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Showdown over brokers is imminent

Amid mounting criticism of his leadership, Florida's top mortgage industry regulator promised Monday to find out why his agency allowed thousands of people with criminal histories to sell home loans in the state.

Don Saxon, commissioner of the Office of Financial Regulation, vowed to work with state Chief Financial Officer Alex Sink to tighten mortgage broker licensing standards.

Sink, however, has included Saxon's resignation on a list of reforms she's demanding to overhaul the embattled agency.

The call for Saxon's ouster was prompted by a Miami Herald investigation that showed more than 10,000 criminals have been allowed to peddle home loans in Florida since 2000. Among them are bank burglars, cocaine traffickers and identity thieves who have gone on to commit at least $85 million in mortgage fraud, the newspaper found.

Eric Eikenberg, chief of staff for Gov. Charlie Crist, called the newspaper's findings "outrageous" and said the governor, who is traveling in Europe, will take up the issue when he returns later this week.

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

In a prepared statement on Monday, Saxon said he takes "the responsibility of consumer protection very seriously." He said the current law allows him to deny a license only if the applicant has been found guilty of crimes involving fraud, dishonest dealing or "moral turpitude."

The Herald found 4,065 people this decade who were issued licenses despite convictions for those crimes. At least 20 brokers have been allowed to keep their licenses even after being found guilty of mortgage fraud.

Saxon's statement also said his agency denies, on average, 30 percent of the applications received from aspiring brokers.

A Miami Herald analysis of the OFR's database of mortgage professionals showed tens of thousands were denied for technical reasons, such as failing to submit a complete application.

But the agency issued only 28 final orders between 2000 and 2007 denying applicants based on their criminal records, the newspaper found.

Sink has called for an executive order that would put an immediate ban on granting licenses to convicted felons, and from renewing licenses for felons already in the industry.

She also has called for the state to start licensing professionals known as "loan originators" -- who do the same work as mortgage brokers but currently do not have to pass competency exams or submit to criminal background checks.

More than 5,000 entered the industry with criminal backgrounds since 2000, including people guilty of grand theft, bank robbery and insurance fraud.

The issues are expected to surface next Tuesday, when Crist, Sink, Attorney General Bill McCollum and Agriculture Commissioner Charles Bronson gather for an already scheduled meeting of the Financial Services Commission.

Sink said she'll also push for Saxon's resignation -- a demand she issued in a press release on Sunday.

"When you're licensing a high number of brokers, sure, you might expect a few to slip through the cracks. But not thousands. Somebody was asleep at the switch, " Sink said. It would require votes by three of the four commission members to fire Saxon.

The consumer watchdog group ACORN issued a statement Monday calling for Saxon's ouster and a "beefed-up regulatory approach" at the OFR. "Don Saxon needs to be held accountable for allowing these crooks to rob Floridians of their homes and livelihoods, " demands Carolyn Patmon, Head of ACORN's Anti-Foreclosure Committee Florida House Minority leader Dan Gelber, D-Miami Beach, also backed Sink's call for Saxon's ouster and an investigation at the state agency.

But other state legislators said an immediate resignation by Saxon is premature, arguing facts must be gathered first.

"We have to be cautious about having a knee-jerk reaction, " said Rep. Jennifer Carroll, R-Jacksonville, who chairs the Committee on Financial Institutions, which oversees OFR.

"But a full investigation needs to occur and occur now."

Sen. Bill Posey, R-Rockledge, similarly refused to weigh in on whether Saxon should stay or go. He called an immediate ban on felons getting a mortgage license "a good idea."

Rep. Carlos Lopez-Cantera, R-Miami, said Sink should bear some responsibility for the OFR's troubles.

"The CFOs responsibility is to make sure things like this don't happen, " he said. But he agreed Saxon should go. In an interview, the legislator retrieved his father's mortgage broker license.

"The license is signed by Don Saxon, " Lopez-Cantera said. "So, yes, he should resign. He's the one who signed all those licenses."

Miami Herald staff writer Rob Barry contributed to this report.