Findings Of Fact For the purposes of these proceedings, Jager Industries, Inc. and Castle Realty Ltd. are synonymous as Petitioner. Through name changes, Castle Realty Ltd. became Jager Industries, Inc. Under the provisions of the Mortgage Brokerage Act, Chapter 494, Florida Statutes, the Office of the Comptroller, Department of Banking and Finance (Department), is charged with the responsibility and duty of administering the Mortgage Brokerage Guaranty Fund (Fund) which includes the duty to approve or deny applications for payment from the Fund, as set forth in Section 494.042, Florida Statutes. At all times material hereto, 1st Federated Realty Mortgage, Inc. (1st Federated) was licensed as a mortgage broker in this state pursuant to Chapter 494, Florida Statutes, having license number HE 7896. On or about January 8, 1981, 1st Federated filed for bankruptcy in the United States Bankruptcy Court for the Middle District of Florida, Tampa, Division. Thereafter, on or about December 16, 1981, 1st Federated was dissolved. On January 29, 1985, the Department received a letter dated January 25, 1985, by regular mail, requesting payment from the Fund on behalf of Castle Realty Ltd. Attached to the letter was a final judgment entered on April 21, 1982, in the Circuit Court for Pinellas County against 1st Federated in the principal amount of $50,000 based upon a violation of Section 494.042(2)(d), Florida Statutes, a Writ of Execution returned unsatisfied and an Affidavit of Reasonable Search. Thereafter on May 17, 1987, the Department received by certified mail a copy of the Complaint filed against 1st Federated and supporting documents including a copy of the Master Loan Commitment, Affidavit and Acceptance of Service. Pursuant to the Master Loan Commitment, Castle Realty paid $50,000 to 1st Federated as a Master Commitment Fee in exchange for a promise by 1st Federated to fund up to $4,000,000 for individual condominium loans. The individual commitments and closing of loans were subject to the lender approving the borrower's credit; however, approvals could not be unreasonable withheld. Timely notice of the institution of the action by Petitioner against 1st Federated as required by s. 494.043(5), Florida Statutes (1985), was waived by Respondent. No evidence was submitted regarding the number of claims involving 1st Federated and the amount of those claims that have been paid by Respondent from the Fund. Accordingly, no recommendation is made regarding the amount of Petitioner's claim that may be paid from the Fund pursuant to the limitations contained in s. 494.044, Florida Statutes (1985). By Notice of Intent to Deny Payment from the Mortgage Brokerage Guaranty Fund dated May 22, 1987, Respondent entered findings of fact, conclusions of law and denied Petitioner's claim. As grounds therefor, Respondent concluded that the 1985 and 1986 amendments to Chapter 494 were applicable in this case as those amendments were remedial or procedural in nature and should be given retrospective application. Thereafter, Petitioner requested formal proceedings by petition filed June 16, 1987, and this request was forwarded to the Division of Administrative Hearings by the Comptroller's letter dated July 23, 1987.
Findings Of Fact Express Financial Group of Florida, Inc., (EFGF) has never been licensed as a mortgage brokerage business pursuant to Chapter 494, Florida Statutes. Express Financial Mortgage Systems- Inc., (EFMS) was first registered as a mortgage brokerage business on June 21, 1988, with registration NO. HB 133412124. James C. Saunders was the licensed principal broker. EFMS renewed its registration on September 1, 1988, and the registration is still active. Prior to the first registration of EFMS in Florida, a business also called Express Financial Mortgage Systems, Inc., with an address in White Plains, New York, operated in Florida using several unlicensed persons who are not parties to this action, specifically Heidi D. Clark, Rutherford Smith, Tom Quellhorst, and Matt Piazza. Express Mortgage Corporation (ENC) was first registered as a mortgage brokerage business on May 9, 1988, registration NO. HB 592876630. The registration is still active subject to renewal by August 31, 1990. James T. Hines first became licensed as a mortgage broker on January 12, 1988, license no. HA 252880288. He was a self-employed broker at 780 Bayou Drive, Destin, Florida, his home address. On May 9, 1988, Hines was licensed as the principal broker of EMC. Hines terminated his registration with EMC on July 1, 1988. Effective July 11, 1988, Hines again became licensed as a self-employed mortgage broker. This license became inactive on September 1, 1989, because Hines failed to renew it by August 31, 1989. The license is still inactive. James C. Saunders first became licensed as a mortgage broker on June 21, 1988, as the principal broker with EFMS. On November 14, 1988, Saunders also became the principal broker for EMC. The endorsements with both EFMS and EMC were terminated for failure to renew the licenses by August 31, 1989. On October 20, 1989, Saunders renewed his license as a self- employed broker. That license is still active. At all times relevant to this case, Hines was also a licensed real estate broker with Express Listings, Inc. (Listings). EFMS, EFG, EMC, and Listings all operated from office space at 1021 Highway 98 East, Gulfview Plaza, Destin, Florida. On November 4, 1987, Clark, acting as representative of Express Financial Mortgage Systems, Inc., of White Plains, N.Y., signed a Customer Agency and Fee Agreement to assist Henry and Heidi Maclin in securing a mortgage loan with Cite Savings. A check for $1241.25 was written to Express Mortgage by Express Financial Mortgage Systems, Inc., of New York on January 27, 1988. While this check allegedly represented payment of a brokerage commission on the Maclin loan, no evidence was introduced to show that any of the parties named in this Administrative Complaint were involved in the Maclin loan or received any compensation from it. On December 30, 1987, entities identified as Express Financial Systems or Express Financial Group were named as recipients of $660 brokerage fee on a mortgage loan for Carrie Moye. Again, no evidence was introduced to show that the parties in this case were involved in or received mortgage brokerage fees for the Moye mortgage loan. Listings was paid a real estate commission of $330 on the real estate portion of the transaction. On March 1, 1988, Clark, acting as representative of Express Financial Group and Express Financial Mortgage Systems, Inc., of New York, agreed to assist William and Janice Bennett in seeking a mortgage loan from Prudential Home Mortgage Company. On the April 14, 1988, Settlement Statement, Express Financial Group was listed as being entitled to a $674.00 brokerage fee on the Bennett loan. Again, Clark and Express Financial Group are not parties to this case. On March 23, 1988, Clark, as representative of Express Financial Group and Express Financial Mortgage Systems, Inc., of New York, agreed to assist Franklin and Priscilla Ford in securing a mortgage loan from Prudential Home Mortgage Company. Express Financial Group is shown as being entitled to receive a brokerage fee of $2,550.00 on the Ford loan. Again, no showing was made that any party to this case was involved in or received compensation from the Ford loan. On March 22, 1988, James T. Hines signed a Customer Agency and Fee Agreement as representative to assist Jacqueline C. and William S. Ansley in securing a mortgage loan from Citisavings. The form which Hines signed is on letterhead of Express Financial Group, Inc., which is shown to include Express Listings Corporation, a licensed real estate brokerage firm, and Express Mortgage Corporation, a licensed mortgage brokerage firm. However, the form also stated that the Ansleys agreed to allow Express Financial Mortgage Systems, Inc., of 1021 Highway 98 East, Suite I, Destin, Florida 32541, to receive mortgage commitments on their behalf. The Ansley loan closed on April 21, 1988, and on April 26, 1988, Ansley wrote a check for $1,925.00 to Express Financial Group, but no competent evidence was introduced to show the purpose of this check. No evidence was introduced showing that any party to this case received any compensation or mortgage brokerage fee for the Ansley mortgage loan. On December 29, 1987, Tom Quellhorst as a representative of Express Financial Group and Express Financial Mortgage Systems, Inc., of New York, agreed to assist William H. and Margaret C. Kinna in securing a mortgage loan from Prudential Home Mortgage Company. The February 5, 1988, Settlement Statement shows Express Financial Group to be entitled to a $1,260 brokerage fee for the Kinna loan. There is no showing that a brokerage fee was ever paid or that any party to this case was involved in the Kinna loan. On December 1, 1987, Rutherford Smith, as representative of Express Financial Mortgage Systems, Inc., of New York, agreed to assist Robert Schonhut in securing a mortgage loan from Prudential Home Mortgage Company. A check dated January 29, 1988, from Express Financial Mortgage Systems, Inc., of New York, to Express Mortgage, Destin, for $126.63, allegedly for a quarter of a point of the Schonhut mortgage loan, was introduced into evidence. No evidence was presented that showed any involvement in or compensation received by any party to this case. On February 8, 1988, Tom Quellhorst, as representative for Express Financial Group and Express Financial Mortgage Systems, Inc., of New York, agreed to assist Marion and Sylvia Howl and in securing a mortgage loan from Prudential Home Mortgage Company. The March 14, 1988, Settlement Statement shows Express Financial Group to be entitled to a brokerage fee of $1,239.75 for the Howland loan. There is no showing that any party to this case was involved in or received compensation for the Howland loan. On January 22, 1988, James T. Hines signed a Customer Agency and Fee Agreement as representative for Express Financial Group, Inc., and Express Financial Mortgage Systems, Inc., of New York, to assist Tom and Sally Underwood in securing a mortgage loan from Prudential Home Mortgage Company. There is no showing that a loan was secured or a brokerage fee paid in connection with the Underwood agreement. No competent evidence was introduced to show that James C. Saunders was connected with any of the transactions described above. Further, Hines denied ever soliciting for a mortgage loan or receiving any compensation for acting as a mortgage broker in connection with any of the transactions described above.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Office of the Comptroller, Department of Banking and Finance, enter a Final Order and therein: Dismiss all charges against Express Mortgage Corporation, Express Financial Group of Florida, and James C. Saunders. Find Express Financial Mortgage Systems, Inc., guilty of violating Section 494.055(1)(1) in connection with the Ansley loan. Find James T. Hines guilty of violating Section 494.055(1)(1) in connection with the Ansley loan and guilty of violating Section 494.055(1)(q) by failing to comply with Section 494.0393(2). Revoke the mortgage brokerage business license of Express Financial Mortgage Systems, Inc. Impose a $500 fine on James T. Hines and place his mortgage broker license on probation for one year. DONE and ENTERED this 13th day of June, 1990, in Tallahassee, Florida. DIANE K. KIESLING 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 13th day of June, 1990. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 88-5086 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Department of Banking and Finance Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1(1); 2a(2); 2b(3); 3a-d(4); 4a-d(5); and 6c(7). Proposed findings of fact 5a, 6a-c, 7a & b, 1Ob, 11b, 12b, 13b, and 15 are rejected as being unsupported by the competent, substantial evidence. Proposed findings of fact 5b, 8a & b, 9a & b, 10a, 11a, 12a, 13a, and 14 are subordinate to the facts actually found in this Recommended Order. COPIES FURNISHED: James T. Hines 2481 Arthurs Court Marietta, GA 30062 Paul C. Stadler, Jr. Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, FL 32399-0350 James C. Saunders 60 Indian Bayou Drive Destin, FL 32541 Express Financial Mortgage Systems, Inc. 1021 Highway 98 East, Suite A Destin, FL 32541 Express Financial Group of Florida, Inc. 1021 Highway 98 East, Suite A Destin, FL 32541 Murai, Wald, Biondo, Matthews & Moreno, P.A. Registered Agent for Express Mortgage Corp. 9th Floor Ingraham Building 25 South Second Avenue Miami, FL 33131 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 William G. Reeves General Counsel The Capitol Plaza Level, Room 1302 Tallahassee, FL 32399-0350 =================================================================
The Issue The central issue in this case is whether the Respondents are guilty of the violations alleged in the Amended Administrative Complaint; and, if so, what penalty should be imposed.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact: The Department of Banking and Finance, Division of Finance, is charged with the responsibility of administering the provisions of Chapter 494, Florida Statutes. At all times material to the allegations in this case, Diko Investments, Inc. ("Diko") conducted business as a mortgage broker in Palm Beach County, Florida. At all times material to the allegations in this case, Dieter Kolberg ("Kolberg") was an officer, director, and acted as principal mortgage broker for Diko. Kolberg passed the mortgage broker's examination on May 28, 1985. Diko was issued a license as a mortgage broker with Kolberg as its principal broker on June 26, 1985 (license NO. HB-16568) Prior to May 28, 1985, Diko ran advertisements soliciting investors for mortgage opportunities. These ads included Kolberg's home telephone number. Prior to May 28, 1985, Kolberg/Diko entered into a business relationship with Michael D. Cirullo, a licensed mortgage broker, to "co-broke" mortgage transactions. Pursuant to their agreement, Cirullo represented the borrower/mortgagor while Kolberg obtained and represented the lender/mortgagee. Kolberg and Cirullo solicited and negotiated at least two loans prior to May 28, 1985. Kolberg acted in expectation of being paid as a mortgage broker. Cirullo remitted 50 percent of the commissions earned on these transactions to Diko. Diko stationery included the phrase "Licensed Mortgage Bankers." Neither Diko nor Kolberg has been licensed as a "mortgage banker." In August and September of 1985, investors, Marcel and Ida Barber, responded to a Diko advertisement which offered a 16 percent interest mortgage loan secured by prime residential real estate. The Barbers were interested in a safe, high interest yielding investment and requested more information from Diko. On September 23, 1985, Kolberg wrote to the Barbers to outline the following business policies of Diko: The first objective of the Diko lending program was "The Safety of the Investor's Capital." Any investment was to be secured by a mortgage on prime residential real estate clear of all liens with the exception of a first mortgage where a second mortgage would be given. Investors would be issued mortgagee title insurance to insure against loss due to defects in title to the mortgaged property. Investors would be issued fire and hazard insurance to cover any losses in the event of fire or storm. Subsequent to the receipt of the aforesaid letter, the Barbers decided to invest $25,000 in a mortgage through Diko/Kolberg. This initial transaction proceeded satisfactorily and the objectives addressed in paragraph 10 above were met. In late December, 1985, the Barbers advised Kolberg that they would be willing to invest an additional $50,000 in early January, 1986. The Barbers expected the transaction to be handled in the same manner as their prior investment through Diko. After reviewing two or three loan proposals, the Barbers chose to invest in a loan to Tony Medici/Automatic Concrete, Inc. The loan was to be secured by a second mortgage on property at 713-717 "L" Street, West Palm Beach, Florida. The "L" Street property consisted of a 24-unit apartment complex and an adjacent laundry facility. Kolberg accompanied the Barbers to view the property. During discussions with the Barbers regarding the proposed investment, Kolberg made the following false material representations: That the property had a high occupancy; That rental payments were guaranteed or subsidized by a government program; That the asset-to-debt ratio for the property was acceptable; and That a proposed expansion of the laundry facility would further enhance the security of the loan. Financial statements of the borrower (Medici/Automatic Concrete, Inc.) did not include all obligations against the "L" Street property. Diko/Kolberg did not give the Barbers an accurate or complete statement of the financial condition of the "L" Street investment. Kolberg knew the information on the statement was incomplete. Diko/Kolberg did not disclose to the Barbers the high rate of crime in the area which compromised the security of the "L" Street investment. Kolberg knew of the crime problem in the area. Diko/Kolberg did not disclose to the Barbers that foreclosure proceedings had been instituted against the "L" Street property. Kolberg knew of the foreclosure action as well as the delinquency on other obligations. Kolberg did not disclose to the Barbers that he represented, as trustee, a Kolberg family company which would directly benefit from the Barber loan. The Barber loan would satisfy a mortgage held by Kolberg, as trustee, on the subject property, which mortgage was in default and in the process of foreclosure (the Ropet Anlagen foreclosure). Kolberg did not disclose to the Barbers that another mortgage held on the "L" Street property (David Marsh loan) was also in default. A subordination agreement was required to be executed by Marsh in order for the Barber/Medici loan to close. Marsh agreed to subordinate his mortgage position for approximately $3,000 in arrear payments. Marsh was owed approximately $125,000 but chose to subordinate because by doing so he was able to recoup a small amount of what he considered a lost investment. Kolberg knew of Marsh's situation and did not advise the Barbers. The Barber loan to Medici/Automatic Concrete, Inc. closed on January 18, 1986. The Barbers delivered a check for $53,000 payable to the title company chosen by Diko. Neither Diko nor Kolberg gave the title company, Manor Title, closing instructions to protect the lenders' interests. Kolberg did, however, instruct the title company to list expenses relating to the Ropet Anlagen foreclosure against the Medici loan. Proceeds from the closing, in the amount of $50,000 were paid to Kolberg, as trustee for "Ropet Anlagen," and deposited to an account by that name. The name "Ropet Anlagen" translates to "Ropet Investments." Kolberg handles all transactions for this Kolberg family company in the United States. (Kolberg has two sons, Robin and Peter, from a former marriage. The name "Ropet" may derive from their names.) Kolberg's former wife, Patricia Kolberg, owns an interest in Ropet Anlagen. Regular monthly payments were made by Kolberg to Patricia Kolberg on a Ropet Anlagen account. Many of the checks drawn on the Ropet Anlagen account were for personal expenses of Kolberg or his business. The first mortgage on the "L" Street property was 45 days overdue on January 13, 1986. Kolberg knew of this delinquency but did not advise the Barbers. To the contrary, Diko gave the Barbers an estoppel notice from a prior closing showing the first mortgage to be current. The first mortgagee ultimately foreclosed its mortgage and the Barbers lost their entire investment. The Barbers did not receive a fire and hazard insurance policy to cover losses in the event of fire or storm for the "L" Street property. The Barbers did not receive a mortgagee title insurance policy until March, 1986, by which time the first mortgage was further in default. Additionally, the mortgagee policy disclosed a financing statement and a collateral assignment of rents recorded prior to the Barbers' mortgage.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Banking and Finance, Office of the Comptroller, enter a Final Order revoking the mortgage broker license issued to Dieter Kolberg and Diko Investments, Inc. DONE and RECOMMENDED this 30th day of November, 1987, in Tallahassee, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of November, 1987. APPENDIX Rulings on proposed Findings of Fact submitted by Petitioner: Paragraphs 1, 2, 3, 4 and 5 are accepted. Paragraph 6 is accepted; however, Kolberg's interest when financing with funds he controlled was only on a temporary, interim basis. The activities were conducted with Diko to receive a commission, therefore requiring a license. Paragraphs 7-15 are accepted. Paragraph 16 is accepted to the extent addressed in findings of fact paragraphs 12, 13. Paragraphs 17-18 are accepted to the extent addressed in findings of fact paragraphs 14, 18, 22. Paragraphs 19-27 are accepted. Paragraph 28 is rejected as immaterial and unnecessary. Paragraphs 29-42 are accepted. The detail of Petitioner's finding is unnecessary to the conclusions reached herein. Paragraphs 43-45 are accepted but unnecessary. Paragraph 46 is accepted. Paragraph 47 is rejected as unnecessary and immaterial. Paragraphs 48-52 are accepted. Paragraph 53 is rejected as unnecessary. Paragraph 54 is accepted. Paragraph 55 is accepted to the extent found in findings of fact paragraphs 20, 21. Paragraphs 56-57 are accepted. Paragraph 58 is accepted to the extent addressed in finding of fact paragraph 21. Paragraphs 59-63 are accepted but unnecessary. Paragraphs 64-65 are accepted. Rulings on proposed Findings of Fact submitted by Respondents: Paragraph 1 is accepted. Those portions of paragraph 2 which set forth Respondent's dates of testing and licensure are accepted, the balance is rejected as an erroneous conclusions of law. Paragraph 3 is rejected as contrary to the weight ofevidence. Paragraph 4 is accepted but irrelevant to the issue. Paragraph 5 is rejected as the transaction was solicited with Kolberg's company, Diko, participating as a mortgage broker. Paragraph 6 is accepted but irrelevant to the issue. Paragraph 7 is rejected as contrary to the weight of theevidence and law. Paragraph 8 is accepted but does not mitigate, as a matter of law, Respondent's improper useage of the phrase. Paragraphs 9-11 are accepted; however the detail of thefindings is unnecessary and immaterial to the issues of thiscause. Paragraphs 12-14 are accepted to the extent addressed in findings of fact paragraphs 12, 13 the balance is rejected as unnecessary and immaterial. Paragraph 15 is rejected as unnecessary, relevant portions having previously been addressed. Paragraph 16 is accepted. Paragraph 17 is accepted but is unnecessary. Paragraph 18 is rejected to the extent it qualifies Barber as a "Sophisticated Investor." The record is clear Mr. Barber was experienced in the laws of France; however, he relied on Kolberg completely as to both transactions which took place in Palm Beach. Moreover, Mr. Barber's useage and understanding of the English language was suspect. He could hardly be considered a "sophisticated investor" in light of the total circumstances. Paragraph 19 is rejected as contrary to the weight of the evidence. Paragraph 20 is accepted to the extent addressed in finding of fact paragraph 13, the balance is rejected as contrary to the weight of evidence. Moreover, it is found that the only times of capacity occupancy (which were limited) were due to temporary, transient, undesirable tenants who may have directly affected the crime problem. Paragraph 21 is accepted. Paragraph 22 is rejected as contrary to the weight of evidence. Paragraphs 23-24 are rejected as contrary to the weight of evidence. Paragraph 25 is accepted but is unnecessary. The crime problem was there prior to closing and was undisclosed to Barber. That it worsened after closing only assured the disclosure should have been made. Paragraphs 26-35 are rejected as contrary to the weight of the evidence. Many of the facts asserted here are based on testimony given by Kolberg. Respondents presume that testimony to be truthful, accurate, and candid. I found the opposite to be true. Paragraph 36 is accepted but does not mitigate Respondents' responsibilities to have completed the items at closing. Paragraph 37 is accepted with same proviso as above paragraph 36, ruling #22). Paragraphs 38-39 are rejected. See ruling #21. Paragraph 40 is accepted. Paragraph 41 is accepted but see findings of fact paragraph 21 as to Kolberg's useage of Ropet funds for personal expenses. Paragraphs 42-43 are rejected as contrary to the weight of the evidence. COPIES FURNISHED: Lawrence S. Krieger, Esquire 111 Georgia Avenue, Suite 211 West Palm Beach, Florida 33401 Keith A. Seldin, Esquire 1340 U.S. Highway #1, Suite 106 Jupiter, Florida 33469 Honorable Gerald Lewis Comptroller, State of Florida Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350
Recommendation Based on the foregoing Stipulated Facts, Supplemental Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Banking and Finance, enter a final order that the following disbursements from the Mortgage Broker Guaranty Fund be made Payee on the claims against Polk Investments, Inc.: Amount Amendolaro $ 2,661,22 Victorias 10,000.00 Fournier, Janice 10,000.00 Wilson 1,334.71 Ledfords 6,573.09 Fournier, Robert 10,000.00 Murphy 4,715.49 Murphy as Trustee 4,715.49 Total $50,000.00 RECOMMENDED this 13th day of November, 1986 in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSON, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of November, 1986. COPIES FURNISHED: Paul C. Stadler, Jr., Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301 Dennis P. Johnson, Esquire SHELNUT AND JOHNSON, P.A. Suite One Belvedere Professional Center 1525 South Florida Avenue Lakeland, Florida 33806-2436 Cristy F. Harris, Esquire HARRIS, MIDYETTE & CLEMENTS, P.A. Post Office Box 2451 Lakeland, Florida 33806-2451 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301 Charles Stutts General Counsel Plaza Level The Capitol Tallahassee, Florida 32301
Findings Of Fact At all times pertinent to the allegations contained herein, Respondent was a licensed Mortgage Broker and the principal broker for Mortgage Associates of Countryside, located at 2623 Enterprise Rd., Clearwater, Florida. The Department was and is the state agency charged with regulating the activities of mortgage brokers in this state. In September, 1987, Andrew Grosmaire and Kevin Gonzalez, compliance officer and financial examiner, respectively, for the Department, pursuant to a complaint from Mark Snyder, conducted an examination of Respondent's affairs as they pertained to his operation as a mortgage broker. During the survey, which covered the period from August, 1986 through August, 1987, Mr. Grosmaire and Mr. Gonzalez examined between 50 and 60 loan files which had culminated in loan closings. In addition, they examined loan files which did not result in closings, bank account records, and other of Respondent's miscellaneous records. In order for an appropriate audit of a closed loan file to be conducted, it is imperative that the loan closing statement be included. Without it, the examiner cannot accurately determine what, if any, closing costs the borrower actually paid and if closing costs paid were consistent with those disclosed by the broker on the Good Faith Estimate Form at the initial interview. Of the closed loan files reviewed, these closing statements were missing from seven files. Respondent admits that several closed loan files did not have the required closing costs statement form enclosed. He attributes this, however, to the failure of his processor, an assistant, to place the closing statement in the file. They were not presented at hearing or thereafter. The investigators examined the Good Faith Estimate Forms in those files which culminated in loans and found that the form utilized by the Respondent failed to contain language, required by statute, which summarized the limits and conditions of recovery from the Mortgage Brokerage Guaranty Fund. Respondent contends that the pertinent statutory section was not in existence at the time he was engaged in mortgage brokerage activities. This was found to be not true. The Act became effective July 1, 1986 and the files surveyed were from the period August, 1986 through August, 1987. Examination of the Good Faith Estimate Forms used by the Respondent in each of the cases which culminated in loan closing revealed that Respondent consistently underestimated closing costs. This resulted in the borrowers generally paying higher closing costs than was initially disclosed to them. On -loans applied for by Mr. and Mrs. Snyder, Mr. Iyer, and Mr. Toland. Respondent redistributed loan points to himself in an amount higher than that which was agreed to by the parties. In the Toland case, Mr. Toland agreed to pay a 1% loan origination fee in the amount of $996.00. The settlement statement dated approximately 2 months later reflected that Toland paid Respondent a loan origination fee of $1,128.00 in addition to a 1% ($664.00) loan discount fee to the lender. This latter mentioned discount fee was not disclosed in advance to Mr. Toland on the estimate form nor was the excess loan origination fee charged. It should be noted here that a second Good Faith Estimate Form, dated nine days after the original, reflecting a 3% loan origination fee, was found in the file. Though signed by Respondent, this second form was not signed by the borrower as required. It cannot, therefore, serve to support Respondent's claim that he advised the Tolands of the higher cost by this second form. There is no showing that the Tolands were aware of it. In the Iyer case, the estimate form dated September 19, 1986 reflected a points and origination charge of $1,332.50 which is 1% of the mortgage loan amount of $133,250.00. The Iyers were subsequently approved for a mortgage in the amount of $145,600.00. The closing statement dated March 6, 1987, almost six months later, reflects that the Iyers paid a 2% loan origination fee of $2,740.00 to Mortgage Associates and a load discount fee of $685.00 to the lender. Here again the Respondent claims that a second cost estimate form reflecting a 2% point and origination fee of $2,912.00 was subsequently executed by the Iyers. However, this second form, found in Respondent's files, is undated and fails to reflect the signature of either Respondent or the Iyers. It cannot, therefore, serve as proof that the Iyers were made aware of the change. It does appear, as Respondent claims, that the bottom of the second form, (here, a copy) , was excluded from the copy when made, but there is no evidence either in the form of a signed copy or through the testimony of the Iyers, that they were aware of the change. Consequently, it is found that the Iyers had not been made aware of the second estimate and had not agreed to pay as much as they did, in advance. As to the Snyder closing, both Mr. Snyder and Respondent agree that it was their understanding at the time the loan was applied for, that Respondent would attempt to obtain a lower interest rate for them than that which was agreed upon in the application and in the event a lower rate was obtained, Respondent's commission points would remain the same as agreed upon in the brokerage agreement. In that case, as Respondent points out, his commission is based on the mortgage amount, not the interest rate, and he would be entitled to the agreed upon percentage of the loan face amount regardless of the interest rate charged by the lender on the loan. The Snyders had agreed to a 1% commission to Respondent plus a 1% loan origination fee to the lender. When the lender agreed to lend at par, without an origination fee, Respondent appropriated that 1% to himself, thereby collecting the entire 2% called for in the application. This was improper. Respondent's claim that it is an accepted practice in the trade is rejected. The Snyders initially made demand upon the Respondent for reimbursement of that additional 1% and ultimately had to hire an attorney to pursue their interests. Respondent subsequently made a $400 partial reimbursement payment of the amount owed but nothing further notwithstanding the fact that the Snyders ultimately secured a Judgement in Pinellas County Court against him for $1,082.52 plus interest, attorney's fees and costs. As a result, the Florida Mortgage Brokerage Guarantee Fund will reimburse the Snyders for their loss. According to the investigators, the Snyders Toland, and Iyer files, in addition to the problems described, also reflected that Respondent received payments for other items which should have gone into an escrow account. These included such things as credit reports and appraisal fees. The Department requires that any money received by a broker other than as commission, be placed in the broker's escrow account pending proper disbursement. Respondent did not have an escrow account. Mr. Gonzalez looked at Respondent's overall operation, including closed files, in an attempt to correlate between income and outgo to insure that Respondent's operation was in compliance with the statute. In addition to his search for an escrow account, Mr. Gonzalez also examined Respondent's "Loan Journal" which by statute is required to contain an entry for each transaction in each loan. The purpose of this journal is to provide a continuing record to show when each item in the loan processing was accomplished. In Mr. Gonzalez' opinion, the Respondent's journal was inadequate. It contained repeat and conflicting entries for specific items which hindered the investigators' ability to determine an audit trail. In addition, all required information was not put in the journal in complete form in each account. In the opinion of the investigators, the Respondent's violations were significant in that they made it impossible for the Department to determine compliance with statutes and Department rules and inhibited the compliance examination. All in all, Respondent's way of handling his accounts, his failure to maintain an escrow account, and his unauthorized increase in commission income, all indicated his actions were not in the best interest of his clients. The investigators concluded that clients funds were not being handled properly and that the purpose of Chapter 494, Florida Statutes, to protect the consumer, was not being met. In Mr. Gonzalez' opinion, Respondent's method of business constituted incompetence as a mortgage broker and "possibly" fraudulent practice. It is so found. Both Mr. Gonzalez and Mr. Grosmaire indicated they had extreme difficulty in attempting to locate Respondent after the complaint was filed by Mr. Snyder, in order to conduct their examination. They finally located him at a site different from that which appeared in the records of the Department. Respondent contends that the Department had been notified in writing within the required time, of his change of location when he filed a notice of fictitious name. He contends that after filing his notice of name change, he received no response from the state but took no action to inquire whether the change had been made. In any case, his current address was in the phone book and had the agents chose to look there, they would have found him. Respondent contends that the good faith estimates required by the statute are just that, an estimate, and that actual figures may vary from and exceed these estimates. This is true, but there is a procedure provided whereby the broker is to notify the client of a change in advance and if the change exceeds a certain amount, it may constitute grounds for voiding the contract. In paragraph 7 of the complaint, Petitioner alleges that Respondent used a form for the estimates which failed to contain a statement defining the maximum estimated closing costs. Review of the statement offered herein reflect this to be a fair analysis. However, Respondent claims that certain items cannot be predicted accurately in that some companies charge more than others for the same item and it was his practice to insert in the estimate portion of the form a "worst case scenario." However, at no time did he address in his form what could be the maximum a prospective purchaser might be expected to pay. Respondent "doesn't like" the total picture painted by the investigators concerning his operation. He claims it is cot a fair and accurate representation. In many cases, he claims, he expended funds on behalf of clients in excess of that he received in either commission or reimbursement and even though he may have received more than entitled in some cases, it "evens out over a period of time." Though this may be so, it is no way to do business. The state requires the keeping of accurate records and, just as the broker should not be required to assume responsibility for other than his own misconduct, neither should the client be required to pay more than is his legal obligation. Respondent professes to know the mortgage business and he resents having his qualifications as a mortgage broker questioned. In his opinion, he has trained himself well and has acted in good faith on the basis of the information available to him at the time. He ignores the impact of the Judgement of the court in the Snyder matter because he feels it was "unilateral." He believes the law is designed to protect the client and he wants to know who protects the broker. It is for that very reason, he contends, that fees paid in advance are not refundable. Mr. Sample feels the Department should be more informative to the brokers and get the governing regulations updated more quickly. Respondent cherishes his license and claims he needs it to make a living. He went out of business once before, several years ago, because of bad business conditions, (the reason he uses for not complying with the court order), but did not declare bankruptcy because he wanted to go back into business and pay off the judgements against him. Though he has been back in business for several years, he has failed to make any effort to pay off any of his former creditors even though in his former operation, he improperly tapped his escrow account for other business expenses.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Respondent, Howard E. Sample's license as a mortgage broker in Florida be revoked. RECOMMENDED this 15th day of September, 1988 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of September, 1988. APPENDIX TO RECOMMENDED ORDER IN CASE NUMBER 88-2858 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Insofar as Petitioner's submission refers to testimony of a witness, that is considered as a proposed finding of fact. FOR THE PETITIONER; Accepted and incorporated herein & 3. Accepted and incorporated herein 4. & 5. Accepted and incorporated herein Accepted and incorporated herein & 8. Accepted and incorporated herein Rejected as contra to the evidence A conclusion of law and not a finding of fact & 11a Accepted and incorporated herein Accepted Accepted and incorporated herein Accepted Accepted and incorporated herein - 18. Accepted 19. - 21. Accepted and incorporated herein Accepted & 24. Accepted and incorporated herein 25. & 26. Accepted and incorporated herein Accepted &-29. Accepted 30. - 34. Accepted and incorporated herein FOR THE RESPONDENT: Nothing Submitted by way of Findings of Fact COPIES FURNISHED: Elise M. Greenbaum, Esquire Office of the Comptroller 400 West Robinson St. Suite 501 Orlando, Florida 32801 Howard E. Sample 2465 Northside Drive Apartment 505 Clearwater, Florida 34621 Honorable Gerald Lewis Ccmptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 Charles L. Stutts, Esquire General Counsel Department of Banking and Finance Plaza Level, The Capitol Tallahassee, FL 3 2399-0350
Findings Of Fact Respondent, George G. Walsh, is a licensed real estate broker in the State of Florida, holding license number 0117943. Mr. Walsh is the owner of and the qualifying broker for G. G. Jerry Walsh Real Estate, located in Panama city, Florida. In May 1989, Respondent was the acting broker for Howard Bilford of Miami, Florida. Mr. Bilford owned a five acre parcel of property located in Bay County, Florida. Around May 15, 1989, Tama and Paul Russ, through Mr. Walsh's office, entered into a contract for the purchase of Mr. Bilford's property. The purchase price of the property was $15,000. The Russ' gave Mr. Walsh a $500 binder for deposit in his escrow account. The $500 was placed in Respondent's escrow account. Simultaneous with the signing of the sales contract and deposit receipt agreement, Mr. Walsh also prepared an estimated closing cost statement. On that closing cost statement, Mr. Walsh estimated that a survey of the property would cost the Russ' $450. During this meeting, Mr. Walsh explained to the Russ' that, especially if a financial institution was involved in the financing of the property, there would be certain costs which they would probably have to pay up front. Part of those costs included a survey of the property. At about the same time, the Russ' made application for a loan to a credit union located in Panama City, Florida. At the time of the loan application, the loan officers Mrs. Stokes, prepared a closing cost statement estimating the loan closing costs which the Russ' would encounter. On the credit union's closing cost statement, the cost of a survey was estimated to be $150 to $200. Since it was the credit union that required the survey, the Russ' believed that that estimate was the more accurate. The Russ' simply could not afford a $500 survey. As part of the loan application, an appraisal of the property was required. The appraisal was ordered by the credit union on May 16, 1989, and was completed on May 31, 1989. Unfortunately, the property had been vandalized by unknown persons, and the mobile home which was on the property had suffered severe and substantial damage. The appraisal indicated that the real estate was worth $10,500. With such a low appraisal, the credit union would not lend the amount necessary to purchase the property at the negotiated price. In an effort to renegotiate the property's price, Tama Russ inspected the property and prepared a list of the items which would have to be repaired to make the mobile home liveable. At the same time, the Russ' placed no trespassing signs and pulled logs across the entry to the property. The Russ' also placed padlocks on the doors to the mobile home and removed the accumulated garbage inside the mobile home in an effort to secure the property. They made no other repairs to the property. On June 1, 1990, the Russ' told the loan officer to hold the loan application. At some point during this process, both Mr. Walsh and the Russ' became aware that the survey would cost a considerable amount more than had been expected. By using a favor with Mr. Walsingham of County Wide Surveying, Mr. Walsh obtained a survey price of $500 for the Russ'. In an effort to help the Russ' close on the property, Mr. Walsh contacted Mr. Bilford to see if he would agree to pay the $500 survey cost. Mr. Bilford so agreed, contingent on the closure of the transaction, and sent Mr. Walsh a check made out to County Wide Surveying in the amount of $500. At that point, the Russ' believed that they were no longer obligated to pay for the survey since Mr. Walsh told them that Mr. Bilford was to pay for the survey. On June 3, 1989, Mr. Bilford agreed to a renegotiated price of $10,500.00 on the property. Additionally the Russ' agreed to sign a ten year promissory note for $2,000 bearing 11% interest per annum. Since there were changes in the terms of the contract, the Russ' entered into a net contract with Mr. Bilford on June 3, 1989. The new contract expired on June 30, 1989. Around June 5, 1989, the Russ' learned that their credit had been preliminarily approved. However, such preliminary approval only indicated that the Russ' had sufficient income to proceed with the more costly loan underwriting requirements of the credit union. Such preliminary approval did not indicate that the loan would be finally approved by the financial institution. The preliminary approval was communicated to Mr. Walsh by Tama Russ. Ms. Russ intended the communication to mean that they had been preliminarily approved by the financial institution. Mr. Walsh in an abundance caution contacted Mrs. Stokes, the loan officer. Mrs. Stokes advised him that the Russ' credit had been preliminarily approved. She did not tell him that the loan had been finally approved. Through a misunderstanding of what Mrs. Stokes communicated to him, Mr. Walsh ordered the survey from County Wide Realty on June 7, 1989. There was no reliable evidence presented that the credit union had authorized him to order the survey. The credit union at no time during this process ordered the survey. Mr. Walsh testified that Ms. Russ told him to order the survey. Ms. Russ denies that she gave Mr. Walsh permission to order the survey. At best this evidence goes only to demonstrate Respondent's intent with regards to the actions he undertook in this case and removes this case from a Section 475.25(1)(b), Florida Statutes, violation. At some point Ms. Stokes left the employ of the credit union. On June 16, 1989, as part of her leaving, she unilaterally closed the Russ' loan application file and cancelled the loan application. Neither the Russ' nor Mr. Walsh were notified of the closure or the cancellation. The credit union's file fell into the void created between a change of employees. Because Mr. Walsh was unaware of Ms. Stokes' actions, Mr. Walsh, on July 13, 1989, after the expiration of the Russ' sales contract, contacted the credit union in order to obtain the loan closing package from the institution. The credit union had to hunt for the Russ' file. The credit union president called the Russ' about the loan and he was advised that they did not want the loan. The credit union's president then reviewed the loan file and noted that the Russ' had insufficient income to come up with the amount of the promissory note. He also thought the real estate constituted insufficient collateral for the loan. The loan application was officially denied on July 15, 1989. The Russ' were notified of the credit union's denial credit. The real estate transaction never closed. However, sometime after July 15, 1989, Mr. Walsh received the survey from County Wide. The survey indicates that the field work for the survey was completed on July 17, 1989, and that it was drawn on July 18, 1989. 1/ There was no reliable evidence which indicated any attempt had been made to cancel the survey. Sometime, after July 15, 1989, Tama Russ contacted Mr. Walsh in order to obtain the return of their $500 deposit. After many failed attempts to get the Russ' to voluntarily agree to pay for the cost of the survey, Mr. Walsh, around October, 1989, unilaterally paid the Russ' deposit to County Wide Realty. Mr. Walsh followed this course of action after speaking with some local FREC members who advised him that since FREC was swamped with deposit disputes that nothing would happen as long as he used his best judgment. The payment of the deposit to the surveyor, without prior authorization from the Ruse' violates Section 475.25(1)(d) and (k) Florida Statutes.
Recommendation Based on the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, the pleadings and argument of the parties, it is therefore, RECOMMENDED that the Florida Real Estate Commission enter a Final Order finding Respondent guilty of violating Sections 475.25(1)(d) and 475.25(1)(k), Florida Statutes, issuing a letter of reprimand to Respondent with instructions to immediately replace the Russ' trust deposit and forthwith submit the matter to the commission for an escrow disbursement order and levying a $250 fine. IT IS FURTHER RECOMMENDED that the portions of the Administrative Complaint alleging violation of Section 475.25(1)(b) be dismissed. DONE and ENTERED this 29th day of January, 1991, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of January, 1991.
The Issue Whether or not the Respondent, Peter Van Wie Investments, Inc., and. Peter Van Wie its president, a licensed mortgage broker in the State of Florida, by placing deposited monies received from investors in savings account number 4-0011068 at the United States Federal Savings and Loan Association of Broward County, 234 East Commercial Boulevard, Lauderdale by the Sea, Florida, said savings account being in the name of Peter Van Wie Investments, Inc. is 4. in violation of rule 3D-40.06(7), Florida Administrative Code (formerly Rule 3-3.06(7), Florida Administrative Code) , and thereby subjected to a possible suspension under the terms of Section 494.05(1)(f), Florida Statutes. Whether or not the Respondent, Peter Van Wie Investments, Inc. and Peter Van Wie as president, a licensed mortgage broker in the State of Florida, paid to Richard Clarke and Frederick Beck, who were not licensed pursuant to Section 494.04, Florida Statutes, certain commissions, bonuses or fees in connection with the arranging, negotiation, selling, purchasing, and planning of the mortgage loans set forth in Exhibit "A" (of the Administrative Complaint) in violation of Section 494.08(5), Florida Statutes, and thereby subjected the Respondent to a possible suspension under the terms of Section 494.05(1)(g) , Florida Statutes. Whether or not the Respondent, Peter Van Wie Investments, Inc. and Peter Van Wie as president, a licensed mortgage broker in the State of Florida, has charged and accepted fees and commissions in excess of the maximum allowable fees or commissions on the transactions set forth in Exhibit B (of the Administrative Complaint) in violation of Section 494.08(4) , Florida Statutes, and Rule 3D-40.08(3)(4), Florida Administrative Code, (formerly Rule 3-3.08(3)(4) Florida Administrative Code) and thereby subjected the Respondent to a possible suspension under the terms of Section 494.05(1)(g) Florida Statutes. Whether or not the Respondent, Peter Van Wie Investments, Inc. and Peter Van Wie as president, a licensed mortgage broker in the State of Florida, on or about March 12, 1975, received from Marie W. Neal, $14,000.00 for the purpose of investing in a promissory note and mortgage for land located in Dora Pines Development, and subsequently on April 1, 975, wrote a check to First National Resources. in the amount of $11,760.00 to pay for said promissory note and mortgage for Marie W. Neal, which on April 24, 1975, was returned by Lauderdale Beach Bank for non- sufficient funds in violation of Section 494.05(1)(e), Florida Statutes, and thereby subjected the Respondent to a possible suspension under the terms of Section 494.05(1)(e), Florida, Statutes. Whether or not the Respondent, Peter Van Wie Investments, Inc. and Peter Van Wie as president, a licensed mortgage broker in the State of Florida, has failed to obtain for Marie W. Neal, a promissory note and mortgage or remit said funds for such promissory note and mortgage to her in violation of Section 494.05(1)(e) Florida Statutes, and thereby subjected the Respondent to a possible suspension under the terms of Section 494.05(1)(e), Florida Statutes. Whether or not the Respondent, Peter Van Wie Investments, Inc. and Peter Van Wie as president, a licensed mortgage broker in the State of Florida, has failed to account or deliver to Marie W. Neal after demand, said funds which came to $14,000.00 which were placed with the Respondent for purposes of investing in a promissory note and mortgage for land located in Dora Pines Development which funds had come into the hands of the Respondent which were and are not the property of the Respondent in which in law and equity the Respondent is not entitled to retain, in violation of Section 494.04(1) Florida Statutes, and thereby subjected Respondent to a possible suspension under the terms of Section 494.05(1)(e), Florida Statutes. Whether or not the Respondent, Peter Van Wie Investments, Inc. and Peter Van Wie as president, a licensed mortgage broker in the State of Florida, has failed to place, immediately upon receipt, funds in the amount of $14,000.00 received of Marie W. Neal into an escrow account, with an escrow agent located and doing business in Florida or to deposit said funds in a trust or escrow bank account maintained by the Respondent with some bank located and doing business in Florida or to deposit said funds in a trust or escrow bank account maintained by the Respondent with some bank located and doing business in Florida, in violation of Section 494.05(1)(e), Florida Statutes, and thereby subjecting the Respondent to a possible suspension under the terms of Section 494.05(1)(f), Florida Statutes.
Findings Of Fact Peter Van Wie Investments, Inc. through the person of Peter Van Wie, its president, was a licensed mortgage broker in the State of Florida during the time period contemplated by the Administrative Complaint. The Respondent was issued said license on October 4, 1974. At a time when the Respondent's mortgage broker license was in effect, Peter Van Wie Investments, Inc. and/or Peter Van Wie deposited monies received from investors in a savings account number 4-0011068, at the United Federal Savings and Loan Association of Broward County, 234 East Commercial Boulevard, Lauderdale by the Sea, Florida. This savings account was in the name of Peter Van Wie Investments, Inc. While operating as Peter Van Wie Investments, Inc., Peter Van Wie Investments, Inc. and/or Peter Van Wie paid to Richard Clarke and Frederick Beck, who were not licensed pursuant to Section 494.04(04, Florida Statutes, certain commissions, bonuses or fees in connection with the arranging negotiation, selling, purchasing and planning of mortgage loans. These sales by Mr. Beck and Mr. Clarke are identified in the Exhibit "A to the Complaint and Petitioner's Exhibit "C" admitted into evidence during the hearing. Richard Clarke became a licensed mortgage broker in the State of Florida on December 19, 1973. Frederick Beck has never been licensed under Chapter 494, Florida Statutes. There was admitted into evidence in the course of the hearing, Petitioner's Composite Exhibit "B". The columns that are shown on the pages of the exhibit running horizontally represent in succession: the date, name of the investor, whether or not the investor was a Florida resident, the amount of the mortgage, the amount of commission paid, whether the note was in the file of the Respondent, whether or not the mortgage was in the file of the Respondent, whether or not the title insurance policy on real estate was in the file, the interest rate return for the investor, whether or not the arrangement was for interest only or interest and principal, and the name of the broker/developer. The facts which surrounded the transaction shown in Petitioner's Composite Exhibit "B" are as follows: An investor would be in contact with Peter Van Wie Investments, Inc. concerning the purchase of certain promissory notes and mortgage for land which were being offered by a developer/mortgagor. The investor made out a check to Peter Van Wie Investments, Inc. using the acronym PVWI, Inc. The money for purchasing the promissory note and mortgage was then held in the escrow account until Peter Van Wie Investments, Inc. received the promissory note and mortgage through an intermediary acting in behalf of the developer. The money that had been received from the investor stayed in the escrow account until the receipt of the promissory note and mortgage and then was removed in the entire amount and placed in the Peter Van Wie Investments, Inc. operating account. A percentage of the investment principal would then be deducted from the amount which had been placed in the operating account and the amount remaining after the percentage had been deducted would be forwarded to the intermediary, who would make a further dispersion of the proceeds to the developer. The percentage to be deducted from the investment principal amount was determined by prior negotiations between the intermediary, and Peter Van Wie investments, Inc. These percentage amounts deducted from the investment principal were characterized by the Respondent in the course of the hearing, as being a discount allowed by the intermediary for sales of the promissory notes and mortgages to the Respondent. This characterization by the Respondent is rejected and these percentage amounts are found to be fees or commissions charged by the Respondent, which are in excess of the maximum allowable fees or commissions on transactions, in that they are in excess of the amounts allowed under Section 494.08(4)) Florida Statutes, and Rule 3D-40.08(3)(4), Florida Administrative Code, (formerly Rule 3-3.08(3)(4), Florida Administrative Code). In connection with other allegations found in the Administrative Complaint, it has been shown that on March 12, 1975, the Respondent received from one Marie W. Neal, $14,000.00 for the purpose of investing in a promissory note and mortgage for land located in Dora Pines Development. Peter Van Wie, on April 18, 1975, wrote a check to First National Resources in the amount of $11,760.00 to pay for the promissory note and mortgage for Marie W. Neal. On April 24, 1975, the check that had been written to First National Reserves was returned by the Lauderdale Beach Bank, for non-sufficient funds. The Respondent's explanation of the reason for the non-sufficient funds is found in his Answer to the Administrative Complaint in paragraph 6. It is not clear from the record whether Marie W. Neal ever physically received a promissory note and mortgage; however, a promissory note and mortgage deed have been recorded in Lake County, Florida, in her favor. There was no proof that the person, Marie W. Neal, ever asked that the Respondent remit such funds she had paid for the promissory note and mortgage. Furthermore, there is no evidence to the effect that the Respondent failed to deliver to to Marie W. Neal after demand, the said $14,000.00 which came into the Respondent's hands, or which had been placed in the escrow account of the Respondent and from which the non-sufficient funds check had been written to First National Resources. By an exhibit attached to the Answer of the Respondent, it is shown that the $14,000.00 was placed in the escrow account so designated at the United Federal Savings and Loan Association of Broward County, 234 East Commercial Boulevard, Lauderdale by the Sea, Florida, on March 13, 1975.
Recommendation It is RECOMMENDED that the license of the Respondent, Peter Van Wie Investments, Inc. and Peter Van Wie as president, a licensed mortgage broker in Florida, be suspended for a period of one year in view of the violations which have been proven in the course of the hearing. DONE and ENTERED this 15th day of July, 1976, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: R. Terry Rigsby, Esquire Assistant General Counsel Office of the Comptroller The Capitol Tallahassee, Florida 32304 Peter Van Wie, President Peter Van Wie Investments, Inc. 16 Winnebago Road Sea Ranch Lakes, Florida B. Paul Pettie 2314 E. Atlantic Boulevard Pompano Beach, Florida 33062 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE, DIVISION OF FINANCE, Petitioner, vs. Administration Proceeding Number 75-21 DOF-MB PETER VAN WIE INVESTMENTS, INC., Case No. 75-1512 and PETER VAN WIE, PRESIDENT, Respondent. /
Findings Of Fact Respondent, Ann K. Croasdell, was a registered real estate broker at all times material hereto. She has been issued License #0141344. On June 28, 1978, William Young, the owner of apartment #47, 848 Park Lake Circle, Maitland, Florida, conveyed said apartment to Susan B. Bickley. A warranty deed as to this transaction was recorded on June 30, 1978. On April 24, 1979, Bickley conveyed apartment #47, 848 Park Lake Circle, Maitland, Florida, to Respondent. This deed was recorded on April 25, 1979. Thereafter, on April 26, 1979, Respondent conveyed apartment #47, 848 Park Lake Circle, Maitland, Florida, to William Young. The warranty deed was signed by Respondent in Young's presence and Respondent delivered the warranty deed to Young by physically handing it to him after the document had been notarized. The warranty deed from Respondent to Young was not recorded until September 3, 1980. Over a year after she conveyed to Young, Respondent went to Levie Florida Investments, licensed mortgage brokers, and made application for a second mortgage loan on the subject property. Respondent dealt with James Levie, a mortgage banker with Levie Florida Investments. Levie was present when the application was made and saw the Respondent sign the document. His signature also appears on Respondent's mortgage loan application dated August 11, 1980. On August 20, 1980, the closing for the second mortgage on apartment #47, 848 Park Lake Circle, Maitland, Florida, was held. On that date, Respondent executed a mortgage deed and mortgage note from herself to Levie Florida Investments, a certificate of confirmation specifically stating that Respondent was the owner, a notice to first mortgage holder, and a loan closing statement. At that closing, Levie Florida Investments disbursed, to Respondent, its check #5937, in the amount of $6,000.00. The check was signed by James Levie and was delivered to Respondent at the time of closing. Subsequently, the check was negotiated by Respondent and returned to Levie Mortgage marked paid. Respondent never advised Levie Mortgage Company or any of it agents, including James Levie, up to and including the date of closing, that she had executed a deed to the property to any other party. She never indicated to anyone at Levie Mortgage Company or any of its agents that anyone else had any other interest in the property; nor did she ever indicate that she was acting as a trustee, agent or in any other fiduciary capacity on behalf of another person in seeking this loan. Further, Levie was never made aware by anyone, while the transaction was pending, that, in fact, a deed had been executed to another individual. It was not until after the loan had been closed and the mortgage had been placed in default that James Levie ultimately found out that a deed had been executed by William Young. This was discovered when he requested a title search be made by Giles, Hedrick & Robinson prior to the institution of foreclosure action. The evidence was inconclusive as to the reason Respondent failed to inform Levie Mortgage Company as to the ownership status of the property on which she sought and obtained the second mortgage loan. Respondent claims she was serving in a trust relationship with William T. Young at the time. Young denies this relationship existed or that he had knowledge of the second mortgage transaction.
Recommendation In consideration of the foregoing, it is RECOMMENDED: That Petitioner enter a Final Order suspending Respondent's real estate broker's license for a period of three years. 2/ DONE and ORDERED this 21st day of March, 1983, in Tallahassee, Florida. R.T. CARPENTER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of March, 1983
The Issue The issues for determination in this proceeding are whether Respondents, Samuel T. Henson and DuPont Funding Corporation, committed multiple acts in violation of applicable statutes and administrative rules and, if so, what, if any, penalties should be imposed.
Findings Of Fact Petitioner is the administrative agency charged with responsibility for administering and enforcing the provisions of Chapter 494, Florida Statutes.3 Respondent, DuPont Funding Corporation ("DuPont") is a Florida corporation engaged in the mortgage brokerage business at a single location at 7300 West Camino Real Drive, Boca Raton, Florida 33442. DuPont is registered with Petitioner under registration number HB 592710662. Respondent, Samuel T. Henson, ("Henson"), is the principal mortgage broker for DuPont. Henson is licensed by Petitioner as a mortgage broker pursuant to license number HA 247542864. As the mortgage broker for DuPont, Henson is responsible for his compliance with Chapter 494, Florida Statutes, as well as that of DuPont. Petitioner examined and investigated Respondents in response to five complaints received by Petitioner. The investigation involved events allegedly occurring between January 1, 1989 through August 31, 1990. Misuse And Misapplication Of Deposits The Smith Transaction Respondents failed to refund a deposit in the amount of $1,493.00 to Mr. J. W. Smith (the "Smith transaction"). Mr. Smith deposited $1,493.00 with Respondents to pay the costs of a mortgage applied for by the purchaser of commercial property owned by Mr. Smith. According to the terms of the Mortgage Loan Agreement and Application, the deposit was refundable if Respondents were unable to obtain financing for the proposed transaction. After Respondents were unable to obtain the financing applied for, they refused to refund Mr. Smith's deposit. Mr. Smith owned the Esmeralda Inn in Chimney Rock, North Carolina (the "Inn"). The Inn was listed for sale with Daniel Murr of First Commercial Brokers in Asheville, North Carolina, in the amount of $650,000.00. In October, 1989, Mr. Smith received a full price offer to purchase the Inn from Mr. and Mrs. William C. Robeck. Mr. and Mrs. Robeck were represented by a Mr. Castaldi as the their agent. The terms of the offer required Mr. and Mrs. Robeck to pay $25,000.00 and for Mr. Smith to carry a second mortgage in the amount of $185,000.00. The balance of the purchase price was to be paid in the form of a first mortgage in the amount of $440,000.00. Mr. Smith did not accept the offer of purchase from Mr. and Mrs. Robeck because he considered the amount of the cash invested by the purchasers to be insufficient. Sometime in December, 1989, Mr. Smith received a full price offer to purchase the Inn from Mr. Andrew Okpych. The terms of the offer required Mr. Okpych to pay $100,000.00 and for Mr. Smith to carry a second mortgage in the amount of $200,000.00. The Branch Bank and Trust Company in Asheville, North Carolina agreed to provide a first mortgage in the amount of $350,000.00. Mr. Smith wanted to minimize the amount of his second mortgage. He was advised by Mr. Daniel Murr that Respondents had represented to Mr. Murr that they could obtain a first mortgage for the purchase in the amount of $440,000.00 to finance the Smith-to-Okpych transaction. This financing proposal would reduce the second mortgage held by Mr. Smith to $110,000.00. Mr. Smith authorized Mr. Murr to contact Respondents. Henson contacted Mr. Smith by telephone to discuss the proposed financing in the amount of $440,000.00 on or about December 19, 1989. During that telephone conversation, Henson represented to Mr. Smith that Henson had located a lender which had already approved the needed $440,000.00 loan. Henson refused repeated requests by Mr. Smith to identity the lender. Henson insisted that Mr. Smith sign an agreement to pay the costs of the loan transaction and deposit $1,500.00 with Respondents before Henson would identify the lender which had pre-approved the loan in the amount of $440,000.00. Mr. Smith and Mr. Okpych signed a Mortgage Loan Agreement and Application (the "agreement") with Respondents on January 5, 1990. Mr. Okpych signed the agreement as borrower and Mr. Smith signed as the person responsible for all expenses incurred in connection with the agreement. The agreement was signed by Henson on January 5, 1992, and sent by facsimile to Mr. Smith and Mr. Okpych from the office of Mr. Smith's attorney. Mr. Smith and Mr. Okpych made several changes to the agreement and initialed the changes. One such change made the deposit from Mr. Smith a refundable deposit by deleting the prefix "non-" from the word "non-refundable" in the typed form of the agreement. Mr. Smith and Mr. Okpych sent the modified agreement to Henson by facsimile on the same day. Mr. Smith telephoned Henson on January 5, 1992, to advise Henson that the modified agreement had been sent by facsimile. Henson stated that he had received the agreement and stated that the modifications were acceptable. Henson directed Mr. Smith to wire transfer the $1,500.00 deposit. Mr. Smith wired $1,500.00, less the $7.00 charge for the wire transfer, on January 10, 1990. The wire transfer in the amount of $1,493.00 was sent to the account of Dupont Funding Corporation, account number 3601345943, NCNB, Deerfield Beach, Florida. Henson notified Mr. Smith by telephone on or about January 15, 1992, that he could not procure the needed financing. The reason given by Henson was that the lender did not want to make the loan because the property was located in North Carolina. Henson still refused to identify the lender to Mr. Smith, but suggested that the needed financing may be obtainable from "General Electric." See Exhibit 12 at 24. The next day, Henson telephoned Mr. Smith and stated that the loan was not available from any lender and that the deposit of $1,493.00 would be refunded to Mr. Smith later in the week. After repeated requests and written demands, Mr. Smith's deposit in the amount of $1,493.00 has not been refunded. The Robeck Transaction Respondents failed to refund a deposit in the amount of $2,500.00 to Mr. and Mrs. William C. Robeck (the "Robeck transaction"). Mr. and Mrs. Robeck deposited $2,500.00 with Respondents when the Robeck's applied for a mortgage in the amount of $440,000.00 on October 11, 1989, in their unsuccessful attempt to purchase the Inn from Mr. Smith. When Mr. Robeck questioned whether the deposit was refundable, Henson changed the typed form of the Mortgage Loan Agreement and Application (the "loan application") by deleting the prefix "non-" in the typed word "non-refundable". The modified loan agreement was signed by the Robeck's and Henson. Respondents were unable to obtain financing for the proposed transaction. After the Robecks were unable to obtain financing, Respondents refused to refund the Robeck's deposit. Mr and Mrs. Robeck made an offer to purchase the Inn from Mr. Smith sometime in October, 1989. The offer was rejected, and the Robeck's asked Henson to refund their deposit sometime in January, 1990. Henson refused to refund the deposit and told Mr. Robeck to find another bed and breakfast inn. Mr. Robeck found another bed and breakfast inn for sale in Franklin, North Carolina. He offered to acquire the inn by lease-purchase. His offer was accepted, but Mr. Robeck later found approximately $1,000,000.00 in stolen property on the premises. The owner was arrested, and the lease-purchase transaction was not consummated. Mr. Robeck again requested the refund of his deposit, and Henson again refused the request. Mr. Robeck has never been refunded any portion of his deposit. The Shuster Transaction Respondents failed to refund a deposit in the amount of $2,500.00 to Mr. Sanford Shuster (the "Shuster transaction"). Mr. Shuster deposited $2,500.00 with Respondents when he applied for a mortgage in the amount of $3,500,000.00 on February 8, 1990, to finance the acquisition of an Assisted Care Living Facility ("ACLF"). Henson changed the typed form of the Mortgage Loan Agreement and Application (the "mortgage application") by deleting the prefix "non-" in the typed word "non-refundable". The modified mortgage application was signed by Mr. Shuster and Henson. Mr. Shuster was unable to obtain financing, and Respondents refused to refund Mr. Shuster's deposit. Mr. Shuster made repeated attempts to obtain his refundable deposit from Respondents including several telephone conversations with Henson and two written demands for payment on April 10, 1990, and on June 2, 1990. In every instance, Henson agreed to refund the deposit but never did so. Mr. Shuster and Henson entered into a compromise agreement on September 10, 1990. Pursuant to the terms of the compromise agreement, Henson agreed to pay Mr. Shuster $2,000.00 in full settlement of the $2,500.00 claim by Mr. Shuster. Henson paid none of the $2,000.00 required under the settlement agreement with Mr. Shuster. Mr. Shuster sued Henson in Palm Beach County Court and obtained a Final Judgment against Henson on January 31, 1992, in the amount of $2,058.75. On May 7, 1991, Henson paid Mr. Shuster $100.00 toward the amount due under the Final Judgment, but made no other payments. Mr. Shuster has never received the balance of the deposit owed to him and has a claim pending with the Mortgage Brokerage Guaranty Fund. The Linker Transaction Respondents failed to refund deposits totaling $22,500.00 to Mr. Gerald Linker (the "Linker transaction"). Mr. Linker deposited $22,500.00 with Respondents when he applied for a mortgage in the amount of $1,250,000.00 in May, 1990, to finance the acquisition of an alcohol and drug abuse center (the "center"). Henson obtained a written loan commitment from Nationwide Funding, Inc. ("Nationwide"), on May 23, 1990. Neither Nationwide nor Respondents performed in accordance with the terms of the commitment. Mr. Linker never received his loan and never received his deposits. Mr. Linker's attorney made repeated attempts to have Mr. Linker's deposits refunded to him. Mr. Linker's attorney filed suit in the Circuit Court of the 15th Judicial Circuit in Palm Beach County, Florida, and obtained separate judgments against Henson and Dupont in the respective amounts of $69,023.01 and $69,520.78. Respondents paid none of the $138,543.79 owed to Mr. Linker. Mr. Linker has a claim pending with the Mortgage Brokerage Guaranty Fund. The Barth Transaction Respondents failed to return a refundable deposit in the amount of $10,000.00 to Mr. Andrew J. Barth (the "Barth transaction"). Mr. Barth deposited $10,000.00 with Respondents when he applied for financing in connection with the purchase of the Cardinal Retirement Village in Bradenton, Florida, on November 17, 1989. Mr. Barth was to assume an existing mortgage of approximately $9,800,000.00 in the transaction. Respondents agreed to arrange the assumption. The owners of the Cardinal Retirement Village refused to proceed and Respondents never refunded Mr. Barth's deposit. The agreement between Mr. Barth and Respondents provided in relevant part: The deposit will be refunded no later than thirty (30) days from this date if this real estate and mortgage transaction is not successfully completed and closed. Mr. Barth made repeated attempts to have his deposit refunded to him. In May, 1990, Mr. Barth's attorney negotiated a Pay Back Agreement with Respondents in which Respondents agreed to pay $1,500.00 a month to Mr. Barth to refund the deposit with interest. Respondents paid only $3,000.00 to Mr. Barth. Mr. Barth has never received the balance owed to him for his refundable deposit. Failure To Maintain Escrow Accounts Respondents failed to maintain an escrow account during 1988 and 1989 and failed to place deposits in escrow. Respondents failed to place deposits in escrow for the Smith, Robeck, Shuster, Linker, and Barth transactions. The accounts to which the monies were deposited by Respondents were not escrow accounts. Respondents failed to place deposits from numerous other transactions in escrow. Respondents failed to deposit in escrow the following amounts: an appraisal fee of $250.00 and a credit report fee of $150.00 collected from Mr. Eric Jason prior to closing a mortgage for $101,650.00 on November 30, 1989; an appraisal fee of $250.00 and a credit report fee of $50.00 collected from Francis J. and Barbara A. Lynch prior to closing a mortgage for $50,000.00 on February 5, 1990; a deposit of $2,000.00 in part payment of the brokerage fee collected from Mr. Nicholas A. Paleveda and Ms. Marjorie Ewing prior to closing a mortgage for $356,400.00 on April 20, 1990; a deposit of $350.00 collected from Mr. Richard L. Trombley prior to closing a mortgage for $40,000.00 on November 2, 1990; and a deposit of $350 collected from the Sun Bay Development Corporation prior to closing a mortgage for $292,500.00 on February 6, 1990. Excessive, Duplicate, And Undisclosed Charges Respondents imposed excessive, duplicate, or undisclosed charges in numerous mortgage transactions. The costs itemized and collected from borrowers in these transactions were not supported by actual expenditures. Respondents collected $625.00 from Mr. and Mrs. Ernest L. Sego for an appraisal that cost $250.00. Mr. and Mrs. Sego paid $325.00 for an appraisal report at the time they executed a Mortgage Brokerage Agreement on August 17, 1988, for a mortgage in the amount of $151,000.00. At the closing on April 7, 1989, Mr. and Mrs. Sego were charged an additional $300.00. Respondents collected $50.00 from Mr. and Mrs. Sego for a credit report at the time the Mortgage Brokerage Agreement was executed. At the closing, Mr. and Mrs. Sego were charged an additional $45.00 for a credit report. Respondents underestimated the closing costs for: Mr. Jason in the amount of $590.00; The Lynch's in the amount of $492.50; and Mr. and Mrs. Sego in the amount of $1,140.00. Failure To Disclose Respondents failed to disclose costs incurred by numerous borrowers. Respondents failed to disclose changes in the cost of title insurance which occurred between the time the borrowers signed Good Faith Estimate forms and the time the mortgage transactions closed. The estimated cost for title insurance for the Lynch's was $460.00 while the actual cost was $637.50. The estimated cost of title insurance for Mr. and Mrs. Sego was $200.00 and the actual cost was $263.00. The Mortgage Brokerage Agreement/Good Faith Estimate was not signed by two borrowers in separate transactions. Neither Mr. and Mrs. Knowlton nor Mr. Trombley signed those documents. Respondents failed to disclose payments made to a co- broker in two separate transactions. Mr. Nicholas Cancel was hired by Respondents to process loans. Loan processing is limited to preparing the documentation necessary to close a loan. Mr. Cancel is a licensed mortgage broker who was employed by a broker other than Respondents. Respondents failed to disclose payments made to Mr. Cancel in his capacity as an independent broker in the mortgage loans to the Lynch's and Mr. Jason. Failure To Maintain Books And Records And Failure To Cooperate Respondents failed to maintain books and records at the principal place of business. Respondents maintained only one business location. When Petitioner's investigator visited Respondents' office and asked for the books and records, Henson told the investigator that there were no books and records at the office. Petitioner subsequently served Respondents with a subpoena to produce Dupont's books and records. Respondents produced 57 mortgage files and some banking records. The files produced by Respondents were incomplete. Most contained only brochures. No files were produced on the Shuster and Linker transactions. During the investigation Henson represented to the investigator that he was neither president nor a corporate officer of Dupont. However, Henson repeatedly signed loan application and loan closing documents as president of Dupont including the Smith, Robeck, and Shuster transactions. Henson also entered into numerous co-brokerage arrangements as president of Dupont including arrangements with Mr. Cancel and Ms. Patricia Towers, president of Towers Mortgage Corporation, 6971 North Federal Highway, Boca Raton, Florida 33487. Fraud, Deceit, Misrepresentation, And Gross Negligence Respondents' intent to defraud and deceive the public is evidenced by a consistent pattern and practice of incompetence, gross negligence, misrepresentation, and failure to disclose material facts in multiple transactions over an extended period of time. Respondents knew or should have known that the acts committed by them constituted violations of law. Respondents violations resulted in financial loss to numerous individuals and to the public generally. Respondents failed to comply with agreements voluntarily executed by them and failed to pay amounts due under judgments duly entered against them by Florida courts. Respondents failed to cooperate with state investigators and failed to maintain books, records, and escrow accounts required by law.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner issue a final order revoking the license of Respondent, Henson, and revoking the registration of Respondent, Dupont. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 29th day of September 1992. DANIEL MANRY 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 29th day of September 1992.
Findings Of Fact The Respondent Hollywood, Inc., is a licensed corporate real estate broker engaged in real estate activities. Hollywood, Inc., is also a subdivider and builder of residential homes in Broward County. One of the qualifying brokers for Respondent Hollywood, Inc., is the Respondent William D. Horvitz, who also serves as President and a Director of the corporation. On or about March 12, 1981, Mildred McGehee, a real estate salesman working for the Respondent Hollywood, Inc., showed a model home and building in Rock Creek, a Hollywood, Inc., development, to Andrew and Linda Medvin. As a result of McGehee's efforts, the Medvins, as Buyers, signed a contract with Respondent Hollywood, Inc., as Seller, to construct and purchase a dwelling unit for a total purchase price of $118,900. Pursuant to the contract, the Medvins gave the Respondent Hollywood, Inc., a good faith deposit for $11,890 at the time the contract was executed. The Medvins' deposit was not placed into a broker's escrow account by the Respondent Hollywood, Inc. The subject contract required the Medvins to supply $11,910 cash at closing and to make application to a qualified lending institution for the mortgage balance, $95,100. Under the provisions of paragraph (c) on page two of the contract, the contract was contingent upon: "BUYER obtaining a firm commitment (the term 'firm commitment' as used in this Contract shall mean a written agreement by a Qualified Lending Insti- tution to make a mortgage loan to BUYER on the Property in the amount of the above MORTGAGE BALANCE) for said loan within thirty (30) days from the date of execution hereof by SELLER." Respondent's Exhibit 1. The mortgage balance referred to in the contract was $95,100. The failure of the Medvins to make and complete an application for the mortgage financing or failure of the Medvins to timely satisfy any conditions in the firm commitment was cause for default under the contract unless the Medvins made other arrangements satisfactory to Respondent Hollywood, Inc., for payment of the total purchase price at closing. The Medvins timely filed applications for $80,000 rather than $95,100 as set forth in the contract, with four lending institutions. Two of the lending institutions rejected the application, one offered a $75,000 loan and one, Hollywood Federal, offered a commitment of $80,000 subject to the Medvins' sale and verification of the sale of the home which they then owned. The delivery by the Medvins of the disapproval for mortgage financing from a qualified lending institution would have resulted in the return of the Medvins' deposit and termination of the contract. A copy of a disapproval of financing was never delivered to Respondent Hollywood, Inc., by the Medvins. The Medvins gave the letter of commitment with conditions issued by Hollywood Federal to Respondent Hollywood, Inc., pursuant to the contract. As long as the special conditions of the mortgage loan commitment made by Hollywood Federal were met, the lender was obligated to make the loan to the Medvins. The Medvins intended to personally supply at closing the difference between the amount due Respondent Hollywood, Inc., under the contract and the mortgage financing received from Hollywood Federal. Upon receipt from the Medvins of the mortgage loan commitment with conditions, the Respondent Hollywood, Inc., commenced construction on their home pursuant to the contract. The Respondent Hollywood, Inc., constructed a residence for the Medvins in accordance with the specifications contained in the contract and the changes and modifications to the residence requested by the Medvins during the course of construction. A condition of the mortgage financing commitment from Hollywood Federal received by the Medvins was that they sell their present home prior to February 19, 1982, the scheduled date of closing. The Medvins did not sell their present home prior to February 19, 1982, the scheduled date of closing. Section 2.C of the subject contract provides: Failure by the Buyer to timely make and complete application for mortgage financing or failure by the Buyer to satisfy any conditions in the firm commitment timely shall be cause for default of Buyer under Paragraph 7 (as hereinafter) of the Contract unless Buyer makes other arrangements satisfactory to the Seller for pay- ment of the Total Purchase Price at closing. (Emphasis added.) Respondent's Exhibit 1. Pursuant to the contract, the Respondent Hollywood, Inc., notified the Medvins that their home was constructed and complete and a closing date of February 19, 1982, was set. Although Linda Medvin had repeated contact with Hollywood, Inc.'s personnel between April 20, 1981, and February, 1982, regarding extras and changes to the house being constructed for her, the Medvins did not inform Hollywood, Inc., until February 10, 1982, that they did not intend to close on the home. The Medvins failed to appear at the closing which was scheduled for February 19, 1982. The contract provides that as soon as Seller notifies the Buyer of his readiness to close, it is the duty of the Buyer to execute all documents required by the lending institution in order to close the mortgage loan and home purchase simultaneously. The Respondent Hollywood, Inc., was informed by legal counsel that the failure of the Medvins to make arrangements satisfactory to Hollywood, Inc., for payment of the purchase price at closing constituted a default by the Medvins as Buyers under the terms of the contract and all payments including the deposit were to be retained by the Seller as liquidated damages. The Medvins through counsel demanded the return of their earnest money deposit. The Respondents have refused to return the deposit based on their belief that the Medvins were in default under the contract. The Respondent, William D. Horvitz, has not personally engaged in any dealings with the Medvins and is not the only licensed broker associated with Hollywood, Inc. The Respondent Horvitz was not involved either directly or in a supervisory capacity in the transaction between the Medvins and Hollywood, Inc.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Florida Real Estate Commission enter a Final Order dismissing the Administrative Complaint filed against Respondents Hollywood, Inc., and William D. Horvitz. DONE AND ENTERED this 30th day of September, 1983, at Tallahassee, Florida. SHARYN L. SMITH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 30th day of September, 1983. COPIES FURNISHED: John Huskins, Esquire Department of Professional Regulation - Legal Section 400 West Robinson Street Orlando, Florida 32801 Carlos Alvarez, Esquire and Carolyn S. Raepple, Esquire HOPPING BOYD GREEN & SAMS Post Office Box 6526 Tallahassee, Florida 32314 Randy Schwartz, Esquire Assistant Attorney General Department of Legal Affairs Suite 212 400 West Robinson Street Orlando, Florida 32801 Howard Huff, Executive Director Florida Real Estate Commission Department of Professional Regulation 400 West Robinson Street Orlando, Florida 32801 Fred M. Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
