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.
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 At issue in this proceeding is whether Respondents committed the offenses set forth in the Administrative Complaints and, if so, what penalty should be imposed.
Findings Of Fact Preliminary matters Petitioner, Department of Business and Professional Regulation, Division of Real Estate (Department), is a state government licensing and regulatory agency charged, inter alia, with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, including Chapters 455 and 475, Florida Statutes. Respondent, Mizeral Robinson (Robinson), is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0484257. From July 18, 1988, through January 5, 1997, Robinson was registered with the Department as a broker/officer of Wakefield Realty, Inc. (Wakefield Realty), a broker-corporation, and from January 6, 1997, through June 30, 1997, Robinson was registered as an active broker-salesperson with Township Realty, Inc., a broker-corporation located at 1333 South State Road 7, North Lauderdale, Florida. Since June 30, 1997, Robinson has been registered as a broker-salesperson without a current employer, with an address of 6372 Harbor Bend, Margate, Florida. From July 18, 1988, through January 6, 1997, Wakefield Realty was registered with the Department as a broker-corporation (registration number 0255869), with an address of 4699 North State Road 7, Fort Lauderdale, Florida. However, in October 1996, without notice to the Florida Real Estate Commission, Wakefield Realty relocated its offices to 2240 Woolbright Road, Boynton Beach, Florida. On January 6, 1997, the license of its corporate broker, Robinson, was reissued as a broker-salesperson with Township Realty, Inc., and, no active broker having been appointed to fill the vacancy within 14 calendar days, Wakefield Realty's corporate registration was cancelled. Rule 61J2-5.018, Florida Administrative Code. The Dobson contract and related matters (DOAH Case No. 97-5041) On October 31, 1995, Respondents, Robinson and Wakefield Realty, as agents for Hubert and Ruth Dobson, the Buyers, presented a written offer to purchase a house owned by Adrienne and Nancy Cutler, the Sellers, at 951 Southwest 88th Terrace, Pembroke Pines, Florida. On November 7, 1995, following negotiations, the Dobsons' offer was accepted by the Sellers. The agreed purchase price was $123,480, with the method of payment as follows: a $2,000 deposit tendered with the offer; an additional deposit of $4,000 "due within 10 United States banking days after date of acceptance"; the proceeds ($117,306) of a new conventional mortgage to be secured by the buyers; and, a balance of $174 to be paid by the buyers at closing. All deposits were to be held in escrow by Wakefield Realty. In addition to the provisions of the agreement relating to the deposits, discussed supra, the agreement contained the following pertinent provisions: D. NEW MORTGAGES: . . . if this Contract provides for Buyer to obtain a new mortgage, then Buyer's performance under this Contract shall be contingent upon Buyer's obtaining said mortgage financing upon the terms stated, or if none are stated, than upon the terms generally prevailing at such time in the county where the property is located. The buyer agrees to apply within 5 banking days . . . and to make a good faith, diligent effort to obtain the mortgage financing. In the event a commitment for said financing is not obtained within 45 banking days . . . from the date of this Contract, then the other party may terminate this Contract by delivery of written notice to the other party or his agent, the deposit shall be returned to the Buyer and all parties shall be released from all further obligations hereunder. This right of termination shall cease upon the Buyer obtaining a written commitment letter for mortgage financing at the rate and terms of payment previously specified herein prior to the delivery of the notice of termination. * * * X. DEFAULT: In the event of default of either party, the rights of the non- defaulting party and the broker shall be as provided herein and such rights shall be deemed to be the sole and exclusive rights in such event; (a) If Buyer fails to perform any of the covenants of this Contract, all money paid or deposited pursuant to this Contract by the Buyer shall be retained by or for the account of the Seller as consideration for the execution of this Contract as agreed and liquidated damages and in full settlement of any claims for damages and specific performance by the Seller against the Buyer. . . . * * * (CHECK and COMPLETE THE ONE APPLICABLE) (X) IF A WRITTEN LISTING AGREEMENT IS CURRENTLY IN EFFECT: Seller agrees to pay the Broker named above including cooperating sub-agents and/or cooperating Buyers Agents named, according to the terms of an existing, separate written agreement; * * * If Buyer fails to perform and deposit(s) is retained, 50% thereof, but not exceeding the Broker's fee above provided, shall be paid Broker, as full consideration for Broker's services including costs expended by Broker, and the balance shall be paid to Seller. To finance the purchase, Robinson submitted an application on the Dobsons' behalf for a conventional residential mortgage loan with Citizens Federal Bank. That application was denied January 8, 1996. Following the denial of their application, the Dobsons made demand of Respondents, under the mortgage contingency provision of the purchase agreement, for the return of their $6,000 deposit.3 Respondents, notwithstanding the rejection of the Dobsons' application for financing and the Sellers' execution of a release of deposit, which directed the escrow agent to disburse the escrow deposit of $6,000 to the Dobsons, failed and refused to return any portion of the deposit to the Dobsons. To date, such failure continues, and the proof is compelling that Respondents have converted the deposit to their own use and benefit.4 The Rafiee contract and related matters (DOAH Case No. 98-0003) On October 25, 1996, Respondent, Mizeral Robinson, procured a written offer from Iran Rafiee to purchase a triplex owned by Henry Sweigart, located at 11460 Northwest 39th Street, Coral Springs, Florida. The stated purchase price was $195,000, with the method of payment as follows: a $1,000 deposit tendered with the offer; an additional deposit of $9,000 "due within 5 United States banking days after date of acceptance"; the proceeds ($156,000) of a new conventional mortgage to be secured by the buyer; and, a balance of $30,000 [sic] to be paid by the buyer at closing. All deposits were to be held by Wakefield Realty, Inc., Mizeral Robinson, escrow agent. According to the "Deposit Receipt and Contract for Sale and Purchase," Rafiee's offer was accepted on what appears to be October 27, 1996 (Petitioner's Exhibit 12), and Rafiee's initial deposit, which was in Robinson's possession by at least October 25, 1996,5 was deposited on October 30, 1996.6 Accepting October 25, 1996, as the date Robinson received the check, the check was deposited "no later than the end of the third business day following receipt."7 Rule 61J2-14.008(d), Florida Administrative Code. In addition to the provisions of the agreement relating to the deposits, discussed supra, the agreement contained the following pertinent provisions: 29. DEFAULT: In the event of default of either party, the rights of the non- defaulting party and the broker shall be as provided herein and such rights shall be deemed to be the sole and exclusive rights in such event. If Buyer fails to perform any of the covenants of this Contract, all money paid or to be paid as deposits pursuant to this Contract by the Buyer shall be retained by or for the account of the Seller as consideration for the execution of this Contract as agreed and liquidated damages and in full settlement of any claims for damages and specific performance by the Seller against the Buyer. * * * (CHECK AND COMPLETE THE ONE APPLICABLE) (X) IF A WRITTEN LISTING AGREEMENT IS CURRENTLY IN EFFECT: Seller agrees to pay the Broker(s) named above according to the terms of an existing, separate written professional service fee agreement; * * * If Buyer fails to perform and deposit(s) is retained, 50% thereof, but not exceeding the Broker's fee above provided, shall be paid Broker, as full consideration for Broker's services including costs expended by Broker, and the balance shall be paid to Seller. Within days of the acceptance of her offer, Ms. Rafiee decided that she no longer desired to purchase the property and, on or about October 31, 1996, notified Robinson of her decision and requested the return of her deposit. At the time, Robinson was noncommittal and, observing that the check had only recently been deposited and likely had not yet been paid, stated they would have to speak of the matter at a later date. Thereafter, when pressed regarding the return of Ms. Rafiee's deposit, Robinson informed her that the deposit had been given to the seller, as required by the contract. Nevertheless, when Ms. Rafiee voiced her intention to pursue the matter further, Robinson agreed to pay her $800 (the parties agreeing that Robinson was entitled to $200 for her efforts) by December 20, 1996. Following the passage of a number of deadlines, and one check returned for insufficient funds, Robinson, in or about May 1997, eventually paid Ms. Rafiee the $800.00. At hearing, Robinson averred that because of Ms. Rafiee's default, she and the seller were, under the terms of the contract, each entitled to 50% of the $1,000 deposit, and that she disbursed the deposit accordingly. As for her offer to pay Ms. Rafiee $800, it was Robinson's view that such offer was made to appease Ms. Rafiee, since Robinson expected to secure further business from her, and should not be considered an admission that Ms. Rafiee was entitled to the return of any of her deposit. Given Ms. Rafiee's default under the purchase agreement, it must be concluded that Robinson, as the broker, had apparent authority to retain 50% ($500) of the deposit and to remit the remaining 50% ($500) to the seller. This is what Robinson avers she did and, given the proof or, stated differently, the lack thereof, it cannot be resolved, with the requisite degree of certainty, that she did otherwise.8
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered revoking Respondents' licensure and eligibility for licensure. DONE AND ENTERED this 29th day of May, 1998, in Tallahassee, Leon County, Florida. WILLIAM J. KENDRICK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 29th day of May, 1998.
Recommendation Based on the foregoing Stipulated Facts, Supplemental Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Banking and Finance, enter a final order that the following disbursements from the Mortgage Broker Guaranty Fund be made Payee on the claims against Polk Investments, Inc.: Amount Amendolaro $ 2,661,22 Victorias 10,000.00 Fournier, Janice 10,000.00 Wilson 1,334.71 Ledfords 6,573.09 Fournier, Robert 10,000.00 Murphy 4,715.49 Murphy as Trustee 4,715.49 Total $50,000.00 RECOMMENDED this 13th day of November, 1986 in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSON, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of November, 1986. COPIES FURNISHED: Paul C. Stadler, Jr., Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32301 Dennis P. Johnson, Esquire SHELNUT AND JOHNSON, P.A. Suite One Belvedere Professional Center 1525 South Florida Avenue Lakeland, Florida 33806-2436 Cristy F. Harris, Esquire HARRIS, MIDYETTE & CLEMENTS, P.A. Post Office Box 2451 Lakeland, Florida 33806-2451 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32301 Charles Stutts General Counsel Plaza Level The Capitol Tallahassee, Florida 32301
Findings Of Fact Respondent Anglickis is a Florida real estate broker holding license number 0001869. Respondent American Heritage Realty, Inc., is a corporate real estate broker holding license number 0169476. The address of both respondents is 102 East Leland Heights Boulevard, Lehigh Acres, Florida. (P-26.) Respondent Anglickis is president of American Heritage Builders, Inc., respondent American Heritage Realty, Inc., and Lee County Mortgage and Title, Inc. All three companies are located at the same address. (Testimony of Campbell; P-5, P-26.) On March 12, 1979, Louis G. Hofstetter and his wife, Dale I. Hofstetter, both residents of North Carolina, entered into a real estate contract with American Heritage Builders, Inc. Respondent Anglickis signed on behalf of American Hertiage Inc. Under the terms of the contract, the Hofstetters were to Purchase a lot and home to be constructed thereon by American Heritage Builders, Inc. The purchase price included the transfer of a lot owned by the Hofstetters and a cash down payment. (Testimony of Hofstetter; P-1, P-3, P-26.) The contract estimated closing costs to be approximately $2,000". It also contained conflicting conditions relative to the time within which any mortgage financing must be obtained. . . . In the event PURCHASER'S application for mortgage financing is not approved within sixty (60) days from date hereof, all monies receipted for, less cost of credit report, will be returned to the PURCHASER and this contract will be null and void. * * * FOR MORTGAGE TRANSACTIONS: This contract of Purchase and Sale shall be void unless Purchaser's application for Mortgage has been approved by a bank or financial institution and Purchaser has executed the Mortgage Acceptance Form, within four (3) [sic] months from date of this Contract of Purchase. 2/ (P-1, R-1.) On March 12, 1979, the Hofstetters signed a mortgage loan application and submitted it to Lee County Mortgage and Title, Inc. (P-26.) On May 5, 1979, 45 days after accepting the application, Lee County Mortgage and Title, Inc., submitted the Hofstetters' mortgage loan application to First Federal of DeSoto. (Testimony of Archer.) On June 15, 1979 (95 days after receiving the loan application), Lee County Mortgage and Title, Inc., wrote the Hofstetters indicating that the local lender needed additional information on their stock holdings, and enclosing a document titled "Good Faith Estimate of Settlement Charges". This document estimated that closing costs would be $2,754--$754 more than the estimate contained in the real estate contract. (P-5.) On June 22, 1979, the Hofstetters protested the increased closing cost, requested clarification, and provided the requested information on their stock holdings. (Testimony of Hofstetter; P-26.) On July 7, 1979, the Hofstetters notified Lee County Mortgage and Title, Inc., that the increased closing cost deviated from the contract, that they therefore considered the contract cancelled and wanted the deposit refunded. (Testimony of Hofstetter; P-8.) On June 29, 1979, Robert Campbell, vice-president of Lee County Mortgage and Title, Inc., wrote the Hofstetters and explained the meaning of each component of the closing cost. (P-7.) On July 17, 1979, respondent, as president of American Heritage Builders, Inc., wrote a letter to the Hofstetters expressing his position: * * * Let me try and put the contract in the proper perspective for you. It's our contention that you have reluctantly provided to us the information that would enable us to make a proper and expedient application to the lending institution and that much of this information has been confused, causing further delays. In accordance with the contract, you were to make this application as quickly and as expediently as Possible so that the contract would not expire. However, this is not the case. Thus, my immediate Position is that the contract should be expired and all of the deposits, including the cash and the lot which we gave you $6,995.00 trade for, would be forfeited as agreed upon liquidated damages. He ended by outlining other alternatives and repeating his asserted right to cancel the transaction and retain the Hofstetters' deposit as liquidated damages * * * First, the lending institution must make a quick determination based on the facts that they have that you are either eligible or not eligible for a mortgage loan as outlined in our contract. If they still do not have enough information, we have no other choice then but to ask you to pay the increase which we have experienced at this time (price list enclosed), and in paying that increase we would be willing to take another 90 days to try and secure a loan for you. If your mortgage loan is denied, your deposit less the costs of processing your mortgage application will be returned to you. Of course, the third choice is the choice I hope we do not have to take, and that is cancelling this transaction and retaining your monies as agreed upon liquidated damages. (P-9.) Mr. Hofstetter responded on July 22, 1979. He denied that he was responsible for any delay or confusion in the Processing of their loan application; asserted that 93 days had elapsed from the submission of their loan application and Mr. Campbell's letter of June 15, 1979, asking for additional financial information; and informed respondent Anglickis that the contract had already expired by virtue of the clause allowing 60 days to obtain mortgage financing. He then, again, asked that his deposit be returned. (P-10.) On July 30, 1979, respondent Anglickis, as president of American Heritage Builders, Inc., wrote to the Hofstetters indicating that the loan had been approved 3/ and he was prepared to build their home at the contract price. He then addressed Mr. Hofstetter's July 22, 1979, denial of any responsibility for delay in obtaining the mortgage loan: I have reviewed your letter of July 22, 1979 and I understand we certainly have a difference of opinion as to whose fault the delay has been caused by. However, I don't think it's time to look at whose fault the delay might be, since it all has worked out to your satisfaction. The mortgage has been approved and we are ready to build. I expect you will now sign the mortgage papers when receipted for so that we may begin construction immediately. (P-11.) On August 6, 1979, the Hofstetters restated to respondent Anglickis that they were not prepared to go ahead with construction, that the contract became null and void by operation of the 60-day mortgage financing clause, and that the deposit should be immediately returned. (P-12.) On August 31, 1979, respondent Anglickis notified the Hofstetters that, pursuant to the contract conditions, he was retaining their full deposit, including cash and the real estate lot for which they received a $6,995 credit toward the purchase price. The full down payment totaled $10,350. (P-1, P-13.) On September 8, 1979, the Hofstetters replied: We cannot understand why you continue to ignore the provisions of the second sentence of Paragraph Two on the reverse side of Contract No. 1997, dated 12 March 1979. You say you intend to invoke the Provisions of the third sentence of this para- graph, but this sentence is Predicated on the assumption that the mortgage would be approved within sixty (60) days. The mortgage was not approved until late July (your letter of 17 July 1979 indicated it was not yet approved, and your letter of 30 July 1979 stated that it had now been approved), more than 120 days past the date of the original contract. Our Position is as Previously stated on several occasions: on 12 May 1979 the contract became null and void, and on that date our deposit should have been refunded. Any action other than this is illegal, according to the terms of the contract. We are due return of our down payment, plus interest, from 12 May 1979. (P-24.) On October 3, 1979, First Federal of DeSoto, which had continued to process the Hofstetter loan application, issued a commitment approving the requested loan. On October 10, 1979, the Hofstetters rejected the mortgage loan. (P-26.) Subsequently, the Hofstetters wrote letters to the Florida Department of Legal Affairs and the Lehigh Chamber of Commerce complaining of respondent Anglickis' retention of their deposit; they, then, retained an attorney and filed a civil action against respondents in the circuit court of Lee County. That action was settled out-of-court. There is no evidence whatsoever to support respondent Anglickis' assertion to the Hofstetters that they were dilatory or responsible for confusion or delay in obtaining the necessary mortgage financing.
Recommendation Based on the foregoing, it is RECOMMENDED: That the charges against respondent American Heritage Realty, Inc., be dismissed; That respondent Richard A. Anglickis be administratively fined $1,000. DONE and RECOMMENDED this 13th day of October, 1982, in Tallahassee, Leon County, Florida. R. L. CALEEN, Hearing Officer Division of Administrative Hearings The Oaklnd Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of October, 1982.
The Issue Whether the Petitioner's application for licensure as a mortgage broker should be granted or denied.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Office is the state agency responsible for regulating mortgage brokerage and mortgage lending and for licensing mortgage brokers. §§ 494.0011(1); 494.0033(2), Fla. Stat. License revocation and criminal prosecution The Office's predecessor, the Department of Banking and Finance ("Department"), issued a mortgage broker's license to Mrs. Comas in 1997. Mrs. Comas worked as a mortgage broker with Miami Mortgage Lenders until 1999, when she left her employment with that company after she was involved in what will be referred to as "the Sipple transaction." The Department initiated disciplinary action against Mrs. Comas's mortgage broker's license, and, because Mrs. Comas stipulated to the material facts of the Sipple transaction, an informal administrative hearing was held before a hearing officer appointed by the Department. The Department entered a final order revoking Mrs. Comas's mortgage broker's license on June 25, 2001, which was upheld on appear by the Third District Court of Appeal in Comas v. Department of Banking and Finance, 820 So. 2d 1088 (Fla. 3d DCA 2002). The material facts of the Sipple transaction and the basis for the revocation of Mrs. Comas's mortgage broker's license were set out by the district court in Comas, which quoted the Final Order with approval, as follows: "Appellant's conduct in altering a customer check, depositing it in her personal account, and later writing a letter to the customer on company letterhead falsely stating that the funds were in the hands of the title company jeopardized not only the customer, but also her employer and the title company. This conduct violates the numerous statutory provisions referenced in the Final Order, casts considerable doubt on either Appellant's competence, integrity, or both, and clearly warrants license revocation." Criminal charges were filed against Mrs. Comas as a result of her actions in the Sipple transaction. The information filed against Mrs. Comas, and all counts thereof, was dismissed by order of the Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida, in April 2002. Denials of applications for licensure as a mortgage broker subsequent to revocation In October 2002, Mrs. Comas applied for licensure as a mortgage broker. The Office notified her that it intended to deny her application in a Notice of Denial dated March 17, 2003. Mrs. Comas requested an administrative hearing, and the case was transmitted to the Division of Administrative Hearings and assigned DOAH Case No. 03-1738. A recommended order was entered on September 30, 2003, in which the administrative law judge found that Mrs. Comas failed to establish that she was rehabilitated and recommended that Mrs. Comas's application be denied. The Office entered a final order in which it adopted the findings of fact and conclusions of law in the recommended order, and denied Mrs. Comas's application for licensure as a mortgage broker. Among the findings of fact made in the Recommended Order in DOAH Case No. 03-1738 and adopted in the Office's Final Order was a finding that Mrs. Comas had failed to make restitution to the owner of Miami Mortgage Lenders, who had paid Ms. Sipple the monies that Mrs. Comas had improperly deposited in her personal account. On March 10, 2006, Mrs. Comas again applied to the Office for licensure as a mortgage broker. In a Notice of Denial of Application dated November 9, 2006, the Office notified Mrs. Comas that it intended to deny her application. Mrs. Comas did not request an administrative hearing, and the Office entered a final order denying the application on December 18, 2006. The Office incorporated into the final order the factual bases set forth in the November 9, 2006, Notice of Denial of Application, which were virtually identical to the factual bases set forth in paragraphs a. through d. of the Notice of Denial at issue herein. RPM Lenders, Inc. and related companies In 1997, Mrs. Comas and her husband, Rolando Comas, founded RPM Lenders, Inc. ("RPM Lenders"). Mrs. Comas worked as a mortgage broker with RPM Lenders from the time she left her employment at Miami Mortgage Lenders in 1999 until her mortgage broker's license was revoked in 2001. Mrs. Comas continued working for RPM Lenders after her mortgage broker's license was revoked in 2001.2 RPM Lenders shared office space with RPM Systems, a computer company which set up computer networks and distributed computers, and it also shared office space with RPM Loans and Realty, which was created in 1999 or 2000 to handle real estate transactions. On or about December 29, 2003, Mr. Comas and Mrs. Comas, on behalf of RPM Lenders, signed a Stipulation and Consent that was incorporated into a final order entered by the Office on December 30, 2003. In the Stipulation and Consent, it was recited that Mrs. Comas was the sole owner and president of RPM Lenders until May 14, 2003. In paragraph 6.1.1 of the Stipulation and Consent, Mrs. Comas agreed that she would "not become a mortgage broker, principal broker, principal representative, owner, officer or director of R.P.M. Lenders, Inc." From 2004 through April 17, 2008, Mrs. Comas was the corporate secretary for RPM Lenders until it ceased business in 2007, when its name was changed to ROC Lenders, Inc. ROC Lenders, Inc., never did any business, but Mrs. Comas nonetheless continued to serve as that company's corporate secretary until her name was deleted as the corporate secretary pursuant to a filing with the Florida Secretary of State dated April 17, 2008.3 At the times material to this proceeding, Mrs. Comas managed RPM Lenders, RPM Loans and Realty, and RPM Systems. Her title with RPM Lenders and RPM Loans and Realty was "Finance Manager," and her duties included the general daily management responsibilities of an office manager, such as ensuring that office equipment was repaired and maintained and ordering office supplies, as well as duties that included customer support, marketing and advertising, developing and implementing quality control procedures, preparing financial statements, handing accounts receivable and accounts payable, reconciling all bank accounts, reviewing all funded files, and attending all of the closings. Mrs. Comas was paid a management fee for her services as Financial Manager and Office Manager for RPM Lenders and RPM Loans and Realty. In providing customer support for RPM Lenders and RPM Loans and Realty, Mrs. Comas responded to customer complaints on behalf of the brokers employed by those companies, reviewing files and attempting to resolve problems and disagreements between customers and brokers. RPM Loans and Realty was created in 1999 or 2000 "for realty purposes," and Mrs. Comas began working with RPM Loans and Realty as a real estate associate beginning in March 1999. Mrs. Comas continued to work with RPM Loans and Realty both as manager and as a real estate associate up to the time of the final hearing.4 Rehabilitation As part of her practice as a real estate associate, Mrs. Comas accepts deposits from buyers and transmits them to title companies.5 Mrs. Comas's license as a real estate associate was current at the time of the final hearing, and it has never been the subject of disciplinary action. In a letter dated November 12, 2008, to Sherry Sipple, the person whose check Ms. Comas altered and deposited in her personal bank account, Mrs. Comas denied having altered the check, stating that her name was placed on the check by someone else. Mrs. Comas did not mention in the letter her depositing Ms. Sipple's check in her personal bank account, and Mrs. Comas blamed Ms. Sipple and Ms. Sipple's brother for what she called a "misunderstanding," stating that, because Ms. Sipple and Ms. Sipple's brother went to the closing on the subject property without Mrs. Comas, she was unable to deliver to the title company the money Ms. Sipple had entrusted to her. Mrs. Comas apologized to Ms. Sipple "for what happened," but then asked that she give Mrs. Comas's attorney a "statement of acceptance of this BIG MISUNDERSTANDING."6 Mrs. Comas telephoned Mark Mazis, her employer at Miami Mortgage Company, and apologized to him for "what happened."7 Mrs. Comas acknowledged in her testimony at the final hearing that she did something wrong, although she insisted that she did not intend to steal Ms. Sipple's money by placing it in her personal bank account but intended only to expedite Ms. Sipple's closing. Since her license was revoked in 2001, Mrs. Comas has contributed to charities and attends church approximately twice a month. Summary The Sipple transaction The evidence presented by the Office in the form of the opinion of the Third District Court of Appeal in Comas v. Department of Banking and Finance establishes conclusively that, in 1999, Mrs. Comas committed fraud, misrepresentation, deceit, or incompetence in a mortgage financing transaction; that Mrs. Comas failed to deliver funds to her customer that Mrs. Comas was not entitled to retain; and that Mrs. Comas misappropriated the customer's check by depositing it in her personal account. Untruthful testimony in DOAH Case No. 03-1738 The evidence presented by the Office is not sufficient to support a finding of fact that Mrs. Comas gave untruthful testimony in a previous administrative proceeding. In the Notice of Denial dated August 6, 2008, the Office stated as one of the factual grounds for its denial of Mrs. Comas's application for a mortgage broker's license that Mrs. Comas had testified untruthfully at the final hearing in DOAH Case No. 03- 1738. This allegation was apparently based on several findings of fact in the Recommended Order which were referenced in the Office's Proposed Recommended Order in the instant case, as follows: At the July 23, 24[, 2003] formal hearing three issues were litigated — Mrs. Comas’s claims about the circumstances of the Sipple transaction, Mrs. Comas’s claim that she had paid restitution, and her claim that she had apologized to the victims, Sherry Sipple (now Sherry Mercugliano) and Marc Mazis. (Exhibit Q) On these three claims, Mrs. Comas’s testimony conflicted with that of the victims. (Id.) The Administratively [sic] Law Judge weighed the conflicting testimony and determined: 18. Through the time of the hearing, Comas falsely claimed the transaction failed because Sipple was dissatisfied with the interest rate Comas was able to obtain. This testimony is rejected in favor of Sipple's much more convincing explanation that she rejected the balloon payment Comas proposed, insisting upon the fixed rate which she had required from the beginning. * * * 20. For all of the trouble Comas caused Sipple and Mazis, she has never apologized to them. Although Comas testified to the contrary on that point, her self- serving testimony is not credible. * * * 22. Taking into account the entire record, and having had the opportunity to view the demeanor, credibility, ability to perceive facts, knowledge of the facts and circumstances of the events to which they testified, and motive to testify, of each of the witnesses in close and stressful quarters, the conclusion is inescapable that the victims' version of events is entirely consistent with the truth. To the extent that victims' recollections or characterizations of material events differ from those of Comas and her witnesses, the testimony of the victims is credited. (Emphasis added.) (Id.) Consequently, Petitioner made false claims and testified untruthfully at the July 23-24, 2003 formal hearing. The discussions in the quoted paragraphs are not findings of fact regarding the truth or falsity of Mrs. Comas's testimony. Rather, the Administrative Law Judge was assessing the quality and quantity of the evidence presented by the parties as a predicate to making findings of fact regarding the issue of whether Mrs. Comas had established rehabilitation. The Administrative Law Judge's assessment that Mrs. Comas's testimony was not as credible or as persuasive as the conflicting testimony of other witnesses was an assessment of the weight of the evidence and the credibility of the witnesses made by the Administrative Law Judge in order to determine which conflicting testimony and evidence is the more persuasive. Although the Administrative Law Judge included in paragraph 18 of the Recommended Order in DOAH Case No. 03-1738 a statement that Mrs. Comas made a "false" claim in her testimony, it is clear from a reading of the entire paragraph that the Administrative Law Judge found Ms. Sipple's version of the events more credible. Indeed, an Administrative Law Judge would be acting improperly if he or she were to make a finding of fact that a party's or witness's testimony was untruthful or false because the truth or falsity of evidence is not at issue in an administrative proceeding. Such a finding would amount to a finding that the party or witness had committed perjury, which cannot be litigated in an administrative forum but is, rather, subject to criminal prosecution. See Ch. 837, Fla. Stat. The Office's denials of Mrs. Comas's applications for licensure subsequent to the revocation of her license The evidence presented by the Office establishes that it denied Mrs. Comas's applications for licensure as a mortgage broker in 2003 and 2006. The 2003 denial was based on a Final Order in which the Office, adopting the findings of fact and conclusions of law in the Recommended Order in DOAH Case No. 03- 1738, found that Mrs. Comas had failed to establish that she had rehabilitated herself since the license revocation. The 2006 denial referenced, among other grounds, the denial of her application for licensure in 2003 for fraud and dishonest dealing. The Office's denials of Mrs. Comas's previous applications for licensure cannot, however, serve as an independent basis for denial of the application at issue herein. Were the previous denials sufficient of themselves to provide a basis for denying Mrs. Comas's future applications, the Office could perpetuate the denial of Ms. Comas's future applications indefinitely without regard to any efforts of Mrs. Comas to prove herself entitled to licensure. Mrs. Comas's service as an officer of RPM Lenders The evidence presented by the Office is sufficient to establish that Mrs. Comas violated a final order of the Office by serving as an officer of RPM Lenders and its successor company, ROC Lenders, Inc., subsequent to signing a stipulation in December 2003 averring that she would not serve as a corporate officer of RPM Lenders. Mrs. Comas's role in responding customer complaints about the service provided by mortgage broker employed by RPM Lenders does not, however, rise to the level of acting as an officer of the corporation.8 Rehabilitation The evidence presented by Mrs. Comas is not sufficient to establish that she has rehabilitated herself in the 10 years that have elapsed since the Sipple transaction. Although she attends church and contributes to charities, she presented no evidence of any other community service. The lack of any disciplinary action against her real estate associate's license since it was issued is a factor in Mrs. Comas's favor, but she failed to present any evidence regarding the number of real estate transactions she handles, and it was, therefore, not possible to assess the frequency with which she handled the funds of others in the context of real estate transactions. Other than her testimony about the November 2008 conversation with Mr. Mazis, Mrs. Comas presented no evidence with respect to her apology to him or to any acknowledgment she made to him that she had acted improperly in the Sipple transaction. Mrs. Comas's letter of apology to Ms. Sipple consisted primarily of her attempts to cast her actions in the Sipple transaction in a light favorable to herself, to excuse her actions as efforts to assist Ms. Sipple, and to blame others, including Ms. Sipple, for the incident. Although Mrs. Comas expresses remorse for what happened, she does not accept responsibility for her actions.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Office of Financial Regulation enter a final order denying the application of Marta Comas for licensure as a mortgage broker pursuant to Section 494.0033(4), Florida Statutes, for the acts specified in Section 494.0041(2)(b), (f), (h), (i), (j), (p), (q), and (u)2., Florida Statutes. DONE AND ENTERED this 27th day of February, 2009, in Tallahassee, Leon County, Florida. PATRICIA M. HART Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of February, 2009.
The Issue The issue in the case is whether the allegations of the Administrative Complaint are correct and, if so, what penalty should be imposed.
Findings Of Fact At all times material to this case, Frederick L. Roberts (Respondent) was a licensed Florida mortgage broker, holding license number MB 316324569. In November 1993, a friend of the Respondent, Alan Petzold, introduced Tami Aaronson to him. Ms. Aaronson owned property in Maryland and was interested in securing a mortgage on the Maryland property to provide funding for a Florida home for herself and her son, Jarrett. According to Ms. Aaronson, Mr. Petzold is the father of a minor son, Jarrett Aaronson. The Respondent believed that such was the case at the time he met the family. The Respondent met several times with Ms. Aaronson. The Respondent gave a “Flagship Mortgage Company” business car to Ms. Aaronson. The business card had the Respondent’s name printed on it. The Respondent had been briefly employed by Flagship Mortgage Company, but apparently was not so employed at the time he met Ms. Aaronson. Frederick L. Roberts (Respondent) received check number 0170, dated November 22, 1993, from Tami Aaronson as “Custodian for Jarrett Aaronson” in the amount of three thousand dollars. The notation on the check states that it is for “refinancing.” Ms. Aaronson believed the check was payment for services the Respondent would render in obtaining refinancing of the Maryland property. There was no written agreement between the Respondent and Ms. Aaronson, or between the Respondent and Mr. Petzold. The Respondent completed no written documentation related to the Aaronson transaction. The Respondent did not place the Aaronson deposit into a segregated escrow account. The Respondent did not record the Aaronson deposit into an escrow transaction journal. During the period he held the Aaronson funds, the Respondent worked on unrelated business, and traveled to China for about thirty days. The Respondent performed no work on behalf of Ms. Aaronson, Mr. Petzold, or Jarrett Aaronson. There is no evidence that the Respondent intended to perform any work on behalf of Aaronson/Petzold. The Respondent asserted that he asked for a three thousand dollar “deposit” as a means of discouraging the couple from asking for his assistance. The assertion is not credible. The Respondent asserts that the three thousand dollars he received from Ms. Aaronson was a deposit against travel expenses he would incur during his examination of the property in Maryland. The assertion is not supported by credible evidence. In the spring of 1994, the Respondent received a telephone call from Ms. Aaronson. The Respondent asserts that he believed Ms. Aaronson to have called him from a mental hospital. For whatever reason, at that time he determined that he no longer wanted to be involved in the Aaronson/Petzold situation. Shortly after receiving the Aaronson phone call in spring 1994, the Respondent also received a call from a Department of Banking and Finance investigator, apparently looking into a complaint received from Ms. Aaronson. The Respondent thereafter contacted Mr. Petzold and made arrangements to return the funds to him. According to a notarized statement dated May 9, 1994, the Respondent returned the three thousand dollars to Jarrett R. Aaronson and Alan C. Petzold. The Respondent testified that the money had been returned on May 8, 1994 to Mr. Petzold. The Respondent offered into evidence a document dated May 8, 1994, purporting to be a receipt received from Mr. Petzold for return of the funds. The signature is not notarized. The Respondent did not return the Aaronson deposit to Tami Aaronson. There is no evidence that Ms. Aaronson authorized the return of the three thousand dollars to Mr. Petzold. There is no evidence that Ms. Aaronson authorized the return of funds to Jarrett. Ms. Aaronson has not received any part of the three thousand dollars allegedly refunded. There is no evidence that the funds have been redeposited into the minor child’s custodial account. The Respondent asserts that he was not acting as a mortgage broker and was merely investigating the property to determine whether the Aaronson property could be used as a source of funds for the purchase of Florida property. The Respondent asserts that had a refinancing situation arisen, he would have referred Ms. Aaronson to another licensed person who would assist in the actual refinancing. The assertion is not supported by credible evidence. The Respondent asserts that in the spring of 1994 he had reason to believe that Ms. Aaronson had been hospitalized in a mental facility, and therefore he returned the funds to Mr. Petzold. The rationale for the failure to return the funds to the appropriate party is not persuasive.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Insurance enter a Final Order suspending the mortgage broker license held by Frederick L. Roberts until the following conditions are met: Payment to Tami Aaronson of $3,000 plus appropriate interest calculated from November 22, 1993. Payment of an administrative fine in the amount of $5,000. After compliance with the above conditions, the license suspension shall be lifted, and a two-year probationary period shall begin RECOMMENDED this 22nd day of October, 1997, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of October, 1997. COPIES FURNISHED: Clyde C. Caillouet, Esquire Department of Banking and Finance 4900 Bayou Boulevard, Suite 103 Pensacola, Florida 32503 Michael W. Carlson, Esquire Carlton Fields Ward Emmanuel Smith & Cutler, P.A. 215 South Monroe Street, Suite 500 Tallahassee, Florida 32301 Harry Hooper, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350 Hon. Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350
The Issue The issue is whether PMF, Inc.’s (PMF), mortgage broker license should be revoked and an administrative fine imposed on PMF’s principal loan originator, Scott Cugno, for the reasons stated in an Administrative Complaint (Complaint) issued by the Office of Financial Regulation (OFR) on January 18, 2017.
Findings Of Fact Background OFR is the state agency charged with administering and enforcing the provisions of chapter 494, which regulates loan originators, mortgage lenders, and mortgage brokers. Rules implementing the statutory law are found in chapter 69V-40. To ensure compliance with the law, OFR conducts periodic audits of the records and activities of all licensees. In early 2012, Mr. Cugno assumed ownership of PMF. From January 25, 2012, until January 1, 2015, PMF was a licensed mortgage lender with its principal office located at 142 West Platt Street, Suite 118, Tampa. Besides the principal office, PMF operated five branch offices. As a mortgage lender, PMF could offer credit to an applicant, make the mortgage loan, and close the loan in its own name. § 494.001(23), Fla. Stat. To settle an earlier disciplinary action, PMF surrendered its lender license in December 2014. Pet’r Ex. 5. On December 30, 2014, PMF was issued mortgage broker license number MBR 1689, which still remains active. A mortgage broker conducts loan originator activities through one or more licensed loan originators employed by the broker. § 494.001(22), Fla. Stat. A broker shops an applicant’s credit and loan application to different lenders, but unlike a mortgage lender, it cannot close loans in its own name. § 494.001(17), Fla. Stat. Mr. Cugno is the sole owner of PMF and its principal loan originator. By definition, he is the control person of PMF. § 494.001(6)(a), (b), and (f), Fla. Stat. A control person is subject to administrative penalties if the broker or lender engages in prohibited acts set forth in section 494.00255(2). An audit of PMF’s business records and activities was conducted by OFR for the period July 1, 2014, through April 30, 2015. After the audit was concluded, a formal Report of Examination (Report) was forwarded to Mr. Cugno on February 25, 2016. Pet’r Ex. 1. The Report stated that it contained a series of findings “that may be violations of Chapter 494, Florida Statutes.” Therefore, it recommended that management thoroughly review the matter and promptly respond in writing stating any exceptions or disagreements it had, any action taken to correct the possible violations, and any mitigating evidence. A written response was filed by Mr. Edgar, PMF’s independent consultant, who interacted with the auditors on behalf of PMF during the examination and responded to document requests. Pet’r Ex. 2. After receiving Mr. Edgar’s response, the Complaint was issued by OFR on January 18, 2017. Although the Report contains 13 findings that may be violations of chapter 494, the Complaint relies on only eight. Based upon the scope and nature of the violations, the charging document seeks to revoke PMF’s mortgage broker license and to impose a $53,300.00 administrative fine on Mr. Cugno, as the control person of the lender and broker. No action is proposed regarding Mr. Cugno’s loan originator license. The thrust of the Report is the failure of Mr. Cugno to have complete control over the operations of the business. In determining the merits of the charges, the undersigned has considered: a) Mr. Cugno’s responses to OFR’s Requests for Admissions, which admit the allegations in five Counts3/; b) Mr. Edgar’s written response to the Report, which essentially admits all of the violations and outlines the proposed corrective action that PMF intends to implement; and c) the evidence in the record. The Charges Count I Count I alleges that during the audit period, PMF operated a branch office in Delray Beach, Florida, without a license. Each branch office is required to be separately licensed. § 494.0011(2), Fla. Stat.; Fla. Admin. Code R. 69V- 40.036. A branch office is defined in section 494.001(3) as a location, other than a mortgage lender’s or mortgage broker’s principal place of business, where business is conducted under chapter 494, and one of the following is true: Business cards, stationery, or advertising references a licensee’s name associated with a location that is other than the licensee’s principal place of business; Advertising, promotional materials, or signage using a licensee’s name suggests that mortgage loans are originated, negotiated, funded, or serviced at a location that is other than the licensee’s principal place of business; or Mortgage loans are originated, negotiated, funded or serviced by the licensee at a location that is other than its principal place of business. The Delray Beach location was not licensed as a branch office. Without a license, PMF was not authorized to use the Delray Beach address on any materials used in its mortgage business or to originate loans from that location. During the audit period, a PMF employee, Bryan J. Mittler, then a recently admitted attorney who had worked for PMF since around 2012, was using business stationery and business cards under the name of PMF that referenced his name and the Delray Beach location, 2236 Bloods Grove Circle. Pet’r Ex. 10. The printed material contained statements such as “We’re your key to financing your new home” and “For a free no-obligation consultation and instant pre-approval call us anytime!” Id. Another business card identifies Mr. Mittler as an attorney and branch manager of PMF. Id. None of these materials mention the address of the principal office in Tampa. They support a finding that Mr. Mittler was using promotional materials to originate, negotiate, fund, or service mortgage loans at the Delray Beach location. Other indicia of operating a branch office are found in Mr. Mittler’s response to a written inquiry by the auditor in September 2015, in which he signed the letter as “Branch Manager.” Pet’r Ex. 8. Mr. Mittler’s letter states in part that “[w]e became a branch in November 2012 with the first loan disposition in December 2012.” Id. He also acknowledges that “[o]ur branch’s loan files are maintained at 2236 Bloods Grove Circle, Delray Beach, FL.” Id. In yet another letter to the auditor, Mr. Mittler identifies himself as Branch Manager. Pet’r Ex. 10. The Delray Beach office also maintained its own bank account and identified it as a branch bank account. Pet’r Ex. 11. Finally, internet advertising by PMF during the audit period states that Mr. Mittler “was chosen to head our new, Delray Beach branch office.” Pet’r Ex. 13. In response to a request by the auditor that PMF provide a list of all PMF employees, on September 29, 2015, Mr. Edgar submitted a list of employees as of that date, which identifies Mr. Mittler as the branch manager of the Delray Beach office. It describes his duties as “manag[ing] all operations of branch office [and] Originating Mortgages.” Pet’r Ex. 7. Finally, Mr. Edgar’s response to the Report states that “I am surprised to find that the Delray Beach office was not licensed as a branch.” Pet’r Ex. 2. He characterizes this as “negligence” on the part of PMF and represents that PMF intends “to license this branch and be in full compliance.” Id. PMF was eventually issued a branch license for the Delray Beach office in March 2016. At hearing, Mr. Cugno denied that PMF was operating a branch office in Delray Beach. He testified that even though there was no branch office, Mr. Mittler was allowed to use the title of branch manager because Mr. Mittler did not want to be given a less important title. Mr. Cugno also explained that a “statute” or “regulation,” later identified in Respondents’ PRO as Rule 1-3.3, The Rules Regulating the Florida Bar, required Mr. Mittler to provide his Delray Beach address on all documents and materials that he prepared or was using. While the rule requires that an attorney’s official bar name “be used in the course of a member’s practice of law,” it does not specifically require that a member’s address be reflected on all documents prepared. Assuming that the rule imposes this requirement, nothing in the record suggests, much less proves, that Mr. Mittler’s activities on behalf of PMR were part of his practice of law, he was employed as an attorney for PMF, or a law office was even located at the Delray Beach address. The PRO contends the Delray Beach location “may” have been a law office which caused confusion in PMF’s “paperwork.” These arguments have been rejected. By clear and convincing evidence, OFR has established that during the audit period, the Delray Beach location was a branch office within the meaning of section 493.001(3), and it operated without a license. Count II Each mortgage broker and lender must maintain a Mortgage Brokerage and Lending Transaction Journal (Journal) which, at a minimum, contains the name of the mortgage loan applicant, date of the application, disposition of the application, and the name of the lender, if applicable. § 494.0016(1), Fla. Stat.; Fla. Admin. Code R. 69V-40.265(1). Count II alleges that during the audit period, PMF violated the statute and rule by failing to maintain a complete and accurate Journal of all transactions at its Tampa office. PMF’s response to the Report states that, to correct the deficiency described in Count II, the firm would begin “implementing controls” and making “periodic audits” to ensure that a current Journal would be maintained in the future. Pet’r Ex. 2. Also, in its response to the Requests for Admissions, PMF admits that it maintained separate Journals for each of the branch offices, and the principal office Journal was incomplete or inaccurate. Finally, unrefuted testimony by the auditor at hearing established that an examination of PMF’s Journal revealed that certain loans were not listed and “entries that were part of the requirements of the loan journal were not made.” Notably, out of more than 470 transactions identified in PMF’s mortgage loan report (a quarterly report that must be filed by licensed companies indicating their loan activity), the Journal listed only 182 loans. Pet’r Ex. 20. At hearing, Mr. Cugno testified that PMF did not know how to fill out a journal, and efforts by his former compliance manager to get instructions from OFR were unsuccessful. However, this does not excuse the violation. By clear and convincing evidence, the charge in Count II is sustained. Count III A mortgage broker is required to maintain at its principal place of business the complete documentation of each mortgage loan transaction/application for three years from the date of the original entry. § 494.0016(1), Fla. Stat.; Fla. Admin. Code R. 69V-40.175(8). The Complaint alleges that PMF violated this requirement by failing to maintain at its principal office all records of email and electronic communications between PMF and its borrowers. The evidence shows that during the audit period, complete documentation of every application/transaction was not maintained at the Tampa office. For example, some loan originators at branch offices had individual email accounts through which they were communicating and transmitting documents for loan files, but they did not copy those email communications to the principal office. Pet’r Ex. 23 and 24. In his response to the Requests for Admissions, Mr. Cugno admitted that certain documentation for loan applications was kept at locations other than their Tampa office. In his response, Mr. Edgar also acknowledged that PMF did not comply with the statute and rule and represented that PMF would utilize a new “email usage policy and procedure” to correct the problem. While Respondents allege the information from the Tampa and branch offices was available on-line, this does not satisfy the requirement that complete documentation be maintained at the principal office. By clear and convincing evidence, the allegations in Count III have been established. Count IV Section 494.00165(2) requires that a licensee maintain a record of samples of each of its advertisements for examination by OFR for two years after the date of publication or broadcast. The purpose of this requirement is to enable the auditor to verify that the licensee’s advertisements are not deceptive or misleading. To comply with the statute, PMF was required to maintain for two years in a central file a copy of each advertisement. During the examination, the auditor requested that PMF provide its complete file of advertisements during the audit period. PMF initially responded that there was no corporate advertising and therefore no samples were kept on file. Pet’r Ex. 12. A subsequent audit of the branch offices revealed that business cards, flyers, placards, posters, and internet were used by the branch offices for advertising purposes. Pet’r Ex. 10, 11, 13, 15, and 17. The auditor also found entries on PMF’s books reflecting advertising expenses of over $200,000.00 during the audit period. In his response to the Report, Mr. Edgar admitted that due to operating the business as a “decentralized model,” PMF did not have proper supervision of the marketing activities of loan officers. Mr. Edgar went on to state that he was “surprised” to learn that “several Loan Officers appear to have engaged in either limited advertising campaigns or hosting their own independent activities.” He promised that PMF would “begin to exercise more control over the marketing activities of all employees” and to ensure that all documentation related to advertising would be sent to the Tampa office for centralized storage. At hearing and in their PRO, Respondents took a different tack and argued that: it is technically impossible to provide the auditor with every single copy of material that could be characterized as a marketing activity; the $200,000.00 advertising expense on their books was a “coding error”; and during the audit period, Respondents misunderstood what OFR considers to be advertising, and once this misconception was cleared up, they submitted “a more fulsome response.” These arguments have been considered and rejected as being contrary to the clear and convincing evidence. By clear and convincing evidence, the charge has been sustained. Count V Section 494.00165(1)(e) prohibits licensees from engaging in misleading advertisements regarding mortgage loans, brokering services, or lending services. Count V alleges that after January 1, 2015, PMF continued to advertise itself as a lender even though its lender license had been surrendered.4/ As of January 1, 2015, PMF was a licensed mortgage broker and no longer held a mortgage lender license. Advertising by the Fort Myers branch office after January 1, 2015, identified PMF as a “full correspondent lender” and listed the old mortgage lender license number. Pet’r Ex. 15. Also, as late as February 2016, advertising posters were on the windows at the Tampa office, visible to the public, reflecting that PMF was an approved VA lender. Pet’r Ex. 17. Finally, OFR witness Slisz testified that as of March 30, 2018, the Fort Myers branch office still was advertising itself as a full correspondent lender. By advertising in this manner, PMF implied to consumers that it would originate the loan, negotiate the terms of the loan, and determine the fees that would be charged, things it could not do as a broker. In his response to the Report, Mr. Edgar admitted that PMF did not comply with the statute “due entirely to [its] negligence in updating PMF’s logo and promotional materials after the change in licensing that occurred [on January 1, 2015].” Pet’r Ex. 2. However, he asserted there was no intent to deceive or mislead customers. In their PRO, Respondents also concede “there were a few months where this advertisement occurred,” but maintain there is no evidence that any consumer had been impacted. Finally, in their response to the Requests for Admissions, Respondents admit that after January 1, 2015, PMF continued to represent itself as a licensed mortgage lender. In mitigation, Mr. Cugno pointed out that no customer was harmed. Also, he blamed the advertising signs in the windows at PMF’s Tampa office on the building manager, who he says put the signs up for a few days to block the sun while new blinds were being installed. By clear and convincing evidence, OFR has established that the charges in Count V are true. Count VI Section 494.0025(7) provides that a licensee cannot “pay a fee or commission in any mortgage loan transaction to any person or entity other than a licensed mortgage broker or mortgage lender, or a person exempt from licensure under this chapter.” The statute is designed to ensure that every person receiving fees in a transaction is licensed. Count VI alleges that during the audit period, Respondents paid commissions or fees from mortgage loan transactions to entities that were not licensed brokers or lenders. During the audit period, several loan originators established separate entities that were not licensed but were paid fees or commissions for various transactions. Pet’r Ex. 18. In its response to the Report, Mr. Edgar conceded that such fees were paid incorrectly because PMF “mistakenly believed” that its practice of paying a loan officer’s separate business entity was equivalent to paying the loan officer personally. The response added that in the future, “only licensed individuals will be paid commissions on mortgage loan transactions” and “no separate loan entities will be compensated any amount for any work performed on mortgage loan transactions.” Pet’r Ex. 2. Respondents also acknowledge in their response to the Requests for Admissions that they paid fees, costs, and expenses to persons or entities that did not hold loan originator licenses. Finally, at hearing, Mr. Cugno admitted that unlicensed entities were “definitely” paid, but there was no intent to deceive customers. By clear and convincing evidence, OFR has established that the allegation in Count VI is true. Count VII Section 494.00665(1) requires each mortgage lender business to be operated by a principal loan originator who is to have full charge, control, and supervision of the business. The Complaint alleges that Mr. Cugno was not in full charge, control, and supervision of PMF when it held a mortgage lender license. PMF was a licensed mortgage lender during the first six months of the audit period, July 1, 2014, through December 30, 2014. During that time, Mr. Cugno was PMR’s principal loan originator. The Complaint alleges that while Mr. Cugno was the control person in 2014, PMF engaged in two or more of the following acts: Operated a branch office without a license; Failed to maintain complete and accurate Mortgage Lending Transaction Journal; Failed to maintain complete documentation at its principal place of business; and Advertised without maintaining a record of samples of each advertisement. The significance of having committed “two or more” violations was not explained. As previously found, however, all of these charges have been established by clear and convincing evidence. Respondents contend they did not have proper notice as to which of the four acts OFR relies upon to prove this charge. But items (a) through (d) simply track Counts I through IV in the Complaint. In his response to the Requests for Admissions, except for the branch office allegation, Mr. Cugno admitted that the other allegations are true. The response to the Report states that Respondents are “embarrassed” by the auditor’s findings and that new policies and procedures will be implemented to address the deficiencies. The response acknowledges that PMF “has been without a committed and proactive compliance professional in a full time capacity for some time,” and represents that Mr. Edgar will become PMF’s Vice President of Compliance and Human Resources and apply for a license as a loan originator. Pet’r Ex. 2. At hearing, Mr. Cugno did not directly respond to the charges. Instead, he testified that he would defer to the undersigned’s judgment in deciding whether the charges are true. By clear and convincing evidence, the allegations in Count VII have been proven. Count VIII Section 494.0035(1) requires each mortgage broker business to be operated by a principal loan originator who is to have full charge, control, and supervision of the mortgage broker. PMF was a licensed mortgage broker during the last four months of the audit, January 1, 2015, through April 30, 2015. During this same time period, Mr. Cugno was the principal loan originator. The Complaint alleges that Mr. Cugno was not in full charge, control, and supervision of PMF when it engaged in two or more of the following acts: Operated a branch location without a license; Failed to maintain complete and accurate Mortgage Brokerage Transaction Journals; Failed to maintain complete documentation at its principal place of business; Advertised without maintaining a record of samples of each advertisement; Inaccurately advertised themselves as a lender; and Paid fees or commission from mortgage loan transactions to entities that were not licensed mortgage brokers or mortgage lenders. Items (a) through (f) are the six violations described in Counts I through VI of the Complaint. Although the significance of having committed “two or more” violations was not explained, each of these allegations has been proven by clear and convincing evidence. Even the response to the Report admits that Mr. Cugno did not exercise full control over the operations of the business during the audit period. By clear and convincing evidence, the allegations in Count VIII have been proven. Disciplinary Guidelines Rule 69V-40.111 adopts by reference a range of penalties that may be imposed on a mortgage loan originator and mortgage entity for violating each of the 102 statutory provisions that OFR enforces. See Form OFR-494-14. Depending on the nature of the violation, the administrative fines are categorized as Level A ($1,000.00 to $3,500.00), B ($3,500.00 to $7,500.00), and C ($7,500.00 to $10,000.00). In determining an appropriate penalty that falls within the penalty guidelines, OFR must consider the mitigating and aggravating factors set forth in subsection (3) of the rule. Mitigating factors to be considered are as follows: If the violation rate is less than 5% when compared to the overall sample size reviewed; No prior administrative actions by the Office against the licensee or control person within the past 10 years; If the licensee detected and voluntarily instituted corrective responses or measures to avoid the recurrence of a violation prior to detection and intervention by the Office; If the violation is attributable to a single control person or employee, and if the licensee removed or otherwise disciplined the individual prior to detection or intervention by the Office; If the licensee is responsive to the Office’s requests or inquiries or made no attempt to impede or delay the Office in its examination or investigation of the underlying misconduct; or Other control, case-specific circumstances. Aggravating factors to be considered in assessing a penalty are as follows: If the violation rate is more than 95% when compared to the overall sample size reviewed (sample size must be equal to or greater than 25 transactions and cover a date range of at least 6 months); The potential for harm to the customers or the public is significant; Prior administrative action by the Office against the licensee or an affiliated party of the licensee within the past 5 years; If the licensee’s violation was the result of willful misconduct or recklessness; The licensee attempted to conceal the violation or mislead or deceive the Office; or Other control relevant, case-specific circumstances. In its PRO, OFR maintains that PMF’s broker license should be revoked, and an administrative fine in the amount of $53,300.00 should be imposed on Mr. Cugno. On the other hand, Respondents’ PRO contends that revocation of the broker license is not warranted, and “a fine of no more than $10,000.00 total for all matters in the Administrative Complaint is a fair outcome.” The worksheet used by OFR in determining the proposed penalties would be helpful, but it is not in the record. Also, at hearing, neither party addressed in detail the mitigating and aggravating factors. However, testimony by OFR’s Director of the Division of Consumer Finance, Mr. Oaks, briefly explained the rationale for OFR’s proposed disciplinary action. For operating a branch office without a license, the rule calls for a penalty of $1,000.00 per day, with a maximum penalty of $25,000.00. Because this violation occurred every day during the 304-day audit period, Mr. Oaks explained that OFR is proposing the maximum penalty of $25,000.00. For failing to maintain a complete and accurate Journal at the principal office, the guidelines call for a penalty ranging from $1,000.00 to $3,500.00 and suspension or revocation of the license. Mr. Oaks testified that after reviewing all mitigating and aggravating circumstances, the maximum penalty of $3,500.00, and license revocation, are appropriate for the violations described in Count II. For failing to maintain at its principal place of business the complete documentation of each mortgage loan transaction/application for three years from the date of original entry, the disciplinary guidelines call for a fine ranging from $1,000.00 to $3,500.00 and suspension or revocation of the license. Mr. Oaks testified that OFR is extremely dependent on records when conducting a compliance examination. If complete and accurate records are not kept at the principal place of business, OFR cannot ensure that the business is operating in a lawful manner. Where there is an absence of records, there is potential for great consumer harm. Given the circumstances presented here, he proposes a $2,700.00 penalty and revocation of the license. For failing to maintain a record of samples of each advertisement for a period of two years, the disciplinary guidelines call for a fine ranging from $1,000.00 to $3,500.00 and suspension or revocation of the license. In this case, PMF had no samples of advertisements at its principal office. When no samples are maintained, OFR is unable to determine whether a licensee is engaging in misleading or deceptive advertising. For this reason, Mr. Oaks proposes a fine of $3,500.00 and revocation of the license. For engaging in misleading advertising, the disciplinary guidelines call for a fine ranging from $3,500.00 to $7,500.00 and suspension or revocation of the license. Mr. Oaks characterized PMF’s advertising after January 1, 2015, as “completely misleading” because it erroneously represented to the public that PMF was a correspondent lender. For this reason, he proposes the maximum penalty of $7,500.00 and revocation of the license. For paying a fee or commission in any transaction to a person or entity other than a lender or broker, the disciplinary guidelines call for a fine ranging from $3,500.00 to $7,500.00 and suspension or revocation of a broker’s license. Mr. Oaks explained that the licensing process is designed to protect consumers from unlicensed individuals and to ensure that only licensed individuals will be involved in the transaction. For violating the statute, Mr. Oaks proposes a fine of $4,100.00 and revocation of the license. If a principal loan originator fails to have complete control over the operations of a mortgage lender, the disciplinary guidelines call for a penalty ranging from $1,000.00 to $3,500.00. Because of the number and nature of violations, Mr. Oaks concluded that Mr. Cugno did not have control of his business and did not take adequate steps to ensure that the business was “being run lawfully.” Besides Mr. Oaks’ testimony, OFR witness Slisz, the Tampa area financial manager, also concluded there was a lack of complete control by Mr. Cugno based on loan originators “using emails not on the company server”; an “unlicensed location”; “loan originators taking freedom to advertise on their own without approval”; and PMF’s inability “to produce a log of the loans that the company received applications for.” OFR seeks the maximum penalty of $3,500.00. If a principal loan originator fails to have complete control over the operations of a broker, the disciplinary guidelines call for a penalty ranging from $1,000.00 to $3,500.00. For the reasons enunciated by Mr. Oaks and witness Slisz, OFR seeks the maximum penalty of $3,500.00. Besides the foregoing testimony, the evidence shows that there was a potential for harm to customers or the public; most of the violations proven were “serious”; PMF has one prior disciplinary action in December 2014, which was resolved by PMF surrendering its lender license and paying a $2,500.00 fine; and PMF was issued a notice of non-compliance regarding its late filing of quarterly reports for the year 2012. Pet’r Ex. 4. In mitigation, there is no evidence that any specific customer was harmed or misled. There is no evidence that the violations were the result of willful misconduct or recklessness on the part of Respondents, or that they attempted to conceal a violation or mislead or deceive OFR. The violations cited by the auditor appear to be due to a lack of oversight by management, neglect, or a failure to understand OFR regulations. Although Respondents did not detect or voluntarily institute corrective action or measures prior to the audit, there is evidence that beginning with his assumption of control of the business in 2012, and during the audit, Mr. Cugno occasionally contacted the Tampa district office seeking advice on how to comply with OFR statutes and rules. Finally, there is no evidence that PMF attempted to impede or delay the examination or investigation of the underlying misconduct, or that any customer was harmed. Considering the aggravating and mitigating factors on which the parties presented evidence, the undersigned determines that the mortgage broker license should be suspended for six months and a $20,000.00 administrative fine imposed on Mr. Cugno. Procedural Issues In their PRO, Respondents focus largely on the argument that Mr. Cugno was not qualified to represent himself or PMF, and therefore the case should be reopened to allow Respondents, with the assistance of counsel, “to make [their] record and better present the facts and the circumstances.” PRO at 16. Mr. Cugno is the owner and president of the corporation. As such, he may represent the corporation in an administrative proceeding, even though he is not an attorney. See The Magnolias Nursing & Convalescent Ctr. v. Dep’t of Health & Rehab. Servs., 428 So. 2d. 256, 257 (Fla. 1st DCA 1982)(“it is clear that self-representation by corporations is permissible in administrative hearings”). Because Mr. Cugno is not a “qualified representative” under rule 28-106.106, there is no requirement that a preliminary determination be made that he is "qualified" to represent his corporation. Likewise, the rule does not require that a preliminary determination be made that an individual, acting pro se, is qualified to represent himself. Mr. Cugno is an experienced operator of a mortgage business, having been in that field for 22 years. Besides PMF’s operations in Florida, Mr. Cugno testified that he operates “businesses” in Alabama, Tennessee, Kentucky, Minnesota, and Georgia. Mr. Cugno acknowledged receipt of the Complaint on February 6, 2017. After initially requesting that an informal telephonic hearing under section 120.57(2) be conducted to contest the application of the law, on September 28, 2017, he asked that he be given a formal hearing under section 120.57(1) to contest the factual findings in the Complaint. During the seven-month informal phase of this proceeding, Mr. Cugno elected to represent himself and the corporation. After the proceeding was converted to a formal proceeding, an Initial Order was issued on September 29, 2017, which informed Mr. Cugno that a “party may appear personally or be represented by an attorney or other qualified representative.” Notwithstanding this information, Mr. Cugno voluntarily decided to continue to represent himself and the corporation. Prior to the hearing, he participated in three depositions taken by OFR; he deposed OFR witness Quaid; he responded to discovery requests; and he served discovery on OFR. At hearing, he engaged in extensive cross-examination of the OFR auditor. Finally, in a letter to OFR dated August 19, 2015, Mr. Cugno stated that PMF has its own “legal department,” see Petitioner’s Exhibit 12; and, at hearing, he testified that PMF employed three attorneys, on at least a part-time basis, as loan originators. If these representations are true, legal advice was not far away. In any event, Respondents are not entitled to a second hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Office of Financial Regulation enter a final order sustaining the charges in Counts I through VIII; suspending PMF’s mortgage broker license for six months; and imposing an administrative fine on Mr. Cugno in the amount of $20,000.00. DONE AND ENTERED this 29th day of June, 2018, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of June, 2018.
Findings Of Fact At all times pertinent to the allegations contained herein, Respondent was a licensed Mortgage Broker and the principal broker for Mortgage Associates of Countryside, located at 2623 Enterprise Rd., Clearwater, Florida. The Department was and is the state agency charged with regulating the activities of mortgage brokers in this state. In September, 1987, Andrew Grosmaire and Kevin Gonzalez, compliance officer and financial examiner, respectively, for the Department, pursuant to a complaint from Mark Snyder, conducted an examination of Respondent's affairs as they pertained to his operation as a mortgage broker. During the survey, which covered the period from August, 1986 through August, 1987, Mr. Grosmaire and Mr. Gonzalez examined between 50 and 60 loan files which had culminated in loan closings. In addition, they examined loan files which did not result in closings, bank account records, and other of Respondent's miscellaneous records. In order for an appropriate audit of a closed loan file to be conducted, it is imperative that the loan closing statement be included. Without it, the examiner cannot accurately determine what, if any, closing costs the borrower actually paid and if closing costs paid were consistent with those disclosed by the broker on the Good Faith Estimate Form at the initial interview. Of the closed loan files reviewed, these closing statements were missing from seven files. Respondent admits that several closed loan files did not have the required closing costs statement form enclosed. He attributes this, however, to the failure of his processor, an assistant, to place the closing statement in the file. They were not presented at hearing or thereafter. The investigators examined the Good Faith Estimate Forms in those files which culminated in loans and found that the form utilized by the Respondent failed to contain language, required by statute, which summarized the limits and conditions of recovery from the Mortgage Brokerage Guaranty Fund. Respondent contends that the pertinent statutory section was not in existence at the time he was engaged in mortgage brokerage activities. This was found to be not true. The Act became effective July 1, 1986 and the files surveyed were from the period August, 1986 through August, 1987. Examination of the Good Faith Estimate Forms used by the Respondent in each of the cases which culminated in loan closing revealed that Respondent consistently underestimated closing costs. This resulted in the borrowers generally paying higher closing costs than was initially disclosed to them. On -loans applied for by Mr. and Mrs. Snyder, Mr. Iyer, and Mr. Toland. Respondent redistributed loan points to himself in an amount higher than that which was agreed to by the parties. In the Toland case, Mr. Toland agreed to pay a 1% loan origination fee in the amount of $996.00. The settlement statement dated approximately 2 months later reflected that Toland paid Respondent a loan origination fee of $1,128.00 in addition to a 1% ($664.00) loan discount fee to the lender. This latter mentioned discount fee was not disclosed in advance to Mr. Toland on the estimate form nor was the excess loan origination fee charged. It should be noted here that a second Good Faith Estimate Form, dated nine days after the original, reflecting a 3% loan origination fee, was found in the file. Though signed by Respondent, this second form was not signed by the borrower as required. It cannot, therefore, serve to support Respondent's claim that he advised the Tolands of the higher cost by this second form. There is no showing that the Tolands were aware of it. In the Iyer case, the estimate form dated September 19, 1986 reflected a points and origination charge of $1,332.50 which is 1% of the mortgage loan amount of $133,250.00. The Iyers were subsequently approved for a mortgage in the amount of $145,600.00. The closing statement dated March 6, 1987, almost six months later, reflects that the Iyers paid a 2% loan origination fee of $2,740.00 to Mortgage Associates and a load discount fee of $685.00 to the lender. Here again the Respondent claims that a second cost estimate form reflecting a 2% point and origination fee of $2,912.00 was subsequently executed by the Iyers. However, this second form, found in Respondent's files, is undated and fails to reflect the signature of either Respondent or the Iyers. It cannot, therefore, serve as proof that the Iyers were made aware of the change. It does appear, as Respondent claims, that the bottom of the second form, (here, a copy) , was excluded from the copy when made, but there is no evidence either in the form of a signed copy or through the testimony of the Iyers, that they were aware of the change. Consequently, it is found that the Iyers had not been made aware of the second estimate and had not agreed to pay as much as they did, in advance. As to the Snyder closing, both Mr. Snyder and Respondent agree that it was their understanding at the time the loan was applied for, that Respondent would attempt to obtain a lower interest rate for them than that which was agreed upon in the application and in the event a lower rate was obtained, Respondent's commission points would remain the same as agreed upon in the brokerage agreement. In that case, as Respondent points out, his commission is based on the mortgage amount, not the interest rate, and he would be entitled to the agreed upon percentage of the loan face amount regardless of the interest rate charged by the lender on the loan. The Snyders had agreed to a 1% commission to Respondent plus a 1% loan origination fee to the lender. When the lender agreed to lend at par, without an origination fee, Respondent appropriated that 1% to himself, thereby collecting the entire 2% called for in the application. This was improper. Respondent's claim that it is an accepted practice in the trade is rejected. The Snyders initially made demand upon the Respondent for reimbursement of that additional 1% and ultimately had to hire an attorney to pursue their interests. Respondent subsequently made a $400 partial reimbursement payment of the amount owed but nothing further notwithstanding the fact that the Snyders ultimately secured a Judgement in Pinellas County Court against him for $1,082.52 plus interest, attorney's fees and costs. As a result, the Florida Mortgage Brokerage Guarantee Fund will reimburse the Snyders for their loss. According to the investigators, the Snyders Toland, and Iyer files, in addition to the problems described, also reflected that Respondent received payments for other items which should have gone into an escrow account. These included such things as credit reports and appraisal fees. The Department requires that any money received by a broker other than as commission, be placed in the broker's escrow account pending proper disbursement. Respondent did not have an escrow account. Mr. Gonzalez looked at Respondent's overall operation, including closed files, in an attempt to correlate between income and outgo to insure that Respondent's operation was in compliance with the statute. In addition to his search for an escrow account, Mr. Gonzalez also examined Respondent's "Loan Journal" which by statute is required to contain an entry for each transaction in each loan. The purpose of this journal is to provide a continuing record to show when each item in the loan processing was accomplished. In Mr. Gonzalez' opinion, the Respondent's journal was inadequate. It contained repeat and conflicting entries for specific items which hindered the investigators' ability to determine an audit trail. In addition, all required information was not put in the journal in complete form in each account. In the opinion of the investigators, the Respondent's violations were significant in that they made it impossible for the Department to determine compliance with statutes and Department rules and inhibited the compliance examination. All in all, Respondent's way of handling his accounts, his failure to maintain an escrow account, and his unauthorized increase in commission income, all indicated his actions were not in the best interest of his clients. The investigators concluded that clients funds were not being handled properly and that the purpose of Chapter 494, Florida Statutes, to protect the consumer, was not being met. In Mr. Gonzalez' opinion, Respondent's method of business constituted incompetence as a mortgage broker and "possibly" fraudulent practice. It is so found. Both Mr. Gonzalez and Mr. Grosmaire indicated they had extreme difficulty in attempting to locate Respondent after the complaint was filed by Mr. Snyder, in order to conduct their examination. They finally located him at a site different from that which appeared in the records of the Department. Respondent contends that the Department had been notified in writing within the required time, of his change of location when he filed a notice of fictitious name. He contends that after filing his notice of name change, he received no response from the state but took no action to inquire whether the change had been made. In any case, his current address was in the phone book and had the agents chose to look there, they would have found him. Respondent contends that the good faith estimates required by the statute are just that, an estimate, and that actual figures may vary from and exceed these estimates. This is true, but there is a procedure provided whereby the broker is to notify the client of a change in advance and if the change exceeds a certain amount, it may constitute grounds for voiding the contract. In paragraph 7 of the complaint, Petitioner alleges that Respondent used a form for the estimates which failed to contain a statement defining the maximum estimated closing costs. Review of the statement offered herein reflect this to be a fair analysis. However, Respondent claims that certain items cannot be predicted accurately in that some companies charge more than others for the same item and it was his practice to insert in the estimate portion of the form a "worst case scenario." However, at no time did he address in his form what could be the maximum a prospective purchaser might be expected to pay. Respondent "doesn't like" the total picture painted by the investigators concerning his operation. He claims it is cot a fair and accurate representation. In many cases, he claims, he expended funds on behalf of clients in excess of that he received in either commission or reimbursement and even though he may have received more than entitled in some cases, it "evens out over a period of time." Though this may be so, it is no way to do business. The state requires the keeping of accurate records and, just as the broker should not be required to assume responsibility for other than his own misconduct, neither should the client be required to pay more than is his legal obligation. Respondent professes to know the mortgage business and he resents having his qualifications as a mortgage broker questioned. In his opinion, he has trained himself well and has acted in good faith on the basis of the information available to him at the time. He ignores the impact of the Judgement of the court in the Snyder matter because he feels it was "unilateral." He believes the law is designed to protect the client and he wants to know who protects the broker. It is for that very reason, he contends, that fees paid in advance are not refundable. Mr. Sample feels the Department should be more informative to the brokers and get the governing regulations updated more quickly. Respondent cherishes his license and claims he needs it to make a living. He went out of business once before, several years ago, because of bad business conditions, (the reason he uses for not complying with the court order), but did not declare bankruptcy because he wanted to go back into business and pay off the judgements against him. Though he has been back in business for several years, he has failed to make any effort to pay off any of his former creditors even though in his former operation, he improperly tapped his escrow account for other business expenses.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Respondent, Howard E. Sample's license as a mortgage broker in Florida be revoked. RECOMMENDED this 15th day of September, 1988 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of September, 1988. APPENDIX TO RECOMMENDED ORDER IN CASE NUMBER 88-2858 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Insofar as Petitioner's submission refers to testimony of a witness, that is considered as a proposed finding of fact. FOR THE PETITIONER; Accepted and incorporated herein & 3. Accepted and incorporated herein 4. & 5. Accepted and incorporated herein Accepted and incorporated herein & 8. Accepted and incorporated herein Rejected as contra to the evidence A conclusion of law and not a finding of fact & 11a Accepted and incorporated herein Accepted Accepted and incorporated herein Accepted Accepted and incorporated herein - 18. Accepted 19. - 21. Accepted and incorporated herein Accepted & 24. Accepted and incorporated herein 25. & 26. Accepted and incorporated herein Accepted &-29. Accepted 30. - 34. Accepted and incorporated herein FOR THE RESPONDENT: Nothing Submitted by way of Findings of Fact COPIES FURNISHED: Elise M. Greenbaum, Esquire Office of the Comptroller 400 West Robinson St. Suite 501 Orlando, Florida 32801 Howard E. Sample 2465 Northside Drive Apartment 505 Clearwater, Florida 34621 Honorable Gerald Lewis Ccmptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 Charles L. Stutts, Esquire General Counsel Department of Banking and Finance Plaza Level, The Capitol Tallahassee, FL 3 2399-0350
The Issue Whether the application of the Respondent Melvin Haber for a mortgage broker's license should be approved or denied.
Findings Of Fact Respondent Melvin Haber applied for registration as a mortgage broker by filing an application for registration as a mortgage broker on December 20, 1976. On January 14, 1977, Petitioner issued to Respondent its Notice of Intent to Deny Respondent's Application for registration as a mortgage broker. The reasons for such denial were set forth in an accompanying document entitled "Administrative Charges and Complaint." Petitioner Division of Finance had determined that Respondent Melvin Haber did not meet the proper qualifications necessary to be licensed as a mortgage broker and that he had, through Guardian Mortgage and Investment Corporation, charged and received fees and commissions in excess of the maximum allowable fees or commissions provided by the Florida Statutes; and although he had stated otherwise on his application, Respondent in fact had been charged in a pending lawsuit with fraudulent and dishonest dealings; and had demonstrated a course of conduct which was negligent and or incompetent in the performance of acts for which he was required to hold a license. By letter dated January 19, 1977, to Mr. Joseph Ehrlich of the Comptroller's Office, Tallahassee, Florida, Petitioner received a request from the Respondent Melvin J. Haber in which he acknowledged receipt of his rejection for mortgage broker's license and stated, "I received notice today of my rejection for my mortgage broker's license. I would, therefore, withdraw my application and re- quest return of $75.00 as I will not answer the rejection as I can't afford an attorney at this time." A Special Appearance to Dismiss Complaint was entered on February 11, 1977. The grounds are as follows: "1. The Department of Banking and Finance does not have jurisdiction over this Respondent. There is no jurisdiction in any administrative proceeding over this Respondent. There is no pending application for any mortgage broker's license by this Respondent. The application originally filed for the mortgage broker's license was withdrawn on January 19, 1977. A copy of the letter withdrawing application is attached hereto as Exhibit A. The proceedings are moot and would serve no useful purpose. Permitting this tribunal to proceed on a non-existent request for broker's license would deny to the Respondent due process of law, equal protection of the law, and his rights under the State and Federal Constitutions applicable thereto." On March 4, 1977, the Division of Administrative Hearings received a letter from Eugene J. Cella, Assistant General Counsel, Office of the Comptroller, State of Florida, requesting a hearing in this cause be set at the earliest practical date, and enclosed in the letter requesting a hearing was a copy of the Division of Finance's Administrative Complaint and a copy of the Respondent's Special Appearance to Dismiss the Complaint. A hearing was set for April 22, 1977, by notice of hearing dated March 30, 1977. A letter was sent by Irwin J. Block, Esquire, informing the attorney for the Petitioner that the Respondent "intends to permit the matter to proceed solely upon the written Special Appearance to Dismiss Complaint heretofore filed." Evidence was submitted to show that between May 29, 1973 and continuing through November 25, 1976, Guardian Mortgage and Investment Corporation and Melvin Haber as Secretary/Treasurer charged and received fees and commissions in excess of the maximum allowed fees or commissions in violation of the Florida Statutes and the Florida Administrative Code. Respondent's application for registration as a mortgage broker indicated that Petitioner was not named in a pending lawsuit that charged him with any fraudulent or dishonest dealings. However, on August 5, 1976, a suit was filed in Dade County, Florida, which charged the Petitioner and others with fraud in violation of the Florida Securities Law. The application was filed by Respondent, was processed by Petitioner and a Notice of Intent to Deny Respondent's Application for Registration was filed together with Administrative Charges and Complaint. The Division of Administrative Hearings has jurisdiction upon request of a party for a hearing once an application has been received and the Division has investigated and fully considered the application and issued its Notice of Intent to Deny and filed a Complaint on the applicant. In this cause the question of whether the applicant is entitled to a refund of fees also must be resolved. An orderly procedure to finalize the resolution of the issues is desirable and necessary. The Proposed Order filed by the Petitioner has been examined and considered by the Hearing Officer in the preparation of this order.
Recommendation Deny the application of applicant Melvin Haber for a mortgage broker's license. Refund the Seventy-Five Dollar ($75.00) fee Respondent paid upon filing the application. DONE and ORDERED this 31st day of May, 1977, in Tallahassee, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Richard E. Gentry, Esquire Assistant General Counsel Office of the Comptroller Legal Annex Tallahassee, Florida 32304 Irwin J. Block, Esquire Fine, Jacobson, Block, Goldberg & Semet, P.A. 2401 Douglas Road Miami, Florida 33145
