Financial regulator asked to step down
On Sunday, the Miami Herald published an investigation titled âBorrowers Betrayed.â It revealed that state regulators allowed thousands of ex-convicts to enter the mortgage business. In response, Floridaâs Chief Financial Officer Alex Sink has called for the commissioner of the stateâs Office of Financial Regulation, Don Saxon, to resign.
According to the Heraldâs eight-month investigation, more than 10,000 mortgage brokers who had criminal records were licensed between 2000 and 2007, during the Jeb Bush and Charlie Crist administrations. More than 4,000 of them had committed crimes that should have made them ineligible for a mortgage license. These crimes include extortion, fraud, and racketeering.
About $85 million in mortgage fraud had been committed by people approved for mortgage licenses by the Office of Financial Regulation, and some had been convicted of stealing customersâ identities and money.
Florida ranks second in the nation for the number of foreclosure filings and the state is rife with mortgage fraud. Only three cities in the country have more suspected mortgage fraud than Miami, according to the FBI, and Tampa ranks seventh on the list.
The Herald investigation found that as the number of fraud cases increased, the mortgage industry lobbied for changes but were resisted by the Office of Financial Regulation.
Frank Gregoire is the former chair of the Florida Real Estate Appraisal Board and is running for Pinellas County Property Appraiser. Gregoire told WMNF that the Office of Financial Regulation refused to prosecute complaints against mortgage brokers.
The Herald reported that Don Saxonâs office routinely ignored a 2006 law that requires national criminal background checks of applicants. Even after licenses were issued, punishment was infrequent. At least 20 mortgage brokers committed mortgage fraud and then still were able to keep their licenses. Over the past five years, the number of revocations has declined.
Carolyn Patmon is the head of the Anti-foreclosure Committee with Orlando ACORN. Patmon said it is the job of regulators like Don Saxon to hold peopleâs feet to the fire.
âACORN wants to ensure that all predatory lending is eradicated in Florida. We feel as members that it needs to start with Don Saxon. This will send a message loud and clear. â¦ This has cost the average Floridians millions of dollars because Don Saxon didnât do his job. It shows a lack of leadership.â
ACORN will hold press conferences in Orlando and Miami on Thursday to call for the resignation of Don Saxon, who Patmon says has been âasleep at the wheel.â
WMNF spoke with the media relations official with the Office of Financial Regulation but we were told that no one from the office is available to be interviewed, but they are reviewing the information.
Saxon wrote a letter to the Florida Cabinet, which makes up the Financial Services Commission on Tuesday. The letter can be found in our news archive. In it, Saxon wrote, âI have instituted a full and comprehensive review of the allegationsâ and it contains details about several of the licensees profiled in the Miami Herald article.
On Wednesday, the AARP Florida announced that it wants Saxon to step down, calling for ânew leadership in the Office of Financial Regulation.â Lori Parham, the state director of AARP Florida said that sheâs concerned about how this crisis has affected elderly residents and people with disabilities.
Gegoire said that in a meeting on October 4, 2007, he was told by the Office of Financial Regulation that 75 percent of lenders were exempt from their regulation.
Like the other members of Floridaâs Cabinet, CFO Alex Sink is on the Financial Services Commission, which oversees the Office of Financial Regulation. Thatâs why Republican Representative Carlos Lopez-Cantera, from Miami, said that Sink shares some of the blame. WMNF attempted to get comment from Sink, but she did not return our calls.
In an editorial Tuesday, the Tampa Tribune wrote: âThe aversion to sensible regulation by federal and state leaders in recent years has proved costly.â
WMNF asked Gregoire whether there was a culture of de-regulation in Tallahassee. "No. I don't believe that that is the case."
The Republican-controlled Legislature created a special job category called loan originator which has the same functions as mortgage brokers but is not required to be licensed or subject to background checks.
Alex Sanchez, president and CEO of the Florida Bankers Association, said there are two reasons why Florida has a major foreclosure problem. One is due to flippers, speculators who purchased properties in order to sell them quickly at a profit, causing artificial inflation, and the other is because of mortgage fraud.
The Florida Cabinet, which includes CFO Sink and Governor Charlie Crist, will discuss this issue and the future of Don Saxon during its next meeting on July 29.
Photo by SeÃ¡n Kinane/WMNF (July 2008)comments powered by Disqus