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Review: State Was Lax On Mortgage Writers

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By CATHERINE DOLINSKI

The Tampa Tribune

Published: September 17, 2008

TALLAHASSEE - Florida has failed to adequately investigate criminal backgrounds and take other steps to stop convicted felons from writing mortgages, a state review has found.

The state Cabinet ordered the review, led by Chief Inspector General Melinda Miguel, after the Miami Herald reported that Financial Regulation Commissioner Don Saxon's office had let more than 10,000 ex-felons work as brokers since 2000, some of whom defrauded customers out of an estimated $85 million.

The furor triggered Saxon's resignation last month at the behest of Chief Financial Officer Alex Sink.

The state also passed emergency rules detailing which past crimes may stop felons from receiving licenses. According to the state's review, 588 brokers licensed between 2003 and 2007 might have been barred or delayed from receiving a license under the emergency rules passed last month.

When Saxon tendered his resignation, he said he hoped the state's review would clear him of many allegations in the Herald. But Miguel reported that the newspaper's accounts of specific felon-brokers were accurate.

"It does confirm for me the fact that we need a new kind of leadership over at the Office of Financial Regulation," Sink said.
Saxon was out of town Tuesday. An Office of Financial Regulation spokeswoman had no comment.

There is plenty of responsibility to go round for Florida's mortgage mess, said Miguel, who produced recommendations for the Cabinet, the Office of Financial Regulation and the Legislature.

Among those for lawmakers: require licensing for loan originators, a little-regulated profession in which people perform tasks similar to mortgage brokering. In 2007, Miguel found, 231 felons whose past crimes kept them from acquiring mortgage brokering licenses began writing mortgages as loan originators.

In response to the Herald's allegations, the state passed emergency rules last month detailing which past crimes may stop felons from receiving licenses. According to the report, 588 brokers licensed between 2003 and 2007 might have been barred or delayed from receiving a license under the new rules.

"It has to be a priority; there has to be more oversight," said Sen. Mike Fasano, R-New Port Richey, who has sponsored anti-foreclosure fraud legislation. "I'm a big believer that there is a lot of fraud still going on out there."

Saxon's office now forwards fingerprints for first-time applicants to federal law enforcement authorities to check their criminal backgrounds - a requirement in statute since 2006, which Saxon's office ignored until March. Miguel said the state should also demand background checks at the time of license renewal.

Sink said she was especially concerned by the finding that Saxon's office failed to address consumer complaints. "The second concern is a lack of enforcement mentality."

Attorney General Bill McCollum, who did not support the call for Saxon's ouster, said Tuesday that the report points out inefficiencies and weaknesses, but is no indictment of Saxon.

"Nothing in here that indicated the technical decisions made by the office with respect to certain approvals of mortgage brokers licenses were wrong."

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

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