State of Connecticut Suspends Groton-Based Mortgage Company

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The state Department of Banking issued a 10-page summary suspension against Matrix Investment Corp. and said it is considering civil penalties
By Anthony Cronin

The Day, New London, Conn.

RISMEDIA, August 10 ? (KRT) ? State regulatory officials have suspended the licenses of a Groton-based financial services firm to make first and second mortgages, alleging that the firm violated a number of regulations governing the mortgage business.

The state Department of Banking issued a 10-page summary suspension against Matrix Investment Corp. and said it is considering civil penalties in connection with the eight violations cited in the complaint.

Matrix Investment Corp., which has offices on Poquonnock Road and Route 184 in Groton, offers a number of services, ranging from mortgage banking and real estate brokerage to government relations. The corporation, founded in 1982, is owned by the Johnson Family Trust. The privately held firm is headed by G. Thomas Johnson, who serves as its chairman and chief executive officer.

Brian J. Woolf, an East Hartford-based attorney representing Matrix, said the regulatory action was unfair and added that Matrix will vigorously challenge the suspension during a Banking Department hearing later this month. He said the suspension is harming the firm’s mortgage-related business, which operates in some 30 states. The firm offers both first mortgages as well as secondary mortgages, such as those used in refinancings.

“Obviously, the summary suspension without even a hearing is of grave concern to Matrix Investment Corp.,” Woolf said. “What it did, in effect, without any due process, is stopped them from conducting business,” he said. Woolf, whose private practice includes representing commercial and financial clients, was the state’s banking commissioner from 1980 to 1985 during the administration of former Gov. William A. O’Neill.

Connecticut banking regulators allege that Matrix failed to disburse loan proceeds in a timely manner in at least 10 refinancings of existing loans as well as three other refinanced loans. The regulators also claim that Matrix denied them “unrestricted” access to its principal place of business or “wherever records were located.” In the report, banking officials said the firm was “otherwise uncooperative with the examination and investigation.”

The suspension report also cited several civil actions against Matrix’s consumer credit business as well as a civil complaint filed by the state’s labor commissioner against Matrix concerning workplace issues. Banking officials allege that Matrix failed to notify the banking commissioner of the Labor Department violations and complaint.

In addition to the Connecticut banking department’s allegations, the New York State Department of Banking’s superintendent on July 25 temporarily suspended Matrix’s mortgage-related license in that state for 30 days. The temporary New York action will end on Aug. 23. The Long Island newspaper Newsday had reported that banking regulators took the action after receiving several complaints against the company. Both states’ banking departments oversee companies that offer mortgages to consumers.

State banking officials said Matrix’s hearing on the license suspension is tentatively scheduled for 10 a.m. on Wednesday, Aug. 24, at its offices on Constitution Plaza in Hartford, but the date could change depending on other hearings to be held. During the hearing, Matrix representatives will be able to offer evidence and rebuttal arguments against the state’s suspension order.

Woolf said that while the suspension is in effect, the firm cannot conduct mortgage-related activity in Connecticut. “Based upon information that I’ve obtained from my client, there’s no substantive violation of Connecticut law to warrant the action that the department has taken,” said the former banking commissioner. “Not one consumer has been financially harmed by anything that Matrix has done during its entire operation,” Woolf said.

Copyright ? 2005, The Day, New London, Conn.

Distributed by Knight Ridder/Tribune Business News.

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