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IN THE MATTER OF:

VANGUARD FUNDING LLC
NMLS # 2675

   ("Respondent")




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NOTICE OF AUTOMATIC SUSPENSION

TEMPORARY ORDER TO
CEASE AND DESIST

NOTICE OF INTENT TO REVOKE
MORTGAGE CORRESPONDENT
LENDER LICENSES

NOTICE OF INTENT TO ISSUE
ORDER TO CEASE AND DESIST

                        AND

NOTICE OF RIGHT TO HEARING

I. LEGAL AUTHORITY AND JURISDICTION

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”.

Pursuant to the authority granted by Sections 36a-17 and 36a-498f of the Connecticut General Statutes, the Commissioner, through the Consumer Credit Division (“Division”) of the Department of Banking, has investigated the activities of Respondent to determine if it has violated, is violating or is about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner.

Section 36a-17(a) of the Connecticut General Statutes provides, in pertinent part, that:

The commissioner, in the commissioner’s discretion, may, subject to the provisions of section 36a-21 and the Freedom of Information Act, as defined in section 1-200, (1) make such public or private investigations or examinations within or outside this state, concerning any person subject to the jurisdiction of the commissioner, as the commissioner deems necessary to carry out the duties of the commissioner . . . . 

Section 36a-498f(a) of the Connecticut General Statutes provides, in pertinent part, that:

In addition to any authority provided under this title, the Banking Commissioner shall have the authority to conduct investigations and examinations as follows:

(1)  For purposes of . . . general or specific inquiry or investigation to determine compliance with sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to:  . . . (C) any other documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence.

Section 36a-492 of Connecticut General Statutes provides, in pertinent part, that:

(a) (1)  Each licensed . . . mortgage correspondent lender . . . shall file with the commissioner a single surety bond, written by a surety authorized to write such bonds in this state, covering its main office and file an addendum to such bond to cover any branch office, in a penal sum determined in accordance with subsection (d) of this section, provided the penal sum of the bond for licensed . . . mortgage correspondent lenders shall be not less than one hundred thousand dollars . . . .  The bond shall cover all mortgage loan originators sponsored by such licensee.

(2)  Each mortgage loan originator licensee shall be covered by a surety bond with a penal sum in an amount that reflects the dollar amount of loans originated by such mortgage loan originator in accordance with subsection (d) of this section, provided such coverage shall be provided through a single surety bond filed with the commissioner by the person who sponsors such mortgage loan originator.

(b)  . . .  The bond shall run concurrently with the period of the license for the main office . . . .

(c)  The surety company shall have the right to cancel the bond at any time by a written notice to the principal stating the date cancellation shall take effect.  Such notice shall be sent by certified mail to the principal at least thirty days prior to the date of cancellation.  A surety bond shall not be cancelled unless the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation.  After receipt of such notification from the surety company, the commissioner shall give written notice to the principal of the date such bond cancellation shall take effect and such notice shall be deemed notice to each mortgage loan originator licensee sponsored by such principal.  The commissioner shall automatically suspend the licenses of a . . . mortgage correspondent lender . . . on such date and inactivate the licenses of the mortgage loan originators sponsored by such lender . . . .  No automatic suspension or inactivation shall occur if, prior to the date that the bond cancellation shall take effect, (1) the principal submits a letter of reinstatement of the bond from the surety company or a new bond, [or] (2) the . . . mortgage correspondent lender . . . has ceased business and has surrendered all licenses in accordance with subsection (a) of section 36a-490 . . . .  After  a . . . mortgage correspondent lender . . . license has been automatically suspended pursuant to this section, the commissioner shall give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-494 and an opportunity for a hearing on such action in accordance with section 36a-51 and require such licensee to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section. . . .

Section 36a-51 of the Connecticut General Statutes provides, in pertinent part, that:

(a)  The commissioner may . . . revoke . . . any license issued by the commissioner under any provision of the general statutes by sending a notice to the licensee by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt.  The notice shall be deemed received by the licensee on the earlier of the date of actual receipt or seven days after mailing or sending.  Any such notice shall include:  (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the general statutes . . . involved; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that the licensee may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice. . . .

(b)  If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless the licensee fails to appear at the hearing.  After the hearing, the commissioner shall . . . revoke . . . the license for any reason set forth in the applicable licensing provisions of the general statutes if the commissioner finds sufficient grounds exist for such . . . revocation . . . .  If the licensee does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner shall . . . revoke . . . the license.  No such license shall be . . . revoked except in accordance with the provisions of chapter 54.

Section 36a-52 of the Connecticut General Statutes provides, in pertinent part, that:

(a)  Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of the general statutes within the jurisdiction of the commissioner, . . . the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt.  The notice shall be deemed received by the person on the earlier of the date of actual receipt, or seven days after mailing or sending.  Any such notice shall include:  (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the general statutes . . . alleged to have been violated; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that such person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice.  If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice, unless the person fails to appear at the hearing.  After the hearing, the commissioner shall determine whether an order to cease and desist should be issued against the person named in the notice.  If the person does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner shall issue an order to cease and desist against the person.  No such order shall be issued except in accordance with the provisions of chapter 54.

(b)  If the commissioner finds that the public welfare requires immediate action, the commissioner may incorporate a finding to that effect in the notice sent in accordance with subsection (a) of this section and issue a temporary order requiring the person to cease and desist from the activity which constitutes such alleged violation and to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section.  Such temporary order shall become effective on receipt and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in the notice.

Section 4-182(c) of the Connecticut General Statutes provides, in pertinent part, that:

No revocation, suspension, annulment or withdrawal of any license is lawful unless, prior to the institution of agency proceedings, the agency gave notice by mail to the licensee of facts or conduct which warrant the intended action and the specific provisions of the general statutes . . . that authorize such intended action, and the licensee was given an opportunity to show compliance with all lawful requirements for the retention of the license.


II.  MATTERS ASSERTED

1.
Respondent is a New York limited liability company with an office at 300 Garden City Plaza, Suite 170, Garden City, New York (“Main Office”).  Respondent also has an office at 155 Route 109, West Babylon, New York, Branch ID # 1463894 (“Branch Office”).
2.
The Main Office and the Branch Office are presently licensed by the Commissioner through the Nationwide Multistate Licensing System and Registry (“NMLS”) to engage in the business of a mortgage correspondent lender.
3.
On July 17, 2017, the Commissioner received notice from Great American Insurance Company that surety bond number 1963217 issued on behalf of Respondent with respect to its mortgage correspondent lender licenses for its Main Office and its Branch Office would be cancelled effective August 17, 2017.
4.
On July 17, 2017, pursuant to Section 4-182(c) of the Connecticut General Statutes, the Division sent a certified letter (Certified Mail No. 70142120000037014758) to Respondent at its Main Office and sent a copy by mail to the Branch Office giving Respondent an opportunity to show compliance with all lawful requirements for the retention of its mortgage correspondent lender licenses in Connecticut. 5.  As of August 17, 2017, Respondent failed to file with the Commissioner a letter of reinstatement of the bond or a new bond and did not request surrender of its licenses.
5.
As of August 17, 2017, Respondent failed to file with the Commissioner a letter of reinstatement of the bond or a new bond and did not request surrender of its licenses.
6.
The Commissioner automatically suspended Respondent’s mortgage correspondent lender licenses in Connecticut effective August 17, 2017.


III.  STATUTORY BASIS FOR REVOCATION OF MORTGAGE 
CORRESPONDENT LENDER LICENSES AND ORDER TO CEASE AND DESIST

Section 36a-494 of the Connecticut General Statutes, provides, in pertinent part, that:

(a)(1)  The commissioner may . . . revoke . . . any . . . mortgage correspondent lender . . . license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, or if the commissioner finds that the licensee . . . has done any of the following:  . . . (C) violated any of the provisions of this title . . . .

(b)  Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any of the provisions of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, . . . the commissioner may take action against such person . . . in accordance with sections 36a-50 and 36a-52.

Section 36a-489(a)(1) of the Connecticut General Statutes provides, in pertinent part, that:

The commissioner shall not issue an initial license for a . . . mortgage correspondent lender . . . unless the commissioner, at a minimum, finds that:  . . . (D) the applicant has met the surety bond requirement under section 36a-492 . . . . 

Respondent’s failure to maintain a surety bond that runs concurrently with the period of its mortgage correspondent lender licenses, as more fully described in paragraphs 1 through 6, inclusive, of the Matters Asserted, constitutes sufficient grounds for the Commissioner to deny applications for such licenses under Section 36a-489(a)(1)(D) of the Connecticut General Statutes and constitutes a violation of Section 36a-492 of the Connecticut General Statutes, both of which constitute grounds for the Commissioner to revoke Respondent’s licenses to engage in the business of mortgage correspondent lending in Connecticut from the Main Office and Branch Office pursuant to Sections 36a-494(a)(1) and 36a-494(a)(1)(C) and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes.  Such violation also forms a basis to issue an order to cease and desist against Respondent pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes.


IV.  FINDING AND STATUTORY BASIS FOR
TEMPORARY ORDER TO CEASE AND DESIST

The Commissioner finds, pursuant to Section 36a-52(b) of the Connecticut General Statutes, that public welfare requires immediate action to issue a temporary order requiring Respondent to cease and desist from violating Section 36a-492 of the Connecticut General Statutes, in that due to Respondent’s failure to maintain is surety bond, any borrower or prospective borrower who may be damaged by the failure of Respondent or any mortgage loan originator who may be covered by such bond to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a borrower or prospective borrower to Respondent or any mortgage loan originator who may be covered by such bond, will not be able to proceed on such surety bond to recover damages.


V.  NOTICE OF AUTOMATIC SUSPENSION, TEMPORARY ORDER TO CEASE
AND DESIST, NOTICE OF INTENT TO REVOKE MORTGAGE CORRESPONDENT
LICENSES, NOTICE OF INTENT TO ISSUE ORDER TO CEASE AND DESIST
AND NOTICE OF RIGHT TO HEARING

WHEREAS, the Commissioner has reason to believe that Respondent has engaged in acts or conduct which constitutes sufficient grounds for the Commissioner to revoke its licenses to engage in the business of a mortgage correspondent lender in Connecticut from its Main Office and Branch Office pursuant to Sections 36a-494(a)(1), 36a-494(a)(1)(C) and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes, and forms a basis to issue an order to cease and desist against Respondent pursuant to Sections 36a-494(b) and 36a-52(a) of the Connecticut General Statutes;

AND WHEREAS, the Commissioner has made the finding required under Section 36a-52(b) of the Connecticut General Statutes.

NOW THEREFORE, pursuant to the authority granted in Section 36a-492(c) of the Connecticut General Statutes, the Commissioner gives NOTICE that on August 17, 2017, the licenses of Vanguard Funding LLC to engage in the business of a mortgage correspondent lender in Connecticut from 300 Garden City Plaza, Suite 170, Garden City, New York, and 155 Route 109, West Babylon, New York were AUTOMATICALLY SUSPENDED pending proceedings for revocation.

THE COMMISSIONER ORDERS, pursuant to the authority granted in Section 36a-52(b) of the Connecticut General Statutes, that Vanguard Funding LLC immediately CEASE AND DESIST from violating Section 36a-492 of the Connecticut General Statutes.  This Temporary Order to Cease and Desist shall become effective upon receipt by Vanguard Funding LLC and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in this Temporary Order to Cease and Desist.

FURTHER, notice is hereby given to Respondent that the Commissioner intends to REVOKE Respondent’s licenses to engage in the business of a mortgage correspondent lender in Connecticut from the Main Office and Branch Office and issue an order requiring Respondent to CEASE AND DESIST from violating Section 36a-492 of the Connecticut General Statutes, subject to Respondent’s right to a hearing on the allegation set forth above.

A hearing will be granted to Respondent if a written request for a hearing is received by the Department of Banking, Consumer Credit Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following its receipt of this Notice of Automatic Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke Mortgage Correspondent Lender Licenses, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing as set forth in subsections (a) and (b) of Section 36a-51 and Section 36a-52(a) of the Connecticut General Statutes.  This Notice of Automatic Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke Mortgage Correspondent Lender Licenses, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing shall be deemed received on the earlier of the date of actual receipt, or seven days after mailing or sending.  To request a hearing, complete and return the enclosed Appearance and Request for Hearing Form to the above address.  If Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”.  Once a written request for hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a hearing officer and sets the date of the hearing in accordance with Section 4-177 of the Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies.  If a hearing is requested, the hearing will be held on November 8, 2017, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.

The hearing will be held in accordance with the provisions of Chapter 54 of the Connecticut General Statutes, unless Respondent fails to appear at the requested hearing.  At such hearing, Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.

If Respondent does not request a hearing within the time prescribed or fails to appear at any such hearing, the allegation herein will be deemed admitted.  Accordingly, the Commissioner will issue an order revoking Respondent’s licenses to engage in the business of a mortgage correspondent lender in Connecticut from 300 Garden City Plaza, Suite 170, Garden City, New York, and from 155 Route 109, West Babylon, New York, and issue an order that Respondent cease and desist from violating Section 36a-492 of the Connecticut General Statutes.

So ordered at Hartford, Connecticut
this 29th day of September 2017.                  ________/s/_________
                                                               Jorge L. Perez
                                                               Banking Commissioner



CERTIFICATION

I hereby certify that on this 29th day of September 2017, I caused to be mailed by certified mail, return receipt requested, the foregoing Notice of Automatic Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke Mortgage Correspondent Lender Licenses, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing to Vanguard Funding LLC, Attention:  Brian Ofsie, President, 300 Garden City Plaza, Suite 170, Garden City, New York 11530, certified mail no. 70162070000104623078; and to Vanguard Funding LLC, Attention:  Brian Ofsie, President, 155 Route 109, West Babylon, New York 11704, certified mail no. 70162070000104623085.


                                                               ________/s/_________
                                                               Tina M. Daigle
                                                               Paralegal

Administrative Orders and Settlements