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IN THE MATTER OF: BLUM GROUP LLC ("Respondent")
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NOTICE OF AUTOMATIC SUSPENSION TEMPORARY ORDER TO NOTICE OF INTENT TO ISSUE 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-534c, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Correspondent Lenders, Brokers and Loan Originators”.
Pursuant to the authority granted by Section 36a-17 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:
The commissioner, in the commissioner’s discretion, may 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-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 36a-492 of the Connecticut General Statutes provides, in pertinent part, that:
(a)(1) No . . . mortgage broker license, and no renewal thereof, shall be granted unless the applicant has filed a bond with the commissioner written by a surety authorized to write such bonds in this state, . . . the form of which shall be approved by the Attorney General. Effective July 31, 2010, the penal sum of the bond shall be maintained in an amount that reflects the dollar amount of the loans originated by the . . . mortgage broker, as determined by the commissioner.
(2) Effective July 31, 2010, each person licensed as a mortgage loan originator shall be covered by a surety bond in accordance with this section, provided such coverage shall be provided through the bond of the mortgage lender, mortgage correspondent lender or mortgage broker who sponsors such mortgage loan originator. The penal sum of the bond shall be maintained in an amount that reflects the dollar amount of loans originated by the mortgage loan originator, as determined by the commissioner. The commissioner may adopt regulations in accordance with chapter 54 with respect to the requirements for such surety bonds.
(b) . . . The bond shall run concurrently with the period of the license granted to the applicant, and the aggregate liability under the bond shall not exceed the penal sum of the bond. . . .
(c) The surety company shall have the right to cancel the bond at any time by a written notice to the licensee stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the licensee 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 licensee of the date such bond cancellation shall take effect. The commissioner shall automatically suspend the license on such date, unless the licensee prior to such date submits a letter of reinstatement of the bond from the surety company or a new bond or the licensee has ceased business and has surrendered the license in accordance with subsection (a) of section 36a-490. After a license has been automatically suspended, the commissioner shall give the licensee notice of the automatic suspension, proceedings pursuant to section 36a-494 and an opportunity for a hearing on such action in accordance with section 36a-51 and require the licensee to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section.
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 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 Connecticut limited liability company with an office at 530 Middlebury Road, Suite 213B, Middlebury, Connecticut (“Middlebury Office”). |
| 2. |
On November 22, 2010, Respondent requested renewal of its mortgage broker license for the Middlebury Office on the Nationwide Mortgage Licensing System for the January 1 through December 31, 2011 renewal period. Such license was renewed on December 14, 2010. |
| 3. |
On March 28, 2011, the Commissioner received notice from Washington International Insurance Company that surety bond number S 9071083 issued on behalf of Respondent with respect to its mortgage broker license for the Middlebury Office would be cancelled, effective on April 26, 2011. |
| 4. |
On March 29, 2011, pursuant to Section 4-182(c) of the Connecticut General Statutes, the Division sent a letter to Respondent giving Respondent an opportunity to show compliance with all lawful requirements for retention of its mortgage broker license in Connecticut.
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| 5. |
To date, Respondent has failed to file with the Commissioner a letter of reinstatement of the bond from the surety company or a new bond and Respondent has not surrendered its license. |
| 6. |
The Commissioner automatically suspended Respondent’s mortgage broker license in Connecticut for the Middlebury Office on April 26, 2011.
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III. STATUTORY BASIS FOR REVOCATION OF MORTGAGE BROKER LICENSE,
ORDER TO CEASE AND DESIST AND IMPOSITION OF CIVIL PENALTY
Section 36a-494 of the Connecticut General Statutes provides, in pertinent part, that:
(a)(1) The commissioner may . . . revoke . . . any . . . mortgage broker 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, any control person of the licensee, the qualified individual or branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following: . . . (C) violated any of the provisions of this title . . . .
(b) Whenever it appears to the commissioner that 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 or licensee 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 broker . . . unless the commissioner, at a minimum, finds that: . . . (D) the applicant has met the surety bond requirement under section 36a-492 . . . . If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial.
Respondent’s failure to maintain a surety bond that runs concurrent with the period of its mortgage broker license, as more fully described in paragraphs 1 and 5 of the Matters Asserted, constitutes sufficient grounds for the Commissioner to deny an application for such license 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 license to act as a mortgage broker in Connecticut from the Middlebury 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 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 pursuant to Section 36a-52(b) of the Connecticut General Statutes, in that due to Respondent’s failure to maintain its 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 BROKER LICENSE,
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 license to act as a mortgage broker in Connecticut from the Middlebury 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, 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 finds 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 April 26, 2011, the license of Blum Group LLC d/b/a Blum Group Lending to act as a mortgage broker in Connecticut from 530 Middlebury Road, Suite 213B, Middlebury, Connecticut, was 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 Blum Group LLC d/b/a Blum Group Lending immediately CEASE AND DESIST from violating Section 36a-492 of the Connecticut General Statutes. This Temporary Order shall become effective upon receipt by Blum Group LLC d/b/a Blum Group Lending, 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.
FURTHER, notice is hereby given to Respondent that the Commissioner intends to REVOKE Respondent’s license to act as a mortgage broker in Connecticut from the Middlebury 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 Broker License, 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 Broker License, 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. The enclosed Appearance and Request for Hearing Form must be completed and mailed 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 July 27, 2011, 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, the Commissioner will issue an order revoking Respondent’s license to act as a mortgage broker in Connecticut from 530 Middlebury Road, Suite 213B, Middlebury, Connecticut, 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 of June 2011. ________/s/_________
Howard F. Pitkin
Banking Commissioner
CERTIFICATION
I hereby certify that on this 30th day of June 2011, the foregoing Notice of Automatic Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke Mortgage Broker License, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing was sent by registered mail, return receipt requested, to Blum Group LLC d/b/a Blum Group Lending, Attention: Christopher D. Blum, Managing Member, 530 Middlebury Road, Suite 213B, Middlebury, Connecticut 06762, registered mail no. RB028020699US.
________/s/_________
Doniel Kitt
Prosecuting Attorney