STATEWIDE GRIEVANCE COMMITTEE

Citicorp Mortgage, Inc., Complainant vs. Jay B. Matz, Respondent

Grievance Complaint #95-0349

PROPOSED DECISION

Pursuant to Practice Book '27J, the undersigned, duly- appointed reviewing committee of the Statewide Grievance Committee, conducted a hearing at the Superior Court, 235 Church Street, New Haven, Connecticut, on March 6, 1996, and June 5, 1996. The hearing addressed the record of the complaint filed on October 25, 1995, and the probable cause determination filed by the Danbury Judicial District Grievance Panel on December 21, 1995, finding that there existed probable cause that the Respondent violated Rule 8.4(c) of the Rules of Professional Conduct.

Notices of the hearing were mailed to the Complainant and to the Respondent. The Complainant, represented by counsel, appeared at the March 6, 1996 hearing. The Respondent appeared at both the March 6, 1996 and the June 5, 1996 hearings and gave testimony. An exhibit was received into evidence.

This reviewing committee finds the following facts by clear and convincing evidence:

In or about March and April, 1989, the Respondent and his wife executed an agreement to purchase a home in Trumbull, Connecticut for $258,000.00. Subsequent to entering into the contract, the Respondent and his wife applied to the Complainant for a mortgage loan to partially finance the purchase. On or about April 19, 1989, the Complainant issued the Respondent and his wife a mortgage loan commitment in the amount of $206,400.00. The commitment provided, in part, that "[t]here shall be no other financing affecting the premises at the closing unless approved by" the Complainant. The Respondent and his wife accepted the Complainant's mortgage loan commitment on or about April 28, 1989.

The closing on the property took place on or about June 23, 1989. In connection with the closing, the Respondent and his wife signed a disclosure/settlement statement reflecting that the difference between the purchase price of the property and the Complainant's mortgage loan was paid for by the Respondent and his wife with their own funds. In fact, the seller of the property provided the Respondent and his wife with secondary mortgage financing in the amount of $51,100.00. The secondary financing was not disclosed by the Respondent and his wife to the Complainant and violated the terms of the Complainant's mortgage loan. The Complainant discovered the existence of the secondary financing agreement when the Respondent and his wife defaulted on the mortgage loan.

This reviewing committee also considered the following:

The Respondent testified that in purchasing the property he relied on the advice of a mortgage broker who assured him that the transaction, as it occurred, was a common one and was not improper. The Respondent testified that he never intended to cause anyone any harm, that he should have known better, and he should not have relied on the broker.

It is the opinion of this reviewing committee that there exists clear and convincing evidence that the Respondent violated Rule 8.4(c) of the Rules of Professional Conduct. The Respondent obtained a mortgage loan from the Complainant under false pretenses and based on a clear misrepresentation to the Complainant. The Respondent knowingly obtained financing from the Complainant and entered into a secondary financing transaction clearly contrary to the terms of his agreement with the Complainant. It is our recommendation that the Respondent be reprimanded by the Statewide Grievance Committee.

Attorney Margaret P. Mason

Mr. Marcus R. McCraven