State Financial Regulator Saxon Keeps Job, For Now

The state's chief mortgage regulator will keep his job for now while state investigators probe allegations that his office licensed thousands of convicted criminals to work as mortgage brokers.

Gov. Charlie Crist and other members of the state Cabinet passed Tuesday morning on their first opportunity to oust Financial Regulations Director Don Saxon, who said he will face the Cabinet again on Aug. 12 with proposals to tighten licensing rules for mortgage brokers.

It was Saxon's first chance to address Cabinet members since The Miami Herald published an exposé this month about ex-felons who received licenses from the state to become mortgage brokers - some of whom defrauded consumers and banks out of an estimated $85 million.

Chief Financial Officer Alex Sink, who initially called for Saxon to step down, stopped short Tuesday of moving to remove him, explaining afterward that she did not feel she had the necessary votes from the other Cabinet members.

Crist said he may support removing Saxon but wants to verify the allegations. "It's clear to me we need to take action," he said. "The people do count on us, and they expect us to do something."

To that end, Crist and the other Cabinet members - Sink, Attorney General Bill McCollum and Agriculture Commissioner Charles Bronson - directed the inspectors general in their own offices to investigate Saxon's office and the allegations leveled by the Herald.

Saxon, who penned a 40-page defense last week in response to the Herald's report, made no objection to the inquiry but said that the media had unfairly portrayed his department.

"We do not have a systematic process of licensing felons," he said, stressing that in the past 10 years his office has denied 30 percent of the applications for mortgage broker licensure. "If we made mistakes, they were honest mistakes."

Saxon said he is forming a plan that will better "ensure the safety of Florida consumers." Among his proposals, he said, will be to codify at the state level a law approved recently by Congress that would tighten licensing standards and empower the state to regulate "loan originators," who do about the same job as a mortgage broker but do not have to be licensed. According to the Herald investigation, convicted criminals have flocked to the field of loan originating.

Saxon said he will also investigate the circumstances under which his staff decided to license felons. The law, he said, requires his staff to make such decisions on a "case-by-case" basis.

That didn't satisfy Sink, who faulted Saxon for a pattern of "weak" regulation and urged him to consider changes proposed by her staff.

McCollum argued that Saxon's office was hamstrung by the Cabinet's 2007 move to make the restoration of civil rights, including professional licensing, to felons nearly automatic. McCollum proposed barring felons from applying for mortgage brokering and related licenses for seven years.

Sink and Crist argued that McCollum's proposal would be too sweeping.

"Our first duty is to protect, but I also believe we have a duty to give people second chances," Crist said.