STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE OF COMPTROLLER, )

)

Petitioner, )

)

vs. ) Case No. 86-2246

)

JOSEPH D. BURKE, )

)

Respondent. )

)

RECOMMENDED ORDER

Final hearing in the above-styled case was held in Titusville, Florida on September 25, 1986, before Mary Clark, Hearing Officer of the Division of Administrative Hearings.

The parties were represented as follows:

For Petitioner: Robert K. Good, Esquire

Office of the Comptroller

400 West Robinson Street, Suite 501 Orlando, Florida 32801

For Respondent: Joseph D. Burke

Post Office Box 323

Sagamore Beach, Massachusetts 02532 [did not appear at hearing]

Background and Procedural Matters

This proceeding commenced on April 29, 1986, with Petitioner's Notice of Intention to Suspend or Revoke and Administrative Charges and Complaint. The notice alleged several violations of Chapter 494 Florida Statutes, the "Mortgage Brokerage Act", and sought revocation or suspension of all licenses held by Respondent under that act.

Joseph D. Burke answered the notice with a petition for formal hearing disputing generally the allegations of the complaint. Mr. Burke did not appear at the final hearing but sent a letter, filed on September 29, 1986, that stated he chose "not to defend" and briefly discussed the various allegations. The facts contained within that letter have not been considered in the preparation of this Order. They are unsworn and ex parte, and are not competent evidence.

At the hearing Petitioner presented the testimony of two witnesses, a complainant and an agency financial examiner. Eleven exhibits were admitted, consisting of documents from Respondent's files relating to business transactions with various individuals seeking mortgage loans. Petitioner made a timely request to file a twelfth exhibit after the hearing.

Petitioner has submitted a proposed recommended order in compliance with Rule 22I-6.31 Florida Administrative Code. Specific rulings on each proposed finding of fact are included in the attached appendix.

Issue

The issue in this proceeding is whether Respondent violated Chapter 494 Florida Statutes, as alleged, and if so, what disciplinary action should be taken.

FINDINGS OF FACT

1. Joseph D. Burke first held broker's license number HB0013603 on February 23, 1984. Under that license Joseph Burke was principal broker for Burke Mortgage Company in Cocoa, Florida. The license was cancelled on September 1, 1985, for failure to renew. Joseph Burke also held two mortgage solicitor's licenses: HK 0009779 and HK 0011217, with Burke Financial Services Corporation. These licenses were active until August 31, 1986, and were not renewed.

   
   

2. The Department of Banking and Finance receives applications and issues all licenses to do business in the state of Florida for mortgage brokers and mortgage solicitors. Since 1984 the Department has conducted three complete examinations of Joseph Burke's mortgage broker/mortgage solicitor records.

   
   

3. Anthony D. Winn approached Joseph Burke in March or April 1985 for a mortgage loan for a house he was having built. Mr. Winn paid $200.00 for an investigation for credit and was given a form, "Good faith estimates", setting out estimated settlement charges and acknowledging collection of the $200.00. The form was signed by Becky Robinson, a person in the Burke Mortgage Company office, but not signed by the borrower. In May 1985, Mr. Winn gave two checks for $300.00 each to Joseph Burke. The verbal understanding was that these funds would be held in escrow for closing costs. No written agreement or confirmation was given. The builder and Anthony Winn decided to hold off on the contract for the house. Mr. Winn did not get his mortgage loan and never received any refund from Joseph Burke. The funds were not maintained in an escrow account.

   
   

4. On October 5, 1984, Joseph Burke issued a loan approval form on Burke Mortgage Company letterhead to Roland and Shirley Paquette, Sr. There was, in fact, no lender commitment. On February 13, 1985, a form was sent to the Paquettes denying credit for inability to verify income. In fact, the income had been verified by Aider Construction Company on September 12, 1984. The completed verification form was in the Burke Mortgage Company file.

   
   

5. On October 5, 1984, Joseph Burke issued a loan approval form to Roland and Lisa Paquette Jr. This was on Burke Mortgage Company letterhead and the file revealed no lender commitment to support the "approval". On February 13, 1985, the Paquettes were issued a statement of credit denial on the basis of "insufficient liquid assets to close the loan".

   
   

6. Three versions of a good faith estimate form were found in the file for Betty Lemert: one with figures signed by someone other than Joseph Burke or the borrower; one with figures unsigned by anyone; and one blank form signed by Betty Lemert. No broker's agreement was found in the Betty Lemert file.

7. Although Joseph Burke routinely accepted deposits he did not maintain a trust account.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1) Florida Statutes.

   
   

9. The Department of Banking and Finance may suspend a license for up to two years for (among other prohibited activities) failure to maintain a trust account and failure to comply with any rules promulgated under the provisions of the "Mortgage Brokerage Act". Subsections 494.05(1)(f) and (g) Florida Statutes.

   
   

10. The Department may revoke a license issued under Chapter 494 Florida Statutes, for (among other violations) a demonstrated course of conduct of negligence or incompetence. Subsection 494.05(2) Florida Statutes.

    
    

11. Rule 3D-40.006(5), Florida Administrative Code requires a licensee to maintain in his files a brokerage agreement and closing statement signed by the borrower for inspection by the Department for at least 5 years.

    
    

12. Rule 3D-40.006(6), Florida Administrative Code requires that if a mortgage broker accepts a deposit in connection with the application for a mortgage loan, there must be an agreement in writing signed by the parties, with each party retaining a copy, setting forth the disposition of the deposit, whether the loan is finally consummated or not.

    
    

13. Rule 3D-40.006(7), Florida Administrative Code requires that if deposits are accepted, the licensed mortgage broker must maintain a trust fund account and evidence of that account must be preserved and made available to the Department.

    
    

14. Through the testimony of a complainant and through the testimony and records compiled by the agency financial examiner, the Department has proved that Joseph D. Burke violated each of the above-cited provisions of law and rules.

    
    

15. While his broker's license has been cancelled and the six-months reactivation period provided in Rule 3D-40.003(3) Florida Administrative Code has expired, the mortgage solicitor's licenses have been inactive for only two months and could be reactivated through a summary, non-examination process in that rule.

RECOMMENDATION

Based upon the foregoing, it is recommended that the Petitioner, Office of the Comptroller, Department of Banking and Finance, enter its Final Order revoking the mortgage solicitor's licenses of Respondent, Joseph D. Burke.

DONE AND RECOMMENDED this 21st day of October, 1986, in Tallahassee, Florida.

MARY CLARK

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 21st day of October, 1986.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2246

The following constitute my specific rulings on the proposed findings of fact submitted by Petitioner in this case:

1. Adopted in paragraph #1.

2. Adopted in conclusion of law #3.

3. Adopted in general in paragraph #2. 4.and 5. Adopted in paragraph #4.

6.and 7. Rejected as unsubstantiated by the evidence.

1. Adopted in paragraph #5.

2. Rejected as unsubstantiated by the evidence.

3. and 11. Adopted in paragraph #6.

1. Adopted in Paragraph #7.

2. through 16. Adopted in general in paragraph #3.

COPIES FURNISHED:

Robert K. Good, Esquire Office of the Comptroller

400 West Robinson Street Orlando, Florida 32801

Joseph D. Burke Post Office Box 323

Sagamore Beach, MA 02532

Docket for Case No: 86-002246

Orders for Case No: 86-002246