COMMONWEALTH OF VIRGINIA STATE CORPORAT[ION COMMISSION

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

V.

SECURITY TRUST MORTGAGE, L.L.C., Defendant

APPLICATION OF

DANIEL MCDONALD

For a mortgage loan originator license

ICE C

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CASE NO. BFI-2012-00067

CASE NO. BFI-2013-00069

14EARING EXAMINER'S RULING

July 18,2013

On April 9, 2013, the State Corporation Commission ("Commission") issued a Rule to Show Cause in which the Bureau of Financial Institutions ("Bureau") is seeking an order from the Commission revoking the license of Security Trust Mortgage, L.L.C . ("Security Trust"), a mortgage broker licensed under Chapter 16 of Title 6.2 of the Code of Virginia ("Code"), pursuant to § 6.2-1619 of the Code. That case was docketed as Case No . BFI-2012-00067, and assigned to a hearing examiner to conduct all further proceedings on behalf of the Commission and to file a final report .

Daniel McDonald, sole owner and officer of Security Trust, filed a Response to Rule to Show Cause ("Response") on behalf of Security Trust on May 9, 2013 . The Bureau filed a Motion for Default Judgment on May 24, 2013, contending among other things that the Response was defective as McDonald cannot represent Security Trust because he is not a licensed attorney, and that entry of defaultjudgment was appropriate. That Motion is pending.

On June 6, 2013, the Commission issued a Scheduling Order on the Application of Daniel McDonald ("McDonald") which contests the denial of his application for a mortgage loan originator license. That case was docketed as Case No. BFI-2013-00069, and also assigned to a hearing examiner to conduct all further proceedings on behalf of the Commission and to file a final report .

In the June 6, 2013, Scheduling Order the Commission determined there is significant overlap between the issues involved in both proceedings as McDonald is the sole owner and officer of Security Trust . In the interests of judicial economy the cases therefore were combined for purposes of hearing to be scheduled by the examiner .

As directed by the Commission, the Bureau filed a response to McDonald's application on July 16, 2013 ("Bureau Response"). The Bureau contends that the application should fail because McDonald is not eligible for a license . The Bureau asserts that McDonald has failed to identify facts or circumstances that have changed since the Commission affirmed the Bureau's License Denial Order dated December 27, 201 1, that would warrant his receipt of a license now. The

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Commission's order was issued just a year ago . ' The Bureau also asserts that McDonald is barred a from bringing the current application by the doctrines of collateral estoppel or, alternatively, res

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I find that McDonald should be provided an opportunity to offer evidence of changed W circumstances . Moreover, Security Trust should also be provided an opportunity to present CO

evidence, through Virginia legal counsel, why its license should not be revoked as requested by the Bureau . I therefore find that a consolidated hearing should be scheduled for the purpose of receiving evidence on both cases . Accordingly,

IT IS HEREBY DIRECTED that a hearing shall be convened on September 11, 2013, at 10 a.m . in the Commission's Courtroom, Second Floor, Tyler Building, 1300 East Main Street, Richmond, Virginia 23219, at which time evidence will be received on the application of McDonald contesting the denial of his application for a mortgage loan originator license and, the related Rule to Show Cause issued against Security Trust .

torah V. Elleanbergg Chief Hearing Examiner

Document Control Center is requested to mail by REGULAR and CERTIFIED MAIL, RETURN RECEIPT REQUESTED, to : Daniel McDonald, 1407 Hearthstone Drive, Fredericksburg, Virginia 2240 1 ; and Daniel McDonald, President, Security Trust Mortgage, L.L.C., 1407 Hearthstone Drive, Fredericksburg, Virginia 22401 .

' Petition of Daniel McDonald, For approval of mortgage loan originator license, Case No. BFI-2012-00003, 2012 S.C.C . Ann. Rep. 22 . Bureau Response at 1 .

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