Findings Of Fact The pleadings in this case, Petitioner's Notice of Intention to Suspend" and Respondent's "Petition for Formal Hearing" establish the following uncontroverted facts: William D. McCaffrey is a mortgage solicitor holding license number HK0007207. The Department of Banking and Finance is charged with the responsibility and duty of administering and enforcing the provisions of the Mortgage Brokerage Act, including the duty to suspend the license of those persons registered under the act for violations of the terms therein. William D. McCaffrey has been convicted of a federal offense and is presently in federal custody at the Federal Correctional Institute in Montgomery, Alabama. On November 13, 1985, Respondent pled guilty to "Interstate transportation of fraudulently obtained credit cards, in violation of title 15 U.S. Code, Section 1644(b) as charged in count 6 of the Indictment". (Petitioner's Exhibit #2) Count 6 of the indictment provides: Count Six On or about December 13, 1982, defendants WILLIAM D. McCAFFREY and WILLIAM BARTRAM III did knowingly, with unlawful and fraud- ulent intent, transport and cause to be transported in interstate commerce from Clarkston, Georgia, by way of Nevada, to the District of Arizona, a fraudulently obtained American Express Credit Card in the name of William Smith, knowing said credit card to have been fraudulently obtained. All in violation of Title IS, United States Code, Section 1644(b), and Title 18, United States Code, Section 2. (Petitioner's Exhibit #1) The U.S. District Court for the District of Arizona in case #CR 85-53 PHX adjudged William D. McCaffrey guilty as charged and convicted, sentenced him to imprisonment for 5 years, and ordered that he pay a fine of $10,000 and make restitution to American Express in the amount of $5,481.27. (Petitioner's Exhibit #2 Judgement and Probation/Commitment Order)
Recommendation Based upon the foregoing it is recommended that a final order be entered suspending Respondent's mortgage solicitor's license for a period of two years. DONE AND ORDERED this 23rd day of October 1986, in Tallahassee, Florida. MARY CLARK 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 23rd day of October, 1986. COPIES FURNISHED: Robert K. Good, Esquire Office of the Comptroller 400 West Robinson Street Orlando, Florida 32801 Clyde Taylor, Jr., Esquire 1105 Hays Street Tallahassee, Florida 32301
The Issue Whether Respondent Department should deny Petitioner's application for a mortgage solicitor's license upon the grounds that Petitioner violated Chapter 494, Florida Statutes (1979), and lacks the requisite honesty, truthfulness, and integrity to act as a mortgage solicitor in Florida.
Findings Of Fact Upon consideration of the testimony and documentary evidence presented at hearing, the following facts are determined: On February 4, 1980, the Department served Requests for Admissions upon the Applicant. The Requests asked the Applicant to admit or deny the truth of each alleged finding of fact contained in the Department's Order of Denial dated December 7, 1979. Those findings of fact form the basis of the Department's proposed denial of Applicant's license. By his Answers to Request for Admissions (Respondent's Exhibit 3), the Applicant admitted the truth of each and every Finding of Fact contained in the Department's Order of Denial. The relevant Findings of Fact, which are now admitted and undisputed, are set out below: The Applicant, James B. Payne, was previously licensed as a mortgage broker in the State of Florida under license number 2387 and registration number 90-1. His license expired on or about August 31, 1977. On or about July 18, 1979, the Department received Applicant's application requesting registration as a mortgage solicitor. The application was not completed until Applicant passed his mortgage brokerage license exam. On August 29, 1979, the Applicant took, but failed to pass, the mortgage brokerage examination in Miami, Florida. However, on October 9, 1979, the Applicant retook, and successfully passed, the examination. Thereafter, the Department, pursuant to Chapter 494, supra, conducted an investigation into the Applicant's background and qualifications for registration as a mortgage solicitor. On or about May 15, 1978, [prior to filing the application at issue here] the Applicant had applied to the Department for a mortgage solicitor's license, pursuant to Chapter 494, supra. After receiving his application, the Department conducted an investigation into the background and qualifications of the Applicant. That investigation resulted in an Order of Denial which was issued on August 4, 1978, in administrative proceeding number 78-9 DOF (ME). An Affidavit of Default was entered in that action on September 1, 1978. That earlier Order of Denial [which became final and is not at issue here] contained the following allegations, now admitted by the Applicant: "(i) That at all times material hereto [subparagraphs (i)-(iv), post] the Applicant was employed by Metropolitan Mortgage Company as its Chief Financial Officer at 2244 Biscayne Boulevard, Miami, Florida. "(ii) On or about August, 1976, the Applicant did knowingly and with intent to defraud Metropolitan Mortgage Company, approve payment of a purported $5,000 mortgage fee to one Robert Day by check number 8309 issued by Metropolitan Mortgage Company and dated September 2, 1976. Said check was cashed on or about September 3, 1976, at the Capital Bank of Miami. On or about September 2, 1976, a cashier's check in the amount of $4,500.00 was issued by the Capital Bank of Miami and made payable to the Applicant. The Applicant represented that said payment to Robert Day constituted a share of a brokerage commission for commitments entered into between Metropolitan Mortgage Company and Tremont Savings and Loan Association. The primary fee for said transaction was paid to Mortgage Brokerage Services, East Orange, New Jersey. No such brokerage commission sharing agreement between mortgage brokerage services and Robert Day ever existed. "(iii) On or about June 3, 1977, the Applicant did knowingly and with intent to defraud Metropolitan Mortgage Company, make a false requisition upon said Metropolitan Mortgage Company for a check disbursement in the amount of $3,150.00 payable to State Savings and Loan Association by check number 11797 dated June 3, 1977, and drawn on Flagship National Bank. The Applicant did knowingly and with intent to defraud Metropolitan Mortgage Company, misrepresent that said requisition was for a verbal commitment issued by State Savings and Loan Association to buy conventional mortgages valued at $315,000.00 at a net of 8.75 percent. The Applicant did misrepresent to State Savings and Loan Association that said check constituted rentals collected by Metropolitan Mortgage Company on two foreclosed units at Tallwood Condominiums. At no time did State Savings and Loan Association issue the above described commitments either verbally or in writing. In fact, said requisition was made for the purpose of payment to State Savings and Loan Association for the Applicant's personal misadministration of loans regarding the Tallwood Condominiums and the Segars account in the respective sums of $6,340.00 and $4,210.00. "(iv) On or about June, 1977, the Applicant did knowingly and with intent to defraud Metropolitan Mortgage Company, approve payment of a purported brokerage fee to David G. Witherspoon, in the sum of $6,500.00 by check number 11796 dated June 3, 1977, issued by Metropolitan Mortgage Company and drawn on the Flagship National Bank of Miami. The Applicant represented that said payment to Donald G. Witherspoon constituted a share of a brokerage commission for commitments entered into between Metropolitan Mortgage Company and Tremont Savings and Loan Association. On or about June 6, 1977, said check was converted to cashier's check number 070087 drawn on the Flagship National Bank of Miami and made payable to one Donald G. Witherspoon. The primary fee for said transaction was paid to Mortgage Brokerage Services, East Orange, New Jersey. No such brokerage commission sharing agreement between Mortgage Brokerage Services and Donald G. Witherspoon ever existed. Donald G. Witherspoon was never a party to such transaction nor did he ever see, receive or sign said check." Misconduct by the Applicant Subsequent to the August 4, 1978, Order of Denial The Applicant represented himself to Mr. Alan N. Schneider of Kings Way Mortgage Company of Coral Gables, Florida, as being a licensed mortgage broker/solicitor in the State of Florida. From December 22, 1978, until February 23, 1979, the Applicant was employed by Kings Way Mortgage Company as a mortgage solicitor, and did act in the capacity of a mortgage solicitor and negotiated several loans and collected fees. At all times above, the Applicant was not licensed as a mortgage broker and/or solicitor in the State of Florida. That on or about February 1, 1979, the Applicant represented himself as, and acted in the capacity of a mortgage broker and/or solicitor in the State of Florida without being licensed as required by Chapter 494, supra, and in violation of Section 494.04, supra. When the Applicant filed his application at issue here, he failed to indicate, in response to Question No. 7, the existence of a Final Judgment against him in the amount of $1,482.35. Such Judgment was entered against the Applicant in Dade County, Florida, on August 15, 1978, in Case No. 78-7543 SPO5. Competence, Character, and Reputation of the Applicant Applicant has had considerable experience in the field of mortgage banking. The president and vice-president of two mortgage brokerage companies established, without contradiction by the Department, that the Applicant is extremely knowledgeable in the area of mortgage banking. (Testimony of Ruiz, Petitioner's Exhibit No. 1) Should the Applicant qualify for and receive a license, Allan Zalesky, President of First Capital Mortgage Company, and Albert Ruiz, Vice-President of Conley and Jones, a mortgage banking firm, would be willing to consider employing him as a mortgage solicitor. While no evidence was presented to indicate Zalesky was aware of the Applicant's past misconduct, or the basis for the Department's proposed denial of the Applicant's license, Ruiz was generally familiar with the Department's charges against the Applicant. Ruiz, nevertheless, affirmed that, should the Applicant be licensed, he would employ him as a competent mortgage solicitor, not just as a friend. (Testimony of Ruiz, Petitioner's Exhibit 1) The Applicant's reputation in the community, to the extent that it is known by his friend, Luiz, is one of "truthfulness, honesty, and integrity." (Testimony of Ruiz) Extenuating and Mitigating Circumstances Surrounding the Applicant's Misconduct Although the Applicant failed, in response to Question 7, to disclose on his application for licensure the existence of a Final Judgment against him, dated August 16, 1978, the Applicant had previously satisfied the Judgment, on or about November, 1978. Although the Judgment creditor had been paid by the Applicant, a Satisfaction of Judgment was not executed until March 18, 1980. (Testimony of the Applicant, Petitioner's exhibit 2) The Applicant intends to repay Metropolitan Mortgage Company for the losses it suffered due to the Applicant's prior misconduct. While the Applicant has made tentative arrangements to that end, no such payments have yet been made. (Testimony of Applicant) The Applicant admits his past misconduct as a mortgage solicitor as alleged by the Department, and sincerely regrets his actions. His fraudulent conduct, which forms the basis of the Department's previous 1978 Order of Denial, occurred, in part, because he was suffering financial difficulties, and faced mounting medical bills of his wife. He was aware that his continued functioning as a mortgage solicitor, subsequent to that Order denying a license, was unlawful but he felt compelled to do so because of mental and financial difficulties and his physical condition at that time. Further, he was encouraged by his friends at the mortgage company to engage in such activities. (Testimony of Applicant) The Applicant has never before engaged in misconduct in connection with mortgage brokerage transactions. His misconduct caused him embarrassment and great humiliation resulted in mounting family debts, and left him unemployed since February, 1979. His primary knowledge, and skills are limited to the mortgage banking field, and, unless he is able to act as a mortgage solicitor, it will be difficult to pay his debts and support his family. He freely acknowledges, and sincerely regrets his wrongful actions, and genuinely regrets the hardships which his actions have imposed on his family and friends. He professes to understand the value of and need for honesty and integrity in mortgage banking. Insisting that he has learned his lesson, he promises that, if licensed, he will never again engage in misconduct. (Testimony of Applicant)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Applicant's application for licensure as a mortgage solicitor be DENIED, without prejudice to his right to reapply in future years with new and substantially different evidence of rehabilitation. DONE and ORDERED this 30th day of June, 1980, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Ronald B. Gilbert, Esquire Douglas Centre, Suite 807 2600 Douglas Road Coral Gables, Florida 33134 Franklyn J. Wollettz, Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301
The Issue These administrative proceedings involve three related cases which were consolidated for purposes of proceedings before the Division of Administrative Hearings. DOAH Case No. 87-3299 began on or about May 13, 1987, with the issuance of an Administrative Complaint and Notice of Rights by the Department of Banking and Finance, Division of Finance (hereinafter "Department"), against Respondents Mid South Mortgage Corporation (hereinafter "Mid South"), Carolyn G. Stanley (hereinafter "Stanley"), William D. Hughes (hereinafter "Hughes"), John Childers (hereinafter "Childers"), and Janie Cincotta (hereinafter "Cincotta"). An Amended Administrative Complaint was filed later. The Amended Administrative Complaint charges the Respondents with nine counts of violations of the Mortgage Brokerage Act, Chapter 494, Florida Statutes. In addition to the Administrative Complaint, on about May 13, 1987, the Department issued a Cease and Desist Order and Notice of Rights against Childers and Cincotta, which was docketed as DOAH 87-3300, and a second Cease and Desist Order and Notice of Rights against Mid South, which was docketed as DOAH Case No. 87-3301. The Administrative Complaint in DOAH Case No. 87-3299 was never served on Cincotta. At the commencement of the formal hearing, the Department announced that it was not pursuing the Administrative Complaint against Cincotta. The Cease and Desist Order in Case No. 87-3300 was served on Cincotta. At the commencement of the formal hearing, Cincotta confirmed that she did not contest the Cease and Desist Order in Case No. 87-3300. Prior to the formal hearing, Hughes and the Department entered into a stipulation for the disposition of all issues in DOAH Case No. 87-3299 that relate to Hughes. Following the hearing in this case, a transcript of the proceedings at hearing was filed. Thereafter the Department filed proposed recommended orders in all three of these consolidated cases. The Respondents have not filed any proposed recommended orders. The Department's proposed recommended orders have been carefully considered during the formulation of this recommended order. Specific rulings on all proposed findings of fact are contained in the appendix which is attached hereto.
Findings Of Fact Based on the exhibits received in evidence and on the testimony of the witnesses at the hearing, I make the following findings of fact. Preliminary Factual Findings Mid South is a corporation organized and existing under and by virtue of the laws of the State of Florida. Mid South has been and is conducting business in the State of Florida as a mortgage brokerage business pursuant to Chapter 494, Florida Statutes, having been issued license No. HB-592335611. Mid South has been and is conducting business in the State of Florida as a mortgage brokerage business at 1815 West 15th Street, Suite 8, Panama City, Florida 32407. Persons Employed by Mid South John Childers From October 1983 until present, Childers has been employed at Mid South. Childers is President of Mid South and a 50 percent shareholder of Mid South. Childers is the chief executive officer in charge of running Mid South in Mississippi, Alabama, Georgia, Tennessee, and Florida. Childers is not now, nor has he ever been, licensed pursuant to Chapter 494, Florida Statutes. Although Childers explained to Carolyn G. Stanley, the designated Principal Mortgage Broker of Mid South, that she was in charge of the offices of Mid South, Childers assumed the responsibility of overseeing the mortgage brokerage business of Mid South, because Stanley did not have time to do so. In the event a borrower became angry because his interest rates were increased above what was agreed to, it was Childers who would try to "work out a deal" with the borrower by reducing the points. Ann King Beach From on or about July 25, 1985, Ann King Beach was the Designated Principal Mortgage Broker of Mid South pursuant to Chapter 494, Florida Statutes, having license No. HB-16762. From on or about September 1, 1985, Ann King Beach ceased to be employed by Mid South. Janie Cincotta Cincotta was employed by Mid South in Pensacola, Florida, for two different periods of time. The first period of employment began on or about September 1985 and ended on or about February 1986. From on or about September 1985 through on or about February 1986, the Pensacola, Florida, office of Mid South was continuously open. Cincotta's second period of employment with Mid South began on or about October 1986 and ended on or about March 1987. From on or about the end of October 1986 to on or about March 1987, the Pensacola, Florida, office of Mid South was continuously open. Cincotta's job responsibilities included the same responsibilities as those of Linda Banquicio, described below, and more. Cincotta would send out the verifications, work up the Good Faith Estimate, type the application, answer the telephone, and interview the applicants. Childers was aware of Cincotta's job responsibilities. Cincotta was compensated by Mid South. Cincotta was not licensed pursuant to Chapter 494, Florida Statutes. William D. Hughes From on or about September 19, 1985, the Mid South office at 692 Heinberg Street, Pensacola, Florida, was licensed pursuant to Chapter 494, Florida Statutes, having license No. HB-17159. From on or about September 19, 1985, William D. Hughes was designated as the broker in full charge, control, and supervision of the Pensacola, Florida, office of Mid South. Hughes terminated his employment with Mid South on or about April 15, 1986. On or about April 1, 1986, Hughes informed Childers that he was terminating his employment with Mid South. By letter dated September 2, 1986, Mid South notified the Department that Hughes was no longer employed by Mid South. On or about October 14, 1986, Hughes filed an Application for Registration as a Branch Office for the Pensacola, Florida, location of Mid South. On or about December 15, 1986, Hughes became the Designated Associate Broker at the branch office of Mid South, having license No. HT-9017. Said branch office was assigned license No. HL-1724. On or about April 1, 1987, Hughes notified the Department that he had terminated his employment with Mid South. Although Hughes became licensed with the Department as the Designated Associated Broker at the Pensacola, Florida, branch office of Mid South, he never actually worked there in that capacity. During the second period of Cincotta's employment, Childers knew that Hughes was not working at the Pensacola, Florida, office of Mid South. At the end of October or the beginning of November 1986, Childers told Cincotta that if Hughes received a telephone call, she was to respond that Hughes was not in. Thereafter, Childers would return the telephone call for Hughes. The reason for the foregoing instructions was to prevent Mid South from getting "into trouble," because Mid South did not have a licensed broker in the Pensacola, Florida, office of Mid South. Hughes received commissions only on the loans that he brought into Mid South. Hughes did not receive a commission on any other mortgage loan that was processed through the Pensacola, Florida, office of Mid South and which was considered to be a "house loan." There appear to have been two types of house loans on which Hughes did not receive commissions during his employment at Mid South. The first type was mortgage loans referred to Mid South from Source Mortgage wherein Source Mortgage shared a brokerage fee with Mid South. The other type of house loan involved borrowers who sought the services of Mid South, but did not initiate the mortgage loan process through either Hughes or Source Mortgage. Kenneth E. Boles From on or about November 20, 1985, Kenneth E. Boles was designated Principal Mortgage Broker of Mid South pursuant to Chapter 494, Florida Statutes, having license No. HB- 17651. From on or about July 24, 1986, Kenneth E. Boles ceased to be employed by Mid South. Linda Banquicio Linda Banquicio began working in the Pensacola, Florida, office of Mid South from on or about June 13, 1986, to on or about August 22, 1986. Banquicio was employed at Mid South to answer the telephone, type, inform borrowers of the interest rates, provide loan application forms to borrowers, assist borrowers in filling out the loan applications, type the verification forms to be mailed out, and fill in the estimated closing costs on the Good Faith Estimate. Childers was aware of Banquicio's job responsibilities. Banquicio was not licensed pursuant to Chapter 494, Florida Statutes. Carolyn G. Stanley From on or about January 13, 1986, Carolyn G. Stanley was designated as Principal Mortgage Broker of Mid South pursuant to Chapter 494, Florida Statutes, having license No. HB- 16762. Stanley was employed as Principal Mortgage Broker of Mid South in Panama City, Florida. As Principal Mortgage Broker of Mid South, Stanley did not take any action to oversee the offices of Mid South other than the Panama City, Florida, office where she was employed, because Childers had assumed that responsibi1ity. From on or about July 8, 1987, Stanley ceased to be employed by Mid South. Harold J. Larrieu, Jr. Harold J. Larrieu, Jr., filed an application to act as broker at the Pensacola, Florida, office of Mid South on or about August 25, 1986, but he withdrew his application on or about September 9, 1986. Advertisements of Mid South On April 27, May 4, 11, 18, and 25, 1986, Mid South advertised fixed rate financing in the Pensacola News Journal without stating the address of Mid South or that Mid South was a licensed mortgage broker. On June 29 and July 6, 13, 20, 27, and August 24, 1986, Mid South advertised fixed rate financing in the Pensacola News Journal. Lock-ins During Cincotta's second period of employment, it was the practice of Mid South to lock-in interest rates for a period of sixty days. However, few, if any, of the mortgage loans would close within that sixty-day lock-in period. Excessive Charges The following charges incurred are in excess of the costs disclosed to the following borrowers at the time Mid South accepted the application with respect to said borrowers: Borrower/cost Amount disclosed at time deposit or application Amount description accepted charged Michael A. Adam Discount/Origination Fee $2,384.00 2,460.00 Appraisal 200.00 225.00 Title Insurance 476.80 500.00 Doc. Preparation 0 200.00 Intangible tax 119.20 123.00 Doc. Stamps 89.40 92.25 Insurance 64.84 246.00 Thomas E. Almon Discount/Origination Fees 4,200.00 4,900.00 Recording 15.00 25.00 Survey 100.00 125.00 Pest Inspection 10.00 15.00 Copy Fee 0 6.00 Doc. Preparation 0 200.00 Jimmy M. Avera Title Insurance 425.00 496.60 R.E. Tax 217.87 293.16 Survey 150.00 225.00 Exp. Mail 0 24.75 ASMT 0 5.00 Doc. Preparation 0 200.00 Gloria F. Bates Survey 200.00 375.00 Title Insurance 650.00 736.00 Darrell R. Bond Appraisal 200.00 250.00 Title Insurance 326.00 381.00 Pest Inspection 25.00 40.00 Doc. Preparation 0 200.00 Fed. Express 0 12.50 Long Distance 0 10.00 Randy K. Burelson Hazard Insurance 0 210.00 Survey 83.00 150.00 David K. Bush Appraisal 175.00 200.00 Title Insurance 320.00 325.00 Survey 75.00 90.00 Pest Inspection 35.00 40.00 Doc. Preparation 0 200.00 City/County Tax 0 30.00 State Tax 0 40.00 James H. Cameron Survey 150.00 525.00 Doc. Preparation 0 200.00 Recording Fees 27.00 509.00 Sharon L. Cook Appraisal 125.00 200.00 Title Insurance 320.00 400.00 Thomas Elder Discount/Origin Fees 1,662.50 1,805.00 Hazard Insurance 0 326.00 Doc. Preparation 0 200.00 Willie C. Mixon PMI Insurance 370.58 670.12 Hazard Insurance 0 186.00 Doc. Preparation 0 200.00 John W. Whalen Survey 100.00 200.00 Betty A. Wilson Pest Inspection 25.00 40.00 Appraisal 0 250.00 Credit Report 0 35.00 Document Preparation Fees In addition to receiving brokerage fees, Mid South received a document preparation fee in the following amounts involving the below-noted borrowers although there is no documentation to indicate that the document preparation fee was disbursed to a third party. Borrower Amount Michael A. Adams $200.00 Thomas Almon 150.00 Jimmy M. Avera 200.00 Gloria F. Bates 150.00 Darrell R. Bond 150.00 Randy K. Burelson 200.00 David K. Bush 150.00 James H. Cameron 150.00 Sharon L. Cook 150.00 Thomas Elder 200.00 Edward E. Jackson 200.00 Willie C. Mixon 150.00 Russell O. Paul 200.00 John D. Reeder 150.00 John W. Whalen 150.00 Betty A. Wilson 150.00 In the following mortgage loan transactions brokered by Mid South, the Closing Statement failed to disclose the name of the broker or co-broker paid. Borrower Amount of brokerage fee Actual recipient of brokerage fee Michael A. Adams $2,460.00 Mid South Thomas E. Almon 4,900.00 unknown Jimmy M. Avera 584.00 Alabama Federal 1,168.00 Alabama Federal Gloria F. Bates 1,840.00 First Southern Savings 1,840.00 Mid South Darrell R. Bond 816.00 First Southern Savings 816.00 Mid South David K. Bush 400.00 First Southern Savings 400.00 Mid South James H. Cameron 2,000.00 First Southern Savings 200.00 Mid South Sharon L. Cook 800.00 First Southern Savings 800.00 Mid South Willie C. Mixon 494.00 Source Mortgage 1,482.35 Mid South and First Southern Savings Russell O. Paul 424.00 unknown 424.00 unknown John W. Whalen 646.65 First Southern Savings 646.65 Mid South 431.10 Source Mortgage Betty A. Wilson 1,088.00 First Southern Savings 1,088.00 Mid South Edwards Transaction Robert Edwards is a contractor who does remodeling, renovations, and room additions on residences. Edwards located a residence, which was run down and had been abandoned for two years but was in a nice neighborhood and on a beautiful wooded lot. The purchase price of the house was $19,000. With $10,000 to $15,000 of renovations put into the house, it could have been sold for approximately $45,000 at a profit of between $11,000 to $16,000. On or about early June 1986, Edwards called Mid South to inquire about the possibility of borrowing enough money to purchase and renovate the house. During that telephone conversation, an unidentified employee of Mid South told Edwards that he would have to discuss his proposal with Childers, but if his credit checked out, it would take from two to four weeks to close the loan. In early July 1986, Edwards met with Childers to discuss his proposal. At that meeting, Childers reviewed the proposal and "said he thought it would fly, that it was a good idea." Edwards thereupon filled out a credit application, was given a loan application to complete, and was told by Banquicio to sign a blank Good Faith Estimate. Subsequent to the early July 1986 meeting, Edwards completed the paperwork and informed Banquicio that he did not want to obtain an appraisal before he had qualified for the loan. Thereafter, Banquicio informed Edwards that Childers had indicated that Edwards should have the appraisal done because the loan looked good. In reliance on the foregoing representation, Edwards had an appraisal done on the residence on August 26, 1986, at a cost of $250. On or about September 3, 1986, Edwards went to the Pensacola, Florida, office of Mid South to seek assistance in obtaining his mortgage loan, at which time Stanley provided him his first completed Good Faith Estimate. At that time Stanley informed Edwards that all he had to do was wait for the closing and that Mid South would be getting in contact with him. However, contrary to Stanley's representation, Mid South never contacted him, so he began calling the Mobile, Alabama, office of Mid South, but was unable to speak to Childers. Shortly thereafter, the residence was sold to another purchaser, because Edwards had been unable to obtain his mortgage loan. At no time did Mid South inform Edwards that he did not make enough money to get the mortgage loan. Suhrheinrich Transaction During late June or early July 1986, Robert Suhrheinrich contacted Banquicio, an employee of Mid South, by telephone in order to apply for a mortgage loan. During the telephone conversation, Banquicio agreed to try to obtain a mortgage loan for Suhrheinrich. Prior to July 13, 1986, Suhrheinrich obtained a letter from Childers. The letter indicates that Suhrheinrich was eligible for a 15 year mortgage loan at an interest rate of 9 3/4 percent. Subsequent to receiving that letter, Suhrheinrich obtained from Mid South a Good Faith Estimate that indicated the interest rate was now 9 percent, a Request for Verification of Employment dated July 24, 1986, and a document entitled Loan Package Instructions, which states, in part, "If you have any questions regarding the information requested, please feel free to call John Childers at (904) 438-9760." During this period, Childers indicated to Suhrheinrich that he could obtain 90 percent loan to value. Thereafter, sometime in October 1986, Childers contacted Suhrheinrich and indicated that the mortgage loan was ready to close, but that the interest rate was about 10 percent and that he could give Suhrheinrich a loan of only 80 percent to value. Prior to the conversation wherein Suhrheinrich was told that the loan was ready to close, Suhrheinrich was never informed that the interest rate might be changed from the 9 percent figure disclosed to him on the Good Faith Estimate, or that a 90 percent loan to value could note be obtained. As a result of Mid South's increasing the interest rate to approximately 10 percent, Suhrheinrich did not obtain the mortgage loan because at that rate it did not pay to refinance his first and second mortgages. Further, the 80 percent loan to value offered by Mid South did not meet Suhrheinrich's needs. In reliance on the representation Mid South made to Suhrheinrich, he spent a total of $400 on an appraisal, survey, and termite inspection. Ward Transaction On or about August 3, 1986, Mary Ward contacted Banquicio, an employee of Mid South, by telephone and inquired about obtaining a mortgage loan. On or about August 21, 1986, pursuant to Banquicio's request, Ward went to the Pensacola, Florida, office of Mid South and filled out various documents in order to obtain the mortgage loan. During September 1986, Ward went to the Pensacola, Florida, office of Mid South to obtain her paperwork, because she had not been able to speak with Childers to find out whether she had been approved. Sitting in the office was an individual whom Banquicio identified as being Mid South's broker. Although Ward requested to speak to the individual identified as being Mid South's broker, Banquicio did not accommodate said request. Meinscher Transaction On or about August 18, 1986, Alacia Meinscher contacted Banquicio, an employee of Mid South, to obtain a mortgage loan. Banquicio agreed to attempt to obtain a mortgage loan for Meinscher. Meinscher filled out an application and, pursuant to Banquicio's request, signed a blank Good Faith Estimate. Approximately a week after filling out the application, Childers informed Meinscher the amount of the points that she would be charged and that the interest rate would be 9 3/4 percent. Childers and Banquicio informed Meinscher that it would take approximately twenty-one days for a determination as to whether Meinscher could obtain a mortgage loan. After waiting approximately sixty days for an indication from Mid South as to whether Meinscher could obtain a mortgage loan, Meinscher "gave up" on Mid South and went to another company. Meyers Transaction On or about October 10, 1986, Donald Meyers contacted Cincotta, an employee of Mid South, by telephone and inquired about the possibility of obtaining a $75,000 mortgage loan. During that conversation, Cincotta indicated that Mid South was offering an 8 1/2 percent fixed rate for thirty years. On or about October 28, 1986, Meyers met with Cincotta in the Pensacola, Florida, offices of Mid South and filled out a loan application form. At the October 28, 1986, meeting, Cincotta indicated that Mid South could obtain a mortgage loan for Meyers and she gave Meyers a Good Faith Estimate disclosing an interest rate of 8.5 percent and 2 points. The interest rate on the Good Faith Estimate has since been altered to read 9.5, whereas it originally was 8.5 when the document was prepared. At the October 28, 1986, meeting, Cincotta represented that, unless there was some unforeseen situation, the mortgage loan could close within 30 to 60 days. Cincotta locked in Meyers' mortgage loan for 60 days at 8 1/2 percent and 2 points. After the 60 day lock-in expired, Cincotta did not relock Meyers' rate, because the practice was that, once the loan had been submitted to Childers, Childers handled the lock-ins if they expired. On or about November 1986, Meyers received a second Good Faith Estimate Which indicated an interest rate of 8.5 percent and 2 points. On or about February 17, 1987, Meyers went to the offices of O. Gwen King for the closing. At the closing, the loan documents shows an interest rate of 9 1/2 percent with 2 1/2 points. At the closing, Meyers, by telephone, spoke to Childers who indicated that the loan of 8 1/2 percent plus 2 points was not available, but that he could lower the points on the 9 1/2 percent loan. After further discussions with Childers, Meyers left the February 17, 1987, meeting without closing. On or about April 7, 1987, Meyers requested by letter that his loan file (including the loan application, credit report, and appraisal) be returned to him. Meyers never received a response to his letter of April 7, 1987. In reliance on the representation made to Meyers, he spent $225 on an appraisal. Gillis Transaction On or about November 10, 1986, James G. Gillis called Mid South about obtaining a mortgage loan and spoke with Cincotta, an employee of Mid South. On or about November 12, 1986, Gillis met with Cincotta who agreed to try to obtain a mortgage loan for Gillis. At the meeting with Cincotta on November 12, 1986, Gillis obtained a Good Faith Estimate which showed the interest rate to be 9 percent. Gillis declined to lock-in the 9 percent interest rate at that time, because Cincotta indicated her belief that the rates were coming down. Cincotta estimated that it would take between four and six weeks to close the mortgage loan. The Advance Disclosure Statement-Fixed Rate Mortgage Loan dated December 29, 1986, which indicates an interest rate of 9 percent and 2 points, was blank when it was signed by Gillis. On or about January 7, 1987, Cincotta locked Gillis in at the rate of 8 1/4 percent and 2 points. Cincotta indicated to Gillis that he was locked in until the mortgage loan closed. On or about March 24, 1987, Childers contacted Gill and indicated that he was ready to close at an interest rate of 8 3/4 percent and 3 points. In response, Gillis requested that he be given 8 1/4 percent with 2 points as agreed to on the Good Faith Estimate. On or about March 26, 1987, Childers and Gillis engaged in negotiations with regard to the mortgage loan but were unable to reach agreement. After the 60 days lock-in expired, Cincotta did not relock Gillis because the practice was that, once the loan had been submitted to Childers, Childers handled the lock-ins if they expired. By letter dated April 7, 1987, Gillis requested return of his appraisal, survey, credit report, and pest inspection, but did not receive any of said documents back. In reliance on the representations made by Mid South, Gillis spent $225 on an appraisal, $30 on a pest inspection, and $80 on a maintenance agreement. Mock Transaction On or about early January 1987, Jewel and George Mock received a Rate Bulletin put out by Mid South dated January 2, 1987. The Rate Bulletin stated in part: RATE FEES REMARKS . . . ONE YEAR A.R.M. 15 Year 5.00 percent 2.00 + 1.00 Annual, 5 percent Life Cap 2.5 percent Margin NO NEGATIVE In reliance on the Rate Bulletin, Mr. and Mrs. Mock, along with Gene Bogan, their realtor, went to the office of Mid South to obtain said A.R.M. loan on or about January 14, 1987, and spoke to Cincotta, an employee of Mid South. During the January 14, 1987, office visit, Cincotta agreed to attempt to obtain the A.R.M. loan for them. During the January 14, 1987, office visit, the Mocks were not told that the A.R.M. could become unavailable. Subsequent to the January 14, 1987, office visit, Mr. and Mrs. Mock received a Regulation Z Disclosure Statement which indicated that the Annual Percentage Rate of their mortgage loan was 9.399 percent. Mrs. Mock contacted Cincotta about the 9.399 percent on the Disclosure Statement. In response, Cincotta indicated the form was just a "general disclosure." Although Mr. and Mrs. Mock signed and returned the Disclosure Statement, they still were under the impression that they had qualified for the A.R.M. On or about February 1987, Bogan informed Mr. and Mrs. Mock that the loan on the Disclosure Statement was not the same as the loan that Mr. and Mrs. Mock had applied for. Rather than giving the Mocks the A.R.M., the Disclosure Statement was for a fixed rate of 8 3/4 percent G.E.M. loan. During February or March of 1987, Childers contacted Bogan and when Bogan insisted that the Mocks be given the loan they applied for, Childers responded, "Well, nobody can give you that." Childers further stated that the A.R.M. in the Rate Bulletin was a "misprint." On or about February 1987, Childers contacted Mr. Mock to inform him that the loan Mid South was obtaining for him was better because "the initial payments would be equivalent to somewhat less than five percent," and tried to persuade Mr. Mock to take the G.E.M. loan that Mid South was actually offering. During March or April 1987, Cincotta confirmed to Mr. Mock that the A.R.M. was not available. The A.R.M. would have been a better mortgage than the G.E.M. loan that was actually offered because, among other things, it would more quickly reduce the principal amount of the mortgage debt. In reliance on Mid South's representations that they were offering the A.R.M., Mr. and Mrs. Mock spent approximately $400 for brass fixtures, mirrors, and for having the rugs cleaned in the house they were seeking to purchase. Due to the failure of Mid South to give the Mocks the A.R.M., Bogan lost half of a $7,000 commission.
Recommendation Based upon all of the foregoing, it is recommended that the Department issue final orders in these cases to the following effect: In DOAH Case No. 87-3299 Incorporating the terms of the stipulation and consent agreement entered into between the Department and William D. Hughes; Placing Carolyn G. Stanley on probation for a period of three years under the condition that she will not act as a principal mortgage broker, designated associated mortgage broker, or in any way supervise the operation of, or be responsible for the supervision of, a person or an office engaged in the business of acting as a mortgage broker pursuant to Chapter 494, Florida Statutes; Revoking the license of Mid South Mortgage Corporation to act as a registrant pursuant to Chapter 494, Florida Statutes; Fining John Childers a total of $10,000.00; and Fining Mid South Mortgage Corporation a total of $15,000.00. In DOAH Case No. 87-3300 Entering a cease and desist order against John Childers and Janie Cincotta ordering said persons to cease and desist from any and all present and future violations of the provisions of Chapter 494, Florida Statutes, or the rules duly promulgated by the Department with respect thereto, more specifically, but not by way of limitation from, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly making, negotiating, acquiring, selling, or arranging for, or offering to make, negotiation, acquire, sell, or arrange for, a mortgage loan or mortgage loan commitment. In DOAH Case No. 87-3301 Entering a cease and desist order against Mid South Mortgage Corporation ordering said mortgage broker to cease and desist from any and all present and future violations of the provisions of Chapter 494, Florida Statutes, or the rules duly promulgated by the Department with respect thereto, more specifically, but not by way of limitation from, operating a mortgage brokerage office in the state of Florida without having a duly licensed broker in full charge, control, and supervision of said office on a full-time basis. DONE AND ENTERED this 28th day of July, 1988, at Tallahassee, Florida. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parlay Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 1988. APPENDIX TO RECOMMENDED ORDER IN CASE NOS. 87-3299, 87-3300, & 87-3301 The following are my specific rulings on all of the proposed findings of fact submitted by all parties. Findings proposed by Petitioner All proposed findings of fact submitted by the Petitioner have been accepted and Incorporated into the findings of fact in this recommended order, except as specifically noted below: Paragraphs 1, 2, 3, and 4: The findings proposed in these paragraphs have been omitted from the findings of fact because they involve primarily procedural or introductory details. (Most of this information has been included in the introduction to the recommended order.) Paragraph 5: The findings proposed in this paragraph have been omitted as unnecessary subordinate details. Paragraph 50: Rejected as Irrelevant. Paragraph 51: Rejected a Irrelevant or as subordinate and unnecessary details. Paragraphs 141, 142, and 143: Rejected as subordinate and unnecessary details (I have found that the A.R.M. would have been a better mortgage than the G.E.M.) Findings proposed by Respondents (The Respondents did not submit any proposed findings.) COPIES FURNISHED: John Childers, President Mid South Mortgage Corporation 955 Downtowner Boulevard, Suite 105 Mobile, Alabama 36609 Ms. Carolyn G. Stanley Mid South Mortgage Corporation 955 Downtowner Boulevard, Suite 105 Mobile, Alabama 36609 Ms. Janie Cincotta 2829 Village Circle Pensacola, Florida 32504 Mr. William D. Hughes 4347 Burton Wood Court Pensacola, Florida 32504 Paul C. Stadler, Jr., Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350
Findings Of Fact At all times pertinent to the allegations contained herein, Respondent was a licensed Mortgage Broker and the principal broker for Mortgage Associates of Countryside, located at 2623 Enterprise Rd., Clearwater, Florida. The Department was and is the state agency charged with regulating the activities of mortgage brokers in this state. In September, 1987, Andrew Grosmaire and Kevin Gonzalez, compliance officer and financial examiner, respectively, for the Department, pursuant to a complaint from Mark Snyder, conducted an examination of Respondent's affairs as they pertained to his operation as a mortgage broker. During the survey, which covered the period from August, 1986 through August, 1987, Mr. Grosmaire and Mr. Gonzalez examined between 50 and 60 loan files which had culminated in loan closings. In addition, they examined loan files which did not result in closings, bank account records, and other of Respondent's miscellaneous records. In order for an appropriate audit of a closed loan file to be conducted, it is imperative that the loan closing statement be included. Without it, the examiner cannot accurately determine what, if any, closing costs the borrower actually paid and if closing costs paid were consistent with those disclosed by the broker on the Good Faith Estimate Form at the initial interview. Of the closed loan files reviewed, these closing statements were missing from seven files. Respondent admits that several closed loan files did not have the required closing costs statement form enclosed. He attributes this, however, to the failure of his processor, an assistant, to place the closing statement in the file. They were not presented at hearing or thereafter. The investigators examined the Good Faith Estimate Forms in those files which culminated in loans and found that the form utilized by the Respondent failed to contain language, required by statute, which summarized the limits and conditions of recovery from the Mortgage Brokerage Guaranty Fund. Respondent contends that the pertinent statutory section was not in existence at the time he was engaged in mortgage brokerage activities. This was found to be not true. The Act became effective July 1, 1986 and the files surveyed were from the period August, 1986 through August, 1987. Examination of the Good Faith Estimate Forms used by the Respondent in each of the cases which culminated in loan closing revealed that Respondent consistently underestimated closing costs. This resulted in the borrowers generally paying higher closing costs than was initially disclosed to them. On -loans applied for by Mr. and Mrs. Snyder, Mr. Iyer, and Mr. Toland. Respondent redistributed loan points to himself in an amount higher than that which was agreed to by the parties. In the Toland case, Mr. Toland agreed to pay a 1% loan origination fee in the amount of $996.00. The settlement statement dated approximately 2 months later reflected that Toland paid Respondent a loan origination fee of $1,128.00 in addition to a 1% ($664.00) loan discount fee to the lender. This latter mentioned discount fee was not disclosed in advance to Mr. Toland on the estimate form nor was the excess loan origination fee charged. It should be noted here that a second Good Faith Estimate Form, dated nine days after the original, reflecting a 3% loan origination fee, was found in the file. Though signed by Respondent, this second form was not signed by the borrower as required. It cannot, therefore, serve to support Respondent's claim that he advised the Tolands of the higher cost by this second form. There is no showing that the Tolands were aware of it. In the Iyer case, the estimate form dated September 19, 1986 reflected a points and origination charge of $1,332.50 which is 1% of the mortgage loan amount of $133,250.00. The Iyers were subsequently approved for a mortgage in the amount of $145,600.00. The closing statement dated March 6, 1987, almost six months later, reflects that the Iyers paid a 2% loan origination fee of $2,740.00 to Mortgage Associates and a load discount fee of $685.00 to the lender. Here again the Respondent claims that a second cost estimate form reflecting a 2% point and origination fee of $2,912.00 was subsequently executed by the Iyers. However, this second form, found in Respondent's files, is undated and fails to reflect the signature of either Respondent or the Iyers. It cannot, therefore, serve as proof that the Iyers were made aware of the change. It does appear, as Respondent claims, that the bottom of the second form, (here, a copy) , was excluded from the copy when made, but there is no evidence either in the form of a signed copy or through the testimony of the Iyers, that they were aware of the change. Consequently, it is found that the Iyers had not been made aware of the second estimate and had not agreed to pay as much as they did, in advance. As to the Snyder closing, both Mr. Snyder and Respondent agree that it was their understanding at the time the loan was applied for, that Respondent would attempt to obtain a lower interest rate for them than that which was agreed upon in the application and in the event a lower rate was obtained, Respondent's commission points would remain the same as agreed upon in the brokerage agreement. In that case, as Respondent points out, his commission is based on the mortgage amount, not the interest rate, and he would be entitled to the agreed upon percentage of the loan face amount regardless of the interest rate charged by the lender on the loan. The Snyders had agreed to a 1% commission to Respondent plus a 1% loan origination fee to the lender. When the lender agreed to lend at par, without an origination fee, Respondent appropriated that 1% to himself, thereby collecting the entire 2% called for in the application. This was improper. Respondent's claim that it is an accepted practice in the trade is rejected. The Snyders initially made demand upon the Respondent for reimbursement of that additional 1% and ultimately had to hire an attorney to pursue their interests. Respondent subsequently made a $400 partial reimbursement payment of the amount owed but nothing further notwithstanding the fact that the Snyders ultimately secured a Judgement in Pinellas County Court against him for $1,082.52 plus interest, attorney's fees and costs. As a result, the Florida Mortgage Brokerage Guarantee Fund will reimburse the Snyders for their loss. According to the investigators, the Snyders Toland, and Iyer files, in addition to the problems described, also reflected that Respondent received payments for other items which should have gone into an escrow account. These included such things as credit reports and appraisal fees. The Department requires that any money received by a broker other than as commission, be placed in the broker's escrow account pending proper disbursement. Respondent did not have an escrow account. Mr. Gonzalez looked at Respondent's overall operation, including closed files, in an attempt to correlate between income and outgo to insure that Respondent's operation was in compliance with the statute. In addition to his search for an escrow account, Mr. Gonzalez also examined Respondent's "Loan Journal" which by statute is required to contain an entry for each transaction in each loan. The purpose of this journal is to provide a continuing record to show when each item in the loan processing was accomplished. In Mr. Gonzalez' opinion, the Respondent's journal was inadequate. It contained repeat and conflicting entries for specific items which hindered the investigators' ability to determine an audit trail. In addition, all required information was not put in the journal in complete form in each account. In the opinion of the investigators, the Respondent's violations were significant in that they made it impossible for the Department to determine compliance with statutes and Department rules and inhibited the compliance examination. All in all, Respondent's way of handling his accounts, his failure to maintain an escrow account, and his unauthorized increase in commission income, all indicated his actions were not in the best interest of his clients. The investigators concluded that clients funds were not being handled properly and that the purpose of Chapter 494, Florida Statutes, to protect the consumer, was not being met. In Mr. Gonzalez' opinion, Respondent's method of business constituted incompetence as a mortgage broker and "possibly" fraudulent practice. It is so found. Both Mr. Gonzalez and Mr. Grosmaire indicated they had extreme difficulty in attempting to locate Respondent after the complaint was filed by Mr. Snyder, in order to conduct their examination. They finally located him at a site different from that which appeared in the records of the Department. Respondent contends that the Department had been notified in writing within the required time, of his change of location when he filed a notice of fictitious name. He contends that after filing his notice of name change, he received no response from the state but took no action to inquire whether the change had been made. In any case, his current address was in the phone book and had the agents chose to look there, they would have found him. Respondent contends that the good faith estimates required by the statute are just that, an estimate, and that actual figures may vary from and exceed these estimates. This is true, but there is a procedure provided whereby the broker is to notify the client of a change in advance and if the change exceeds a certain amount, it may constitute grounds for voiding the contract. In paragraph 7 of the complaint, Petitioner alleges that Respondent used a form for the estimates which failed to contain a statement defining the maximum estimated closing costs. Review of the statement offered herein reflect this to be a fair analysis. However, Respondent claims that certain items cannot be predicted accurately in that some companies charge more than others for the same item and it was his practice to insert in the estimate portion of the form a "worst case scenario." However, at no time did he address in his form what could be the maximum a prospective purchaser might be expected to pay. Respondent "doesn't like" the total picture painted by the investigators concerning his operation. He claims it is cot a fair and accurate representation. In many cases, he claims, he expended funds on behalf of clients in excess of that he received in either commission or reimbursement and even though he may have received more than entitled in some cases, it "evens out over a period of time." Though this may be so, it is no way to do business. The state requires the keeping of accurate records and, just as the broker should not be required to assume responsibility for other than his own misconduct, neither should the client be required to pay more than is his legal obligation. Respondent professes to know the mortgage business and he resents having his qualifications as a mortgage broker questioned. In his opinion, he has trained himself well and has acted in good faith on the basis of the information available to him at the time. He ignores the impact of the Judgement of the court in the Snyder matter because he feels it was "unilateral." He believes the law is designed to protect the client and he wants to know who protects the broker. It is for that very reason, he contends, that fees paid in advance are not refundable. Mr. Sample feels the Department should be more informative to the brokers and get the governing regulations updated more quickly. Respondent cherishes his license and claims he needs it to make a living. He went out of business once before, several years ago, because of bad business conditions, (the reason he uses for not complying with the court order), but did not declare bankruptcy because he wanted to go back into business and pay off the judgements against him. Though he has been back in business for several years, he has failed to make any effort to pay off any of his former creditors even though in his former operation, he improperly tapped his escrow account for other business expenses.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Respondent, Howard E. Sample's license as a mortgage broker in Florida be revoked. RECOMMENDED this 15th day of September, 1988 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of September, 1988. APPENDIX TO RECOMMENDED ORDER IN CASE NUMBER 88-2858 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Insofar as Petitioner's submission refers to testimony of a witness, that is considered as a proposed finding of fact. FOR THE PETITIONER; Accepted and incorporated herein & 3. Accepted and incorporated herein 4. & 5. Accepted and incorporated herein Accepted and incorporated herein & 8. Accepted and incorporated herein Rejected as contra to the evidence A conclusion of law and not a finding of fact & 11a Accepted and incorporated herein Accepted Accepted and incorporated herein Accepted Accepted and incorporated herein - 18. Accepted 19. - 21. Accepted and incorporated herein Accepted & 24. Accepted and incorporated herein 25. & 26. Accepted and incorporated herein Accepted &-29. Accepted 30. - 34. Accepted and incorporated herein FOR THE RESPONDENT: Nothing Submitted by way of Findings of Fact COPIES FURNISHED: Elise M. Greenbaum, Esquire Office of the Comptroller 400 West Robinson St. Suite 501 Orlando, Florida 32801 Howard E. Sample 2465 Northside Drive Apartment 505 Clearwater, Florida 34621 Honorable Gerald Lewis Ccmptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 Charles L. Stutts, Esquire General Counsel Department of Banking and Finance Plaza Level, The Capitol Tallahassee, FL 3 2399-0350
Findings Of Fact At all times pertinent to the incidents involved herein, the Respondent, Jerry L. Daniel, was licensed as a real estate broker in Florida under license number 365403. Petitioner, Division of Real Estate (Division), is and was the state agency charged with the responsibility for governing the conduct of real estate brokers in Florida. On August 19, 1984, and for several years prior thereto, Doteileen Mariner owned a three bedroom home located at 1260 Schenly Street, Port Charlotte, Florida. The property was encumbered by a first mortgage held by the First Federal Savings and Loan Association in Punta Gorda, Florida. Sometime during 1983 she decided to sell this property and made inquiries toward that end. She was first contacted by Roger King, a real estate agent, with a view toward purchasing her property and in August, 1984, Mr. King presented her with a contract to buy the property. King and the Respondent, who were purchasing it together, were to assume the existing first mortgage and give her a second, balloon, mortgage in the amount of $23,000.00 for five years with a $5,000.00 down payment and payment of interest only thereafter until the end of the period of the mortgage. Mrs. Mariner agreed to this proposal and signed a contract for sale which reflected a total purchase price of $69,500.00 on or about August 22, 1984. She was not given a copy of the contract at that time, however, and Petitioner's Exhibit 2, which purports to be a contract for the sale of the property, bearing her signature and that of the Respondent, dated August 22, 1984, reflects a total purchase price of $74,900.00 with $18,900.00 paid as deposit, and a new mortgage of $56,000.00. According to Mrs. Mariner, these were not the figures which appeared on the contract she signed. At the same time, Mrs. Mariner also signed an addendum to the original contract, dated August 21, 1984, one day prior to the contract which it purports to supplement, which is also signed by Respondent and Mr. King and which reveals that the existing first mortgage on $29,335.00 was to be paid at closing; that the seller, Mrs. Mariner, was to receive $5,000.00 in cash at closing; and that a second mortgage for $23,000.00 would be held for 60 months with interest payments at 10% per year to be made monthly in the amount of $191.67 each. Mrs. Mariner received the $5,000.00 down payment but did not receive the $18,900.00 deposit and, to the best of her recollection, did not agree to a new first mortgage being substituted for the existing first mortgage she had with First Federal. Respondent, on the other hand, indicates he made very clear to Mrs. Mariner, and the documentation which he admits to signing reflects, that the original first mortgage was to be paid off and a second first mortgage for a larger amount substituted therefor. Examination of the contract shows it has been modified by alteration of the figures thereon. When this is done is not known. Mrs. Mariner moved out of the property the next day after the contract was signed and at the closing, held in September, 1984, was given an envelope with certain documents in it which included a second mortgage on the property in the amount of $23,000.00 signed by both Respondent and Mr. King on September 24, 1984. This second mortgage included a clause which subordinated it to the new first mortgage on the property which was dated July 25, 1985, nine months subsequent to the date of the second mortgage. Mrs. Mariner did not examine the documents at that time but accepted her $5,000.00 down payment and left the area. She assumed the property was transferred and, in fact, received her monthly interest payments on time for several years. However, after a period of time, the payments stopped and after several months of trying unsuccessfully to reach Respondent, she finally contacted him and arranged to come back to Florida to meet with him. When she met with Respondent, he indicated he was having financial difficulties and was unable to make the monthly payments. However, he offered to deed her property back to her and to convey to her two other properties he owned, both of which were encumbered by substantial first mortgages. Both had some equity in them which, he claims, when added to the equity in her original property, would be adequate to make her whole and enable her to avoid any financial loss on her part. On July 10, 1986, Respondent executed a Quit Claim Deed to Mrs. Mariner for the property which she originally owned. This deed showed a first mortgage of $58,000.00 compared to the $29,355.00 first mortgage she originally had. Therefore, as a result of her dealings with the Respondent, she had her property back temporarily, had received $5,000.00 in cash, and had received some monthly payments of $191.67 each. She also had an indebtedness of approximately $30,645.00 more than she had when she met Respondent and because of her inability to make the payments on the new first mortgage, lost the property to foreclosure. Respondent and Mr. King arranged for interim financing on the Mariner property at a high rate of interest with a temporary lender until such time as they could arrange new first mortgage financing. This was done several months later and Respondent encumbered the property with a new mortgage in the amount of $58,400.00. That new first mortgage, dated June 25, 1985, was made payable to Standard Federal Savings and Loan Association and was recorded in the public records of Charlotte Count, Florida on July 2, 1985, prior to the recordation of the original second mortgage, dated September 24, 1984, which Respondent and King had given to Mrs. Mariner. It should also be noted that this second mortgage, dated September 24, 1984, reflects at the bottom of page 1, "subject to and inferior to that certain mortgage to Standard Federal Savings and Loan Association dated June 25, 1985 [sic], filed July 2, 1985 sic; recorded in Official Records Book 823, page 779 of the Public Records of Charlotte County, Florida in the original principal amount of $58,400.00." Respondent has not explained how a mortgage executed on September 24, 1984 can refer to as existing and legitimately be made subordinate to a first mortgage which did not come into existence until 9 months later. He claims total ignorance of how that happened. He assumed that since all documents were turned over to the title company at the time of closing, the second mortgage would be recorded at that time. This testimony is ingenuous and unbelievable. Mrs. Mariner received approximately $3,200.00 in interest payments from Respondent in addition to the $5,000.00 down payment. In the Spring of 1986, she was served with a summons for foreclosure of the first mortgage on her property. She has now lost the property and the difference between her equity in it at the time of sale to Respondent and the Deposit she received. Petitioner has alleged that Mrs. Mariner's loss was approximately $39,000.00. The exact amount of loss is irrelevant. What is pertinent is not the loss to Mrs. Mariner but whether Respondent's conduct here constitutes misconduct and it obviously does. Respondent denies any responsibility for this situation. He claims he was approached by Roger King in 1984 with the opportunity to buy Mrs. Mariner's property. At the time, he was involved in investing in family homes owning two or three at that time and up to twenty to thirty thereafter. At the time of this transaction, he had had only one other deal with Mr. King who had done the negotiations for the purchase of the Mariner property and drafted the documents. Respondent, however, is the only buyer listed on the contract though King appears as a mortgagor on the second mortgage. Mr. Daniel claims he saw Mrs. Mariner first at the closing at Federal Title Insurance Company on September 24, 1984. He relates that the contract for the purchase of the property and the addendum were signed prior to closing and he was not present at the time Mrs. Mariner signed them. He claims not to know who got her to sign them. Respondent claims, however, that he explained all the provisions of the transaction to Mrs. Mariner prior to the closing including the fact that her existing first mortgage would be paid off; that a new first mortgage in a higher amount would be placed on the property; and that the mortgage she was holding would be subordinate to the new first mortgage. She denies this. He asserts that he took out 90 day interim financing arrangement with Family Credit at a higher interest rate for the sole purpose of allowing the deal to close so that Mrs. Mariner could be on her way to Delaware. His assertions of concern for Mrs. Mariner's welfare are not believable. Respondent claims he told Mrs. Mariner at closing that her second mortgage would not be recorded until after permanent financing through a new first mortgage was secured and that the new institutional mortgage would be superior to hers. She does not recall this, however, but her testimony was so indefinite, vague, and unsure, it is difficult to determine what Mrs. Mariner was told. As was found before, his contention is unworthy of belief. Respondent also contends that the rental income from the property was supposed to be between $700.00 and $800.00 per month which would have been sufficient to pay not only the monthly payment on the first mortgage but also the interest payment on the second mortgage. However, these expectations were not realized and he received only rental income of $550.00 per month which was sufficient to pay only the first mortgage. Because of financial reverses he was having at the time with some of his commercial properties, which put him in a poor cash flow position, he stopped making payments on both the first and second mortgages early in 1986 and subsequently lost Mrs. Mariner's property to foreclosure. Respondent overlooks the fact that the lower rental he obtained, $550.00 per month, was more than sufficient to cover the $191.67 per month owed to Mrs. Mariner and still return him a substantial return on his investment of $5,000.00 if he had been a legitimate investor in rental property. It is obvious from the evidence that Respondent had far more in mind than that reasonable return. Respondent contends it was never his intention not to pay Mrs. Mariner. However, Respondent bought a piece of property which had a current first mortgage of $29,335.00. He replaced that with a new first mortgage of $58,400.00 which gave him a cash surplus of approximately $27,000.00. The second mortgage which he owed to Mrs. Mariner was for $23,000.00, well below the amount he had received in cash as a result of the refinancing. It is clear that Respondent took this money and failed to pay Mrs. Mariner even though there were adequate funds available from the refinancing to do so. It is clear that he intended for her to be in a subordinate position and that he intended to make, and did make, a substantial amount of money out of the transaction. He tried to deed Mrs. Mariner's property back to her, along with two other properties in which he had equity, to reduce her loss, but she refused his offer. His financial difficulties resulted in his going into bankruptcy through which he lost his entire financial base. Since his bankruptcy, Respondent has been employed as a broker/manager at the Bee Ridge office of Schlott Realtors and as a part of his duties, is responsible for hiring, training, and supervising sales associates. Larry D. Romito, manager and president of the Florida division of Schlott Realty, learned of the Respondent from two or three of his existing sales associates who spoke highly of him. As a result of their recommendations, Mr. Romito sought Respondent out and spent a substantial amount of time with him before offering him a job with the company. During more than fifteen hours of interview time, Respondent spoke quite frankly about his financial difficulties and their effect on him as well as what led up to them. Since Respondent has come with the company, his performance has been exemplary. He has been involved in excess of one thousand transactions and his leadership has been remarkable. There are nine managers in the company and Respondent is to be recognized as the number one manager of all divisions at the next award period. Mrs. Romito has found Respondent to be very objective and reliable and has had no questions with regard to Respondent's honest or integrity.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Respondent's license as a real estate broker be revoked and that he pay an administrative fine of $1,000.00 but that the revocation be suspended for a period of three years under such terms and conditions as may be prescribed by the Commission. RECOMMENDED this 16th day of March, 1989 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4573 The following constituted my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER; Accepted and incorporated herein Rejected. At the time in issue, Respondent's license was issued c/o Jerry Daniels Realty, not Schlott Of Florida. Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein except for that statement that the new first mortgage was concealed from Federal Savings and Loan Association of Punta Gorda. Rejected as a restatement of testimony which is accurately recited. Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein FOR THE RESPONDENT; Accepted in so far as it indicates the contract was drafted by someone other than Mrs. Mariner and that the contract and addendum were signed at her house. Accepted and incorporated herein Rejected as contra to the weight of the evidence. Mrs. Mariner denies being told recording her mortgage was being withheld. Rejected as a restatement of testimony. Accepted and incorporated herein Accepted and incorporated herein First sentence accepted and incorporated herein. Second sentence not a Finding of Fact but a restatement of the testimony. Accepted and incorporated herein COPIES FURNISHED: Steven W. Johnson, Esquire Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Dana J. Watts, Esquire 700 Sarasota Way Sarasota, Florida 34236 Kenneth A. Easley, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Darlene F. Keller Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
The Issue The issue in this case is whether the Petitioner’s application for licensure as a mortgage broker should be approved.
Findings Of Fact The parties set forth an extensive set of stipulated facts in the Prehearing Stipulation filed prior to the commencement of the hearing. The stipulated facts describe the activities of Richard Eric Watts (Petitioner) on behalf of Frederick M. Larry in relation to a $50,000 investment of Mr. Larry's funds with D. F. Owen, Inc., in May 1985. At approximately the same time as the Larry investment was made, the Petitioner contracted with D.F. Owen to act as an investment adviser for a fee of $33,500. The stipulated facts describe the activities of the Petitioner on behalf of Cynthia Halabrin Trust. The Petitioner was the trustee for the trust, which was a residence. During a period of time that the residence was under renovation, the Petitioner allowed Mr. Larry to reside without payment to the trust. The stipulated facts describe the activities of the Petitioner regarding the unregistered operation of "Watts Investment Management, Inc." during 1985 and the subsequent registration of the entity in 1986. The stipulated facts describe the activities of the Petitioner regarding his employment as a broker for Paine Webber from 1982-1985, and the failure to obtain approval for outside employment activities while working for the investment firm. The stipulated facts describe the legal action taken by Cynthia Halabrin Raybuck against the Petitioner and Paine Webber related to the activities of the Petitioner as trustee of the Halabrin trust. The parties settled the case through arbitration. The stipulated facts address the creation of "Danbury Mortgage Company," and describe the preliminary activities of the unlicensed entity. The facts also identify the Petitioner's association with the Paradigm Mortgage Company, based in Jacksonville, Florida. For purposes of this Recommended Order, all stipulated facts set forth in the prehearing stipulation filed by the parties are adopted and incorporated herein. On or about August 29, 1996, the Petitioner filed an application with the Department of Banking and Finance, Division of Finance (Department) seeking licensure as a mortgage broker. The Petitioner’s application disclosed that in 1989 he was denied admission to the Florida Bar. In January 1989, the Petitioner was notified by the Florida Board of Bar Examiners (“Board”) of their intent to deny his application for admission to the Florida Bar. A hearing was conducted in June 1989 regarding the denial. The Petitioner was represented by legal counsel and testified under oath at the hearing. On August 31, 1989, the Board of Bar Examiners denied Petitioner’s application for admission. Based on the facts set forth in the Board's order, the Board concluded that the Petitioner “engaged in acts to serve his own interest to the detriment of others, violated registration laws, neglected payment of student loan obligations and issued numerous worthless checks.” The Board also determined that the Petitioner provided misleading testimony at his Bar hearing and failed to disclose material information on his application. Although at the formal administrative hearing the Petitioner attempted to explain the circumstances under which the Board's determination occurred, the testimony at hearing and the stipulated facts support the findings made by the Board. Upon the filing of the Petitioner's application for licensure as a mortgage broker, the Department undertook a review of the application. Based on the review, the Department determined that the Petitioner had held himself out for business as a mortgage broker without an appropriate license. In December 1995, the Petitioner registered the name "Danbury Mortgage Corporation" with the Florida Department of State, Division of Corporations. In January 1996, the Petitioner established a business location for Danbury Mortgage Corporation. The Petitioner listed the business under the "mortgage brokers" section of the Sarasota Yellow Pages. At no time was the Danbury Mortgage Company licensed by the Department of Banking and Finance. At the hearing, the Petitioner suggested that no mortgage business had been conducted by Danbury Mortgage Company. The Petitioner asserted that he had affiliated with another company (Paradigm) and that the other company was handling the registration of his office as a Paradigm branch. The evidence establishes that the Petitioner was involved in completion of at least one mortgage loan application on behalf of Paradigm Mortgage Company without appropriate licensure. The Paradigm "branch" office was located in the same building as Danbury Mortgage Company, and shared the Danbury telephone number. Based on a cryptic telephone message received by the Petitioner from a Paradigm supervisor, the Petitioner assumed that he was licensed. The Petitioner did not return the telephone call and made no credible attempt at determining whether he was licensed prior to acting on behalf of Paradigm Mortgage Company.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a Final Order denying the application of Richard Eric Watts for licensure as a mortgage broker. DONE AND ORDERED this 30th day of December, 1997, in Tallahassee, Leon County, Florida. _ _ WILLIAM F. QUATTLEBAUM 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 Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 1997. COPIES FURNISHED: Honorable Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Harry Hooper, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350 Richard E. Watts, pro se 1345 Main Street, Suite C-4 Sarasota, Florida 34236 Pamela R. Jacobs, Esquire Regional Counsel Department of Banking and Finance 1300 Riverplace Blvd, Suite 640 Jacksonville, Florida 32207
The Issue The issue in Case No. 94-2065 is whether National Mortgage Bankers, Inc. violated certain disciplinary proceedings governing mortgage brokers and, if so, what penalty should be imposed. The issue in Case No. 94-2066 is whether National Mortgage Bankers, Inc. is entitled to licensure as a correspondent mortgage lender.
Findings Of Fact As of September 3, 1992, the Department of Banking and Finance, Division of Finance (Department), issued a mortgage lender's license to National Mortgage Bankers, Inc. (NMB). At all material times, NMB acted as a mortgage broker, not a mortgage lender. NMB originated mortgaged loans, which were funded by third parties. NMB's principal place of business was in Pt. Charlotte. At all material times, Sheldon Voron was employed as the chief executive officer of NMB. Business was slow for NMB during the first few months after it acquired its mortgage lending license. NMB was operated by Mr. Voron, who supervised loan officers and the processing of loan applications, and Mark Asciutto, who handled bookkeeping, payroll, and the checking accounts, including the escrow account. Mr. Asciutto left the company in September 1993. By the end of 1992, the net worth of NMB was $89,115.23, according to an audited financial statement issued on February 12, 1993. The net worth deteriorated during 1993, dropping to $63,533 by December 31, 1993, according to an audited financial statement issued on March 7, 1994. At no time did NMB ever advise the Department that its net worth was below $250,000. In early 1993, business picked up from late 1992, and NMB hired a second loan processor. Refinancing activity in early 1993 required that NMB continually add new help. At this time, the approval of uncomplicated conventional loan applications took 30-45 days, and the operation ran smoothly. But business continued to increase. From March to June, NMB opened up offices in Naples and Sarasota. A branch in office in Englewood was opened and quickly closed due to its proximity to other offices. By April, the volume of business at NMB was increasing rapidly, aided in part by the addition of government loans. An average of 75 cases monthly during the first three months increased to 125 cases in April. Employing four to five loan processors, NMB continued to hire additional employees, but soon had problems finding qualified persons, as competition in the lending business was increasing due to considerable refinancing activity. Mr. Asciutto handled the escrow account during these busy months, until another employee assumed these duties in late July or August 1994. Mr. Asciutto routinely transferred money from the escrow account to the general operating account when Mr. Asciutto determined that NMB was entitled to retain the money, such as when customers had not been responsive to inquiries from NMB employees. The only such transfer for which a specific amount was identified at the hearing was $860, which was swept from escrow to general operations by check dated April 16, 1993. As is obvious from the trend in net worth, profitability did not increase in direct proportion to increases in business volume. In fact, total income increased from $82,716.01 in 1992 to $556,907 in 1993, but net income increased only from $30,714.88 to $43,528. NMB simply could not keep up with the business, as is evidenced by the experiences of its customers. In July 1993, William Zinser read an NMB advertisement in the newspaper offering an adjustable mortgage rate and a low fixed-rate mortgage. He called the number and set up an appointment to visit the office. He met with an employee of NMB, who discussed interest rates and closing fees. She assured Mr. Zinser that it would take only about 30 days to close the loan. Mr. Zinser submitted a loan application, and the employee said NMB would be back in touch with him. Mr. Zinser waited three or four weeks and heard nothing. He called and was told that there were no problems. On two or three occasions, an NMB employee requested from Mr. Zinser a profit and loss statement or a verification of his wife's income. However, NMB had the wife's income information since the start of the loan application process and twice had received the profit and loss statements. On January 4, 1994, Mr. Zinser applied for a loan with another lender. Shortly thereafter, an NMB employee called him and said that his loan was approved. When he said that he had gone elsewhere, she reminded him that he had obligated himself to pay a $1250 fee in connection with the loan. He refused to pay. On or about July 15, 1993, Janice Hamann first contacted NMB about refinancing her home. She applied for a mortgage, and an NMB employee asked for more information. She supplied it the following day, and the employee said everything was fine. The employee said that it would probably take 4-6 weeks to close. On August 13, 1993, Ms. Hamann called NMB to check on the status of the loan application. An NMB employee said that they would probably close when she returned from a week's vacation. On August 23, Ms. Hamann called and was told to provide some additional information on her payment history. She provided the requested information by September 20. For a second time, she had to provide verification of her husband's employment. On September 18, Ms. Hamann received notification from her homeowner's insurer that they had changed her insurance, evidently to show a new loss payee. No one from NMB had told her that the loan was ready to close. A couple of months later, surveyors showed up and surveyed the property that was to have been the subject of the loan and additional property. Ms. Hamann called NMB and informed them of the mistaken inclusion of additional property. On November 22, Ms. Hamann called NMB and said that she wanted her paperwork and was withdrawing her application. Ten days later, someone from NMB called her and said they were ready to close. Ms. Hamann restated her demand for her paperwork and refused to close. A few days later, she received a letter demanding $1500 in addition to the $300 that she had paid for the credit check, survey, and appraisal. She still receives bills from the surveyor. On September 9, 1993, Richard Chadbourne contacted NMB about refinancing a mortgage. At the first office visit, he completed an application and delivered a check to NMB in the amount of $300. An NMB employee said they would contact him for more information and said it would take 30-45 days to close his loan. At the first meeting, Mr. Chadbourne stated that he wanted the 3.259 percent variable rate mortgage with a six point cap, which NMB was offering. An NMB employee said that they could get him a 3.375 percent rate. On the one or two occasions that NMB contacted Mr. Chadbourne for more information, he provided it to them immediately. Repeated calls to NMB by Mr. Chadbourne or his agent were never returned. No one from NMB ever called Mr. Chadbourne to tell him whether his loan was approved or denied, and he never withdrew his application. On September 10, 1993, Katherine Healey and her husband visited the NMB office to apply for a refinancing loan. Responding to a newspaper advertisement for a 3.375 percent interest rate, the Healeys learned that they would have to pay $1250 in fees to obtain such a low rate. They agreed to pay the sum. They were asked only for salary information and certain documentation concerning their liabilities. An NMB employee said they could lock in the quoted rate when they returned from vacation in a couple of weeks. After returning from vacation, the Healeys called NMB repeatedly, but often could not find anyone to speak to or to return their calls. When they finally talked to someone about their loan, they were told they had to pay another $100 or $150 to lock in at 3.375 percent. They continued calling NMB without much success for two months after returning from vacation. They could not get a closing date, and nothing was happening. In response to their repeated requests to lock in an interest rate, they were told only that they could not lock in until two weeks before closing. By the end of November, the Healeys applied elsewhere for a refinancing loan. Shortly after the Healeys applied elsewhere for a loan, which closed about three weeks later, they received a call from an employee of NMB, who told them that they had a closing date. They said that they had decided to obtain a loan elsewhere. The employee demanded the $1250 fee, which the Healeys had not yet paid, and threatened to sue them if they did not pay. The Healeys refused to pay the fee and were able to use the appraisal, for which they had already paid, with their new application. However, they had to pay for a second credit report. In November 1993, Wendy Harrison contacted NMB for two mortgages--one on a home in Massachusetts and one on a home in Punta Gorda. She filed mortgage applications on or about December 15, 1993, but, by mutual agreement, she withdrew her application on the Florida home. Ms. Harrison subsequently left several telephone messages that were not returned. In January, she was assigned a new loan processor, who still did not return calls. Around this time, Ms. Harrison's husband received a notice from the mortgagee on the Florida property concerning a payoff amount. The Harrisons contacted NMB and told them that this was the wrong property. Mortgage rates began to increase in January. Ms. Harrison called repeatedly on the status of her mortgage refinancing from mid-January to mid- March. A new person assumed loan processing duties on her file. She called Ms. Harrison on or about March 9 and said that the credit report raised some problems. This was the first time either Mr. or Ms. Harrison had been told that there were problems with the credit report, which NMB had received in late December. Ms. Harrison mailed the requested explanatory documents on the following day. Two weeks later, after hearing nothing, Ms. Harrison called NMB and learned that the interest rate would be 8 percent annually, which was higher than the rate in effect when she initiated the loan approval process. The NMB employee explained that the higher rate was due to the fact that the Massachusetts property was a rental property, but NMB employees had known that from the start. However, the NMB employee assured Ms. Harrison that the file was complete and being forwarded to Miami for final approval. The following day, Ms. Harrison sent a certified letter withdrawing the application and asking for the appraisal and any other services for which she had already paid. NMB received the letter on March 26. On April 5, Ms. Harrison found in her mailbox an unstamped, uncancelled envelope that had evidently been hand- delivered by an NMB employee or agent. Inside was a rejection letter backdated to March 23, so as to look like the Harrison application had been rejected before it was withdrawn. Based on customer complaints, the Department financial examiner conducted an unannounced inspection of NMB from November 15-17, 1993. In addition to discovering a violation of the minimum net worth requirement imposed upon mortgage lenders, the examiner found several violations of requirements imposed upon mortgage brokers. At no time did NMB disclose in writing that it could not guarantee acceptance into a particular loan program and could not promise any specific loan conditions or terms. When taking applications, NMB failed to disclose the nature of the mortgage brokerage fee charged by NMB. The fee varied according to the terms of the loan, and NMB only disclosed a broad range of fees at the time of the application. NMB received monies from customers, but did not record check numbers for checks used to pay vendors on behalf of specific customers. NMB thereby failed to maintain an updated record of escrow account activity on an appropriate form. In fact, NMB had the Department-promulgated form, but, as discussed below, used it improperly to try to record mortgage brokerage transactions. NMB did not maintain supporting documentation for monies paid from its escrow account on behalf of customers. NMB often used courier prepayments to pay unrelated expenses. NMB did not record the dates and amounts paid out of escrow. NMB maintained a mortgage brokerage transaction journal, but it lacked the date the customer applied for the mortgage loan, the date of disposition of the application, the total amount of brokerage fees, and the name of the lender. NMB used the Department-promulgated form for escrow account activity and tried to adapt it for mortgage brokerage transactions, but failed to include the above-cited crucial items of information. Concerning NMB's application for a correspondent mortgage broker's license, there is evidence, in at least one case, of fraud or deceit. Ms. Harrison, who was very credible, described an act of fraud or dishonest dealing in the postdating and delivery of her rejection letter. The atmosphere of incompetence and neglect that prevailed at NMB might well have left a typed letter unmailed for days or even weeks. However, an employee or other agent committed a wilful act of deceit in driving the letter out to Ms. Harrison's home and leaving it in the mailbox, rather than simply dropping it in the mail.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Banking and Finance enter a final order revoking the mortgage lender's license of National Mortgage Bankers, Inc. and denying its application for licensure as a correspondent mortgage lender. ENTERED on November 3, 1994, in Tallahassee, Florida. ROBERT E. MEALE 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 on November 3, 1994. COPIES FURNISHED: Hon. Gerald Lewis Comptroller The Capitol, Plaza Level Tallahassee, FL 32399-0350 William G. Reeves General Counsel Department of Banking and Finance The Capitol Plaza Level, Room 1302 Tallahassee, FL 32399-0350 Susan E. Steinberg Assistant General Counsel Office of the Comptroller 1313 Tampa St., Suite 615 Tampa, FL 33602-3394 Sheldon Voron 775 Tamiami Tr. Port Charlotte, FL 33953
The Issue Whether petitioner's application for licensure as a mortgage lender pursuant to the "Saving Clause," Section 494.0065, Florida Statutes, should be approved.
Findings Of Fact Background Petitioner, Homesafe Mortgage Company (Homesafe), initially known as FMC Mortgage Company, a Florida corporation, was established on May 24, 1990, and has, since its inception, been owned by Orlando Monteagudo and his wife, Omaida. On September 16, 1990, Homesafe applied to respondent, Department of Banking and Finance (Department), for registration as a mortgage brokerage business under the provisions of Section 494.039, Florida Statutes (1989). Homesafe's application was approved, and its mortgage brokerage business license was issued on October 24, 1990. A few days after Homesafe was licensed, the assets of another corporation wholly owned by Orlando and Omaida Monteagudo, First Miami Investments Corporation (FMIC), discussed more fully infra, were transferred to it, and Homesafe assumed the mortgage business of FMIC. At that time, FMIC became idle, and ceased doing business. On October 1, 1991, a new law, the "Mortgage Brokerage and Mortgage Lending Act," Chapter 91-245, Laws of Florida, became effective, which substantially changed the provisions of Chapter 494, Florida Statutes, and required businesses desirous of engaging in activities as mortgage lenders to be licensed as such. The Act also required such licensure for entities engaged in the business of servicing loans, if they proposed to service loans for more than four months, whereas previously no license was required for such activity. As a consequence of the amendments to chapter 494, Homesafe filed a timely application for licensure as a mortgage lender pursuant to the "Saving Clause," Section 494.0065, Florida Statutes. Pertinent to this case, that section provided: (1)(a) Any person in good standing who holds an active registration pursuant to former s. 494.039 . . . or any person who acted solely as a mortgage servicer on September 30, 1991, is eligible to apply to the department for a mortgage lender's license and is eligible for licensure if the applicant: 1. For at least 12 months during the period of October 1, 1989, through September 30, 1991, has engaged in the business of either acting as a seller or assignor of mortgage loans or as a servicer of mortgage loans, or both . . . . (Emphasis added) And, Section 494.001(17), Florida Statutes, defined a "person" to mean "an individual, partnership, corporation, association, or other group, however organized." Also pertinent to an evaluation of Homesafe's application by the Department was Rule 3D-40.202, Florida Administrative Code, which provided: Eligibility for Application for Mortgage Lender License Pursuant to the Saving Clause. A mortgage brokerage business licensee which changes their business entity, such as the incorporation of a sole proprietorship or partnership, shall be deemed the same "person" as defined s. 494.001(17), FS., for the purpose of determining eligibility pursuant to s. 494.0065, FS., provided the applicant is owned by the same person(s) holding the same ownership interest as the mortgage brokerage business licensee prior to any change in the resulting business entity. By letter of April 13, 1992, the Department notified Homesafe of its intention to deny Homesafe's application for licensure as a mortgage lender pursuant to the "Saving Clause." The basis for the Department's denial was it conclusion that Homesafe had not "engaged in the business of either acting as a seller or assignor of mortgage loans or as a servicer of mortgage loans, or both" for "at least 12 months during the period of October 1, 1989, through September 30, 1991, as required by the "Saving Clause," and that the provisions of Rule 3D-40.202 were not applicable to Homesafe's circumstances, such that credit for FMIC's activities could be accorded Homesafe. Subsequently, the Department amended its notice of denial to include, as an additional basis for denial, its contention that Homesafe violated the provisions of Section 494.0072(2)(k), Florida Statutes, by acting as a mortgage lender subsequent to October 1, 1991, without a current, active license. Homesafe filed a timely request for formal hearing and disputed the bases upon which the Department proposed to deny its application. Homesafe's activities and those of its predecessor in interest, FMIC Orlando Monteagudo, the chief executive officer and co-owner of Homesafe, has personally held an active license as a mortgage broker since 1984, and has, through various entities, been active in the mortgage brokerage business since that date, without unfavorable incident. On July 20, 1989, Orlando and Omaida Monteagudo became the sole owners of OJM Enterprises, Inc. (OJM), then known as The R & M Group, Inc., a Florida corporation, through a structured buy out from his former partners, with whom Monteagudo apparently felt strong dissatisfaction. OJM was the parent company of First Mortgage Corporation (FMMC) and First Miami Investment Corporation (FMIC), both Florida corporations. FMMC had been licensed as a mortgage brokerage business since at least March 14, 1986; however, neither OJM nor FMIC were ever so licensed. 2/ In September 1990, Monteagudo, out of a desire to further distance himself from his former associates, and on the advice of his accountant as to the best way to wrap up the affairs of OJM, FMMC and FMIC, contemplated the merger of OJM and FMMC into FMIC by September 30, 1990, and the transfer of their assets and mortgage brokerage business activities to Homesafe, which until that time had been largely inactive. In furtherance of such plan, Homesafe, as heretofore noted, on September 16, 1990, applied to the Department for registration as a mortgage brokerage business under the provisions of Section 494.039, Florida Statutes (1989). Homesafe's brokerage business license was issued on October 24, 1990. In the interim, a merger agreement was executed on September 29, 1990, on behalf of FMMC, FMIC and The R & M Group, Inc., whereby the parties agreed to merge The R & M Group, Inc., and FMMC into FMIC. [Use of the name "The R & M Group, Inc.," OJM's former name, was a mistake and would lead to a delay in filing with the Secretary of State as discussed infra.] Under the agreement, which was to have been effective September 30, 1990, FMIC would be the surviving entity, and "all the estate, property, rights, privileges, powers, franchises, and interests of each of the . . . corporations" would be vested in FMIC as the surviving corporation, without further act or deed. Considering the restructuring that was occurring, the proof is persuasive that at least by October 1, 1990, and more probably at some unidentifiable date shortly prior thereto, Homesafe began to service mortgage loans on behalf of FMIC. Thereafter, by October 30, 1990, following approval of its application for a mortgage brokerage business license, Homesafe received the assets of FMIC and assumed the mortgage brokerage business that had previously been operated through the corporate group, now FMIC. At that time, FMIC became idle and ceased doing business. Notwithstanding their efforts to effect a technical merger by September 30, 1990, the Secretary of State, by letter of January 4, 1991, rejected the merger agreement because The R & M Group, Inc., had changed its name on September 4, 1990, to OJM Enterprises, Inc. Accordingly, the parties were advised to correct their agreement to properly reflect the corporate parties if they desired the Secretary of State to accept such filing. Consequently, on January 14, 1991, the parties executed an amended merger agreement that properly reflected the corporate parties as FMMC, FMIC and OJM Enterprises, Inc. That agreement was duly filed with the Secretary of State on January 18, 1991, and FMIC became, technically, the surviving corporation that date. Under the terms of that agreement, as with the initial agreement, Orlando and Omaida Monteagudo, as the sole owners of OJM, became the sole owners of FMIC. The Department's Rule 3D-40.202 Pertinent to this case, Rule 3D-40.202, Florida Administrative Code, provides: Eligibility for Application for Mortgage Lender License Pursuant to the Saving Clause. A mortgage brokerage business licensee which changes their business entity, such as the incorporation of a sole proprietorship or partnership, shall be deemed the same "person" as deemed in s. 494.001(17), FS., for the purpose of determining eligibility pursuant to s. 494.0065, FS., provided the applicant is owned by the same person(s) holding the same ownership interest as the mortgage brokerage business licensee prior to any change in the resulting business entity. Here, the Department and Homesafe disagree as to the proper interpretation of the foregoing provision. The intent of the rule, according to the Department, was to permit those who were licensed as a mortgage brokerage business prior to the adoption of the "Mortgage Brokerage and Mortgage Lending Act," Chapter 91-245, Laws of Florida, but were not a corporate entity, to qualify under the "Saving Clause." Notably, under the amendments to chapter 494, only corporations are eligible for licensure as a mortgage lender. See Section 494.0061, Florida Statutes. Therefore, the Department interprets the rule to apply only when there has been an actual change in the form of the business entity, through incorporation of a sole proprietorship or partnership, and does not consider the rule applicable where, as here, a mere transfer of assets occurred between corporations. Contrasted with the Department's interpretation, Homesafe contends that the provisions of the rule are broad enough to cover the situation where, as here, the mortgage brokerage business of one corporation is assumed by another corporation, as long as the ownership interests remain the same. Under such interpretation, Homesafe and FMIC, the surviving corporation, would be considered the same "person" for purposes of determining eligibility under the "Saving Clause," and Homesafe could be credited, if necessary, with the time periods FMIC or its merged parts operated as a mortgage brokerage business to satisfy the "12-month" standard of the "Saving Clause." While Homesafe's interpretation may be a permissible interpretation of Rule 3D-40.202, so is the Department's. Indeed, the Department's interpretation of the rule is consistent with the intent of the rule and the doctrine of noscitur a sociis often applied as an aid to statutory construction. Under such circumstances, and for the reasons set forth in the conclusions of law, deference is accorded the agency's interpretation. Homesafe's activities subsequent to October 1, 1991 Pertinent to the Department's charge that Homesafe has acted as a mortgage lender subsequent to October 1, 1991, without a current, active license, the proof demonstrates that since October 1, 1991, Homesafe has made between 120-170 mortgage loans, sold those loans to investors, and thereafter serviced the majority of those loans. In response, Monteagudo retorts that Homesafe was entitled to licensure under the "Saving Clause," and that it was entitled to and needed to continue its business pending Department approval of its application.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered approving Homesafe's application for licensure as a mortgage lender pursuant to the "Saving Clause," Section 494.0065, Florida Statutes. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 28th day of April 1993. WILLIAM J. KENDRICK 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 28th day of April 1993.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Respondent Ronald E. Clampitt is the President of Respondent Action Mortgage Corporation and is the person designated to act on behalf of said corporation under the provisions of Chapter 494, Florida Statutes. Action Mortgage Corporation currently holds a mortgage brokerage license. The individual mortgage broker license issued to respondent Clampitt expired on August 31, 1980, and has not been renewed. Respondent Joseph W. Langford currently holds a license as a mortgage solicitor for and on behalf of Home Mortgage Investment Corporation. His prior individual mortgage broker license expired on August 31, 1980, and has not been renewed. COUNT I The respondents were counter codefendants in a civil suit filed in the Circuit Court of Sixth Judicial Circuit of the State of the Florida in and for Pinellas County, which case was numbered 78-12033-18 and styled Action Mortgage Corporation, etc., et al., Plaintiffs, vs. Denture Services, Inc., etc., et al., Defendants. On February 8, 1980, a Final Judgment was entered in that proceeding by Circuit Court Judge David Seth Walker. Judge Walker found, as a matter of fact, that a limited confidential/fiduciary relationship existed between Langford and the counter-plaintiffs, and opined that certain activities on the part of the individual counter-defendants were "bedecked with the badge of fraud." The Court, inter alis, awarded the counter-plaintiffs Final Judgment in the nominal sum of $1.00, plus costs. It was noted that the claim of the counter-plaintiffs for punitive damages had previously been denied. Subsequent to the Final Judgment enteed in Case No. 78-12033-18, the counter-plaintiffs filed a Motion for Rehearing on the matter of punitive damages, since the Court had noted in its Final Judgment that the activities of the counter-defendants were "bedecked with the badge of fraud." The counter- defendants (respondents herein) also moved the Court to alter or amend its Final Judgment so as to remove the fraud language quoted above. By Order filed on March 10, 1980, both motions were denied by Judge Walker. Judge Walker's deposition was taken on August 22, 1980, and was received into evidence in this proceeding as petitioner's Exhibit 9. Referring to the language in the Final Judgment "bedecked with the badge of fraud," Judge Walker makes the following comments: "I do not interpret that as a finding of fraud absolute, but just that there were indicia of fraud." (p.4) "But I did not consider this to be an absolute finding of fraud. I think I mentioned that on one of the motions that the counter-plaintiffs made to reconsider the judgment of $1.00 or the refusal to grant punitive damages. I reiterated at that hearing that I found that it was an indicia, but I did not go so far in my own mind as to specifically find fraud." (p. 4) "If I had wanted to find specifically that they were in fact guilty of fraud, I would have said as much. The phrase, in my mind, 'bedecked with a badge of fraud,' is meant to suggest the indicia of fraud. Fraud is a legal conclusion that must be based upon several legally accepted circumstances. And in law school we learned the term, 'badges of fraud.' But a badge of fraud does not per se constitute fraud. I didn't feel that I needed to go too deeply in the questions, because of my finding that the counter-plaintiffs had not in fact suffered any real damage." (pp. 7 and 8) "I listed a certain series of circmustances and activities which had taken place, rather specifically. And I found that these activities and circumstances were bedecked by the badge of fraud which is admittedly a little bit flowery for normal language, but that's what I said. I did not specifically find fraud. Fraud always carries with it the badges of fraud in and of it- self does not collaterally, and on the other hand mean that fraud exists. I did not go that far in this particular judgment. I did not feel I had to." (pp. 18 and 19) "I did not feel that it was necessary for the Court to delve into the ultimate determination of fraud." (p. 20) "I do not perceive that my final judgment made an absolute finding of fraud. Again, the phrase, 'badge of fraud,' simply menas to me an indicia of fraud, and I'm confortable with the finding that that indicia is there. But as far as a finding of fraud is concerned, I did not proceed to that point, and it's not there." (pp. 20 and 21) COUNT II In 1978, Dorothy L. Jones and Byron A. Jones were the owners of real property located at 2656 Granada Circle East in St. Petersburg, Florida. The first mortgage on that property held by Molten, Allen and Williams, Inc. or the Mortgage Corporation of the South, was in default and a foreclosure action, and is pendens against the property had been filed. The monthly mortgage payments were approximately $225. At that time, Dorothy Jones was separated from her husband, lived in the home with her five minor children and was having financial difficulties. Having seen a newspaper advertisement, Dorothy Jones contacted the Respondents in an effort to obtain a second mortgage or additional funds with which to pay her debts and preserve her homestead. Neither of the Respondents agreed to make a second mortgage loan to Mrs. Jones. Instead, they agreed to make an outright purchase of the Jones's residence and lease the property back to Dorothy Jones at a monthly payment which approximated her prior monthly mortgage payment. The lease payments were later increased to $275 per month due to the loss of homestead exemption on the property. It was Mrs. Jones' understanding that she would be given the opportunity to repurchase the home at less than fair market value though she may have to pay a down payment and higher monthly payments. No appraisal was performed on the property. The closing of the transaction took place at a title company, independent of the Respondents. Mrs. Jones understood that she was signing a deed to the property and other documents transferring title to Respondents. The property was purchased by the Respondents in February of 1978 for $23,656.54 and the transfer was made subject to the mortgage to Molten, Allen and Williams, Inc., in the amount of $21,848.44. No funds were paid to Mr. or Mrs. Jones at the time of closing. During the months which followed, Dorothy Jones fell far behind in her lease payments to the Respondents. In May of 1979, Respondent Langford notified Mrs. Jones that the property owners had elected to sell the property in the near future, and advised her to contact his office if she was still interested in purchasing the property. In July of 1979, Dorothy Jones filed a Complaint against the Respondents in the Circuit Court in and for Pinellas County seeking a declaratory decree as to her rights under the aforementioned deed, lease and oral agreement to repurchase the property. (Civil No. 79-7307-17). Mrs. Jones was represented by an attorney in that action. By Order filed on July 29, 1980, the Circuit Court approved the terms and conditions of a Stipulation entered into by the Respondents and Mrs. Jones whereby Mrs. Jones was given the opportunity to purchase the subject property from the Respondents for $32,000 within 90 days, and was also required to pay back rental payments to the Respondents. For some reason not clear from the evidence adduced in the proceeding, Mrs. Jones did not repurchase the property from the Respondents. By Final Judgment filed on October 15, 1980, Mrs. Jones' claim against the Respondents was dismissed with prejudice and Respondents were awarded a judgment against Mrs. Jones in the amount of $2,887.50. Apparently, an eviction action in the County Court for Pinellas County resulted in the award of possession of the home to the Respondents. Mrs. Jones vacated the subject property in October of 1980. In April of 1981, Respondents sold the subject property to Harold and Peralita Odlam for a purchase price of $41,7000. COUNT III Respondent Clampitt was licensed as an individual mortgage broker for the years 1978 and 1979. His 1979 license expired on August 31, 1979, as did the license of Action Mortgage Corporation. Mr. Clampitt made an attempt to renew his individual mortgage broker license on October 16, 1979. The renewal license for Action Mortgage Corporation also bears the date of October 16, 1979. During the period of time between August 31, 1979 (the date upon which his individual mortgage broker license expired) and October 16, 1979 (the date upon which said renewal license was issued), respondent, Clampitt, as an individual mortgage broker, received at least three mortgage brokerage fees or commissions. A broker is considered to be licensed by the petitioner when a completed application form accompanied by the correct fee is received by the petitioner. It is the petitioner's practice to mail out renewal application to its approximately 6,500 licensees on July 15 of each year with the request that they be returned by August 15. All licenses expire on August 31 and are reissued for the following year to be effective from September 1 to August 31. Those applications which are received by the petitioner after August 31 bear a different license date. The correct amount to be remitted for the renewal of respondent Clampitt's individual license was $125-- a $75 license fee and a $50 guaranty fund fee. The $190 check received by the petitioner from the respondent on or before August 31, 1979, was accompanied by three renewal application cards. The petitioner did not apply $125 of the $190 to the renewal of respondent Clampitt's individual license because petitioner could not ascertain how the respondent desired to have the funds applied. Although a small minority of licensees do not renew their licenses in a timely fashion, it is not the practice of the petitioner to directly notify a licensee that his license has expired. Respondent Clampitt did hold a license with an effective date of September 13, 1979, as an additional broker for Fickling and Walker, Inc. in Winter Park, Florida. Under this license, respondent Clampitt would have no authority to act individually or on behalf of anyone other than Fickling and Walker, Inc. COUNT IV Respondent Clampitt arranged for a loan to a Mr. and Mrs. Fink. When examining the respondent's books, petitioner's financial examiner was unable to account for an apparent overcharge of $13.80 for credit life insurance on the loan. The examiner did not examine the loan closing documents with regard to this transaction. The evidence establishes that there had been a clerical error in the respondent's office concerning this transaction, that the cost of the credit life insurance had been miscalculated and that respondent Clampitt was entitled to the $13.80. COUNT V It is the practice of the respondent Clampitt to interview his clients over the telephone, look at the involved property and then, if he agrees to make a loan, send the client to a title insurance company to sign the necessary papers. These papers include a loan closing statement, the required RESPA statement and a recision notice which allows the customer to cancel the transaction within 72 hours without cost or obligation. Thereafter, generally five to seven days later, the customer returns to the title company to receive the loan proceeds. Respondent Clampitt does not take deposits and most often does not even meet this clients on a face-to-face basis. All borrower disclosures and rights required by law are provided respondent's clients by the title insurance company.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED THAT: The Administrative Charges and Complaint filed on March 23, 1981, against Joseph W. Langford be DISMISSED; The Administrative Charges and Complaint filed on February 3, 1981, against Action Mortgage Corporation be DISMISSED; Counts I, II, IV and V of the Administrative Charges and Complaint filed against Ronald E. Clampitt on February 3, 1981, be DISMISSED; and Respondent Ronald E. Clampitt be found guilty of accepting fees at a time when his individual license had expired, but, because of the unintentional violation of the pertinent statutory provisions, no disciplinary action be imposed for this offense. Respectfully submitted and entered this 27th day of July, 1981, 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 27th day of July, 1981. COPIES FURNISHED: Walter W. Wood Assistant General Counsel Office of the Comptroller Suite 1302 - The Capitol Tallahassee, Florida 32301 John C. Dew and Jay Emory Wood Harris, Barrett and Dew Post Office Drawer 1441 600 Florida National Bank Building St. Petersburg, Florida 33731 Comptroller Gerald A. Lewis State of Florida The Capitol Tallahassee, Florida 32301
The Issue At issue in this proceeding is the following clause on Form DBF-F-24, which form is incorporated by reference in Rule 3D-40.09(2), Florida Administrative Code: If the above commitment or a commitment in an amount and/or upon terms acceptable to the undersigned is obtained and said mortgage loan is not closed because (I) (We) have not fulfilled our part of this agreement, (I)(We) agree to pay $ the application deposit being a part, for obtaining said commitment. The Association contends that this type of charge is not authorized in Chapter 494, Florida Statutes, and is prohibited by other provisions of law. The validity of the above-cited clause is the sole issue here.
