Findings Of Fact Mr. Charles Peters was employed by Ameri-lantic Corporation at the time he applied for licensure as a mortgage broker, and he is currently employed by Ameri-lantic Mortgage Brokerage Company. Mr. Peters' duties at Ameri-lantic have included contacting potential lenders. These duties have also included discussing loan terms and rates with potential lenders. As an employee of Ameri-lantic, Mr. Peters has received compensation for his efforts on behalf of his employer, in the form of salary. There is no evidence that Mr. Peters' compensation was based on commissions of any kind. There is no evidence that Mr. Peters' duties included contacting persons who wished to borrow money, or that he acted to bring together those who wish to borrow with those who wished to lend money for mortgages.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the application of Charles Peters for licensure as a mortgage broker be granted, if he meets the other requirements for licensure, such as sucessful completion of the written examination. DONE and ENTERED this 4th day of December, 1990, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. 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 4th day of December, 1990. COPIES FURNISHED: Eric Mendelsohn, Esquire Department of Banking and Finance Office of the Comptroller 111 Georgia Avenue Suite 211 West Palm Beach, Florida 33401-5293 Robert L. Saylor, Esquire 215 Fifth Street Suite 302 West Palm Beach, Florida 33401 Honorable Gerald Lewis Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance The Capitol Plaza Level, Room 1302 Tallahassee, Florida 32399-0350
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.
The Issue Whether petitioner's application for a mortgage broker's license should be granted or denied.
Findings Of Fact Application and Reasons for Denial Applicant is a 52-year-old former mortgage broker who resides in Dade County, Florida. He was first licensed as a mortgage broker in Florida in 1959. His license remained in effect until it expired in 1976. He reapplied for registration as a mortgage broker in December, 1976. In June, 1977, the Department denied his application despite Applicant's attempt to withdraw his application in January, 1977. (P-1, R-6, R-7.) On March 18, 1981, Applicant filed another application with the Department for a license to act as a mortgage broker. That application is the subject of this proceeding. The Department seeks to deny it on grounds that the Applicant is insolvent; that he had a final judgment entered against him in a civil action on grounds of fraud, misrepresentation, or deceit; and that he lacks the requisite competence, honesty, truthfulness, and integrity to act as a mortgage broker in Florida. II. Insolvency Applicant is insolvent and deeply in debt. His insolvency arises out of his association with a company known as Guardian Mortgage and Investment Corporation ("Guardian Mortgage"), a mortgage brokerage firm operating in Dade County. He was secretary/treasurer and one of several mortgage brokers who worked for that company. Prior to its going out of business in 1976, it and its several brokers were accused of numerous financial misdealings. Between 1974 and 1980, over 31 civil lawsuits were filed against Applicant concerning financial transactions in which he was involved; most of the transactions occurred in connection with his employment at Guardian Mortgage. As a result of these lawsuits, and his failure to defend against them (on advice of counsel) , final judgments in excess of $500,000 have been entered against him and remain unpaid. Applicant has not attempted to pay off any of these judgments, although his codefendant, Archie Struhl, has made efforts to satisfy some of them. (Testimony of Lipsitt, Haber; R-4, R-5, R-6.) After Guardian Mortgage ceased operations, Applicant ran a hotel and orange grove operation in Central America. His wife was a preschool teacher. He has not earned any money beyond that necessary to meet his basic needs. (Testimony of Haber.) In the past, the Department has ordinarily refused to issue mortgage broker licenses to applicants who are insolvent. The reason for this policy is that the public "could be injured if a man [mortgage broker] did not have sufficient monies to back him up . . ." Tr. 144.) The only exception to this policy of denying applications on grounds of insolvency is when an applicant has shown that he is making an honest effort to satisfy and pay off the outstanding judgments. (Testimony of Ehrlich.) III. Civil Judgment of Fraud Entered Against Applicant In April, 1977, a civil action was filed by Murray Ritter against three codefendants: Applicant, Archie Struhl, and Guardian Mortgage. (Circuit Court of Dade County, Case No. 77-10849, Division II.) Count II of the complaint alleged that the defendants committed fraud by failing to invest $10,000 in a first mortgage and, instead, converted the money to their own use. On July 20, 1977, the circuit court, upon plaintiff's motion, entered a Final Summary Judgment in favor of plaintiff and against the three defendants. The judgment awarded plaintiff $10,000 in compensatory damages, $5,000 in punitive damages, and court costs of $63, for a total of $15,063. (R-5, R-6.) IV. Experience, Honesty, Truthfulness, Integrity, Competency, and Background of Applicant Applicant was a licensed mortgage broker for many years. The Department acknowledges that his experience in mortgage financing is adequate. (Testimony of Ehrlich.) Applicant denies that he ever engaged in wrongdoing as a mortgage broker, that he knew of improprieties occurring at Guardian Mortgage, or participated in a cover-up. He denies that he ever misrepresented facts or acted dishonestly as a mortgage broker. The evidence is insufficient to establish that Applicant lacks honesty, truthfulness, or integrity. (Testimony of Haber.) However, Applicant has not demonstrated that he has the requisite background and competence to engage in financial transactions involving mortgage financing. Civil judgments were entered (by the Circuit Court of Dade County) against Applicant in the following cases, each of which involved mortgage financing, unsecured loan transactions, or real estate investments negotiated by Applicant: Irvings S. Philipson, et al. v. Venus Development Corporation, et al., Case No. 74-1320. Dr. Seymour Z. Beiser, et al. v. Guardian Mortgage and Investment Corporation, et al., Case No. 76-24374. Dade Federal Savings and Loan Association of Miami v. Brenda Alexander, et al., Case No. 75-16230. City National Bank of Miami v. Guardian Mortgage and Investment Corporation, et al., Case No. 75-39444. Leon Earler, et al. v. Venus Development Corporation, et al., Case No. 76-22138. Jesus Suarez v. Leonard Gordon, et al., Case No. 76-26381. John J. Nussman, et al. v. Melvin J. Haber, et al., Case No. 76-30569 (12). County National Bank of North Miami Beach v. Sid Shane, et al., Case No. 77-27909 (14). Herman Mintzer, et al. v. Guardian Mortgage and Investment Corporation, Case No. 76-16842. Melvin Waldorf, et al. v. Guardian Mortgage and Investment Corporation, Case No. 76-16344. Florence Margen v. Guardian Mortgage and Investment Corporation, et al., Case No 76-39412. Biscayne Bank v. Guardian Mortgage and Investment Corporation, et el., Case No. 76-39857 (8). Harry Jolkower, et al. v. Archie Struhl, et al., Case No. 77-19172. Hilliard Avrutis v. Archie Struhl, et al., Case No. 32494. Julius Wladawsky, et al. v. Melvin J. Haber, et al., Case No. 76-22554 (14). Taken as a whole, these judgments support an inference that Applicant lacks the competence and background necessary to act as a responsible mortgage broker in Florida. 2/ (Testimony of Ehrlich; R-4, R-5.)
Recommendation Based on the foregoing, it is RECOMMENDED: That the application for a mortgage broker's license be DENIED. DONE AND RECOMMENDED this 15th day of January, 1982, in Tallahassee, Florida. R. L. CALEEN, JR. 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 15th day of January, 1982.
The Issue The issue in this case is whether disciplinary action should be taken against Respondents' mortgage brokerage licenses for the reasons set forth in the Order to Cease and Desist, Administrative Complaint and Notice of Rights filed by Petitioner on January 18, 1989 (the "Administrative Complaint".) The Administrative Complaint alleges that Respondents violated the following statutory and rule provisions: Section 494.055(1)(b), Florida Statutes, by charging borrowers closing costs that were in excess of the actual amount incurred by the mortgagor; Section 494.08(3), Florida Statutes, and Rule 3D- 40.008(9), Florida Administrative Code, by charging excess brokerage fees; Section 494.055(1)(b), Florida Statutes, by engaging in deceit, misrepresentation, negligence or incompetence in mortgage financing transactions and for breach of the fiduciary duty of a broker as a result of the manner in which escrow accounts were handled; Section 494.055(1)(h), Florida Statutes, due to the misuse, misapplication or misappropriation of funds, mortgage documents or other property entrusted to Respondents as a result of the excess charges assessed to borrowers and the misuse of monies in the escrow accounts; Rule 3D- 40.006(6)(a), Florida Administrative Code, for failing to maintain trust, servicing and escrow account records in accordance with good accounting practices; and Section 494.0393(2), Florida Statutes by failing to operate the company under the full charge, control and supervision of a principle who is a licensed mortgage broker.
Findings Of Fact At all times pertinent hereto, Respondent All States Mortgage and Investment Corporation ("All States Mortgage") was licensed by the Department as a mortgage brokerage company having been issued License Number HB-592582215. All States Mortgage had its principle place of business in Davie, Florida. All States Mortgage did not typically engage in traditional "mortgage broker functions." Instead, it generally worked with other mortgage brokers in providing funds for loans brought to All States Mortgage by other brokers. At all times pertinent hereto, Respondent, Lynn F. Smith ("Smith") was a licensed mortgage broker having been issued License Number HA-265-72-0045. Smith was the principle mortgage broker for All States Mortgage. Smith has been the principle mortgage broker for All States Mortgage since its inception and has been registered with the Department as a licensed mortgage broker since before a license was issued to All States Mortgage. In addition to being the principle broker for All States Mortgage, Smith was an officer and director of the company and had responsibility for the direction, control, operations and management of the company. In May of 1988, Respondents were affiliated with a licensed consumer finance company known as All States Finance Company. Currently, both All States Mortgage and All States Finance are inactive and an application has been filed to transfer the license of All States Mortgage to a new company known as All States Financial Services. As a result of an audit and examination conducted by the Department in May, 1988, it was determined that one client of All States Mortgage, Donald Salvog, was charged a brokerage fee in excess of the maximum allowable fee under Chapter 494. After notification by the Department, Respondents admitted that they inadvertently charged an excess fee to Mr. Salvog and Respondents immediately proceeded to refund the excess of $82.63 to the customer. There is no evidence that Respondents charged any other customers with a brokerage fee in excess of the maximum allowed under Chapter 494. In a number of the individual mortgage transactions in which it was involved, Respondents charged a standard credit report fee of $25.00 to the borrowers. The following chart reflects the individual loan files where such a fee was charged and the total amount of the invoices in the respective loan file to support the charges. Borrower's Name Cost per Closing Stmt. Cost per Invoices Roland Sagraves $25.00 $3.25 John Murphy $25.00 $3.25 Donald Salvog $25.00 $2.95 Harry Walley $25.00 $2.57 Raymond Parker $25.00 $5.14 Shateen/Lawrence $25.00 $5.75 James Arnold $25.00 $3.94 Richard Pope $25.00 $5.04 James Smith $25.00 $6.50 9. In four of the nine customer files listed in Findings of Fact 8 above, a "standard factual" credit report was included in the file. The typical cost for a "standard factual" is $45.00. No invoices were included in those files to reflect this cost. In obtaining credit reports for an individual mortgage transaction, Respondents did not generally order a credit report from an existing service. Instead, All States Mortgage had an on-line computer terminal with a direct phone modem linked to the individual credit reporting agency's computer data base. An employee of All States Mortgage, usually Burton Horowitz, used this computer link-up to conduct a credit report on the borrower. "Standard Factual" reports were ordered from existing services as necessary to supplement the computer search. The standard $25.00 fee charged by All States Mortgage was based upon an estimate of the overhead and indirect costs associated with producing credit reports in this manner. The overhead and indirect costs involved in obtaining credit reports as described in Findings of Fact 10 include the cost of leasing the equipment, the labor involved in obtaining the computer report (it typically takes an operator 30 minutes to obtain the credit reports) and the cost of the materials involved in producing a copy of the report. The standard $25.00 fee charged by All States Mortgage was not based on a specific allocation of the indirect costs associated with producing a particular report, but, instead, was simply based upon an estimate of the costs involved. During the course of its operations, All States Mortgage would periodically receive funds that were to be held in escrow. These escrow funds were kept in an interest-bearing account that was used by All States Mortgage and All States Finance. (This account is hereinafter referred to as the "Commingled Account.") The escrow funds in this Commingled Account were mixed with other funds of All States Mortgage as well as money belonging to All States Finance. Respondents contend that the escrow funds were commingled with the other funds because the companies had only one interest bearing account and that account had limited check writing ability. Respondents transferred money between the interest bearing Commingled Account and their other operating accounts on a continuous basis. At the end of each month, Respondents attempted to perform a reconciliation as to the escrow balances in the Commingled Account. On several occasions during the period from July 1987 through May 1988, the balance in the Commingled Account was less than the total funds that Respondents were supposed to be holding in escrow. No evidence was introduced to indicate that Respondents' handling of the escrow funds and/or the Commingled Account ever resulted in a loss to any of their borrowers or customers. Thus, while the evidence does indicate that, on occasion, the balance of the Commingled Account was less than the funds that should have been in escrow, the difference on each occasion was ultimately corrected in the reconciliation process. Respondents failed to use good accounting principles in the handling of the escrow funds. The Department has not adopted any rules requiring a mortgage broker to handle escrow funds in a separate account. Prior to the initiation of this Administrative Complaint, Respondents were never informed that they were required to do so. The Department's examiners prepared a schedule indicating that Respondents had diverted some of the escrow funds to their own use. However, that schedule includes several loans that had already been sold to another company on the date listed. Thus, the schedule does not accurately reflect the funds that should have been in escrow on any particular day. Although Respondent Lynn Smith was only in the office approximately fifteen percent (15%) of the time while the Department's examiners were conducting their audit in May of 1988, insufficient evidence was introduced to establish the charge that Smith was not fully supervising or controlling the actions of the employees of All States Mortgage. The unrefuted testimony of Smith indicates that she often worked non-regular hours, that she reviewed all the documents for every transaction in which All States Mortgage was involved and she supervised the work of all of the employees of the company. Extenuating circumstances in May of 1988 caused her to be out of the office more than usual during regular business hours. However, this fact alone is insufficient to establish the charge that she was not fully supervising or controlling the actions of the company.
Recommendation Based upon the foregoing Findings of Facts and Conclusions of Law it is, it is RECOMMENDED that the Department of Banking and Finance enter a final order finding the Respondents guilty of violating Sections 494.055(1)(b), (d), (f), (h) and (k) and issue a reprimand to the Respondents and impose a fine of one thousand five dollars ($1,500.00). DONE and ORDERED this 9th day of July, 1990, in Tallahassee, Florida. J. STEPHEN MENTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1990.
Findings Of Fact At all times material to these proceedings, the Respondent Cline was licensed by the State of Florida as a mortgage broker and held license number HB 0017832 from January 13, 1986 through May 31, 1987. During this period of time, Respondent Cline was president and principal mortgage broker for MAC at the 4045 Tamiami Trail, Port Charlotte location. The Respondent was a director and shareholder of the corporation. The Respondent Henderson was also licensed as a mortgage broker and held license number HA 0007460 from March 29, 19856 through June 19, 19889. Respondent Henderson conducted business through MAC as the corporation's vice president. The Respondent was a director and shareholder of the corporation. In response to a consumer complaint, the Department initiated an examination of the books and records maintained at the Port Charlotte location of MAC on April 21, 1987. The conduct of the Respondents in their business dealings as mortgage brokers with MAC was investigated as part of the Department's review process. The examination and investigation involved the time period from March 1, 1986 to June 1, 1987. The written examination report prepared by the Department's financial examiner concludes that the Respondents, as officers and directors of MAC, financially compensated MAC employees who were not licensed under the Mortgage Brokerage Act for soliciting or negotiating mortgage loans. Six alleged mortgage solicitors were named in the report. The loan packages of seventeen mortgages, along with MAC's commission reports, were submitted as evidence to support the conclusion. A review of the documentation, along with a review of the commission checks and the testimony of Kimberly L. Johnson (nee Steed) revealed that the documents identified as "commission reports" were not indicators of commission funds received by the six employees named in the complaint. These employees were paid on a set salaried basis. They were hired by MAC to perform the ministerial acts of taking or typing applications for loans under the direction of a mortgage broker. The use of these employees' names in the commission reports incidentally shows which employee assisted in the completion of forms that resulted in commissions to the licensed brokers who completed the mortgage financing transactions. This interpretation of the "commission reports" is clearly supported by the first page of the reports, Petitioner's Exhibits 17 and Commission checks on the loans, were issued to the licensed mortgage brokers. The evidence demonstrates that Rebecca Henderson, who was one of the employees performing ministerial acts, on one occasion acted beyond her authority and "locked in" the interest rate for a mortgage applicant while she was completing the application. The Department did not present evidence to show that either Respondent Henderson or Respondent Cline had actual knowledge of the employee's actions. Neither licensee was the mortgage broker directing the employee at the time the incident occurred. During the course of the Department's examination, the conclusion was reached that MAC advertised in a newspaper that the corporation was a "mortgage banker" and a "FNMA lender." The Department alleges that MAC is not a "mortgage banker" and a "FNMA lender." At hearing, Kenneth Moulin, a former shareholder of MAC, testified that the goal of MAC was to become a bank. The corporation had money which was used to fund two mortgage loans with MAC as mortgagor. Petitioner's Exhibit 34, which was loan documentation on the residential loan application of William T. Martel and Lora A. Martel, names MAC as the lender. The documents also include FNMA forms used by FNMA lenders. The examination report concluded that MAC did not maintain records for a five-year period. The company started doing business in March 1986. Records were continuously maintained from MAC's inception. An advertisement placed in the newspaper, The Monday Sun, which was published on April 28, 1986, failed to include the phrase that MAC was a "licensed mortgage broker." The advertisement was placed by Respondent Henderson. In mitigation, it should be noted that Respondent Henderson had his mortgage brokerage license for less than one month and was new to the business as it is regulated by the Department. There was no evidence provided to demonstrate that Respondent Cline was aware of the improper advertisement. Other documents provided which purported to be advertisements were not authenticated. They lacked mastheads or headings which could sufficiently identify the place, date or kind of publication. As part of the mortgage financing transactions involved in the sampling of mortgages conducted by the Department, MAC collected fees from applicants for the preparation of documents and reports. Specific fees were quoted to applicants and receipts were clearly marked to demonstrate that the fees were non-refundable to applicants. In its bookkeeping entries, MAC continuously failed to maintain ledger entries which showed that the fees had been assessed on each application, and that the monies had been used for the intended purposes for which they had been collected. In the sampling of mortgages reviewed by the Department, MAC retained money assessed for discount points. The money was not used to reduce the interest rate on mortgages closed, as represented to the borrowers by MAC. Instead, the mortgages were immediately assigned and the discount assessment was retained by MAC for its own, undisclosed use.
Recommendation Based upon the foregoing, it is RECOMMENDED: That Respondent Henderson be issued a reprimand for failure to place the words "licensed mortgage broker" in the April 28, 1986 advertisement. That all other charges against the Respondents be dismissed. DONE and ENTERED this 27th day of November, 1989, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerkk of the Division of Administrative Hearings this 27th day of November, 1989. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-2202 Petitioner's proposed findings of fact are addressed as follows: Accepted. See HO #1. Accepted. See HO #2. Accepted. See HO #1. Accepted. See HO #2. Rejected. See HO #2. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. See HO #1. Rejected. Irrelevant. Rejected. Irrelevant. Accepted. See HO #3. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Irrelevant. Rejected. Document speaks for itself. Also, this is established as proper evidence under Section 494.051, Florida Statutes, so these findings are redundant. Rejected. Report speaks for itself. Accepted. Accepted. Reject the phrase "negotiation." Contrary to fact. See HO #5. Reject the phrase "negotiate." Contrary to fact. See HO #5. 21.-24. Rejected. Contrary to fact. Kimberly L. Johnson is the same person as Kimberly L. Steed who has been licensed as a mortgage broker since September 29, 1986. 25.&26. Rejected. Contrary to fact. See above. This rendering of the testimony is rejected by the fact finder. Accepted. &29. Rejected. Contrary to fact. See HO #5 and HO #6. Accepted. Rejected. See HO #5. Contrary to fact. Accepted. Rejected. Contrary to fact. See HO #5. Accepted. Rejected. Contrary to fact. See HO #5. Rejected. Contrary to fact. Steed completed ministerial acts. See HO #5. Accept the first sentence. Reject the rest as contrary to fact. See HO #5. Rejected. Improper legal conclusion. See HO #12. Rejected. Contrary to fact. See HO #12. Rejected. Cumulative. Rejected. Repetitive. See HO #12. Rejected. Contrary to fact. See HO #12. Accepted. See HO #13. Accepted. Accepted. Rejected. Improper legal conclusion. Appli- cation fees were not set up as entrusted funds. See HO #12. Rejected. Contrary to fact. See HO #8 and #9. Accepted. Accepted. Rejected. See HO #8. Contrary to fact. Accepted. Accepted. Accepted. Accepted. Rejected. Repetitive. Rejected. Contrary to fact. Cline was not the mortgage broker on any of the transactions presented at hearing. Accepted. Accepted. Accepted. Accepted. Rejected. See HO #8 and #9. Accepted. See HO #13. Accepted. See HO #13. Accepted. See HO #13. Respondent Cline's proposed findings of fact are addressed as follows: Accepted. See HO #1. Accepted. Accepted. Rejected. The records presented were found to be reliable when compared with the originals presented simultaneously by Respondent Henderson, although those were not officially placed in evidence. Rejected. See above. Accepted. See Conclusions of Law. Accepted. See HO #3. Accepted. Accepted. Accepted. See HO #5. Accepted. See HO #5. Rejected. Calls for legal conclusion. Rejected. See Section 494.051, Florida Statutes. Accepted. Accepted. Accepted. See HO #8 and #9. Accepted. See Conclusions of Law. Rejected. Irrelevant. See Section 494.051, Florida Statutes. However, the competency of the examiner was considered in the factual determinations made by the Hearing Officer. Accepted. Not listed as factual finding. As a Conclu- sion of Law, the Hearing Officer cannot rule on this matter. Respondent Henderson's proposed findings of fact are addressed as follows: Accepted. Accepted. See preliminary matters. Accepted. Accepted. See HO #2. Rejected. Improper legal conclusion. Unable to rule on proposed finding. Insufficient. 7. Accepted. See HO #5. 8. Accepted. See HO #8. 9.&10. Reject. Insufficient. 11. Accepted. See HO #12. 12. Rejected. Insufficient. 13. Accepted. 14. Accepted. See HO #12. 15. Accepted. See HO #2. 16. Rejected. Conclusionary. 17. Accepted. 18. Accepted. 19.-30. Not listed as factual findings. As Conclusions of Law, Hearing Officer cannot rule on these matters. COPIES FURNISHED: Elsie M. Greenbaum, Esquire Assistant General Counsel Office of the Comptroller 400 West Robinson Street Suite 501 Orlando, Florida 33801 Ann Mitchell, Esquire GERALD DUNCAN ENGVALSON & MITCHELL Foxworthy Professional Building Suite 101 1601 Jackson Street Fort Myers, Florida 33902 Floyd G. Henderson Post Office Box 2875 Port Charlotte, Florida 33949 Charles L. Stutts, Esquire General Counsel Office of the Comptroller The Capitol Tallahassee, Florida 32399-0350 Honorable Gerald A. Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: For the period September 1, 1987 through August 31, 1988, Respondent was registered as the principal mortgage broker for the company AFM. Respondent's license number, HT 0010066, and street address, 3200 N. Military Trail, Suite 300, Boca Raton, Florida 33431, were included on the mortgage broker business registration renewal form executed and submitted by Respondent to the Department. AFM's mortgage brokerage registration number was HY0019932. Ronald Mims performed an examination of the AFM business records for a period which included September 1, 1987 through August 31, 1988. One of the loan transactions examined by Mr. Mims pertained to a borrower/applicant named Frazer. The records maintained by AFM related to this transaction contained a good faith estimate, dated April 15, 1988, that was prepared and executed by Darlene M. Mannarino, as the AFM office manager. The file did not contain a copy executed by the borrower. The good faith estimate described in paragraph 2 provided, in part: In compliance with Chapter 494 of Florida Statutes; Lender/Broker hereby acknowledges receipt of an application fee in the amount of $ 300.00 , and agrees that this will be applied towards the settlement charges. If an acceptable commitment is not obtained or loan closing does not occur for any reason, this deposit will not be refunded. A copy of a check in the amount of $300.00 payable to "American Funding1 from Frazer Distributors was included in the AFM-Frazer transaction file. Also included was a loan application executed by Respondent as the AFM interviewer. None of the documents contained in the Frazer file dIsclosed the limits and conditions of recovery from the Mortgage Brokerage Guaranty Fund (MBGF). Such documents did not disclose the escrow/trust agent if other the payee, American Funding. AFN did not have an escrow/trust account. The good faith estimate for the Frazer transaction provided for an estimated charge of $225.00 for an anticipated appraisal fee. Peter H. Sayles performed an appraisal for the Frazer transaction. The total amount billed to AFM by Sayles for he Frazer account was $350.00. Mr. Sayles was not paid for this work nor for an additional $100.00 due to him from AFM for a Roberts account. Mr. Sayles obtained a default judgment for these amounts in summary claims. Mr. Mims also obtained copies of records maintained by AFM related to a transaction for a borrower/applicant named Neger. A good faith estimate executed by the borrower on October 27, 1987, contained the same language as described in paragraph 3 above. The amount of the Neger deposit, however, was $250.00. The file did not contain a copy of the good faith estimate executed by AFM. The file held a copy of a check dated October 27, 1987, from Daniel Neger to "American Funding" in the amount of $250.00. The Neger loan application was signed by Darlene/Sherin Reynolds as the interviewer for AFM. The Neger documents maintained by AFM did not disclose the conditions or limits for recovery from the MBGF. Additionally, the documents did not disclose the escrow/trust agent for the transaction if other than the payee (American Funding). At the time of this transaction AFM did not maintain an escrow/trust account. At all times material to this case, Darlene Mannarino was not licensed by the Department. Except as noted above, Ms. Mannarino's duties and the type of payment she received for the work she rendered on behalf of AFM are not established by the record in this case. AFM did not maintain a mortgage journal in connection with the loan transactions it processed. Instead, AFM retained records in a card index file for loan applications. The records maintained in the card index file were incomplete and, consequently, inadequate to allow Mr. Mims to track the status and completion of loan transactions processed by AFM.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department of Banking and Finance, Division of Finance, enter a final order placing the Respondent licensee on probation for a period of two years. Further, it is recommended that the Department impose an administrative fine against Respondent in the amount of $1000.00. DONE and ENTERED this 2nd day of July, 1990, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH 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 2nd day of July, 1990. APPENDIX TO CASE NO. 90-0743 RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE DEPARTMENT: Paragraphs 1 and 2 are accepted. Paragraph 3 is rejected as contrary to the weight of the evidence or unsupported by the record. Paragraph 4 is accepted. Paragraph 5 is accepted but is irrelevant. Paragraph 6 is accepted. Paragraph 7 is accepted. Paragraph 8 is rejected as unsupported by the weight of the evidence. While the Department established that Sayles was not paid for appraisal services rendered, that does not imply nor establish that Respondent misused funds. Whether funds exist from which Sayles could be paid, is unknown. All that is known is that AFM, for whatever reason, did not pay Sayles. Paragraph 9 is rejected as unsupported by the weight of the evidence. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE RESPONDENT: The first sentence of paragraph 1 is accepted. The balance of the paragraph is rejected as unsupported by the evidence or irrelevant. Paragraph 2 is rejected as irrelevant or contrary to the weight of the credible evidence. Paragraph 3 is accepted but is irrelevant. Paragraph 4 is rejected as contrary to the weight of the evidence or argument. Paragraph 5 is rejected as contrary to the weight of the evidence or argument. COPIES FURNISHED: Eric Mendelsohn Assistant General Counsel Office of the Comptroller Ill Georgia Avenue, Suite 211 West Palm Beach, Florida 33401-5293 Jerald A. Goldstein JERALD A GOLDSTEIN, P.A. 3200 North Military Trail Suite 300 Boca Raton, Florida 33431 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 Mr. William G. Reeves General Counsel The Capitol Plaza Level, Room 1302 Tallahassee, Florida 32399-0350
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.
Findings Of Fact In his application for registration as a mortgage broker (Exhibit 2), David Stain, Petitioner, in response to question 7 "Have you any judgments against you?" answered "No". By letter dated May 12, 1980 (Exhibit 1), Respondent advised Stein that background investigation revealed numerous judgments against him and stated it would he necessary for Stein to advise why he chose to answer question 7 in the negative. After receiving no response from Stein, Respondent, on 2 July 1980, entered a Final Order denying Stein's application for registration as a mortgage broker. Grounds given in this Order were based upon numerous unsatisfied judgments entered against Stein in Pennsylvania. Exhibit 3, a composite exhibit of court records from Allegheny County, Pennsylvania, shows judgements entered against David Stein and in favor of: Pennsylvania Department of Revenue (2), Diner's Club, Ford Motor Credit Company, Charles Arnold, Alan Shaffer, Carl Kronander, and CNA Financial Corporation.
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