| * * * * * * * * * * * * * * * * * * * * * * * * IN THE MATTER OF: VILLAGE MORTGAGE COMPANY | * * * * * * * * * * | CONSENT ORDER |
WHEREAS, 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”;
WHEREAS, Village Mortgage is a Connecticut corporation that is currently licensed as a mortgage lender under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes;
WHEREAS, on November 10, 2014, the Commissioner, through the Consumer Credit Division (“Division”) of the Department of Banking (“Department”), commenced an examination of Village Mortgage pursuant to Section 36a-17 of the Connecticut General Statutes, as amended by Public Acts 14-7 and 14-89;
WHEREAS, as a result of such examination, the Commissioner alleges that, on October 21, 2014, Village Mortgage caused funds received from mortgagors, intended to be held in escrow for the payment of mortgagors’ taxes and insurance premiums, to be used to pay down Village Mortgage’s outstanding operating line of credit. Such activity forms a basis to suspend, revoke or refuse to renew Village Mortgage’s mortgage lender license pursuant to Sections 36a-494(a)(1) and 36a-51(a) of the Connecticut General Statutes, issue an order to cease and desist pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes;
WHEREAS, the Commissioner also alleges that, on November 4, 5 and 10, 2014, Village Mortgage caused funds received from mortgagors, intended to be held in escrow for the payment of mortgagors’ taxes and insurance premiums and the payment of mortgage principal and interest to third-party mortgagees, to replace monies transferred from the mortgagors’ taxes and insurance premium escrow account on October 21, 2014. Such activity forms a basis to suspend, revoke or refuse to renew Village Mortgage’s mortgage lender license pursuant to Sections 36a-494(a)(1) and 36a-51(a) of the Connecticut General Statutes, issue an order to cease and desist pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty pursuant to Sections 36a-494(b) and 36a-50(a) of the Connecticut General Statutes;
WHEREAS, Village Mortgage has provided evidence that the sum of monies held in its non-escrow operating accounts on the dates of October 21 and November 4, 5 and 10, 2014, exceeded the amount of monies transferred on each of such dates;
WHEREAS, the Commissioner believes that such allegations would support initiation of proceedings against Village Mortgage, which proceedings would constitute a “contested case” within the meaning of Section 4-166(4) of the Connecticut General Statutes;
WHEREAS, Section 4-177(c) of the Connecticut General Statutes and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;
WHEREAS, the Commissioner and Village Mortgage now desire to resolve the allegations set forth herein;
WHEREAS, Village Mortgage acknowledges that this Consent Order is a public record and is a reportable event for purposes of the regulatory disclosure questions on the Nationwide Mortgage Licensing System and Registry (“NMLS”), as applicable;
WHEREAS, Village Mortgage voluntarily agrees to consent to the entry of the sanctions imposed below solely for the purpose of obviating the need for formal administrative proceedings concerning the allegations set forth herein;
AND WHEREAS, Village Mortgage, through its execution of this Consent Order, voluntarily agrees to waive its procedural rights, including a right to notice and an opportunity for hearing as it pertains to the allegations set forth herein and voluntarily waives its right to seek judicial review or otherwise challenge or contest the validity of this Consent Order.
CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Village Mortgage, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing the following sanctions:
| 1. | No later than the date this Consent Order is executed by Village Mortgage, Village Mortgage shall remit to the Department of Banking by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, the sum of Thirty-five Thousand Dollars ($35,000) as a civil penalty; |
| 2. | For a period of three (3) years commencing on the date this Consent Order is executed by Village Mortgage, Village Mortgage shall retain an independent certified public accountant acceptable to the Director of the Consumer Credit Division (“Division Director”), who shall: (a) audit all bank accounts that contain monies held in escrow for others, including but not limited to, escrow accounts for the payment of mortgagors’ taxes and insurance premiums and the payment of mortgage principal and interest to third-party mortgagees, and (b) issue, no less than quarterly, audit reports opining on Village Mortgage’s compliance with generally accepted accounting principles, industry standards and its contractual obligations concerning the monies in such accounts. Village Mortgage shall ensure that a copy of each audit report is provided directly from the independent certified public accountant to the Division Director immediately after issuance; |
| 3. | For a period of three (3) years commencing on the date this Consent Order is executed by Village Mortgage, Village Mortgage shall retain a compliance officer sufficiently experienced in mortgage regulatory and compliance issues and acceptable to the Division Director, who shall oversee Village Mortgage’s compliance with federal and state laws and regulations applicable to its mortgage originating, lending and servicing operations in Connecticut; |
| 4. | No later than ninety (90) days after the date this Consent Order is executed by Village Mortgage, Village Mortgage shall: (a) develop and implement internal control policies and procedures concerning its bank accounts containing monies held in escrow for others to ensure that such monies are utilized only for the purposes for which they have been collected, and (b) provide evidence, acceptable to the Division Director, that such policies and procedures have been communicated to staff and will be effectively monitored for compliance; and |
| 5. | No later than ninety (90) days after the date this Consent Order is executed by Village Mortgage, Village Mortgage shall provide evidence, acceptable to the Division Director, that Village has implemented a liquidity risk and cash management plan to ensure its ability to meet future cash flow obligations for no less than three (3) years in light of anticipated operational growth. |
CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Sanctions set forth above be and are hereby entered; |
| 2. | Upon issuance of this Consent Order by the Commissioner, this matter will be resolved and the Commissioner will not take any future enforcement action against Village Mortgage based upon the allegations set forth herein; provided that issuance of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against Village Mortgage based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed or if any representation made by Village Mortgage and reflected herein is subsequently discovered to be untrue; |
| 3. | So long as this Consent Order is promptly disclosed by Village Mortgage and its control persons on NMLS, as applicable, nothing in the issuance of this Consent Order shall adversely affect the ability of Village Mortgage to apply for or obtain licenses or renewal licenses under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes, provided all applicable legal requirements for such license are satisfied; and |
| 4. | This Consent Order shall become final when issued. |
Issued at Hartford, Connecticut
this 24th day of March 2015. _______/s/_________
Jorge L. Perez
Banking Commissioner Designate
I, Laurel A. Caliendo, state on behalf of Village Mortgage Company, that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Village Mortgage Company; that Village Mortgage Company agrees freely and without threat or coercion of any kind to comply with the sanctions entered and terms and conditions ordered herein; and that Village Mortgage Company voluntarily agrees to enter into this Consent Order, expressly waiving the procedural rights set forth herein as to the matters described herein.
By: ________/s/___________
Name: Laurel A Caliendo
Title: President & CEO
Village Mortgage Company
State of: Connecticut
County of: Hartford
On this the 6th day of March 2015, before me, Lillian Neale, the undersigned officer, personally appeared Laurel A. Caliendo who acknowledged herself to be the President & CEO of Village Mortgage Company, a corporation, and that she as such President & CEO, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by herself as President & CEO.
In witness whereof I hereunto set my hand.
_________/s/_________
Notary Public
Date Commission Expires: May 31, 2018