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Mortgage Chief Resigns; Emergency Rules Instituted

Tribune photo by COLIN HACKLEY

Don Saxon told the Cabinet on Tuesday that he wanted to keep his job until the state concludes its audit of his office's licensing and regulation of mortgage brokers.

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By CATHERINE DOLINSKI

The Tampa Tribune

Published: August 13, 2008

TALLAHASSEE - Florida's top regulator of mortgage brokers said Tuesday that he will leave his post Sept. 30 amid continuing criticism for allowing thousands of ex-convicts to obtain mortgage brokering licenses and, in some cases, commit fraud.

Meanwhile, the state is taking new steps to make it harder for ex-felons to get into the mortgage brokering business. But whether the new rules are legal remains unclear, since the state has made restoration of civil rights for felons nearly automatic - including the right to hold professional licenses.

Financial Regulation Commissioner Don Saxon told the state Cabinet on Tuesday that he wanted to keep his $137,158-a-year post until the state concludes its ongoing audit of his office's licensing and regulation of mortgage brokers. According to reports in the Miami Herald, Saxon's office has let more than 10,000 ex-felons work as mortgage brokers since 2000, some of whom defrauded consumers and banks out of an estimated $85 million.

"I recognize that things could have been done better," said Saxon, who has worked in state government for 33 years. "It was always my hope that once that audit is completed, it will demonstrate that our office has not acted as recklessly, if you will, as the Miami Herald might suggest."

Saxon Agreed To Leave Voluntarily

But the embattled regulator ran headlong into the wrath of Alex Sink, Florida's chief financial officer, who first called for Saxon's ouster last month. She moved Tuesday to remove Saxon, effective Sept. 30.

Saxon responded that he would voluntarily leave as requested, at which point the Cabinet - Gov. Charlie Crist, Attorney General Bill McCollum, Agriculture Commissioner Charles Bronson and Sink - accepted his "intent to resign."

"To me, this is not just about some article that was written in the Miami Herald," Sink said afterward, noting a "damning" grand jury report that surfaced this year about inadequate oversight by Saxon's office of check-cashing businesses. "It's about a culture of leadership that needs to change."

Cabinet Votes To Toughen Laws

Saxon's resignation followed the Cabinet's vote to adopt emergency rules to make it tougher for felons to work as mortgage brokers. Depending on their crime, some will be ineligible for licenses; others will have to wait between five and 15 years after completing their sentences. Although the Cabinet approved the rules unanimously, it remained divided about whether they would hold up in court.

At issue is how much authority Saxon's office has to restrict licenses based on past crimes unrelated to the industry. State statute clearly authorizes the office to deny mortgage brokering licenses based on financial crimes, but the Miami Herald noted that some brokers who defrauded the public had committed other serious offenses, such as drug trafficking.

The rules the Cabinet passed are based on different kinds of crimes committed:

Class A: never qualifies for a license. Applies to serious felonies "involving an act of fraud, dishonesty or a breach of trust, or money laundering." Included in these are extortion, armed robbery, embezzlement and bribery.

Class B: must wait 15 years. Applies to other serious felonies including murder, arson and drug trafficking.

Class C: must wait seven years. Applies to other felonies.

Class D: must wait five years. Applies to misdemeanors "involving fraud, dishonest dealing or any other act involving moral turpitude."

Saxon proposed the rules at the Cabinet's behest. They will last 90 days, giving the state time to initiate the time-consuming process of setting permanent rules, which are expected to resemble the emergency version. All states must eventually comply with tough new federal regulations signed into law by President Bush last month; in Florida, that is likely to require not only administrative rules but new laws as well.

'It May Not Be Legal'

McCollum and Bronson joined Crist and Sink in voting for the emergency rules but expressed doubts about regulators' authority to restrict licenses based on unrelated crimes.

"I think we ought to try it," the attorney general said. "It may be legal; it may not be legal."

McCollum is working on his own plan for the clemency board to limit licensing for felons seeking to enter sensitive professions including - but not limited to - mortgage brokering. McCollum was the lone vote on the board in 2007 against making civil rights restoration nearly automatic for felons; the board meets next in October.

Crist, who campaigned on the promise of automatic rights restoration, said he was unwilling to tamper with that process.

Reporter Catherine Dolinski can be reached at (850) 222-8382 or cdolinski@tampatrib.com.

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