The Issue The issue in this case is whether Respondents have discriminated against Petitioners based on Petitioners' national origin.
Findings Of Fact On August 28, 2009, Ms. Greene was a loan officer employed by CenterState Home Loans, LLC. The office where Ms. Greene worked was located inside CenterState Bank, N.A., located at 6930 Gall Boulevard in Zephyrhills, Florida. The office is separate from CenterState Banks, Inc. There is signage on a glass wall of her office stating, "CenterState Home Loans, LLC." Ms. Greene is paid by CenterState Home Loans, LLC. She is paid by commission. Thus, there is no incentive not to complete loan applications. CenterState Home Loans, LLC, is a separate corporation from CenterState Banks, Inc., and CenterState Bank, N.A. Both CenterState Banks, Inc., and CenterState Bank, N.A. are interest holders in CenterState Home Loans, LLC, but are not the managing members of CenterState Home Loans, LLC. Platinum Home Mortgage Corporation is the managing member of CenterState Home Loans, LLC. As the managing member, Platinum Home Mortgage manages the quality control and integrity of CenterState Home Loans, LLC. CenterState Home Loans, LLC, is not authorized to do Federal Housing Association (FHA) loans. Any FHA loans originated by CenterState Home Loans, LLC, are assigned to Platinum Home Mortgage. On August 28, 2009, Petitioners, Mr. Velez's mother, and Petitioners' young daughter came to Ms. Greene's office to discuss the possibility of obtaining a loan through CenterState Home Loans, LLC, and a loan through the Pasco County Home Buyers Program. The purpose of the Pasco County Home Buyers Program is to aid qualified home buyers in purchasing their primary residences. Initially, Petitioners were interesting in applying for an FHA loan. Prior to the meeting, Mr. Velez had telephoned Ms. Greene and asked what types of information would need to be submitted. Ms. Greene stated that he would need W-2 forms, paystubs, bank statements, and anything that showed proof of any assets or debts. Petitioners brought some of the documentation to the meeting. At the meeting, Petitioners supplied information to Ms. Greene, who typed the information into her computer using loan software entitled "Loan Soft." The information was placed on a Uniform Residential Application, which is called a Form 1003. No property was identified on the Form 1003 because Petitioners did not have a sales contract for a specific piece of property. They indicated that the property they wanted to purchase would be approximately $140,000. Mr. Velez told Ms. Greene that he was anticipating a 50 percent loan from Pasco County Home Buyers Program, which would leave approximately $70,000 to be financed plus closing costs. When Ms. Greene input the information into the computer program, it automatically calculated the approximate closing costs. The interest used to do the calculations was based on the interest rate on August 28, 2009, and was not a guaranteed rate. With Petitioners' permission, Ms. Greene pulled a credit report on each of them during the meeting on August 28, 2009. The credit report showed that there were some debts in collection and that there was an outstanding judgment against Ms. Guerrero. Additionally, based on CenterState Home Loan, LLC, guidelines, the credit scores did not qualify Petitioners for a second mortgage, which included a Pasco County Home Buyers Program loan. On August 28, 2009, Ms. Greene needed additional asset information from the Petitioners and requested that they provide her with information concerning checking, savings, or money market accounts for at least a two-month period. Mr. Velez did present a bank statement at the meeting, which showed a current balance of less than $200. Ms. Greene told Petitioners that the debts in collection and the outstanding judgment needed to be resolved. Additionally, Ms. Guerrero was an authorized signer on some of her mother's credit cards, and a statement would have to be provided that Ms. Guerrero was not responsible for the debts associated with those credit cards. The software program that Ms. Greene used automatically completes a page in the application titled, "Pre- Approval Cover Sheet and Check List." The program put "completed" by a number of items which had not been completed, such as the Form 1003 and current asset statements. Petitioners had supplied some pay stubs and some bank statements at the August 28, 2009, meeting. The Form 1003 did not indicate that Petitioners had been pre-approved for a loan. The meeting ran near to the time CenterState Home Loans, LLC, was closing and could not be completed before closing time. Ms. Greene printed out a copy of the Form 1003, with the information that had been completed, and gave it to Petitioners. Petitioners were to complete, sign, and return the Form 1003 to Ms. Greene. Additionally, Petitioners were to provide evidence that the debts had been paid and the judgment satisfied, along with evidence of current assets. Because the application was not completed and additional information was needed, Ms. Greene could not fully analyze the application. Sometime after the August 28, 2009, meeting, Ms. Greene reviewed the information that had been supplied to her by Petitioners and discussed the information with Mr. Velez on the telephone. Mr. Velez wanted to schedule a meeting to discuss the application. She advised him that, based on the credit scores and the limited funds in his bank account, he could not qualify for a loan with a second lien by the Pasco County Home Buyers Program. Thus, there would be no need to meet. Mr. Velez told her that he wanted to continue with the process. Petitioners set about paying off the debts in collection and satisfying the judgment against Ms. Guerrero. Mr. Velez had received a disability settlement and placed some money in a bank account. Petitioners did not supply updated information to Ms. Greene. Sometime in October or November 2009, Mr. Velez called Ms. Greene and requested that she send a realtor a pre-approval letter. Ms. Greene replied that she could not do that because she did not have the supporting documents to be able to give a pre-approval letter. Mr. Velez became very angry and demanded the documents he had previously provided at the August 28, 2009, meeting. Ms. Greene had only copies of the documents that he provided, but she placed them in an envelope and left them for Mr. Velez to pick up. Petitioners stated in Form 1003 that their ethnicity was Hispanic or Latino. Mr. Velez stated at the final hearing: My basis for my racial discrimination was the fact that she [Ms. Greene] denied us the opportunity to turn in updated information when stated that she would allow us to do so. Ms. Greene never stated that she would not take additional information because Petitioners were Hispanic. She has processed loans for other Hispanics which involved the Pasco County Home Buyers Program, and she has closed loans for other minorities. Ms. Greene never discussed Petitioners national origin with them. She did not base any decision regarding their loan application on their national origin. After Petitioners were advised by Ms. Greene that they would not qualify for a loan involving the Pasco County Home Buyers Program, they applied for loans at two other lending institutions and were turned down on the basis of too many inquiries or insufficient credit scores. They finally received a loan from Manhattan Mortgage.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered dismissing Petitioners' Petition for Relief. DONE AND ENTERED this 3rd day of December, 2010, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL 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 3rd day of December, 2010.
Findings Of Fact 1. Prior to September 1, 1986, mortgage brokers in Florida who worked for several companies were issued separate licenses for each company. P. Ex. 10, P. The Respondent, Dennis C. Young, had several such licenses, the first having been issued on March 26, 1982. Id., P. 9. Prior to September 1, 1986, mortgage broker's licenses were issued for only one year and expired annually on August 31st. P. Ex. 10, P. 9-10. During the period from September 1, 1985, through August 31, 1986, the Respondent had only one mortgage broker license HA 0006667 as an additional broker for American Financial Consultants of Central Florida. R. Ex. 1, P. Ex. 10, P. 10-11. That license expired on August 31, 1986. Id. at P. 14. On January 22, 1986, the Respondent applied to the Petitioner, the Department of Banking and Finance, Division of Finance, for registration as a mortgage broker under Chapter 494, Florida Statutes. P. Ex. 7. This application was for a license with Southern States Mortgage Company. P. Ex. 10, P. 12. On April 18, 1986, Petitioner denied the application of the Respondent for registration as a mortgage broker. The basis of the denial was a finding by the Petitioned of a number of statutory violations by the Respondent as a mortgage broker for American Financial Consultants of Central Florida. P. Ex. 10, P. 13. On July 11, 1986, or shortly thereafter, the Petitioner advised the Respondent that his request for a formal administrative hearing with respect to the denial of his application for registration as a mortgage broker was denied because not timely filed, and advised the Respondent that he had thirty days from July 11, 1986, in which to file an appeal, if he so desired, to the Fifth District Court of Appeal. The Respondent contacted the attorney for the petitioner. The attorney for the petitioner in fact told the Respondent that he could reapply for a license, and if his application was again denied, the Respondent could then seek a formal administrative hearing and judicial review. The Respondent was also told that the petitioner would not forego or abate the final order denying the application, but was advised to "let sit" the final order denying his January 22, 1986, application. T. 100. The Respondent did not file a judicial appeal from the July 11, 1986, order. During the period from September 1, 1986, to November 12, 1987, the Respondent was not a licensed mortgage broker licensed by the Department of Banking and Finance, Division of Finance. P. Ex. 6, P. Ex. 10, P. 15. Between January 22, 1986, and June 12, 1987, the Respondent did not file any application with the Petit loner for licensure as a mortgage broker. P. Ex. 10, p. 15. In about December, 1986, the Respondent was hired by Independence One Mortgage Corporation as a builder's loan representative for a builder that Independence One Mortgage Corporation was then servicing. The builder was building and selling homes in the Williamsburg subdivision. T. 33, 35-37, 64. The Respondent's office was located at the building site. Independence One Mortgage Corporation hired the Respondent to offer to the clients of the builder the type of mortgage that Independence One Mortgage Corporation was then offering, and in so doing, to handle all aspects of negotiating mortgage loan commitments, from initial interview, making quotes of daily mortgage rates to the builder's customers, and following up on the application from the beginning to closing of the mortgage. T. 37. The Respondent told Independence One Mortgage Corporation that he held a current valid mortgage broker's license with Investor's Home Mortgage Company and showed the agent of Independence One a "license" that the Respondent claimed was his and was then valid. T. 37. This statement was untrue. The agent for Independence One Mortgage Corporation who hired the Respondent had known the Respondent several years earlier as an aggressive mortgage solicitor. T. 36 Independence One Mortgage Corporation thought that the Respondent then held a valid mortgage broker's license, and would not have hired the Respondent if he had not represented that he was a licensed mortgage broker. T. 37-38. While employed by Independence One Mortgage Corporation, the Respondent negotiated mortgage loans. He quoted mortgage rates to prospective borrowers, received and processed applications from prospective borrowers, prepared good faith estimates of settlement charges, and closed mortgage loans. T. 42-56, 96-97; P. Exs. 1, 2, 4, and 5. During his employment with Independence One Mortgage Corporation, the Respondent negotiated over 40 mortgage loans. T. 55. From December, 1986, to May, 1987, the Respondent was paid a salary by Independence One Mortgage Corporation. In May, 1987, due to a lack of mortgage demand, Independence One placed the Respondent on a commission basis only. About two weeks later, the Respondent resigned his employment with Independence One. T. 55-57, 65-66. At about the same time, Independence One Mortgage Corporation learned that the Respondent did not have a valid mortgage broker's license. T. 57-59. On June 12, 1987, the Respondent filed another application for licensure as a mortgage broker. P. Ex. 9. In answer to question number 6, which asked whether he had ever had his license "denied, suspended or revoked," he answered no. This answer was not true. P. Ex. 10, P. 16. The Respondent testified that he answered question number 6 in the negative because he thought that he would be afforded a right to contest the previous denial of his application if the new application was denied. At the time that the Respondent stated in his application that he had never had a license previously denied, the Respondent knew that statement was not true. He knew that he might again reapply and in such reapplication contest the basis for denial, but he also knew that the denial of the first application was final and that he had lost his right to appeal. See findings of-fact 5 through 8. If the Respondent had answered yes to question 6, he was required by the application form to identify the agency that denied the application for licensure and to provide the names of the complaining parties. P. Ex. 9. By failing to truthfully answer question 6, the Respondent failed to notify the Petitioner of the existence of the prior dispute concerning his licensure. This was a material misstatement of fact. If the Respondent had been candidly pursuing the option of making a second application in order to gain another appeal right, he would have candidly disclosed to the Petitioner in his second application that a prior application had been denied. In that manner, the Respondent would have laid the issue squarely on the table. By answering no to question 6, the Respondent affirmatively sought to mislead the Petitioner so that the prior basis of denial might not become the basis for denial of the second application. The Petitioner construes the provisions of Chapter 120, Florida Statutes, as mandating that a license be issued if not denied within ninety days from the filing of the application. P. Ex. 10, pp. 20-23. During the period in which the June 12, 1987, application was pending, the Petitioner did not independently verify the answers to questions on the license application, and assumed that the answer to question 6 was correct. P. Ex. 10, pp. 16 and 20. Had it known that the Respondent had previously been denied a mortgage broker's license, the Petitioner would have denied the application of June 12, 1987, for a material misrepresentation of facts. P. Ex. 10, P. 23. For these reasons, and since the ninety day period had expired, the Petitioner issued mortgage broker license HA 261088342 to the Respondent on November 12, 1987. P. Ex. 6. In July, 1987, Colony First Mortgage Corporation was looking for a branch manager for its Mount Dora, Florida, office. The company wanted a branch manager who held a mortgage broker's license to solicit business, as well as to hire and supervise other loan officers. T. 25. The Respondent applied for the job, and Colony First Mortgage Corporation asked for his mortgage broker's license. T. 93. The Respondent told Colony First Mortgage Corporation that he had a mortgage broker's license. T. 26. This statement was untrue. In July, 1987, the Respondent was employed by Colony First Mortgage Corporation as a branch manager in the Mount Dora, Florida, office. T. 24-25, 59-60. Colony First Mortgage paid the Respondent a salary with an override of the branch's mortgage loan production. It was also possible for the Respondent to have been paid a small commission for mortgage loans that he might personally have solicited, but there is no evidence in the record (one way or the other) that any commissions were ever paid or not paid. T. 26, 28. The Petitioner requires that licensed mortgage brokers who change employment file an "application for endorsement" to change the registration of that license to the new employment. T. 72# At some time shortly before August 11, 1987, the Respondent filed with the Petitioner an "application for endorsement" for endorsement of a mortgage broker's license to work for Colony First Mortgage Corporation. P. Ex. 8. Colony First Mortgage Corporation required the Respondent to file this application as a condition of the Respondent's employment. The application bears the signature of a William D. Tharpe, dated August 11, 1987, representing himself as the principal broker for the Respondent, and stating that the Respondent was employed on July 6, 1987, as a mortgage broker. The Respondent submitted the application for endorsement 50 that he would be licensed as a mortgage broker working as a mortgage broker for Colony First Mortgage Corporation. The Respondent characterized his own activity at Colony First Mortgage as operation as a mortgage broker for Colony First Mortgage. T. 10. But he denied that he personally solicited loans, T. 109, and characterized his work as supervision of loan officers, who did solicit and negotiate mortgage loans. T. 109-111. In his employment at Colony First Mortgage, the Respondent hired staff, since all prior staff had left, and trained and supervised loan officers. T. 110-111. There is no evidence that the Respondent personally solicited or negotiated mortgage loans. Toward the end of October, 1987, Colony First Mortgage learned that the Respondent did not have a mortgage broker's license. The company removed the Respondent from his manager's position and subsequently terminated his employment. T. 27# Directly under the heading of the Respondent's application for endorsement is the statement: "Use this form only if currently licensed." Two lines under that statement is the following statement in bold print: "CURRENT LICENSE MUST BE RETURNED WITH THIS APPLICATION." The Respondent signed the form and stated in part I of the form that he had license number HA 001637. Another license number appears above the first number, and is HA 0016329. P. Ex. 8. The application for endorsement is used only if the applicant has a current license. Neither license number was a valid license currently or previously held by the Respondent. Thus, the representation on the application for endorsement, P. Ex. 8, as to license numbers was untrue. T. 114. The Respondent admits placing the first number on the form and denies placing the second number on the form. The Respondent asserts that the first number he placed on the form was his guess as to the correct number, and that he thought the petitioner would correct it if it were incorrect. He further asserts that he represented that he was licensed because he thought that since he had reapplied, the prior denial of licensure was still a pending issue, and that he could rely on earlier licenses that had expired. He further stated that he intended the number to represent the number of one of his earlier licenses. T. 115. The Respondent did hold license number HA 0016329, which expired on August 31, 1985, and license number HA 0006667, which expired on August 31, 1986. R. Ex. 1 and 2. It is credible that the Respondent was trying to use one of his expired license numbers, notably, the one that expired on August 31, 1985, HB 0016329, which is similar to the number he used, HA 001637. But it is not credible that the Respondent thought that he was "currently licensed" as required by the form. The Respondent knew that his prior licenses expired automatically each year. T. 116. He knew that his January 22, 1986, application had been denied. He knew he was not currently licensed. T. 102. He only had pending an application for a license, and had no currently active license number. Thus, it is concluded that the Respondent knew that he did not have a valid license number when he placed the number HA 001637 on the application for endorsement. This was a material misstatement of fact. See findings of fact 38, 39, and 47. The Respondent denies that he placed the second license number HA 0016329 upon the application. The second series of numbers is written in larger script than the first one. While there are some similarities in some of the numbers compared to other numbers written by the Respondent on the application (the 6 is the same as the 6 in the Respondent's social security number and telephone number, the 2 is the same as the first 2 in the telephone number), there is insufficient evidence in this record to conclude that the Respondent placed the second license number on the application. P. Ex. 8. The Petitioner relied upon the statements in the application for endorsement, P. Ex. 8, when it issued the mortgage broker's license to the Respondent on November 12, 1987. p. Ex. 10, P. 20.
Recommendation For these reasons, it is recommended that the State of Florida, Department of Banking and Finance, Division of Finance, enter its final order finding that Dennis C. Young committed the violations described above and revoking license number HA 261088342 issued to him on November 1, 1987. DONE and ENTERED this 11th day of October, 1988, in Tallahassee, Florida. WILLIAM C. SHERRILL JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of October, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-2273 The following are rulings upon proposed findings of fact which have either been rejected or which have been adopted by reference. The numbers used are the numbers used by the parties. Statements of fact in this appendix are adopted as additional findings of fact. Findings of fact proposed by the Petitioner: 1. The phrase "due to fiat of operation of law" is a conclusion of law, not fact. 2, 5, 6, 7, 22, 23, 39, 46 (second sentence) 49, 50, and 55. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 14 (first sentence). The fact that a witness "testified" in a certain way is not a relevant finding of fact. The subject matter of the Respondent's testimony, that he in fact filed another application in May or June of 1986, is rejected as not proven by credible evidence. The Department had no evidence of any application between January 22, 1986, and June 12, 1987. The testimony of the Respondent on this point was not supported by a copy of the alleged application. Due to the Respondent's evasiveness as to other material points at issue in this case, the testimony of the Respondent is rejected as not credible and unsupported. Findings of fact proposed by the Respondent: 1.C. This proposed finding of fact is contrary to the credible evidence. 1.E. While these proposed findings of fact are true, they are irrelevant. A "mortgage broker" is defined by law (section 494.02(3), F1a. Stat.) to include any person, who for compensation or gain, "directly or indirectly" "negotiates" "a mortgage loan or mortgage loan commitment." The relevant issue is what the Respondent in fact did, not what the titles on the form said. 1.F-H. These proposed findings of fact are contrary to the credible evidence. 2.D.and G. A "mortgage broker" is defined by law (section 494.02(3), Fla. Stat.) to include any person, who for compensation or gain, "directly or indirectly" "negotiates" "a mortgage loan or mortgage loan commitment." As discussed in the conclusions of law, the Respondent indirectly negotiated mortgage loans through his supervision of loan officers at Colony First Mortgage Corporation. 2.F. This proposed finding of fact is contrary to the credible evidence. See P. Ex. 8. 3.A.1-3. The Respondent admitted that Mr. Berkowitz told him to "let sit" the denial of his January 22, 1986, application, and the Respondent admitted that Mr. Berkowitz, on behalf of the Petitioner, would not abate or forgo the decision of denial. T. 100. Thus, it is clear that the Respondent knew that his application had been denied. This, coupled with receipt of P. Ex. 7, makes any contrary belief not credible. 3.B.4. There was intent to deceive. The Respondent knew he was not currently licensed. He knew the earlier license (the one which he tried to place by number on application) had expired. He knew that his last application had been finally denied. He only had a pending application (June 12, 1987), and had no decision on that yet. The Respondent told Colony First Mortgage Corporation that he was currently licensed. If the Respondent had no intent to deceive, he would have clearly mentioned on the application for endorsement the denial of his January 22, 1986, application, and his theory of the continued "existence" of his expired license. COPIES FURNISHED: Elise M. Greenbaum, Esquire Assistant General Counsel Office of the Comptroller 400 West Robinson Street, Suite 501 Orlando, Florida 32801 Dennis C. Young 4050 Gallagher Loop Post Office Box 771 Casselberry, Florida 32707 Hon. Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 Charles L. Stutts, Esquire General Counsel Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350
Findings Of Fact Respondent, Graystone Fairways Corporation (GFC), is wholly owned by Louis Wingold, a Canadian developer. He is also its president. In January, 1979, GFC entered into a five-year joint venture with Tamway Corporation (Tamway), whose president was Harvey Kaliff. The agreement provided that GFC and Tamway would construct, develop and market a two phase condominium project in Tamarac, Florida known as Fairways of Tamarac III (Fairways or project). Each phase of the project was intended to have thirty units. To date only the first phase of the project has been constructed. Building permits for the second phase have been obtained, but no construction work has commenced. The project was apparently subject to registration requirements with petitioner, Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (Division). It is that agency which has initiated the complaint herein, of which two of three counts therein remain pending. Under the foregoing joint venture agreement, GFC generally provided the financing for the project while Tamway provided the site construction and sales of units. The agreement further designated Tamway as the managing partner to conduct the day-to-day business of the joint venture. Among other things, Tamway was authorized to enter into purchase and sale contracts for the sale of individual units in the project. Accordingly, Wingold had no active participation in the management of the project's day-to-day business, for the agreement provided that Kaliff would have that responsibility. After Fairways of Tamarac III was constructed, Kaliff hired Ron Settler and Victoria Falzone as salespersons to market and sell the individual units. The first unit was sold by Settler to Irving A. Goodman in November, 1982. Goodman was represented by counsel at the closing and, through counsel, received a packet of documents. In the summer of 1984 Goodman learned that he should have received a prospectus prior to closing, but did not. He was given a prospectus by the present project manager, Joan Nathanson, after asking for a copy. Two other units were purchased in July and September, 1983, respectively, by Sidney G. Resnick and Morton Tolmack. Both were sold by either Settler or Falzone. Tolmack was represented by counsel at closing while Resnick had no attorney. Although both executed receipts for condominium documents which reflected a prospectus was included in their packet of documents, their oral testimony to the contrary is accepted as being more credible and persuasive, and it is found that neither received a prospectus at or before closing. When they discovered at a later date they were supposed to have received one, they were given one by Nathanson. Wingold had no knowledge of Tamway's failure to give a prospectus to Goodman, Resnick and Tolmack. He first learned of this when the complaint herein was filed. Sometime in 1983 or early 1984, Wingold discovered that Kaliff was not fulfilling the terms of his obligation under the joint venture. Beginning in February, 1984, three circuit court actions were filed, and a settlement, the joint venture was dissolved, and GFC was given exclusive title and rights to the project by Tamway/Graystone. According to Wingold, Settler was convicted on 22 counts of theft from the project. He was dismissed from employment around May, 1984. During the course of the above litigation, no units could be sold because Kaliff would not agree to sign any documents conveying clear title to the purchaser. Consequently, no sales efforts could be made during this period of time. Except for the time when the litigation was pending, the unsold project units were being offered for sale by the developer in the ordinary course of business. When the settlement was executed on September 5, 1984, thirteen out of thirty units had been sold by Kaliff and Tamway. The last closing under Kaliff's management occurred in May, 1984. Wingold hired a new project manager that same month, and after the litigation was settled, began advertising in local newspapers in an effort to sell the remaining units. This included periodic advertising in two Fort Lauderdale newspapers in September and October, 1984 and January, 1985. This effort met with little or no success due to the then-existing "glut" of condominiums in South Florida. Wingold then searched for a broker to sell the units. Although he had a difficulty in finding a broker who was interested in marketing the units, in February, 1985 he executed a six-month agreement with Condovest, Inc., a firm in Miami that specializes in such sales. Since September, 1984 the developer has closed on six units and has four more under constract at the present time. This leaves seven unsold units, all of which are now rented except one which is used as a model apartment and office. The office is open only on week-days except by special appointment. The unsold units were rented by Wingold due to a large monthly payment ($15,000) on the construction loan. Such units were offered for rent in local newspaper advertisements and at one time on a sign appearing at the front entrance to the property. The rents are used to cover the debt service until the units are sold. The oldest lease agreement expires in May, 1986. Therefore, only the model unit is immediately available for occupancy by a buyer. All others must be sold subject to the lease. Even so, four units are now under contract subject to the leases, and Wingold continues to seek buyers for the remaining rented units. Subsection 718.503(2), Florida Statutes (Supp. 1984), requires that a prospectus be given to purchasers of condominium units prior to closing. Goodman, Resnick and Tolmack were not given such documents as required by law. This finding is based upon the testimony of the three unit owners which is accepted as being the more persuasive evidence on this issue. However, there is no evidence that any of the three was harmed or disadvantaged by their failure to receive copies of the prospectus until 1984 or 1985, particularly since two were represented by counsel at closing. Subsection 718.301(2), Florida Statutes (Supp. 1984), also requires that a meeting be called to allow unit owners to elect a majority of the members of the board of administration when none of the unsold units in the project are being "offered for sale by the developer in the ordinary course of business." There is no evidence of record as to how the agency construes that term, or what is the generally accepted meaning within the condominium industry. It is undisputed that no meeting has yet been called by Wingold. However, Wingold has not done so nor is he required to do so since units have been and are still being offered for sale in the ordinary course of business. Besides this, he fears that he cannot fulfill the terms of the four pending purchase and sell contracts if control of the project is turned over to the present unit owners.3 But this concern is irrelevant to a determination of the issue presented herein.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty as charged in Count II of the amended notice to show cause, and that it be fined $500.00 to be paid within thirty days from date of the Final Order in this Cause. Count I should be DISMISSED, with prejudice. DONE and ORDERED this l6th day of December, 1985, in Tallahassee, Florida. DONALD R. ALEXANDER 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 16th day of December, 1985.
Findings Of Fact On November 15, 1976, the Outrigger Club, Inc., a Florida corporation, through its president, Ervin Freeman, and its Secretary, Joan Dimon, executed a warranty deed conveying all right, title and interest, in and to certain property located at Northeast 135th Street and Biscayne Boulevard, North Miami, Florida, to Petitioner, Biscayne South, Inc. (hereafter Biscayne South), a Florida corporation. The warranty deed was recorded with the Clerk of the Circuit Court of Dade County, Florida, on November 16, 1976. On November 22, 1976, Biscayne South executed a mortgage deed in favor of Fidelity Mortgage Investors, a Massachusetts business trust, as a second mortgage on the same parcel of land to secure the payment of a promissory note in the principal sum of $1,500,000.00 which note was made by Outrigger Club, Inc., on the same date in favor of Fidelity Mortgage Investors. On November 22, 1976, Outrigger Club, Inc., as the "borrower" executed a future advance agreement with Fidelity Mortgage Investors as "lendor". The future advance agreement provides for the advancement of the sum of $1,500,000.00 to be secured by a prior mortgage dated October 27, 1972, executed by Outrigger Club, Inc., in favor of Fidelity Mortgage Investors, which mortgage provided for future advances. On November 22, 1976, a construction loan and disbursement agreement was executed by the parties thereto which provided that the $1,500,000.00 advance be paid to Miami National Bank as disbursement agent for the benefit of Biscayne South. On November 23, 1976, the mortgage deed and the future advance agreement were recorded in the public records of Dade County, Florida, and on that same date, the warranty deed was rerecorded in the public records of Dade County, Florida. Because the 1.5 million dollars was paid to Miami National Bank to be disbursed for future construction work on a draw-down basis, Outrigger Club, Inc., the grantor, never received the 1.5 million dollars. The warranty deed provides in paragraph 9 thereof that the conveyance is subject to: a second mortgage wherein the Outrigger Club Inc., is mortgagor and the trustees of Fidelity Mortgage Investors, a Massachusetts business trust, is mortgagee, dated the day of November, 1976, which said mortgage is given as additional collateral for payment of certain sums as provided under a settlement and release agreement between the Outrigger Club, Inc., a Florida corporation, and Lawrence F. Lee, Jr., and others as trustees of Fidelity Mortgage Investors, a Massachusetts business trust dated the 16th day of January, 1976. Neither the Department of Revenue nor Biscayne South have introduced evidence to establish that such a mortgage in fact exists or if it did, the value of such mortgage. The only mortgage in evidence is Respondent, Department of Revenue's Exhibit 2, which shows Biscayne South as mortgagor rather than the Outrigger Club, Inc., as recited in the warranty deed. However, the future advance agreement introduced as Respondent's Exhibit No. 3, establishes the existence of a mortgage encumbering the subject property in which the Outrigger Club, Inc., is mortgagor and Fidelity Mortgage Investors is mortgagee. Such mortgage is dated October 27, 1972, and not dated with the month of November, 1976, as recited in paragraph 9 of the warranty deed. As recited in the future advance agreement, the mortgage of October 27, 1972, secured an indebtedness of $7,214,000.00. The mortgage provided that future advances could be made to Outrigger Club, Inc., not to exceed in the aggregate $16,500,000.00. The future advance agreement provides that an additional advance of $1,500,000.00 is to be made to Outrigger Club, Inc., thereby increasing the indebtedness represented by the October 27, 1972, mortgage to the aggregate sum of $8,715,000.00. In other words, the buyer of the property sought to borrow an additional 1.5 million dollars. The lender, in order to achieve priority of lien to secure its loan, treated the funding as an advance against a preexisting mortgage originally binding the seller, but then delivered the 1.5 million dollars directly to Miami National Bank for the benefit of the buyer. Accordingly, the seller never received the proceeds of the loan but rather participated in a "book transaction" for the benefit of the buyer and the lender.
The Issue The issue in this case is whether a portion of Florida Administrative Code Rule 67-48.0072 is an invalid exercise of delegated legislative authority.
Findings Of Fact The Petitioner is a limited partnership and developer of affordable housing in Florida. The Petitioner is seeking to construct a 116-unit affordable housing family apartment complex ("Elmwood Terrace") in Fort Myers, Lee County, Florida. The Petitioner has standing to initiate and participate in this proceeding. The Respondent is a public corporation organized under Chapter 420, Florida Statutes (2010), to administer state programs that provide financial support to developers seeking to construct affordable housing. Such support is provided through a variety of mechanisms, including the use of federal tax credits. The federal tax credit program was created in 1986 to promote the construction and operation of privately-developed affordable housing. The tax credits relevant to this proceeding provide a dollar-for-dollar credit against federal tax liabilities for a period of ten years. The Respondent is the designated Florida agency responsible for distribution of the federal tax credits. The tax credits are awarded pursuant to a "Qualified Allocation Plan" (QAP) that must be annually approved by the Governor and adopted as an administrative rule by the Respondent. As a matter of course, developers receiving the federal tax credits sell them through syndicators for discounted cash. The sale of the tax credits generates debt-free cash equity for developers. Developers seeking financial support to build affordable housing units submit applications to the Respondent during an annual competitive process known as the "Universal Cycle." Every three years, the Respondent commissions a study (the "Shimberg Report"), which measures, within each Florida county, the number of "cost-burden" renters earning 60 percent or less of an area's median income (AMI) who pay more than 40 percent of their income in rent. The AMI is determined by the federal government. The cost-burden households are further classified into four groups: families, the elderly, farm workers, and commercial fishermen. The Shimberg Report also assesses needs related to homeless people in the state. Developers seeking to obtain affordable housing financing are required to set aside a portion of the proposed units for income-limited residents. Access to affordable housing units is generally targeted towards persons receiving no more than 60 percent of the AMI. The Universal Cycle process allows the Respondent to target specific housing deficiencies in terms of geographic availability and population demographics and to preserve the stock of existing affordable housing. During the Universal Cycle process, the Respondent identifies areas where additional affordable housing is unnecessary, to discourage additional development in weak markets and to encourage development in those locations where there is a lack of access to affordable housing. The Respondent classifies areas where there is little need for additional affordable housing as "Location A" areas. Each application filed during the Universal Cycle is evaluated, scored, and competitively ranked against other applications filed during the same Universal Cycle. After the Respondent completes the competitive ranking of the applications submitted in the Universal Cycle, the applicants are provided with an opportunity to review and comment on the evaluation and scoring of the proposals. Applicants may also cure defects in their own proposals. After the close of the review and comment period, the Respondent publishes a revised competitive ranking of the proposals. Developers may challenge the second ranking through an administrative hearing. After the second ranking process is final, developers achieving an acceptable score receive preliminary funding commitments and proceed into a "credit underwriting" evaluation process. The credit underwriting process is governed by Florida Administrative Code Rule 67-48.0072. The Respondent selects an independent credit underwriter who reviews each proposal according to requirements set forth by administrative rule (the "Credit Underwriting Rule"). The cost of the credit underwriting review is paid by the developer. The credit underwriter considers all aspects of the proposed development, including financing sources, plans and specifications, cost analysis, zoning verification, site control, environmental reports, construction contracts, and engineering and architectural contracts. The responsibility for the market study is assigned by the credit underwriter to an independent market analyst. The credit underwriter prepares a report for each applicant invited into the process. The reports are submitted to the Respondent's nine-member, statutorily-created Board of Directors (Board). The Board approves or denies each application for financial support. The Petitioner applied for funds for the Elmwood Terrace project during the 2007 Universal Cycle. The Petitioner's application received a perfect score, maximum points, and was allocated tax credits in the amount of $1,498,680. The Petitioner thereafter entered the credit underwriting process. The credit underwriting analysis was performed by Seltzer Management Group (SMG). SMG contracted with a market analyst, Vogt, Williams & Bowen Research, Inc. (VWB), to prepare the required market study. The affordable units at Elmwood Terrace were initially intended for persons receiving incomes no more than 60 percent of the AMI. The VWB research indicated that the Elmwood Terrace project would adversely affect the existing affordable housing developments, if the Elmwood Terrace units were available to the 60 percent AMI population. The existing affordable housing developments, also serving the 60 percent AMI population, included two developments that had participated in the Respondent's "Guarantee Fund" program, addressed elsewhere herein. VWB determined that the impact of the Elmwood Terrace project on the existing developments could be ameliorated were some of the Elmwood Terrace units targeted during "lease-up" to persons at income levels of not more than 50 percent of the AMI. The lease-up period is the time required for a new development to reach anticipated occupancy levels. The issue was the subject of discussions between the Petitioner, VWB, and SMG. To resolve the anticipated negative impact on the existing affordable housing developments, the Petitioner agreed to target the 50 percent AMI population. In September 2008, the credit underwriter issued his report and recommended that the Petitioner receive the previously-allocated tax credits. On September 22, 2008, the Respondent's Board accepted the credit underwriting report and followed the recommendation. In the fall of 2008, after the Petitioner received the tax credits, the nation's economic environment deteriorated considerably. As a result, the syndicator with whom the Petitioner had been working to sell the tax credits advised that the sale would not occur. The Petitioner was unable to locate an alternate purchaser for the tax credits. The Petitioner considered altering the target population of the project in an attempt to attract a buyer for the tax credits, and there were discussions with the Respondent about the option, but there was no credible evidence presented that such an alteration would have resulted in the sale of the Petitioner's tax credits. Lacking a buyer for the tax credits, the Petitioner was unable to convert the credits to cash, and they were of little value in providing funds for the project. The Petitioner was not alone in its predicament, and many other developers who received tax credits in the 2007 and 2008 Universal Cycles found themselves unable to generate cash through the sale of their tax credits. In early 2009, Congress adopted the American Recovery and Reinvestment Act of 2009 (PL 111-5), referred to herein as ARRA, which incorporated a broad range of economic stimulus activities. Included within the ARRA was the "Tax Credit Exchange Program" that provided for the return by the appropriate state agency of a portion of the unused tax credits in exchange for a cash distribution of 85 percent of the tax credit value. The State of Florida received $578,701,964 through the Tax Credit Exchange Program. The ARRA also provided additional funds to state housing finance agencies through a "Tax Credit Assistance Program" intended to "resume funding of affordable housing projects across the nation while stimulating job creation in the hard-hat construction industry." On July 31, 2009, the Respondent issued a Request for Proposals (RFP 2009-04) to facilitate the distribution of the ARRA funds. The Respondent issued the RFP because the 2009 QAP specifically required the Respondent to allocate the relevant federal funds by means of a "competitive request for proposal or competitive application process as approved by the board." The 2009 QAP was adopted as part of the 2009 Universal Cycle rules. Projects selected for funding through the RFP would be evaluated through the routine credit underwriting process. Participation in the RFP process was limited to developers who held an "active award" of tax credits as of February 17, 2009, and who were unable to close on the sale of the credits. The RFP included restrictions against proposals for development within areas designated as "Location A." Although the location of the Elmwood Terrace project had not been within an area designated as "Location A" during the 2007 Universal Cycle process, the Respondent had subsequently designated the area as "Location A" by the time of the 2009 Universal Cycle. The RFP also established occupancy standards for projects funded under the RFP that exceeded the standards established in the Universal Cycle instructions and an evaluation process separate from the Universal Cycle requirements. Although the restrictions in the RFP would have automatically precluded the Petitioner from being awarded funds, the Petitioner submitted a response to the RFP and then filed a successful challenge to the RFP specifications (DOAH Case No. 09-4682BID). In a Recommended Order issued on November 12, 2009, the Administrative law Judge presiding over the RFP challenge determined that certain provisions of the RFP, including the automatic rejection of Location A projects, the increased occupancy standards, and the RFP evaluation criteria, were invalid. The Respondent adopted the Recommended Order by a Final Order issued on December 4, 2009, and invited the Petitioner into the credit underwriting process by a letter dated December 9, 2009. The credit underwriter assigned to analyze the Petitioner's project was SMG, the same credit underwriter that performed the original analysis of the Petitioner's project during the 2007 Universal Cycle. SMG retained Meridian Appraisal Group, Inc. (Meridian), to prepare the required market study. The Respondent was not consulted regarding the SMG decision to retain Meridian for the market analysis. The decision to retain Meridian for the market analysis was entirely that of SMG. The Respondent did not direct SMG or Meridian in any manner regarding the assessment or evaluation of any negative impact of the proposed project on existing affordable housing developments. Meridian completed the market study and forwarded it to SMG on January 26, 2010. The Meridian market analysis included a review of the relevant data as well as consideration of the actual economic conditions experienced in Lee County, Florida, including the extremely poor performance of the existing housing stock, as well as significant job losses and considerable unemployment. The Meridian market analysis determined that the Elmwood Terrace development would have a negative impact on two existing affordable housing apartment developments that were underwritten by the Respondent through a Guarantee Fund created at Section 420.5092, Florida Statutes, by the Florida Legislature in 1992. The existing Guarantee Fund properties referenced in the SMG recommendation are "Bernwood Trace" and "Westwood," both family-oriented apartment developments within five miles of the Elmwood Terrace location. The Guarantee Fund essentially obligates the Respondent to satisfy mortgage debt with the proceeds of Florida's documentary stamp taxes, if an affordable housing development is unable to generate sufficient revenue to service the debt. Because the Guarantee Fund program essentially serves to underwrite the repayment of mortgage debt for a "guaranteed" affordable housing development, the program increases the availability, and lowers the cost, of credit for developers. The Guarantee Fund program has participated in the financing of more than 100 projects, most of which closed between 1999 and 2002. Since 2005, the Respondent has not approved any additional Guarantee Fund participation in any affordable housing developments. The Respondent's total risk exposure through the Guarantee Fund is approximately 750 million dollars. Prior to October 2008, no claims were made against the Guarantee Fund. Since November 2008, there have been eight claims filed against the Guarantee Fund. Affordable housing financing includes restrictions that mandate the inclusion of a specific number of affordable housing units. Such restrictions are eliminated through foreclosure proceedings, and, accordingly, access to affordable housing units can be reduced if a development fails. Presuming that the eight claims pending against the Guarantee Fund eventually proceeded through foreclosure, as many as 2,300 residential units could be deducted from the stock of affordable housing. When there is a claim on the Guarantee Fund, the Respondent has to assume payment of the mortgage debt. The claims are paid from the Guarantee Fund capital, which is detrimental to the Respondent's risk-to-capital ratio. The risk-to-capital ratio is presently four to one. The maximum risk-to-capital ratio acceptable to rating agencies is five to one. The eight claims against the Guarantee Fund have ranged between ten and 18 million dollars each. The Respondent's bond rating has declined because of the eight claims. A continued decline in the Respondent's bond rating could result in documentary stamp tax receipts being used for payment of Guarantee Fund claims and directed away from the Respondent's programs that are intended to support the creation of affordable housing. In an effort to prevent additional claims against the Guarantee Fund, the Respondent has created the "Subordinate Mortgage Initiative" to provide assistance in the form of two- year loans to troubled Guarantee Fund properties. When preparing the 2010 market study, Meridian did not review the VWB market analysis performed as part of the 2007 application. Although the Petitioner has asserted that Meridian should have reviewed the 2007 VWB analysis, there is no evidence that Meridian's decision to conduct an independent market study without reference to the prior market review was inappropriate. On February 8, 2010, SMG issued a recommendation that the Petitioner's funding request be denied "because of the proposed development's potential financial impacts on developments in the area previously funded by Florida Housing and an anticipated negative impact to the two Guarantee Fund properties located within five miles of the proposed development." There is no evidence that the Meridian analysis was inadequate or improperly completed. There is no evidence that the SMG's reliance on the Meridian analysis was inappropriate. For purposes of this Order, the Meridian analysis and the SMG credit underwriting report have been accepted. Elmwood Terrace, a newer development with newer amenities, would compete for residents with the Bernwood Trace and Westwood developments. The financing for Bernwood Trace and Westwood was premised on projections that the affordable housing units would be leased to the 60 percent AMI population; however, the developments have been unable to maintain full occupancy levels, even though a number of units in the two properties are leased at reduced rates based on 50 percent AMI income levels. A rent reduction implemented by an existing development, whether based on economic conditions or resulting from competition, constitutes a negative impact on the development. There is no credible evidence that the occupancy rates are attributable to any difficulty in management of the two developments. It is reasonable to conclude that the leasing issues are related to economic conditions present in Lee County, Florida. In January 2010, VWB conducted an alternative market analysis. The VWB analysis was not provided to SMG or to the Respondent at any time during the credit underwriting process. Based on the 2010 VWB analysis, the Petitioner asserted that economic conditions in Lee County, Florida, have improved since the first credit underwriting report was completed in 2008 and that the improvement is expected to continue. There is no noteworthy evidence that economic conditions have improved or will significantly improve in the Lee County, Florida, market in the predictable future, and the VWB analysis is rejected. The Petitioner offered to mitigate any negative impact on the Guarantee Fund properties by committing affordable units to 50 percent AMI income levels. Given the existing economic and rental market conditions in Lee County, Florida, the evidence fails to establish that the offer would actually alleviate the negative impact on the affected Guarantee Fund developments. The 2010 VWB analysis states that there is substantial unmet demand for housing at 50 percent AMI and that there will be no impact on the Guarantee Fund units if the Elmwood Terrace units were set aside for such individuals. There is no credible evidence that there is a substantial and relevant unmet affordable housing demand in Lee County, Florida. The VWB analysis is rejected. Following the completion of each annual Universal Cycle process, the Respondent actively solicits feedback from developers and the public and then amends the Universal Cycle requirements to address the issues raised, as well as to reflect existing affordable housing needs and general concerns of the Board. The amendments are applicable for the following Universal Cycle. In 2009, the Respondent amended subsection (10) of the Credit Underwriting Rule as part of the annual revisions to the Universal Cycle process. The relevant amendment (referred to by the parties as the "Impact Rule") added this directive to the credit underwriter: The Credit Underwriter must review and determine whether there will be a negative impact to Guarantee Fund Developments within the primary market area or five miles of the proposed development, whichever is greater. The amendment was prompted by the Respondent's experience in the fall of 2008 when considering two separate applications for affordable housing financing. The potential negative impact of a proposed development on an existing Guarantee Fund property was central to the Board's consideration of one application, and the Board ultimately denied the application. In the second case, the Board granted the application, despite the potential negative impact on a competing development that was not underwritten by the Guarantee Fund. The intent of the language was to advise developers that the existence of Guarantee Fund properties within the competitive market area would be part of the credit underwriting evaluation and the Board's consideration. Notwithstanding the language added to the rule, the credit underwriter is charged with reviewing the need for additional affordable housing. Even in absence of the added language, consideration of any negative impact to competing developments based on inadequate need for additional affordable housing would be appropriate. In rendering the 2010 credit underwriting report on Elmwood Terrace, the credit underwriter complied with the directive. Prior to determining that the Petitioner's funding application should be denied, the Respondent's Board was clearly aware of the Petitioner's application, the credit underwriting report and market analysis, and the economic conditions in Lee County, Florida. There is no credible evidence of any need for additional affordable housing in Lee County, Florida. There is no credible evidence that the Lee County, Florida, market can sustain the addition of the units proposed by the Petitioner without adversely affecting the financial feasibility of the existing Guarantee Fund developments. The Board was aware that the Elmwood Terrace development could attract residents from the nearby Guarantee Fund properties and that local economic conditions threatened the financial viability of the properties. Given current economic conditions, approval of the application at issue in this proceeding would reasonably be expected to result in a negative impact to existing affordable housing developments. The protection of Guarantee Fund developments is necessary to safeguard the resources used to support the creation and availability of affordable housing in the state.
Findings Of Fact At all times relevant hereto, respondent, George Sherbon, was a licensed real estate broker having been issued broker's license number 0348688 by petitioner, Department of Professional Regulation, Division of Real Estate (Division). When the events herein occurred, respondent was employed as a salesman for V. P. Stone, Inc., a real estate firm located at 5905 Gulf Boulevard, St. Petersburg Beach, Florida. On April 1, 1987, Paul D. and Anna Martin entered into a listing agreement with Century 21 Spinning Wheel Ent., Inc. (Century 21) to sell their home at 2543 58th Terrace South, St. Petersburg, Florida. The listing agent was Cheryl Coudry, now known as Cheryl Hutton, a licensed salesperson with Century 21. On September 11, 1987 respondent solicited and obtained a contract for sale on the Martin property executed by Frank Dicenzo, a resident of Pittsburgh, Pennsylvania, who had a daughter living in the St. Petersburg area. Dicenzo had responded to an advertisement run by Sherbon in a Pittsburgh newspaper. After a week or so of negotiations, the parties eventually agreed to a sales price of $92,500, and the final contract was executed on September 20, 1987. The contract called for Dicenzo to make an initial $100 deposit when the contract was executed and an additional deposit of $19,900 by September 25, 1987, or a total deposit of $20,000. Dicenzo gave respondent the initial $100 which was deposited into the escrow account of V. P. Stone, Inc. The contract provided further that the sale would be contingent on Dicenzo obtaining a $72,500 first mortgage. Finally, in accordance with Dicenzo's request, the contract provided that Dicenzo could take occupancy of the premises four weeks after the loan was approved. It is noted that Dicenzo initially asked for occupancy by October 16, 1987. On September 18, Sherbon introduced Dicenzo to Tony Black, a loan officer at Savings of America, a local lending institution, for the purpose of Dicenzo making a loan application. On September 24, or the day before the additional deposit was due, Dicenzo became ill with what he described as a bleeding ulcer and decided to return to Pittsburgh and stay at his mother's home. Before he left, Dicenzo did not make the additional deposit as required by the contract. According to Dicenzo, he placed no great significance on the September 25 due date and felt that if the deposit was made "within a reasonable time," it would be okay. Respondent was aware of the September 25 deadline and attempted to get a check for the $19,900 deposit from Dicenzo's daughter but was unsuccessful. Respondent contends he kept trying to contact Dicenzo in Pittsburgh during the next five week period but was unable to reach him. Dicenzo acknowledged he knew that Sherbon was trying to contact him but still made no effort to talk to Sherbon. Instead, he simply told his daughter he would take care of the matter when he returned to Florida in late October. Whether this message was conveyed to Sherbon is not of record. Sherbon prepared contemporaneous notes concerning the transaction and used these to refresh his recollection at hearing. He pointed out that such notes were kept on all real estate transactions. According to his notes, he telephoned Coudry and Black on September 24 concerning Dicenzo's illness and the fact that he was having difficulty obtaining the additional deposit from Dicenzo. Although Black recalled talking with Sherbon, he denied that Sherbon told him that there was no deposit and said such information was a material item that would have prompted him to stop processing the application until the deposit could be verified. Likewise, Coudry, who could not recall many aspects of the transaction, did recall speaking with Sherbon but remembered Sherbon simply telling her that he was in the process of showing Dicenzo various commercial properties and would be obtaining the deposit at that time. Their testimony is deemed to be more credible and persuasive and is hereby accepted. Coudry assumed that Sherbon had received the additional deposit since she was never specifically told otherwise by Sherbon. Accordingly, she did not contact the Martins until several weeks after the September 25 due date. Coudry did not learn that no deposit had been collected until mid-January 1988 when Anna Martin disclosed to her this fact. In the meantime, although the Martins knew the contract was contingent on Dicenzo obtaining a loan, they nonetheless assumed that Dicenzo would have no problem securing a loan and that such a loan would be approved in a week or so. Also, they knew the contract called for possession of the property by Dicenzo four weeks after the loan was approved. Because of these assumptions, and having received no advice from Coudry that the full deposit had not been made on September 25 as required by the contract, the Martins made application around September 28 to buy another home in a nearby modular home park and asked that the application be expedited. Unfortunately for the Martins, they were far more successful than Dicenzo in securing prompt approval of their loan application. Once approved, and after a closing was held, the Martins had the utilities hooked up, erected a storage shed, and incurred other expenses. Also, they began making mortgage payments on the second house. On October 24, 1987 the Martins telephoned Sherbon and told him their listing with Century 21 had expired. During the conversation, Sherbon did not mention that Dicenzo had failed to make the $19,900 deposit. Dicenzo's application with Savings of America was denied on October 30, 1987 because of Dicenzo's "ratio of ... expenses to ... total income." By this time, Dicenzo had returned to Florida and had spoken with Sherbon. At respondent's urging, Dicenzo reapplied to the same institution and was turned down a second time on November 12, 1987. In addition, at Coudry's suggestion, Dicenzo had already visited another lender in October but refused to pay a $250 application fee and consequently did not file an application. Also, through Sherbon, Dicenzo was given the name of a mortgage lender suggested by the Martins but, after three visits, decided not file an application. Information regarding the second Savings of America denial was conveyed to Coudry around mid-November but, for whatever reason, she did not contact Sherbon regarding the status of the contract. It is noteworthy that at that time Sherbon did not tell Coudry that Dicenzo had still failed to make an additional deposit as required by the contract. Despite the loan application denials, Sherbon encouraged Dicenzo to keep trying to arrange financing so that the deal could go through. Dicenzo agreed to do so but, as noted in the following finding of fact, at that point Dicenzo considered the contract to be "null and void." Sherbon's efforts to find financing continued until mid-January 1988. When the loan application was denied on November 12, Dicenzo construed the contract to be void since the financing contingency was not met. According to Dicenzo, he did not believe the property was tied up while his contract was pending, felt no obligation to make the $19,900 deposit because it meant he would have to transfer funds from a money market account he purportedly maintained in Pittsburgh, and felt no moral obligation to the Martins even though by then they had committed themselves to a second home. The Martins were advised by telephone on the evening of November 12 of the second turn down of Dicenzo's loan application. By then, however, they were already committed to the second purchase. They claimed they did not learn of Dicenzo's failure to make the $19,900 deposit until mid-January 1988 when Sherbon visited their home and disclosed this fact. This is also borne out by a letter from the Martins' attorney to Dicenzo on December 1, 1987 advising Dicenzo that the contract was void and a claim might be made on his deposit for damages. When the Martins learned that only $100 had been deposited, they filed a complaint with the Division. That prompted this proceeding. Because of the failed contract, the Martins were unable to maintain two mortgage payments and were ultimately forced to give up the second home at a substantial monetary loss. They have since returned to their first home. The evidence shows that in the real estate trade, it is not customary or proper for the buyer's realtor to personally contact the seller. Rather, the practice and custom is for the buyer's agent to advise the listing broker of all pertinent developments and the listing broker then relays any necessary information to the seller. Thus, Sherbon had no responsibility to personally advise the Martins of any information pertaining to the contract. Rather, this responsibility rested with Coudry. Respondent contended he kept Coudry abreast of all developments concerning Dicenzo and that he assumed Coudry would advise the Martins that no deposit had yet been collected. To the extent this version of events conflicts with previous findings, it is not accepted. Sherbon expressed sympathy for the Martins' plight but maintained he was not at fault. There is no evidence that Sherbon has been subjected to prior disciplinary action by the Division.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating Subsection 475.25(1)(b), Florida Statutes (1987) to the extent noted in the conclusions of law and that his broker's license be suspended for three months. All other charges should be dismissed. DONE and RECOMMENDED this 26th day of April, 1989, in Tallahassee, Florida. DONALD R. ALEXANDER 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 26th day of April, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4688 Petitioner: 1-2. Covered in finding of fact l. Rejected as being unnecessary. Covered in finding of fact 2. 5-7. Covered in finding of fact 3. Covered in finding of fact 5. Covered in finding of fact 10. Covered in finding of fact 7. Rejected since respondent owed a duty to Coudry, and not the Martins, to keep her abreast of all pertinent matters. Covered in findings of fact 7 and 12. Covered in findings of fact 7 and 8. Covered in finding of fact 8. Covered in findings of fact 6 and 10. Rejected as being subordinate to other findings. Covered in finding of fact 11. 18-19. Covered in finding of fact 6. Respondent: Respondent's proposed order contains sections entitled "admitted facts", "unrebutted facts" and "uncontested facts". They are ruled upon in that order. Admitted facts: Covered in finding of fact l. Covered in finding of fact 3. Covered in finding of fact 2. Covered in finding of fact 3. Covered in finding of fact 3. Covered in background. Unrebutted facts: Covered in finding of fact 7. Covered in finding of fact 15. Covered in finding of fact 10. 4-6. Covered in finding of fact 6. 7-8. Covered in finding of fact 5. Covered in finding of fact 11. Covered in finding of fact 12. Rejected since Sherbon learned of the loan denial even though he did not receive a written copy of the turn-down letter. Covered in finding of fact 13. Covered in finding of fact 8. Rejected since the testimony of Anna Martin is accepted as being more credible on this factual issue. Uncontested facts: Rejected as being cumulative. Partially covered in findings of fact 6, 7 and 16. The remainder is rejected as being cumulative, argument of counsel or not supported by the more credible evidence. COPIES FURNISHED: James H. Gillis, Esquire Post Office Box 1900 Orlando, Florida 32802 Daniel B. Schuh, Esquire 248 Mirror Drive St. Petersburg, Florida 33701 Darlene Keller, Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Kenneth E. Easley, Esquire 130 North Monroe Street Tallahassee, Florida 32399-0750 =================================================================
The Issue Whether Petitioner was properly denied mortgage assistance through Florida Housing Finance Corporation's ("Florida Housing") Hardest-Hit Fund Elderly Mortgage Assistance ("ELMORE") program based on a conviction for fraud allegedly in connection with a real estate transaction.
Findings Of Fact The Parties Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes, to promote the public welfare by administering the governmental function of financing or refinancing housing. For purposes of this proceeding, Florida Housing is an agency of the State of Florida. Florida Housing is also considered the state's housing finance agency which means Florida Housing, at times, conducts business as if it were a financial institution. Florida Housing administers the Hardest-Hit Fund, using funds appropriated by the United States Congress through the Emergency Economic Stabilization Act to help stabilize housing markets and prevent foreclosures. The Hardest-Hit Fund comes directly to Florida Housing from the United States Treasury through a Housing Finance Agency ("HFA") Participation Agreement. The ELMORE program is one of the programs created under the umbrella of the Hardest-Hit Fund. The ELMORE program is designed to assist senior homeowners in Florida who are facing foreclosure due to the inability to pay property charges such as property taxes, homeowners insurance, and homeowners or condo association dues after the homeowner was paid all of the equity under a reverse mortgage. The HFA agreement is a summary guideline for the ELMORE program and its general requirements. The stated goal of the program is to help senior homeowners remain in their homes. The Summary Guidelines include certain borrower eligibility criteria, property/loan eligibility criteria, and program exclusions, among other guidelines. The program exclusions reference the "Dodd-Frank exclusion for having been convicted of a mortgage-related felony in the past ten years." The Dodd-Frank Act exclusion for criminal applicants is codified 12 U.S.C. § 5220b, and states in part: (d) Prevention of qualification for criminal applicants (1) In general No person shall be eligible to begin receiving assistance from the Making Home Affordable Program authorized under the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 et seq.), or any other mortgage assistance program authorized or funded by that Act, on or after 60 days after July 21, 2010, if such person, in connection with a mortgage or real estate transaction, has been convicted, within the last 10 years, of any one of the following: Felony larceny, theft, fraud, or forgery. Money laundering. Tax evasion. On or about February 27, 2017, Betty Baldwin, Power of Attorney for Tolz, submitted an application for mortgage assistance through Florida Housing's Hardest-Hit Fund for ELMORE benefits. On or about May 11, 2017, the application was denied. On or about November 8, 2018, Tolz submitted another application for mortgage assistance from the ELMORE program. On December 5, 2018, Florida Housing's Director of Homeownership Programs, David Westcott, issued a letter with an ineligibility determination to Tolz, which included a Notice of Rights.1/ Mr. Westcott is ultimately responsible for the final eligibility determinations on Hardest-Hit Fund mortgage assistance applications. The Denial of ELMORE Program Benefits Mr. Westcott denied Tolz's application for ELMORE program funds because she had, what Mr. Westcott determined to be, a disqualifying felony conviction in connection with a real estate transaction in violation of the Dodd-Frank Act provision. Mr. Westcott testified that pursuant to the HFA agreement with the United States Treasury, Florida Housing is prohibited from using ELMORE funds to assist applicants that have a disqualifying Dodd-Frank Act conviction. During the period of 2003 through 2010, Tolz used her position as a fiduciary in the role of bankruptcy trustee, receiver, and personal representative to misappropriate millions of dollars from bankruptcy estates, receiverships, and other matters, by writing or causing the writing of unauthorized checks from a variety of fiduciary accounts which contained funds she was appointed to safeguard. Tolz then used the misappropriated money for her own benefit and to conceal her previous misappropriations by restoring the balances of other fiduciary accounts from which she had previously taken funds in a Ponzi scheme framework. To conceal this theft, Tolz falsified documents and used a fictitious bank account. On or about December 12, 2011, Tolz was convicted in Broward County Circuit Court of grand theft in the first degree. Tolz was convicted on or about July 27, 2011, in the United States District Court for the Southern District of Florida of conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349. To secure a plea deal and in order to bolster her claim that her sentence should be reduced from the federal guidelines, prior to sentencing, Tolz surrendered five real estate properties, which she owned, to the United States government. The value of these properties was then used to offset and lessen Tolz's restitution obligation to her victims. Tolz understood that these properties would not be accepted to satisfy her restitution obligation unless they were purchased, mortgaged, or improved with the assets of her victims. In the federal criminal case, Tolz executed a Factual Basis Supporting Change of Plea ("Factual Basis") on or about April 15, 2011. Tolz agreed not to contest the information in the Factual Basis. Further, Tolz agreed that it provided a sufficient factual basis for her plea of guilty in the case, and had the case proceeded to trial, that the United States would have proven the facts beyond a reasonable doubt. Paragraph 11 of the Factual basis states: MARIKA TOLZ, directly or indirectly, utilized funds obtained through the fraudulent scheme to purchase, maintain and improve real properties, including, but not limited to the following real properties: 2344 North Federal Highway, Hollywood, Florida; 1804 Sherman Street, Hollywood, Florida; 704 SE 3rd Avenue, Hallandale, Florida; 815 SW 30th Street, Ft. Lauderdale, Florida; and 3031 North Ocean Blvd, Apartment 403, Fort Lauderdale, Florida 33308. In making the ineligibility determination on Tolz's application for ELMORE program funds, Mr. Westcott determined that Tolz's conviction was in connection with a real estate transaction because Tolz agreed in the Factual Basis that she used funds obtained through the fraud to "purchase, maintain and improve real properties." Florida Housing determined that Tolz's conviction disqualified her from receiving mortgage assistance from the ELMORE program because: As part of the Hardest-Hit Fund, the ELMORE program funds are authorized by the Emergency Economic Stabilization Act of 2008; Tolz was convicted of the enumerated offense of a "fraud;" The conviction occurred on or about July 21, 2011, which is within the last ten years; and The conviction was in connection with a real estate transaction because Tolz used funds obtained through the fraud to "purchase, maintain and improve real properties." "In Connection With" A Mortgage or Real Estate Transaction Tolz contends that her crimes were not "in connection with a mortgage or real estate transaction." At both her sentencing hearing in federal court and at the final hearing in this proceeding, Tolz stated that she owned these surrendered properties for 30 or 40 years. Tolz now argues that because she owned these properties well before the fraud of which she was convicted occurred, no mortgage or real estate transaction was involved in the crime and, therefore, she should not be disqualified from ELMORE benefits. Tolz now claims she surrendered these properties to facilitate the forfeiture on the advice of counsel, that she was heavily medicated at the time of sentencing, and that the prosecutor and the court knew that these properties were not associated with her underlying crimes. Tolz admitted at final hearing that she surrendered these properties to do an end-run around the system to reduce the more than two million dollars she owed in restitution. However, in that same sentencing hearing, the prosecutor representing the United States stated "I'll also indicate, although it's clear from the record, that notwithstanding the picture that she's somehow a pauper, or was a pauper, the fact of the matter is the forfeiture properties indicated in the forfeiture which she agreed to were her properties, at least partially paid for by the offense."2/ An impartial reading of the sentencing transcript demonstrates that during sentencing the United States believed that the properties involved in the criminal forfeiture were, in part, paid for by the crime for which Petitioner was convicted. The undersigned finds the facts, as offered by Tolz in her 2011 "Factual Basis" offered in support of a sentence reduction and reduction of her restitution obligation, to be more credible than her denial at final hearing that these properties were not purchased, improved, or maintained with the funds from her crimes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing enter a final order dismissing Petitioner's Amended Petition. DONE AND ENTERED this 30th day of April, 2019, in Tallahassee, Leon County, Florida. S MARY LI CREASY 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 30th day of April, 2019.
Findings Of Fact Based upon the pleadings and responses thereto, an Order imposing sanctions for Respondent's failure to submit discovery as required by the undersigned dated October 15, 1986 and the entire record compiled herein, I hereby make the following relevant factual findings. Respondent is the developer of a condominium known as La Residence. As Presently developed, La Residence consists of sixty units. La Residence is located in Boca Raton, Florida. Respondent failed to meet the completion date for the subsequent phases of La Residence as is described in the declaration of condominium of La Residence. According to the Declaration of Condominiums for La Residence, the scheduled dates listed for construction of the subsequent phases of La Residence were June, 1982 for phase II; February, 1983 for phase III, and November, 1983 for phase IV. Amendments to the Declaration of Condominium of La Residence were recorded on June 30, 1981, March 22, 1982 and August 2, 1984. Respondent did not furnish the Division with copies of the above-referred amendments. Additionally, Respondent failed to provide purchasers of units within La Residence, copies of the above-referred amendments. Respondent failed to hold annual members meeting for the years 1981, 1982, 1983 and 1984. Respondent failed to call a members meeting to allow non-developer unit owners to elect a director after fifteen percent of the available units had been conveyed. Respondent failed to mail to unit owners, copies of the proposed annual budget for the years 1982, 1983, and 1984. Respondent failed to include the statutory reserves and the proposed annual budget as required for the years 1982, 1983 and 1984. Respondent failed to fund reserve accounts for the years 1982, 1983 and 1984. Respondent failed to provide unit owners with financial reports for fiscal years 1982, 1983 and 1984. Respondent failed to pay the developer's share of assessments due to be paid by the developer after June 30, 1982. The Declaration of Condominium for La Residence was recorded in the public records of Palm Beach County in 1981. Control of the Condominium Association was turned over to non-developer unit owners on February 16, 1985. No "turnover report" was prepared by a certified public accountant nor was such a report ever furnished to the Condominium Association by Respondent. Respondent has not provided the Condominium Association copies of all canceled checks and bank statements for the time period dating from the recordation in 1981 to January 31 1984. Respondent, or a representative on its behalf, did not appear at the hearing to refute or otherwise contest the alleged violations set forth in the Notice to Show Cause filed herein.
Recommendation Based on the foregoing Findings of Fact and Conclusions, of a Law, it is hereby RECOMMENDED Respondent pay to the Division, within thirty (30) days of issuance of the Division's Final Order, a civil penalty in the amount of ten thousand dollars ($10,000). Respondent secure the services of an independent certified public accountant who shall review the condominium records and submit a turnover review in accordance with the provisions of Section 718.301(4)(c), Florida Statutes (1985) and rule 7B-23.03(4)(5) and (6), Florida Administrative Code. Within thirty days of the Division's Final Order, it is recommended that the Division issue guidelines to Respondent to ensure that the condominium records are reviewed in accordance with the above-referenced statutory and rule provisions. Provided that monies are found to be due and owing the association based on the review, Respondent shall be directed to remit such amounts to La Residence of Boca Del Mar Condominium Association. Recommended this 23rd day of March, 1987, in Tallahassee, Florida. JAMES E. BRADWELL, 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 23rd day of March, 1987.
