STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROGELIO SANTOS, )

)

Petitioner, )

)

vs. ) CASE No. 86-0691

) DEPARTMENT OF BANKING AND FINANCE, ) DIVISION OF FINANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officers Donald R. Alexander, on April 15, 1986 in Miami, Florida.

APPEARANCES

For Petitioner: Robert Wayne, Esquire

1225 South West 87th Avenue Miami, Florida 33174

For Respondent: Charles E. Scarlett Esquire

The Capitol, Suite 1302 Tallahassee, Florida 32301

BACKGROUND

This matter arose when respondents Department of Banking and Financed Division of Financed issued proposed agency action on February 5, 1986 advising petitioner, Rogelio Santos, that his application for registration as a mortgage solicitor had been denied because petitioner lacked the requisite honesty, truthfulness and integrity necessary for licensing. This finding stemmed from an incident which occurred when Santos worked as a loan officer at a lending institution in Coral Gables, Florida, in September, 1985. Respondent disputed the above finding and requested a formal hearing to contest the proposed agency action. The matter was forwarded by respondent to the Division of Administrative Hearings on March 5, 1986, with a request for a

formal hearing. By notice of hearing dated March 31, 1986, a final hearing was scheduled for April 25, 1986 in Miami, Florida.

At final hearing, petitioner testified on his own behalf presented the testimony of Jeffrey R. Glick and offered petitioner's exhibits 1 and 2 which were received in evidence. Respondent presented the testimony of Luis Alvarez and Ann Gott, and offered respondent's exhibits 1 and 2. Both were received in evidence.

The transcript of hearing was filed on June 20, 1986.

Neither party filed proposed findings of fact and conclusions of law.

The issue is whether petitioner meets the qualifications for registration as a mortgage solicitor.

Based upon all of the evidence the following findings of fact are determined:

FINDINGS OF FACT

1. On November 8, 1985, Petitioners Rogelio Santos, made application with respondent Department of Banking and Finance Division of Finance (Division or agency), for licensure as a mortgage solicitor. After conducting an investigation of petitioner's background, the agency issued a proposed final order on February 15, 1986, denying the application on the ground petitioner had not exhibited the requisite honesty, truthfulness and integrity necessary for licensure. The proposed agency action precipitated the instant proceeding.

   
   

2. On August 1, 1985 petitioner began working as a loan officer with First American Mortgage Corporation (First American) in Coral Gables Florida. In the early part of that month Luis Alvarez visited the offices of First American for the purpose of securing a $81,800 first mortgage on a house located at 1601 S.W. 83rd Avenue, Miami. Alvarez was referred to petitioner for assistance. Petitioner took Alvarez's application and required him to sign a request for verification of deposit (VOD) form. As a general rule, the VOD is signed in blank by the applicant, and then forwarded to a loan processor who fills in the upper part of the form with information taken from the loan application. The VOD is then sent to depositories (such as banks, saving and loan associations and credit unions) who independently verify the deposits listed by the applicant on the loan application. Among other things, the depository fills in the type of account, account number, current balance, average balance for previous two months and date account opened. After completion, the VOD is

   then returned to the lender who uses that information to evaluate the applicant's creditworthiness.

   
   

3. Alvarez stated on the loan application he had $10,000 in an account at Southeast Bank in Miami (Southeast). The loan processor then typed in the amount of $1,000 (rather than

   $10,000) on the VOD, and forwarded it to Southeast for verification. For some reason, the form was not typed and mailed until September 6. Southeast completed the form on September 9, 1985. It was received by Santos on September 12, and reflected that Alvarez had a current balance of $5,708.01 and an average balance for the previous two months of $2,800.00. The current balance was a sufficient amount of cash to close on the loan.

   However- because the current balance was greater than the average balance for the two previous months, Santos was required to obtain an explanation from the applicant for the recent increase in the account balance, and to send out a new VOD confirming the updated information. Having been previously told to process applications as quickly as possible and knowing that the obtaining of new information would delay the loan for several more weeks Santos altered the VOD on September 12 by increasing the average balance for the previous two months from $2,800.00 to

   $12,800. He did this by adding a III in front of the number

   $2,800. By doing this, the VOD showed a larger average balance for the previous two months then the current balance, and no further information from Alvarez was needed. Santos then forwarded the altered VOD to a loan processor for further processing without disclosing his actions.

   
   

4. On September 16 a First American loan processor questioned the $12,800 figure, believing the VOD had been altered. After being questioned, Santos readily acknowledged that he had changed the figure. Santos was then requested to immediately resign from the institution. However First American's president gave Santos a good recommendation when he sought employment elsewhere and testified at final hearing that Santos would be a good employee with proper supervision.

   
   

5. With full knowledge of the prior incident Mountain South Corporation (Mountain South), another lending institution in the Miami area, hired Santos a few weeks later. In order to retain his job it was necessary that Santos obtain a license as a mortgage solicitor. When his application was denied by respondent he could no longer work at Mountain South. If the application is approved he will be rehired by that institution. This was confirmed by Mountain South's president who testified at final hearing.

   
   

6. Alvarez was financially qualified for the loan irrespective of Santos' alteration of the figure. Although

   Alvarez's application was initially denied by First American it was because he failed to disclose on the application that he was self-employed. The denial had nothing to do with Santos' action. After submitting a corrected applications Alvarez was approved for the loan and he closed on the property in December, 1985.

   
   

7. Santos is a college graduate and has worked in the mortgage banking business for approximately three years. Prior to joining First American, he worked as loan officer at the Kendall branch of Centrust Mortgage Corporation of Miami. He was in charge of underwriting all mortgage loans at that branch. During his tenure with the firms Santos had one of the highest approval rates of loans of any of his counterparts in the other fifteen Centrust branch offices, and his work was described as "quality" by one of its senior officers. Santos considers his actions at First American to be a brief lapse of judgments and desires to reenter the mortgage brokerage profession.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1985).

   
   

9. Subsection 494.04(4), Florida Statutes (1985), provides the following requirements relative to licensure of mortgage solicitors:

   
   

   (4)...The department shall require such information with regard to the applicant as it may deem desirable, with due regard to the paramount interests of the public as to the experience, backgrounds honesty, truthful- ness, integrity, and competency of the appli- cant as to financial transactions involving primary or subordinate mortgage financing

   
   

10. Subsection 494.05(4), Florida Statutes (1985), provides that a license application may be denied if:

    
    

    An applicant does not meet all requirements of s. 494.04, has been guilty of any of the actions specified in subsection (1) of this section; or has violated any other provision of this chapter.

    
    

11. Subsection 494.05(1)(b), Florida Statutes (1985), proscribes the following conduct:

    (b) Misrepresentation, circumvention, or concealment by the licensee through whatever subterfuge or device of any of the material particulars or the nature thereof, regarding a transaction to which he is a party, and of injury to another party thereto.

    
    

12. The agency alleges that Santos' actions constituted misrepresentation or concealment, and that Alvarez suffered injury by virtue of this conduct. Therefore, it contends the application should be denied.

    
    

13. In order for the agency to deny licensure, the foregoing statute (s. 494.05(1)(b), F.S.) requires (a) that the applicant misrepresent, circumvent or conceal a material particular in a transaction, and (b) that such action result in injury to a third party. In the case at barb it is undisputed that Santos concealed the alteration of the VOD in the Alvarez transaction. Since this document was used to determine the credit-worthiness of the applicant, it must be deemed to be a "material particular" in the transaction. However there was no injury to Alvarez by virtue of said concealment. He was otherwise financially qualified to close on the loan and even without the alteration his application would have been denied on the ground he misstated the nature of his employment. This was confirmed by testimony of a First American officer. Therefore petitioner's actions do not constitute a basis for licensure denial under this statute.

    
    

14. Subsection 494.05(4) requires that an applicant meet all requirements of Subsection 494.04(4). Among other things the latter statute requires an applicant to have the attributes of honesty, truthfulness and integrity in matters relating to mortgage financing. Therefore, the pertinent inquiry is whether Santos' actions ate First American are such as to render him dishonest, untruthful and without integrity. In resolving this question, it is noted that his last three employers (including First American) all characterized him as a good employee. He also has a job waiting at a lending institution if licensure is granted. Given the single isolated lapse of judgment, the recommendations of his former employers, and the undersigned's belief that the interests of the public will not be compromised, it is concluded that the application should he approved.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of lawn it is

RECOMMENDED that the application of Rogelio Santos for registration as a mortgage solicitor he GRANTED.

DONE and ORDERED this 24th day of July, 1986, in Tallahassee Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of July, 1986.

ENDNOTES

1/ Proposed findings of fact and conclusions of law were due ten days after the transcript of hearing was filed, or by June 30, 1986.

2/ Although it was suggested at hearing that Santos also knew that Alvarez was self-employed, and did not disclose this information to his superiors, Santos' testimony to the contrary is accepted as being more credible and persuasive.

COPIES FURNISHED:

Robert Wayne, Esquire

1225 South West 87th Avenue Miami, Florida 33174

Charles E. Scarlett Esquire The Capitol, Suite 1302 Tallahassee Florida 32301

Gerald Lewis, Comptroller The Capitol

Tallahassee, Florida 32301

Docket for Case No: 86-000691

Orders for Case No: 86-000691