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1st Republic Mortgage Bankers, Inc. - Suspension Order

State of New York Banking Department


In the Matter of

1st Republic Mortgage Bankers, Inc.  

A Licensed Mortgage Banker pursuant
to Article XII-D of the New York
 Banking Law

- Respondent -

SUSPENSION ORDER     

 


Whereas, 1st Republic Mortgage Bankers, Inc. (“1st Republic”) was granted a license on May 10, 2001, to engage in business as a mortgage banker pursuant to Article XII-D of the New York Banking Law (the “Banking Law”).  Based on the State of New York Banking Department’s (“the Banking Department”) records, 1st Republic maintains a principal office at 110 Jericho Turnpike, Suite 200, Floral Park, New York, 11001.

Whereas, on January 14, 2009, by email the Banking Department was advised that a warehouse line provider discovered improprieties in 1st Republic’s warehouse line accounts, including the double-booking of loans, the pledging of unclosed loans, and the failure to properly disburse loan proceeds;

 Whereas, on January 22, 2009, by email, 1st Republic’s General Counsel, Russell A. Fayer advised the Banking Department that definite improprieties by an officer of the corporation had been discovered and that federal authorities were investigating the matter;

Whereas, 1st Republic’s warehouse line was suspended on or about January 14, 2009 as a result of these improprieties;

Whereas, during an onsite visitation conducted January 27, 2009, it was discovered that 1st Republic closed 13 loans totaling $4,659,318 on New York properties for which loan proceeds were not disbursed;

Whereas, based on the foregoing, 1st Republic is in violation of Part 38.7(a) (8) for its failure to disburse funds in accordance with its commitments to make mortgage loans;

Whereas, 1st Republic’s failure to disburse funds is considered a default of its financial obligations;

Whereas, Section 592 of the Banking Law provides that the Superintendent maylicense an applicant as a mortgage banker if the Superintendent shall find that the applicant'sfinancial responsibility, experience, character and general fitness are such to command the confidence of the community that the applicant's business will be operated honestly; fairly and efficiently within the purpose of Article 12-D of the Banking Law;

Whereas, pursuant to Section 595(2) of the Banking Law, the Superintendent may on good cause shown, or where there is substantial risk of public harm, suspend a mortgage banker license for a period not exceeding thirty days, pending investigation;

Whereas, pursuant to Section 595(5) of the Banking Law, the suspension of a mortgage banker license shall not impair or affect the obligation of any pre-existing lawful contract between the mortgage banker  and any person;

Whereas, 1st Republic’s aforementioned actions constitute grounds for suspension or revocation of its license under Sections 595(2); and

NOW THEREFORE, the Superintendent hereby finds that 1st Republic Mortgage Bankers, Inc. has engaged in dishonest and inequitable practices that may cause substantial harm to the persons afforded the protection of Article 12-D. Consequently, good cause exists for suspending its license as there is substantial risk of public harm. The Superintendent hereby immediately suspends 1st Republic Mortgage Bankers, Inc.’s mortgage banker license for a period not exceeding 30 days from the date of this Order pending investigation.

Witness, my hand and official seal of the Banking Department at the City of New York, this 15th day of May in the year two thousand nine.

____________________________
Rholda L. Ricketts
Deputy Superintendent of Banks