STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BANKING AND )

FINANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 93-0174

)

HARRIETT IJAMES, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Tampa, Florida on April 13, 1993, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Lisa L. Elwell, Esquire

Assistant General Counsel Office of the Comptroller Regional Service Center

1313 Tampa Street, Suite 615

Tampa, Florida 33602-3394

For the Respondent: Harriett Ijames, pro se

8341 Paddlewheel Street

Tampa, Florida 33617 STATEMENT OF THE ISSUES

The issue for consideration in this matter is whether Respondent's license as a mortgage broker in Florida should be disciplined because of the matters alleged in the Administrative complaint filed herein.

PRELIMINARY MATTERS

By an Administrative Complaint for Order to Cease and Desist, dated October 8, 1992, the Department of Banking and Finance, (Department), alleged that the Respondent herein, Harriett Ijames, violated the terms and conditions of a Final Order of the Department; received a fee without a written broker agreement; accepted an application fee prior to making adequate written disclosure to a loan applicant; assessed a non-refundable fee without adequate disclosure; and converted funds obtained through misrepresentation; all in violation of various sections of Chapter 494, Florida Statutes. On January 7, 1993, through counsel, Respondent denied the allegations and demanded a formal hearing. This hearing followed.

Prior to the hearing, Respondent's counsel moved to withdraw for cause. The motion was granted. Thereafter, at Respondent's request, the undersigned continued the hearing to allow her time to retain alternate counsel. Several days prior to the hearing, Respondent telephonically contacted the undersigned to request additional time to secure counsel and was advised to contact the Department's counsel to secure her concurrence. This was not forthcoming.

Respondent thereafter appeared at hearing without counsel and reiterated her request for additional time, representing she had just recently retained counsel who directed her to request another continuance to allow him time to prepare.

Counsel, however, neither contacted the undersigned himself or filed an appearance. Respondent's ore tenus motion for further continuance was denied.

At the hearing, Petitioner presented the testimony of Arthur M. James, the Department's Area Financial Manager for the Division of Finance; Rufus and Rhudine McGhee, clients of the Respondent; George Banks, a licensed mortgage broker; and Frank Brigliadora, also a licensed mortgage broker. Petitioner also introduced Petitioner's Exhibits 1 through 7. Respondent testified in her own behalf and introduced Respondent's Exhibit A.

A transcript was provided. Subsequent to the hearing, counsel for Petitioner submitted Proposed Findings of Fact which have been accepted and are incorporated herein. Respondent failed to submit either Proposed Findings of Fact or argument after hearing.

FINDINGS OF FACT

1. At all times pertinent to the allegations herein, the Petitioner, Department of Banking and Finance, (Department), was the state agency in Florida responsible for the regulation and licensing of mortgage brokers in this state, and Respondent, Harriet Ijames, was a licensed mortgage broker.

   
   

2. On February 17, 1989, Respondent entered into a Stipulation, Consent Agreement and Final Order with the Department whereby she was placed on probation for 2 years for misconduct relating to the misappropriation of mortgage application fees, with the further requirement that she not act independently but under the supervision of a broker acceptable to the Department.

   
   

3. On October 2, 1991, the Department filed a complaint against the Respondent alleging she had violated the terms of the prior Consent Order by conducting business as a mortgage broker without the requisite supervision. Thereafter, on April 29, 1992, Respondent entered into another Stipulation, Consent Agreement and Final Order with the Department regarding the October, 1991 complaint by which she was again placed on probation conditioned upon her operating only under the supervision of an approved broker. This latter Order provided that any violation thereof would be automatic grounds for immediate and summary revocation of her license and also imposed an administrative fine of

   $2,000.00. The Final Order incorporating that agreement was issued by the Department on July 13, 1992.

   
   

4. In May, 1992, Respondent was contacted by Rhudine M. McGhee, a resident of Tampa, who had been referred to her by a mutual acquaintance. Mrs. McGhee indicated she was interested in purchasing another house. Somewhat later, Respondent contacted Mrs. McGhee and told her of a friend who had a house for sale. She also gave Mrs. McGhee the addresses of some other houses in the area which were for sale. Mrs. McGhee did not like any of them. Thereafter, Respondent advised Mrs. McGhee that she was a mortgage broker and not a real

   estate broker, and that she would have a real estate broker contact her. Respondent also offered to provide Mrs. McGhee with listings of Resolution Trust Corporation foreclosures in the desired price range.

   
   

5. Some time later, the broker referred by Respondent showed Mrs. McGhee a house she liked and she signed a contract to buy it. In the interim, Respondent had taken a credit application from the McGhees over the phone and followed up with a visit to the McGhee home. On May 13, 1992, during the visit to the McGhee residence, Respondent had Mrs. McGhee sign a loan application. On that same visit, she solicited and received from Mrs. McGhee a check for $300.00, payable to the Respondent and subsequently endorsed and cashed by her, which reflected the check was the application fee for a loan. She specifically asked that the check be made to her, personally. When Mrs. McGhee asked Respondent about the check, she was told it would be credited to the purchase price at time of closing. This was not done and it was only later, after a complaint was filed with the Department, that Mr. Brigliadora, the mortgage broker with whom she was affiliated, repaid the fee from his company's funds.

   
   

6. Though at hearing Respondent denied she took a loan application fee or that the check she received was for that purpose or bore any notation to that effect when received, Mrs. McGhee is quite certain she put that notation on the check at her husband's direction at the time she gave it to Respondent. Respondent claimed the check was for finding the house but Mr. McGhee specifically recalls Respondent indicating the check was to be an application fee to be credited against the purchase price. It is so found.

   
   

7. On June 1, 1992, Respondent again returned to the McGhee home to have them sign a second loan application. This time Mr. McGhee was not at home and Respondent suggested to Mrs. McGhee that she sign her husband's name to the application. This was done. Respondent did not give the McGhees copies of the applications they signed but said she would bring them copies at a later date. This was never done. Though Respondent also denies soliciting the second application, her apparent signature appears on both application forms and it is found she did both solicit and sign the forms and the application fee check.

   
   

8. The first application was for a loan of $80,000.00 at 8.5 percent. The second was for $36,000.00 at 8.625 percent.

   
   

9. At the time of the solicitation, Respondent was employed by Frank Brigliadora, a licensed mortgage broker and owner of the Money Tree Mortgage Co. However, neither Respondent nor Mr. Brigliadora had notified the Department of their arrangement or obtained Departmental approval of the supervisory relationship.

   
   

10. Clearly, Respondent knew the taking of an application fee, as the evidence indicates she did here, was inappropriate. Sometime in mid 1992, Respondent approached George Banks, a licensed mortgage broker in Tampa and owner of his own brokerage company, with a view toward working for him. In their conversation about that, they discussed the practice of application fees. Respondent indicated she wanted to take a fee of $200.00 to $300.00 up front, but Banks felt this was not proper, advised her so, and declined to accept her as a broker. Even when she claimed that other brokers took fees of this nature, he demurred, claiming he did not endorse the practice.

11. Respondent worked for Mr. Brigliadora, a licensed mortgage broker, at his firm, Money Street Mortgage, for approximately 3 months during 1992. At the time she went to work for him, Respondent did not tell him she was under sanctions by the Department to have strict supervision and at no time did he agree to the Departmental supervision program.

    
    

12. Mr. Brigliadora did not receive the $300.00 check Respondent obtained from the McGhees nor did he ever get the money it represented from the Respondent. It was only just before or at the closing on the property that he first became aware of the deposit. When he refunded the money to the McGhees, Respondent agreed to reimburse him but she never did.

    
    

13. Normally, Money Street Mortgage does not take application fees on residential loans, and Mr. Brigliadora denies he ever approved or suggested to Respondent that she solicit them. When Respondent gave him the documentation on the McGhee loan application it did not include the required good faith estimate found in the brokerage agreement nor did the application form or any other document make the required disclosures. The application he got from Respondent does not constitute a brokerage agreement and Mr. Brigliadora never got one from the Respondent on this loan. What he received is no more than an application for a loan.

    
    

14. Mr. James, the Department's Area Financial Manager, whose job includes the assignment of examiners and the review of investigations by examiners, knows Respondent as a licensed mortgage broker under Chapter 494, Florida Statutes.

    He is aware of prior complaints received by the Department about the Respondent in the past. Two of them relate to the Final Orders previously mentioned herein.

    
    

15. In the instant case, he recalls receiving a telephone call regarding a deposit of $300.00 given to Respondent and commenced an investigation into the incident. The current Administrative Complaint which resulted in this hearing was the outcome of that investigation. Based on his evaluation of the matters discovered in the investigation, he concluded that Respondent took a fee from a client without having a brokerage agreement with that client; failed to make the required full disclosure to a client; and misappropriated a fee which she received from a client; all of which are violations of various provisions of Chapter 494.

    
    

16. In his official capacity with the Department, Mr. James had the duty to approve a supervisory mortgage broker for the Respondent as called for in the two prior Final Orders referred to previously herein. Neither Money Street Mortgage nor Mr. Brigliadora were submitted by Respondent for approval by the Department even though Respondent knew she was required to do so.

    
    

17. Respondent claims she made it very clear to Mrs. McGhee that she was a mortgage broker and not a real estate broker. Nonetheless, Mrs. McGhee, she claims, insisted Respondent help her and offered to pay her for her efforts. Respondent claims that all Petitioner's witnesses lied about her and forged documents relating to her alleged activities. She denies she would ever cheat or disobey the rules because she knows she would lose her license if she did. Claiming she is well respected in the community, she asserts the Department did not thoroughly investigate the allegations against her and is, therefore, destroying her reputation over something which did not happen as alleged. Her assertions are not accepted, however.

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

    
    

19. In its Administrative Complaint, the Department has charged Respondent with several violations of the provisions of Chapter 494, Florida Statutes, including the failure to comply with the terms of an Order of the Department; receiving a fee as a mortgage broker without a written agreement with a borrower; accepting an application fee for a mortgage without making proper disclosures to the borrower; converting funds fraudulently obtained through misrepresentations made to a loan applicant; and by generally engaging in a pattern of misconduct in her dealing with a mortgage applicant. The burden of proof is on the Department to establish the misconduct of the Respondent by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

20. Section 494.0041(2), Florida Statutes, permits the discipline of a mortgage broker for:

    
    

    (b) Fraud, misrepresentation, deceit, negligence or incompetence, in any mortgage financing transaction.

    (j) Failure to comply with any department order or rule made or issued under ss. 494.001 - 494.0077.

    
    

21. Under the provision of Section 494.0038, Florida Statutes, a person may not receive a fee for acting as a mortgage broker except pursuant to a written agreement between the brokerage and the borrower, which must describe the services to be provided and specify the amount of and terms for payment of a fee. In addition, the broker must make full disclosure to the borrower of certain information pertinent to the relationship. It is, therefore, unlawful for a person to act in a deceptive manner so as to perpetrate a fraud upon any borrower or lender or to obtain property by fraud, willful misrepresentation of a future act, or false promise. (Section 494.0025, Florida Statutes).

    
    

22. In 1989 and again in 1992, the Department entered Orders directing the Respondent to refrain from any activity in the mortgage brokerage business without such activity being under the supervision of another licensed mortgage broker approved by the Department. The Department had the authority to issue such orders under Section 494.0014, Florida Statutes. Nonetheless, shortly after the entry of the second Order, Respondent, who was working with a mortgage brokerage firm at the time, obtained an application for a mortgage loan from a client, and accepted a fee therefor. Though she was associated with a mortgage brokerage firm, the relationship had not been approved by the Department as was required by its prior Orders, and this activity constitutes a violation of Section 494.0041(2)(j), Florida Statutes.

    
    

23. Though she denies the check she received from the client was a fee for obtaining a mortgage, the evidence indicates to the contrary and her acceptance of this fee was improper in light of the fact that there was no brokerage agreement but, instead, merely an application for a loan. This is in violation of Section 494.0038(1)(a), Florida Statutes. In addition, the acceptance of the fee without making the required full written disclosure called for in the statute, also constitutes a violation of Section 494.0038(2), Florida Statutes.

24. The evidence clearly shows that notwithstanding her representation to the client that the fee paid to her by them would be credited to their account at closing, it was neither transmitted to the closer nor credited to them but, instead, was improperly converted by her to her own uses. This is a violation of Sections 494.0025(4) and 494.0041(2)(b), Florida Statutes. Taken together, the evidence of Respondent's activity demonstrates a clear pattern of misconduct in the conduct of mortgage brokerage activity, which is a violat ion of Section 494.0014(3), Florida Statutes.

    
    

25. Having concluded that Respondent has repeatedly and in several particulars been in violation of the statutes governing the activities of mortgage brokers, the question remains as to the appropriate disciplinary action to be taken against her. The evidence of record indicates this is not the first instance of misconduct in which the Respondent has been involved and demonstrates clearly her lack of qualifications to hold a mortgage broker's licence.

    
    

26. Petitioner indicates, in its Proposed Recommended Order, its desire to impose an administrative fine in the amount of $20,000.00 against the Respondent in addition to a revocation of her license. The two previous disciplinary Orders issued by the Department against the Respondent reflect her total disregard of business ethics and professional decorum in her dealing with the public and, in addition, for the requirements imposed upon her by the Department. Her license should be revoked. However, it does not appear, from the evidence presented, that her improper actions were so egregious or so unjustly enriched her that the administrative fine sought would be appropriate.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

Recommended that a Final Order be entered in this case finding her guilty of the offenses alleged in the Administrative Complaint filed herein; revoking Harriett Ijames' license as a mortgage broker in Florida; and imposing an administrative fine of $5,000.00.

RECOMMENDED this 24th day of May, 1993, in Tallahassee, Florida.

ARNOLD H. POLLOCK

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of May, 1993.

COPIES FURNISHED:

Lisa L. Elwell, Esquire Office of the Comptroller 1313 Tampa Street, Suite 615

Tampa, Florida 33602-3394

Harriett Ijames

8341 Paddlewheel Street

Tampa, Florida 33617

Gerald Lewis Comptroller State of Florida

The Capitol, Plaza Level Tallahassee, Florida 32399-0350

William G. Reeves General Counsel

Department of Banking and Finance Room 1302

The Capitol

Tallahassee, Florida 32399-0350

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency which will issue the Final Order in this case concerning its rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency which will issue the Final Order in this case.

Docket for Case No: 93-000174

Orders for Case No: 93-000174