2012 Connecticut General Statutes
Title 36a - The Banking Law of Connecticut
Chapter 668 - Nondepository Financial Institutions
Section 36a-494 - (Formerly Sec. 36-440i). Suspension, revocation or refusal to renew license or taking of other action. Removal from office and from employment or retention. Temporary order to cease business. Hearings.

(a)(1) The commissioner may suspend, revoke or refuse to renew any mortgage lender, mortgage correspondent lender or 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: (A) Made any material misstatement in the application; (B) committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any residential mortgage loan transaction, including disclosures required by subdivision (6) of subsection (a) of section 36a-493, or part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information; (C) violated any of the provisions of this title or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business; or (D) failed to perform any agreement with a licensee or a borrower. For purposes of this subdivision, “agent” includes any settlement agent used by the licensee and “settlement agent” means the person specified in any HUD-1 settlement statement or other settlement statement, provided such settlement agent has been selected by the licensee. Any settlement agent whose name appears on the licensee’s list of approved settlement agents shall be deemed selected by the licensee even if the settlement agent is selected from such list by the borrower.

(2) The commissioner may suspend, revoke or refuse to renew any mortgage loan originator license or any loan processor or underwriter 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 committed any fraud, misappropriated funds, misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any residential mortgage loan transaction or has violated any of the provisions of this title or of any regulations adopted pursuant to such title or any other law or regulation applicable to the conduct of such licensee’s business.

(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, or any regulation adopted pursuant thereto, (2) any person is, was, or would be a cause of the violation of any such provisions or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) any licensee has failed to perform any agreement with a borrower, committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any residential mortgage loan transaction, including disclosures required by subdivision (6) of subsection (a) of section 36a-493, or part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.

(c) (1) The commissioner may remove any individual conducting business under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b from office and from employment or retention as an independent contractor in the mortgage business in this state whenever the commissioner finds as the result of an investigation that such person: (A) Has violated any of said sections or any regulation or order issued thereunder; or (B) for any reason that would be sufficient grounds for the commissioner to deny a license under section 36a-489, by sending 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 such person on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (i) A statement of the time, place and nature of the hearing; (ii) a statement of the legal authority and jurisdiction under which the hearing is to be held; (iii) a reference to the particular sections of the general statutes, regulations or orders alleged to have been violated; (iv) a short and plain statement of the matters asserted; and (v) a statement indicating that such person may file a written request for a hearing on the matters asserted not later than fourteen days after receipt of the notice. If the commissioner finds that the protection of borrowers requires immediate action, the commissioner may suspend any such person from office and require such person to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this subsection, by incorporating a finding to that effect in such notice. The suspension or prohibition shall become effective upon receipt of such notice and, unless stayed by a court, shall remain in effect until the entry of a permanent order or the dismissal of the matters asserted.

(2) 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 such person fails to appear at the hearing. After the hearing, if the commissioner finds that any of the grounds set forth in subparagraph (A) or (B), of subdivision (1) of this subsection exist with respect to such person, the commissioner may order the removal of such person from office and from any employment in the mortgage business in this state. If such person fails to appear at the hearing, the commissioner may order the removal of such person from office and from employment in the mortgage business in this state.

(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. The commissioner shall give the licensee an opportunity for a hearing on such action in accordance with section 36a-52. Such temporary order shall become effective upon receipt by the licensee 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.

(P.A. 85-399, S. 10; P.A. 86-403, S. 78, 132; P.A. 88-230, S. 1, 12; P.A. 89-347, S. 17; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; 93-194, S. 5, 7; P.A. 94-122, S. 237, 340; P.A. 99-36, S. 29; P.A. 00-61, S. 2, 9; P.A. 02-111, S. 11; P.A. 04-69, S. 8; P.A. 05-46, S. 3; P.A. 06-45, S. 4; P.A. 07-91, S. 17; 07-156, S. 12; P.A. 08-176, S. 31, 50; P.A. 09-209, S. 14; P.A. 11-216, S. 22; P.A. 12-96, S. 14.)

History: P.A. 86-403 deleted reference to chapter 657a in Subsec. (a); P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 89-347 amended Subsec. (a) by adding failure to make disclosures required by Sec. 36-440h(a)(6) as grounds for suspending, revoking or refusing to renew a license; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 93-194 specified that provisions apply to persons who are not licensed as well as to licensees, effective June 23, 1993; P.A. 94-122 deleted Subsec. (c) re cease and desist provisions and made technical changes, effective January 1, 1995; Sec. 36-440i transferred to Sec. 36a-494 in 1995; P.A. 99-36 made technical changes; P.A. 00-61 amended Subsec. (b) by adding language re licensee’s failure to perform an agreement with a borrower, effective July 1, 2000; P.A. 02-111 amended Subsec. (a) by designating existing provisions as Subdiv. (1) and, within said Subdiv., redesignating existing Subdivs. (1) to (4) as Subparas. (A) to (D), replacing “owner” with “proprietor”, adding reference to misappropriated funds in Subpara. (B), replacing former statutory references with reference to “this title” in Subpara. (C) and adding reference to licensee in Subpara. (D), and by adding new Subdiv. (2) re commissioner’s authority to suspend, revoke or refuse to renew registration of originator; P.A. 04-69 substituted “36a-498a” for “36a-498” throughout and amended Subsec. (b) to allow commissioner to take action against violator or licensee in accordance with Sec. 36a-52; P.A. 05-46 amended Subsec. (b) to allow commissioner to impose civil penalty or issue cease and desist order against licensees and registrants who commit fraud, misappropriate funds or misrepresent, conceal, suppress, intentionally omit or otherwise intentionally fail to disclose any material particulars of mortgage loan transaction to anyone entitled to such information; P.A. 06-45 amended Subsec. (a)(2) to provide that violations of title 36a or regulations or any other law applicable to conduct of registrant’s business are grounds for suspension, revocation or refusal to renew registration of originator, effective May 8, 2006; P.A. 07-91 amended Subsec. (a)(1) and (2) to authorize commissioner to take any other action, in accordance with provisions of Sec. 36a-51, effective June 5, 2007; P.A. 07-156 amended Subsec. (a)(1) to insert “mortgage lender or first mortgage broker” re license, amended Subsec. (a)(2) to substitute “license” and “licensee” for “registration” and “registrant”, and amended Subsec. (b) to delete references to “registrant”, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 12, from September 30, 2008, to July 1, 2008, and amended Subsec. (a) to add “mortgage correspondent lender”, make conforming changes and, in Subdiv. (2), include findings that licensee has “concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose” any material particulars, effective July 1, 2008; P.A. 09-209 changed “mortgage loan” to “residential mortgage loan” throughout, amended Subsec. (a) by changing “proprietor, director, officer, member, partner, shareholder” to “any control person of the licensee, the qualified individual or branch manager with supervisory authority”, added Subsec. (c) re removal from office and from employment or retention as independent contractor and opportunity for hearing, added Subsec. (d) re temporary order to cease business under license and opportunity for hearing, and inserted references to other licensing provisions throughout, effective July 31, 2009; P.A. 11-216 amended Subsec. (a)(2) to add “any loan processor or underwriter licensee or”; P.A. 12-96 amended Subsec. (a)(1) to add definitions of “agent” and “settlement agent” and provide that any settlement agent whose name appears on list of approved settlement agents shall be deemed selected by licensee, and amended Subsec. (b) to designate existing provisions re violations as Subdivs. (1) and (3) and to add Subdiv. (2) re violation due to an act or omission the person knew or should have known would contribute to the violation.