HOWARD PITKIN – Permanent changes

It is becoming a familiar scenario.

The Connecticut Department of Banking late last month fined two more mortgage companies for violations, such as imposing prepaid finance charges in excess of the 5 percent allowed and filing mortgage applications that contained inaccurate information. The violations were the latest in a recent spate that has seen the department issuing several enforcement orders in recent weeks.

The two latest companies to be cited by the department are Middlebury-based EPI Mortgage Center and First Alternative Mortgage Corp., which has an office in Weston.

But the increase in citing mortgage companies does not indicate a temporary crackdown, but rather permanent changes in the department’s regulatory program, according to state Banking Commissioner Howard Pitkin.

The DOB always has had jurisdiction over mortgage companies, and over the past three years the department has been receiving more and more complaints from Connecticut residents about the industry.

“The mortgage industry, other than what was handled by banks, has grown exponentially,” Pitkin said. “We felt our regulatory program should be ramped up.”

So the officials at the DOB decided to become more involved.

“Our regulatory program has improved tremendously over the past several years,” Pitkin said.

Those improvements have resulted in the department finding more violations. Some of the most common occur when a loan originator is not properly registered, or when there is a violation of the maximum 5 percent prepaid charge. Other companies have faced enforcement orders for opening locations without a license.

The fast growth of mortgage companies over the past three years has led to a certain amount of ignorance of the various mortgage laws and regulations.

“I think you find very few people intending to break the law,” Pitkin said.

There are several steps that mortgage companies can take to stay in compliance with the law, he said.

“I think, first of all, the primary thing they need to do is be cognizant of the law,” Pitkin said. Companies should hire capable people, and have internal training for compliance. It can be helpful if companies include that training in their regular audit program, he said.

According to a bulletin, the DOB entered into a settlement agreement with EPI Mortgage after an investigation discovered that EPI closed loans in two names other than its licensed name, that it imposed prepaid finance charges on two mortgage loans issued to Connecticut consumers that exceeded the 5 percent maximum and that it employed or retained at least one originator without registering them.

EPI has agreed to pay $6,000 as a civil penalty.

The DOB also entered into a settlement agreement with First Alternative Mortgage after an investigation by the Consumer Credit Division revealed that the company filed applications for mortgage licenses that contained inaccurate information. First Alternative agreed to pay $5,000 as a civil penalty.