Findings Of Fact During 1982 and 1983, Petitioner was licensed as a mortgage broker and real estate broker in the State of Florida. His mortgage broker's license expired in September, 1983. At all times material hereto, Petitioner utilized his mortgage broker's and real estate broker's license to engage in real estate development speculation. He worked closely with Jeffrey Graham, who was also licensed as a mortgage broker and who was a co-owner with Petitioner of Continental Development, Continental Mortgage Company and the Real Estate Spot. They were engaged in buying and selling existing residential properties and constructing new homes for sale. Financing for Petitioner's speculative real estate transactions was provided primarily by The Bank of Florida, located in St. Petersburg, Florida. The Bank provided financing on 80 to 85 percent of his transactions, but at some point in 1982 or 1983, Petitioner and Graham found themselves unable to obtain further construction financing from the Bank. In order to continue receiving financing from the Bank, Petitioner and Graham initiated the use of "stand-in" buyers. A "stand-in" buyer would not have to use any of his own money as a deposit or down payment, even though real estate contracts executed in connection with these transactions would show an earnest money deposit by such buyers. The buyer's role was simply to lend his credit to the transaction and to share in any profits on the eventual sale of the property. On or about March 25, 1983, Petitioner executed, as seller, a contract for sale of real estate and deposit receipt with Norman Tanner, buyer. The transaction involved the sale of real estate in Pinellas County, Florida, and reflects a total purchase price of $25,000, with an earnest money deposit of $5,000 which the contract specified was to be held by Petitioner, as seller, until closing. Petitioner also executed a Settlement Statement on March 29, 1983, in connection with a loan obtained by Tanner from The Bank of Florida which indicated that Tanner had paid an earnest money deposit of $5,000. Based upon the testimony of Norman Tanner at hearing, it is found that he did not provide the earnest money deposit indicated on the sales contract or Settlement Statement which Petitioner executed as seller. Petitioner testified that this transaction was carried out in his individual capacity as a personal investment, and not under the authority of his mortgage broker's license. In fact, Petitioner did not deal directly with Tanner in this transaction. Tanner's dealings were with Petitioner's partner, Jeffrey Graham. Nevertheless, the evidence and demeanor of the witnesses establishes that Petitioner was aware of the fact that Tanner had not paid the deposit reflected on the instruments he executed, and that such instruments were used to induce the Bank to make a mortgage loan to Tanner. Petitioner, as seller, received $19,665.56 cash at settlement from this transaction with Tanner. On or about February 24, 1982, Petitioner executed a contract for sale of real estate and deposit receipt with Joseph Armendinger, buyer. The transaction involved the sale of real estate in Pinellas County, Florida, and reflects a total purchase price of $48,000, with an earnest money deposit of $6,500 which the contract specified was to be held in escrow by The Real Estate Spot, Inc., until closing. Petitioner and Armendinger also executed an Affidavit of Purchaser and Vendor in connection with obtaining financing for this transaction, and said Affidavit also indicated the buyer's purported cash equity of $6,500 in the property. At the time, Petitioner was co-owner of The Real Estate Spot, and Armendinger was an electrician who was doing some work at The Real Estate Spot and became interested in the "stand-in" buyer transactions he observed while doing electrical work at Petitioner's office. On or about October 27, 1982, Petitioner and Armendinger executed another contract for sale and deposit receipt for a second piece of property, which reflects a total price of $85,000 and an earnest money deposit by Armendinger of $5,000. Thereafter, they executed an Affidavit of Purchaser and Vendor and Settlement Statement reflecting Armendinger's purported cash equity of $4,250.00. Petitioner used the proceeds from this transaction to pay off an existing mortgage and judgment on the property, and realized $1,607.46 in cash, which was shared with Jeffrey Graham, co-seller. Petitioner knew that the contracts for sale and Affidavits which he executed with Armendinger were to be presented to The Bank of Florida and used for the purpose of Armendinger obtaining financing for the purchase of these properties. Based upon the testimony of Joseph Armendinger at hearing, it is found he did not provide any earnest money deposit or downpayment in connection with these two transactions with Petitioner. Armendinger relied on Petitioner, a licensed mortgage broker and real estate broker, in these transactions, and was told by Petitioner that he would not have to put any money of his own into these transactions. Petitioner knew that Armendinger had not made any deposit or downpayments concerning these transactions at the time he executed the contracts for sale and deposit receipts, Affidavits and Settlement Statement. On December 16, 1982, Petitioner executed two mortgages in favor of Patricia G. Herren on property he had previously sold to Armendinger. These mortgages totalled $21,793.35, and were recorded in Pinellas County, Florida, on December 28, 1982. These mortgages were used by Petitioner, along with a $10,000 mortgage he executed in Herren's favor, to obtain a satisfaction from Herren of a mortgage she held on a piece of property she sold to Petitioner in October 1982 in St. Petersburg Beach. The $10,000 Herren mortgage was also recorded on December 28, 1982. Having obtained the satisfaction, Petitioner then sold the St. Petersburg Beach property to Juanita Murdaugh and Jeffrey Graham on December 17, 1982, prior to recording the $10,000 Herren mortgage. He did not disclose on the Affidavit of Purchaser and Vendor which he executed that he had an outstanding $10,000 mortgage in favor of Herren on this St. Petersburg Beach property, although this mortgage should have been disclosed as "secondary financing." In each of the Affidavits of Vendor and Purchaser executed by Petitioner in connection with sales of property as described herein, there is the following statement in Item VII: The certifications of this affidavit are for the purpose of inducing the Lender named above or its assignees to make or purchase the first mortgage described by this affidavit.... By signing the Affidavits of Vendor and Purchaser, Petitioner, as the "Property Vendor," made the following certification: The PROPERTY VENDOR hereby certifies that to the extent PROPERTY VENDOR is a party, the Financial Terms, including Total Purchase Price, and the Liens are as set forth in Items III and IV above, [and] hereby acknowledges the inducement purpose of this affidavit as set forth in Item VII above....
Recommendation Based upon the foregoing, it is recommended that Petitioner's application for licensure as a mortgage broker be DENIED. DONE AND ENTERED this 19th of October, 1987, in Tallahassee, Florida. DONALD D. CONN 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 19th day of October, 1987. APPENDIX (DOAH No. 87-0033) Rulings on Petitioner's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 1.(a) Adopted in Findings of Fact 2, 4. 2.(a) Rejected as not based on competent substantial evidence. 2.(b) Rejected in Findings of Fact 5, 6. 2.(c) Rejected in Finding of Fact 10. 2.(d) Rejected in Findings of Fact 6-10. 2.(e), (f) Rejected in Finding of Fact 11. Rulings on Respondent's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 2. Adopted in Findings of Fact 2, 3. 3. Adopted in Finding of Fact 2. 4. Adopted in Findings of Fact 3, 4. 5-6. Rejected as not based upon competent substantial evidence. 7. Adopted in Finding of Fact 5. 8. Adopted in Findings of Fact 5, 6. 9. Adopted in Findings of Fact 7, 10. 10-11. Adopted in Findings of Fact 7, 9, 10. Adopted in Findings of Fact 8, 10. Adopted in Findings of Fact 8, 9, 10. 14-19. Adopted in Finding of Fact 11. Adopted in Finding of Fact 12. Adopted in Finding of Fact 13. Rejected as not based on competent substantial evidence. Adopted in Finding of Fact 11. Rejected as unnecessary and cumulative. COPIES FURNISHED: John Swisher, Esquire Dillinger & Swisher 5511 Central Avenue St. Petersburg, FL 33710 Stephen M. Christian, Esquire Office of Comptroller 1313 Tampa Street Tampa, FL 33602-3394 Honorable Gerald Lewis Department of Banking and Finance Comptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 Charles L. Stutts General Counsel Plaza Level The Capitol Tallahassee, FL 32399-0350
The Issue Whether Assertive Mortgage LLC’s (“Assertive Mortgage”) application for a mortgage broker license should be granted.1 1 Unless stated otherwise, all statutory references shall be to the 2020 version of the Florida Statutes. See generally McClosky v. Dep’t of Fin. Serv., 115 So. 3d 441 (Fla. 5th DCA
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, the entire record of this proceeding, and matters subject to official recognition, the following Findings of Fact are made: OFR is the state agency responsible for regulating mortgage brokering, mortgage lending, and loan origination.8 Toshia Glover became a Florida-licensed mortgage broker in 1999, and she became licensed in Florida and Georgia as a mortgage loan originator in 2000. At some point after 2003, she obtained a Florida real estate broker’s license. In 2006, Ms. Glover became a Georgia-licensed mortgage broker. Ms. Glover operated a mortgage broker company called A+ Loans from 2005 until September of 2008. The economic downturn that occurred in 2008 decimated her real estate and loan origination businesses and forced her to discontinue operations. 7 Pages 9 and 10 of the Transcript erroneously attribute comments by Petitioner’s counsel to counsel for Respondent. 8 Prior to 2010, OFR issued mortgage broker licenses to individuals and businesses. Since 2010, OFR has issued loan originator licenses to individuals and mortgage broker licenses to businesses. Therefore, the individual mortgage broker license is the historical equivalent of the current loan originator license. Section 494.001(18), Florida Statutes, defines a “loan originator” as “an individual who, directly or indirectly, solicits or offers to solicit a mortgage loan, accepts or offers to accept an application for a mortgage loan, negotiates or offers to negotiate the terms or conditions of a new or existing mortgage loan on behalf of a borrower or lender, or negotiates or offers to negotiate the sale of an existing mortgage loan to a noninstitutional investor for compensation or gain.” Ms. Glover moved to Georgia from Florida during the fourth quarter of 2008, and sustained herself by doing odd jobs. Ms. Parrish estimates that she earned less than $10,000 in 2009. In February of 2009, OFR unsuccessfully attempted to personally serve an Administrative Complaint on Toshia Glover alleging that A+ Loans and Ms. Glover, as the principal broker of A+ Loans, received improper compensation of $1,530 and $600. Those allegations amounted to violations of sections 494.0038(1)(a) and (1)(b)1. Florida Statutes (2005 and 2006), and rule 69V-40.008(1). In March and April of 2009, OFR published notice of the Administrative Complaint in the Sun-Sentinel daily newspaper. After Ms. Glover and A+ Loans did not respond to the Administrative Complaint, OFR issued a “Default Final Order and Notice of Rights” (“the Default Final Order”) on April 22, 2009, immediately revoking Ms. Glover’s mortgage broker license and imposing a $7,000 administrative fine for which Ms. Glover and A+ Loans were jointly and severally liable. Ms. Glover and A+ Loans were also required to refund a total of $2,130 to one or more borrowers. Ms. Glover married her current husband on December 12, 2012, and has not used her maiden name since. She will hereinafter be referred to as Ms. Parrish. Ms. Parrish owns Assertive Mortgage. In September of 2020, Ms. Parrish, on behalf of Assertive Mortgage, filed an application with OFR for licensure as a mortgage broker. The application identified Ms. Parrish as Assertive Mortgage’s president and qualifying individual. Ms. Parrish is the owner and president of Assertive Mortgage. OFR determined that Assertive Mortgage’s application could not be granted because the Default Final Order had revoked Ms. Parrish’s mortgage broker license.
Conclusions For Petitioner: H. Richard Bisbee, Esquire H. Richard Bisbee, P.A. Suite 206 1882 Capital Circle Northeast Tallahassee, Florida 32308 For Respondent: Joaquin Alvarez, Esquire Office of Financial Regulation Fletcher Building 200 East Gaines Street Tallahassee, Florida 32399
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Office of Financial Regulation issue a final order denying Assertive Mortgage, LLC’s, application for a mortgage broker license. DONE AND ENTERED this 3rd day of December, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: S G. W. CHISENHALL Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of December, 2021. H. Richard Bisbee, Esquire H. Richard Bisbee, P.A. Suite 206 1882 Capital Circle Northeast Tallahassee, Florida 32308 Russell C. Weigel, Commissioner Office of Financial Regulation 200 East Gaines Street Tallahassee, Florida 32399-0350 Joaquin Alvarez, Esquire Office of Financial Regulation Fletcher Building 200 East Gaines Street Tallahassee, Florida 32399 Anthony Cammarata, General Counsel Office of Financial Regulation The Fletcher Building, Suite 118 200 East Gaines Street Tallahassee, Florida 32399-0370
The Issue The issue in these cases is whether petitioners are entitled to payment from the mortgage brokerage guaranty fund, and if so, in what amounts. A further issue is in what order of priority the claims should be paid. Based upon all of the evidence, including the pleadings filed in this cause, the following findings of fact are deter- mined:
The Issue In this proceeding pursuant to Section 120.56(4), Florida Statutes, Petitioner Dave Taylor (“Taylor) alleges that various purported “statements” which he attributes to Respondent Department of Banking and Finance (the “Department”) constitute rules-by-definition that were not adopted under, and therefore violate, Section 120.54(1)(a), Florida Statutes.
Findings Of Fact The evidence adduced at final hearing established the facts that follow. The Department of Banking and Finance is the state agency charged with the administration of Chapter 494, Florida Statutes, titled “Mortgage Brokerage and Mortgage Lending.” As such, it is responsible for regulating all persons, including mortgage brokers and lenders, licensed under that chapter. Taylor is licensed under Chapter 494 as a mortgage broker and as a “continuing education school.” His firm, Florida Compliance Specialists, Inc., provides consulting services to Chapter 494 licensees. The present dispute stems from amendments to Chapter 494 that the legislature enacted during the 2001 regular session. See Ch. 2001-228, Laws of Florida. These amendments were contained in a bill (CS/HB 455) approved by the governor on June 13, 2001, and became effective on October 1, 2001; they created a new position called “principal representative.” As defined by the legislature, the term “principal representative” means “an individual who operates the business operations of a licensee under part III.” Section 494.001(29), Florida Statutes (2001) (emphasis added).4 This statutory definition is amplified in a mandate that requires all licensees (and applicants) to designate a “principal representative who exercises control of the licensee’s business[.]” Sections 494.0061(8) and 494.0062(11), Florida Statutes. (Emphasis added). Notably, the terms “operates” and “exercises control of” are not defined. As mentioned, the statute requires all licensees and applicants to designate a PR. Although PRs do not engage in a licensed occupation (i.e. there is no PR license), an individual appointed to the post of PR after October 1, 2001, must satisfy certain educational and testing requirements (the details of which are not important here), and the designating lender must submit documents showing that its PRD has complied with those requirements.5 After the governor signed CS/HB 455 into law but before the amended statutes took effect, the Department began making rules to implement the new provisions. Before long, proposed rules were published in the August 31, 2001, issue of Florida Administrative Weekly. One provision of these proposed rules instructed that “[a]n individual can only be a principal representative for one [lender].” This “one lender to a PR” proposal did not implement an explicit statutory directive but arose from the Department’s then-prevailing interpretation of the statutory description of a PR as one who “operates” and “exercises control of” the lender’s business. Further illuminating the Department’s understanding of these terms were the Designation forms that it proposed to adopt, wherein the PRD was required to acknowledge that he or she would be “in full charge, control, and supervision of the [lender’s] business.” A person, the Department reasoned, could be “in full charge,” etc., of but one company at a time. In the course of rulemaking, however, the Department receded from its original interpretation. As a result, revised proposed rules——from which the bright line, “one lender to a PR” directive had been deleted——were published in the October 5, 2001, Florida Administrative Weekly.6 An amended Designation, which unlike earlier versions lacked language requiring a PRD to confirm (with his or her signature) having “full charge, control, and supervision” of the applicant’s or licensee’s business, was proposed as well.7 By the end of January 2002, the Department’s proposed rules relating to PRs had been adopted and, at the time of this Final Order, were among the agency’s duly promulgated, existing rules. See Rule 3D-40.242, Florida Administrative Code. Although the Department does not presently have a bright line rule or policy that flatly forbids an individual from serving simultaneously as PR to more than one licensee, the Department continues to be skeptical that a dual designee can effectively perform, for more than one lender at a time, the responsibilities that it believes inhere in the office of PR. Accordingly, whenever a lender or applicant nominates an XPR for PR, the Department without exception subjects that lender’s Designation to stricter scrutiny than would be given if its PRD were not an XPR. (Indeed, if the PRD is not an XPR, then the Department presumes that he or she will be able to carry out the duties of a PR and hence makes no inquiry as to how the PRD will function as PR.) The first outward manifestations of the Department’s internal decision to scrutinize any Designation in which an applicant’s PRD is an XPR emerged in late November 2001 after the agency had received four separate applications naming Taylor as PR.8 As the Department had discovered upon review of these four applications, Taylor was already serving as PR to an existing licensee. This situation had given rise to a dilemma for which the Department was not fully prepared, as evidenced by a November 26, 2001, e-mail message from an agency attorney to the responsible policy makers in which she (the attorney) had advised that: There are two pending applications in which there are no deficiencies and we need to decide how will [sic] we will proceed since we took out the language in the rule that specifically stated an individual could only be a PR for one company at a time. Let me know what times you would be available [for a meeting to decide what to do]. The Department quickly decided what to do. Between November 27 and November 29, 2001, the Department issued four nearly identical letters, one sent by certified mail to each applicant who had chosen Taylor as its PR, which provided, in pertinent part: We are in receipt of your company’s application to become licensed as a mortgage lender in the State of Florida. A review of the application materials indicates that [applicant’s name] has designated Dave Taylor at [address] as the company’s Principal Representative. [The next four paragraphs quote Sections 494.001(29); 494.0062(11); 494.0062(1)(f); and 494.0062(12), Florida Statutes, which pertain to PRs.] Sections 494.0072(1) and (2)(c), Florida Statutes, provide as follows: Whenever the department finds a person in violation of an act specified in subsection (2), it may enter an order imposing one or more of the following penalties against that person: Revocation of a license or registration. Suspension of a license or registration, subject to reinstatement upon satisfying all reasonable conditions that the department specifies. Placement of the licensee or applicant on probation for a period of time and subject to all reasonable conditions that the department specifies. Issuance of a reprimand. Imposition of a fine in an amount not exceeding $5,000 for each count or separate offense. Denial of a license or registration. Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection (1) may be taken: (c) A material misstatement of fact on an initial or renewal application.[9] Dave Taylor has already been designated as a principal representative for another licensed lender under part III of Chapter 494, Florida Statutes. Please advise in detail how Mr. Taylor will operate and exercise control over your business.[10] We request that your response be submitted to the Department within 10 days of the date of this letter. If you have any questions regarding this matter, please call me at [phone number]. On or about November 30, 2001, the Department created a new deficiency code, DF 416, the description of which is “principal representative is designated to more than one entity.” This is an active deficiency code and is used consistently as a “red flag” on all applications to which it applies. When an application is tagged with a DF 416, the applicant is sent a letter in the form of the letters quoted in the preceding paragraph. This letter will hereafter be referred to as the “DF 416 Inquiry Letter.”11 It is important to emphasize that all applicants whose PRD is an XPR are sent the DF 416 Inquiry Letter, without exception.12 It is undisputed that Taylor has met all of the educational and testing requirements necessary to serve as a PR, and that the Department has no objection, based on facts and circumstances unique to Taylor, to Taylor’s being a lender’s PR. (In fact, he is presently a PR to one lender,13 under a designation to which the Department, consistent with its policy and practice of making no inquiry concerning PRDs who are not XPRs, raised no objection.) The Department’s concern about Taylor’s having been designated a PR by more than one company is indistinguishable from the concern that it expresses regarding all dual designees. This is why, although the contents of the DF 416 Inquiry Letter were developed to resolve a problem that specifically involved Taylor and his clients, the Department decided (and was able) to implement its Taylor-made solution on a generally applicable basis by sending the DF 416 Inquiry Letter to all applicants whose PRD is a dual designee. Each of the four applicants that had designated Taylor as its PR declined the Department’s November 2001 invitation to submit detailed information regarding the manner in which Taylor would operate and control the licensed business. Each applicant chose, instead, to designate someone else as PR. Thus, whatever advantages or considerations Taylor expected to receive in exchange for serving as these lenders’ PR were lost; the Department’s letters (the letters that became the form for the DF 416 Inquiry Letter) were the proximate cause of that loss, in that but for the letters, the lenders would not summarily have severed their respective business relationships with Taylor. After deciding how to deal with applicants whose PRDs are XPRs, the Department turned its attention to the dual designees of existing licensees. This was, in a sense, a bigger problem because, in their respective Designations, more than 50 licensees had selected an individual for PR who was a dual designee. Beginning around December 12, 2001, the Department sent all these lenders a letter similar to the DF 416 Inquiry Letter. This letter stated: We are in receipt of the principal representative designation forms for the following companies: [lender’s names]. A review of the principal representative forms indicates that [PRD’s name and address] has been designated the Principal Representative for both companies. [The next two paragraphs quote statutory provisions pertaining to PRs.] Sections 494.0072(1) and (2)(p) state as follows: Whenever the department finds a person in violation of an act specified in subsection (2), it may enter an order imposing one or more of the following penalties against that person: Revocation of a license or registration. Suspension of a license or registration, subject to reinstatement upon satisfying all reasonable conditions that the department specifies. Placement of the licensee or applicant on probation for a period of time and subject to all reasonable conditions that the department specifies. Issuance of a reprimand. Imposition of a fine in an amount not exceeding $5,000 for each count or separate offense. Denial of a license or registration. Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection (1) may be taken: (p) Failure to comply with, or violations of, any other provision of ss. 494.001-494.0077. Please advise in detail how you will operate and exercise control over both of the above- mentioned businesses. We request that your response be submitted to the Department within 14 days of the date of this letter. If you have any questions regarding this matter, please call me at [phone number]. This form letter will be referred to as the “Compliance Inquiry Letter.” The evidence is unequivocal that the Department has sent, and plans to send, the Compliance Inquiry Letter to all licensees whose Designation names a person determined to be a dual designee, without exception.14 Taylor’s Description of the Alleged Rules-by-Definition In his petition, as required by Section 120.56(4)(a), Florida Statutes, Taylor described the alleged rules-by- definition. Here, in his words, are the Department’s alleged statements: Only one person can realistically “operate the business operations” of a licensee and “exercise control over the licensee’s business.” Therefore, only one individual shall prima facie be designated as principal representative for only one mortgage lender. The above rule shall not apply, however, to mortgage lenders which the Department deems to be “grand-fathered” i.e., such companies who designated their principal representative on or prior to October 1, 2001, the effective date of the statutory amendments. In such instances, an individual will be permitted multiple designations without further departmental scrutiny or inquiry as to how that individual will “operate” or “exercise control over each business.”[Footnote omitted]. Except for “grand-fathered” companies, if an individual once designated principal representative by a mortgage lender is similarly designated principal representative by a separate mortgage lender, the Department based upon the agency statement recited in (a) above, will require the subsequent mortgage lender(s) (i.e., the lender(s) other than the one first designating that individual) to provide in writing a detailed explanation to the Department, subject to potential sanctions, describing how that individual will operate and exercise control over that second mortgage lender. The Department considers as a “licensing deficiency” any mortgage lender application or principal representative designation submitted to the Department where the individual designated as the mortgage lender’s principal representative has previously been and continues to be designated principal representative by another mortgage lender. The Department, based upon this “deficiency,” shall not deem the application(s) “complete” for purposes of section 120.60, Florida Statutes. Such application(s) shall be subjected to the licensing procedures set forth in paragraphs (e) and (f) hereafter. In conformity with the agency statement set forth in (a) above, the Department will not undertake an inquiry of the principal representative designation submitted by the mortgage lender who first designated the individual as its’ principal representative. The Department will require mortgage lenders to provide the information referred to in section c above, through the use of a form, [i.e., the form letters attached as EXHIBITS “14”, “15”, & “16”, to this Petition]. Further, this form created for the purpose of soliciting information [not specifically required by statute or an existing rule] will require mortgage lenders to provide a response, specifically subject to announced sanctions, of details not otherwise required under the applicable statutes or rules. The Department, though requiring mortgage lenders to comply with the agency statements through the threat of announced sanctions, shall not provide to mortgage lenders or their designated principal representatives any clarifying or defining circumstances or criteria the Department will deem as acceptable——contractual or otherwise——for a person to be designated as principal representative for more than one mortgage lender. Any responses provided by such mortgage lenders in response to the Department’s written form shall be submitted by the applicant “at their peril.” Ultimate Factual Determinations In his just-quoted statements “a,” “c,” “d,” and “e,” Taylor described, with reasonable particularity, the essence of policies that, in fact, fall within the statutory definition of the term “rule.” Statement “a” describes (albeit somewhat imprecisely) a Departmental mindset, the view that a person is likely to have difficulty simultaneously serving more than one master as a PR; the last sentence of statement “d” accurately describes the Department’s related policy of not inquiring as to how a PRD who is not a dual designee will operate and control the lender’s business (because the agency presumes that a person will probably have no difficulty serving as PR to one lender at a time). Taken together, these views, in fact, constitute the Department’s interpretation of the PR statutes.15 Taylor’s statement “c” and the third sentence of “d” (all of which, of course, he attributes to the Department) correctly describe, for the most part,16 the Department’s policy of requiring additional information from all licensees and applicants whose Designations nominate an XPR for the position of PR. This policy is plainly driven by the Department’s interpretation of the PR statutes, and it leads, in turn, directly to statement “e.” Restated to conform to the evidence, statement “e” holds that the Department will send either the DF 416 Inquiry Letter or the Compliance Inquiry Letter, whichever is applicable, to any lender whose PRD is an XPR. It is the form letters——the DF 416 Inquiry Letter and the Compliance Inquiry Letter——that have emerged as the most visible, most readily identifiable unadopted rules of the Department, for they solicit information not specifically required by statute or by an existing rule. By the end of December 2001 at the latest, rulemaking was both feasible and practicable with regard to the above- described statements, but no effort was made to adopt them as rules. Thus, the Department failed timely to commence rulemaking with regard to these statements in accordance with Section 120.54(1)(a), Florida Statutes.17
Conclusions For Petitioner: H. Richard Bisbee, Esquire Law Office of H. Richard Bisbee 124 Salem Court, Suite A Tallahassee, Florida 32301-2810 For Respondent: Cynthia K. Maynard, Esquire James H. Harris, Esquire Department of Banking and Finance Fletcher Building, Suite 526 101 East Gaines Street Tallahassee, Florida 32399-0350
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of appeal with the Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner is a Florida corporation headquartered in Boca Raton, Florida. William Kirschner is Petitioner's owner and chairman of the board. Stacey Interlandi is its President and principal broker. Petitioner is in the mortgage lending and brokerage business. All of the mortgage loans it makes are sold to investors. Petitioner held an active mortgage brokerage business registration (No. HB 592567137 00) issued pursuant to former Section 494.039, Florida Statutes, which was effective from September 1, 1990, until its expiration on August 31, 1992. 2/ It currently holds a mortgage brokerage business license (No. MBB 592567137 000) issued pursuant to Section 494.0031, Florida Statutes. The effective date of this license was September 1, 1992. The license expires on August 31, 1994. From October 1, 1989, through September 30, 1991, Petitioner acted as a seller or assignor of mortgage loans and/or a servicer of mortgage loans. Since October 1, 1991, Petitioner has made mortgage loans by advancing funds to mortgage loan applicants. With respect to each of these loans, however, the commitment to advance funds was made prior to October 1, 1991. Since October 1, 1991, Petitioner has sold or assigned mortgage loans to non-institutional investors, but for no monetary gain. Since October 1, 1991, Petitioner has serviced mortgage loans pursuant to agreements into which it entered prior to October 1, 1991. At no time has Petitioner been licensed as a mortgage lender pursuant to Chapter 494, Part III, Florida Statutes. On or about July 31, 1991, the Department sent the following written advisement concerning the revisions made by the 1991 Legislature to Chapter 494, Florida Statutes, to all registered mortgage brokerage businesses, including Petitioner: The 1991 Legislature revised Chapter 494, Florida Statutes, effective October 1, 1991. A copy of the new law is enclosed. Some of the changes which affect mortgage brokerage businesses are: A mortgage brokerage business may not make (fund) loans or service loans. Only mortgage lenders and correspondent mortgage lenders may make (fund) loans. Only mortgage lenders may service loans. A mortgage brokerage business may ONLY act as a mortgage broker. "Act as a mortgage broker" is defined as: "... for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, accepting or offering to accept an application for a mortgage loan, soliciting or offering to solicit a mortgage loan on behalf of a borrower, or negotiating or offering to negotiate the terms or conditions of a mortgage loan on behalf of a lender." There are no net worth requirements for mortgage brokerage businesses. A principal broker designation form must be completed and maintained in the principal place of business and a branch broker designation form must be completed and maintained at each branch. The required forms will be sent to your office prior to October 1, 1991. To act as a mortgage broker, a licensed individual must be an associate of a licensed brokerage business and is prohibited from being an associate of more than one mortgage brokerage business. "Associate" is defined as: ". . . a person employed by or acting as an independent contractor for a mortgage brokerage business . . ." Under the new law, no fee or notification to the Department is required when a mortgage broker becomes an associate of your business. However, the license of each mortgage broker must be prominently displayed in the business office where the associate acts as a mortgage broker. Note: The Department will discontinue processing change of status requests under the current law effective August 1, 1991. Mortgage brokerage businesses in good standing which hold an active registration are eligible to apply for licensure as a mortgage lender pursuant to the saving clause. The applicant must have: For at least 12 months during the period of October 1, 1989, through September 30, 1991, engaged in the business of either acting as a seller or assignor of mortgage loans or as a servicer of mortgage loans, or both; Documented a minimum net worth of $25,000 in audited financial statements; Applied for licensure pursuant to the saving clause before January 1, 1992 and paid an application fee of $100. Should you meet the above requirements and wish to apply for licensure as a mortgage lender pursuant to the saving clause or if you wish to apply for licensure as a mortgage lender pursuant to Section 494.0061, please contact the Department for the appropriate application. These applications will be available in early September 1991. THESE CHANGES ARE EFFECTIVE OCTOBER 1, 1991. PLEASE REVIEW THE ENCLOSED COPY OF THE LAW CAREFULLY FOR OTHER CHANGES WHICH MAY AFFECT YOUR MORTGAGE BROKERAGE BUSINESS. As promised, application forms for licensure as a mortgage lender were available the first week of September, 1991. Petitioner requested such an application form on September 18, 1991. The requested form was mailed to Petitioner the following day. On December 31, 1991, Petitioner submitted a completed application for licensure as a mortgage lender pursuant to the "saving clause," Section 494.0065, Florida Statutes. The application was accompanied by an application fee of $100.00 and an audited financial statement reflecting that Petitioner had a net worth in excess of $25,000.00. At the time of the submission of its application, Petitioner had an unblemished disciplinary record.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order granting Petitioner's application for licensure as a mortgage lender pursuant to the "Saving Clause." DONE AND ENTERED in Tallahassee, Leon County, Florida, this 18th day of November, 1992. STUART M. LERNER 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 18th day of November, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-4313 The following are the Hearing Officer's specific rulings on the findings of facts proposed by the Department: 1-7. Accepted and incorporated in substance, although not necessarily repeated verbatim, in this Recommended Order. 8. Rejected because it is more in the nature of a statement of the law, albeit an accurate one, than a finding of fact. 9-12. Accepted and incorporated in substance. 13. Rejected because it is more in the nature of a statement of the law, albeit an accurate one, than a finding of fact. 14-15. Accepted and incorporated in substance. 16. Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer. 17-21. Accepted and incorporated in substance. 22. Rejected because it is not supported by persuasive competent substantial evidence. 24 6/-39. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer. 40. Rejected because, even if true, it would have no bearing on the outcome of the instant case.
The Issue Whether Petitioner's responses to the mortgage brokers examination administered in April 1995 were properly graded and, if not, whether Petitioner passed the examination? Whether Petitioner's responses to the mortgage brokers examination administered in May 1995 were properly graded and, if not, whether Petitioner passed the examination?
Findings Of Fact Respondent is the agency of the State of Florida responsible for the licensure of mortgage brokers pursuant to Part II of Chapter 494, Florida Statutes. Pursuant to Section 494.0033(2)(b), Florida Statutes, individuals who apply for licensure as a mortgage broker are required to pass a licensure examination. To pass the examination, a candidate must receive a minimum score of 75. National Assessment Institute is the company employed by Respondent to administer the licensure examination. Petitioner applied for licensure as a mortgage broker. On April 25, 1995, Petitioner took the mortgage broker examination. Petitioner was advised that she had achieved a score of only 64. Petitioner was afforded an opportunity to review the examination questions and her answers thereto, and she did so on May 12, 1995. She questioned her failure to receive credit for fourteen of her answers on that examination and provided written explanations why she believed her answers to those questions were correct. Petitioner's written challenges and explanations regarding her answers to those fourteen questions were reviewed by staff of National Assessment Institute. The individual who reviewed Petitioner's responses did not testify in this proceeding. This individual determined that Petitioner's answers to those fourteen questions were incorrect and that her explanations were without merit. Petitioner was advised that she was not entitled to additional credit for her answers on the April 1995 examination. At the final hearing in this cause, Petitioner failed to present any evidence that her April 1995 examination was improperly graded or that she was otherwise entitled to additional credit for her responses to the challenged questions on the examination. Petitioner also sat for the licensure examination administered May 23, 1995. Petitioner received a score of 74 on this examination. On June 9, 1995, Petitioner reviewed the grading of answers to the May 1995 examination. Petitioner asserts that the reviewer gave her the wrong question book so that the answer key would make her answers appear incorrect. For her review on June 9, 1995, Petitioner was provided a correct copy of her examination book, a photo copy of her answer sheet, her original scratch paper, and two challenge sheets. The information provided Petitioner reflected the response to each question the Respondent considered to be the correct response. At the final hearing in this cause, Petitioner failed to present any evidence that her May 1995 examination was improperly graded or that she was otherwise entitled to additional credit for her response to any question on the examination. Petitioner failed to establish that the April or May examination was improperly administered. She likewise failed to establish that the opportunity to review the scoring of these two examinations was compromised by fraud or mistake. The Respondent has promulgated Rule 3D-40.031(2), Florida Administrative Code, which authorizes it to request additional information in conjunction with a licensure application, which information may include the applicant providing evidence of a passing score on the mortgage broker examination. That Rule requires that additional information requested must be received by the Respondent within 90 days. The Respondent requested that Petitioner provide evidence that she had received a passing score on the examination. Petitioner has been unable to provide that information.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order that adopts the findings of fact and conclusions of law contained herein. It is FURTHER RECOMMENDED that Petitioner's challenges to the scoring of the April and May 1995 licensure examinations be dismissed and, consequently, that Petitioner's application for licensure as a mortgage broker be denied. DONE AND ENTERED this 16th day of May, 1996 in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of May, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5132 The proposed findings of fact submitted by Petitioner are rejected as they are not supported by the record. While Petitioner purports to explain her answers to certain questions on the April 1995 examination, this evidence was not presented at the formal hearing. The following rulings are made as to the proposed findings of fact submitted by Respondent. The proposed findings of fact in paragraphs 1, 2, 3, 4, and 5 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 6 are adopted in part by the Recommended Order. The fact that Petitioner challenged ten question as a result of her review on June 9, 1995, was not established. Since there was no dispute that the request for formal hearing was timely and this is a de novo proceeding, the proposed findings of fact in paragraph 7 are unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 8, 9,10, 11, 13, and 14 are subordinate to the findings made. The proposed findings of fact in paragraphs 12 and 15 are rejected as being unnecessary to the conclusions reached. COPIES FURNISHED: Ms. Nasrin Y. Niknam 53 Castle Harbour Isle Drive Fort Lauderdale, Florida 33308 Deborah Guller, Esquire Office of the Comptroller Department of Banking and Finance 201 West Broward Boulevard, Suite 302 Fort Lauderdale, Florida 33301 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
Findings Of Fact The Parties. The Department is a state agency charged with the administration and enforcement of Chapter 494, Florida Statutes, the Florida Mortgage Brokerage Act, and the rules promulgated thereunder. Financial Funding is a corporation. Eric Schwartz is the sole director, officer and shareholder of Financial Funding. Mr. Schwartz has been licensed by the Department as a mortgage broker continuously since 1983. Between 1983 and 1988 Mr. Schwartz acted as broker for a wholly-owned mortgage brokerage business. From 1988 until October 1, 1991, Mr. Schwartz was licensed as a self-employed mortgage broker. Mr. Schwartz has also held a real estate broker's license since approximately 1978. Financial Funding was created by Mr. Schwartz in order to comply with newly enacted requirements of Chapter 494, Florida Statutes. Effective October 1, 1991, licensed mortgage brokers in Florida were required to be employed by a mortgage brokerage business. Mr. Schwartz was, therefore, required to create a business entity or work for someone else's mortgage brokerage business in order to continue as a mortgage broker. Financial Funding's Application. On or about December 12, 1991, Financial Funding filed an application with the Department for licensure as a mortgage brokerage business (hereinafter referred to as the "Application"). It was revealed in the Application that Mr. Schwartz was the President of Financial Funding. By letter dated April 24, 1992, the Department denied Financial Funding's Application. The Department denied the Application because of its conclusion that Mr. Schwartz, an officer of Financial Funding, had violated Chapter 494, Florida Statutes and had a disciplinary history. Financial Funding timely challenged the denial of its Application. The Eason Complaint. Between approximately 1984 and 1987, Mr. Schwartz was the sole owner and president of Paramount Finance Corporation (hereinafter referred to as "Paramount"). Mr. Schwartz was the principal mortgage broker for Paramount and utilized Paramount as the vehicle for his practice as a mortgage broker. On or about November 5, 1985, Agnes Eason filed a complaint against Mr. Schwartz and Paramount (hereinafter referred to as the "Eason Complaint"), in the Circuit Court of the Eleventh Judicial Circuit, In and For Dade County, Florida. A Final Judgment was entered on the Eason Complaint on or about February 17, 1987. The court found that Mr. Schwartz had initiated contact with the Plaintiff, Agnes Eason. The court also found that Mr. Schwartz had represented to Ms. Eason that the Small Business Administration (hereinafter referred to as the "SBA"), was about to foreclose a lien on her home. The court also found that "[t]he Small Business Administration, in fact, was not foreclosing on Plaintiff's property [and had no plans to institute foreclosure proceedings in the near future.]" The language in brackets was struck from the Final Judgment. Therefore, no determination was made as to whether foreclosure proceedings might have been instituted in the future. The striking of this language, however, does not prove that the SBA was considering possible foreclosure proceedings on Ms. Eason's property. Nor was Mr. Schwartz's testimony persuasive enough to reject the findings of the court on the Eason Complaint. The court concluded that Mr. Schwartz told Ms. Eason that "the only way to save her home from foreclosure" would be to execute notes and mortgages in favor of Paramount. Ms. Eason executed the suggested notes and mortgages and they were recorded. Although the notes and mortgages were executed on terms which Ms. Eason accepted, the court concluded that "no consideration" passed from Paramount to Ms. Eason for the notes or mortgages. The court also concluded that Ms. Eason executed the notes and mortgages because of the misrepresentation concerning the SBA by Mr. Schwartz. The court found that when Ms. Eason notified Mr. Schwartz that her payments on the note she had executed to Paramount were more than she could afford, the notes and mortgages were cancelled and a satisfaction was recorded. The court also found that after cancelling the notes and mortgages, Mr. Schwartz incorrectly told Ms. Eason that "the only way left to save her home from imminent foreclosure by the Small Business Administration" would be to execute a Warranty Deed conveying the fee simple interest in Ms. Eason's home to him. Mr. Schwartz also told Ms. Eason that, pursuant to a document titled a "Disclosure", he would grant Ms. Eason and her mother a life estate in the property. Mr. Schwartz was also to pay Ms. Eason $1,000.00 and to pay real estate taxes on the property pursuant to the Disclosure. Ms. Eason executed a Warranty Deed and the Disclosure on June 18, 1985. The Warranty Deed was recorded June 19, 1985. The Disclosure was recorded, but not until September 13, 1985. Although the transaction was explained by Mr. Schwartz to Ms. Eason and she accepted it, the court concluded that Mr. Schwartz's representation that foreclosure by the SBA was imminent was incorrect and that Mr. Schwartz failed to tender the sum of $1,000.00 agreed to in the Disclosure. Although Mr. Schwartz testified that he did attempt to tender the $1,000.00 (less $175.00 in recording fees), he did so after the Eason Complaint had been filed and it was rejected because of the litigation. Therefore, although the Disclosure agreement was executed June 18, 1985, Mr. Schwartz did not attempt to tender the $1,000.00 until some time after the Eason Complaint was filed on November 5, 1985. The court also found that Mr. Schwartz had not paid real estate taxes on the property as promised in the Disclosure. Mr. Schwartz explained, however, that the taxes had not been paid because the first real estate taxes due on the property had not become due until after the litigation had been instituted. The court concluded as a matter of law, among other things, the following: That the Defendant, ERIC SCHWARTZ, on behalf of Defendant PARAMOUNT FINANCE CORPORATION [fraudulently] misrepresented a material fact to the Plaintiff, AGNES EASON, for the purpose of inducing Plaintiff to execute the aforementioned notes and mortgages. That the Defendant, ERIC SCHWARTZ [fraudulently] misrepresented a material fact to the Plaintiff, AGNES EASON, for the purpose of inducing Plaintiff to execute the aforementioned Warranty Deed and "Disclosure." That the Warranty Deed executed by Plaintiff in favor of Defendant was procured by Defendant SCHWARTZ through the exercise of coercion and duress upon Plaintiff. That no consideration passed from Defendant SCHWARTZ to Plaintiff for any of the instruments executed by Plaintiff. That the purported promises made by Defendant SCHWARTZ in the "Disclosure", to the effect that certain debts of the Plaintiff will be paid by SCHWARTZ "if necessary", are illusory promises and impose no obligation upon the Defendant SCHWARTZ. Such promises are therefore unenforceable and do not constitute consideration in support of the subject conveyance. The court ordered the promissory notes, Warranty Deed and the Disclosure cancelled and declared them null and void. The Department's Awareness of the Eason Complaint. There were employees of the Department that were aware of the Eason matter at the time that an administrative action against Mr. Schwartz, which is discussed, infra, was being investigated by the Department. Prior to the action of the Department in this case, the Department has not taken disciplinary action against Mr. Schwartz's individual mortgage broker license as the result of the judgment on the Eason Complaint. The weight of the evidence failed to prove why the Department did not take action against Mr. Schwartz as a result of the judgment on the Eason Complaint until this case arose. The evidence also failed to prove, however, that the Department ever represented to Mr. Schwartz that it would not take any action against his license as a result of the Eason matter. 1990 Administrative Action. At some point during 1987, Mr. Schwartz decided to begin business as a mortgage broker with Mr. Stephen Hertz. Mr. Schwartz intended to discontinue operating through Paramount. Mr. Schwartz and Mr. Hertz intended to operate their business as Dollar Mortgage Company (hereinafter referred to as "Dollar"). In June of 1987 Mr. Schwartz prepared an application to register Dollar as the mortgage broker. Mr. Schwartz also prepared an endorsement transferring his individual license as principal mortgage broker to Dollar. These documents (hereinafter referred to as the "Dollar Applications"), were provided to Mr. Hertz to file with the Department. Mr. Schwartz, having been advised by Mr. Hertz that the Dollar Applications had been filed, believed that the Dollar Applications had been filed with the Department. Before being informed by the Department that the Dollar Applications had been approved or that his individual license had been renewed, Mr. Schwartz engaged in several mortgage brokerage transactions in the name of Dollar. Engaging in the transactions in the name of Dollar, therefore, constituted acting as a mortgage brokerage business without a license. At some point after the Dollar Applications were filed, Mr. Schwartz contacted Mr. Paul Richman of the Department's Miami office to determine what the status of the applications was. Mr. Schwartz was informed that the Department was in the process of changing the manner in which applications were processed and the process was causing a delay. Mr. Richman advised Mr. Schwartz to check with the Department's Tallahassee office in November, 1987, if the Department had not acted on the Dollar Applications by then. In November, 1987, Mr. Schwartz contacted the Department's Tallahassee office and was informed that the Dollar Applications had never been received. Mr. Schwartz submitted new applications at that time. As a result of the fact that Mr. Schwartz had transacted business before his license had been renewed and had acted in the name of Dollar before receiving approval of Dollar to transact such business, the Department filed an Administrative Complaint, Number 1154-F-5/88 (hereinafter referred to as the "Complaint"), against Mr. Schwartz. The Complaint was entered August 29, 1988. On or about January 23, 1990, the Department and Mr. Schwartz entered into a Stipulation and Consent Agreement (hereinafter referred to as the "Stipulation"), settling the Complaint. Mr. Schwartz admitted in the Stipulation to the following: 3. Eric S. Schwartz admits that he acted as a mortgage broker with an inactive license, and that Dollar acted as a mortgage brokerage business without a valid registration but denies intentional wrongdoing as more fully set forth in Mr. Schwartz's affidavit dated May 30, 1989 which is referenced as if fully set forth at length herein. Pursuant to the Stipulation, Mr. Schwartz was required to pay an administrative fine of $2,500.00 for his violation of Chapter 494, Florida Statutes. It was also agreed that the Dollar application would be withdrawn and it was. Mr. Schwartz's individual license was, however, renewed. The Stipulation also provided that the Department would make at least one examination of Mr. Schwartz's mortgage brokerage activities during each six month period during the next twenty-four months from the date of the Stipulation. Audits were in fact conducted by the Department. No further charges were brought against Mr. Schwartz as a result of these audits. Additionally, the following agreement was contained in the Stipulation: 13. The Department agrees that, upon execution of this Stipulation, payment of the administrative fine, payment of the restitution ordered, and faithful compliance hereafter by Eric S. Schwartz with all of the terms and conditions of this Stipulation, the Department will take no further action against Eric S. Schwartz for violations of the Act and the rules of the Department as set forth in the Complaint. However, should the Department, in its exercise of its discretion, deem it necessary to take action against Eric S. Schwartz for violations of the Act and rules of Department occurring after the time period set forth in the Complaint, then, in that event, all such allegations and charges may be used against Eric S. Schwartz in any such subsequent proceeding, if relevant. Eric S. Schwartz understands that there is no order, administrative or judicial, sealing these proceedings in the event of a future administrative complaint regarding activities alleged to occur subsequent to the final date of the timeframe of the investigation of the affairs of Eric S. Schwartz' activities as set forth in the Complaint. See the second paragraph number "13" on page 4-5 of the Stipulation. In March of 1990, the Department entered a Consent Final Order incorporating the Stipulation. The Department has not brought any charges against Mr. Schwartz subsequent to the execution of the Stipulation. The Department has continued to renew Mr. Schwartz's mortgage broker's license.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order denying Financial Funding's application for licensure as a mortgage brokerage business. DONE AND ENTERED this 21st day of January, 1993, in Tallahassee, Florida. LARRY J. SARTIN 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 21st day of January, 1993. APPENDIX The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Financial Funding's Proposed Findings of Fact Accepted in 6 and 8. Accepted in 9. Accepted in 3. Accepted in 4. Accepted in 5. Although the Department offered no such evidence, the weight of the evidence failed to prove that there is "no difference." Hereby accepted. See 8. Accepted in 34. Accepted in 10-11 and 28-29. Accepted in 30, 32-33 and 37. Accepted in 31 and 34. Whether Mr. Hertz advised Mr. Schwartz to start doing business in the name of Dollar is not relevant. The evidence failed to prove that Mr. Schwartz "had no reason to operate improperly." What Mr. Hertz noted in his letter of May 18, 1988 is hearsay. The evidence failed to prove when the documents "had been previously provided . . . ." The weight of the evidence also failed to prove that Mr. Schwartz "was not at fault." Hereby accepted. See 37 and 38. The weight of the evidence failed to prove that Mr. Schwartz had "nothing to hide." The evidence also failed to prove that the Department's audits were "extremely thorough. What the Department did during their audits of Mr. Schwartz is based upon hearsay. Accepted in 37. Accepted in 39. Not relevant. Hereby accepted. Accepted in 12 and 25. See also 17-19 and 21. The weight of the evidence failed to prove the second sentence. The fifth sentence through the end of this proposed paragraph is not relevant. The evidence also failed to prove that Ms. Eason was "initially pleased." 20 See 14-15, 19, 21 and 22. 21 See 25-27. The weight of the evidence failed to prove that the Department was aware of the Eason matter for "seven years." The weight of the evidence also failed to prove the third sentence.. The Department's Proposed Findings of Fact Accepted in 1. Accepted in 12. Hereby accepted. Accepted in 13, 21 and 23 and hereby accepted. Accepted in 34. Accepted in 35. The Stipulation was executed in January, not December. Accepted in 36. Accepted in 37. Accepted in 38. Accepted in 40. Accepted in 6. Accepted in 3 and 7. Accepted in 8. COPIES FURNISHED: Harold F. X. Purnell, Esquire Highpoint Center, Suite 1200 106 East College Avenue Tallahassee, Florida 32301 J. Ashley Peacock Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, FL 32399-0350 William G. Reeves General Counsel Room 1302 The Capitol Tallahassee, FL 32399-0350
Findings Of Fact The Department, a state agency, initiated the underlying proceeding when the Cease and Desist Order was filed on February 20, 1990. Petitioner, CGFS, Inc., is a corporation which has its principal office in this state. At the time the action was initiated by the Department, the corporation had less than 25 full-time employees and a net worth of less than $2 million dollars. Petitioner DeBellonia is the sole shareholder in the subchapter S corporation and does not have an independent claim for attorney's fees and cost. A Final Order dismissing the Cease and Desist Order was entered in favor of the Petitioners DeBellonia and CGFS, Inc. on October 16, 1990. The time for seeking judicial review of that order has expired and the order has become final agency action as a matter of law. The underlying Cease and Desist Order directed to Mr. DeBellonia and CGFS, Inc. was based upon a complaint made by Ms. Connie Jones, a client of CGFS, Inc. who dealt with Mr. DeBellonia. Ms. Jones, who contacted the Department, told representatives of the agency that Mr. DeBellonia, as president of CGFS, Inc., had agreed to arrange a mortgage loan on her behalf which was to be secured by real estate in Dade City, Florida. During the time period in which Ms. Jones had the business meeting with DeBellonia, neither Mr. DeBellonia nor CGFS, Inc. were licensed as a mortgage broker or a mortgage brokerage business. If the business transaction had occurred as originally represented by Ms. Jones, both Mr. DeBellonia and CGFS, Inc. would have been in violation of the Mortgage Brokerage Act. Based upon the complaint initiated by Ms. Jones prior to the Department's filing of the Cease and Desist Order, the agency had reason to believe that Mr. DeBellonia and CGFS, Inc. were violating or about to violate the law by acting as a mortgage broker and mortgage brokerage business without the proper licenses. Mr. DeBellonia and CGFS, Inc. were able to reveal during the formal hearing process that Ms. Jones' impressions of what occurred during her meeting with Respondent DeBellonia were faulty. It was necessary, however, for the Hearing Officer to resolve the question of what weight should be given to Ms. Jones' testimony and what credibility assessment should be made to resolve the disputed issues of material facts involved in the case. The Department disputes portions of the application for attorney's fees and costs relating to time spent with a private investigator and the review of a title search. Based upon the attorney's testimony at hearing in which he gave the reasons for the use of the investigator and the title search, the 1.33 hours spent by him on these matters during his preparation of the case was reasonable and necessary. As there is no other dispute as to the reasonableness of the hours spent by Mr. Mone in defending the Petitioners, it is determined that the 11.65 hours he spent in defending CGFS, Inc. as to the Cease and Desist Order should be included in his fee charges. Although the Hearing Officer specifically finds that $300.00 an hour is a reasonable hourly rate for an attorney of Mr. Mone's experience when the matter pursued is a civil action, this case is an administrative proceeding. Based upon the affidavit of Burton Wiand, whose law practice includes civil trial litigation as well as administrative law proceedings, $150.00 per hour is a reasonable fee within the Pinellas County and Hillsborough County area for services similar to those reasonably required from Mr. Mone in these proceedings. Great weight is given to Mr. Wiand's affidavit, and $150.00 per hour is a reasonable fee in this case.
Findings Of Fact At the time of CMNI's application, Mr. Giunta was president of CMNI and, as such, exercised primary control over the day-to-day activities of CMNI (Tr.12). Mr. Giunta is also the president of Christian Investors Network, Inc. (CINI), and exercised similar control over the activities of that corporation (Tr. 11-12). Mr. Giunta, CMNI, and CINI have never been licensed as mortgage brokers by the Department (Tr. 12-13). CINI, with the knowledge and approval of Mr. Giunta, placed advertisements in the St. Petersburg Times (Tr. 13). One such advertisement appeared in St. Petersburg Times edition of April 20, 1986, under the heading "Loan Information." That advertisement stated "Major Real Estate Financing" and "Residential Real Estate." (Exhibit 1). Sometime in the middle of 1986, Paul Mark called Mr. Giunta in response to an advertisement in the St. Petersburg Times. Mr. Mark was seeking a mortgage loan or loans to build several houses on real estate he owned and so informed Mr. Giunta, who indicated to Mr. Mark that he could arrange a mortgage loan for Mr. Mark (Tr. 28-29). Messrs. Mark and Giunta met shortly after the telephone call. Mr. Mark handed Mr. Giunta a package of documents including a site plan, survey, credit information and a completed mortgage loan application. Mr. Giunta again stated that he would have no problem arranging a mortgage loan for Mr. Mark and requested a fee for such service in the amount of $300.00 (Tr. 30-31). After the meeting, Mr. Mark sent to Mr. Giunta a check made out to Mr. Giunta in the amount of $300.00, together with a letter dated July 16, 1986, confirming that Mr. Giunta would secure mortgage financing (Tr. 31-33); Exhibit 3). In October of 1986, Clifford Clark called Mr. Giunta in response to a newspaper advertisement, seeking a mortgage loan to refinance a certain parcel of property owned by Mr. Clark. Mr. Giunta stated that he could arrange mortgage financing for Mr. Clark at an interest rate of approximately ten percent (Tr. 48-49). After the telephone contact, Messrs. Clark and Giunta met and Mr. Giunta had Mr. Clark fill out a residential loan application (Exhibit 7). Mr. Clark provided Mr. Giunta with originals of his deed to the property and other real estate related documents. Mr. Giunta indicated that he could obtain mortgage financing for Mr. Clark and requested a fee of $250.00, whereupon Mr. Clark gave Mr. Giunta a check for that amount (Tr. 49-51). In early 1986, Robert Miraglia called Mr. Giunta in response to a newspaper advertisement, seeking a second mortgage. Mr. Giunta arranged to meet with Mr. Miraglia to discuss the requested loan. In August of 1986, Russell Foreman contacted Gerald Giunta in response to a newspaper advertisement, seeking a mortgage loan to refinance his home (Exhibit 5). On August 26, 1986, Mr. Foreman met with Mr. Giunta and at Mr. Giunta's request gave him copies of his deed, a survey of the lot, the mortgages to be satisfied and other real estate related documents. Mr. Giunta assured Mr. Foreman that there would be no problem in obtaining a mortgage loan and requested a fee of $200.00. Mr. Foreman wrote a check for that amount and gave it to Mr. Giunta (Exhibit 5). Mr. Giunta never informed Messrs. Mark, Clark, Miraglia and Foreman that he was not a licensed mortgage broker. In approximately April of 1986, Mr. Giunta met with Mr. Arthur M. James, Area Financial Manager for the Department's Tampa Regional Field Office. At that meeting, Mr. James explained to Mr. Giunta that he could not offer to arrange or negotiate mortgage loans on behalf of clients and collect a fee for such service without first becoming licensed by the Department as a mortgage broker (Tr. 84). At some point prior to May 8, 1986, Mr. Giunta was contacted by the Department and informed of the statutes and regulations applicable to advertising his services in the area of real estate financing (Exhibit 2; Tr. 23-24). At some point in 1987, CMNI, with the knowledge and approval of Giunta, listed "Christian Mortgage Network, Inc." in the yellow pages of a local telephone book under the heading of "Mortgages." (Exhibit 1; Tr. 15).
Findings Of Fact Petitioner presented one witness that had audited the books and records of Respondent. This audit revealed that Respondent had handled some 350 transactions involving mortgages and that on approximately 50 of those transactions the Respondent had withheld a commission more than authorized by statute or department rule. The witness testified to only a few of those transactions shown on his work sheet attached to a deposition admitted into evidence. Thereafter Respondent stipulated that if asked about all of the other transactions shown on the work sheet, this witness, and the auditor who performed the balance of the audit, would testify the same for those other transactions, viz. that the worksheet figures were extracted from the records of Respondent and the authorized commissions shown thereon were computed using either the statutory method or the rule method and that both methods would give the same results. These figures show that the Respondent overcharged the borrower on approximately 50 transactions as alleged. On approximately 2/3 of the transactions the funds were remitted to a master broker, and on the other 1/3 the funds were remitted to the borrower. Further, that the notes and mortgages were received by Respondent for delivery to his client some 4 to 6 weeks after he had disbursed the money from his trust account. Upon expiration of Petitioner's case Respondent renewed his motions for dismissal and further moved for dismissal on the grounds that the funds for a majority of the transactions involved were remitted to another broker, and for those remitted directly to the borrower (developer) the charges were not excessive but those actually proposed by the borrower-developer. This motion was denied and Respondent then testified in his own behalf. Richard Zaloudek percent has been a licensed mortgage broker since 1960 and is also a licensed real estate broker. He has been in the mortgage brokerage business since 1948. Prior to obtaining his mortgage broker's license he dealt in FHA mortgages which were exempt. He renewed his license automatically each year until September, 1975 when he received no response from the Comptroller's Office to his application for renewal. Since a valid license is required to operate as a mortgage broker, Respondent has been unable to so act since the expiration of his license in September, 1975. When Respondent was approached by the master broker representing Mortgage Development Corporation to sell mortgages for it, he questioned the legality of such transactions. He was presented with a copy of the opinion of the office of the Comptroller, Division of Securities, dated January 10, 1973. This indicated that the notes secured by mortgages that he was being solicited to sell complied with the statutes and rules affecting securities. Thereafter he advertised in the news media that he had these high interest paying notes secured by mortgage for sale. When a client came into his office to invest he would take their investment, deposit same in his trust account, and then forward to the master broker or borrower the deposit less the commission the borrower and master broker had authorized him to deduct. Thereafter the note and mortgage was mailed to Respondent who presented it to the investor. As a result of many people losing money in investments in promissory notes secured by mortgages on land, newspaper coverage of various facets of the land development industry became widespread. In several cases the various mortgage brokers, such as Respondent herein, were named in these articles in the newspapers; and press reports were issued by the Comptroller's Office that certain licenses, including that of Respondent, had been revoked. Because of the adverse publicity, not only did Respondent's mortgage brokerage business drop off and stop completely when his license was not renewed in September, 1975, but also his business as a real estate broker suffered. Respondent's testimony that he lost real estate listings totaling some two million dollars was not rebutted. Nor was his testimony that this represented a loss of some $70,000 in income.
