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• Government Actions:

  BEFORE THE DEPARTMENT OF BUSINESS OVERSIGHT OF THE STATE OF CALIFORNIA- In the Matter of: THE COMMISSIONER OF BUSINESS OVERSIGHT, Complainant, v. NETWORK FUNDING, LP, Respondent
  

  STATEMENT OF FACTS IN SUPPORT OF ORDER TO DISCONTINUE VIOLATION PURSUANT TO FINANCIAL CODE SECTION 50321 AND NOTICE OF INTENT TO MAKE ORDER FINAL

  The Commissioner of Business Oversight (Commissioner) is informed and believes, and based upon such information and belief, alleges and charges as follows: I. Introduction 1. The Commissioner brings this action under Financial Code section 50321. The Commissioner is authorized to administer and enforce the provisions of the California Residential Mortgage Lending Act (CRMLA) (Financial Code Section §50000 et seq.) and the rules promulgated thereunder that regulate the business and activities of residential mortgage lenders and servicers.

  2. Network Funding, LP (Network Funding) is a residential mortgage lender and servicer licensed by the Commissioner pursuant to the CRMLA. Network Funding has its principal place of business located at 9700 Richmond Avenue, Suite 320, Houston, Texas 77042. II. CRMLA Violation 3. On or about February 27, 2017, the Commissioner commenced a regulatory examination of the books and records of Network Funding under the CRMLA (2017 regulatory examination). The 2017 regulatory examination disclosed that Network Funding had obtained signed blank documents pertaining to per diem interest disclosures in violation of Financial Code section 50204, subdivision (e). 4. At least three loan files contained signed per diem interest disclosure documents in which the desired disbursement date or the additional per diem interest charges were left blank to be filled in after the execution of the disclosures. 5. By reason of the foregoing, Network Funding has violated Financial Code section 50204, subdivision (e). 6. Financial Code section 50321 provides: If, after investigation, the commissioner has reasonable grounds to believe that any licensee has violated its articles of incorporation or any law or rule binding upon it, the commissioner shall, by written order addressed to the licensee, direct the discontinuance of the violation. The order shall be effective immediately, but shall not become final except in accordance with the provisions of Section 50323. 7. Financial Code section 50323 provides: (a) No order issued pursuant to Section 50321 or 50322 may become final except after notice to the affected licensee of the commissioner’s intention to make the order final and of the reasons for the finding. The commissioner shall also notify the licensee that upon receiving a request the matter will be set for hearing to commence within 15 business days after receipt. The licensee may consent to have the hearing commence at a later date. If no hearing is requested within 30 days after the mailing or service of the required notice, and none is ordered by the commissioner, the order may become final without hearing and the licensee shall immediately discontinue the practices named in the order. If a hearing is requested or ordered, it shall be held in accordance with the provisions of the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and the commissioner shall have all of the powers granted under that act. If, upon the hearing, it appears to the commissioner that the licensee is conducting business in an unsafe and injurious manner or is violating its articles of incorporation or any law of this state, or any rule binding upon it, the commissioner shall make the order of discontinuance final and the licensee shall immediately discontinue the practices named in the order. (b) The licensee has 10 days after an order is made final to commence an action to restrain enforcement of the order. If the enforcement of the order is not enjoined within 10 days by the court in which the action is brought, the licensee shall comply with the order.

  WHEREFORE, good cause showing, the Commissioner is issuing an Order to Discontinue Violation Pursuant to Financial Code section 50321 and notifying Network Funding, LP of her intention to make the order final. 

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