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Saxon Admits Mistakes But Extends Blame To Legislature

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The Associated Press

Published: July 25, 2008

MIAMI - The head of a state agency that allowed thousands of criminals to sell home loans in Florida has acknowledged his office did not follow a screening law but blamed legislators for failing to provide money to enforce it.

That's one of the explanations in a 40-page response to a Miami Herald investigation that revealed more than 10,000 people with criminal records were permitted to work in Florida's mortgage industry between 2000 and 2007.

People who entered the business with criminal records committed nearly $85 million in mortgage fraud, the newspaper reported Sunday.

Office of Financial Regulation Commissioner Don Saxon issued his explanations late Tuesday.

"I am committed to investigate the concerns and fully address all issues identified," Saxon wrote.

Saxon recommended toughening state law to keep felons out of the industry. He previously told the Herald he had not tried to change the law before because he didn't think such a measure would pass.

Saxon conceded that his agency failed, until two years later, to abide by a 2006 law requiring the screening of mortgage broker license applicants for federal crimes. The Legislature had not provided any money for the screenings, he wrote.

State Sen. Gwen Margolis, D-Sunny Isles, said that should not have been a problem because the Joint Legislative Budget Commission, of which she is a member, meets throughout the year to make budget changes.

Dozens of brokers kept their licenses after being convicted of financial crimes, including mortgage fraud, the newspaper also reported. In his response, Saxon wrote that regulators had no way of knowing about brokers convicted after getting their license.

Saxon's response came two days after state Chief Financial Officer Alex Sink called for his resignation based on the Herald's findings. Sink also is seeking an executive order to stop issuing and renewing broker licenses to convicted felons, saying regulators "were asleep at the switch."

"In cases where someone has already been convicted of financial fraud ... there are no second chances," she said.

Sink plans to bring up the issue when Gov. Charlie Crist and the Florida Cabinet, which oversees Saxon's office, meet Tuesday.

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