissioner as conservator, as provided for in 8 V.S.A. § 36103(c) , shall maintain possession and control of the business and assets of Border Lodge until such time as Border Lodge is liquidated in accordance with 8 V.S.A. § 36101.

7. The Commissioner, as conservator, and having all the powers of the members, the directors, the officers, and the committees of Border Lodge, and in accordance with the liquidation provisions of8 V.S.A. § 3610l(b), waives any and all notice and meeting requirements and approves and directs the dissolution and liquidation of Border Lodge. Border Lodge shall immediately cease to do business except for the purposes of liquidation.

8. Pursuant to 8 V .S.A. § 36103(d), the Commissioner may, at his discretion, appoint such agents as he considers necessary to assist in carrying out his duties as conservator.

9. Pursuant to 8 V.S.A. §§ 36103(c)(2) and 36103(d), the Commissioner appoints the National Credit Union Administration Board ("NCUA") as liquidating agent of Border Lodge .

10. All expenses incurred by the Commissioner in exercising his authority as conservator with respect to Border Lodge shall be paid out of the assets of Border Lodge.

1 Not later than ten days after the date on which the Commissioner takes possession and control of Border Lodge's business and assets, it may apply to the Superior Court, Washington County, for an order requiring the Commissioner to show cause why the Commissioner should not be enjoined from continuing such possession and control. 8 V.S.A. § 36103(b).

Shelter Mortgage Company, LLC.

Order
Monday, May 13, 2013
Docket No. 13-010-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/13-010-B_20150312092257.pdf

Docket No. 13 -010-B

In The Matter Of: SHELTER MORTGAGE COMPANY, LLC, Respondent


STIPULATION AND CONSENT AGREEMENT

Background

1. Pursuant to 8 V.S.A. Chapters 1 and 73, the Commissioner of the Department of Financial Regulation is charged with administering and enforcing Vermont law as it pertains to licensed lenders in the State of Vermont.

2. Shelter Mortgage Company, LLC is an Illinois limited liability company. Shelter Mortgage also uses the trade name SugarTree Mortgage.

3. At all relevant times, January 1, 2011 through April30, 2012, Shelter Mortgage held lender licenses for locations at 4000 West Brown Deer Road, Brown Deer, Wisconsin and 550 Hinesburg Road, Suite #103, South Burlington, Vermont.

4. At all relevant times, January 1, 2011 through April30, 2012, Shelter Mortgage had an office at 19 Roosevelt Highway, Suite #110, Colchester, Vermont. The Colchester office was not a licensed location.1

5. The Department has reason to believe that:

a. Shelter Mortgage engaged in licensed lender business from its unlicensed Colchester location, in violation of8 V.S.A. §§2201 (a), 2206 (a), 2208 (a), and 2228; and/or

b. Shelter Mortgage failed to keep and use accurate business records and failed to submit accurate records to the Department that would enable the Commissioner to determine whether Shelter Mortgage was complying with the provisions of 8 V.S.A. Chapter 73 and other relevant laws and regulations, in violation of 8 V.S.A. §2223.

6. Shelter Mortgage has denied any intentional wrongdoing on its part.

7. The parties wish to resolve this matter without administrative or judicial proceedings.

8. Shelter Mortgage and the Department expressly agree to enter into this Stipulation and Consent Agreement in full and complete resolution of the alleged violations described in paragraph 5.

Stipulation and Agreement

Shelter Mortgage and the Department hereby stipulate and agree as follows:

9. Although Shelter Mortgage neither admits nor denies the Department's allegations, Shelter Mortgage does not dispute that there is a factual basis for the Department's allegations in this Stipulation and Consent Agreement.

10. Shelter Mortgage agrees to pay: (a) an administrative penalty to the "Department of Financial Regulation" in the amount of$25,000.00; and (b) a $5,000.00 payment to the "VT DFR- Financial Services Education & Training Special Fund", which payments shall be made on or before May 15, 2013.

11. Shelter Mortgage: (a) shall not engage in licensed lender business from an unlicensed location; and (b) shall maintain and submit to the Department accurate business records that will enable the Commissioner to determine whether Shelter Mortgage is complying with the provisions of 8 V.S.A. Chapter 73 and other relevant laws and regulations.

12. In the event Shelter Mortgage fails to make the payments described in paragraph 10 on or before May 15, 2013, the Commissioner may, upon request from the Banking Division of the Department, issue an Order suspending, revoking, or terminating any or all of Shelter Mortgage's licenses arid imposing additional administrative penalties. The Department's failure to exercise this option shall not constitute a waiver of the right to exercise such option at any other time.

13. The Department shall retain continuing jurisdiction in this matter until Shelter Mortgage has complied with the terms and conditions of this Stipulation and Consent Agreement.

14. This Stipulation and Consent Agreement shall not prevent any person from pursuing any claim he or she may have against Shelter Mortgage, nor shall it be understood as determining whether any such claim may or may not exist in law or equity.

15. Nothing contained in this Stipulation and Consent Agreement shall restrain or limit the Department in responding to and addressing any actual complaint filed with the Department involving Shelter Mortgage and the Department reserves the right to pursue restitution in connection with any complaint filed with the Department.

16. Shelter Mortgage knowingly and voluntarily waives any right it may have to judicial review by any court of these matters by way of suit, appeal, or extraordinary relief resulting from entry or enforcement of this Stipulation and Consent Agreement.

ORDER

NOW THEREFORE, IT IS HEREBY ORDERED THAT:

17. Shelter Mortgage shall comply with all agreements, stipulations, and undertakings as recited above.

18. Shelter Mortgage shall make the payments described in paragraph 10, which payments shall be made on or before May 15, 2013.

19. In the event Shelter Mortgage fails to make the payments described above on or before May 15, 2013, the Commissioner may, upon request from the Banking Division of the Department, issue an Order suspending, revoking, or terminating any or all of Shelter Mortgage's licenses and may impose additional administrative penalties. The Department's failure to exercise this option shall not constitute a waiver of the right to exercise such option at any other time.

20. This Order shall not prevent any person from pursuing any claim he or she may have against Shelter Mortgage.

21. Nothing contained in this Order shall restrain the Department from responding to and addressing any complaint involving Shelter Mortgage filed with the Department or shall preclude the Department from pursuing any other violation of law:

22. This Order shall not be construed as an adjudication of any violation of any Vermont law or federal law, except as specifically set forth herein.

1 Shelter Mortgage subsequently received a lender license for its Colchester office on December 13, 2012.


David Leonard Rome

Order
Monday, September 16, 2013
Docket No. 13-017-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/13-017-B_20150312092832.pdf

Docket No. 13 -017-B

In The Matter Of: David Leonard Rome, Respondent


ORDER SUSPENDING MORTGAGE LOAN ORIGINATOR LICENSE

The Commissioner of the Department of Financial Regulation issues this Order suspending David Leonard Rome's mortgage loan originator license.

Findings Of Fact

1. David Leonard Rome ("Rome") (NMLS #774735) is an individual that currently holds a Vermont Mortgage Loan Originator license issued by the Department of Financial Regulation.

2. The Georgia Department of Banking and Finance revoked Rome's mortgage loan originator license on April24, 2013.

3. In order to be a mortgage loan originator, a licensee may not have had a mortgage loan originator license, or any similar license, revoked in any governmental jurisdiction. (A subsequent formal vacation of such revocation shall not be deemed a revocation.) 8 V.S.A. §2204 (a)(4).

5. Rome has not provided the Department with a vacation of the Georgia revocation.

6. The Commissioner may, among other remedies, suspend, revoke, condition, refuse to renew a license, issue a cease and desist order, or terminate a license, or take any other action or remedy the Commissioner deems necessary, if a mortgage loan originator licensed in Vermont has a mortgage loan originator license, or similar license, revoked in another jurisdiction. 8 V.S.A. §§15, 2204 (a)(4), 2210.

7. On July 29, 2013 the Department sent Administrative Charges and Notice of Hearing Rights (the "Administrative Charges") by certified mail, return receipt requested, to Rome's current address as stated on his license. Rome received the Administrative Charges on or before August 6, 2013 as indicated on the certified mail return receipt. The Administrative Charges constitute notice to Rome of his right to have a hearing and defend against the charges.

8. Rome has not requested a hearing or otherwise defended against the charges within the time permitted by law.

Conclusions Of Law

9. Rome's mortgage loan originator license was revoked by the Georgia Department of Banking and Finance and Rome has not provided the Department with a vacation of the Georgia revocation. This constitutes grounds for the Commissioner to issue an order suspending, revoking, conditioning, terminating, or refusing to renew Rome's license or to take any other action or remedy the Commissioner deems necessary. 8 V.S.A. §§15, 2204 (a)(4), 2210.

10. The Department provided Rome with adequate written notice and an opportunity for a hearing as required by 8 V.S.A. § 2210 and Regulation B-82-1; Rome did not request a hearing or otherwise defend against the charges.

ORDER

Pursuant to the authority contained in 8 V.S.A. Chapters 1, 3, and 73, the Vermont Administrative Procedures Act (3 V.S.A. §§ 809 et seq.), and Department Regulation B-82-1, it is hereby ordered:

11. Rome's Vermont mortgage loan originator license is suspended until such time as he provides evidence satisfactory to the Commissioner that the Georgia revocation has been vacated.

12. In the event Rome does not provide satisfactory evidence to the Commissioner that the Georgia revocation has been vacated on or before December 1, 2013, Rome shall not be permitted to renew his Vermont mortgage loan originator license and such license shall automatically expire on December 31, 2013.

Zackary Nathan Tierney

Order
Monday, September 16, 2013
Docket No. 13-018-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/13-018-B_20150312092926.pdf

Docket No. 13-018-B

In The Matter Of: Zackary Nathan Tierney, Respondent


ORDER SUSPENDING MORTGAGE LOAN ORIGINATOR LICENSE

The Commissioner of the Department of Financial Regulation issues this Order suspending Zackary Nathan Tierney's mortgage loan originator license.

Findings Of Fact

1. Zackary Nathan Tierney ("Tierney") (NMLS #913716) is an individual that currently holds a Vermont Mortgage Loan Originator license issued by the Department of Financial Regulation.

2. The Georgia Department of Banking and Finance revoked Tierney's mortgage loan originator license on April 23, 2013.

3. In order to be a mortgage loan originator, a licensee may not have had a mortgage loan originator license, or any similar license, revoked in any governmental jurisdiction. (A subsequent formal vacation of such revocation shall not be deemed a revocation.) 8 V.S.A. §2204 (a)(4).

5. Tierney has not provided the Department with a vacation of the Georgia revocation.

6. The Commissioner may, among other remedies, suspend, revoke, condition, refuse to renew a license, issue a cease and desist order, or terminate a license, or take any other action or remedy the Commissioner deems necessary, if a mortgage loan originator licensed in Vermont has a mortgage loan originator license, or similar license, revoked in another jurisdiction. 8 V.S.A. §§15, 2204 (a)(4), 2210.

7. On July 29, 2013 the Department sent Administrative Charges and Notice of Hearing Rights (the "Administrative Charges") by certified mail, return receipt requested, to Tierney's current address as stated on his license. Tierney received the Administrative Charges on August 6, 2013 as indicated on the certified mail return receipt. The Administrative Charges constitute notice to Tierney of his right to have a hearing and defend against the charges.

8. Tierney has not requested a hearing or otherwise defended against the charges within the time permitted by law

Conclusions Of Law

9 Tierney's mortgage loan originator license was revoked by the Georgia Department of Banking and Finance and Tierney has not provided the Department with a vacation of the Georgia revocation. This constitutes grounds for the Commissioner to issue an order suspending, revoking, conditioning, terminating, or refusing to renew Tierney's license or to take any other action or remedy the Commissioner deems necessary: 8 V.S.A. §§15, 2204 (a)(4), 2210.

10. The Department provided Tierney with adequate written notice and an opportunity for a hearing as required by 8 V.S.A. § 2210 and Regulation B-82-1. Tierney did not request a hearing or otherwise defend against the charges.

ORDER

Pursuant to the authority contained in 8 V.S.A. Chapters 1, 3, and 73, the Vermont Administrative Procedures Act (3 V.S.A. §§ 809 et seq.), and Department Regulation B-82-1, it is hereby ordered:

11. Tierney's Vermont mortgage loan originator license i!? suspended until such time as he provides evidence satisfactory to the Commissioner that the Georgia revocation has been vacated.

12. In the event Tierney does not provide satisfactory evidence to the Commissioner that the Georgia revocation has been vacated on or before December 1, 2013, Tierney shall not be permitted to renew his Vermont mortgage loan originator license and such license shall automatically expire on December 31, 2013

Brandon Thomas Maddick

Order
Monday, September 16, 2013
Docket No. 13-020-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/13-020-B_20150312093014.pdf

Docket No. 13-020-B

In The Matter Of: Brandon Thomas Maddick, Respondent


ORDER SUSPENDING MORTGAGE LOAN ORIGINATOR LICENSE

The Commissioner of the Department of Financial Regulation issues this Order suspending Brandon Thomas Maddick's mortgage loan originator license.

Findings Of Fact

1 Brandon Thomas Maddick ("Maddick") (NMLS #901957) is an individual that currently holds a Vermont Mortgage Loan Originator license issued by the Department of Financial Regulation.

2. The Georgia Department of Banking and Finance revoked Maddick's mortgage loan originator license on April 23, 2013.

3. In order to be a mortgage loan originator, a licensee may not have had a mortgage loan originator license, or any similar license, revoked in any governmental jurisdiction. (A subsequent formal vacation of such revocation shall not be deemed a revocation.) 8 V .S.A. §2204 (a)(4).

5. Maddick has not provided the Department with a vacation of the Georgia revocation.

6. The Commissioner may, among other remedies, suspend, revoke, condition, refuse to renew a license, issue a cease and desist order, or terminate a license, or take any other action or remedy the Commissioner deems necessary, if a mortgage loan originator licensed in Vermont has a mortgage loan originator license, or similar license, revoked in another jurisdiction. 8 V.S.A. §§15, 2204 (a)(4), 2210.

7. On July 29, 2013 the Department sent Administrative Charges and Notice of Hearing Rights (the "Administrative Charges") by certified mail, return receipt requested, to Maddick's current address as stated on his license. Maddick received the Administrative Charges on August 2, 2013 as indicated on the certified mail return receipt. The Administrative Charges constitute notice to Maddick of his right to have a hearing and defend against the charges.

8. Maddick has not requested a hearing or otherwise defended against the charges within the time permitted by law.

Conclusions Of Law

9. Maddick’s mortgage loan originator license was revoked by the Georgia Department of Banking and Finance and Maddick has not provided the Department with a vacation of the Georgia revocation. This constitutes grounds for the Commissioner to issue an order suspending, revoking, conditioning, terminating, or refusing to renew Maddick's license or to take any other action or remedy the Commissioner deems necessary. 8 V.S.A. §§15, 2204 (a)(4), 2210.

10. The Department provided Maddick with adequate written notice and an opportunity for a hearing as required by 8 V .S.A. § 2210 and Regulation B-82-1. Maddick did not request a hearing or otherwise defend against the charges.

ORDER

Pursuant to the authority contained in 8 V.S.A. Chapters 1, 3, and 73, the Vermont Administrative Procedures Act (3 V.S.A. §§ 809 et seq.), and Department Regulation B-82-1, it is hereby ordered:

11. Maddick's Vermont mortgage loan originator license is suspended until such time as he provides evidence satisfactory to the Commissioner that the Georgia revocation has been vacated.

12. In the event Maddick does not provide satisfactory evidence to the Commissioner

that the Georgia revocation has been vacated on or before December 1, 2013, Maddick shall not be permitted to renew his Vermont mortgage loan originator license and such license shall automatically expire on December 31, 2013.

Securities Finance Trust Company

Order
Monday, July 29, 2013
Docket No. 13-021-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/13-021-B_20150312092344.pdf
Docket No. 3-021-B

IN THE MATTER OF: SECURITIES FINANCE TRUST COMPANY

 

This Order is issued by the Commissioner of the Vermont Department of Financial Regulation pursuant to 9 V.S.A. §§ 5102(15)(H), 5102(3)(E) of the Vermont Securities Act, 9 V.S.A. Chapter 150 (the "Securities Act"), and the provisions of 8 V.S.A. § 15(a).

Findings and Law

1. Securities Finance Trust Company ("SFTC") has filed an application with the Department for an Independent Trust Company charter under 8 V.S.A. Chapter 77.

2. Contemporaneous with the issuance of this Order the Commissioner will issue a Certificate of Authority to SFTC for a Vermont Independent Trust Company charter.

3. Solely in connection with, and ancillary to, the provision of trust services, including acting as an independent agent lender in the securities lending industry, SFTC may engage in activities that would cause SFTC to come within the definition of "broker-dealer" under 9 V.S.A. § 5102(3) of the Securities Act or the definition of "investment adviser" under 9 V.S.A. § 5102(15) of the Securities Act.

4. SFTC will be regulated and examined by the Banking Division of the Department pursuant to Vermont laws and regulations governing the operation of an independent trust company in Vermont, and will be examined pursuant to examination protocols and standards as established by the Department and as amended from time to time.

5. 9 V.S.A. § 5102(15)(H) of the Securities Act authorizes the Commissioner to exclude any person, by rule or order, from the definition of "investment adviser" under the Securities Act.

6. 9 V.S.A . § 5102(3)(E) of the Securities Act authorizes the Commissioner to exclude any person, by rule or order, from the definition of "broker-dealer" under the Securities Act.

Order

NOW, THEREFORE, IT IS HEREBY ORDERED that:

7. SFTC and any employee engaged in the business of SFTC, is excluded from the definition of "investment adviser" under Section 5201 (15) of the Securities Act, and is excluded from the definition of "broker-dealer" under Section 5201 (3) of the Securities Act.

8. The exclusions provided under Section 7 of this Order shall be subject to the following conditions:

(i) SFTC shall limit any activities as a broker-dealer to those activities described in 9 V.S.A. § 5102(3)(C) of the Securities Act;

(ii) SFTC shall immediately report any customer complaints regarding SFTC, its employees, or its agents to the Department's Banking Division; and

(iii) SFTC and its employees and agents shall be subject to the anti-fraud and related enforcement provisions of the Securities Act.

THIS ORDER SH . ALL BE EFFECTIVE AS OF THE DATE EXECUTED BELOW AND SHALL REMAIN IN EFFECT UNLESS AND UNTIL THIS ORDER IS SUBSEQUENTLY AMENDED OR RESCINDED BY THE COMMISSIONER.

Amerisave Mortgage Corporation

Order
Wednesday, July 31, 2013
Docket No. 13-024-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/13-024-B_20150312092605.pdf

DOCKET NO. 13-024-B

 

SETTLEMENT AGREEMENT AND ORDER AMERISAVE MORTGAGE CORPORATION

 

WHEREAS, Amerisave Mortgage Corporation (hereinafter "Arnerisave'') is a corporation licensed as a mortgage broker or lender under the laws of the various state mortgage regulators;

WHEREAS, Amerisave maintains its corporate headquarters at 3350 Peachtree Road, N.E., Suite 1000, Atlanta, Georgia, which is its principal place of business;

WHEREAS, the states of Alaska, Arizona, California. Connecticut, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia (hereinafter referred to as "the Participating States") have agreed, through their respective regulatory agencies, to negotiate and enter into this Settlement Agreement and Order (hereinafter referred to as the "Agreement");

WHEREAS, the Alaska Department of Commerce, Community, and Economic Development; the Arizona Department of Financial Institutions; the California Department of Corporations; the Connecticut Department of Banking; the Georgia ·Department of Banking and Finance; the Hawaii Division of Financial Institutions; the Illinois Department of Financial and Professional Regulation; the Indiana Department of Financial Institutions; the Idaho Department of Finance; the Iowa Division of Banking; the Kentucky Department of Financial Institutions; the Louisiana Office of Financial Institutions; the Maryland Division of Financial Regulation; the Massachusetts Division of Banks; the Mississippi Department of Banking; the Missouri Division of Finance; the Montana Division of Banking and Financial Institutions; the Nebraska Department of Banking and Finance; the New Jersey Department of Banking and Insurance; the New Mexico Regulation and Licensing Department; the North Carolina Office of the Commissioner of Banks; the North Dakota Department of Financial Institutions; the Ohio Department of Commerce; Division of Financial Institutions; the Oregon Division of Finance & Corporate Securities; the Pennsylvania Department of Banking and Securities; the South Carolina Department of Consumer Affairs; the South Dakota Division of Banking; the Tennessee Department of Financial Institutions; the Vermont Department of Financial Regulation; the Virginia State Corporation Commission; the Washington Department of Financial Institutions; the West Virginia Division of Financial Institutions; the Wisconsin Department of Financial Institutions; the Wyoming Division of Banking; and, the District of Columbia Department of Insurance, Securities, and Banking (hereinafter referred to as the "State Mortgage Regulators") have agreed to address enforcement concerns with Amerisave in a coordinated manner, working through the Multistate Mortgage Committee pursuant to the CSBS/AARMR Nationwide Cooperative Protocol for Mortgage Supervision, in the interest of economy of time and resources for the Participating States and Amerisave;

WHEREAS, Amerisave and the State Mortgage Regulators are collectively referred to as the "Parties";

WHEREAS, Amerisave acknowledges that it has full knowledge of its rights to notice and hearing pursuant to the laws of the Participating States;

WHEREAS, Amerisave enters into this Agreement solely for the purpose of resolving disputes with the State Mortgage Regulators in their entirety and without admitting any allegations or implications of fact, and without admitting any violation of laws, regulations or rules governing the conduct and operation of its mortgage lending business in each Participating State;

WHEREAS, on July 19, 2010, the State Mortgage Regulators commenced a Multi-State Examination of Amerisave, covering the period of April1, 2008 to March 31,2010, the scope of which was to review Amerisave's financial safety and soundness, adequacy of management controls and operations and compliance with applicable laws and regulati9ns;

WHEREAS, the State Mortgage Regulators conducted that Multi-State Examination pursuant to their respective statutory authorities, and according to the protocols established by the CSBS/AARMR Nationwide Cooperative Protocol for Mortgage Supervision and the Nationwide Cooperative Agreement for Mortgage Supervision dated January 15, 2008;

WHEREAS, a report of the Multi-State Examination was subsequently issued;

WHEREAS, the State Mortgage Regulators reserved from the Multi-State Examination any issue not addressed in the Multi-State Examination on Report, notably the issue of unlicensed loan origination and unlicensed branch offices;

WHEREAS, the State Mortgage Regulators conducted a follow-up investigation of the activities of Amerisave's unlicensed employees and unlicensed branch offices;

WHEREAS, Amerisave cooperated with the State Mortgage Regulators during the course of the follow-up investigation by voluntarily providing documents, recordings, employee lists, loan lists, and other responses to inquiries;

WHEREAS, as of March 31, 2010, Amerisave had, in addition to its principal office in Atlanta, Georgia, seven (7) licensed branches in the states of Arizona, Maryland, Nevada, Ohio, Pennsylvania and Tennessee. Each branch office held one (1) license in the state in which the branch office was located; and

WHEREAS, at the time of this Agreement, Amerisave has, in addition to its principal office in Atlanta, Georgia, five (5) single-licensed branches in each of the states of Arizona, California, Hawaii, Ohio and Nevada.

THE STATE MORTGAGE REGULATORS' CONTENTIONS

WHEREAS, based on its investigation, the State Mortgage Regulators contend, as a general matter, that certain unlicensed Amerisave employees, including but not limited to, employees with the title of Senior Mortgage Processor ("SMP"), engaged in mortgage loan origination activities for which a mortgage loan originator ("MLO") license was required by one or more Participating States;

WHEREAS, based on its investigation, the State Mortgage Regulators specifically contend that certain unlicensed Amerisave employees engaged in mortgage loan origination activities, in states where such activities required a license, by: I) soliciting potential borrowers by telephone using leads generated by third parties that were purchased by Amerisave; 2) verbally obtaining from potential borrowers certain financial information that Amerisave relied upon in making tentative credit decisions; 3) analyzing that financial information for the purpose of discussing mortgage options with potential borrowers and to generate "personalized rate sheets" for potential borrowers; 4) sending these "personalized rate sheets" to borrowers via e-mail; 5) discussing with potential borrowers possible rates, terms, and conditions· of residential loans, including numerous topics requiring a license; and/or 6) advertising on websites, on business cards, and as attachments to e-mails that these unlicensed employees were qualified to answer questions from potential borrowers about Amerisave loans;

WHEREAS, the State Mortgage Regulators contend that certain unlicensed Amerisave employees engaged in certain mortgage loan activities without requisite supervision, direction and instruction by a licensed MLO and that a licensed MLO did not always assign, authorize arid monitor the performance of clerical and support duties by Amerisave loan processors as required by the SAFE Act, 12 U.S.C. §§ 5101-5116 (hereinafter the "SAFE Act"), and its regulations, 12 CFR Part 1007 and 1008, Appendix C to Part 1008, and the corresponding enabling statutes in each of the Participating States; and

WHEREAS, the State Mortgage Regulators contend that certain unlicensed Amerisave employees engaged in the mortgage loan business from locations that were not licensed as branches in those Participating States that require branch licenses;

AMERISAVE'S CONTENTIONS

WHEREAS, Amerisave contends, as a general matter, that Amerisave and its employees, including its unlicensed employees, intended to comply with state licensing laws at all times, including those laws governing MLO and branch licenses, and admit no wrongdoing; and

WHEREAS, Amerisave contends that certain state laws applicable to the licensing of

MLOs and branch offices are vague, subject to multiple interpretations, and inconsistent from state to state;

WHEREAS, Amerisave contends that the activities of its unlicensed employees and loan processors were designed to be compliant with the SAFE Act, its regulations, the corresponding enabling statutes in each of the Participating States, and admits no wrongdoing; and

NOW, THEREFORE, having negotiated this Agreement in order to resolve their contrary contentions and disputes without incurring the costs, inconvenience and delays associated with protracted administrative proceedings and possible judicial review, the Parties. hereby enter into this Agreement to resolve, by mutual agreement, the issues identified above.

COMPLIANCE MEASURES

1. Amerisave agrees that it will require any of its employees who engage in mortgage loan origination to take the necessary examinations, obtain the necessary education, and apply for the necessary mortgage origination licenses prior to engaging in any activities requiring a MLO license.

2. Amerisave agrees that it will not allow any employee to originate residential mortgage loans for Amerisave in any state in which that person is not licensed to originate residential mortgage loans.

3. Amerisave agrees that its unlicensed employees will engage in residential mortgage loan activities only to the extent such activities do not require a license under the statutes and regulations of the Participating States, and that they will be supervised, instructed, and directed by licensed MLOs, to the extent such supervision, instruction, and direction is required by applicable law.

4. Amerisave agrees that it will apply for and hold branch licenses for any locations for which the applicable Participating States require such a license.

5. Amerisave agrees that its corporate policies, procedures and controls will strictly adhere to the SAFE Act and its regulations and to the laws of each of the Participating States, to the extent those laws are applicable.

6. Amerisave agrees that this Agreement does not invalidate or otherwise make void any agreements previously entered into with any Participating State, to the extent such prior agreements do not conflict with the terms of this Agreement.

7. Amerisave agrees to ensure that: (i) all residential mortgage loans are originated by MLOs who are licensed in all states in which such licenses are required under applicable state law; and (ii) all mortgage applications are signed by the licensed MLOs responsible for such loans; and (iii) in states which require MLO licensing for solicitation activities, residential mortgage loans are only solicited 'by licensed MLOs.

8. Within a reasonable time, Arnerisave will take the following steps to implement certain of the compliance terms in this Agreement:

a. Amerisave will eliminate the position of SMP, and will offer current SMPs the opportunity to remain employed with Arnerisave by becoming licensed MLOs.

b. MLOs will be required to work from a licensed branch office or from Amerisave's licensed corporate headquarters in Atlanta, Georgia, unless a Participating State does not have a branch office licensing requirement.

c. Arnerisave may create one or more call centers staffed with Customer Service Representatives who will be supervised by licensed MLOs if required by applicable law, who will respond to general inquiries from potential and existing customers, and who will perform general customer service, administrative, and clerical activities as allowed under applicable federal and state law.

d. Each Customer Service Representative staffing the call center will be an employee whose compensation will be based, in part, on compliance with Amerisave's policies and procedures and the quality of his or her customer service, and whose compensation will not be based on the volume of funded loans.

e. Customer Service Representatives will direct any potential borrower or customer who makes an inquiry, other than a general inquiry, to the Amerisave website or to an MLO licensed in the state where the property is located.

9. Amerisave agrees that, for one year following the Effective Date set forth in paragraph 18 of this Agreement, Amerisave will provide the Participating States with any script that it develops for use by its unlicensed employees when speaking with potential borrowers or customers. Participating States agree to notify Amerisave within 45 days of the receipt of any such script if the script presents any legal concerns for that Participating State.

10. Amerisave agree that all mortgage loan records, including any correspondence associated with specific customer loan files, will be preserved and retained in the manner prescribed and to the extent required by applicable state and federal laws.

11. For purposes of assessing whether Amerisave has taken appropriate steps, in a timely manner, to implement the compliance terms of this Agreement, Amerisave agrees that:

a. For one year following the Effective Date set forth in paragraph 18 of this Agreement, Amerisave will provide quarterly reports to representatives of the State Mortgage Regulators that will describe Amerisave's progress in licensing MLOs and branch offices; and

b. Amerisave will contract with an independent third party, at Amerisave's expense, to conduct a compliance audit of a sample of Amerisave's total transactions in the period between 12 and 24 months after the Effective Date of this Agreement If that audit suggests that Amerisave should take significant additional steps to implement the compliance terms of this Agreement, Amerisave will contract for a second compliance audit, at Amerisave's expense, to be conducted on a sample of Amerisave's total transactions in the period between 12 and 24 months after the completion of the first compliance audit

12. Nothing in this Agreement shall be interpreted to permit Amerisave or its employees to violate any provision of the SAFE Act or any applicable law or rule of the Participating States.

REPRESENTATIONS AND WARRANTIES

13. Amerisave represents to the State Mortgage Regulators that Amerisave is implementing measures to become fully compliant with its obligations under this Agreement, and that Amerisave will hereafter continue to comply with all regulatory requirements imposed by each individual State Mortgage Regulator.

SETTLEMENT PAYMENTS

14. Amerisave agrees to reimburse the Pennsylvania Department of Banking and Securities $50,000 for investigative costs, which amount will be paid in one lump sum within ten days of the Effective Date of this agreement as defined in paragraph 18 below.

15. Amerisave agrees to make an aggregate settlement payment to the Participating States in the amount of $2,231,934.81 US, which shall be apportioned among the State Mortgage Regulators as follows:

Alaska- $8,351.85 US; Arizona- $59,722.82 US; California- $566,584.48 US; Connecticut- $50,639.43 US; Georgia-$120,075.59 US; Hawaii- $13,269.48 US; Idaho­ $14,143.28 US; Illinois- $82,543.08 US; Indiana- $32,513.28 US; Iowa- $15,301.56 US; Kentucky- $24,750.73 US; Louisiana- $40,905.77 US; Maryland- $94,512.03 US; Massachusetts- $118,531.21 US; Mississippi- $17,536.85 US; Missouri- $31,233.07 US; Montana- $8,412.81 US; Nebraska- $10,729.38 US; New Jersey- $173,946.03 US; New Mexico- $19,264.12 US; North Carolina- $107,375.09 US; North Dakota- $3,759.35 US; Ohio- $71,813.70 US; Oregon- $41,495.07 US; Pennsylvania­ $129,362.20 US; South Carolina- $34,017.02 US; South Dakota- $4,003.20 US; Tennessee- $50,700.39 US; Vermont- $5,953.99 US; Virginia- $139,969.65 US; Washington- $71,041.51 US; West Virginia- $14,102.63 US; Wisconsin- $35,906.85 US; Wyoming- $4,470.58 US; and the District of Columbia- $14,996.75 US.

16. The settlement payments described in paragraphs 14 and 15 of this Agreement shall be made as follows:

a. The payments described in paragraph 15 shall be made in equal semi-annual installments over a period of two years m1til the amount due each Participating State is fully paid. The first payment to each Participating State shall be made within ten days after execution of the Agreement, and the second payment shall be made six months after the execution of this Agreement. Additional semi-annual installment payments shall be made twelve months, eighteen months and twenty-four months after the execution of this Agreement.

b. The payments will be made in accordance with the payment instructions provided by each of the Participating States.

c. Amerisave and each Participate State acknowledge and agree that the allocation of the aggregate settlement payment described in paragraphs 14 and 15 of this Agreement is appropriate and that the total aggregate payments made to the Participating States under this Agreement shall not exceed $2,300,000 inclusive of investigative costs.

17. Amerisave acknowledges that any surety bond(s) that it may maintain in each of the Participating States as a condition to maintaining Amerisave's mortgage license has been and continues to be a surety bond for payment of obligations of the type provided for in this Agreement. In the event that Amerisave fails to submit any payment(s) set forth in this Agreement, in the amounts specified herein and iii accordance with the applicable deadlines, Amerisave agrees that it will not object to the State Mortgage Regulators submitting a claim(s), nor attempt to defend or defeat such authorized claim(s), for any unpaid amount(s) against said surety bond(s).

GENERAL PROVISIONS

18. Effectiveness. This Agreement shall become effective immediately upon the date it is fully executed by all of the State Mortgage Regulators ("Effective Date").

19. Consent. Amerisave hereby knowingly, willingly, voluntarily and irrevocably consents to the execution of this Agreement (without any admission of liability) pursuant to the authority of the State Mortgage Regulators in each Participating State and agrees that it understands all of the terms and conditions contained herein. Amerisave, by voluntarily entering into this Agreement, waives any right to a hearing or appeal concerning the terms, conditions and/or payments set forth in this Agreement.

20. Public Record. The provisions of this Agreement shall become public upon the Effective Date of this Agreement.

21. Entire Agreement. This Agreement contains the whole agreement between the Parties. There are no other terms, obligations, covenants, representations, statements, or conditions, of any kind whatsoever, concerning this Agreement.

22. Binding Nature. The terms of this Agreement shall be legally binding upon each State Mortgage Regulator and Amerisave's officers, owners, directors, employees, heirs, successors and assigns. The provisions of this Agreement shall remain effective and enforceable except to the extent that, and until such time as: (a) any provision of this Agreement shall have been modified, terminated, suspended, or set aside, in writing by mutual agreement of the State Mortgage Regulators collectively and Amerisave, or (b) there is a substantial change in federal or state law that would make further compliance with this Agreement unnecessary or unreasonable, in that Amerisave would be subject to requirements or prohibitions that would not apply to other mortgage lenders.

23. Standing and Choice of Law. Each State Mortgage Regulator has standing to enforce this agreement in the courts or administrative hearing process of the State Mortgage Regulator's home state. In the event of any disagreement between any State Mortgage Regulator and Amerisave regarding the enforceability or interpretation of this agreement or any Party's compliance therewith, the courts or administrative hearing process of the state of the State Mortgage Regulator shall have exclusive jurisdiction over the dispute, and the substantive and procedural laws of said State Mortgage Regulator's home state shall govern the interpretation,

construction and enforceability of this agreement.

24. Counsel. This Agreement is entered into by the Parties upon full opportunity for

legal advice from legal counsel.

25. Notices. Any notice or other communication that may or must be given by any of the Parties under this Agreement shall be in writing and shall be delivered by U.S. Mail, with a secondary form of delivery by e-mail (where possible), fax or prepaid overnight courier to:

For notices to Amerisave:

Carol Poupart

President

Amerisave Mortgage Corporation One Capital City Plaza

3350 Peachtree Road 10th Floor

Atlanta, GA 30326

Fax: (678) 500-7554

E-mail: cpoupart@amerisave.com

 

With a copy to:

Steven M. Kaplan, Esq. K&L Gates LLP

1601 K Street, N.W.

Washington, D.C. 20006-1600

Fax: (202) 778-9100

E-mail: steven.kaplan@klgates.com

 

For notices to the Participating States and/or State Mortgage Regulators:

Linda Carroll, Esq.

Deputy Chief Counsel

Pennsylvania Department of Banking and Securities Office of Chief Counsel

17 N. Second Street, Suite 1300

Harrisburg, PA 17101

Fax: (717) 783-8427

E-mail: licarroll@pa.gov

 

With a copy to:

Steven C. Shennan, Esq.

Financial Legal Examiner Supervisor Washington Department of Financial Institutions Division of Consumer Services

Enforcement Unit

P.O. Box 41200

Olympia, WA 98504

Fax: 360-664-2258

E-mail: Steven.Sherman@dfi.wa.gov

 

Notices given to Linda Carroll and Steven Shennan as indicated above shall be effective notice as to all of the Participating States and/or State Mortgage Regulators.

26. Privilege. None of the Parties hereto waives or intends to waive any applicable attorney-client, work product privilege, confidentiality, or any other protection applicable to any negotiations, statements, production of records, information or proceedings relative to this Agreement. This provision shall survive termination of this Agreement.

27. Limited Release. This Agreement is the complete document representing the resolution of any and all disputes between the Parties concerning all mortgage loan activities within the scope of the Multi-State Examination of Amerisave and/or the State Mortgage Regulators' follow-up investigation of the activities of Amerisave unlicensed employees and unlicensed branch locations. Neither Amerisave nor any of its owners, directors, officers, employees, successors or assigns will be subject to any related examination or enforcement claims or actions by the State Mortgage Regulators concerning any mortgage loan activities within the scope of the Multi-State Examination or the State Mortgage Regulators' follow-up investigation that occurred prior to the Effective Date of this Agreement. The State Mortgage Regulators reserve all of their rights, duties, and authority to enforce all statutes, rules and regulations under their jurisdictions against Amerisave regarding any mortgage loan activities outside the scope of this Agreement, the Multi-State Examination or the State Mortgage Regulators' follow-up investigation or that occurred after the Effective Date of this Agreement.

28. Other Enforcement Action.

a. Notwithstanding any other relief to the contrary, if Amerisave fails to comply with any of the terms and conditions set forth above, the State Mortgage Regulators may pursue any action allowed by law concerning such failure, including, but not limited to, revocation of any license of Amerisave, imposition of any fine against Amerisave, or any other remedy allowed by law. Further, the parties acknowledge and agree that any such failure by Amerisave to comply with this Agreement with respect to a particular State shall be treated as a violation of an order of the State Mortgage Regulator of such State and may be enforced as such.

b. Amerisave acknowledges and agrees that this Agreement is only binding on the State Mortgage Regulators and not any other local, state or federal agency, department or office regarding matters within this Agreement.

29. Authorization. The persons below are authorized to execute this Agreement and to legally bind the Parties on behalf of whom they execute this Agreement.

30. Counterparts. This Agreement may be executed in separate counterparts, by facsimile or by PDF. A copy of the signed Agreement will be given the same effect as an originally signed Agreement.

31. Titles. The titles used to identify the paragraphs of this Agreement are for the convenience of reference only and do not control the interpretation of this Agreement.

WHEREFORE, in consideration of the foregoing, including the recital paragraphs, the State Mortgage Regulators and Amerisave, intending to be legally bound, do hereby execute this Agreement.

Ocwen Financial Corp. and Ocwen Loan Servicing, LLC.

Order
Thursday, December 19, 2013
Docket No. 13-058-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/13-058-B_20150312093244.pdf

DOCKET NO. 13-058-B

IN RE: OCWEN FINANCIAL CORPORATION and OCWEN LOAN SERVICING, LLC,; Respondents.

 

SETTLEMENT AGREEMENT AND CONSENT ORDER OCWEN FINANCIAL CORPORATION AND OCWEN LOAN SERVICING, LLC

WHEREAS, Ocwen Financial Corporation is a publicly traded Florida corporation headquartered in Atlanta, Georgia and Ocwen Loan Servicing, LLC is a limited liability company and wholly owned subsidiary servicing company of Ocwen Financial Corporation located in Palm Beach, Florida (collectively, "Ocwen").

WHEREAS, on or about September 1, 2011, Ocwen acquired Litton Loan Servicing, LP ("Litton"), a servicer of residential mortgages and a Delaware limited partnership.

WHEREAS, on or about December 27, 2012, Ocwen acquired Homeward Residential Holdings, Inc., including its subsidiary Homeward Residential, Inc. (together, "Homeward"), which previously operated under the name American Home Mortgage Servicing, Inc., a servicer of residential mortgages and a Delaware corporation.

WHEREAS, the Alabama State Banking Department, Alaska Division of Banking and Securities, Arizona Department of Financial Institutions, Arkansas Securities Department, California Department of Business Oversight, Connecticut Department of Banking, Delaware Office of the State Bank Commissioner, District of Columbia Department of Insurance, Securities and Banking, Florida Office of Financial Regulation, Georgia Department of Banking and Finance, Idaho Department of Finance, Illinois Department of Financial and Professional Regulation, Indiana Department of Financial Institutions, Iowa Division of Banking, Kansas Office of the State Bank Commissioner, Kentucky Department of Financial Institutions, Louisiana Office of Financial Institutions, Maryland Office of Financial Regulation, Massachusetts Division of Banks, Michigan Office of Financial and Insurance Regulation, Minnesota Department of Commerce, Mississippi Department of Banking and Consumer Finance, Missouri Division of Finance, Montana Division of Banking and Financial Institutions, Nebraska Department of Banking and Finance, Nevada Department of Business and Industry, New Hampshire State Banking Department, New Jersey Department of Banking and Insurance, New Mexico Financial Institutions Division, North Carolina Office of the Commissioner of Banks, North Dakota Department of Financial Institutions, Ohio Division of Financial Institutions, Oregon Division of Finance and Corporate Securities, Rhode Island Department of Business Regulation, South Carolina Department of Consumer Affairs, South Dakota Division of Banking, Tennessee Department of Financial Institutions, Texas Department of Savings and Mortgage Lending, Utah Department of Financial Institutions, Vermont Department of Financial Institutions, Virginia Bureau of Financial Institutions, Washington Department of Financial Institutions, West Virginia Division of Financial Institutions, Wisconsin Department of Financial Institutions, Wyoming Division of Banking, (hereinafter referred to as the "State Mortgage Regulators") are members of the Conference of State Bank Supervisors ("CSBS") and/or American Association of Residential Mortgage Regulators ("AARMR") and have agreed to address enforcement concerns with Ocwen in a coordinated manner, working through its Multi-State Mortgage Committee.

WHEREAS, the Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming (collectively, "Participating States") have agreed, through their respective regulatory agencies to negotiate and enter into this Settlement Agreement and Consent Order (hereinafter referred to as the "Agreement"). For the purpose of this agreement, the law of the Participating States means the laws within the jurisdiction of the Participating States.

WHEREAS, the State Mortgage Regulators and Ocwen ("the Parties") enter into this Agreement with the understanding that the Consumer Financial Protection Bureau and Participating States Attorneys General, as plaintiffs, have entered a Consent Judgment against Ocwen in the United States District Court for the District of Columbia (the "Consent Judgment") with terms and conditions that are further outlined herein.

WHEREAS, Ocwen is licensed as a mortgage lender or servicer under the law of the Participating States.

WHEREAS, Litton and Homeward were licensed as mortgage lenders or servicers under the law of the Participating States prior to acquisition by Ocwen.

WHEREAS, on or about December 1, 2010, the State Mortgage Regulators commenced a Multi-State Examination (the "Multi-State Examination") of Ocwen covering the period of December 1, 2010 to October 24, 2011, in order to determine Ocwen's compliance with applicable Federal and State laws and regulations, financial condition, and control and supervision of the licensed servicing operation. The Multi-State Examination of Ocwen was conducted pursuant to their respective statutory authorities, and in accordance with the protocols established by the CSBS/AARMR Nationwide Cooperative Protocol for Mortgage Supervision and the Nationwide Cooperative Agreement for Mortgage Supervision dated January 15, 2008.

WHEREAS, on or about November 29, 2010, the State Mortgage Regulators commenced an examination of Litton covering the period of January 1, 2009 to October 31, 2010, in order to determine Litton's compliance with applicable Federal and State laws and regulations, financial condition, and control and supervision of the licensed servicing operation. The Multi-State Examination of Litton was conducted pursuant to their respective statutory authorities, and in accordance with the protocols established by the CSBS/AARMR Nationwide Cooperative Protocol for Mortgage Supervision and the Nationwide Cooperative Agreement for Mortgage Supervision dated January 15, 2008. In addition, the Florida Office of Financial Regulation conducted an independent concurrent examination of Litton covering the period of January 1, 2008 to December 31, 2010.

WHEREAS, on or about October 29, 2010, the State Mortgage Regulators commenced a multi-state examination of Homeward covering the period of January 1, 2009 to November 5, 2010 in order to determine Homeward's compliance with applicable Federal and State laws and regulations, financial condition, and control and supervision of the licensed servicing operation. The Multi-State Examination of Homeward was conducted pursuant to their respective statutory authorities, and in accordance with the protocols established by the CSBS/AARMR Nationwide Cooperative Protocol for Mortgage Supervision and the Nationwide Cooperative Agreement for Mortgage Supervision dated January 15, 2008. In addition, the Florida Office of Financial Regulation conducted an independent concurrent examination of Homeward covering the period of January 1, 2008 to December 31, 2010.

WHEREAS, reports of examination were issued pursuant to the Multi-State Examinations of Ocwen, Litton, and Homeward and the independent concurrent examinations of Litton and Homeward by the Florida Office of Financial Regulation (collectively, the "Reports of Examination"). Ocwen, Litton, and Homeward subsequently responded to the Reports of Examination as required by the State Mortgage Regulators.

WHEREAS, Ocwen acknowledges that it has full knowledge of its rights to notice and hearing pursuant to the law of the Participating States.

WHEREAS, Ocwen enters into this Agreement solely for the purpose of resolving disputes with the State Mortgage Regulators concerning their findings as communicated in the Reports of Examination in their entirety and without admitting any allegations or implications of fact, and without admitting any violations of applicable laws, regulations, or rules governing the conduct and operation of its mortgage servicing business. Ocwen acknowledges that the State Mortgage Regulators have and maintain jurisdiction over the underlying dispute and subsequent authority to fully resolve the matter.

WHEREAS, the intention of the State Mortgage Regulators in effecting this settlement is to remediate harms resulting from the alleged unlawful conduct of Ocwen, Litton, and Homeward identified in the Reports of Examination and related inquiries and investigations undertaken by the State Mortgage Regulators in the course of supervision.

EXAMINATION FINDINGS

WHEREAS, "Examination Findings" means Reports of Examination and related inquiries and investigations by the State Mortgage Regulators that identified practices that may otherwise violate the laws and regulations of the Participating States and related Federal law, including but not limited to the allegations and Releases that are the basis of the Consent Judgment and specifically including:

a. Lack of controls related to document execution, including evidence of robo-signing, unauthorized execution, assignment backdating , improper certification and notarization, chain of title irregularities, and other related practices affecting the integrity of documents relied upon in the foreclosure process;

b. Deficiencies in loss mitigation and loan modification processes , including but not limited to:

1. Failure to effectively communicate with borrowers regarding loss mitigation and other foreclosure avoidance alternatives;

2. Failure to account for documents submitted in tandem with application for loss mitigation assistance;

3. Lack of reasonable expedience in approving or denying loss mitigation applications;

4. Providing false or misleading reasons for denial of loan modifications; and

5. Failure to honor the terms loan modifications for transferred accounts and continued efforts to collect payments under the original note terms.

c. Lack of controls related to general borrower account management , including but not limited to:

1. Misapplication of borrower payments;

2. Inaccurate escrow accounting and statements; and

3. Assessment of unauthorized fees and charges.

d. Inadequate staffing and lack of internal controls related to customer service;

e. Deficiencies in control and oversight of third-party providers, including but not limited to, local foreclosure counsel;

f. Deficiencies in document maintenance processes, including but not limited to, failure to produce documents requested in tandem with examinations; and

g. Deficiencies in management control and supervision necessary to ensure compliance with applicable laws and regulations.

AGREEMENT OBLIGATIONS

1. Consent Judgment. This Agreement incorporates the Consent Judgment as entered in the United States District Court for the District of Columbia in the matter brought against Ocwen by the Consumer Financial Protection Bureau and Participating State Attorneys General, as plaintiffs. The Consent Judgment, including all of its exhibits, are fully integrated into this Agreement and appended hereto, and the Consent Judgment, along with its exhibits, set forth the terms and conditions applicable to Ocwen and the State Mortgage Regulators, apart from and supplemented by the terms and conditions in this Agreement. To the extent that the terms and conditions contained in this Agreement conflict with any provisions of the Consent Judgment or its exhibits, the terms and conditions of this Agreement shall control.

2. Servicing Standards, Cash Payments, and Other Consumer Relief Ocwen shall comply with the following servicing standards, payment obligations, and other consumer relief:

a. Servicing Standards. Ocwen shall comply with the Servicing Standards set forth in Exhibit A of the Consent Judgment.

b. Payments to Foreclosed Borrowers. Ocwen shall pay or cause to be paid the sum of $127.3 million (the "Borrower Payment Amount"). pursuant to the terms of the Consent Judgment and Exhibit B into an interest bearing escrow account to provide cash payments to borrowers whose homes were sold in a foreclosure sale between and including January I, 2009 and December 31, 2012 and who otherwise meet criteria set forth by the Monitoring Committee as set forth in the Consent Judgment, and to pay the reasonable costs and expenses of the Administrator, including taxes and fees for tax counsel, if any. This payment obligation shall be satisfied through payment under the Consent Judgment.

c. Other Consumer Relief. Ocwen shall provide $2 billion of relief pursuant to the Consent Judgment and Exhibit C to consumers who meet the eligibility criteria in the forms and amounts described under the Consent Judgment to remediate harm to consumers caused by the alleged unlawful conduct of. Ocwen, Litton, and Homeward.

MONITORING AND ENFORCEMENT

3. No Restriction on Existing Examination and Investigative Authority. This Agreement shall in no way preclude the State Mortgage Regulators from exercising their examination or investigative authority authorized under the law of the Participating States; however, retention of examination and investigative authority shall not be construed as affecting the scope of the release in Paragraph 8 of this Agreement. Retention of examination and investigative authority shall not be construed as affecting or limiting the terms or conditions set forth in Paragraph 5 of this Agreement for bringing an enforcement action for a violation of this Agreement or the Consent Judgment.

4. Sharing of Information and Cooperation. The State Mortgage Regulators may collectively or individually request and receive any information or documents in the possession of the Administration and Monitoring Committee (the "Monitoring Committee") established under the Consent Judgment subject to the procedural safeguards for documents designated as "CONFIDENTIAL" as set forth in Paragraph F of Exhibit D. This Agreement shall not limit Ocwen's obligations, as a licensee of the State Mortgage Regulators, to cooperate with any examination or investigation, including but not limited to, any obligation to timely provide requested information or documents to the State Mortgage Regulators upon request.

5. Reserved Enforcement Authority. Any failure to comply with the terms and conditions of this Agreement shall be treated as a violation of an Order of the State Mortgage Regulators and may be enforced as such pursuant to the laws of the Participating States subject to the terms and conditions set forth in this paragraph. The State Mortgage Regulators, collectively or individually, may take any administrative enforcement action authorized under the law of the Participating States. In the course of any such action, the State Mortgage Regulators may admit into evidence Monitor Report(s) and Quarterly Report(s). Such admissibility shall not prejudice Ocwen's right and ability to challenge the findings and/or the statements in the Monitor Report as flawed, lacking in probative value or otherwise. The Monitor Report with respect to a particular Potential Violation shall not be admissible or used for any purpose if Ocwen cures the Potential Violation pursuant to Section E of Exhibit D of the Consent Judgment. In addition, unless immediate action is necessary in order to prevent irreparable and immediate harm, prior to commencing any action the State Mortgage Regulators shall provide notice to the Monitoring Committee of its intent to bring an action as set forth in paragraph I(2) of Exhibit D of the Consent Judgment. As set forth in Exhibit D, upon notice, the members of the Monitoring Committee shall have no more than 21 days to determine whether to bring an enforcement action. If the members of the Monitoring Committee decline to bring an enforcement action, the State Mortgage Regulator must wait 21 additional days after such a determination by the members of the Monitoring Committee before commencing an enforcement action. Subject to the notification requirements set forth above, the State Mortgage Regulators, as licensing authority for Ocwen, may pursue violations of this Agreement independently of the Consumer Financial Protection Bureau and Participating State Attorneys General, plaintiffs to the Consent Judgment. In the event of an action to enforce the obligations of Ocwen and to seek remedies for an uncured Potential Violation for which Ocwen's time to cure has expired, the State Mortgage Regulators sole relief available in such an action will be the forms of relief set forth in Paragraph I(3) of Exhibit D to the Consent Judgment. The State Mortgage Regulators shall not initiate an enforcement action if barred by the release in Paragraph 8 of this Agreement. In the event a Potential Violation, as defined in Exhibit D to the Consent Judgment, is cured as provided in Paragraph E of Exhibit D, then no State Mortgage Regulator shall have any remedy under this Agreement or the Consent Judgment (other than the remedies in Paragraph E(5) of Exhibit D) with respect to such Potential Violation.

GENERAL PROVISIONS

6. Consent. Ocwen hereby knowingly, willingly, voluntarily, and irrevocably consents to the execution of this Agreement pursuant to the authority of the State Mortgage Regulators and agrees that it understands all of the terms and conditions contained herein. By voluntarily entering into this Agreement, Ocwen waives any right to administrative hearing, administrative review of a hearing, or appeal concerning the terms, conditions, and related obligations set forth in this Agreement.

7. Effectiveness. This Agreement shall become effective upon entry of the Consent Judgment and execution of by all of the named State Mortgage Regulators (the "Effective Date").

8. Release. Upon payment of the Borrower .Payment Amount, the State Mortgage Regulators shall individually and collectively release and forever discharge Ocwen, Litton, and Homeward from any administrative enforcement actions pertaining to or relating to the practices identified herein as Examination Findings that occurred between January 1, 2009 and December 31, 2012 (the "Release Period"). This release shall not otherwise preclude or impair the State Mortgage Regulators from taking enforcement action for any other violations of law not released herein, even if such other violations fall within the Release Period

9. Related Parties. The Release set forth under Paragraph 8 shall extend to all parties liable for the Examination Findings of Ocwen, Litton, and Homeward, which are the basis of this Agreement, which parties are otherwise subject to the jurisdiction of the State Mortgage Regulators, exclusively in their capacity as mortgage licensing authorities, for any violation under the laws or regulations of the Participating States and related Federal law arising from Examination Findings.

10. Fees Assessed to Consumers Not Subject to Release. Any fee assessed to a consumer by Ocwen, Litton, or Homeward, which is later determined to have been specifically prohibited by the laws of the Participating States remains unauthorized and is not otherwise affected by the terms of the Release as set forth under Paragraph 8. As such, claims against Ocwen for reimbursement to mortgage borrowers are not released by this Agreement. Nothing in this Agreement, however, shall require the reimbursement of fees duplicative of any prior voluntary or involuntary payment to the affected borrower, whether directly or indirectly, from any governmental program or other source.

11. Standing and Choice of Law. Each State Mortgage Regulator has standing to enforce this Agreement in the judicial or administrative process otherwise authorized under the Laws of the Participating State. Upon entry, this Agreement shall be deemed a final order of the State Mortgage Regulators unless adoption of a subsequent order is necessary under the laws of the Participating States. In the event of any disagreement between any State Mortgage Regulator and Ocwen regarding the enforceability or interpretation of this agreement and compliance therewith, the courts or administrative agency authorized under the laws of the Participating State shall have exclusive jurisdiction over the dispute, and the laws of the Participating State shall govern the interpretation, construction, and enforceability of this Agreement.

12. Adoption of Subsequent Orders to Incorporate Terms. Ocwen consents to the issuance by each State Mortgage Regulator, if deemed necessary under the law of the Participating States by the State Mortgage Regulator, of a separate administrative order to adopt and incorporate the terms and conditions of this Agreement. Ocwen hereby waives review and approval of any such subsequent orders prior to entry provided the subsequent order does not amend, alter, or otherwise change the terms of the Agreement. In the event a subsequent order amends, alters, or otherwise changes the terms of the Agreement, the terms of the Agreement as set forth herein will control.

13.Attorney's Fees. Ocwen waives and shall not assert any claim for fees, costs or expenses against the State Mortgage Regulators, or any of their agents or employees, related in any way to this enforcement matter or the Consent Judgment or Settlement Agreement and Consent Order, whether arising under common law or under the terms of any statute; for these purposes, the Parties agree that neither Ocwen nor the State Mortgage Regulators are the prevailing party in this action because the Parties have reached a good faith settlement.

WHEREFORE, in consideration of the foregoing, including the recital paragraphs, the State Mortgage Regulators and Ocwen intending to be legally bound do hereby execute this Agreement.

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