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Cabinet to get more data on mortgage fraud, postpones Saxon's fate

Borrowers_banner A divided Florida Cabinet postponed any decision over the fate of the state’s top mortgage regulator Tuesday and decided to investigate The Miami Herald’s findings further before they move ahead with any sanctions.

The Cabinet ordered Don Saxon, commissioner of the Office of Financial Regulation, to report back in two weeks with proposed rules to tighten the regulation of mortgage brokers and loan originators and ordered the inspector general's office to coordinate with a plan to further investigate the problems exposed by The Miami Herald series.

Saxon told Gov. Charlie Crist and the Cabinet that he believes The Miami Herald series exaggerated the flaws of his office when it reported that the state granted mortgage brokers licenses to thousands of convicted felons, including bank robbers, racketeers and crack dealers.

"I believe there's been a rush to judgment by the media," Saxon said. "Unlike what's been reported in the media, we do not have a systemic problem of licensing felons."

But Chief Financial Officer Alex Sink, who has called for Saxon to step down, countered his remarks, saying there are provisions in the law that could have both allowed him to issue sanctions against loan originators and others who committed mortgage fraud and that the office "could have been denying more '' brokerage licenses to questionable officials.

"My distress about the situation is that the commission is coming before us today telling us about some of the things his department is going to be doing and he's known about these issues certainly for many months . . . and we could have been doing a lot more before we got to this point today," she said. "To me, it's too little too late."

Sink complained that "this is a much bigger issue'' and said the mortgage broker profession "has been begging for years for tighter requirements."

Crist echoed Sink's concerns and said The Herald's investigative report was "disturbing and distressing," but he ultimately agreed to take more time to check out the allegations before deciding how to proceed.

"I appreciate the press. I understand the media has a function and a job and a duty, but I’m a trust-but-verify guy also," he said "We’ve all had an opportunity since the story broke to review."

The governor said his "confidence was shaken'' and while he appreciated Saxon's service, "we've got to elect to make a difference, not to mark time. . . . All of us have a duty to hear the alarm bells and understand and . . . avoid some of these unfortunate circumstances for the public."

Agriculture Commissioner Charles Bronson and Attorney General Bill McCollum both defended Saxon and urged the Cabinet to further study the matter before making any decisions on whether Saxon should be held accountable for brokerage licenses falling into the hands of financial criminals.

Bronson said his reading of the law governing Saxon's office was that it was obligated to issue licenses to brokers in most situations. "It doesn't look like it gave you much option," he said.

McCollum said he is aware there were bad characters who have been issued licenses in the mortgage business but wants to clarify "the current state of the law with regard to the powers the OFR has or doesn’t have," McCollum said.