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OAH 3-1005-21527-2 |
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Commerce
MO16554/MPB |
STATE
OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE COMMISSIONER OF COMMERCE
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In the Matter of the Unlicensed Residential Mortgage Originator Activities of Certified Financial Protection Group, LLC; SafeHouse 911, LLC, d/b/a SafeHouse Professional Mortgage Restructuring; and Michael Wayman, individually. |
FINDINGS OF FACT, CONCLUSIONS AND RECOMMENDATION |
This matter came on before
Administrative Law Judge Kathleen D. Sheehy on October 19, 2010, for a
prehearing conference at the Office of Administrative Hearings,
Christopher
M. Kaisershot, Assistant Attorney General,
STATEMENT OF ISSUES
Are
the Respondents subject to discipline because:
1. SHP engaged in unlicensed residential
mortgage origination activities in
2. SHP and Wayman engaged in mortgage
modification activities when they were subject to a cease and desist order
precluding them from engaging in any acts requiring a real estate license in
California, in violation of Minn. Stat. § 58.12, subd. 1(b)(2)(vii);
3. CFPG engaged in unlicensed residential
mortgage origination activities in
4. Respondents collected fees in Minnesota
in violation of Minnesota law, and CFPG failed to provide refunds, failed to
include mandatory contract language, and violated their fiduciary relationship
with consumers, demonstrating incompetence, financial irresponsibility, or
untrustworthiness, in violation of Minn. Stat. §§ 45.027, subd. 7(a)(2) and
(4); 58.12, subd. 1(b)(2)(i), (iv), and (v); 58.13, subd. 1(a)(1)-(2); and
58.16;
5. CFPG and Wayman provided incomplete
information to the Commissioner and have refused to allow a reasonable
inspection of records in response to an administrative subpoena, in violation
of Minn. Stat. § 45.027, subd. 7(a)(3); and
6. CFPG engaged in deceptive or dishonest practices,
in violation of Minn. Stat. §§ 58.12, subd. 1(b)(2)(iv); 58.13, subd. 1(a)(9).
Based
upon the files, records, and proceedings herein, the Administrative Law Judge
makes the following:
FINDINGS OF FACT
1.
On September 13, 2010, a copy of the Notice and Order for
Prehearing Conference was sent by first-class mail to the Respondents and
counsel for CFPG.[1]
2.
The Respondents failed to appear at the prehearing
conference, did not obtain prior approval from the Administrative Law Judge to
be absent from the prehearing conference, did not file a Notice of Appearance,
and did not request a continuance or any other relief.
3.
The Notice and Order for Prehearing Conference contained the
following notice:
Respondents’ failure to appear at the prehearing conference . . . may
result in a finding that Respondents are in default, that the Department’s
allegations contained in the Statement of Charges may be accepted as true, and
that Respondents may be subject to discipline by the Commissioner, including
revocation, suspension, censure, or the imposition of civil penalties.[2]
4.
Because Respondents failed to appear at the prehearing
conference, they are in default.
5.
Pursuant to Minn. R. 1400.6000, the allegations contained in
the Statement of Charges are taken as true and incorporated by reference into
these Findings of Fact.
6.
The Statement of Charges alleges that the Respondents are
unlicensed and are not exempt from licensure in Minnesota; that Michael Wayman
is the president and CEO of CFPG and the owner of SHP; that in March 2009 the
California Department of Real Estate ordered SHP and Wayman, among others, to
cease and desist from engaging in any acts requiring a real estate license in
California based on their unlicensed mortgage modification activities in that
state; that SHP has advertised in Minnesota and has solicited and obtained
mortgage modification business from Minnesota resident T.H.; that CFPG has engaged
in the mortgage modification business with Minnesota residents R.S., B.S., and
A.C.; and that CFPG and Wayman have failed to respond to an administrative
subpoena issued by the Department in May 2010.
Based
upon the foregoing Findings of Fact, the Administrative Law Judge makes the
following:
CONCLUSIONS
1.
The Administrative Law Judge and the Commissioner of Commerce
are authorized to consider the charges against Respondents under Minn. Stat. §§
58.12, 45.027, subd. 1, 45.024, and 14.50.
2.
Respondents received due, proper, and timely notice of the
charges against them, and of the time and place of the prehearing conference. This matter is, therefore, properly before
the Commissioner and the Administrative Law Judge.
3.
The Department has complied with all relevant procedural
legal requirements.
4.
Under Minn. R. 1400.6000, a contested case may be decided
adversely to a party who defaults. A
default occurs when a party fails to appear without the prior consent of the
judge at a prehearing conference. On
default, the allegations of and the issues set out in that Notice of and Order
for Hearing or other pleading may be taken as true or deemed proved without
further evidence.
5.
The Respondents are in default herein as a result of their
failure, without the prior consent of the Administrative Law Judge, to appear
at the prehearing conference.
6.
Assisting or offering to assist a borrower in applying for a
residential mortgage loan, or negotiating or offering to negotiate the terms or
conditions of a residential mortgage loan with a lender on behalf of a
borrower, for compensation or gain or expectation of compensation or gain, is
activity that constitutes mortgage brokering, and it requires a residential
mortgage originator license in Minnesota.[3]
7.
SHP engaged in unlicensed residential mortgage origination
activities by entering into an agreement with
8.
SHP and Wayman are subject to discipline in
9.
CFPG engaged in unlicensed residential mortgage origination
activities by entering into agreements with
10.
A residential mortgage originator who negotiates or offers
to negotiate the terms or conditions of an existing residential mortgage loan
is precluded from receiving any compensation until after the contract has been
fully performed.[4] Residential mortgage originators who solicit
or receive an advance fee in exchange for assisting a borrower located in
Minnesota in obtaining a loan secured by a lien on residential real estate, or
who offer to act as an agent of the borrower in obtaining a loan secured by
such a lien, shall be considered to have created a fiduciary relationship with
the borrower.[5] The terms of any such contract are subject to
disclosure requirements and cancellation rights described in Minn. Stat. §
58.16, subds. 2 and 3.
11.
Respondents collected advance fees from Minnesota residents,
failed to include mandatory language in their contracts with Minnesota
residents, and failed to comply with their fiduciary responsibilities, in
violation of Minn. Stat. §§ 325N.04(1) and 58.16, subds. 2 and 3. This conduct demonstrates incompetence,
financial irresponsibility, or untrustworthiness, as provided in Minn. Stat. §§
45.027, subd. 7(a)(2); 58.12, subd. 1(b)(2)(i), (iv), and (v) (Count IV).
12.
Persons subject to the authority of the Commissioner of
Commerce must comply with requests for information, documents, or other
requests from the department within the time specified in the request, or, if
no time is specified, within 30 days of the mailing of the request by the
department.[6] The Commissioner may take disciplinary action
against a person who has provided incomplete information to the commissioner or
has refused to allow a reasonable inspection of records or premises.[7]
13.
CFPG and Wayman have refused to allow a reasonable request
to inspect records pursuant to an administrative subpoena, in violation of
Minn. Stat. § 45.027, subd. 7(a)(3) (Count V).
14.
A residential mortgage originator shall not make, directly
or indirectly, any false, deceptive, or misleading statement or representation
in connection with a residential loan transaction, including a false,
deceptive, or misleading statement or representation regarding the borrower’s
ability to qualify for any mortgage product.[8]
15.
By instructing a
16.
Disciplinary action against the Respondents is in the public
interest.
Based upon the foregoing Conclusions, the Administrative Law Judge makes the following:
RECOMMENDATION
IT IS HEREBY
RECOMMENDED: that the Commissioner of the Department of Commerce take adverse
action against the Respondents.
Dated: October 27, 2010
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s/Kathleen D. Sheehy |
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KATHLEEN D. SHEEHY |
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Administrative Law Judge |
Reported: Default (not recorded)
This
Report is a recommendation, not a final decision. The Commissioner of Commerce will make the
final decision after reviewing the record and may adopt, reject or modify these
Findings of Fact, Conclusions, and Recommendations. Under Minn. Stat. § 14.61, the Commissioner’s
decision shall not be made until this Report has been available to the parties
to the proceeding for at least ten (10) days.
An opportunity must be afforded to each party adversely affected by this
Report to file exceptions and present argument to the Commissioner. Parties should contact
Emmanuel Munson-Regala, Deputy Commissioner, Market Assurance Division, Minnesota
Department of Commerce,
If the Commissioner fails to issue a final decision within 90 days of the close of the record, this report will constitute the final agency decision under Minn. Stat. § 14.62, subd. 2a. The record closes upon the filing of exceptions to the report and the presentation of argument to the Commissioner, or upon the expiration of the deadline for doing so. The Commissioner must notify the parties and the Administrative Law Judge of the date on which the record closes. To comply with Minn. Stat. § 14.62, subd. 2a, the Commissioner must then return the record to the Administrative Law Judge within 10 working days to allow the Judge to determine the discipline to be imposed.
Under Minn. Stat. § 14.62, subd. 1, the agency is required to serve its final decision upon each party and the Administrative Law Judge by first class mail or as otherwise provided by law.
[1] Affidavit of Service by First Class Mail (September 13, 2010).
[2] Notice and Order for Prehearing Conference at 7.
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