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First New York Capital Holding Corporation DBA 1st New York Mortgage
Settlement Agreement

State of New York Banking Department


In the Matter of

First New York Capital Holding Corporation d/b/a
1 st New York Mortgage

A Registered Mortgage Broker Pursuant
to Article 12-D of the New York
Banking Law

Respondent

Settlement Agreement


WHEREAS, First New York Capital Holding Corporation d/b/a 1 st New York Mortgage (“FNYC”) was granted a registration on August 6, 1993 to engage in business as a registered mortgage broker pursuant to Article XII-D of the New York Banking Law (“Banking Law”) and currently maintains a principal office at 1407 Route 9 Building Two, Clifton Park, NY 12065; a branch office at 221 Broadway, Amityville, NY 11717 and a loan solicitation office at 226 West 71 st Street, New York, NY 10023; and

WHEREAS, as a result of an examination of FNYC, conducted as of October 1, 2004, (“The Examination”) the following violations of the Banking Law and Banking Department Regulations were cited; and

WHEREAS, Part 38.3 of the General Regulations of the Banking Board (“GRBB”) requires the registrant to make all required disclosures and follow procedures stipulated by this Part before accepting any applications. FNYC failed to make timely disclosures; and

WHEREAS, Part 38.3(a)(1)(xii) of the GRBB requires the registrant to disclose a toll free telephone number of a person in a management position with the mortgage broker who can be contacted about problems with the application or the circumstances under which the applicant can call collect. FNYC failed to provide such disclosures; and

WHEREAS, Part 38.3(e) of the GRBB requires the registrant to send two copies of the application or worksheet and appropriate disclosures to the applicant for review within ten days of a telephone application. FNYC failed to provide applicants with the required documents within the established timeframe; and

WHEREAS, Part 38.7(b)(2) of the GRBB requires the filing of an undertaking of accountability with the Department within ten days of hiring or terminating the services of an independent contractor. FNYC failed to so file undertakings of accountability for 17 independent contractors; and

WHEREAS, Part 41 of the GRBB requires lenders and mortgage brokers to provide counseling disclosures and a list of counselors at the time of application and within 3 days of determining that the loan is a high cost home loan. FNYC failed to provide the required disclosures on the high cost loan made to Fulton Hoist Jr.; and

WHEREAS, Section 380-i(a) of the New York General Business Law requires the registrant to reveal to applicants the reason for the adverse action notices and notify the applicant of the name of the lender. FNYC did not provide such disclosure; and

WHEREAS, Section 202.9(b)(1) of Regulation B – Equal Credit Opportunity Act (ECOA) requires the disclosure of the federal agency administering ECOA. FNYC disclosure forms disclose an incorrect address for the Federal Trade Commission administering this regulation; and

WHEREAS, the Banking Department issued an Industry Letter dated June 14, 1999, prohibiting net branching for mortgage brokers and mortgage bankers; and

WHEREAS, The Examination also disclosed that FNYC operated a net branch at 5368 Merrick Road , Massapequa, NY 11758 in contravention of the Department net branching policies;

WHEREAS, Section 597 of the Banking Law and Part 410.8(a) of the Superintendent's Regulations require the registrant to keep books and records for examination and FNYC failed to maintain and provide copies of the canceled checks issued for operating its branch at 5368 Merrick Road, Massapequa, NY 11758; and

WHEREAS, the Banking Department issued an Industry Letter dated August 12, 2003, formally notifying licensees and registrants that the Banking Department may refuse to issue a license or registration to an applicant if any person who is a director, officer, partner, agent, employee or substantial shareholder has been convicted of one of the listed felonies, that the Superintendent may revoke any existing license or registration on the basis of any fact or condition, which, had it existed at the time of the original application, would have warranted the Superintendent in refusing to originally issue such license or registration, and of the requirement to inform the Banking Department upon the employment of a felon; and

WHEREAS, the registrant failed to notify the Department of the employment of a convicted felon, Debra Peavey, on April 20, 2004, as the Branch Manager at 5368 Merrick Road, Massapequa, NY 11758; and

WHEREAS, the Superintendent and the FNYC mutually agree to resolve such violations by the imposition of a fine in the aggregate amount of $25,000 and the required consumer restitution of $18,000 (as listed in Schedule 1), in lieu of commencing a hearing seeking revocation of Respondent’s registration;

NOW, THEREFORE IT IS STIPULATED AND AGREED BY THE PARTIES HERETO AS FOLLOWS:

THAT, FNYC agrees as follows:

  1. FNYC, fully understanding the terms and conditions of the Settlement Agreement ( the “Agreement”), freely and voluntarily waives its right to a hearing on the violations cited and any and all appeals relating to this matter;
  2. FNYC will take all necessary steps to ensure compliance with all applicable federal and state laws and regulations relating to its mortgage business;
  3. FNYC agrees to pay a fine in the amount of $25,000 payable in twelve equal monthly installments upon execution of this Agreement. The first installment to be paid upon execution of this agreement; with successive installments payable monthly thereafter;
    Payment shall be made by electronic transfer, in immediately available funds, pursuant to transfer instructions received from the Banking Department;
  4. FNYC agrees to issue refunds of $18,000 to consumers in six equal monthly installments. The first installment to be paid upon execution of this agreement; with successive installments payable monthly thereafter;
  5. FNYC will develop a formal written compliance manual designed to ensure compliance with all applicable federal and state laws, regulations and supervisory requirements. The manual shall, at a minimum, address:
    1. The designation of an individual responsible for monitoring compliance with all applicable laws, regulations and supervisory requirements;
    2. The handling, safeguarding and destruction of confidential customer information pursuant to privacy and credit reporting laws;
    3. Consumer credit disclosure requirements;
    4. Net branching restrictions; and
    5. Establish screening and due diligence procedures in its employment procedures; and
    6. A compliance training program for employees and independent contractors.
  6. FNYC will develop a comprehensive operations manual governing the day-to-day operations of its branch office(s), which shall, at a minimum, address, maintenance of books and records, segregation of duties and supervision of employees;
  7. FNYC will submit to semi-annual examinations during the 24 months period following the execution of this Memorandum;
  8. Within one hundred and twenty (120) days of the execution of this Agreement, FNYC will submit draft copies of its compliance and operations manual to the Banking Department;
  9. Within one hundred and eighty (180) days of the execution of this Agreement, FNYC will submit final copies of its compliance and operations manuals, approved by an authorized officer, to the Banking Department;
  10. FNYC fully understands the requirements of this Agreement and that failure to meet the above conditions and timeframes shall result in the Banking Department suspending its mortgage broker registration and scheduling a hearing for revocation;
  11. All communication regarding this Agreement shall be sent to:
    Rholda L. Ricketts
    Deputy Superintendent of Banks
    Mortgage Banking Division
    New York State Banking Department
    One State Street
    New York , NY 10004

    Marc A. Davis-Taylor
    President
    First New York Mortgage Corporation
    d/b/a 1 st New York Mortgage
    1407 Route 9 Building Two
    Clifton Park, NY 12065

  12. The provisions of this Agreement shall not bar, estop or otherwise prevent the Superintendent, or any state or federal agency or department, from taking any other action affecting the Registrant, any of its current or former officers, directors, employees, or insiders, or their successors or assigns with respect to the matters relating to this Agreement or other matters not relating to this Agreement;
  13. No extension or waiver of the terms of this Agreement shall be binding on the Banking Department except if in writing, signed by the Superintendent;
  14. Each provision of this Agreement shall remain effective and enforceable until stayed, modified, terminated or suspended in writing by the Superintendent;
  15. The effective date of this Agreement is the date on which it is executed by the Superintendent, or her Deputy; and
  16. The provisions of this Agreement are not confidential.

Agreed to and accepted by:

Dated:__________________. 

By:__________________________
Rholda L. Ricketts
Deputy Superintendent of Banks
New York State Banking Department

Dated:__________________. 

By: __________________________
Marc A. Davis-Taylor
President
First New York Capital Holding Corporation
d/b/a 1 st New York Mortgage