Florida's chief financial officer called for the state's top mortgage regulator, Don Saxon, to resign after a Miami Herald report that his agency issued licenses to thousands of people with criminal histories -- many of whom went on to steal millions from borrowers and banks.
Florida CFO Alex Sink, a member of the state Cabinet, also called for an executive order to stop the Office of Financial Regulation from issuing or renewing mortgage-broker licenses to felons. And she demanded an immediate investigation of the agency to find out "why the people of Florida were not better protected."
A Miami Herald investigation published Sunday showed that more than 10,000 people with criminal records were permitted to work in Florida's mortgage industry during the housing boom between 2000 and 2007. Of those, 4,065 cleared background checks despite having committed crimes that state law requires regulators to screen, including bank robbery, racketeering and extortion.
"I am outraged by the facts presented in today's Miami Herald article on mortgage broker licensing, " Sink said in a statement Sunday afternoon. She added: "Floridians depend on the state to protect them from criminals, and it is inexcusable that state regulators were asleep at the switch."
Premium content for only $0.99
For the most comprehensive local coverage, subscribe today.
Sink sits on the Financial Services Commission, which oversees the OFR.
OFR Commissioner Saxon could not be reached late Sunday to comment. He has led the state agency since its inception in 2003.
The OFR regulates Florida's mortgage industry. Its duties include licensing brokers, conducting financial examinations and investigating consumer complaints.
Last week, Saxon defended his agency in an interview with The Miami Herald, saying the law that requires criminal background checks is "discretionary, " allowing regulators to make decisions on a case-by-case basis.
But Saxon said he couldn't explain why his staff issued licenses to convicted bank robbers and racketeers. "I do not have an answer for that, " he said.
The Miami Herald found that people with criminal records who entered the industry committed nearly $85 million in mortgage fraud. "Certainly we are not proud of the fact these people have gone on to do bad things, " Saxon said.
The newspaper's eight-month investigation also found that regulators allowed at least 20 mortgage brokers to keep their licenses after committing mortgage fraud; routinely ignored complaints, allowing rogue brokers to continue operating; broke state law requiring them to conduct nationwide criminal background checks of applicants; and revoked fewer mortgage licenses in the past five years despite a spike in fraud cases.
Ritch Workman, president of the Florida Association of Mortgage Brokers, said he supports banning felons from the industry. "If these unfortunate circumstances lead to a purge of the bad actors, we welcome that, " Workman said. He expressed admiration for Saxon, adding: "I don't applaud his termination. But that's politics, and I'll stay out of that."