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IN THE MATTER OF:

TOTAL MORTGAGE SERVICES, LLC
NMLS # 2764

  ("Total Mortgage")

   
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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-534c, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Correspondent Lenders, Brokers and Loan Originators”;

WHEREAS, Total Mortgage is a domestic limited liability company that is currently licensed as a mortgage lender under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes, with its main office located at 185 Plains Road, 3rd Floor, Milford, Connecticut;

WHEREAS, on December 8, 2016, Total Mortgage requested renewal of its mortgage lender license for the 2017 licensing period with the Commissioner through the Nationwide Multistate Licensing System and Registry (“NMLS”);

WHEREAS, the Commissioner, through the Consumer Credit Division of the Department of Banking (“Division”), conducted a routine examination pursuant to Sections 36a-17 and 36a-498f of the Connecticut General Statutes into the activities of Total Mortgage 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 examination, the Commissioner alleges that Total Mortgage engaged the services of at least six (6) mortgage loan originators who were not licensed by the Commissioner, in violation of Section 36a-486(b)(1) of the Connecticut General Statutes;

WHEREAS, the Commissioner alleges that Total Mortgage assisted or aided and abetted at least six (6) persons in the conduct of business as mortgage loan originators without valid licenses, in violation of Section 36a-498e(6) of the Connecticut General Statutes;

WHEREAS, the Commissioner alleges that Total Mortgage employed a branch manager at its Branford branch office located at 1082 Main Street, Branford, Connecticut, who failed to meet the requirements established for such position in Section 36a-488 of the Connecticut General Statutes;

WHEREAS, the Commissioner and Total Mortgage settled a claim that Total Mortgage operated two unlicensed branches for a civil monetary penalty in 2006 by Settlement Agreement dated April 5, 2006;

WHEREAS, the Commissioner alleges that Total Mortgage engaged in the business of making residential mortgage loans in Connecticut from a branch office that was not licensed by the Commissioner, in violation of Section 36a-486(a) of the Connecticut General Statutes, and that was not related to the allegations in the 2006 Settlement Agreement;

WHEREAS, the Commissioner further alleges that Total Mortgage altered loan file documents, thereby:  (1) directly or indirectly employing a scheme, device or artifice to defraud or mislead borrowers or lenders or to defraud any person, 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; (3) employing a device, scheme or artifice to defraud, in violation of Section 36a-53b(1) of the Connecticut General Statutes; or (4) engaging in an act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in violation of Section 36a-53b(3) of the Connecticut General Statutes;

WHEREAS, the Commissioner further alleges that Total Mortgage lacked proper supervision over its employees, fostering a company culture which allowed the alleged conduct 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 Total Mortgage 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 Total Mortgage, 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 lender license, pursuant to Sections 36a-494(a)(1), 36a-494(a)(1)(B) and 36a-494(a)(1)(C), and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes; (3) a notice of intent to issue order to cease and desist, pursuant to subdivisions (1), (2) and (3) of Section 36a-494(b) and Section 36a-52(a) of the Connecticut General Statutes; and (4) a notice of intent to impose 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) and Section 36a-50(a) of the Connecticut General Statutes;

WHEREAS, in connection with the matters alleged above, Total Mortgage responded thoroughly and promptly to the Commissioner’s request for information and documentation and has assured 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-534c, inclusive, of the Connecticut General Statutes, and that as a result of the Division’s examination it has taken significant measures to enhance its compliance policies and procedures;

WHEREAS, Total Mortgage terminated the employment of certain employees who bear some responsibility for the conduct alleged above;

WHEREAS, initiation of such enforcement 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, both the Commissioner and Total Mortgage acknowledge the possible consequences of formal administrative proceedings, and Total Mortgage, 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 Total Mortgage desire to resolve the matters set forth herein;

WHEREAS, the Commissioner and Total Mortgage acknowledge that while nothing in this Consent Order constitutes a “finding” for any purpose, Total Mortgage 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, Total Mortgage specifically assures the Commissioner that the violations alleged herein shall not occur in the future;

WHEREAS, Total Mortgage agrees to fully cooperate in any other future examination, investigation, or enforcement action by the Commissioner involving persons not a party to this Consent Order, including providing testimony at any administrative or other legal proceeding;

AND WHEREAS, Total Mortgage, 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, Total Mortgage, through its execution of this Consent Order, consents to the Commissioner’s entry of this Consent Order imposing the following sanctions:

1. No later than the date this Consent Order is executed by Total Mortgage, it 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 Three Hundred Fifty Thousand Dollars ($350,000) as a civil penalty;
2. Total Mortgage shall not engage the services of persons acting as mortgage loan originators who are not licensed by the Commissioner, in violation of Section 36a-486(b)(1) of the Connecticut General Statutes;
3. Total Mortgage shall not assist or aid and abet persons in the conduct of business as a mortgage loan originator without a valid license, in violation of Section 36a-498e(6) of the Connecticut General Statutes;
4. Total Mortgage shall have, at its main office and each of its branch offices, qualified individuals and branch managers, respectively, who meet or exceed the statutory requirements set forth in Section 36a-488 of the Connecticut General Statutes;
5. Total Mortgage shall not engage in the business of making residential mortgage loans in Connecticut from any branch office that is not licensed, in violation of Section 36a-486(a) of the Connecticut General Statutes;
6. Total Mortgage shall not:  (1) directly or indirectly employ a scheme, device or artifice to defraud or mislead borrowers or lenders or to defraud any person, in violation of Section 36a-498e(1) of the Connecticut General Statutes; (2) engage in unfair or deceptive practices, in violation of Section 36a-498e(2) of the Connecticut General Statutes; (3) employ a device, scheme or artifice to defraud, in violation of Section 36a-53b(1) of the Connecticut General Statutes; and (4) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in violation of Section 36a-53b(3) of the Connecticut General Statutes;
7. No later than five (5) business days after this Consent Order is issued by the Commissioner, Total Mortgage shall distribute a copy of this Consent Order to each officer and employee of Total Mortgage, and provide proof of such distribution to the Commissioner;
8. No later than fifteen (15) days after this Consent Order is issued by the Commissioner, Total Mortgage shall create a “zero tolerance” policy forbidding alteration or changes to documents signed by mortgage applicants, which policy Total Mortgage shall submit to the Commissioner for review.  Within five (5) days of approval by the Commissioner, Total Mortgage shall distribute the policy to all its officers and employees and provide proof of such distribution to the Commissioner.
9. No later than sixty (60) days after this Consent Order is issued by the Commissioner, Total Mortgage shall submit to the Commissioner for review and determination of non-objection a comprehensive compliance plan designed to ensure that Total Mortgage’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 Total Mortgage in this Consent Order;
b)
policies and procedures to ensure that the “zero tolerance” policy created in paragraph 8, above, is strictly adhered to, including, but not limited to, policies to report any violations to the Chief Compliance Officer (as defined in paragraph 12, below) and policies to ensure that Total Mortgage’s Human Resources’ response to any violation is appropriate;
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, Total Mortgage employees or clients, who report such violations;
d)
a program establishing annual, mandatory business ethics education for all Total Mortgage employees above and beyond what is required by mortgage loan originator licensure requirements;
e)  an Internal Audit Program, which itself must include:
 
i. the designation of a current or new Total Mortgage employee as Total Mortgage’s internal auditor, who shall oversee the Internal Audit Program;
ii. an evaluation of the effectiveness of Total Mortgage’s (1) risk management policies and procedures and (2) governance processes;
iii. a detailed schedule that ensures that all areas of Total Mortgage’s operations are routinely internally audited;
iv. a reporting structure which directs the internal auditor’s findings directly to Total Mortgage’s ownership;
v. a formal process for Total Mortgage’s ownership to inform senior management of audit findings;
vi. a formal process for senior management to evaluate audit findings; and
vii.  
a formal process to resolve any internal audit findings, including processes to effectuate any required changes.
f)
a Risk Management Program, which must:
i.      identify risk at all levels of Total Mortgage’s operations;
ii.  measure identified risks as to their potential effects;
iii. establish procedures to monitor those risks; and 
iv.
 establish procedures to control those risks.
g) specific timeframes and deadlines for implementation of the steps described in subparagraphs (b) through (f), inclusive, of this paragraph.
10. The Commissioner shall have the discretion to make a determination of non-objection to the Compliance Plan or direct Total Mortgage to make revisions thereto.  If the Commissioner directs Total Mortgage to revise the Compliance Plan, Total Mortgage shall make the revisions and resubmit the Compliance Plan to the Commissioner within thirty (30) days of such direction;
11. After receiving notification that the Commissioner has made a determination of non-objection to the Compliance Plan, Total Mortgage must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Compliance Plan;
12. Within four (4) months after this Consent Order is issued by the Commissioner, Total Mortgage shall present a candidate for approval to the Commissioner that Total Mortgage intends to hire as its new Chief Compliance Officer (“CCO”).
a) 
The CCO shall report directly and only to Total Mortgage’s current chairman.  The CCO shall have the authority, responsibilities, and duties commonly understood for the position of a chief compliance officer and risk management officer for a mortgage lender company having the size and scope of business of that of Total Mortgage.  The CCO shall have the requisite background, experience, and skill set necessary to fulfill the duties of a chief compliance officer for a mortgage lender company having the size and scope of business similar to Total Mortgage.  The Commissioner shall have the discretion to make a determination of non-objection to Total Mortgage’s proposed CCO before Total Mortgage hires such candidate.  If the Commissioner directs Total Mortgage to propose an alternative CCO, Total Mortgage shall find and present such a candidate to the Commissioner within sixty (60) days from exercise of the Commissioner’s discretion.  If six (6) months have elapsed from the issuance of this Consent Order and Total Mortgage has not presented a CCO with the requisite background, experience and skill according to the Commissioner’s sole discretion, the Commissioner may take administrative action against Total Mortgage, including, without limitation, proceedings to revoke or refuse to renew Total Mortgage’s mortgage lender license pursuant to Sections 36a-494 and 36a-51 of the Connecticut General Statutes;
b)
If the Commissioner approves Total Mortgage’s candidate for a CCO but that candidate ceases to serve as CCO within the first three (3) years of the CCO’s employment, Total Mortgage will provide advance notice to the Commissioner that it intends to hire a new CCO.  The procedures for Total Mortgage proposing a replacement CCO within the first three (3) years of hiring the initial CCO shall be as set forth in subparagraph (a), above; and
c)  If at any time within the first three (3) years after a CCO is first hired the CCO position remains vacant for a period of one hundred twenty (120) days, the Commissioner may take administrative action against Total Mortgage, including, without limitation, proceedings to revoke or refuse to renew Total Mortgage’s mortgage lender license pursuant to Sections 36a-494 and 36a-51 of the Connecticut General Statutes.
13. In addition to designating or hiring an internal auditor in accordance with the Compliance Plan set forth above in paragraph 9 and hiring a CCO as set forth in paragraph 12 above, Total Mortgage shall, for a period of three (3) years, also retain the services of an external, independent audit and compliance company who shall review and assess a random sampling of twenty-five percent (25%) of Total Mortgage’s closed and funded Connecticut loans each quarter to assess Total Mortgage’s compliance with Part I of Chapter 668, Sections 36a-485 to 36a-534c, 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 Total Mortgage 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, Total Mortgage shall forward to the Commissioner the engagement letter or contract between the external auditor and Total Mortgage.  After no less than six (6) of the quarterly reports required by this paragraph have been submitted to the Commissioner, as required by paragraph 14, below, Total Mortgage may request that the requirements for the remaining six (6) 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.
14. On or before the fiftieth (50th) day after the end of the second calendar quarter of 2017, and on or before the fiftieth (50th) day after the end of the eleven (11) calendar quarters thereafter, Total Mortgage 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 Total Mortgage by operation of paragraph 13, above, and Total Mortgage’s anticipated response and action, with anticipated dates for doing so;
c)
detailed organization charts for Total Mortgage, listing, at minimum, each employee, director, officer, and owner of Total Mortgage, their title, and the job descriptions for those titles; and
d)  written findings prepared by Total Mortgage 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 Total Mortgage’s compliance with those statutes, regulations, or rules.
15. At the end of the second calendar quarter of 2017, and continuing for the eleven (11) calendar quarters thereafter, Total Mortgage shall require all employees with managerial or supervisory responsibilities to certify in writing to their direct managers or supervisors, up to and including Total Mortgage’s president, who shall report to Total Mortgage’s owners, that they are overseeing the activities of their subordinates, that those activities comply with all applicable Connecticut and federal financial consumer protection laws and regulations and the terms of this Consent Order to the best of their knowledge, and that they are not aware of any conduct that violates applicable Connecticut or federal financial consumer protection laws and regulations or this Consent Order;
16. Except with the prior express written approval of the Commissioner, Total Mortgage, for a period of three (3) years from the date this Consent Order is issued by the Commissioner, shall not take any action which results in a change of its current chairman.
17. 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;
18. In the event of nonperformance or violation by Total Mortgage of any term or condition set forth in this Consent Order, including, without limitation, Total Mortgage’s obligation to submit quarterly progress reports, implement the Compliance Plan, or hire a CCO, as set forth above, the Commissioner shall issue to Total Mortgage a written notice of violation.  During the three (3) 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) calendar days from Total Mortgage’s receipt of said notice, Total Mortgage 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 Total Mortgage 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 Total 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 Total Mortgage 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 Total Mortgage 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-534c, inclusive, of the Connecticut General Statutes or any statute or regulation under the jurisdiction of the Commissioner, or (b) evidence indicating that Total Mortgage withheld information from, or made any misstatement or omission to, the Commissioner in connection with this matter;
3. Subject to the foregoing, upon issuance of this Consent Order by the Commissioner, and so long as this Consent Order is promptly disclosed by Total Mortgage and its control persons on NMLS, as applicable, nothing in the issuance of this Consent Order shall adversely affect the ability of Total Mortgage 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 Total Mortgage; and
4. This Consent Order shall become final when issued.


Issued at Hartford, Connecticut
this 5th day of April 2017.                                            ______/s/__________
                                                                                     Jorge L. Perez
                                                                                     Banking Commissioner

I, John Thomas Walsh, state on behalf of Total Mortgage Services, 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 Total Mortgage Services, LLC; that Total Mortgage Services, 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 Total Mortgage Services, 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:  John Thomas Walsh
                                                                                    Title:  Chief Executive Officer, Owner & Chairman
                                                                                     Total Mortgage Services, LLC


State of:  Connecticut

County of:  New Haven


On this the 4th day of April 2017, before me, Robin Ann Thomas, the undersigned officer, personally appeared John Thomas Walsh who acknowledged himself to be the chief executive officer, owner, and chairman of Total Mortgage Services, LLC, a member managed/manager managed limited liability company, and that he as such chief executive officer, owner, and chairman being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as chief executive officer, owner, and chairman.

In witness whereof I hereunto set my hand.


                                                                                 __________/s/________
                                                                                 Notary Public
                                                                                 Date Commission Expires:  10/31/18


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