The Issue Whether Petitioner's responses to the mortgage brokers examination administered in April 1995 were properly graded and, if not, whether Petitioner passed the examination? Whether Petitioner's responses to the mortgage brokers examination administered in May 1995 were properly graded and, if not, whether Petitioner passed the examination?
Findings Of Fact Respondent is the agency of the State of Florida responsible for the licensure of mortgage brokers pursuant to Part II of Chapter 494, Florida Statutes. Pursuant to Section 494.0033(2)(b), Florida Statutes, individuals who apply for licensure as a mortgage broker are required to pass a licensure examination. To pass the examination, a candidate must receive a minimum score of 75. National Assessment Institute is the company employed by Respondent to administer the licensure examination. Petitioner applied for licensure as a mortgage broker. On April 25, 1995, Petitioner took the mortgage broker examination. Petitioner was advised that she had achieved a score of only 64. Petitioner was afforded an opportunity to review the examination questions and her answers thereto, and she did so on May 12, 1995. She questioned her failure to receive credit for fourteen of her answers on that examination and provided written explanations why she believed her answers to those questions were correct. Petitioner's written challenges and explanations regarding her answers to those fourteen questions were reviewed by staff of National Assessment Institute. The individual who reviewed Petitioner's responses did not testify in this proceeding. This individual determined that Petitioner's answers to those fourteen questions were incorrect and that her explanations were without merit. Petitioner was advised that she was not entitled to additional credit for her answers on the April 1995 examination. At the final hearing in this cause, Petitioner failed to present any evidence that her April 1995 examination was improperly graded or that she was otherwise entitled to additional credit for her responses to the challenged questions on the examination. Petitioner also sat for the licensure examination administered May 23, 1995. Petitioner received a score of 74 on this examination. On June 9, 1995, Petitioner reviewed the grading of answers to the May 1995 examination. Petitioner asserts that the reviewer gave her the wrong question book so that the answer key would make her answers appear incorrect. For her review on June 9, 1995, Petitioner was provided a correct copy of her examination book, a photo copy of her answer sheet, her original scratch paper, and two challenge sheets. The information provided Petitioner reflected the response to each question the Respondent considered to be the correct response. At the final hearing in this cause, Petitioner failed to present any evidence that her May 1995 examination was improperly graded or that she was otherwise entitled to additional credit for her response to any question on the examination. Petitioner failed to establish that the April or May examination was improperly administered. She likewise failed to establish that the opportunity to review the scoring of these two examinations was compromised by fraud or mistake. The Respondent has promulgated Rule 3D-40.031(2), Florida Administrative Code, which authorizes it to request additional information in conjunction with a licensure application, which information may include the applicant providing evidence of a passing score on the mortgage broker examination. That Rule requires that additional information requested must be received by the Respondent within 90 days. The Respondent requested that Petitioner provide evidence that she had received a passing score on the examination. Petitioner has been unable to provide that information.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order that adopts the findings of fact and conclusions of law contained herein. It is FURTHER RECOMMENDED that Petitioner's challenges to the scoring of the April and May 1995 licensure examinations be dismissed and, consequently, that Petitioner's application for licensure as a mortgage broker be denied. DONE AND ENTERED this 16th day of May, 1996 in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of May, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5132 The proposed findings of fact submitted by Petitioner are rejected as they are not supported by the record. While Petitioner purports to explain her answers to certain questions on the April 1995 examination, this evidence was not presented at the formal hearing. The following rulings are made as to the proposed findings of fact submitted by Respondent. The proposed findings of fact in paragraphs 1, 2, 3, 4, and 5 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 6 are adopted in part by the Recommended Order. The fact that Petitioner challenged ten question as a result of her review on June 9, 1995, was not established. Since there was no dispute that the request for formal hearing was timely and this is a de novo proceeding, the proposed findings of fact in paragraph 7 are unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 8, 9,10, 11, 13, and 14 are subordinate to the findings made. The proposed findings of fact in paragraphs 12 and 15 are rejected as being unnecessary to the conclusions reached. COPIES FURNISHED: Ms. Nasrin Y. Niknam 53 Castle Harbour Isle Drive Fort Lauderdale, Florida 33308 Deborah Guller, Esquire Office of the Comptroller Department of Banking and Finance 201 West Broward Boulevard, Suite 302 Fort Lauderdale, Florida 33301 Honorable Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Harry Hooper, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350
The Issue The threshold issue is whether, as a prerequisite to the operation of their foreclosure-related rescue business, Respondents were required to be licensed as mortgage brokers and as loan originators pursuant to chapter 494, Florida Statutes (2017).1/ A secondary issue is whether Respondents solicited, charged, received, or attempted to collect or secure payment for loan modification services without the borrower receiving a material benefit prior to being charged for services.
Findings Of Fact Based upon the demeanor and credibility of the witnesses, other evidence presented at the final hearing, and on the entire record of this proceeding, the following Findings of Fact2/ are made: Background Pursuant to sections 494.0011 and 494.0012, Petitioner is the state agency charged with the regulation and enforcement of chapter 494, relating to mortgage brokering, mortgage lending, and loan origination. Respondents are charged by administrative complaint with: (a) offering loan modification services for compensation without a license, in violation of chapter 494; (b) charging up- front fees from consumers for loan modification services before completing or performing all services included in the agreement for loan modification services, in violation of chapter 494; (c) failing to obey a final order of OFR; and (d) failure to pay a fine imposed by OFR. Respondent National was originally named Save Your Home Law Center, Inc., when organized in 2009. Respondent R. Jason de Groot served as corporate president and a director of National until February 2, 2016. Respondent Carey Clements served as secretary and a director of National, supervised the employees, and generally managed National throughout National’s corporate existence. Carey Clements has not held a loan originator license pursuant to chapter 494, since December 31, 2010. At no time has National held a mortgage broker or mortgage lender license. As explained by Edward Traylor, National was formed at the height of the national housing market crisis in order to assist persons whose homes were in default and at risk of foreclosure. National operated as a “foreclosure-rescue consultant” and provided “foreclosure-related rescue services” to persons who had defaulted on their mortgage payments and whose homes were in the foreclosure process. Section 501.1377(2)(b), Florida Statutes, defines a foreclosure-rescue consultant as “a person who directly or indirectly makes a solicitation, representation, or offer to a homeowner to provide or perform, in return for payment of money or other valuable consideration, foreclosure-related rescue services. The statutory definition expressly excludes: A licensed mortgage broker or mortgage lender that provides mortgage counseling or advice regarding residential real property in foreclosure, which counseling or advice is within the scope of services set forth in chapter 494 and is provided without payment of money or other consideration other than a loan origination fee. “Foreclosure-related rescue services” is defined by section 501.1377(2)(c) as follows: (c) “Foreclosure-related rescue services” means any good or service related to, or promising assistance in connection with: Stopping, avoiding, or delaying foreclosure proceedings concerning residential real property; or Curing or otherwise addressing a default or failure to timely pay with respect to a residential mortgage loan obligation. The Mortgage Rescue Process Edward Traylor, an owner of National, described the steps his company took when approached by a client seeking foreclosure-related rescue services. According to Mr. Traylor, the initial step was to meet face-to-face with the client and obtain authorization for National to talk directly to the client’s lender. Next, National would contact the lender to confirm that the client was in default on his or her mortgage. National would only accept clients whose mortgage loans were in default. Upon confirming that the client was in default, National would determine whether the matter had been referred to the lender’s loss mitigation department, foreclosure department, or assigned to an attorney. Loans in default would be assigned to the loss mitigation department, and if the default was not cured, then to the foreclosure department (or attorney). Once National determined which of the lender’s departments had been assigned the matter, that department was contacted by National to determine the following: current term and interest rate of the loan; type of loan (conventional? FHA? Fannie Mae? Freddie Mac? Home equity line of credit?). Has the loan been approved for a home retention program trial? Has the loan been in a home retention program previously? Is the lender currently evaluating the loan for a retention workout program? Is the home in foreclosure? If so, has a sale date been set? If so, is it possible to postpone the sale date? If a sale date has been set and postponement is possible, what is required from the borrower to postpone the sale? What is the deadline for the borrower to meet those requirements? Does the lender require a current financial package from the borrower in order to consider whether to offer a “workout plan?” If the lender was willing to consider offering the borrower a workout plan, but required updated financial information from the borrower, that information was gathered by National and provided to the lender. However, not all lenders required updated financial information from borrowers as a prerequisite to offering a workout plan. The majority of the borrowers assisted by National had obtained their mortgages through sub-prime lending practices with minimal loan qualifications required. These mortgages were then sold to investors as “mortgage backed securities,” usually in blocks of a billion dollars each. With the national collapse of the housing market in 2007 and 2008, tens of thousands of borrowers in Florida defaulted on their mortgages, resulting in their homes going into foreclosure. Since many of these homes were bundled as mortgage backed securities, the investors in those securities retained banks and other institutions as servicers of those defaulted loans. Those servicers included Wells Fargo, Beneficial Finance, Merrill Lynch, and Bank of America, among others. Each servicer established its own criteria for offering workout plans to lenders. Depending upon the servicer, the workout plan might include a reduction in interest rate, reduction of principal owed, and/or waiver of fees and penalties. The terms of the workout plans offered by the lenders/servicers were nonnegotiable. National did not have the ability to counteroffer the terms of a workout plan. In other words, if the lender’s workout plan was a two-percent reduction in the interest rate, National could not negotiate a higher percentage reduction. In essence, the workout plan was a “take it or leave it” offer to the borrower. However, some lenders/servicers did include several options that the borrower could choose from to incorporate into the workout plan. Those options might include a reduction in the interest rate, term, or principal deferment, or reduction to the current principal balance. In those instances where the lender/servicer was willing to offer options to avoid foreclosure, including a workout plan, National would communicate those options to the borrower, along with a recommendation as to the terms of the workout plan. That recommendation would be based, at least in part, on National’s evaluation of the borrower’s financial condition and ability as reported to National. In the same letter containing National’s workout plan recommendation, the borrower was also informed of the necessity to enter into an Enrollment Agreement with National if the borrower wished to continue receiving services from National. That Enrollment Agreement set forth the scope of services to be provided to the borrower by National, which included four phases of work, identified as Parts I through IV in the agreement: PART 1: SYHHC has conducted the first interview with the Client, prepared a Client Information Form and received authorization to speak to the Lender/Servicer and/or their counsel. SYHHC has made initial contact with the Lender/Servicer to determine if the above loan qualifies for a workout program which will avoid foreclosure and if the Lender will accept a workout offer from the Client. SYHHC has conducted a second interview to compile financial information to help Client determine if they can qualify and what kind of offer they can make. Based upon preliminary information obtained from the Lender/Servicer and Client, SYHHC has prepared a preliminary proposal/offer which Client believes to be reasonable for the Lender/Servicer to consider. SYHHC conducted a third interview with the Client and went over the proposal offer to make sure the Client wishes to proceed with this offer. Client was advised that they could present the offer themselves and no monies were due SYHHC. PART II: SYHHC will collect and verify all information from Client to prepare a reasonable workout plan for Client to present to the Lender/Servicer to avoid foreclosure. SYHHC will contact Client and review the proposed workout with Client. Client may reject any proposed workout option prepared by Save Your Home Help Center and decide not to proceed and cancel this Enrollment Agreement and any monies that have been paid for services rendered as outlined in Part I shall not be refunded and this agreement is cancelled. If Client agrees and accepts in writing the proposed workout offer a payment of $700.00 is due and payable for services rendered. SYHHC shall submit Client’s file to the Lender/Servicer no later than 30 days after receipt of said payment. PART III: Submit Client’s formal workout offer/proposal to Lender/Servicer within 30 days. Weekly contact or as needed with the Lender/Servicer updating file per Lender/Servicer request. Weekly contact or as needed with Client. When Client’s workout/offer is received and processed by Lender/Servicer and is in review for consideration and advises SYHHC that all requested documents have been received a fee of $795.00 is due. Client understands once file is submitted to Lender/Servicer and the above payment is not received within (5) five days following the request for payment the file shall be withdrawn from the Lender/Servicer. PART IV: Continue to update file as requested from Lender/Servicer. Continue providing foreclosure related services until an offer to avoid foreclosure has been provided to Client. SYHHC will review any offer/option provided by Lender/Servicer/Counsel with Client and at the sole discretion of SYHHC may resubmit any counter proposal on behalf of Client until a final offer is presented to Client. If Client’s [sic] declines the latest offer from Lender/Servicer/Counsel and Client’s circumstances have not changed SYHHC reserves the right not to resubmit. If Client receives an offer from Lender/Servicer including a trial period which avoids foreclosure it is agreed that SYHHC has completed this Agreement. No payment was due from borrower to National until after the completion of each of the four phases of work. Was National Providing Unlicensed Loan Modification Services? Count 1 of the Complaint charges Respondents with offering loan modification services for compensation without a license, in violation of section 494.00255(1)(p). Specifically, the Count alleges that “Respondents offered loan modification services, which is acting as a loan originator, mortgage broker, or mortgage lender, and which therefore requires a license from the Office.” The referenced statutory provision prohibits “[a]cting as a loan originator, mortgage broker, or mortgage lender without a current license issued under part II or part III of this chapter.” Section 494.001(15) defines “loan modification” to mean a modification to an existing loan, and specifically does not include a refinancing transaction. OFR conducted a review of National’s operations from the period of January 16, 2013, through February 9, 2016, consisting of 26 sample files, and based upon that review concluded that National was providing loan modification services. OFR’s conclusion that National was offering loan modification services was primarily based upon several of the “best options” letters (Petitioner’s Ex. 7A) referenced above that were sent by National to borrowers. As noted, those letters included recommendations as to the best options offered by lenders/servicers for incorporation in a workout plan. OFR also based its conclusion on a series of communications from National to lenders/servicers proposing a “loan modification or workout option” in order for the borrower to avoid foreclosure. (Petitioner’s Ex. 7B). While on their face, National’s letters to lenders/servicers proposing new terms to the defaulted loans would appear to constitute offers to modify the loans, it is more likely the letters simply identify the options of the workout plan offered by the lender/servicer that were acceptable to the borrower. This inference is consistent with the finding that the terms of the workout plans offered by lenders/servicers were nonnegotiable. In other words, while a loan originator or broker would have the ability to negotiate the terms and conditions of a loan, National, as a rescue consultant could not, since the parameters of the workout plan were established solely by the lenders/servicers. Competent substantial evidence of record established that Respondents were not offering loan modification services and were not acting as loan originators or brokers. Collection of Advance Fees for Loan Modification Services Count II of the Complaint alleges that Respondents solicited, received, or attempted to collect one or more payments, directly or indirectly, for loan modification services before completing or performing all services included in the agreement for loan modification services. Section 494.00296 provides as follows: (1) PROHIBITED ACTS.--When offering or providing loan modification services, a loan originator, mortgage broker, or mortgage lender may not: * * * (c) Solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for loan modification services before completing or performing all services included in the agreement for loan modification services. A fee may be charged only if the loan modification results in a material benefit to the borrower. The commission may adopt rules to provide guidance on what constitutes a material benefit to the borrower. Upon qualifying the borrower, Respondents provided a contract to the borrower for services. The contract included a standard fee of $2,495 to complete the entire process. Only part of the total fee was collected from the borrower at the time Respondents were retained. Contemporaneous with signing the contract, Respondents provided an invoice to the borrower, which showed a total due at the bottom of the page for those future services that were to be rendered through conclusion of the Enrollment Agreement. As noted, the first step in the process was to contact the lender; the next step was to gather documents and information required by the lender; the third step was to submit the information as a package to the lender; the final step was to assist the customer with obtaining approval from the lender. The fees to be charged for the above services were $500, which was due at the time the Enrollment Agreement was executed. The remaining fees were $700, to be paid when the proposed workout offer is agreed to and accepted by the borrower; and $795, for preparing the file, updating the file, reviewing the file with the borrower and obtaining signatures, and submitting the file to the lender. Given the finding that Respondents were not providing loan modification services, and were not acting as loan originators, mortgage brokers, or mortgage lenders, section 494.00296 is inapplicable. However, even if this provision applied, borrowers received a material benefit from the services provided by National in Part 1 of the Enrollment Agreement, since they were advised of the options available to them to avoid foreclosure. While section 494.00296 does not apply to the foreclosure-related rescue services being provided by Respondents, section 501.1377 does apply. That section sets forth very detailed requirements and language that must be included in all written agreements for foreclosure-related rescue services. There is no evidence of record that the Enrollment Agreement used by National did not comply with those requirements. Section 501.1377 also identifies practices that are prohibited. The pertinent section provides: Prohibited acts.--In the course of offering or providing foreclosure-related rescue services, a foreclosure-rescue consultant may not: Engage in or initiate foreclosure- related rescue services without first executing a written agreement with the homeowner for foreclosure-related rescue services; or Solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for foreclosure-related rescue services before completing or performing all services contained in the agreement for foreclosure-related rescue services. While it could be argued that National was in violation of section 501.1377(3)(b) for collecting payments before all services contained in the Enrollment Agreement were completed, this section was not cited in the Complaint, nor does OFR have jurisdiction to bring an enforcement action for violation of the above provision. Failure to Comply with Prior Final Order Count III alleges that Respondents continued to act as loan originators, mortgage brokers, or mortgage lenders without a license, and in violation of the OFR’s Final Order in OFR Case 2012-285 FOF entered on November 2, 2012. Count IV alleges that Respondents failed to pay the $25,000 fine imposed in the Final Order. The procedural history resulting in the entry of the prior Final Order reveals that the allegations contained in the underlying Administrative Complaint were never resolved on their merits. Rather, when Respondents failed to respond to discovery requests propounded on them by OFR, including 13 requests for admissions, those requests for admissions were deemed admitted by the ALJ, and OFR’s motion to relinquish jurisdiction, based upon the matters deemed admitted, was granted. The Final Order, upon which OFR grounds Count III and IV of the instant Complaint, was then entered. Respondents in the prior proceeding were represented by Attorney John Baum. According to Mr. Traylor’s unrebutted testimony, Respondents were advised by Mr. Baum that the matter had been settled or dismissed, and that Respondents had won the case. Respondents were not informed until early 2014 that, in fact, an adverse Final Order had been entered against them, when they received a letter from a collections agency seeking collection of the $25,000 fine. Mr. Baum was disbarred on July 15, 2013, for reasons not of record. The substantive allegations contained in the prior Administrative Complaint are indistinguishable from the allegations at bar. Both assert that Respondents were providing loan modification services without proper licensure, and that payments were received for loan modification services before all services had been provided. Given the findings herein that Respondents have not been improperly providing loan modification services, and lack of adjudication on the merits that Respondents ever improperly provided such services, OFR’s Final Order in OFR Case 2012-285 FOF may not form the basis of the new allegations set forth in Counts III and IV of the instant Complaint.3/
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 dismissing Administrative Complaint No. 69868. DONE AND ENTERED this 9th day of April, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 9th day of April, 2018.
The Issue These administrative proceedings involve three related cases which were consolidated for purposes of proceedings before the Division of Administrative Hearings. DOAH Case No. 87-3299 began on or about May 13, 1987, with the issuance of an Administrative Complaint and Notice of Rights by the Department of Banking and Finance, Division of Finance (hereinafter "Department"), against Respondents Mid South Mortgage Corporation (hereinafter "Mid South"), Carolyn G. Stanley (hereinafter "Stanley"), William D. Hughes (hereinafter "Hughes"), John Childers (hereinafter "Childers"), and Janie Cincotta (hereinafter "Cincotta"). An Amended Administrative Complaint was filed later. The Amended Administrative Complaint charges the Respondents with nine counts of violations of the Mortgage Brokerage Act, Chapter 494, Florida Statutes. In addition to the Administrative Complaint, on about May 13, 1987, the Department issued a Cease and Desist Order and Notice of Rights against Childers and Cincotta, which was docketed as DOAH 87-3300, and a second Cease and Desist Order and Notice of Rights against Mid South, which was docketed as DOAH Case No. 87-3301. The Administrative Complaint in DOAH Case No. 87-3299 was never served on Cincotta. At the commencement of the formal hearing, the Department announced that it was not pursuing the Administrative Complaint against Cincotta. The Cease and Desist Order in Case No. 87-3300 was served on Cincotta. At the commencement of the formal hearing, Cincotta confirmed that she did not contest the Cease and Desist Order in Case No. 87-3300. Prior to the formal hearing, Hughes and the Department entered into a stipulation for the disposition of all issues in DOAH Case No. 87-3299 that relate to Hughes. Following the hearing in this case, a transcript of the proceedings at hearing was filed. Thereafter the Department filed proposed recommended orders in all three of these consolidated cases. The Respondents have not filed any proposed recommended orders. The Department's proposed recommended orders have been carefully considered during the formulation of this recommended order. Specific rulings on all proposed findings of fact are contained in the appendix which is attached hereto.
Findings Of Fact Based on the exhibits received in evidence and on the testimony of the witnesses at the hearing, I make the following findings of fact. Preliminary Factual Findings Mid South is a corporation organized and existing under and by virtue of the laws of the State of Florida. Mid South has been and is conducting business in the State of Florida as a mortgage brokerage business pursuant to Chapter 494, Florida Statutes, having been issued license No. HB-592335611. Mid South has been and is conducting business in the State of Florida as a mortgage brokerage business at 1815 West 15th Street, Suite 8, Panama City, Florida 32407. Persons Employed by Mid South John Childers From October 1983 until present, Childers has been employed at Mid South. Childers is President of Mid South and a 50 percent shareholder of Mid South. Childers is the chief executive officer in charge of running Mid South in Mississippi, Alabama, Georgia, Tennessee, and Florida. Childers is not now, nor has he ever been, licensed pursuant to Chapter 494, Florida Statutes. Although Childers explained to Carolyn G. Stanley, the designated Principal Mortgage Broker of Mid South, that she was in charge of the offices of Mid South, Childers assumed the responsibility of overseeing the mortgage brokerage business of Mid South, because Stanley did not have time to do so. In the event a borrower became angry because his interest rates were increased above what was agreed to, it was Childers who would try to "work out a deal" with the borrower by reducing the points. Ann King Beach From on or about July 25, 1985, Ann King Beach was the Designated Principal Mortgage Broker of Mid South pursuant to Chapter 494, Florida Statutes, having license No. HB-16762. From on or about September 1, 1985, Ann King Beach ceased to be employed by Mid South. Janie Cincotta Cincotta was employed by Mid South in Pensacola, Florida, for two different periods of time. The first period of employment began on or about September 1985 and ended on or about February 1986. From on or about September 1985 through on or about February 1986, the Pensacola, Florida, office of Mid South was continuously open. Cincotta's second period of employment with Mid South began on or about October 1986 and ended on or about March 1987. From on or about the end of October 1986 to on or about March 1987, the Pensacola, Florida, office of Mid South was continuously open. Cincotta's job responsibilities included the same responsibilities as those of Linda Banquicio, described below, and more. Cincotta would send out the verifications, work up the Good Faith Estimate, type the application, answer the telephone, and interview the applicants. Childers was aware of Cincotta's job responsibilities. Cincotta was compensated by Mid South. Cincotta was not licensed pursuant to Chapter 494, Florida Statutes. William D. Hughes From on or about September 19, 1985, the Mid South office at 692 Heinberg Street, Pensacola, Florida, was licensed pursuant to Chapter 494, Florida Statutes, having license No. HB-17159. From on or about September 19, 1985, William D. Hughes was designated as the broker in full charge, control, and supervision of the Pensacola, Florida, office of Mid South. Hughes terminated his employment with Mid South on or about April 15, 1986. On or about April 1, 1986, Hughes informed Childers that he was terminating his employment with Mid South. By letter dated September 2, 1986, Mid South notified the Department that Hughes was no longer employed by Mid South. On or about October 14, 1986, Hughes filed an Application for Registration as a Branch Office for the Pensacola, Florida, location of Mid South. On or about December 15, 1986, Hughes became the Designated Associate Broker at the branch office of Mid South, having license No. HT-9017. Said branch office was assigned license No. HL-1724. On or about April 1, 1987, Hughes notified the Department that he had terminated his employment with Mid South. Although Hughes became licensed with the Department as the Designated Associated Broker at the Pensacola, Florida, branch office of Mid South, he never actually worked there in that capacity. During the second period of Cincotta's employment, Childers knew that Hughes was not working at the Pensacola, Florida, office of Mid South. At the end of October or the beginning of November 1986, Childers told Cincotta that if Hughes received a telephone call, she was to respond that Hughes was not in. Thereafter, Childers would return the telephone call for Hughes. The reason for the foregoing instructions was to prevent Mid South from getting "into trouble," because Mid South did not have a licensed broker in the Pensacola, Florida, office of Mid South. Hughes received commissions only on the loans that he brought into Mid South. Hughes did not receive a commission on any other mortgage loan that was processed through the Pensacola, Florida, office of Mid South and which was considered to be a "house loan." There appear to have been two types of house loans on which Hughes did not receive commissions during his employment at Mid South. The first type was mortgage loans referred to Mid South from Source Mortgage wherein Source Mortgage shared a brokerage fee with Mid South. The other type of house loan involved borrowers who sought the services of Mid South, but did not initiate the mortgage loan process through either Hughes or Source Mortgage. Kenneth E. Boles From on or about November 20, 1985, Kenneth E. Boles was designated Principal Mortgage Broker of Mid South pursuant to Chapter 494, Florida Statutes, having license No. HB- 17651. From on or about July 24, 1986, Kenneth E. Boles ceased to be employed by Mid South. Linda Banquicio Linda Banquicio began working in the Pensacola, Florida, office of Mid South from on or about June 13, 1986, to on or about August 22, 1986. Banquicio was employed at Mid South to answer the telephone, type, inform borrowers of the interest rates, provide loan application forms to borrowers, assist borrowers in filling out the loan applications, type the verification forms to be mailed out, and fill in the estimated closing costs on the Good Faith Estimate. Childers was aware of Banquicio's job responsibilities. Banquicio was not licensed pursuant to Chapter 494, Florida Statutes. Carolyn G. Stanley From on or about January 13, 1986, Carolyn G. Stanley was designated as Principal Mortgage Broker of Mid South pursuant to Chapter 494, Florida Statutes, having license No. HB- 16762. Stanley was employed as Principal Mortgage Broker of Mid South in Panama City, Florida. As Principal Mortgage Broker of Mid South, Stanley did not take any action to oversee the offices of Mid South other than the Panama City, Florida, office where she was employed, because Childers had assumed that responsibi1ity. From on or about July 8, 1987, Stanley ceased to be employed by Mid South. Harold J. Larrieu, Jr. Harold J. Larrieu, Jr., filed an application to act as broker at the Pensacola, Florida, office of Mid South on or about August 25, 1986, but he withdrew his application on or about September 9, 1986. Advertisements of Mid South On April 27, May 4, 11, 18, and 25, 1986, Mid South advertised fixed rate financing in the Pensacola News Journal without stating the address of Mid South or that Mid South was a licensed mortgage broker. On June 29 and July 6, 13, 20, 27, and August 24, 1986, Mid South advertised fixed rate financing in the Pensacola News Journal. Lock-ins During Cincotta's second period of employment, it was the practice of Mid South to lock-in interest rates for a period of sixty days. However, few, if any, of the mortgage loans would close within that sixty-day lock-in period. Excessive Charges The following charges incurred are in excess of the costs disclosed to the following borrowers at the time Mid South accepted the application with respect to said borrowers: Borrower/cost Amount disclosed at time deposit or application Amount description accepted charged Michael A. Adam Discount/Origination Fee $2,384.00 2,460.00 Appraisal 200.00 225.00 Title Insurance 476.80 500.00 Doc. Preparation 0 200.00 Intangible tax 119.20 123.00 Doc. Stamps 89.40 92.25 Insurance 64.84 246.00 Thomas E. Almon Discount/Origination Fees 4,200.00 4,900.00 Recording 15.00 25.00 Survey 100.00 125.00 Pest Inspection 10.00 15.00 Copy Fee 0 6.00 Doc. Preparation 0 200.00 Jimmy M. Avera Title Insurance 425.00 496.60 R.E. Tax 217.87 293.16 Survey 150.00 225.00 Exp. Mail 0 24.75 ASMT 0 5.00 Doc. Preparation 0 200.00 Gloria F. Bates Survey 200.00 375.00 Title Insurance 650.00 736.00 Darrell R. Bond Appraisal 200.00 250.00 Title Insurance 326.00 381.00 Pest Inspection 25.00 40.00 Doc. Preparation 0 200.00 Fed. Express 0 12.50 Long Distance 0 10.00 Randy K. Burelson Hazard Insurance 0 210.00 Survey 83.00 150.00 David K. Bush Appraisal 175.00 200.00 Title Insurance 320.00 325.00 Survey 75.00 90.00 Pest Inspection 35.00 40.00 Doc. Preparation 0 200.00 City/County Tax 0 30.00 State Tax 0 40.00 James H. Cameron Survey 150.00 525.00 Doc. Preparation 0 200.00 Recording Fees 27.00 509.00 Sharon L. Cook Appraisal 125.00 200.00 Title Insurance 320.00 400.00 Thomas Elder Discount/Origin Fees 1,662.50 1,805.00 Hazard Insurance 0 326.00 Doc. Preparation 0 200.00 Willie C. Mixon PMI Insurance 370.58 670.12 Hazard Insurance 0 186.00 Doc. Preparation 0 200.00 John W. Whalen Survey 100.00 200.00 Betty A. Wilson Pest Inspection 25.00 40.00 Appraisal 0 250.00 Credit Report 0 35.00 Document Preparation Fees In addition to receiving brokerage fees, Mid South received a document preparation fee in the following amounts involving the below-noted borrowers although there is no documentation to indicate that the document preparation fee was disbursed to a third party. Borrower Amount Michael A. Adams $200.00 Thomas Almon 150.00 Jimmy M. Avera 200.00 Gloria F. Bates 150.00 Darrell R. Bond 150.00 Randy K. Burelson 200.00 David K. Bush 150.00 James H. Cameron 150.00 Sharon L. Cook 150.00 Thomas Elder 200.00 Edward E. Jackson 200.00 Willie C. Mixon 150.00 Russell O. Paul 200.00 John D. Reeder 150.00 John W. Whalen 150.00 Betty A. Wilson 150.00 In the following mortgage loan transactions brokered by Mid South, the Closing Statement failed to disclose the name of the broker or co-broker paid. Borrower Amount of brokerage fee Actual recipient of brokerage fee Michael A. Adams $2,460.00 Mid South Thomas E. Almon 4,900.00 unknown Jimmy M. Avera 584.00 Alabama Federal 1,168.00 Alabama Federal Gloria F. Bates 1,840.00 First Southern Savings 1,840.00 Mid South Darrell R. Bond 816.00 First Southern Savings 816.00 Mid South David K. Bush 400.00 First Southern Savings 400.00 Mid South James H. Cameron 2,000.00 First Southern Savings 200.00 Mid South Sharon L. Cook 800.00 First Southern Savings 800.00 Mid South Willie C. Mixon 494.00 Source Mortgage 1,482.35 Mid South and First Southern Savings Russell O. Paul 424.00 unknown 424.00 unknown John W. Whalen 646.65 First Southern Savings 646.65 Mid South 431.10 Source Mortgage Betty A. Wilson 1,088.00 First Southern Savings 1,088.00 Mid South Edwards Transaction Robert Edwards is a contractor who does remodeling, renovations, and room additions on residences. Edwards located a residence, which was run down and had been abandoned for two years but was in a nice neighborhood and on a beautiful wooded lot. The purchase price of the house was $19,000. With $10,000 to $15,000 of renovations put into the house, it could have been sold for approximately $45,000 at a profit of between $11,000 to $16,000. On or about early June 1986, Edwards called Mid South to inquire about the possibility of borrowing enough money to purchase and renovate the house. During that telephone conversation, an unidentified employee of Mid South told Edwards that he would have to discuss his proposal with Childers, but if his credit checked out, it would take from two to four weeks to close the loan. In early July 1986, Edwards met with Childers to discuss his proposal. At that meeting, Childers reviewed the proposal and "said he thought it would fly, that it was a good idea." Edwards thereupon filled out a credit application, was given a loan application to complete, and was told by Banquicio to sign a blank Good Faith Estimate. Subsequent to the early July 1986 meeting, Edwards completed the paperwork and informed Banquicio that he did not want to obtain an appraisal before he had qualified for the loan. Thereafter, Banquicio informed Edwards that Childers had indicated that Edwards should have the appraisal done because the loan looked good. In reliance on the foregoing representation, Edwards had an appraisal done on the residence on August 26, 1986, at a cost of $250. On or about September 3, 1986, Edwards went to the Pensacola, Florida, office of Mid South to seek assistance in obtaining his mortgage loan, at which time Stanley provided him his first completed Good Faith Estimate. At that time Stanley informed Edwards that all he had to do was wait for the closing and that Mid South would be getting in contact with him. However, contrary to Stanley's representation, Mid South never contacted him, so he began calling the Mobile, Alabama, office of Mid South, but was unable to speak to Childers. Shortly thereafter, the residence was sold to another purchaser, because Edwards had been unable to obtain his mortgage loan. At no time did Mid South inform Edwards that he did not make enough money to get the mortgage loan. Suhrheinrich Transaction During late June or early July 1986, Robert Suhrheinrich contacted Banquicio, an employee of Mid South, by telephone in order to apply for a mortgage loan. During the telephone conversation, Banquicio agreed to try to obtain a mortgage loan for Suhrheinrich. Prior to July 13, 1986, Suhrheinrich obtained a letter from Childers. The letter indicates that Suhrheinrich was eligible for a 15 year mortgage loan at an interest rate of 9 3/4 percent. Subsequent to receiving that letter, Suhrheinrich obtained from Mid South a Good Faith Estimate that indicated the interest rate was now 9 percent, a Request for Verification of Employment dated July 24, 1986, and a document entitled Loan Package Instructions, which states, in part, "If you have any questions regarding the information requested, please feel free to call John Childers at (904) 438-9760." During this period, Childers indicated to Suhrheinrich that he could obtain 90 percent loan to value. Thereafter, sometime in October 1986, Childers contacted Suhrheinrich and indicated that the mortgage loan was ready to close, but that the interest rate was about 10 percent and that he could give Suhrheinrich a loan of only 80 percent to value. Prior to the conversation wherein Suhrheinrich was told that the loan was ready to close, Suhrheinrich was never informed that the interest rate might be changed from the 9 percent figure disclosed to him on the Good Faith Estimate, or that a 90 percent loan to value could note be obtained. As a result of Mid South's increasing the interest rate to approximately 10 percent, Suhrheinrich did not obtain the mortgage loan because at that rate it did not pay to refinance his first and second mortgages. Further, the 80 percent loan to value offered by Mid South did not meet Suhrheinrich's needs. In reliance on the representation Mid South made to Suhrheinrich, he spent a total of $400 on an appraisal, survey, and termite inspection. Ward Transaction On or about August 3, 1986, Mary Ward contacted Banquicio, an employee of Mid South, by telephone and inquired about obtaining a mortgage loan. On or about August 21, 1986, pursuant to Banquicio's request, Ward went to the Pensacola, Florida, office of Mid South and filled out various documents in order to obtain the mortgage loan. During September 1986, Ward went to the Pensacola, Florida, office of Mid South to obtain her paperwork, because she had not been able to speak with Childers to find out whether she had been approved. Sitting in the office was an individual whom Banquicio identified as being Mid South's broker. Although Ward requested to speak to the individual identified as being Mid South's broker, Banquicio did not accommodate said request. Meinscher Transaction On or about August 18, 1986, Alacia Meinscher contacted Banquicio, an employee of Mid South, to obtain a mortgage loan. Banquicio agreed to attempt to obtain a mortgage loan for Meinscher. Meinscher filled out an application and, pursuant to Banquicio's request, signed a blank Good Faith Estimate. Approximately a week after filling out the application, Childers informed Meinscher the amount of the points that she would be charged and that the interest rate would be 9 3/4 percent. Childers and Banquicio informed Meinscher that it would take approximately twenty-one days for a determination as to whether Meinscher could obtain a mortgage loan. After waiting approximately sixty days for an indication from Mid South as to whether Meinscher could obtain a mortgage loan, Meinscher "gave up" on Mid South and went to another company. Meyers Transaction On or about October 10, 1986, Donald Meyers contacted Cincotta, an employee of Mid South, by telephone and inquired about the possibility of obtaining a $75,000 mortgage loan. During that conversation, Cincotta indicated that Mid South was offering an 8 1/2 percent fixed rate for thirty years. On or about October 28, 1986, Meyers met with Cincotta in the Pensacola, Florida, offices of Mid South and filled out a loan application form. At the October 28, 1986, meeting, Cincotta indicated that Mid South could obtain a mortgage loan for Meyers and she gave Meyers a Good Faith Estimate disclosing an interest rate of 8.5 percent and 2 points. The interest rate on the Good Faith Estimate has since been altered to read 9.5, whereas it originally was 8.5 when the document was prepared. At the October 28, 1986, meeting, Cincotta represented that, unless there was some unforeseen situation, the mortgage loan could close within 30 to 60 days. Cincotta locked in Meyers' mortgage loan for 60 days at 8 1/2 percent and 2 points. After the 60 day lock-in expired, Cincotta did not relock Meyers' rate, because the practice was that, once the loan had been submitted to Childers, Childers handled the lock-ins if they expired. On or about November 1986, Meyers received a second Good Faith Estimate Which indicated an interest rate of 8.5 percent and 2 points. On or about February 17, 1987, Meyers went to the offices of O. Gwen King for the closing. At the closing, the loan documents shows an interest rate of 9 1/2 percent with 2 1/2 points. At the closing, Meyers, by telephone, spoke to Childers who indicated that the loan of 8 1/2 percent plus 2 points was not available, but that he could lower the points on the 9 1/2 percent loan. After further discussions with Childers, Meyers left the February 17, 1987, meeting without closing. On or about April 7, 1987, Meyers requested by letter that his loan file (including the loan application, credit report, and appraisal) be returned to him. Meyers never received a response to his letter of April 7, 1987. In reliance on the representation made to Meyers, he spent $225 on an appraisal. Gillis Transaction On or about November 10, 1986, James G. Gillis called Mid South about obtaining a mortgage loan and spoke with Cincotta, an employee of Mid South. On or about November 12, 1986, Gillis met with Cincotta who agreed to try to obtain a mortgage loan for Gillis. At the meeting with Cincotta on November 12, 1986, Gillis obtained a Good Faith Estimate which showed the interest rate to be 9 percent. Gillis declined to lock-in the 9 percent interest rate at that time, because Cincotta indicated her belief that the rates were coming down. Cincotta estimated that it would take between four and six weeks to close the mortgage loan. The Advance Disclosure Statement-Fixed Rate Mortgage Loan dated December 29, 1986, which indicates an interest rate of 9 percent and 2 points, was blank when it was signed by Gillis. On or about January 7, 1987, Cincotta locked Gillis in at the rate of 8 1/4 percent and 2 points. Cincotta indicated to Gillis that he was locked in until the mortgage loan closed. On or about March 24, 1987, Childers contacted Gill and indicated that he was ready to close at an interest rate of 8 3/4 percent and 3 points. In response, Gillis requested that he be given 8 1/4 percent with 2 points as agreed to on the Good Faith Estimate. On or about March 26, 1987, Childers and Gillis engaged in negotiations with regard to the mortgage loan but were unable to reach agreement. After the 60 days lock-in expired, Cincotta did not relock Gillis because the practice was that, once the loan had been submitted to Childers, Childers handled the lock-ins if they expired. By letter dated April 7, 1987, Gillis requested return of his appraisal, survey, credit report, and pest inspection, but did not receive any of said documents back. In reliance on the representations made by Mid South, Gillis spent $225 on an appraisal, $30 on a pest inspection, and $80 on a maintenance agreement. Mock Transaction On or about early January 1987, Jewel and George Mock received a Rate Bulletin put out by Mid South dated January 2, 1987. The Rate Bulletin stated in part: RATE FEES REMARKS . . . ONE YEAR A.R.M. 15 Year 5.00 percent 2.00 + 1.00 Annual, 5 percent Life Cap 2.5 percent Margin NO NEGATIVE In reliance on the Rate Bulletin, Mr. and Mrs. Mock, along with Gene Bogan, their realtor, went to the office of Mid South to obtain said A.R.M. loan on or about January 14, 1987, and spoke to Cincotta, an employee of Mid South. During the January 14, 1987, office visit, Cincotta agreed to attempt to obtain the A.R.M. loan for them. During the January 14, 1987, office visit, the Mocks were not told that the A.R.M. could become unavailable. Subsequent to the January 14, 1987, office visit, Mr. and Mrs. Mock received a Regulation Z Disclosure Statement which indicated that the Annual Percentage Rate of their mortgage loan was 9.399 percent. Mrs. Mock contacted Cincotta about the 9.399 percent on the Disclosure Statement. In response, Cincotta indicated the form was just a "general disclosure." Although Mr. and Mrs. Mock signed and returned the Disclosure Statement, they still were under the impression that they had qualified for the A.R.M. On or about February 1987, Bogan informed Mr. and Mrs. Mock that the loan on the Disclosure Statement was not the same as the loan that Mr. and Mrs. Mock had applied for. Rather than giving the Mocks the A.R.M., the Disclosure Statement was for a fixed rate of 8 3/4 percent G.E.M. loan. During February or March of 1987, Childers contacted Bogan and when Bogan insisted that the Mocks be given the loan they applied for, Childers responded, "Well, nobody can give you that." Childers further stated that the A.R.M. in the Rate Bulletin was a "misprint." On or about February 1987, Childers contacted Mr. Mock to inform him that the loan Mid South was obtaining for him was better because "the initial payments would be equivalent to somewhat less than five percent," and tried to persuade Mr. Mock to take the G.E.M. loan that Mid South was actually offering. During March or April 1987, Cincotta confirmed to Mr. Mock that the A.R.M. was not available. The A.R.M. would have been a better mortgage than the G.E.M. loan that was actually offered because, among other things, it would more quickly reduce the principal amount of the mortgage debt. In reliance on Mid South's representations that they were offering the A.R.M., Mr. and Mrs. Mock spent approximately $400 for brass fixtures, mirrors, and for having the rugs cleaned in the house they were seeking to purchase. Due to the failure of Mid South to give the Mocks the A.R.M., Bogan lost half of a $7,000 commission.
Recommendation Based upon all of the foregoing, it is recommended that the Department issue final orders in these cases to the following effect: In DOAH Case No. 87-3299 Incorporating the terms of the stipulation and consent agreement entered into between the Department and William D. Hughes; Placing Carolyn G. Stanley on probation for a period of three years under the condition that she will not act as a principal mortgage broker, designated associated mortgage broker, or in any way supervise the operation of, or be responsible for the supervision of, a person or an office engaged in the business of acting as a mortgage broker pursuant to Chapter 494, Florida Statutes; Revoking the license of Mid South Mortgage Corporation to act as a registrant pursuant to Chapter 494, Florida Statutes; Fining John Childers a total of $10,000.00; and Fining Mid South Mortgage Corporation a total of $15,000.00. In DOAH Case No. 87-3300 Entering a cease and desist order against John Childers and Janie Cincotta ordering said persons to cease and desist from any and all present and future violations of the provisions of Chapter 494, Florida Statutes, or the rules duly promulgated by the Department with respect thereto, more specifically, but not by way of limitation from, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly making, negotiating, acquiring, selling, or arranging for, or offering to make, negotiation, acquire, sell, or arrange for, a mortgage loan or mortgage loan commitment. In DOAH Case No. 87-3301 Entering a cease and desist order against Mid South Mortgage Corporation ordering said mortgage broker to cease and desist from any and all present and future violations of the provisions of Chapter 494, Florida Statutes, or the rules duly promulgated by the Department with respect thereto, more specifically, but not by way of limitation from, operating a mortgage brokerage office in the state of Florida without having a duly licensed broker in full charge, control, and supervision of said office on a full-time basis. DONE AND ENTERED this 28th day of July, 1988, at Tallahassee, Florida. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parlay Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 1988. APPENDIX TO RECOMMENDED ORDER IN CASE NOS. 87-3299, 87-3300, & 87-3301 The following are my specific rulings on all of the proposed findings of fact submitted by all parties. Findings proposed by Petitioner All proposed findings of fact submitted by the Petitioner have been accepted and Incorporated into the findings of fact in this recommended order, except as specifically noted below: Paragraphs 1, 2, 3, and 4: The findings proposed in these paragraphs have been omitted from the findings of fact because they involve primarily procedural or introductory details. (Most of this information has been included in the introduction to the recommended order.) Paragraph 5: The findings proposed in this paragraph have been omitted as unnecessary subordinate details. Paragraph 50: Rejected as Irrelevant. Paragraph 51: Rejected a Irrelevant or as subordinate and unnecessary details. Paragraphs 141, 142, and 143: Rejected as subordinate and unnecessary details (I have found that the A.R.M. would have been a better mortgage than the G.E.M.) Findings proposed by Respondents (The Respondents did not submit any proposed findings.) COPIES FURNISHED: John Childers, President Mid South Mortgage Corporation 955 Downtowner Boulevard, Suite 105 Mobile, Alabama 36609 Ms. Carolyn G. Stanley Mid South Mortgage Corporation 955 Downtowner Boulevard, Suite 105 Mobile, Alabama 36609 Ms. Janie Cincotta 2829 Village Circle Pensacola, Florida 32504 Mr. William D. Hughes 4347 Burton Wood Court Pensacola, Florida 32504 Paul C. Stadler, Jr., Esquire Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350
The Issue Whether Respondent discriminated against Petitioner on the basis of his age and handicap in violation of the Florida Human Rights Act of 1977 and the Florida Civil Rights Act of 1992, Chapter 760, Florida Statutes.
Findings Of Fact Petitioner, Harold Asher (Asher), was born on January 13, 1929, and as of April 1, 1992, he was 63 years old. Respondent, Barnett Banks, Inc. (BBI), is a holding company that owns and controls numerous banks in Florida and Georgia. The banks in Florida owned by BBI are located in three geographical regions: the north region, the central region, and the south region. In the south region there are nine banks: Barnett Bank of Key West, Barnett Bank of South Florida (Miami), Barnett Bank of Broward (Fort Lauderdale), Barnett Bank of Palm Beach County, Barnett Bank of Martin County, Barnett Bank of Treasure Coast, Barnett Bank of Lake Okeechobee, Barnett Bank of Naples, and Barnett Bank of Lee County (Fort Myers). Each bank has branches. Barnett Banks, Inc. is an employer subject to Section 760.10, Florida Statutes. Harold Asher was hired by Barnett Bank of Palm Beach County in 1983, at the age of 54 as a loan review officer and was later promoted to Vice President/Loan Review. His job responsibility was to review loans which had been granted by Barnett Bank of Palm Beach County. A loan review is an evaluation of the portfolio after a loan is made to insure that the loan was properly approved, that the analysis done to support the sources of repayment was adequate, that the loan is collectible, that the risk factors associated with the loan is in line with policy and regulatory standards, and that the loan is properly underwritten. The loan review is memorialized on a line or summary sheet. While employed by Barnett Bank of Palm Beach County, Asher had several supervisors, including Ken Parrish, Art Kite, James Kammert, Noel Coan, and Martin Streischek. Barnett Bank of Palm Beach County used a rating system of one to five in evaluating its employees, which equated as follows: 1.0 to 1.49 means fails to meet minimum position accountabilities; 1.5 to 2.49 means with few exceptions, meets position accountabilities; 2.5 to 3.49 means meets position accountabilities; 3.5 to 4.49 means exceeds position accountabilities; and 4.5 to 5.0 means significantly exceeds position accountabilities. In March, 1988, James Kammert rated Asher's performance as 3.0. On January 1, 1989, Art Kite rated Asher's performance for 1988 as 3.70. In June, 1989, Art Kite rated Asher as meeting or exceeding in the key result areas (KRAs) of Asher's position. On January 1, 1990, Art Kite performed an evaluation of Asher's performance for 1989 and rated him 3.45. On January 18, 1991, Neal Coan rated Asher's performance for 1990 as 3.0. While working for Barnett Bank of Palm Beach County, Asher was never disciplined. Prior to 1991, BBI and its banks had a dual system for loan reviews. Some of the banks such as Barnett Bank of Palm Beach County, had set up loan review sections which operated at the bank level only. The staff of these sections would report directly to the bank. BBI had a loan review section for each of its regions. The BBI regional loan review sections would review loans in each of the banks located in that particular region. In January, 1991 a decision was made by BBI to consolidate the loan reviews at the holding company level. On-site teams were established in Miami, Fort Lauderdale, and Palm Beach. A travel team reviewed loans at all the banks including the banks which had on-site teams. As a result of the consolidation, the local banks eliminated their loan review departments and the staff comprising those particular departments were terminated from their positions. At the time of the decision to consolidate, Barnett Bank of Palm Beach County's loan review section consisted of one secretary and three loan officers, one of whom was Asher. The three loan officers interviewed for positions with BBI. Asher and Steven Clapp were hired by BBI. Asher was 61 years of age when he was hired by BBI on January 1, 1991, as the on-site manager for Credit Quality Review at the Barnett Bank of Palm Beach County. His office was located on Datura Street in West Palm Beach. Part of Asher's duties included supervising Mr. Clapp. The BBI on-site manager for Credit Quality Review at Barnett Bank of South Florida (Miami) was Barry Goldberg, who was born on September 24, 1962. The BBI on-site manager for Credit Quality Review at the Barnett Bank of Broward County was Mark Tavoletti, who was born on December 19, 1961. Although the same methods were used to review loans for BBI as were used to review loans for Barnett Bank of Palm Beach County, there were some changes. Computers were used more at BBI. Instead of traveling to the 45 branches of Barnett Bank of Palm Beach to review loans, Asher received the files through the interoffice mail. BBI loan reviews focused more on a loan instead of the work of the loan officer. Monthly reports were required by BBI. BBI report formats differed from those of Barnett Bank of Palm Beach County. Asher no longer selected the loans to be reviewed. BBI selected the loans using specific criteria established by BBI. Asher reported to Scott Bechtle. While working with Mr. Bechtle, Asher did not receive any criticism or disciplinary action. In July, 1991, Edward Angulo (Angulo) took over Mr. Bechtle's position as the Regional Credit Review Director for the south region. Asher, Mr. Goldberg, and Mr. Tavoletti began reporting to Angulo. Angulo's primary duty was to review the line sheets that were generated by the on-site groups and the travel team. From July, 1991 to the end of December, 1991, Angulo met with Asher approximately three to five times and talked with Asher numerous times on the telephone. Angulo reviewed all the line sheets that were generated by Asher and Clapp during that six-month period. In reviewing the work done by the Palm Beach on-site group, Angulo noted that generally the line sheets did not have sufficient quantifiable information, did not contain information supported by an independent evaluation, and contained deficiencies regarding underwriting. He would make comments concerning these problems and call Asher to discuss them. Some times Asher would not provide additional information requested by Angulo or would provide it in an unsatisfactory manner. During the last six months in 1991, Angulo spent more time in connection with the Palm Beach loan reviews than he did with the other loan review teams because of the problems the Palm Beach team was having. Angulo sat in with Asher during an exit meeting with bank management wherein Asher appeared indecisive and unprepared, forcing Angulo to take over and conduct the meeting in its entirety. Angulo completed a performance evaluation on Asher for the period 1/91 to 12/91. Asher was evaluated on nine KRAs: 1) supervise staff, 2) analyze specific loans, 3) determine quality of credit analyses, 4) evaluate underwriting standards, 5) insure accuracy of CSS, 6) evaluate overall credit administration, 7) evaluate loan approval process, 8) prepare reports and exit meetings, and 9) train junior officers. Each KRA was weighted and rated on a scale of one to five, with one being the lowest rating and five being the highest. For KRAs 1, 5, and 9, Asher was rated as 3, which meant that his performance met expectations. For KRAs 2, 3, 7, and 8, Asher received a rating of 2, which stood for approaches expectations. In the KRA concerning evaluating underwriting standards, Asher received a rating of 1, which meant that Asher's performance failed to meet expectations. Angulo noted on the evaluation that Asher needed to improve his performance in the following areas: technical/analytical, independent/inquisitive attitudes, and judgement/decisiveness. Asher's total weighted rating was 2.25, which equates to an overall rating of 2. At the time of the evaluation, Asher and Angulo understood that Asher's position was a Review Officer III. Asher had been performing the work of a Review Officer III. Accordingly, Angulo evaluated his work using the standards for Review Officer III, and evaluated the work actually performed by Asher. However, at the hearing it was revealed that Asher had been a Review Officer II at the time of his employment with BBI and held that position until his termination. On or about April 1, 1992, Angulo met with Asher and discussed Asher's performance since January, 1992. Angulo cited a problem that had occurred concerning a review of Southside Investors which had been done by Asher's subordinate, Steven Clapp. Angulo had discussed with Asher several inconsistencies or omissions in the report relating to potential underwriting problems and asked Asher to have the deficiencies cleared up. As of April 1, 1992, the deficiencies had not been resolved. Angulo also discussed with Asher problems dealing with the adequacy of supervision of report preparation and the conduct of exit meetings with bank management. Deficiencies in these areas had been pointed out in Asher's 1991 annual performance evaluation. Since that evaluation, a monthly report by Steven Clapp had to be amended because of his erroneous conclusion that the bank's overall underwriting and lending practices were inadequate. The incorrect finding was not corrected until a draft of the report was reviewed by the regional office. As the on-site manager, Asher should have reviewed Mr. Clapp's report and caught the error before it was sent to the regional office. Angulo also pointed out to Asher that his performance at exit meetings with bank management still lacked decisiveness, resulting in the need for frequent changes in reports. As a result of the continued deficiencies in Asher's performance since his 1991 performance evaluation, Angulo felt that Asher needed technical training, improvement in supervisory skills, and familiarization with BBI policies and procedures. To assist Asher in reaching an acceptable level of performance, Asher was moved from his on-site manager position to Barnett Banks, Inc.'s Credit Review Office travel team on or about April 1, 1992. There was no decrease in salary, benefits, or pay grade. Additionally, Asher was placed on a 90-day probationary period. In mid-April, 1992, Asher wrote Ken Veniard, a Senior Vice President, stating that he disagreed with Angulo's evaluation and felt that the negative comments were "based on factors totally unrelated to performance, such as age, personality, or simply the lack of complete information." Asher requested to be considered for a transfer. Veniard received the memorandum on April 29, 1992. On or about April 1, 1992, Jack Shoben, a credit review officer with BBI since 1989, was moved into the position of on-site manager for Credit Quality Review at the Barnett Bank of Palm Beach County at the Datura Street location. Jack Shoben was born on October 1, 1947, and as of April 1, 1992, he was 44 years old. Angulo chose Shoben as the on-site manager because of Mr. Shoben's qualifications and experience. After Mr. Shoben became on-site manager, the work product from the on-site team at Barnett Bank of Palm Beach County began to improve; thus Angulo did not have to spend as much time on the Palm Beach site as he had when Asher was on-site manager. William Westland, who was born on October 26, 1927, was Asher's supervisor on the travel team. During Asher's first two weeks on the travel team, he worked in Broward County. His performance was satisfactory. The third week on the travel team was spent in Miami, where Asher was required to review real estate loans. Mr. Westland noted that Asher needed some training in the real estate loan area. On May 10, 1992, shortly after Asher returned from Miami, he suffered a brain seizure and was hospitalized for two days. Six weeks after his seizure, Asher returned to work. As a result of Asher's seizure, his doctors prohibited Asher from driving for at least six months and possibly longer and required his work-related travel to be kept to an absolute minimum, which included avoiding long travel trips of any type. An essential requirement for the position that Asher held on the travel team was that he be able to travel to the different banks in the south region to conduct loan reviews. Asher was aware that extensive travel was a requirement of his job and so advised his doctor by letter dated July 3, 1992. When Asher returned to work, he was temporarily placed on the on-site review team at Palm Beach under the supervision of Jack Shoben. Steven Clapp who had been at Palm Beach on the on-site review team was transferred to the travel team. Asher's probationary period was extended to August 7, 1992. The temporary placement was to accommodate Asher's non-travel status until December 31, 1992, and after such time Asher's continued employment was contingent upon his satisfactory completion of the probationary period and his ability to meet the requirements of all credit review officers of his level, which included travel. During June 1992 until Mr. Asher's termination, Jeff Asher, his son, often drove Asher to Barnett Bank's offices on Datura Street in West Palm Beach. He also drove him home from that location during the same time. Jeff Asher also drove Asher to and from branch locations within Palm Beach County during the same period. A memorandum dated July 28, 1992, was sent from Ken Veniard, Angulo's supervisor, to BBI Credit Quality Staff, stating that although BBI was committed to maintain the on-site loan review teams, that all on-site staff would be required to travel and assist the travel team as necessary. On August 7, 1992, Asher's probationary period lapsed. There was no evaluation of Asher's performance at that time. In August, 1992, Steven Clapp was transferred to the BBI office in Jacksonville to fill a position for which he had posted. The position on the travel team that Mr. Clapp had filled in Asher's absence was held open for Asher in the event that his travel restrictions would be lifted in January, 1993, thereby enabling him to return to his position on the travel. In November, 1992, Asher, Sarah Ketchum, Jack Shoben, and Angulo participated in a teleconference, at which time Angulo advised Asher that if Asher's doctor did not approve a full time travel schedule in January, 1993, Asher's employment with BBI would be terminated effective as of December 31, 1992. On December 28, 1992, Asher visited his doctor, who continued the travel restrictions. On December 30, 1992, Asher, Jack Shoben, Joan Slaughenhaupt, and Angulo participated in a teleconference. Asher stated that his travel restrictions had not changed. Angulo advised Asher that his employment would be terminated effective December 31 due to his inability to travel. Mr. Asher's employment ended on December 31, 1992. On January 1, 1992, the on-site teams in Miami and Fort Lauderdale were each reduced from three to two on-site personnel. The Palm Beach on-site team was reduced to one one-site person, Jack Shoben, who was the only loan review officer there from January 1, 1993 to December 31, 1993. In January, 1994, all on-site positions were eliminated. Mr. Asher's salary at the time of his termination was $47,339.96 annually. In the spring of 1993, Asher and his wife went to Huntsville, Alabama, traveling by automobile two days each way. In June, 1993, all Asher's travel restrictions were lifted. Prior to his driving restrictions being lifted, Asher began driving short distances in his neighborhood. In January, 1994, BBI made an offer of reinstatement to Asher, whereby he would have been reinstated as a Credit Review Officer II on the regional travel team with the same salary, same seniority, and same salary grade level as when he was terminated on December 31, 1992. In addition, a procedure was implemented whereby Asher could report directly to Janice Gurny, Director of Human Resources for BBI in the Jacksonville office, any complaints regarding harassment on the part of his supervisors. Asher received the offer but did not contact anyone at BBI regarding the offer of reinstatement. Asher did not take the offer because it was a Credit Review Officer II position (he was under the impression he was a Credit Review Officer III at the time of his termination); he felt the environment was hostile; and he had his house on the market to sell.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a Final Order denying the Petition for Relief. DONE AND ENTERED this 8th day of June, 1994, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND 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 8th day of June, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-5815 To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact Paragraph 1: Accepted in substance. Paragraph 2: Accepted. Paragraphs 3: The first sentence is accepted in substance. The second sentence is rejected as constituting argument. The third sentence is accepted to the extent that Petitioner received two letters which advised him of his increase in salary and thanked him for his hard work and professionalism and advised him that the bank was glad that he was on the team. Paragraph 4: Accepted in substance. Paragraph 5: The first three sentences are accepted in substance. The last sentence is accepted to the extent that the methods to review loans were basically the same but rejected to the extent that the only changes were in the format of the loan review reporting process. Paragraphs 6-7: Accepted in substance. Paragraph 8: The third, fourth, and fifth sentences are rejected as constituting argument. The remainder of the paragraph is accepted in substance. Paragraph 9: Rejected as subordinate to the facts actually found. Paragraphs 10-11: Accepted in substance. Paragraph 12: The last sentence is rejected to the extent that it implies that Asher was rated on work for which he was not performing. He was doing the job of a level III but his personnel file reflected that he officially was placed in a level II position. The remainder of the paragraph is accepted in substance. Paragraph 13: Rejected as constituting argument. Paragraphs 14-16: Accepted in substance. Paragraph 17: The first sentence is rejected as recitation of testimony. The remainder of the paragraph is rejected as constituting argument. Paragraph 18: The first, second, sixth, and tenth sentences are rejected as not supported by the greater weight of the evidence. The third, fourth, fifth, eighth and ninth sentences are accepted in substance except as to the reference to the placement on the travel team as a demotion. The seventh sentence is rejected as unnecessary. Paragraph 19: The first sentence is rejected as not supported by the greater weight of the evidence. The second sentence is accepted. The last sentence is rejected as recitation of testimony. Paragraphs 20-23: Rejected as recitation of testimony and constituting argument. Paragraph 24: Rejected as constituting argument. Paragraph 25: The first, second, third, and fourth sentences are accepted in substance. The fifth, sixth, and seventh sentences are rejected as not supported by the greater weight of the evidence. The eight sentence is rejected as constituting argument. The ninth sentence is rejected as not supported by the greater weight of the evidence in that the charge against Asher was his failure to catch Mr. Clapp's errors before the report left the Palm Beach office. The last sentence is rejected as irrelevant. Paragraph 26: The first sentence is rejected as subordinate to the facts actually found. The second sentence is rejected as not supported by any evidence. The remainder of the paragraph is accepted in substance. Paragraph 27: Accepted in substance. Paragraph 28: The first, third, and fourth sentences are accepted in substance. The second and fifth sentences are rejected as subordinate to the facts actually found. Paragraph 29: The first sentence is accepted. The remainder of the paragraph is rejected as subordinate to the facts actually found. Paragraph 30: The first sentence is accepted in substance. The remainder of the paragraph is rejected as subordinate to the facts actually found. Paragraph 31: Rejected as mere recitation of testimony. Paragraph 32: Rejected as mere recitation of testimony. Paragraph 33: Rejected as subordinate to the facts actually found. Paragraph 34: Accepted in substance. Paragraph 35: Rejected as subordinate to the facts actually found. Paragraph 36: The first and second sentences are accepted in substance. The remainder of the paragraph is rejected as subordinate to the facts actually found. Paragraph 37: Rejected as constituting argument. Paragraph 38: Rejected as subordinate to the facts actually found. Paragraph 39: Rejected as constituting argument. Paragraph 40: Rejected as subordinate to the facts actually found. Paragraph 41: Accepted. Paragraphs 42: Rejected as subordinate to the facts actually found. Paragraph 43: The first sentence is rejected as not supported by the greater weight of the evidence as it applies to the time period from June, 1992 to June, 1993. The second sentence is accepted. The remainder of the paragraph is accepted in substance. Paragraph 44: Rejected as subordinate to the facts actually found. Respondent's Proposed Findings of Fact Paragraph 1: Accepted. Paragraphs 2-13: Accepted in substance. Paragraph 13: Accepted in substance. Paragraph 14: The first sentence is rejected as constituting argument. The remainder of the paragraph is accepted in substance. Paragraph 15: Accepted in substance. Paragraph 16: The first two sentences are accepted in substance. The remainder of the paragraph is rejected as constituting argument. Paragraphs 17-18: Accepted in substance. Paragraph 19: The first sentence is accepted. The remainder of the paragraph is accepted in substance. Paragraph 20: The first sentence is accepted. The remainder of the paragraph is rejected as unnecessary. Paragraphs 21: The sixth sentence is rejected as constituting argument. The remainder of the paragraph is accepted in substance. Paragraphs 22-24: Accepted in substance. Paragraph 25: The first sentence is accepted in substance. The third sentence is rejected as not supported by the greater weight of the evidence. The remainder of the paragraph is rejected as subordinate to the facts actually found. Paragraphs 26-27: Accepted in substance. Paragraph 28: The first sentence is accepted in substance. The remainder of the sentence is rejected as subordinate to the facts actually found. Paragraph 29: Accepted in substance. Paragraphs 30-34: Rejected as subordinate to the facts actually found. Paragraph 35-39: Accepted in substance. COPIES FURNISHED: James E. Moye, Esquire Patrick J. Kennedy, Esquire 201 East Pine Street, Suite 710 Orlando, Florida 32801 Richard Tannenbaum, Esquire Shea & Tannenbaum 204 Brazilian Avenue, Suite 210 Palm Beach, Florida 33480 Sharon Moultry, Clerk Commission on Human Relations 325 John Knox Road, Building F, Suite 240 Tallahassee, Florida 32303-4149 Dana Baird General Counsel Commission on Human Relations 325 John Knox Road, Building F, Suite 240 Tallahassee, Florida 32303-4149
The Issue The issue in this case is whether Petitioner has carried her burden of proving that her application for licensure in Florida as a loan originator should be granted.
Findings Of Fact The undersigned makes the following findings of material and relevant facts: The Office of Financial Regulation ("Respondent," "Office," or "OFR") has regulatory jurisdiction over loan originators and is responsible for the administration and enforcement of the provisions of chapter 494, Florida Statutes, which includes the approval or denial of applications for licensure as loan originators. Aliette Oliva ("Petitioner" or "Oliva") applied for a license as a loan originator and is the party that is affected by the decision of Respondent to deny her application for licensure as a loan originator. Petitioner's address of record is 13525 Southwest 83rd Avenue, Pinecrest, Florida 33156. On or about May 25, 2016, Respondent issued Petitioner a Notice of Intent to Deny Application for Loan Originator License, which denied Petitioner's application for licensure on the basis that Petitioner had a license, or the equivalent of such license, to practice any profession or occupation revoked or otherwise acted against by the State of Florida, citing provisions of chapter 494, particularly section 494.00255. The license in question, that had been permanently revoked, was Petitioner's real estate salesperson license with the Department of Business and Professional Regulation, Florida Real Estate Commission ("FREC"), revoked in Final Order No. BPR- 2003-02017. The Final Order incorporated an Administrative Complaint issued by the FREC against Petitioner, Case No. 200181619. The Final Order also incorporated an Affidavit for the Voluntary Surrender of License, Registration, Certificate/Permit for Permanent Revocation, which was voluntarily signed by Petitioner on April 30, 2003, with input and counsel from her attorney. Resp. Ex. 3. The certified copy of the Administrative Complaint in question, moved into evidence by Respondent, is missing page three. Resp. Ex. 3.1/ It was stipulated by the parties that Oliva had an active mortgage broker license with Respondent, license number MB0859332, from April 6, 1998, until December 31, 2010. Oliva attempted to modify the terms of the revocation of her real estate license by filing a Motion for Modification of Terms of Revocation, filed with the FREC. This motion was denied by the FREC in their Order Denying Reconsideration dated January 12, 2016. Jason Booth, a supervisor in the Bureau of Finance Regulation, OFR, made the recommendation to deny Oliva's application for licensure as a loan originator that is the subject of this proceeding. Booth then forwarded his recommendation to the legal staff and to the director of OFR, who ultimately denied the license to Oliva. The allegations of fraud in the 2003 Administrative Complaint filed by the FREC were significant factors supporting Booth's recommendation to deny Oliva's application for licensure. In Booth's opinion, "Fraud is the most egregious type of violation that someone in the industry would be held accountable for." In further support of his recommendation to deny Oliva's application for licensure, Booth testified that Count 37 in the Administrative Complaint was also a factor. Booth testified that Count 37 alleges that this would be the second time that Oliva had been found guilty of conduct or misconduct that warranted the suspension of her license. Booth also testified that another factor in support of his recommendation to deny Oliva's application for licensure was that Oliva's Motion for Modification of Terms of Revocation filed with the FREC on or about October 9, 2015, was denied on January 12, 2016, as per a FREC order, an order that was not appealed or contested. In addition, Booth explained that the importance of the motion and the FREC order was that the FREC did not wish to revisit its prior action, which also supported Respondent's recommendation to deny Oliva's license application. When asked by counsel for Petitioner if Respondent must automatically deny an application if the applicant has had a license from another agency previously revoked, Booth answered "maybe." Regarding the determination of whether to approve or deny applications where the applicant has had a license previously revoked, Booth was asked if Respondent has any reasoning or criteria it uses to determine whether an application for a loan originator license should be approved or denied. Booth responded by stating that there is "no criteria" and that those determinations are made on a "case-by-case basis." Other than the allegation in Count 37 regarding Petitioner "having been found guilty a second time of any misconduct that warrants his [sic] suspension," there was no evidence presented to explain or confirm the details of this allegation. Similarly, despite questions to Booth about any results from the Federal Bureau of Investigation or the Florida Department of Law Enforcement criminal background checks, there was no evidence presented revealing any criminal convictions or criminal conduct by Oliva. There was also no evidence presented to explain why the FREC denied Oliva's Motion for Modification of Terms of Revocation, or its reasoning. Edward Geraghty, branch manager for ResMac, the company for which Oliva is currently employed, is licensed with the Respondent as a loan originator. His license number is 320745. Geraghty stated that Oliva has worked as a loan coordinator and processor for Geraghty's branch since December of 2015. Oliva assists loan officers and Geraghty's processing team in obtaining mortgages for ResMac's applicants, as well as processing loans. Geraghty hired Oliva because of her experience and her knowledge about products and about guidelines, which he stated is very hard to find in his industry. As an employee, Geraghty described Oliva as very knowledgeable, proactive, and helpful in the ResMac office, and stated that she uses her experience to assist some of ResMac's less-experienced loan officers. Geraghty has no concerns over her honesty and trustworthiness and had never seen anything that would give him any doubt about Oliva's honesty and trustworthiness. Finally, Geraghty stated that he and his office have seen nothing in any of Oliva's files or tasks that has given them any questions about her abilities. Marina Greenfield has been a friend of Petitioner for ten years. Greenfield trusts Oliva explicitly and stated that she is a great person. Greenfield testified that during a period of economic misfortune for her family, she, her husband, and her two children were practically homeless. Oliva allowed them to stay at her home with her family. Greenfield testified that, if it had not been for Oliva, she would have been in a very bad place and that she cannot speak any more highly of her. During the hearing, the undersigned admitted deposition transcripts of three witnesses: Carlos Cabezas, Mayra Alderete, and Octavio Diaz, without objection, all of which have been reviewed by the undersigned. Cabezas works for ACC Mortgage as an account executive, has known Oliva for 15 years in a professional context, and has worked with Oliva intermittently during those 15 years. Cabezas described Oliva as very professional, with very high ethical standards and very strong work ethics. Alderete has known Oliva for 15 or 16 years as a former client and as a friend. Alderete described Oliva as honest, that she has integrity and good character, helps everyone that needs it, and stated that she is professional. Diaz, a Florida licensed real estate broker for Midtown Realty International, Inc., testified that Oliva worked with him from 2000 to 2003 as an associate realtor. Diaz wrote a letter of support for Oliva and described Oliva as very professional and truthful. Petitioner also offered 13 letters of support, which were admitted into evidence. These letters corroborated and supplemented the testimony given by the character witnesses present at the hearing. The letters of support were written by friends; members of the community; professionals in the community, including several who are licensed with Respondent; and a family member. The letters of support collectively confirm that Oliva is a woman of good moral character, is honest and trustworthy, has integrity, is a model citizen, and contributes a substantial amount of her time to charity and community service. Elio Oliva, Petitioner's husband, is a police officer. He began his career working for the City of Hialeah Police Department from 1988 to 1998. From 1999 to 2003, Elio Oliva was detached to the Drug Enforcement Agency ("DEA") and worked as a "Task Force Agent." During the period the subject FREC Administrative Complaint was opened and pending against Oliva, and when her real estate license was revoked, Elio Oliva had been working to infiltrate a Colombian drug cartel money laundering organization. He worked undercover for a year and a half in this role. The extent of his involvement in this undercover operation is explained in United States v. Puche, 350 F.3d 1137 (11th Cir. 2003). A copy of this case was admitted into evidence as Petitioner's Exhibit 4. Elio Oliva testified that his undercover work and infiltration of the drug cartel was very dangerous. He testified that, if the cartel knew he was an undercover DEA agent, they may have stopped dealing with him or killed him. Elio Oliva performed his undercover operations in Miami and was allowed to go home to his actual residence. After the Puche trial, Elio Oliva had local police and U.S. Marshals surveilling his house for protection. Elio Oliva testified that during the time the FREC fraud case against Petitioner was active and pending, Oliva shared with him that her identity had been stolen. After having a discussion with his wife about who would have access to her personal information, he testified that they concluded that the people who stole Oliva's identity were Igor and Harold Kuntz, two brothers that were involved in the real estate office where Oliva had been working from 1999 to 2000. The undersigned found it significant that, other than this evidence from Elio Oliva and Petitioner, there was no independent evidence offered to corroborate or prove that Oliva's identity had been stolen. For instance, there were no police, law enforcement, or other investigative reports to show that any identity theft had been reported by Oliva, investigated by law enforcement, or had, in fact, occurred. At the time the FREC Administrative Complaint was filed against Petitioner, their son was an infant. Elio Oliva explained that Petitioner was "going through a lot" and that he was not home much because of his undercover work. Elio Oliva testified that Petitioner was told by her attorney at the time to sign the Voluntary Relinquishment so the Administrative Complaint could "go away." Elio Oliva stated that Petitioner was advised to "do the wrong thing." Oliva expressed to her husband that she did not want their name out there and did not want people finding out who Elio Oliva was.2/ Elio Oliva stated that Petitioner voluntarily relinquished her real estate license for the safety of the family. Elio Oliva has been married to Petitioner for 25 years. He described her as an extraordinary human being, a giver, and unselfish. Elio Oliva testified that his wife never committed fraud, misrepresentations, or concealment. Elio Oliva stated that Oliva is "a victim" and that, because of his law enforcement experience, he knows that "bad things happen to good people." Alluding to the alleged theft of Oliva's identity and the resulting revocation of her real estate license, he testified that "in this case, that is what happened to her." During Petitioner's testimony, she explained her employment with several mortgage and real estate companies: Raurell Investment Corporation; Fidelity Plus; Capital Mortgage Providers; Millennium 2000; and Midtown Realty International, Inc. Oliva currently works for ResMac, where she works with the loan originators to get their files ready for underwriting and works in tandem with the loan processors, who perform the final review of the file. Regarding the FREC Administrative Complaint, her voluntary relinquishment of her license, and FREC's Final Order revoking her real estate license, Oliva testified that she was unaware that she had a Final Order entered against her. She testified that she never received a copy of the Final Order. Oliva surrendered her license at the direction and on the advice of her attorney. The Certificate of Service section of the FREC Final Order shows that a copy of the Final Order was sent to the same attorney in Miami, Florida, who had notarized Petitioner's signature on the affidavit which voluntarily relinquished her license, and the senior attorney for the Department of Business and Professional Regulation ("DBPR"). Despite signing the affidavit marked as Respondent's Exhibit 3, page 4, and voluntarily relinquishing her real estate license in response to the FREC 37-count Administrative Complaint, Oliva testified that she is not the person who committed the actions alleged in the FREC Administrative Complaint. Oliva stated she believed that her identity had been stolen by Igor and Harold Kuntz. She testified that, after one of the people Oliva suspected of stealing her identity died, no additional illicit transactions under her real estate license occurred. As support for her claim that she was not the culpable party identified in the FREC fraud complaint, Oliva testified that she could not have committed one of the fraud transactions alleged in the Administrative Complaint because she was caring for her infant son at the time, in February 2001.3/ Because of Elio Oliva's undercover activity, and because Elio Oliva had been involved in two police shootings in 1991 and 1997, Oliva testified that she was not doing well mentally at the time she relinquished her real estate license. In addition, Elio Oliva had not yet been cleared by the state attorney for a shooting incident in 1997 during the time the FREC Administrative Complaint was filed, which also was difficult for her. Oliva's counsel in the fraud case told her that it would be nearly impossible to prove that her identity had been stolen because of the nature of the identity theft and that it would cost a lot of money to contest the allegations. Her counsel also told her that everything was going to go away after she signed the Voluntary Relinquishment form. She claimed that the personal security provided to the family by the police and the U.S. Marshals, the fear of retaliation by the drug cartel against whom Elio Oliva had just testified in Puche, the safety and health concerns of her family, her desire to protect her family, and the pressure from her counsel at the time all factored into her decision to voluntarily relinquish her real estate license. Oliva applied for a loan originator license because of financial concerns, as her family has two children in college, with one more about to go to college, and her husband is retiring soon. Oliva believes she is qualified, that she is a good person, and that she has lived her life in a way that allows her to be an example for her family, friends, and clients.
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 Aliette Oliva's application for a loan originator license. DONE AND ENTERED this 4th day of January, 2017, in Tallahassee, Leon County, Florida. S ROBERT L. KILBRIDE 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 4th day of January, 2017.
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
The Issue The Respondents have been charged with multiple violations of Chapter 494, (1987), the Florida Mortgage Brokerage Act, and administrative rules promulgated pursuant to the act. The violations, described in an amended administrative complaint dated April 16, 1990, are as follows: Rule 3D-40.006(5), F.A.C.: Respondents failed to issue a statement signed by both parties, when receiving a deposit on a mortgage loan, regarding disposition of the deposit and other matters. Section 494.08(10), F.S. and Rule 3D-40.091(2), F.A.C.: Respondents failed to provide a written statement with a summary of limits and conditions for recovery from the Mortgage Broker Guaranty Fund. Section 494.055(1)(b), F.S. and Rule 3D-40.008(1), F.A.C.: Respondents assessed fees for credit reports, phone calls, appraisals and courier services, which fees were not supported by the files. Section 494.055(1)(0), F.S. and Rule 3D-40.006(4), F.A.C.: The department had to issue a subpoena for compensation records. Section 494.055(1)(g) and (p), and Section 494.08(5), F.S.: Borrowers were required to pay higher closing costs than were disclosed on the good faith estimate form. Section 494.08(5), F.S.: Respondents failed to secure executed modified mortgage loan applications from the borrowers or to return excess monies to the borrowers. Section 494.08(5), F.S. and Rule 3D-40.091(1), F.A.C.: Respondents accepted deposits from loan applicants but failed to obtain executed mortgage broker agreements which would disclose the cost of the loans. Sections 494.055(1)(b) and (g), and Sections 494.093(3)(a), (b), (c), and (4), F.S.: Respondents failed to disclose that they would retain both origination fees and discount points as their compensation, and failed to disclose compensation received from the lender in addition to brokerage fees assessed the borrowers on the closing statements. Section 494.055(1)(b), F.S., Section 494.08(5), F.S. and Sections 494.093(3)(a), (b), (c) and (4), F.S.: Respondents collected a servicing release fee from the borrowers when the Respondents were not the lender, and failed to disclose the collection. Section 494.055(1)(e), F.S. and Rule 3D-40.006(b)(a), F.A.C.: Respondents failed to maintain an escrow account.
Findings Of Fact Inlet Mortgage Company, Ltd. ("IMC") is a mortgage brokerage business operating under license #HB65002147500. Its place of business is 700 Virginia Avenue, Suite 105, Ft. Pierce, Florida 34982. John Davis is the principal mortgage broker of Respondent IMC, operating under license #HA246700273. He has been licensed in Florida since approximately 1987, and opened his business in February 1988. As authorized by Section 494.065(1), F.S. (1987), the Department of Banking and Finance ("department") conducted an examination of the affairs of the Respondents for the time period February 1988 through June 1, 1988. The examination was completed on July 5, 1988, with a written report. At the time of the examination Respondents had closed only four loans and had another six in progress. The audit was conducted because a loan processor working for IMC had applied for her mortgage broker license, and her application seemed to imply that she was already practicing mortgage brokering. The audit cleared up this question and the processor was not found to be operating improperly. However, Timothy Wheaton, the department examiner, found other violations by IMC. When an audit or review is conducted by the department, the agency staff first interviews the person in charge to explain the review and to learn about the company. The staff then looks at the licenses, reviews files of closed and active loans, and examines books and accounts, payroll records, and the like. Generally, a sampling of loan files is selected from the broker's loan log, but in this first review all loans were reviewed, as so few existed. The staff writes a preliminary report and conducts an exit interview to let the broker know its findings. Later, a formal report is completed and provided to the broker, who has thirty days to respond. Timothy Wheaton conducted his review of IMC and John Davis at the company office in Ft. Pierce on June 3, 1988 and June 7, 1988. At some point on June 3rd, Wheaton was reviewing compensation records to determine how the broker, his partner and the loan processor were paid. Davis had checkbooks available, but the accountant had not prepared his books as the office had just opened. Wheaton had questions as to whether the checkbooks were all that was available; when he asked for the payroll records, Davis told him he would have to subpoena them. Wheaton returned on Monday with a subpoena and was given the same records as before. Davis admits that he made the demand for the subpoena. He was piqued because he was very busy when the audit staff arrived, and when he suggested they return later, he felt they wrongfully impugned his motives and accused him of hiding something. Respondent Davis has admitted to several "technical" violations or oversights in the loan files at the time of the first review. A summary of the limits and conditions of recovery from the Mortgage Brokerage Guaranty Fund was not being provided, but has been provided since the first audit. Deposits for credit report, appraisal fees and other costs were collected from the borrowers, but the files did not include a statement, signed by the borrowers, describing disposition of the funds in the event that the loan was not consummated, or the term of the agreement. After the first audit Davis has provided such a form statement and has included it in each file. On three closed loans, and one that was still pending, the files did not include documentation to support minimal (i.e., $25.00, $10.00, $6.56) fees for phone calls and courier fees, or fees were collected which exceeded the documentation in the file. Davis explained that these are charges made by the closing attorney, and the files now document those expenses. The difference between what was collected for a credit report and what was spent was returned to the borrower. (For example, $20.30 was returned to borrower, G. Stewart). In three loans closed at the time of the first audit, Davis and IMC received as compensation both the origination fee and a portion of the discount points. In the McCurdy loan, IMC received its 1 percent origination fee ($600.00), plus one half of the 1 percent discount fee ($300.00). In the Alexander loan, IMC received its 1 percent origination fee ($469.00), plus a .75 percent discount fee ($351.75). In the Stewart loan, IMC received its 1 percent origination fee ($612.00), plus 1/2 percent discount fee ($306.00). In each case, the Good Faith Estimate form provided to the borrowers disclosed the fees separately and did not break out which portion of the loan discount would be paid to the lender and which portion would be paid to IMC. The origination fee is sometimes called the broker's fee, although some banks also collect the fee when a mortgage broker is not involved. Discount points are a one-time payment to a lender to increase its yield on the loan. They are a percentage of the loan, paid up front, to reduce the interest rate over the term of the loan. These are distinctly different forms of charges to the borrower. Davis claims that he explained orally to each borrower how much compensation he would receive. The borrowers do not remember the specifics of that explanation, but rather consider the total origination fee and discount fee as their cost of the loan. They knew that the broker was going to be compensated for his services and understood that compensation would come from those fees in some unspecified manner. Davis claims that he checked with some lenders who told him that it was standard practice for part of the broker's compensation to be called a "discount" fee. He considered it a tax advantage to the borrower, as discount fees could be deductible, just as interest is deductible. During the audit, Davis discussed his compensation practice with the agency staff, who explained that, whatever it is called, the broker's compensation had to be fully disclosed to the borrower at the time of application on the Good Faith Estimate form. Between June 3rd and June 7th, Davis attempted to redisclose his compensation to the borrowers, but this resulted in unsigned disclosure forms in the file when the agency review staff returned on June 7th to complete the audit. At the time of the first audit, Davis and IMC maintained an escrow account for the deposits received from applicant/borrowers for audit reports, appraisal fees and other costs. Davis later closed his escrow account because he felt it was costing him money and because he did not consider the funds he received at the time of application to be escrow deposits. In most cases, the credit report and appraisal and other relevant services were ordered the same day as the loan application. Whether the loan was eventually consummated, the customer was still responsible for paying the charge if the services were provided. This is disclosed in a statement at the bottom of the Good Faith Estimate form and in a separate "Notice to Borrower", signed by the applicant which, since the first audit, is maintained in the loan file. According to the Notice to Borrower, if the loan is cancelled or denied, and the services have not been performed, the funds will be returned to the customer, less any cancellation charge by the appraisal or credit firm. These funds are deposits. When the escrow account was closed, Davis deposited the money for appraisals and credit report in his operating account. After services were rendered and an invoice received, he would pay the bill. Barbara Janet (Jan) Hutchersien, conducted the department's second audit of IMC in January 1990. This review covered the period from July 1, 1988 through December 31, 1989. John Davis provided the boxes of loans and bank records and loan log. The auditor used the logs to review a sample of loans from each lender with whom IMC works. The bank records were used to trace funds reflected in the loan files. Ms. Hutchersien found, and noted in her examination report, that no escrow account was maintained, although deposits were received in a sample of loan applications. In the Fishman loan, which closed on 4/11/89, closing costs were disclosed by IMC as $1,822.00 on the Good Faith Estimate form dated 1/12/89, yet those costs actually amounted to $2,075.00, disclosed at closing on the U.S. Housing and Urban Development (HUD) Settlement form, for a difference of $253.00. In determining consistency between a good faith estimate and actual closing costs, the agency staff looks at items which are predeterminable costs. In the Fishman case, the estimate for survey was $225.00, but the actual cost was $400.00, due, according to John Davis, to an oddly-shaped lot. In two loans financed by Greentree Mortgage Corporation, IMC received a substantial fee from the lender, which fee was not disclosed on the Good Faith Estimate form, on the HUD Settlement form, or anywhere in writing to the borrower. File documents call these fees "discount for pricing". In the Meslin loan, closed on 8/11/89, the fee from the lender to broker was $432.00; in the Krueger loan, closed on 7/21/89, the payment was $820.00. These paybacks are called "par plus pricing", a relatively new (within the last five years) form of loan pricing. Par plus pricing allows a borrower who does not wish to pay cash at closing, but who would qualify for a higher interest rate in terms of monthly payments, to avoid paying discount points fee at closing. Instead, the lender pays the points to the broker, and the borrower gets a higher interest rate. This is contrasted with the discount point system where the borrower pays cash points at closing in return for a lower interest rate. Par plus pricing can work to the advantage to all parties: The borrower avoids a large cash outlay at closing, the lender enjoys a higher interest rate over the term of the loan, and the broker receives his money from the lender. The borrower, however, should understand his options, including the option to pay cash at closing for a lower interest rate. Davis did not disclose the payback from the lender in writing because that is the way he says he was told to handle the loan by Greentree's representative. Davis told the borrowers that he was getting his money from the lender. He did not, however, explain that the borrower would be paying a higher interest rate in return, and Roger Krueger did not understand why his loan was at 10 1/4 percent, rather than 9 3/4 percent, which he thought was the going rate at the time of closing. IMC also received funds from the lender in the Barnes loan, closed on 12/30/88. Cobb Financial Partners was the original lender, yet they paid IMC a service release fee ordinarily paid by one lender to another for release of servicing a loan. Although the fee from Cobb to IMC was not disclosed in writing to the borrowers, the Barnes' were told that the fee for IMC's services would come from the lender, rather from them. They were told, and it is disclosed on the Good Faith Estimate form, and on the HUD Settlement Form, that Cobb Partners Financial was paid $900.00 (1.25 percent loan discount) by the borrowers. Of this, $810.00 was returned by Cobb to IMC. John Davis concedes that Cobb, not IMC, was the lender and was not "comfortable" with how Cobb told him to handle his fee. He has not done business with Cobb since this loan and was simply trying to avoid having to charge his fee to Barnes, who had just arrived in town to become the newspaper editor. The borrowers who were the subject of the files in which the agency found violations generally did business with Davis and IMC because they thought he would get the best deal for them. They were financially unsophisticated and trusted him to represent them. They understood that he was being paid for his services and felt that he should be paid. Except for Mr. Krueger, they were generally satisfied with their mortgage rates. The mortgage broker's fiduciary responsibility is to the borrower, rather than the lender, although he must deal fairly and honestly with the lender. The service that the broker provides to the borrower is his knowledge and his ability to shop for the best product. Par plus pricing and other mechanisms by which the broker receives his fee in whole or part from the lender are not considered by the department to be a violation of standards governing the practice of mortgage brokerage, so long as the customer is fully apprised of his options and is informed of the role of those payments in the product or service they are receiving. The Barnes' and Kruegers clearly were not so apprised, nor does the record establish that the Meslins were informed, although they did not testify. Categorizing brokerage fees or compensation as "discount points" is patently misleading, as discount points are used to buy down an interest rate. When the points are diverted instead to the broker, the consumer does not receive the loan for which he has paid. John Davis admits certain technical violations, but unequivocally denies that he wilfully misled his customers or committed fraud. Since the second audit, he has restored his escrow account. He now discloses his compensation as brokers fees rather than discount points, and has learned how to disclose in writing the par plus pricing loans. In considering certain violations as "technical", and in recommending a penalty in this case, the undersigned has considered Respondents' willingness to correct the errors addressed by the department and Respondents' inexperience at the time of the first audit. Although he was involved in banking, insurance, and accounting, John Davis had not practiced mortgage brokering before moving to Florida and starting his business. In his early practice, as evidenced by his own testimony, he was willing to rely on the advice of lenders, rather than to seek guidance from his licensing authority. He misconceived his role as being jointly responsible to the borrowers and lenders with whom he worked, rather than a primary fiduciary duty to the borrowers, his clients. Although the concealment of compensation as discount points was a willful misrepresentation, the record establishes a pattern of ignorance, albeit inexcusable, rather than fraud.
Recommendation Based on the foregoing, it is hereby, RECOMMENDED That a Final Order be entered, finding that Respondents violated Sections 494.055(1)(e), (o), and (q), F.S. (1987); Sections 494.08(5) and (10), F.S. (1987); and Section 494.093(4), F.S. (1987), and imposing a penalty of $1,000.00 fine, and one year probation, with the conditions that Respondent Davis successfully complete a specified amount and type of professional short course work and undergo periodic review and supervision by the agency. DONE AND RECOMMENDED this 30th day of July, 1990, in Tallahassee, Leon County, Florida. MARY CLARK, 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 30th day of July, 1990. APPENDIX The following constitute specific rulings on the findings of fact proposed by the parties. Petitioner's Proposed Findings of Facts Rejected as unnecessary. Adopted in paragraphs 3 and 6. Adopted in paragraphs 5 and 6. Rejected as redundant. - 8. Rejected as unsupported by the weight of evidence except as found in paragraph 6. The department was required to obtain a subpoena due to Respondents' feigned or real refusal to produce certain records. Rejected as unnecessary. Adopted in substance in paragraph 13. Adopted in substance in paragraph 7. Adopted in substance in paragraph 7. - 18. Rejected as unnecessary. Adopted in summary in paragraph 8. Rejected as immaterial. The telephone charges were incurred by the closing agent, not Respondents. Rejected as unnecessary. Rejected as contrary to the weight of evidence. Rejected as unnecessary. Adopted in summary in paragraph 7. and Rejected as unnecessary and - 48. Adopted in summary in paragraph 8. 49. - 52. Adopted in summary in paragraph 14. Adopted in paragraph 15. Rejected as unnecessary. Adopted in paragraph 13. and Rejected as unnecessary. Adopted in paragraphs 16 and 20. 59 - 74. Adopted in summary in paragraphs 16-19. Rejected as unnecessary. The conclusion that the handling of "par plus pricing" was fraudulent is rejected as contrary to the weight of evidence. 77. - 81. Adopted in summary in paragraphs 20 and 21. 82. Rejected as contrary to the weight of evidence. 83. Adopted in paragraphs 10 and 12. 84. Adopted in paragraph 10. 85. - 89. Rejected as unnecessary. 90. Adopted in paragraph 22. 91. - 93. Rejected as unnecessary. 94. Adopted in part in paragraph 26. Respondent's Proposed Findings of Fact Adopted in paragraphs 1 and 2. Rejected as unnecessary. Adopted in paragraph 6. Rejected as contrary to the weight of evidence. Adopted in paragraph 3. Adopted in paragraph 13. - 9. Adopted in summary in paragraph 7. Rejected as contrary to the evidence. Liability for payment occurs when the service is rendered, as reflected in Respondent's "Notice to Borrower". Rejected as unnecessary. Adopted in paragraph 12. Rejected as unnecessary and immaterial. Rejected as unnecessary. - 19. Adopted in summary in paragraph 8. 20. - 22. Rejected as unnecessary. Adopted in paragraph 14. Adopted in substance in paragraph 13. Adopted in substance in paragraph 16. Adopted in substance in paragraph 19. Rejected as unnecessary. - 29. Rejected as contrary to the weight of evidence. Included in conclusion of law number 9. Rejected as immaterial. - 33. Rejected as contrary to the evidence. The terms implied that the loans would be at a discounted rate, but were not, because the "discount" (partial) went to the broker. Adopted in paragraphs 19 and 20. Rejected as immaterial. COPIES FURNISHED: Elise M. Greenbaum, Esquire Office of the Comptroller 400 W. Robinson St., Suite 501 Orlando, FL 32801 John O. Williams, Esquire Renaissance Square 1343 East Tennessee St. Tallahassee, FL 32308 Hon. Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 William G. Reeves General Counsel Dept. of Banking & Finance The Capitol Plaza Level, Rm. 1302 Tallahassee, FL 32399-0350 =================================================================
The Issue The central issue in this case is whether Petitioners are entitled to recover against the Mortgage Brokerage Guaranty Fund and, if so, the priority of payment to be applied to their claim. A secondary issue is whether claimants who gave notice prior to Petitioners are entitled to payment or whether they have waived or abandoned their claims.
Findings Of Fact Based upon the stipulations filed by the parties and the documentary evidence, I make the following findings of fact: The Mortgage Brokerage Guaranty Fund (the "fund") was created in 1977 to provide recovery for any person who meets all of the conditions prescribed in Section 494.043, Florida Statutes. The Department is charged to disburse the fund according to Section 494.044, Florida Statutes. Section 494.043, Florida Statutes, (Supp.1986) provides: Any person who was a party to a mortgage financing transaction shall be eligible to seek recovery from the Mortgage Brokerage Guaranty Fund if: The person has recorded a final judgment issued by a Florida court of competent jurisdiction in any action wherein the cause of action was based on s. 494.042(2); The person has caused to be issued a writ of execution upon such judgment and the officer executing the same has made a return showing that no personal or real property of the judgment debtor liable to be levied upon in satisfaction of the judgment can be found or that the amount realized on the sale of the judgment debtor's property pursuant to such execution was insufficient to satisfy the judgment; The person has made all reasonable searches and inquiries to ascertain whether the judgment debtor possesses real or personal property of other assets subject to being sold or applied in satisfaction of the judgment, and by his search he has discovered no property or assets or he has discovered property and assets and has taken all necessary action and proceedings for the application thereof to the judgment, but the amount thereby realized was insufficient to satisfy the judgment; The person has applied any amounts recovered from the judgment debtor, or from any other source, to the damages awarded by the court. The person, at the time the action was instituted, gave notice and provided a copy of the complaint to the division by certified mail; however, the requirement of a timely giving of notice may be waived by the department upon a showing of good cause; and The act for which recovery is sought occurred on or after September 1, 1977. Recovery of the increased benefits allowable pursuant to the amendments to s. 494.044 which are effective October 1, 1985, shall be based on a cause of action which arose on or after that date. The requirements of paragraphs (1)(a),(b),(c),(d), and (e) are not applicable if the licensee or registrant upon which the claim is sought has filed for bankruptcy or has been adjudicated bankruptcy; however, in such event the claimant shall file a proof of claim in the bankruptcy proceedings and shall notify the department by certified mail of the claim by enclosing a copy of the proof of claim and all supporting documents. Pertinent to this case, Section 494.044, Florida Statutes, (Supp. 1986) Provides: Any Person who meets all of the conditions Prescribed in s 494.043 may apply to the department for payment to be made to such person from the Mortgage Brokerage Guaranty Fund in the amount equal to the unsatisfied portion of that person's judgment or judgments or $20,000, whichever is less, but only to the extent and amount reflected in the judgment as being actual or compensatory damages. As to claims against any one licensee or registrant, payments shall be made to all persons meeting the requirements of s. 494.043 upon the expiration of 2 years from the date the first complete and valid notice is received by the department. Persons who give notice after 2 years from the date the first complete and valid notice is received and who otherwise comply with the conditions precedent to recovery may recovery from any remaining portion of the $100,000 aggregate, in an amount equal to the unsatisfied portion of that person's judgment or $20,000, whichever is less, but only to the extent and amount reflected in the judgment as being actual or compensatory damages, with claims being paid in the order notice is received until the $100,000 aggregate has been fully disbursed. * * * (3) Payments for claims shall be limited in the aggregate to $100,000, regardless of the number of claimants involved, against any one mortgage broker or registrant. If the total claims exceed the aggregate limit of $100,000, the department shall prorate the payment based on the ratio that the person's claim bears to the total claims filed. The first notice received by the Department alleging a claim against Barry Koltun or Oakland Mortgage Company was filed on August 13, 1984. This notice was filed on behalf of John and Mary Ahern. The Department utilized this notice in computing the two-year period addressed in Section 494.044(1), Florida Statutes. For purposes of recovery from the fund, the individual mortgage broker (Koltun) and the company qualified by the broker (Oakland) are treated as one. Petitioners filed an initial notice of their claim against the fund on October 16, 1985. This claim was asserted against Oakland Mortgage Company, Barry Koltun and Robert Tamarro. On January 23, 1987, the Department issued a "Notice of Intent to Grant or Deny Payment from the Mortgage Brokerage Guaranty Fund Re Oakland Mortgage Company." This notice outlined the status of some thirteen claims which had given notice of their civil actions against the licensee within the two year period. Two claimants, Kusich and Szafran, had provided all documentation required by Section 494.043, Florida Statutes; consequently, they were approved for payment. The Petitioner's claim was denied because they had allegedly failed to satisfy the statutory requirements of Section 494.043, Florida Statutes and had failed to do so prior to August 12, 1986 (the end of the two year period). The Petitioners timely filed a petition for formal Chapter 120 proceedings challenging the Department's denial of their claim for payment. Subsequent to January 23, 1987, Petitioners completed the conditions precedent for recovery and submitted all documentation required to satisfy the requirements of Section 494.043, Florida Statutes. On July 6, 1987, the Department received notice and a claim from the Intervenors. This claim satisfied the requirements of Section 494.043, Florida Statutes. Of the thirteen original claims filed, only two claimants (Kusich and Szafran) completed all conditions of Section 494.043, Florida Statutes, on or before August 12, 1986.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Banking and Finance, Division of Finance, enter a Final Order finding the claims of Rusich and Szafran eligible for payment, and that the claim of Petitioners be evaluated as part of the second class established in Section 494.044(1), Florida Statutes, DONE and RECOMMENDED this 1st day of December, 1987, in Tallahassee, Florida. JOYOUS D. PARRISH 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 1st day of December, 1987. COPIES FURNISHED: Paul A. Zeigler, Esquire Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A. Suite 1010, Monroe Park Tower 101 North Monroe Street Tallahassee, Florida 32301 Paul C. Stadler, Jr., Esquire Department of Banking and Finance Division of Finance Suite 1302 The Capitol Tallahassee, Florida 32399-0350 Joseph Degance, Esquire 1995 East Oakland Park Boulevard Suite 101 Fort Lauderdale, Florida 33306 Jack F. Weins, Esquire Boca Bank Building Suite 200 855 South Federal Highway Boca Raton, Florida 33432 Morey Udine, Esquire 3111 University Drive Suite 425 Coral Springs, Florida 32065-6930 Hon. Gerald Lewis Department of Banking and Finance Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 Charles L. Stutts General Counsel Department of Banking and Finance The Capitol Tallahassee, Florida 32399-0350 =================================================================
Findings Of Fact Based upon the evidence adduced at hearing, the factual stipulations into which the parties have entered, and the record as a whole, the following Findings of Fact are made: From approximately October of 1989, to February of 1990, Respondents were employed as telephone consultants by United Financial International, Inc. (hereinafter referred to as "UFI"), a Florida-based business owned by Laura Correa and Anita "Ann" Cuevas that offered to provide assistance to consumers seeking various types of loans, including mortgage loans. Respondents were not then, nor have they ever been, licensed by the Department as mortgage brokers in the State of Florida. Furthermore, at no time did UFI have a license or registration issued by the Department to operate as a mortgage broker, mortgage brokerage business, correspondent mortgage lender or mortgage lender, although it did have at least one employee during the period of Respondents' employment, telephone consultant John Archer, who possessed a Department-issued mortgage broker's license. As telephone consultants for UFI, Respondents answered and screened telephone calls placed by potential UFI clients. Among the callers Respondent Cook screened were Dudley Phipps and Arthur McCullough. Among the callers Respondent Jelich screened was Connie Wiscaver. Phipps, McCullough and Wiscaver were all interested in obtaining mortgage loans. While on the telephone with a potential client, Respondents, as a general rule, identified themselves by name, explained to the caller the services offered and fees charged by UFI, and obtained from the caller the following information, which they recorded on a form provided by their employer: the caller's name, address, telephone number, date of birth, social security number, employer, salary, financial standing, and credit history; and the type, amount and purpose of the loan sought by the caller. Respondents also typically asked what the caller hoped for in terms of interest rate, size of monthly payments and loan repayment schedule. In addition, they indicated what items the caller needed to send to UFI to complete the caller's loan application package. The representations that Respondents made during a typical telephone conversation with a potential client seeking a mortgage loan gave the impression that, if the caller submitted a complete loan application package along with the requisite loan application processing fee, and everything "checked out," Respondents would make the arrangements necessary for the caller to obtain the mortgage loan he or she wanted from one of the lenders with whom UFI had an established relationship. UFI management, in writing, instructed all of its telephone consultants, including Respondents, to incorporate the following in their presentation to potential clients and it randomly monitored the consultants' telephone conversations to make sure that these instructions were being followed: We Co-Broker loans. We are not lenders nor do we have a Funding Committee to evaluate the Loan Package after we receive it. It takes twenty one (21) to thirty (35) [sic] business days from the day we receive ALL the information to evaluate the package. We have an application Fee of $399.00. MANDATORY Please use these statements to increase your credibility and assertiveness with potential clients. The maximum life of the loan will be determined by the investor/lender. The interest rates will be fixed and vary between 12-18 percent. The application fee is non-refundable and the assessed fees to your loan are separate from the application fee. There will be a Brokerage fee of 1-5 percent assessed to your loan upon closing. To increase your potential, please make sure when your [sic] finishing with your potential client to ask them [sic] when they [sic] would like to obtain a loan. Also in your closing statements be sure to tell your client to Bill Recipient with our Federal Express/Express Mail Service to Guarantee overnight delivery. Be advised this is for the return of the Application Fee Only! The application istself [sic] is returned at the client's own expense. The client may pay the application fee by personal check; however, as the checks will be out-of-state it will take approximately (21) days for the check to clear which will hold up the clients [sic] processing. Therefore, we recommend a money order to expidite [sic] the process. We do not like to use regular mail for sending the money orders, we rather the client use our courier sevice [sic]. (see above) If you need assistance please do not hesitate to phone us at 1-800-729-5666. We want to help you secure the funds you require as soon as possible. We sincerely thank you for giving us the opportunity to serve you. In most cases, Respondents followed these instructions. As compensation for performing their duties as UFI telephone consultants, Respondents received a percentage (either 20 or 30 percent) of the non-refundable loan application processing fee submitted by each caller whose call they screened. In an effort to encourage a caller to submit the fee, Respondents sometimes told the caller that, based upon the preliminary information provided, the chances of the desired loan being approved "looked good." They never stated, however, that loan approval was "guaranteed."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order finding Respondents guilty of having violated Section 494.093(1), Florida Statutes (1989), as alleged in the Administrative Complaint, and imposing upon each of them an administrative fine of in the amount of $5,000.00 for having engaged in such wrongdoing. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 19th day of August, 1994. 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 19th day of August, 1994.
