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Jorge L. Perez
Banking Commissioner
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The Department of Banking News Bulletin
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Bulletin 2811 | Week Ending January 5, 2018
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This Bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be directed to
Jorge L. Perez, Banking Commissioner
. Written comments will be considered only if they are received within ten days from the date of this bulletin.
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Order to Cease and Desist and Order Imposing Civil Penalty
Consent Order
On December 29, 2017, the Commissioner entered into a
Consent Order with
Prysma Lending Group, LLC
(NMLS # 2250) (“Prysma Lending Group”)
, Danbury, Connecticut. The Consent Order was based on an examination by the Consumer Credit Division. As a result of the examination, the Commissioner alleged 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, caused a person to conduct business as a mortgage loan originator without valid sponsorship, and, through its loan processing team, improperly altered loan file documents, which conduct would cause the Commissioner unable 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, and would support, among other things, the issuance of a notice of intent to revoke or refuse to renew Prysma Lending Group’s mortgage correspondent lender license.
As part of the Consent Order, Prysma Lending Group agreed to: (1) adhere to a “zero tolerance” policy forbidding alteration or changes to documents signed by mortgage applicants; (2) create and implement 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 the Consent Order, and develop a program which must include mandatory business ethics education for employees greater than required by law; (3) submit 20% of its Connecticut loans to an external independent audit firm to further assess Prysma Lending Group’s compliance with mortgage laws; (4) submit quarterly reports to the Commissioner about its implementation of the Consent Order; and (5) distribute the Consent Order to each of its employees. Lastly, Prysma Lending Group agreed to not violate any of the relevant statutes underlying its mortgage business and agreed to pay a $75,000 civil penalty.
Settlement Agreement and Consent Order
On December 29, 2017, the Commissioner entered into a
multi-state Settlement Agreement and Consent Order (“Consent Order”) with
PHH Mortgage Corporation
(NMLS # 2726) (“PHH”)
, Mount Laurel, New Jersey. The Consent Order was based on a multi-state mortgage loan servicing examination covering the period from January 1, 2008 to December 31, 2010 (“Examination”). As a result of the Examination and related inquiries and investigations, the Consent Order alleges the following practices by PHH: (1) lack of controls related to document execution, including unauthorized execution, inconsistent signatures, faulty assignment, improper certification and notarization, and other related practices affecting the integrity of documents relied upon in the foreclosure process; (2) deficiencies in servicing, foreclosure, loan modification, and other loss mitigation processes; (3) deficiencies related to internal controls, including inadequate staffing levels and lack of independence; (4) deficiencies in control and oversight of third-party providers, particularly local foreclosure counsel; and (5) deficiencies in document maintenance processes, including, but not limited to, failure to retain required documents and failure to produce documents requested in tandem with examinations. The Consent Order requires that PHH: comply with certain servicing standards; conduct audits of its compliance with such servicing standards and quarterly report to regulators the results of such audits for a three-year period commencing on January 1, 2018; transfer monies to an appointed Settlement Administrator for the purpose of providing cash payments to certain borrowers who had loans serviced by PHH and who were affected by foreclosure proceedings; and pay a total administrative penalty to all participating state mortgage regulators of $8,823,515, of which $159,967 shall be for the benefit of the Connecticut Department of Banking.
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John W. Evans (d/b/a Evans Technology Holding Company) and Bonnie A. Evans - Consent Order Entered
On January 2, 2018, the Banking Commissioner entered a
Consent Order (Docket No. CRF-16-8209-S) with respect to
John W. Evans
and
Bonnie A. Evans
of Sharon, Connecticut. John W. Evans did business under the name
Evans Technology Holding Company
. John W. Evans purportedly held himself out as having rights to certain intellectual property, including cooling system related patents, and that Evans Technology Holding Company, an unincorporated entity controlled by John Evans, was purportedly organized for the purpose of holding the intellectual property. Evans Technology Holding Company was variously described by John Evans as a limited liability company to be formed and as a general partnership. The Consent Order had been preceded by a September 22, 2016 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-16-8209-S) alleging that the respondents, through two individuals, since deceased, offered and sold percentage interests in Evans Technology Holding Company to investors located in Connecticut and other states, and raised a total of $141,000. The investors had no special expertise in the Evans intellectual property and were passive and totally dependent on respondents in achieving an investment return. The September 22, 2016 action had also alleged that the respondents violated 1) Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling unregistered securities; 2) the antifraud provisions in Section 36b-4 of the Act by, among other things, failing to disclose to investors the investment’s risks, the registration status of the securities and the basis for income projections; and 3) Section 36b-6(b) of the Act by employing unregistered agents of issuer.
The Consent Order acknowledged that the respondents had provided evidence to the agency indicating that the respondents had extended a $214,895 rescission offer to sixteen investors who held interests in Evans Technology Holding Company, and that the respondents had paid approximately $200,258 in restitution to those investors electing to accept the rescission offer. The amounts included accrued interest.
The Consent Order resolved the allegations in the September 22, 2016 action, and directed the respondents to cease and desist from regulatory violations. In addition, the Consent Order barred the respondents for three years from 1) transacting business in or from Connecticut as an agent, broker-dealer, broker-dealer agent, investment adviser or investment adviser agent; 2) maintaining a direct or indirect ownership interest in a broker-dealer or investment adviser registered or required to be registered under Connecticut's securities laws; and 3) acting in any other capacity that required a license or registration under laws administered by the Commissioner. The Consent Order also fined the respondents $5,000.
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Dated: Tuesday, January 9, 2018
Jorge L. Perez
Banking Commissioner
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