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
The Issue 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.)
Findings Of Fact 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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." 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
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
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.
The Issue The issue in this case is whether the Department of Transportation (Respondent) should approve the request filed by John and Patricia Kirkwood (Petitioners) for an additional relocation mortgage interest differential payment.
Findings Of Fact The Respondent is the state agency responsible for the acquisition of land impacted by proposed transportation projects. In 2010, the Respondent acquired the Petitioners' home located in Altamonte Springs, Florida, during a land acquisition process associated with widening Interstate 4 (I-4). Federal funds were used to pay for the project, including the funds that were provided to the Petitioners. The Respondent paid $251,225.00 for the Petitioners' residence, including various fees, costs, and miscellaneous expenses. In addition to relocation and property costs, the Petitioners were entitled to receive funds related to the difference in interest rates between the mortgage on the Petitioners' original home and a mortgage on a replacement home. Because mortgage interest differential payments are made with federal funds, the Respondent was required to calculate the payment using a "Fixed Rate Mortgage Interest Differential Payment Calculator" set forth at 49 C.F.R. part 24. Although the federal regulation states that the purpose of the payment is to "reduce the new mortgage," the regulation does not require that the payment be made prior to the closing of the replacement dwelling, but only "at or near the time of closing." The Petitioners located a replacement home and commenced to purchase the property. The closing date for the purchase was initially identified as May 15, 2010. The closing date was subsequently moved forward to May 7, 2010. The calculation of a fixed-rate mortgage interest differential payment requires identification of the actual interest rate on the replacement property. Although there was substantial communication between the Petitioners and the Respondent prior to the closing about an estimated interest rate for the new mortgage, the Petitioners were apparently unable to identify the actual interest rate on the mortgage until the closing occurred on May 7, 2010. Once the closing commenced, there was insufficient time for the Respondent to produce a check on May 7, 2010. The Respondent is unable to produce a check in less than two weeks; accordingly, the Respondent was unable to provide the mortgage differential payment prior to or on May 7, 2010. Based on application of the "Fixed Rate Mortgage Interest Differential Payment Calculator," the Respondent calculated that the Petitioners were entitled to receive $12,128.18, and the Petitioners received that amount on June 21, 2010. Because the mortgage interest differential was paid to the Petitioners after the closing, they were unable to apply the payment to the new mortgage. Because the Petitioners did not receive the mortgage interest differential payment prior to or at the closing, the funds were not applied to the purchase of the replacement home. The Petitioners monthly house payment is approximately $69.00 more than it would have been had the mortgage interest differential payment been provided in time to be applied to the amount financed to purchase the replacement home. The amount requested by the Petitioners in this proceeding reflects the total mortgage interest that will eventually be paid by the Petitioners on the replacement home (assuming it is paid as stated in the mortgage), reduced by the Respondent's payment made on June 21, 2010. The Petitioners acknowledged that the Respondent's calculation of the mortgage interest differential complied with the "Fixed Rate Mortgage Interest Differential Payment Calculator." The evidence failed to establish that the Respondent incorrectly calculated the mortgage interest differential to which the Petitioners were entitled.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation enter a final order denying the Petitioners' request for the requested additional mortgage interest differential payment. DONE AND ENTERED this 20th day of September, 2011, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of September, 2011. COPIES FURNISHED: Kimberly Clark Menchion, Esquire Department of Transportation 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399 John Kirkwood Patricia Kirkwood 1515 North Delaware Street Sanford, Florida 32771 Deanna Hurt, Clerk of Agency Proceedings Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450 Gerald B Curington, General Counsel Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450 Ananth Prasad, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 57 Tallahassee, Florida 32399-0450
Findings Of Fact During 1984 Philip Dennis on his own behalf and on behalf of Medi Fund Inc. negotiated in Florida with William Kickliter for the purpose of arranging a mortgage loan. During those negotiations Respondent Dennis represented to Kickliter that both he and Respondent Medi Fund, Inc., were mortgage brokers licensed by the State of Florida. In his stated capacity as a mortgage broker, Respondent Dennis drafted and entered into an agreement with Kickliter whereby Kickliter would obtain a mortgage loan from Respondent Medi Fund, Inc., for financing an ongoing business. Respondent Dennis signed the agreement between Kickliter and Respondent Medi Fund, Inc., pursuant to which Kickliter gave to Respondent Dennis a refundable advance fee of $1,500 by check made payable to Respondent Medi Fund, Inc. No mortgage loan was ever consummated. When Kickliter made demand on Respondent Dennis for the return of his monies, Respondent Dennis sent to Kickliter a post-dated check for only $850 with a notation on that check that it was allegedly for full payment of the refundable advance fee. When Kickliter deposited that check, the check "bounced." Respondent Dennis then stopped payment on the check. Kickliter's refundable advance fee has never been refunded to him by either Respondent Dennis or Respondent Medi Fund, Inc. In 1983 Respondent Dennis negotiated in Florida with Robert N. Goldstein to secure financing so that Goldstein's company Hospitality Consultants, Inc., could acquire a hotel. Respondent Dennis drafted and presented to Goldstein and Goldstein's partner Thomas Palumbo an agreement between Respondent Dennis and Hospitality Consultants, Inc., whereby Respondent Dennis would seek mortgage funding for the corporation. In that agreement Respondent Dennis designated himself as "the broker", a designation which matched his oral representations to Goldstein that he was a mortgage broker licensed in the State of Florida. Respondent Dennis executed that agreement on March 11, 1983, on his own behalf. In 1985 Respondent Dennis negotiated in Florida with Bryan Miller of Deco Redevelopment Corp. to secure real estate mortgage loan financing for hotels located in Miami Beach. Respondent Dennis on behalf of Respondent Medi Funds Inc., drafted an agreement whereby Respondent Medi Funds Inc. would secure financing for real estate renovation and new construction of a hotel complex to be built in Miami Beach. Respondent Dennis entered into that agreement on behalf of Respondent Medi Fund Inc. Pursuant to, that agreement, Miller paid to Respondent Dennis on behalf of Respondent Medi Funds Inc., the sum of $5,000 as a refundable advance fee. Neither Respondent Dennis nor Respondent Medi Funds Inc. has arranged any mortgage loan to Deco Redevelopment Corp. Furthers the $5,090 Refundable advance fee paid to Respondents Dennis and Medi Fund Inc. has never been refunded. In 1985 Respondent Dennis while in Florida negotiated with Millie Bulkeley of Arizona for mortgage loan financing for a mobile home park in Arizona. Thereafter Respondent Dennis drafted and entered into an agreement with Bulkeley whereby Respondent Medi Fund Inc., would secure real estate financing for her. Pursuant to that agreement Bulkeley deposited into Respondent Dennis's bank account in New York $20,000 as a refundable advance fee. No financing was ever secured for the project by Respondent Dennis or Respondent Medi Fund Inc. and the refundable advance fee has never been refunded. During 1983, 1984, and 1985 Respondent Dennis represented himself as being an officer of Respondent Medi Fund Inc. and misrepresented to persons both orally and in writing that both Respondent Dennis and Respondent Medi Fund, Inc., were mortgage brokers licensed by the State of Florida. During the time period of December 1982 up to and including May 2, 1986, neither Respondent Dennis nor Respondent Medi Fund, Inc., has been a licensed mortgage broker. By Order entered April 16, 1986, in this cause Petitioner was awarded certain costs against Respondent Medi Funds Inc., as a result of Medi Fund, Inc.'s, refusal to engage in discovery. Those reasonable costs are $45 for the attendance of the court reporter, $318.10 for the travel expense incurred by Petitioner's attorney, and $1,275 as an attorney's fee for Petitioner's attorney. The Order of April 16, 1986, also required Respondent Medi Funds Inc. to return to Petitioner the witness fee and mileage fee paid to it before its non-appearance at its scheduled deposition.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered finding Respondents Philip Dennis and Medi Fund, Inc., guilty of the allegations contained within the Cease and Desist Order filed herein ordering Respondents Dennis and Medi Fund, Inc. to forthwith and immediately cease and desist from any further violations of Chapter 494, Florida Statutes, requiring Medi Funds Inc. to return to the State of Florida the witness fee and mileage paid to it pursuant to the April 16, 1986 Order entered herein and requiring Respondent Medi Funds Inc. to pay to the State of Florida the sum of $1,638.10, as further required by the April 16, 1986 Order entered herein. DONE and RECOMMENDED this 29th day of August 1986 at Tallahassee Florida. LINDA M. RIGOT 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 29th day of August, 1986. COPIES FURNISHED: Gerald Lewis, Comptroller State of Florida The Capitol Tallahassee, Florida 32301 Deborah Hoffman, Esquire Thomas E. Glick Esquire Office of Comptroller 401 N.W. 2nd Avenue, Suite 870 Miami Florida 33128 Philip Dennis 2124 Northeast 167 Street North Miami Beach, Florida 33160 Medi Funds Inc., a Florida Corporation c/o Philip Dennis 2124 Northeast 167 Street North Miami Beach, Florida 33160
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the parties' stipulations of fact, the following relevant facts are found: The petitioner Jose A. (Tony) Torres was employed by the respondent Office of the Comptroller, Department of Banking and Finance, Division of Finance from approximately June of 1963 until February of 1986. For about 13 years, he held the position of Area Financial Manager in the Tampa office and was responsible for and in charge of regulating mortgage brokerage businesses and licensees in ten counties along the west coast of Florida. By letter dated February 11, 1986, petitioner was notified of the respondent's intent to dismiss him from employment on the grounds that, in spite of prior warnings, he had obtained loans from licensed individuals and institutions he was responsible for regulating. Petitioner was given the opportunity to respond to this notice, did so and the respondent thereafter affirmed its intent to dismiss him. Petitioner did not contest or appeal his dismissal. On March 6, 1986, petitioner submitted to the respondent his application for registration as a mortgage broker. By Order dated and filed on May 23, 1986, respondent denied his application, concluding that petitioner does not have the requisite experience, background, honesty, truthfulness or integrity to act as a mortgage broker in Florida. The factual bases cited for this conclusion are that petitioner was arrested in September of 1979 for gambling; that he declared bankruptcy in 1980; and that he obtained loans in 1981, 1983, and 1984 from individuals and/or financial institutions which were licensed by the Division of Finance, and also that said loans have never been repaid. The Centro Asturiano Club is a private social club where gambling (poker) regularly occurs. On Friday, August 31, 1979, at approximately 3:00 p.m., petitioner and others were arrested for gambling at the Centro Asturiano. At the time of the arrest, the police seized certain items including a Smith and Wesson .38 caliber firearm and $670. A motion to suppress evidence and a motion to dismiss were ultimately granted and the petitioner was not convicted. The gambling arrest occurred on a regular business day in the Office of the Comptroller. Petitioner states that he was on annual leave at the time. An employee in his office observed petitioner's secretary make changes in the petitioner's leave slip forms on the afternoon of August 31, 1979. It was not established that such alterations were not proper. On May 30, 1980, petitioner filed a petition pursuant to Title 11, United States Code. An order for relief was entered under Chapter 7, with a Discharge of Debtor ordered on October 8, 1980, by the United States Bankruptcy Court for the Middle District of Florida (Bankruptcy No. 80-00750). At least six entities listed as creditors in petitioner's bankruptcy proceeding were licensees of the Department of Banking and Finance. At the time, petitioner was charged with examining and regulating those six entities in his capacity as the Area Financial Manager for the Division of Finance. In 1979 and/or 1980, petitioner's superiors in the Department admonished him to refrain from obtaining loans from the industry he regulated, and that such activity constituted a violation of Departmental policy and the Code of Ethics for Public Officers and Employees, Chapter 112, Florida Statutes. On March 1, 1983, petitioner obtained a signature loan of approximately $2,200 from the A. L. Machado, M.D. Pension Trust. Colonial Mortgage, Inc., which was then licensed with the Division of Finance as a mortgage broker, serviced the loan. Darrell T. DiBona, the director of Colonial, became licensed as an additional broker on June 19, 1983. The payment record on this loan, discovered during an examination by the Division of Finance in May of 1985, reflected that four interest payments had been made, but that the principal balance was still outstanding. Darrell T. DiBona made a check payable for one of the petitioner's interest payments owed to the Machado pension fund. The petitioner's version of the facts surrounding the Machado loan is not credible. He states that he had known Darrell T. DiBona for many years. DiBona handled petitioner's insurance needs, and petitioner, wishing to increase his coverage, had had a medical examination which indicated either an irregular heartbeat or fatty tissues in his blood. According to petitioner, he was having lunch with DiBona one day, and DiBona needed to stop by Dr. Machado's office on business. DiBona apparently handled pension funds for various physicians. While at Dr. Machado's office, the subject of petitioner's medical condition arose. Petitioner states that Dr. Machado offered to check his irregular heartbeat and gave him an EKG. During that examination petitioner asserts that he told Dr. Machado that he was having financial difficulties, and Dr. Machado offered to loan him $2,200. Petitioner insists that he made three or four payments on a note, and then paid it off in full in May or July of 1984. This latter payment, according to petitioner, was made in cash and handed to DiBona. Petitioner never received a receipt for the "$2,200 in cash plus the interest." Petitioner states that he subsequently asked for a receipt or the note on several occasions, but was told that it could not be found. The note and payment record were found by the respondent during an examination of Colonial Mortgage in May of 1985. As noted above, the payment record revealed that only three or four interest payments had been made. Dr. Machado has no recollection of examining petitioner in his office or otherwise discussing a loan with him. Had petitioner been examined by Dr. Machado, a ledger card or chart would have been prepared. No ledger card or chart for the petitioner could be discovered in Dr. Machado's office. Dr. Machado did not become aware that money from his pension fund was lent to petitioner until after DiBona's death. His office manager was then asked to write a letter stating that the petitioner's loan had been paid in full. Such a letter was written and petitioner picked up the letter from Dr. Machado's office. Although he had no knowledge concerning the loan, Dr. Machado agreed to sign the letter because he thought that petitioner could be one of DiBona's innocent victims. He, as well as other physicians, lost pension fund monies from accounts handled by Darrell DiBona. Beneficial Mortgage Company was licensed with the Division of Finance in November of 1984 as a mortgage broker. During that time, petitioner contacted the regional supervisor of Beneficial, who does not himself regularly take loan applications, regarding a home mortgage loan for his mother. On November 20, 1984, a $30,590 mortgage loan from Beneficial Mortgage was obtained, and petitioner co-signed the loan documents. The loan proceeds were utilized to pay off two prior mortgages, one of which was Colonial Mortgage. Petitioner's mother is elderly, speaks little English and petitioner often handled her financial affairs. According to the regional supervisor, petitioner was asked to co-sign the note in order to avoid any questions which might arise in the future regarding Mrs. Torres' competency to enter into such a transaction. As a co-signer, however, petitioner was guaranteeing the account. While the mortgage loan was for an amount less than the house was appraised and contained no preferential terms or rates, Beneficial required no standard credit report, income analysis or other financial documentation concerning the petitioner. Mrs. Torres' income and debt ratio were barely sufficient to make the monthly payments on the loan. Petitioner has two brothers and a sister who also live in Tampa. On December 6, 1984, petitioner obtained a $2,000 signature loan from N. D. Properties, Inc. N. D. Properties was solely owned at that time by Ben Langworthy, Jr., who also owned Diversified Mortgage Associates, Inc. At that time, both Diversified and Langworthy were licensed with the Department of Banking and Finance, Division of Finance. The petitioner made at least two loan payments directly to Ben Langworthy, who he knew was licensed by the Department. The $2,000 check given to petitioner was signed by Ben Langworthy. According to petitioner, Mr. Langworthy told him that N. D. Properties, Inc. was owned by two private investors. Petitioner's loan payment record with N. D. Properties shows that the loan has not been timely repaid.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the application of Jose A. (Tony) Torres for registration as a mortgage broker in Florida be DENIED. Respectfully submitted and entered this 3rd day of June, 1987, in Tallahassee, Florida. DIANE D. TREMOR 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 3rd day of June, 1987. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-2473 The proposed findings of fact submitted by the petitioner and the respondent have been fully considered and have been accepted and/or incorporated in this Recommended Order, except as noted below. Petitioner p.1, last paragraph: Rejected; legal conclusion as opposed to factual finding p.2, 2nd paragraph, 2nd sentence: Rejected, irrelevant and immaterial p.2, 3rd paragraph: Rejected; immaterial p.2, 5th paragraph: Rejected; argumentative p.3, 1st two paragraphs: Rejected; argumentative p.3, paragraphs 7, 8 & 9: Accepted, but not included as irrelevant to ultimate disposition p.4, last four paragraphs: Rejected; contrary to the greater weight of the evidence p.5, paragraphs 3 - 5: Rejected; contrary to the greater weight of the evidence p.7, paragraphs 1 and 3: Rejected; not proper factual findings p.8, paragraphs 1 through 7: Rejected; argumentative and improper factual findings Respondent #6: Rejected; not supported by competent, substantial evidence #20 & 21: Rejected; not supported by competent, substantial evidence COPIES FURNISHED: Dick Greco, Esquire Molloy, James & Greco, P.A. 501 East Kennedy Boulevard Suite 910 Tampa, Florida 33602 Sharon L. Barnett Assistant General Counsel Office of the Comptroller 1313 Tampa Street, Suite 713 Tampa, Florida 33602-3394 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0305 Charles Stutts General Counsel Department of Banking and Finance The Capitol - Plaza Level Tallahassee, Florida 32399-0305 =================================================================
Findings Of Fact At all times material hereto, Respondent John E. LeMieux (Respondent LeMieux) was a licensed real estate broker in the State of Florida, having been issued license numbers 051596 and 0266128 in accordance with Chapter 475, Florida Statutes. The last licenses issued were as a broker in care of Retco Realty, Inc., 5942 SW 73rd Street, South Miami, Florida 33143, and as a broker in care of Retco Kassner, Inc., 7311 SW 59th Court, Miami, Florida 33143. At all times pertinent hereto, the Respondent Retco Realty, Inc. (Respondent Retco) was a corporation registered as a real estate broker in the State of Florida, having been issued license number 0141149 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 5942 SW 73rd Street, South Miami, Florida 33143. At all times pertinent hereto, Respondent LeMieux was licensed and operating as the qualifying broker and officer of Respondent Retco. Kenneth and Regina Davis have been married for 12 years and have four children. Both are high school graduates, but neither had been involved in a transaction to purchase real estate prior to the one involved in this proceeding. Ms. Davis is a housewife. Mr. Davis repairs and restores wrecked automobiles. Prior to their dealings with Respondents, the Davises and their four children lived in a rented, two bedroom duplex. In February 1990, Mr. and Mrs. Davis began looking for a house to purchase after their landlord threatened to evict them. The landlord objected to the number of children living in the duplex and to Mr. Davis's practice of parking several cars at the duplex. Because of the threatened eviction, the Davises were anxious to find alternative housing. Mr. and Mrs. Davis saw an advertisement in the Miami Herald for a house located at 14700 South West 104th Place, Miami, Florida. They went to the house on Sunday, February 18, 1990, and, after looking at the house from the outside, decided that they liked the house and called the telephone number listed in the ad on February 18, 1990. In February 1990, Investor's Choice International, Inc., a corporation that was owned and operated by Respondent LeMieux at all times pertinent to this proceeding, owned the house that interested the Davises. Investor's Choice had first acquired the property in 1985 and had subsequently sold the property to Marva Pitter. Respondent LeMieux assisted Ms. Pitter in obtaining a first mortgage on the premises from Savings of America and his corporation took a second mortgage on the premises. Investor's Choice reacquired the property after Ms. Pitter defaulted on the second mortgage and executed a deed to Investor's Choice in lieu of an action to foreclose the second mortgage. Investor's Choice continued to pay the first mortgage to Savings of America, but there was no formal assumption of that first mortgage by Investor's Choice. Respondents had placed the ad for the house, and the number listed was the office of Respondent Retco. Barbara Couret, the Respondents' secretary, answered the Davises's telephone call and promised to have Respondent LeMieux return the call. Later that day Respondent LeMieux talked with Mrs. Davis by telephone, at which time Mrs. Davis gave Respondent LeMieux her and her husband's social security numbers so Respondent LeMieux could check their credit. Mrs. Davis and Respondent LeMieux agreed to meet the following day. The meeting on February 19, 1990, was cancelled when Respondent LeMieux failed to show up and the Davises went home after having waited for him at his office for approximately one hour. That evening Respondent LeMieux called the Davises, apologized for not being able to meet with them as scheduled, and arranged to meet them the following day at Respondent LeMieux's offices. On February 20, 1990, Respondent LeMieux called and changed the location of the meeting to the Pink Flamingo Restaurant on South Dixie Highway, Miami, a location that was mutually convenient. Mr. and Mrs. Davis met with Respondent LeMieux for the first time on February 20, 1990, in the parking lot of the Pink Flamingo Restaurant. At the meeting, Respondent LeMieux told the Davises that he had checked their credit and that he did not believe they would qualify for a FHA loan. Respondent LeMieux told the Davises that his company, Investor's Choice, owned the property and that he would sell it to them for the price of $52,000. The purchase price would be paid as follows: the Davises would pay $2,000 down; they would assume payment of the first mortgage held by Savings of America of approximately $43,000; and they would execute in favor of Respondent LeMieux's corporation a purchase money second mortgage of $7,000. Respondent LeMieux told the Davises that they would have to make an additional payment on the second mortgage of $2,000 around May 1, 1990, when they received their income tax refund. The monthly payment on the first mortgage was to be $367 and the monthly payment on the second mortgage, which was to bear interest at the rate of 12% per annum, was to be $150. One monthly check, in the aggregate amount of $517, was to be paid by the Davises to Respondent Retco Realty. Respondent LeMieux viewed the financing arrangements as a temporary solution to the Davises's credit problems, and he structured the transaction to accommodate those problems. Pursuant to their agreement, the Davises were to live in the house until permanent financing could be arranged. At all times pertinent to this proceeding, Respondent LeMieux was familiar with the terms of the Savings of America first mortgage. He knew that the mortgage was an assumable, variable rate mortgage that provided the borrower with the option of negative amortization in the event the interest rates increased and the borrower wanted to keep his or her monthly payments at a constant level. He knew that the interest rate was tied to an established index and could fluctuate on a monthly basis. He knew that the first mortgage was assumable if the borrower qualified, but otherwise had a "due on sale" clause. The amount of the monthly payment was important to the Davises because of their budgetary constraints. They knew that they would have difficulty paying the $367 first mortgage and the $150 second mortgage, but they felt they could comfortably pay the first mortgage once the second mortgage was paid off. Respondent LeMieux estimated during the meeting of February 20, 1990, that the second mortgage would be paid off around July 1993, assuming that the Davises made the payments to which they agreed, including a payment of $2,000 around May 1, 1990. There is a dispute in the testimony as to what was said about the first mortgage at the meeting between Respondent LeMieux and the Davises on February 20, 1990. From the conflicting testimony, it is found that Respondent LeMieux informed the Davises that the first mortgage was assumable, but that their credit report would not qualify them to assume the mortgage. Respondent LeMieux told them that they would have to clear up their credit problems during the time they were paying off the second mortgage so that they could qualify for a FHA mortgage or, in the alternative, formally assume the Savings America first mortgage, and that title would not be conveyed to them until permanent financing was arranged. As a result of the meeting with Respondent LeMieux on February 20, 1990, Mr. and Mrs. Davis's understanding of the transaction was that the first mortgage payment was fixed, that the interest rate was fixed, and that they would be able to assume the first mortgage (or secure their own mortgage) after they cleared up their credit problems. They would not have entered into the transaction had they known that the interest rate on the first mortgage was variable. Respondent LeMieux asserts that he told the Davises that the mortgage had a variable rate of interest that could fluctuate monthly, and that, because the mortgage permitted negative amortization, the monthly payments could remain constant. This testimony is rejected based on the testimony of Mr. and Mrs. Davis and that of Petitioner's investigator, Hector F. Sehwerert, who testified that Respondent LeMieux told him that he could not specifically recall whether he told the Davises that the first mortgage contained a variable rate. The evidence clearly and convincingly establishes that Respondent LeMieux failed to explain to the Davises that the first mortgage contained a variable interest rate which could cause the monthly payment to fluctuate. Respondent LeMieux knew or should have known that the Davises were relying on his explanation as to the terms of the first mortgage in deciding whether to enter into the subject transaction. He also was aware that the Davises were unsophisticated buyers who were most concerned with the monthly payments they would have to make. His explanation of the terms of the first mortgage misled the Davises into believing that the first mortgage was a fixed rate mortgage and that the payments would remain constant. The Davises did not sign a contract at the meeting of February 20, 1990, but Respondent LeMieux gave them a copy of a contract with the terms of the proposal they had discussed filled out. The Davises took this contract home to think over the transaction. On the evening of February 20, 1990, the Davises gave Respondent LeMieux a check in the amount of $1,000 as a down payment on the house. The following day, the parties executed the contract with the Davises signing as purchasers and Respondent LeMieux signing as president of Investors' Choice International, Inc., the seller, and as president of Respondent Retco Realty, the broker to whom a $2,000 commission was to be paid. The following language appears immediately above the signature line of this form contract: "REALTOR ADVISES BOTH PARTIES TO CONSULT AN ATTORNEY AND FOR THE PURCHASER TO SECURE TITLE INSURANCE." The Davises did not receive the services of an attorney because Ms. Couret told them that an attorney should not be necessary and because they trusted Respondent LeMieux. The contract required a down payment of $2,000 (the receipt of the sum of $1,000 was acknowledged) with the Davises assuming the first mortgage of approximately $43,000 and executing a purchase money second mortgage in the sum of $7,000. The following clauses are found in the contract: 2. ASSUMPTION OF FIRST MORTGAGE: The Purchaser, subject to the lending institution's requirement, including an interest rate of change, if any, agrees to assume an existing First Mortgage of approximately $43,000. Payable at approximately $367 monthly with Homestead Exemption which payment includes principal and interest at existing interest rate on mortgage held by Savings of America. ... * * * 7. NEW PURCHASE MONEY SECOND MORTGAGE: The Purchaser shall execute a purchase money second mortgage and note in favor of (sic) for $7,000.00 payable at $150.00 monthly until paid, including principal and interest at 12% per annum. Said mortgage shall be prepayable without penalty. Documentary stamps, intangible tax and recording mortgage shall be paid by Purchaser. * * * 13. SPECIAL CLAUSES: Purchaser to assume existing 1st mtg. (sic) with Savings of America of approx. (sic) $43,000. Seller to give Buyer a Purchase Money 2nd Mtg. (sic) of $7,000 at 12% per annum, payable $150./mo. (sic) with a $2,000 balloon pmt. (sic) due May 1, 1990. On March 2, 1990, the parties executed an addendum to the contract they had executed on February 21, 1990, which clarified that the Davises were to pay ad valorem taxes and insurance and which contained, in pertinent part, the following: It is understood and agreed that the seller is conveying title at such time as the Purchase Money Second Mortgage of $7,000 is retired; unless that sum is prepaid, the anticipated date of payment in full will occur on or about July 1993. Both parties agree that payment to the first and second mortgages must be made on time, and in the event that these payments or real estate taxes or insurance shall fall into default, that this contract shall be cancelled and all monies forfeited. As an additional incentive for the seller to extend these terms to the buyer, the buyer agrees to make the first and second mortgage payment to the seller's office at 5942 SW 73 Street, Miami, Florida 33143 on or before the first of each month. The aggregate total of these payments will be $517 per month effective April 1, 1990. Both parties understand that the March payment of $367 is now due. Also on March 2, 1990, the Davises paid the Respondents the sum of $1,000, representing the balance of the down payment, paid the sum of $367 representing the March 1990 payment on the first mortgage, and moved into the house. When the Davises received their income tax refund in April 1990, Mrs. Davis went to the Respondents' office to pay the sum of $2,000 on the second mortgage. (This was the payment contemplated by the Special Clauses paragraph of the contract executed February 21, 1990.) At that time Respondent LeMieux informed Mrs. Davis that the sum of $314 was due for insurance on the house and he agreed to accept the sum of $1700 as the lump sum payment on the second mortgage so Mrs. Davis could pay the insurance premium. In addition to the annual insurance premium in the amount of $314 paid by the Davises in April 1990, they paid the annual insurance premium in the amount of $314 in April 1991, and the ad valorem tax bill for 1990 in the amount of $605.89. From March 30, 1990 through April 30, 1991, the Davises made 14 monthly payments in the amount of $517 each by check payable to Respondent Retco Realty. These payments were hand delivered by Mrs. Davis and were always timely made. The Davises and their children liked the house and the neighborhood. During the time the Davises were in the house, they made repairs and improvements worth approximately $500. On May 29, 1991, Mrs. Davis went to Respondents' office to make a regular $517 monthly payment. At that time Respondent LeMieux met with Mrs. Davis and told her that the interest rate on the first mortgage was variable, that the payments on the first mortgage had gone up, and that his second mortgage was not making any money. Prior to this meeting, the Davises did not know that the first mortgage was not a fixed rate mortgage or that the first mortgage payments were subject to change and had changed. At the meeting on May 29, 1991, with Mrs. Davis, Respondent LeMieux prepared a document entitled "Letter of Understanding", and asked Mrs. Davis to sign it on her own behalf and on behalf of her husband. Respondent LeMieux was to sign the Letter of Understanding as president of Investor's Choice International. The Letter of Understanding provided, in pertinent part, as follows: Both parties acknowledge that the existing first mortgage of approximately $43, 500 (sic) held by Savings of America contains a variable interest rate, which is adjusted monthly, and therefore causes the monthly mortgage payments to either increase or decrease by a particular number. Currently the mortgage payment is $477.48. The mortgage also contains a "due-on-sale" clause, and that is why pursuant to the contract dated February 20th, 1990 between the Davises and Investor's Choice, no deed was ever conveyed so as to prevent triggering any "due-on-sale" clause that may cause the mortgage to go into default and subsequent foreclosure. To date, the Davises have made 13 payments of $517 each for a grand total of $6,721. To date, Investor's Choice has paid Savings of America $5,884.69; therefore the difference that was paid to Investor's Choice on that certain second mortgage of $7,000 pursuant to that contract of February 1990 is $836; of which $636 is interest and $200 is principal. Therefore, after the principal reduction that the Davises have made during the course of the last twelve months, namely $1,700 plus $200 by virtue of their monthly installments, the current mortgage balance is $5,100. The parties have agreed that Mrs. Davis will pay $100 toward the principal balance this month, May 1991, leaving a principal unpaid balance due Investor's Choice of $5,000. Said mortgage to be payable at the rate of 12% per annum, interest only monthly, or $50 per month. If Mr. and Mrs. Davis elect to make principal reduction in said mortgage, they will be receipted for same, and the interest payment per month would drop accordingly. Mrs. Davis refused to sign the "Letter of Understanding". After discussing the matter with her husband, the Davises obtained through legal aid the services of attorney Candis Trusty. Ms. Trusty negotiated an agreement with the Respondents' attorney, Robert Korschun, whereby the Davises would be reimbursed the sum of $3,899, they would vacate the premises by September 1, 1991, and they would deposit the sum of $500 into Ms. Trusty's trust account as security for damages to the premises. The Davises did not move out of the premises until September 8, 1991. Thereafter, Respondent LeMieux inspected the premises and informed Ms. Trusty that there were no damages to the premises beyond normal wear and tear, and that he would therefore make no claim on the damages deposit. Respondent LeMieux did assert a claim against the Davises in the amount of $166.67 for unpaid rent for the days they occupied the premises beyond September 1, 1991. Because of the dispute over rent, Ms. Trusty retained, as of the formal hearing, the sum of $166.67 in her trust account. At the formal hearing, Respondent LeMieux continued to assert his entitlement to the rent from the Davises in the amount of $166.67, but he acknowledged that the funds the Davises deposited in Ms. Trusty's trust account were not intended to secure rent and that he had no claim to that particular fund. In October of 1988, Petitioner filed an Administrative Complaint against Respondents which is unrelated to the present proceeding. That Administrative Complaint contained certain factual allegations which charged that Respondents were guilty of "fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction, all in violation of Subsection 475.25(1)(b), Florida Statutes (1988)." This Administrative Complaint was referred to the Division of Administrative Hearings and assigned DOAH Case No. 88-5771. Respondents settled that prior matter and executed a Stipulation which they neither admitted nor denied the allegations of the Administrative Complaint. Respondents were reprimanded and fined in the amount of $400.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding the Respondents guilty of having violated the provisions of Section 475.25(1)(b), Florida Statutes, which assesses an administrative fine in the aggregate amount of $500 against the Respondents, and which places the licensure of both Respondents on probation for a period of six months. DONE AND ENTERED this 15th day of January, 1993, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 15th day of January, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-1906 The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner. The proposed findings of fact in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 10, 11, 13, 14, 15, 16, 17, 18, 19, and 22 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 9 are adopted in part by the Recommended Order, but are rejected to the extent the proposed findings are contrary to the findings made. The proposed findings of fact in paragraphs 12 and 20 are adopted in part by the Recommended Order, but are rejected to the extent the proposed findings are unnecessary to the findings made. The proposed findings of fact in paragraph 21 are rejected as being unnecessary to the conclusions reached. The following rulings are made on the proposed findings of fact submitted on behalf of the Respondents. The proposed findings of fact in paragraph 1 are adopted in material part by the Recommended Order. The proposed findings of fact in the first sentence of paragraph 2 are rejected as being contrary to the findings made. The findings of fact in the last sentence of paragraph 2 are rejected as being unnecessary to the findings made. The remaining proposed findings of fact contained in paragraph 2 are adopted in material part by the Recommended Order or they are subordinate to the findings made. The proposed findings of fact in the first sentence of paragraph 3 are rejected as being unsubstantiated by the evidence or as being unnecessary to the findings made. The proposed findings of fact in the second sentence of paragraph 3 are adopted to the extent that the Respondents's standard form contract contains the advice for the parties to seek the services of an attorney. The proposed findings of fact in the third sentence of paragraph 3 are adopted in material part by the Recommended Order. The proposed findings of fact in the fourth sentence of paragraph 3 are adopted in part by the Recommended Order, but are rejected to the extent that said proposed findings state that Respondent LeMieux was acting to accommodate the Davises. The proposed findings of fact in the fifth sentence of paragraph 3 are rejected since the Davises appeared to understand why the payments on the first mortgage went up after Respondent LeMieux informed Mrs. Davis that the mortgage had a variable interest rate. The proposed findings of fact in the last sentence of paragraph 3 are adopted in part and are rejected in part as being unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 4, 5, and 6 are adopted in part by the Recommended Order or are subordinate to the findings made. The proposed findings of fact in paragraphs 7 and 8 are rejected as being contrary to the evidence or as being unnecessary to the findings made. Both Mr. and Mrs. Davis understood the explanation of the transaction Respondent LeMieux made to them before they signed the contract. That they became confused on cross examination is unnecessary to the conclusions reached in this proceeding. Her confusion as to the meaning of a fixed rate mortgage and the assumability of the mortgage is subordinate to the findings made that Respondent LeMieux did not lie to them about the status of the interest rate on the first mortgage. The statements made by the attorney they consulted during the settlement negotiations are also unnecessary to the conclusions reached in this proceeding. The proposed findings of fact in paragraph 9 consists of argument and are unnecessary as findings of fact. The proposed findings of fact in paragraph 10 are adopted in part by the Recommended Order with the exception of the last sentence, which is rejected as being argument and unnecessary as a finding of fact. The proposed findings of fact in paragraph 11 are rejected as being unnecessary to the conclusions reached. COPIES FURNISHED: Theodore R. Gay, Esquire Department of Professional Regulation 401 Northwest Second Avenue Suite N-607 Miami, Florida 33128 Jorge Gaviria, Esquire 2222 Ponce de Leon Boulevard Mezzanine 200 Coral Gables, Florida 33134-6193 Darlene F. Keller, Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
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
