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Felons Working In Mortgage Industry

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Joyce Potts

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Feb 6, 2005
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Certified Residential Appraiser
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Florida
Why am I not surprised. Not enough resources? Sounds like they have the same problem as the state appraisal boards.

http://www.orlandosentinel.com/news/local/state/orl-mortgage2508jul25,0,26681.story

State official admits felons worked in mortgage industry

The Associated Press July 25, 2008 MIAMI - The head of a state agency that allowed thousands of criminals to sell home loans in Florida has acknowledged that 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, which found that 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 the explanations late Tuesday.

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

Saxon also recommended toughening state law to keep felons out of the industry. He previously told the newspaper that he hadn't tried to change the law before because he didn't think it would pass.

Saxon conceded his agency failed to abide by a 2006 law requiring the screening of mortgage broker license applicants for federal crimes until two years later. The Legislature had provided no money for the screening, he wrote.

State Sen. Gwen Margolis, D-Sunny Isles, said that shouldn't 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 also kept their licenses after being convicted of financial crimes including mortgage fraud, the newspaper 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 Chief Financial Office Alex Sink called for his resignation based on the newspaper'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," Sink said.

Sink plans to bring up the issue when Gov. Charlie Crist and the Florida Cabinet next meet Tuesday. The four-member panel, which also includes Attorney General Bill McCollum and Agriculture Commissioner Charles Bronson, oversees Saxon's office.

It would take three votes to oust him. McCollum said he wants action but isn't yet ready for Saxon's resignation, noting his response disputes some of the allegations and inferences in the newspaper's article.

"We need to evaluate this, weigh it, look at it, make corrections," McCollum said.
 

Michael Tipton

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Sep 25, 2005
Professional Status
Certified Residential Appraiser
State
Florida
Would any attorney be interested in filing a class action law suit filed against the Great State of Florida, the DFR and Mr Saxon?

From an article in Thursday's Miami Herald issue

In his report to the commission late Tuesday, Saxon conceded his department did not abide by a 2006 law that required it to screen mortgage broker license applicants for federal crimes until March 2008.

In the first 11 months of 2007, more than 10,000 applicants got licenses without the federal check. That includes at least one convicted bank robber and a man who was sentenced to prison for money laundering.

Overall, The Miami Herald found 86 brokers and brokerage business owners licensed since 2000 with federal convictions, including people found guilty of forgery, bank fraud and bribery of a public official.

Saxon acknowledged the 2006 law gave his agency the authority to pay for the federal search with its own funds but said the Legislature did not appropriate the money in the budget.

Sen. Gwen Margolis, who sits on the Joint Legislative Budget Commission, said the money question was no barrier since the panel meets periodically through the year to fix funding issues.

''He knows very well that they could have done a budget amendment to fund anything they needed,'' said Margolis, D-Bay Harbor Islands.
 

Ken B

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Feb 18, 2004
Professional Status
Certified General Appraiser
State
Florida
The rest of the story is that a number of those who were rejected for a MB license got jobs as loan originators with lenders since LOs are not required to be licensed in FL. FL's position is that, since the mortgage companies are regulated, the companies are responsible for vetting their LOs.

A follow-on story reported a felon convicted of mortgage fraud in MD had been hired as an LO by a Florida lender and was now in charge of their compliance department. In the convict's words "Who better to make sure it is done right?" My question would be "What is 'it'?"
 

Vernon Martin

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Jun 8, 2005
Professional Status
Certified General Appraiser
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California
Similar problem here in California. It's amazing what we allow convicted felons to do here.
 

Smokey Bear

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Dec 8, 2004
Professional Status
Certified Residential Appraiser
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California
Why am I not surprised? I've been saying for years that all loan originators need to be licensed, but what good is licensing if they will license just anyone?
 

Lost Cause

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Sep 17, 2004
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New York
C'mon, why is everyone so concerned with regulation and enforcement? Don't you all know that the market will take care of these things? Just ask Phil Gramm.
 

JSmith43

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May 5, 2003
Professional Status
Certified General Appraiser
State
California
If borrowers are the least bit alert, they might recognize some of the telltale signs, like when the LO refers to other co-workers as "boss" and you know the LO is not likely to have more than one manager.:shrug:

Regulation, licensing is a poor excuse to let one's guard down, but that is on of it's many effects. In fact, it conditions people and propagandizes people to let their guard down, IMO. I think the official label for the propaganda part of the program is "support the public trust" in the system.
 

JSmith43

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Joined
May 5, 2003
Professional Status
Certified General Appraiser
State
California
C'mon, why is everyone so concerned with regulation and enforcement? Don't you all know that the market will take care of these things? Just ask Phil Gramm.

Former Senator, Phil Graham:
"We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness, America in decline," said the former Texas senator. "You've heard of mental depression; this is a mental recession."

"We've never been more dominant; we've never had more natural advantages than we have today," he said. "We have benefited greatly" from the globalization of the economy in the last 30 years.

If all he would have said is that some of us have to cowboy up and deal with the downers and enjoy our relative advantages, all would have been well. Instead, he sounded like a politically rusty Bill campaigning for Hilary.
 

Lost Cause

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Sep 17, 2004
Professional Status
Certified General Appraiser
State
New York
I wasn't referring to ex-Sen Gramm's fool comments that got him kicked off the McCain campaign. Rather, I was referring to the deregulation legislation he sponsored while still a senator.
 
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