State of Connecticut Department of Banking

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IN THE MATTER OF:

PRYSMA LENDING GROUP, LLC
NMLS # 2250

       ("Prysma Lending Group")
   
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CONSENT ORDER        

WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Part I of Chapter 668, Sections 36a-485 to 36a-534b, inclusive, of the Connecticut General Statutes,
“Mortgage Lenders, Correspondent Lenders, Brokers and Loan Originators”;

WHEREAS, Prysma Lending Group is a domestic limited liability company that is currently licensed as a mortgage correspondent lender under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes, with its main office located at 18 Padanaram Road, Danbury, Connecticut;

WHEREAS, on November 8, 2017, Prysma Lending Group applied for licensure as a mortgage lender in Connecticut, which application is currently pending;

WHEREAS, on November 28, 2017, Prysma Lending Group requested surrender of its mortgage correspondent lender license in Connecticut, which request is currently pending;

WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Division”), conducted a routine examination in April 2017 (“2017 Examination”) pursuant to Sections 36a-17 and 36a-498f of the Connecticut General Statutes into the activities of Prysma Lending Group to determine if it had violated, was violating or was about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner;

WHEREAS, as a result of the Division’s 2017 Examination, the Commissioner alleges that Prysma Lending Group engaged the services of a mortgage loan originator who was licensed by the Commissioner but not sponsored by Prysma Lending Group, in violation of Section 36a-486(b)(1) of the Connecticut General Statutes.  Specifically, the Commissioner alleges that Prysma Lending Group submitted a request for the Commissioner’s approval of such sponsorship but before the Commissioner acted upon that request, the mortgage loan originator engaged in origination activity at Prysma Lending Group by generating disclosures for a mortgage loan application which transferred to Prysma Lending Group when Prysma Lending Group hired the mortgage loan originator;

WHEREAS, as a result solely of the foregoing paragraph, the Commissioner alleges that Prysma Lending Group caused one (1) person to conduct business as a mortgage loan originator without valid sponsorship, in violation of Section 36a-498e(6) of the Connecticut General Statutes;

WHEREAS, as a result of the 2017 Examination, Prysma Lending Group represents to the Commissioner that it has implemented more comprehensive controls to mitigate the possibility of unsponsored loan origination activity, including, specifically, user protocols that block unsponsored mortgage loan originator access to Prysma Lending Group’s Loan Operating System, which access cannot be granted until the Commissioner approves the request for sponsorship of such mortgage loan originator;

WHEREAS, the Commissioner further alleges that Prysma Lending Group, through its loan processing team, improperly altered loan file documents, thereby:  (1) directly or indirectly employing a scheme, device or artifice to mislead borrowers, lenders, or investors, in violation of Section 36a-498e(1) of the Connecticut General Statutes; (2) engaging in an unfair or deceptive practice, in violation of Section 36a-498e(2) of the Connecticut General Statutes; or (3) engaging in an act, practice, or course of business which operates or would operate as a deceit upon any person, in violation of Section 36a-53b(3) of the Connecticut General Statutes;

WHEREAS, in response to the preceding allegations, Prysma Lending Group represents to the Commissioner that it:

a) promptly terminated the employment of the loan processor associated with the improperly altered loan file documents;
b) convened an emergency compliance meeting with all management and staff to discuss the 2017 Examination;
c) retrained staff on its existing policy of “zero tolerance” for mortgage fraud, and required employees to read and affirm their understanding of the policy, by signing and dating a copy of the restated policy, including that Prysma Lending Group forbids alteration or changes to documents signed by mortgage applicants, for any reason whatsoever, and the consequences of violation of said policy including, but not limited to, termination of employment;
d) enhanced its internal controls and ongoing monitoring by installing state-of-the-art, closed-circuit surveillance systems (1) for improved oversight of business operations, including employees and third-party vendors; (2) as a management resource to help verify compliance with state and federal consumer financial laws; and (3) to facilitate management’s ability to take prompt action to address fully any problems identified through the monitoring process, including terminating employee or vendor relationships where appropriate; and
e) established an ongoing quarterly compliance training program, including annual, mandatory business ethics education for all Prysma Lending Group employees above and beyond what is required by mortgage loan originator licensure requirements.

WHEREAS, the Commissioner alleges that Prysma lacked adequate supervision over its employees which allowed the foregoing misconduct to occur;

WHEREAS, the Commissioner maintains that the foregoing allegations, if any were found to be true, would render the Commissioner unable to continue to find that Prysma Lending Group demonstrates the character and general fitness such as to command the confidence of the community and to warrant a determination that it will operate honestly, fairly and efficiently, within the purposes of Sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b of the Connecticut General Statutes;

WHEREAS, such allegations would support initiation of enforcement proceedings against Prysma Lending Group, including, without limitation, proceedings to issue:  (1) a temporary order to cease and desist, pursuant to Section 36a-52(b) of the Connecticut General Statutes; (2) a notice of intent to revoke or refuse to renew mortgage correspondent lender license, pursuant to Sections 36a-494(a)(1), 36a-494(a)(1)(B) and 36a-494(a)(1)(C), as amended by Public Acts 17-38 and 17-236, and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes, as amended by Public Act 17-233; (3) a notice of intent to issue an order to cease and desist, pursuant to subdivisions (1), (2) and (3) of Section 36a-494(b) of the Connecticut General Statutes, as amended by Public Act 17-38, and Section 36a-52(a) of the Connecticut General Statutes, as amended by Public Act 17-233; and (4) a notice of intent to impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation, pursuant to subdivisions (1), (2) and (3) of Section 36a-494(b) of the Connecticut General Statutes, as amended, and Section 36a-50(a) of the Connecticut General Statutes, as amended by Public Act 17-233;

WHEREAS, Prysma Lending Group specifically assures the Commissioner that it is committed to ensuring full compliance with all applicable Connecticut and federal financial consumer protection laws and regulations, including specifically Part I of Chapter 668, Sections 36a-485 to 36a-534b, inclusive, of the Connecticut General Statutes, and that as a result of the Division’s 2017 Examination it has taken significant measures to enhance its compliance policies and procedures, including those described above;

WHEREAS, initiation of enforcement proceedings against Prysma Lending Group 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, both the Commissioner and Prysma Lending Group acknowledge the possible consequences of formal administrative proceedings, and Prysma Lending Group, without admitting any of the allegations set forth herein, voluntarily agrees to consent to the entry of the sanctions imposed below for the purpose of obviating the need for formal administrative proceedings concerning the allegations set forth herein;

WHEREAS, the Commissioner and Prysma Lending Group desire to resolve the matters set forth herein;

WHEREAS, Prysma Lending Group acknowledges that this Consent Order is a public record and is a reportable event for purposes of the regulatory disclosure questions on NMLS, as applicable;

WHEREAS, Prysma Lending Group specifically assures the Commissioner that the violations alleged herein shall not occur in the future;

WHEREAS, Prysma Lending Group agrees to fully cooperate in any other future examination, investigation or enforcement action by the Commissioner, including, without limitation, any directive of the Commissioner to control access to any documents and records of Prysma Lending Group in accordance with Section 36a-498f of the Connecticut General Statutes;

AND WHEREAS, Prysma Lending Group, through its execution of this Consent Order, voluntarily agrees to waive its procedural rights, including a right to a notice and an opportunity for a 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, Prysma Lending Group, through its execution of this Consent Order, consents to the Commissioner’s entry of this Consent Order imposing the following sanctions:

1. Prysma Lending Group shall remit to the Department of Banking by wire transfer, cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, the sum of Seventy-Five Thousand Dollars ($75,000) as a civil penalty in two equal installments as follows:  (a) the first payment of Thirty-Seven Thousand Five Hundred Dollars ($37,500) shall be remitted no later than the date this Consent Order is executed by Prysma Lending Group; and (b) a second and final payment of Thirty-Seven Thousand Five Hundred Dollars ($37,500) shall be remitted no later than January 31, 2018;
2. Prysma Lending Group shall not authorize unsponsored mortgage loan originators to conduct mortgage loan origination activity where the Commissioner has not approved a sponsorship request for such mortgage loan originator’s license, in violation of Section 36a-486(b)(1) of the Connecticut General Statutes, as amended by Public Act 17-38;
3. Prysma Lending Group shall not cause or permit any person to conduct any business as a mortgage loan originator without valid sponsorship, in violation of Section 36a-498e(6) of the Connecticut General Statutes, as amended by Public Act 17-38;
4. Prysma Lending Group shall not:  (1) directly or indirectly employ a scheme, device or artifice to mislead borrowers, lenders, or investors, in violation of Section 36a-498e(1) of the Connecticut General Statutes, as amended by Public Act 17-38; (2) engage in unfair or deceptive practices, in violation of Section 36a-498e(2) of the Connecticut General Statutes, as amended by Public Act 17-38; and (3) engage in any act, practice, or course of business which operates or would operate as a deceit upon any person, in violation of Section 36a-53b(3) of the Connecticut General Statutes;
5. No later than five (5) business days after this Consent Order is issued by the Commissioner, Prysma Lending Group shall distribute a copy of this Consent Order to each member and employee of Prysma Lending Group, and provide proof of such distribution to the Commissioner;
6. No later than fifteen (15) days after this Consent Order is issued by the Commissioner, Prysma Lending Group shall submit a copy of its existing “zero tolerance” policy forbidding alteration or changes to documents signed by mortgage applicants to the Commissioner for review.  Within five (5) business days of non-objection by the Commissioner, Prysma Lending Group shall redistribute the policy to all its members and employees and provide proof of such distribution to the Commissioner.
7.
No later than sixty (60) days after this Consent Order is issued by the Commissioner, Prysma Lending Group shall submit to the Commissioner for review and determination of non-objection a comprehensive compliance plan designed to ensure that Prysma Lending Group’s operations will comply with all applicable Connecticut and federal financial consumer protection laws and regulations and the terms of this Consent Order (“Compliance Plan”).  The Compliance Plan shall include, at a minimum:

a) detailed steps for addressing each action required by Prysma Lending Group in this Consent Order;
b) policies and procedures to ensure that the “zero tolerance” policy described in paragraph 6, above, is strictly adhered to;
c) the development and implementation of a Whistle Blower Policy encouraging the reporting of compliance violations, and safeguarding the rights of those persons, including, but not limited to, Prysma Lending Group’s employees or clients who report such violations;
d) a program establishing annual, mandatory business ethics education for all Prysma Lending Group employees above and beyond what is required by mortgage loan originator licensure requirements;
e) specific timeframes and deadlines for implementation of the steps described in subparagraphs (b) through (d), inclusive, of this paragraph.
8. The Commissioner shall have the discretion to make a determination of non-objection to the Compliance Plan or direct Prysma Lending Group to make revisions thereto.  If the Commissioner directs Prysma Lending Group to revise the Compliance Plan, Prysma Lending Group shall make the revisions and resubmit the Compliance Plan to the Commissioner within thirty (30) days of such direction, provided however, that should Prysma Lending Group fail to submit an acceptable Compliance Plan after the second direction from the Commissioner to revise such plan, the Commissioner may take administrative action against Prysma Lending Group, including, without limitation, proceedings to revoke or refuse to renew Prysma Lending Group’s mortgage correspondent lender license or mortgage lender license pursuant to Sections 36a-494 and 36a-51 of the Connecticut General Statutes;
9. After receiving notification that the Commissioner has made a determination of non-objection to the Compliance Plan, Prysma Lending Group must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Compliance Plan;
10. Prysma Lending Group, for a period of two (2) years, shall request additional services by its existing or new external, independent audit and compliance company, which services must at minimum include the review and assessment of a random sampling of twenty percent (20%) of Prysma Lending Group’s closed and funded Connecticut loans each quarter to assess Prysma Lending Group’s compliance with Part I of Chapter 668, Sections 36a-485 to 36a-534b, inclusive, of the Connecticut General Statutes, the Real Estate Settlement Procedures Act, codified at 12 U.S.C. § 2601 et seq., the Truth in Lending Act, codified at 15 U.S.C. § 1601 et seq., the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, codified at 12 U.S.C. § 5101 et seq., and the terms of this Consent Order.  Such auditor’s findings shall be reported to Prysma Lending Group in writing on or before the forty-fifth (45th) day after the end of each calendar quarter following the date this Consent Order is issued by the Commissioner.  No later than five (5) days after retaining such an external auditor or forty-five (45) days after this Consent Order is issued by the Commissioner, whichever is lesser, Prysma Lending Group shall forward to the Commissioner the engagement letter or contract between the external auditor and Prysma Lending Group.  After no less than four (4) of the quarterly reports required by this paragraph have been submitted to the Commissioner, as required by paragraph 11 below, Prysma Lending Group may request that the requirements for the remaining four (4) quarterly reports be reduced or otherwise amended by submitting a written application to the Commissioner setting forth the basis of the request.  The Commissioner shall review the request and in his sole discretion may grant, deny, or condition the relief sought.
11.
On or before the fiftieth (50th) day after the end of the first calendar quarter of 2018, and on or before the fiftieth (50th) day after the end of the seven (7) calendar quarters thereafter, Prysma Lending Group shall furnish written progress reports to the Commissioner, which shall address and include, at minimum, the following:
a) a description of the form, content, and manner of any actions taken to address each paragraph of this Consent Order and the results thereof;
b) any reports or findings prepared by the independent auditor required to be retained by Prysma Lending Group by operation of paragraph 10 above, and Prysma Lending Group’s anticipated response and action, with anticipated dates for doing so;
c) detailed organization charts for Prysma Lending Group, listing, at minimum, each employee and owner of Prysma Lending Group, their title, and the job descriptions for those titles; and
d) written findings prepared by Prysma Lending Group detailing management’s and staff members’ adherence to the policies, programs, and procedures adopted pursuant to this Consent Order and to applicable Connecticut and federal statutes, regulations, and rules, as well as a description of any operational changes implemented during such quarter which are intended to improve Prysma Lending Group’s compliance with those statutes, regulations, or rules.
12. The provisions of this Consent Order shall remain effective and enforceable as specifically set forth herein, except to the extent that if no time period is established, until such time as the Commissioner modifies, terminates, suspends, or sets aside any provision of this Consent Order in writing.
13. In the event of nonperformance or violation by Prysma Lending Group of any term or condition set forth in this Consent Order, including, without limitation, Prysma Lending Group’s obligation to submit quarterly progress reports or implement the Compliance Plan, as set forth above, the Commissioner shall issue to Prysma Lending Group a written notice of violation.  During the two (2) year period beginning on the date of issuance of this Consent Order in the event that the claimed violation remains uncured after the expiration of thirty (30) days from Prysma Lending Group’s receipt of said notice, Prysma Lending Group consents to the immediate entry and imposition of a civil penalty in the amount of One Hundred Thousand Dollars ($100,000), knowingly, willfully and voluntarily waiving its right to a notice, an administrative hearing, and all appeals in conjunction therewith.


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 Prysma Lending Group based upon the allegations contained herein; provided that issuance of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against Prysma Lending Group 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 Prysma Lending Group and reflected herein is subsequently discovered to be untrue.  Nothing in this Consent Order shall be construed as limiting the Commissioner’s ability to take enforcement action against Prysma Lending Group based upon:  (a) evidence of which the Division was unware on the date hereof relating to a violation of Part I of Chapter 668, Sections 36a-485 to 36a-534b, inclusive, of the Connecticut General Statutes or any statute or regulation under the jurisdiction of the Commissioner, or (b) evidence indicating that Prysma Lending Group withheld information from, or made any misstatement or omission to, the Commissioner in connection with this matter;
3. Prysma Lending Group shall not take any action or permit to be made any public statement, including in regulatory filings or otherwise, denying, directly or indirectly, any allegation referenced in this Consent Order or create the impression that this Consent Order is without factual basis;
4. Subject to the foregoing, upon issuance of this Consent Order by the Commissioner, and so long as this Consent Order is promptly disclosed by Prysma Lending Group and its control persons on NMLS, as applicable, nothing in the issuance of this Consent Order shall adversely affect the ability of Prysma Lending Group to apply for or obtain initial or renewal licenses under Part I of Chapter 668 or Part VII of Chapter 669 of the Connecticut General Statutes, provided that all legal requirements for such licenses are satisfied and the terms of this Consent Order are being performed by Prysma Lending Group; and
5. This Consent Order shall become final when issued.


Issued at Hartford, Connecticut
this 29th day of December 2017.            ______/s/__________
                                                       Jorge L. Perez
                                                       Banking Commissioner

I, Luiz Serva, state on behalf of Prysma Lending Group, LLC, 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 Prysma Lending Group, LLC; that Prysma Lending Group, LLC agrees freely and without threat or coercion of any kind to comply with the sanctions, terms and conditions, and provisions of this Consent Order; and that Prysma Lending Group, LLC 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:  Luiz Serva
                                                       Title:  CEO
                                                       Prysma Lending Group, LLC


State of:  Connecticut

County of:  Fairfield

On this the 28 day of December 2017, before me, Luciane Vieira, the undersigned officer, personally appeared Luiz Serva who acknowledged himself/herself to be the CEO of Prysma Lending Group, LLC, a member managed/manager managed limited liability company, and that as such Luiz Serva being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by herself/ himself as CEO of Prysma Lending Group, LLC.

In witness whereof I hereunto set my hand.


                                                     __________/s/___________
                                                     Notary Public  
                                                     Date Commission Expires:  June 30, 2021

Administrative Orders and Settlements