February 25, 2009

Miami looks to export mortgage fraud

Or at least a task force to investigate it. On the agenda for Miami-Dade County's annual fly-in to DC: pressing for the creation of a nationwide mortgage fraud task force modeled after the county's effort.

Championed by Rep. Kendrick Meek, D-Miami, and Commissioner Sally Heyman, the bill would establish a nationwide task force at the U.S. Department of Justice. The bill would help oversee regional task forces in states hardest-hit by mortgage fraud -- like Florida.

"This has hit Florida so hard, we're to the point where we need all hands on deck,'' Meek said.

Miami-Dade's task force has made more than 100 arrests, said Glenn Theobald, chief legal counsel for the county police department. But he said the local task force would benefit from a national coordinator who could work with task forces across the country -- identifying scammers who cross state lines.

Under Meek's bill, which cleared the House last year but was blocked in the Senate, the task force would aid in enforcing state mortgage fraud laws, and provide training to federal, state, and local law enforcement. Bill Nelson has the legislation in the Senate.

September 16, 2008

Inspector general concludes state regulators weren't protecting Floridians seeking mortgages

In a scathing report on the state's oversight of the mortgage industry, chief inspector general Melinda Miguel of the Office of Financial Regulation told the governor and Cabinet today that "the laws, rules and processes were not sufficient to protect the people of the State of Florida.''

Few escaped blame in the report, which implies that not only state laws as enacted by the legislature were lax but the overseers -- from the Cabinet officials on down -- also failed to protect the public. The report was ordered by the Cabinet after a Miami Herald investigation into mortage brokers found lax oversight had granted mortgage licenses to bank robbers and other felons. The Cabinet had no discussion.

After the meeting, CFO Alex Sink and Gov. Charlie Crist both said they didn't think the former OFR chief Don Saxon, who resigned a month ago, had been vindicated.

"There's a lot of work to be done over there,'' Sink said. "Our first order of business is the advocate on behalf of Florida citizens and that wasn't being done at the Office of Financial Regulation, the report uncovered that...That's got to stop.''

She had no patience for a claim from the agency that they didn't have the resources. "If you don't have resources, you stand up at the podium over there and beat your head or your fist and you tell your bosses that you don't have enough resources and if you don't get those resources this is what will happen. Instead of, where I read in a report, that he was quoted as saying, 'Well, we worked behind the scenes.'''

July 29, 2008

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.

July 28, 2008

McCollum: mortgage fraud felons shouldn't be allowed back in business for 7 years

Borrowers_banner_2In a letter to Chief Financial Officer Alex Sink today, Attorney General Bill McCollum remained silent on the question of whether the state's top mortgage regulator, Don Saxon, should keep his job but he proposed new rules to create a new class of felons in the clemency process.

McCollum proposes a seven-year ban on felons who seek to have their rights restored from entering the mortgage brokerage and lending industry. "Such a rule would provide further limits to ex-felons who seek occupation in the mortgage brokerage and lending industry,'' he wrote. McCollum noted that a federal mortgage fraud bill, expected to be signed by the president, would do the same thing and he wants other provisions of the federal bill to be adopted by rule asap.

McCollum was one of the most rigid opponents to the existing changes to the clemency process that allowed for automatic restoration of rights for many felons and a 15-year waiting period for those that committed the most violent crimes.

The attorney general also told Sink he wants his office to conduct the investigation into the licensing practices of the Office of Financial Regulation. "We need to understand the extent of the problem in order to modify existing rules or to propose legislative remedies to strengthen our efforts," he wrote. Maybe the investigation buys Saxon more time.

Here's his letter: Download mccollum_728.pdf


July 25, 2008

Blame game continues as Lopez-Cantera fingers Sink in mortgage crisis

Borrowers_banner_2Miami Rep. Carlos Lopez-Cantera today continued the blame game emerging over who should have known that Florida's regulation of mortgage brokers was a riddled with holes, as the Miami Herald's series exposed this week.

In a letter to Chief Financial Officer Alex Sink's legislative director, Lopez-Cantera says that she should have been asking more questions and getting more answers if she really wanted to prevent mortgage fraud and calling for Don Saxon's resignation now is "too little too late.''  Download letter_from_carlos_lopezcantera_to_department_of_financial_services.pdf Download letter_from_dfs_to_representative_carlos_lopez_cantera.pdf

"Alex Sink is the top economic cop in this state. Why wasn't mortgage fraud a higher priority?'' Lopez-Cantera asks. He notes that she campaigned on the promise that "I will ask the tough questions." 

It's all more proof that lots of folks in Tallahassee are in serious damage control mode. Sink called for Saxon's resignation the day the Herald series ran. Lopez-Cantera notes that he sponsored legislation last session to crack down on mortgage fraud and Sink never showed a peep of interest in it.

But that raises more questions: Should legislators reviewing the issue of mortgage have been asking these questions too? Should they have asked why the 2006 law to ban felons wasn't enforced. And what about Sink's predecessor Tom Gallagher? Didn't he support the structure of Saxon's office to allow for the full Cabinet to have oversight? Did he ask these questions?

"It's not our job to make sure laws were enforced,'' Lopez-Cantera answers. "It's our job to pass laws.''

UPDATE: House Democratic Leader Dan Gelber offers this response to Lopez-Cantera: 

"Rep Lopez-Cantero's accusations would be funny if the issue wasn't so tragic. Seriously, the idea that the CFO bears blame for a problem that, according to the Herald, was almost entirely baked before she was even elected in 2006 is ludicrous. Further, it was the legislature that in 2003 took away from the CFO any direct oversight over the  Office of Financial Regulation (OFR) and instead made the entire cabinet responsible for the hiring and firing of the head of OFR."

July 24, 2008

Saxon now says: Keep felons out of mortgage business

Borrowers_banner_2 Facing calls for his ouster after allowing thousands of criminals to sell home loans in Florida, the state's embattled chief mortgage regulator proposed changes that would toughen the law to help keep felons out of the industry.

Office of Financial Regulation Commissioner Don Saxon issued a 40-page explanation of his agency's performance three days after a Miami Herald investigation revealed that thousands of criminals -- including some found guilty of bank robbery, cocaine trafficking and racketeering -- received licenses.

Saxon proposed licensing all loan originators -- a move his agency has long resisted, according to internal e-mails and interviews with industry leaders.

Last week, in an interview with The Miami Herald, Saxon said he never tried to change the law because he didn't think it would pass. But when asked who would have opposed such legislation, he couldn't think of anyone. ''I don't have any specific names,'' he said.

In his report Tuesday, Saxon also promised an ''audit'' of any licensed mortgage broker who had a criminal record at the time of their approval. More here.

July 23, 2008

AARP director says 'new leadership' needed at OFR because of lax mortage regulation

Borrowers_banner AARP Florida state director Lori Parnham said today that it's time for "new leadership" at the Office of Financial Regulation in light of the Miami Herald series that exposed the lax oversight over mortgage brokers and loan originators.

"It is outrageous that Florida regulators have allowed convicted criminals, including felons found guilty of financial crimes, to be allowed to hold sensitive mortgage-broker licenses or to work as loan originators,” Parnham said in a statement.

“Faced with rising fiscal pressure and fixed incomes, older Floridians and those living with disabilities are particularly vulnerable to mortgage fraud.  The state clearly has failed in its obligation to protect these citizens.” 

“Since 2004, Florida property insurance rates have tripled, housing costs are high, food and fuel costs are skyrocketing, prescription drug costs are rising twice as fast as overall inflation, and millions of older Floridians are one serious illness away from financial ruin.  Now the state is issuing licenses to steal to convicted felons. It is time for new leadership in the Office of Financial Regulation and a new approach to protecting Florida consumers of all generations.” Read the series here.

July 22, 2008

Eikenberg says broker oversight was "outrageous"

Borrowers_banner_2  Gov. Charlie Crist's top deputy, Eric Eikenberg, said Florida's flawed oversight of mortgage brokers and loan originators was "outrageous" and promised that the governor will respond to the Miami Herald's investigative report when he returns from Europe later this week.

''We have a law in place to protect consumers, and from what we've been told, that hasn't occurred,'' Eikenberg told the Herald. More here.

July 21, 2008

Advocacy group for the poor seeks Saxon's ouster

ACORN, the housing advocacy organization for low income Floridians, is demanding the resignation of Borrowers_banner Don Saxon, head of the Office of Financial Regulation and the state's top mortgage regulator. The organization cited the Miami Herald's investigative report, Borrowers Betrayed, which revealed that the state allowed thousands of felons to obtain mortgage brokers licenses and operate as loan originators, committing at least $85 million in mortgage fraud and swindling hundreds of victims of their life's savings.

"Don Saxon needs to be held accountable for allowing these crooks to rob Floridians of their homes and livelihoods," said Carolyn Patmon, Head of ACORN’s Anti-Foreclosure Committee. "We need to send a message to Tallahassee that we will not allow the mortgage industry continue unabated with little fear of retribution."

Press conferences calling for Saxon's ouster will be held in Miami and Orlando on Thursday. For its part, ACORN has had its own problems with fraud within its own ranks, with an individual accused of embezzlement at its national office.

Continue reading "Advocacy group for the poor seeks Saxon's ouster" »

July 20, 2008

Sink calls for Saxon to resign after Herald investigation

Chief Ftinancial Office Alex Sink today called for the resignation of Don Saxon, Commissioner of the office of Financial Regulation, and issued the following statement in response to the Miami Herald investigation into the state regulation of mortgage brokers:

“The Office of Financial Regulation has a duty to protect Floridians from those who would prey upon them.  I am outraged by the facts presented in today’s Miami Herald article on mortgage broker licensing.

"As one of four members of the Financial Services Commission, I am calling for the Commissioner of the Office of Financial Regulation to step down and for the immediate launch of a thorough investigation to identify why the people of Florida were not better protected.  The Governor and Cabinet must also issue an Emergency Order directing the Office of Financial Regulation to stop issuing or renewing mortgage broker licenses to felons, pending further instruction.

Floridians depend on the state to protect them from criminals, and it is inexcusable that state regulators were asleep at the switch.”