STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BANKING AND )

FINANCE, )

)

Petitioner, )

)

vs. ) Case No. 99-3729

)

BLACKSTONE MORTGAGE COMPANY, )

a Florida corporation, and ) TERESA M. STEININGER, as owner and ) Principal Broker, )

)

Respondents. )

)

RECOMMENDED ORDER

An administrative hearing was conducted in this proceeding on December 3, 1999, in Orlando, Florida, before Daniel Manry, Administrative Law Judge, Division of Administrative Hearings. The parties, witness, and court reporter attended the hearing in Orlando. The undersigned participated by videoconference from Tallahassee, Florida.

APPEARANCES

For Petitioner: Chris Lindamood, Esquire

Department of Banking and Finance Hurston Tower South, Suite S-225

400 West Robinson Street Orlando, Florida 32801

For Respondent: No Appearance

STATEMENT OF THE ISSUES

The issues in this case are whether Respondent violated Sections 494.0043(1)(b), 494.0038(1)(a) and (b)1, and 494.0038(2)(a), Florida Statutes (1997), by failing to provide a

mortgagee's title insurance policy; by obtaining a mortgage broker fee without a written agreement; and by failing to disclose the receipt of rates, points, or fees on behalf of a lender; and, if so, what, if any, penalty should be imposed. (All chapter and section references are to Florida Statutes (1997) unless otherwise stated.)

PRELIMINARY STATEMENT

Petitioner filed an Administrative Complaint against Respondents on April 15, 1999. Respondents timely requested an administrative hearing.

At the hearing, Petitioner dismissed that portion of the Administrative Complaint pertaining to Respondent, Blackstone Mortgage Company ("Blackstone"). Ms. Steininger is the only Respondent in this case. The violations at issue in this proceeding occurred during a period in which Respondent was the sole shareholder and operator of Blackstone. Blackstone continues in operation under new ownership.

At the hearing, Petitioner presented the testimony of one witness and submitted 15 exhibits for admission in evidence.

Respondent did not appear and did not otherwise submit any evidence for admission in evidence.

The identity of the witness and exhibits, and the rulings regarding each, are set forth in the record of the hearing.

Neither party requested a transcript of the record. Petitioner timely filed its proposed recommended order ("PRO") on

December 13, 1999. Respondent did not file a PRO.

FINDINGS OF FACT

1. Petitioner is the state agency responsible for regulating mortgage brokers in Florida. Until September 1999, Respondent was licensed in the state as a mortgage broker pursuant to license number MB9804519. Respondent's license became inactive when Respondent did not renew her license.

2. At all times material to this proceeding, Respondent was the sole owner and operator of Blackstone. Blackstone is licensed in the state as mortgage brokerage business pursuant to license number MBB9901308.

3. On January 8, 1996, Mr. Brian S. Carter and Ms. Lisa G. Carter closed on the purchase of real property located at 1503 Mobile Avenue, Holly Hill, Florida 32117. A non-institutional lender provided a purchase money second mortgage of $19,100 through Karlis and Uldis Sprogis, as co-trustees of the K. E. Sprogis Trust.

4. Respondent was the mortgage broker responsible for the loan in the Carter transaction (the "Carter loan"). On November 12, 1995, Respondent entered into a mortgage brokerage contract with the Carters on behalf of Blackstone.

5. Respondent failed to obtain, or retain in the Carter loan file, a written receipt from the non-institutional lender for the title policy, an opinion of title by an attorney licensed to practice law in Florida, a binder of the title insurance or a conditional opinion of title, or a waiver thereof by the non-

   institutional lender. In her Petition for Hearing, Respondent admits the foregoing findings pertaining to the Carter loan.

6. On July 11, 1996, Ms. Kay George closed on the purchase of real property located at 2753 Foxdale Drive, Deltona, Florida 32738. Ms. George obtained a purchase money first mortgage in the amount of $56,000 from an institutional lender.

7. Respondent was the mortgage broker responsible for the loan in the George transaction (the "George loan"). On June 15, 1996, Respondent entered into a mortgage brokerage contract with Ms. George on behalf of Blackstone.

8. The mortgage broker contract stated that the mortgage brokerage fee to be paid by Ms. George would not exceed $400. However, the contract disclosed that Respondent would receive between $500 and $2,000 in additional compensation from the lender. The loan-closing documents in the George loan disclose that Respondent received additional compensation of $1,140 comprised of $840 in loan origination fees and $300 in processing fees. The mortgage broker contract failed to disclose the loan origination and processing fees paid by the lender to Respondent.

9. On December 29, 1997, Mr. Roy J. Piper and Ms. Laura A. Piper closed on the purchase of real property located at 30 Arrowhead Circle, Ormond Beach, Florida 32174. EMB Corporation ("EMB") provided a purchase money first mortgage of $68,400.

10. Respondent was the mortgage broker responsible for the loan in the Piper transaction (the "Piper loan"). On December 1,

    1997, Respondent entered into a mortgage brokerage contract with the Pipers on behalf of Blackstone.

11. The mortgage broker contract failed to state the amount of the mortgage brokerage fee to be paid by the Pipers. The contract also failed to disclose any additional compensation Respondent was to receive from EMB. The closing documents show that EMB paid Respondent $1,926.25 in additional compensation as a "broker service release premium."

12. On April 9, 1998, Ms. Sunday S. Reiland closed on the purchase of real property located at 300 Chipeway Avenue, Daytona Beach, Florida 32118. Ms. Reiland obtained a first mortgage in the amount of $96,000 from an institutional lender.

13. Respondent was the mortgage broker responsible for the loan in the Reiland transaction (the "Reiland loan"). On

    March 9, 1998, Respondent entered into a mortgage brokerage contract with Ms. Reiland on behalf of Blackstone.

14. The mortgage broker contract stated that the mortgage brokerage fee to be paid by Ms. Reiland would not exceed $250. However, the contract disclosed that Respondent would receive between $960 and $3,000 in additional compensation from the lender.

15. The loan closing documents in the Reiland loan disclose that Respondent received additional compensation of $730 comprised of a $480 "cash out fee" and a $250 processing fee. The mortgage broker contract failed to disclose the "cash out fee" and processing fee the lender paid to Respondent.

16. On April 23, 1998, Mr. Brian M. Reigel closed on the purchase of real property located at 931 Aspen Drive, South Daytona, Florida 32119. Mr. Reigel obtained a first mortgage in the amount of $39,425 from an institutional lender.

17. Respondent was the mortgage broker responsible for the loan in the Reigel transaction (the "Reigel loan"). On April 8, 1998, Respondent entered into a mortgage brokerage contract with Mr. Reigel on behalf of Blackstone.

18. The mortgage broker contract stated that the mortgage brokerage fee for the Reigel loan would not exceed $550. However, the contract also stated that Respondent would receive additional compensation from the lender ranging between $0 and

    $3,000. The loan closing documents in the Reigel loan disclose that Respondent received additional compensation of $1,038 from the borrower's funds for a loan discount fee and a processing fee.

19. On October 16, 1998, Mr. William M. Netterville, III,

    closed on the purchase of real property located at 808 South Grandview Avenue, Daytona Beach, Florida 32118. Mr. Netterville obtained a first mortgage in the amount of $66,000 from an institutional lender.

20. Respondent was the mortgage broker responsible for the loan in the Netterville transaction (the "Netterville loan"). On September 10, 1998, Respondent entered into a mortgage brokerage contract with Mr. Netterville on behalf of Blackstone.

21. The mortgage broker contract stated that the mortgage brokerage fee to be paid by the Mr. Netterville would not exceed

    $1,000. The loan-closing documents in the Netterville loan disclose that an additional mortgage broker fee of $500 was paid from the borrower's funds to Grandview Financial. The mortgage broker contract failed to disclose the fee paid to Grandview.

22. The mortgage broker contract in the Carter loan stated that the mortgage broker "can make loan commitments." However, Respondent could not make loan commitments. Only the lender could make loan commitments pursuant to a written commitment or "lock-in" for the loan. There is no evidence that the Carters ever obtained the necessary loan commitment from the lender. Respondent represented that the mortgage broker was able to provide loan commitments without disclosing the necessity for a written commitment from the lender.

    CONCLUSIONS OF LAW

23. The Division of Administrative Hearings has jurisdiction over the subject matter and parties. The parties were duly noticed for the administrative hearing.

24. Petitioner has the burden of proof in this proceeding. Petitioner must show by clear and convincing evidence that Respondent committed the acts alleged in the Administrative Complaint and the reasonableness of any penalty to be imposed. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

25. Petitioner satisfied its burden of proof in the Carter, Piper, and Netterville transactions. However, Petitioner failed

    to satisfy its burden of proof in the George, Reiland, and Reigel transactions.

26. Respondent violated Section 494.0043(1)(b) in the Carter transaction by failing to provide a non-institutional investor with a mortgagee's title insurance policy or opinion of title by an attorney licensed in the state. Respondent also violated Section 494.0043(1)(b) by failing to obtain a written waiver of the relevant requirements in the statute. The omissions committed by Respondent also violated Florida Administrative Code Rule 3D-40.175(7)(b)(1) and

    3D-40.175(9)(c)(1). (Unless otherwise stated, all references to rules are to rules promulgated in the Florida Administrative Code in effect on the date of this Recommended Order.)

27. Respondent also violated Section 494.0038(2)(a) in the Carter transaction. Respondent failed to properly disclose that Respondent could not make mortgage loan commitments without a written commitment or "lock-in" from the lender.

28. Respondent violated Section 494.0038(1) in the Piper and Netterville transactions by failing to disclose in the respective brokerage contracts the amount of brokerage fee charged in the Piper loan and the fee paid to Grandview in the Netterville loan. Neither of the charges imposed on the borrowers at closing in the Piper and Netterville loans were disclosed in the brokerage contract in violation of the

    requirements prescribed in Section 494.0038(1)(b)1 and 2. The actual charges imposed at closing exceeded those quoted in the mortgage brokerage contract.

29. Petitioner failed to show by clear and convincing evidence that Respondent violated Section 494.0038(1) in the George, Reiland, and Reigel loans. In each transaction, Respondent received additional compensation from the lender at closing. However, the respective mortgage broker contracts disclose that Respondent would receive additional compensation from the lender. The additional compensation received at closing did not exceed the additional compensation disclosed in each mortgage broker contract.

30. Section 494.0038(1)states, in relevant part:

    (b)1. If any of the rates, points, fees, and other terms quoted by or on behalf of the lender are to be received by the mortgage brokerage business, such fact shall be specifically disclosed to the borrower.

    
    

    2. If the mortgage brokerage fee is for brokering a loan for a particular program under which the brokerage fee varies according to the terms of the loan, the brokerage fee may be disclosed as a range of fees at the time of the application. The mortgage broker shall, in such instance, disclose the nature of the fee arrangement to the borrower, and the exact amount of the fee must be disclosed at settlement or closing. (emphasis supplied)

31. Disciplinary statutes such as Section 494.0038(1) are penal in nature and must be strictly interpreted against the authorization of discipline and in favor of the person sought to be penalized. Munch v. Department of Business and Professional

    Regulation, 592 So. 2d 1136, 1143 (Fla. 1st DCA 1992); Fleischman v. Department of Business and Professional Regulation, 441 So. 2d 1121, 1133 (Fla. 3d DCA 1983). A statute imposing a penalty is never to be construed in a manner that expands the statute.

    Hotel and Restaurant Commission v. Sunny Seas No. One, 104 So. 2d 570, 571 (Fla. 1958).

32. Petitioner cited no statute, rule, case law, or other authority for interpreting the term "range of fees" in Section 494.0038(1)(b)2 in a manner that excludes additional compensation in the form of "rates, points, and fees" described in Section 494.0038(1)(b)1 and charged by Respondent in the George, Reiland, and Reigel transactions. The quoted terms are not statutorily defined in Section 494.001. In the absence of a statutory definition, the quoted terms are properly construed by their common and ordinary meaning in favor of the person sought to be disciplined. Munch, 592 So. 2d at 1143; Fleischman, 441 So. 2d at 1133.

33. Section 494.0041 authorizes Petitioner to impose various penalties against Respondent. The penalties range from a written reprimand to revocation of Respondent's license.

34. The penalties that are reasonable in this case should be determined based on all of the surrounding facts and circumstances. Relevant facts and circumstances include the presence or absence of prior disciplinary history and the nature of the harm to the public. Rule 3D-40.111.

35. Revocation of a license under Section 494.0041(1)(a) should be aimed at the dishonest or unscrupulous. Cf. Dreyer v. Florida Real Estate Commission, 370 So. 2d 95, 100 (Fla. 4th DCA 1979); Brod v. Jernigan, 188 So. 2d 575, 581 (Fla. 2d DCA 1966); Rivard v. McCoy, 212 So. 2d 672, 674-676 (Fla. 1st DCA 1968). Petitioner failed to show by clear and convincing evidence that Respondent was dishonest or unscrupulous, rather than negligent, in the Carter, Piper, and Netterville transactions.

36. Petitioner failed to show that Respondent has any prior disciplinary history. Petitioner also failed to show that the harm caused to the individuals in the Carter, Piper, and Netterville transactions was substantial.

37. Petitioner submitted no evidence that Respondent's failure to provide a copy of title insurance to a non- institutional lender resulted in a title defect. Similarly, Petitioner submitted no evidence that Respondent's failure to disclose her inability to provide a loan commitment caused any harm to the borrower in the form of increased interest rates on the loan, or in some other form.

38. Petitioner did show that the violations committed by Respondent in the Piper and Netterville transactions resulted in the payment of $1,926.25 in additional compensation not disclosed in the mortgage brokerage contract for Piper and in the payment of $500 in an additional brokerage fee not disclosed in the mortgage brokerage contract for Netterville.

39. Section 494.0041(1)(d) and (e) authorizes the imposition of a written reprimand and a fine not to exceed $5,000 for each separate offense. In light of the absence of any evidence of prior disciplinary history and or dishonesty, the discipline imposed in this case should be limited to a written reprimand for the violations committed by Respondent in the Carter transaction and imposition of two fines in the respective amounts of $1,926.25 and $500 for each offense committed by Respondent in the Piper and Netterville transactions.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that Petitioner enter a Final Order finding Respondent not guilty of violating Section 494.038(1) in the George, Reiland, and Reigel transactions; guilty of violating Sections 494.043(1)(b) and 494.038(2) in the Carter transaction; guilty of violating Section 494.038(1) in the Piper and Netterville transactions; and issuing a written reprimand for Respondent's violations in the Carter transaction; and imposing fines totaling $2,426.25 for Respondent's violations in the Piper and Netterville transactions.

DONE AND ENTERED this 27th day of January, 2000, in Tallahassee, Leon County, Florida.

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 27th day of January, 2000.

COPIES FURNISHED:

Honorable Robert F. Milligan Comptroller

State of Florida

The Capitol, Plaza Level Tallahassee, Florida 32399-0350

Harry Hooper, General Counsel Fletcher Building, Suite 526

101 East Gaines Street Tallahassee, Florida 32399-0350

Chris Lindamood, Esquire Department of Banking and Finance Hurston Tower South, Suite S-225

400 West Robinson Street Orlando, Florida 32801

Teresa M. Steininger 8907 Roberts Drive

Dunwoody, Georgia 30350

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 99-003729

Orders for Case No: 99-003729