D & L Brokerage Inc. D/B/A First Option Equities - Settlement Agreement
State of New York Banking Department
In the Matter of
D & L Brokerage Inc. D/B/A First Option Equities
A Registered Mortgage Broker Pursuant to
WHEREAS, D & L Brokerage, Inc. ("D & L"), was granted a registration on July 26, 2005 to engage in business as a registered mortgage broker pursuant to Article XII-D of the New York Banking Law (the "Banking Law") and currently maintains a principal office at 236 Remsen Avenue, Brooklyn, NY 11212 and a branch office at 238 Remsen Avenue, Brooklyn, NY 11211; and
WHEREAS, during an examination of D & L conducted on July 28, 2006 by an examiner from the New York State Banking Department (“the Banking Department”) it was disclosed that D & L had funded a loan, paid referral fees to three individuals, submitted an inaccurate Volume of Operations Report for 2005 (“2005 VOOR”), and failed to timely file undertaking of accountability reports for four independent contractors; and
WHEREAS, based on the foregoing, D & L has violated Section 590(5) (a) of the New York Banking Law in that mortgage brokers may not make mortgage loans; and
WHEREAS, based on the foregoing, D & L has violated Part 3500.14(b) of HUD Regulation X - Real Estate Settlement Procedures Act (RESPA) in that no person shall give and no person shall accept any fee, kickback, or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a settlement service involving a federally-related mortgage loan shall be referred to any person; and
WHEREAS,based on the foregoing, D & L has violated Section 597 of the Banking Law and Part 410.8(b) of the Superintendent’s Regulations, which requires each mortgage broker to annually file a report with the superintendent giving such information as the superintendent may require; and
WHEREAS, based on the foregoing, D & L has violated Part 38.7(b)(2) of the General Regulations of the Banking Board which requires that an undertaking of accountability for each independent contractor be filed with the superintendent by the employer in such form as may be prescribed within ten days of commencement of employment; and
WHEREAS, on November 8, 2006, the Banking Department met with D & L to discuss the examination findings and instruct D & L to file a revised 2005 VOOR and to submit a business plan to inhibit the reoccurrence of errors; and
WHEREAS, on October 24, 2007, the Banking Department held a follow up meeting with D & L to discuss D & L’s operating weaknesses and request (i) a revised business plan, (ii) an updated compliance program, (iii) updated operating policies and procedures, and (iv) a letter summarizing the steps taken to ensure compliance with all applicable federal and state laws and regulations relating to the mortgage business; and
WHEREAS, D & L submitted a revised 2005 VOOR, a revised business plan, and operating procedures; and
WHEREAS, a review of D & L’s revised 2005 VOOR by the Banking Department disclosed that D & L had originally reported only 2 of 93 Mortgage Loan Applications Taken during calendar year 2005; and
WHEREAS, the Superintendent and the registrant mutually agree to resolve such violations by the imposition of a fine in the amount of $10,000. 00 in lieu of commencing a hearing seeking revocation of the registration.
NOW, THEREFORE IT IS STIPULATED AND AGREED BY THE PARTIES HERETO AS FOLLOWS:
THAT, the registrant agrees as follows:
- D & L 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.
- D & L will take all necessary steps to ensure compliance with all applicable federal and state laws and regulations relating to its mortgage business.
- D & L agrees to pay a fine of $10,000.00 payable upon execution of this agreement. Payment shall be made by electronic transfer, in immediately available funds, pursuant to transfer instructions received from the Banking Department.
- Within thirty (30) days of the execution of this Agreement, D & L will engage a qualified independent consultant (“Compliance Consultant”) acceptable to the Banking Department to assist D & L in ensuring that its compliance program, policies, and procedures are appropriate for the nature and scale of D & L’s operations.
- Within forty-five (45) days of the execution of this Agreement, D & L will submit for approval by the Banking Department a proposed engagement letter that delineates the scope, terms and conditions of the Compliance Consultant’s review.
The terms of engagement shall, at a minimum, provide for the Compliance Consultant to:
- Assist D & L in developing written programs, policies, and procedures that will reasonably ensure that D & L fulfills its obligations under the provisions of this Agreement and all applicable federal and state laws and regulations;
- Make all work papers, work products, drafts, and interim reports available upon request of the Banking Department;
- Submit all changes to the terms of engagement to the Banking Department for approval.
- Within sixty (60) days of the execution of this Agreement, D & L will submit to the Banking Department an acceptable written plan, which details the steps D & L is taking to ensure compliance with all applicable federal and state laws and regulations relating to the mortgage business. The written plan shall address the recommendations of the Compliance Consultant and the requirements of this Agreement.
- D & L shall develop, and submit to the Banking Department, a comprehensive operations manual governing the day-to-day operations of its head office and branch, which shall, at a minimum, address maintenance of books and records, segregation of duties, and supervision of employees.
- D & L shall develop, and submit to the Banking Department, a formal written compliance manual designed to ensure compliance with all applicable federal and state laws, regulations, and supervisory requirements. Among other things, the written compliance manual shall include policies, procedures, and checklists. In addition, it shall indicate the persons who shall be responsible for preparing particular documents and taking other actions required by the applicable compliance laws.
- The designation of an individual responsible for monitoring compliance with all applicable laws, regulations and supervisory requirements;
- The handling, safeguarding and destruction of confidential customer information pursuant to privacy and credit reporting laws;
- Prohibited Conduct as described by Part 38.7 of the General Regulations of the Banking Board;
- Consumer credit disclosure requirements;
- Residential mortgage lending fees;
- Consultants, employees, independent contractors, and mortgage loan originators;
- A compliance training program for employees and independent contractors.
- Within ninety (90) days of the execution of this Agreement, D & L will submit draft copies of its compliance and operations manuals to the Banking Department;
- Within one hundred and twenty (120) days of the execution of this Agreement, D & L will submit final copies of its compliance and operations manuals, approved by an authorized officer, to the Banking Department;
- D & L will submit to annual examinations during the 24 months period following the execution of this Agreement;
- D & L 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;
- All communication regarding this Agreement shall be sent to:
- All communications regarding this Settlement Agreement shall be sent to:
Ms. Rholda L. Ricketts
Deputy Superintendent of Banks
Mortgage Banking Division
New York State Banking Department
One State Street
New York, NY 10004
Mr. Delroy D. Kenwood
D & L Brokerage, Inc.
236 Remsen Avenue
Brooklyn, NY 11212
- 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.
- No extension or waiver of the terms of this Agreement shall be binding on the Banking Department unless it is in writing and signed by the Superintendent or his Deputy.
- Each provision of this Agreement shall remain effective and enforceable until stayed, modified, terminated or suspended in writing by the Superintendent or his Deputy.
- The effective date of this Agreement is the date on which it is executed by the Superintendent or his Deputy.
- The provisions of this Agreement are not confidential.
The manual shall, at a minimum, address:
Agreed to and accepted by:
Delroy D. Kenwood
D & L Brokerage, Inc.
Rholda L. Ricketts
Deputy Superintendent of Banks
State of New York Banking Department