The Miami Herald

Regulator no fighter for ban on ex-cons

Under fire for allowing bank robbers and racketeers to sell home loans in Florida, the state's chief mortgage industry regulator said he fought to ban ex-convicts from the business during the 2008 legislative session.

The regulator, Don Saxon, said he was "proactive in drafting proposed language to change the law, " in a 40-page defense of his agency last week.

But Saxon, commissioner of the Office of Financial Regulation, never took his case to legislators who could effectively push the change and didn't ask key Cabinet leaders to support the idea, The Miami Herald has found.

The longtime state regulator has faced mounting calls for his resignation since the newspaper reported last week that his office allowed more than 10,000 people with criminal records to sell mortgages in Florida between 2000 and 2007.

Brokers with convictions went on to steal at least $85 million from consumers and banks, The Miami Herald found, while the state's mortgage-fraud rate reached the highest level in the nation.

Although Saxon said he pressed for the ban on criminals, his only attempt to make the change came in a meeting with Rep. Scott Randolph, D-Orlando, OFR spokeswoman Holly Hinson said in an e-mail Friday.

Randolph, who is not on any committee that regulates mortgage brokers, visited Saxon's agency late in the legislative session to discuss possible additions to a bill that he said had no chance of passing. Randolph added that he, not Saxon, requested the meeting.

"If they were trying to stir some urgency or interest, I probably wouldn't have been the one" to talk with, Randolph said.

Saxon raised the issue with Randolph in April -- months after The Miami Herald began to request license files for brokers with felony records.

In her e-mail Friday, Hinson said Saxon discussed the idea with Randolph because his was "the only appropriate bill" for the amendment to ban felons.

OTHER LEGISLATION

But there were other bills introduced earlier in the session that dealt directly with mortgage fraud, including one sponsored by Rep. Carlos Lopez-Cantera, R-Miami. It was passed unanimously by both chambers and was signed by Gov. Charlie Crist in May.

Lopez-Cantera said he had no meetings with Saxon's agency during the session, and had never heard about the proposal to prevent ex-convicts from getting broker's licenses.

"They could have attached it; I guarantee no one asked me to add an amendment to the bill that said that, " Lopez-Cantera said. "I would have accepted it, absolutely."

Sen. Bill Posey, R-Rockledge, who chairs the committee that oversees the mortgage industry, said he doesn't recall seeing such a proposal either. He sat on the governor's task force examining Florida mortgage laws this year.

The proposed ban is just one of the claims in Saxon's report that state officials and industry leaders have called into question.

First, Saxon said he didn't have the money to perform federal background checks on mortgage-broker license applicants, but key lawmakers said he never asked for the funding. Second, Saxon said he has long supported licensing of "loan originators" -- who do the same work as mortgage brokers -- but he has never proposed a law to accomplish that.

Some of the state's top leaders say they were unaware of any effort by Saxon to prevent ex-convicts from getting mortgage-broker licenses.

USUAL PROCEDURE

Typically, agency leaders seeking to change the law submit proposals to the elected officials first, to make sure they will have the necessary political support.

Saxon reports to the Financial Services Commission, which consists of Gov. Charlie Crist, Chief Financial Officer Alex Sink, Attorney General Bill McCollum and Agriculture Commissioner Charles Bronson.

In her Friday e-mail, Saxon's spokeswoman said her office informed Sink about the proposal. Sink's office denied that.

"OFR never shared with our office the need to increase licensing standards nor did they raise an alarm about their ability to regulate mortgage licensees, " said Tara Klimek, spokeswoman for Sink.

"They never talked about it in any of our meetings, and there were quite a few meetings, " Klimek said.

Sink, who has called for Saxon's resignation, also asked her fellow panel members to sign an emergency order to stop Saxon's agency from issuing licenses to felons.

Attorney General spokeswoman Alexis Lambert said Friday that her office received no correspondence from Saxon's agency mentioning a desire to tighten licensing standards or ban people with criminal records from the industry.

"No one is recalling any verbal conversations either, " Lambert said.

Department of Agriculture spokesman Terence McElroy said his agency knew nothing about Saxon's legislative proposal, but added, "We do not handle their legislative agenda, and it would not be circulated around our office."

'STILL REVIEWING'

Asked whether Gov. Crist had heard anything about Saxon's legislative effort, spokesman Sterling Ivey said Friday that his office was "still reviewing and trying to pull some information together."

The governor's office would not be ready to comment before Monday, Ivey said.

OFR spokeswoman Hinson said Crist's office had been informed.

Sink would need the support of at least two other members of the Financial Services Commission to force Saxon out.

The four-member panel is scheduled to meet Tuesday.

Miami Herald staff writer Rob Barry contributed to this report.




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