Facing calls for his ouster after allowing thousands of criminals to sell home loans in Florida, the state's embattled chief mortgage regulator proposed changes that would toughen the law to help keep felons out of the industry.
Office of Financial Regulation Commissioner Don Saxon issued a 40-page explanation of his agency's performance three days after a Miami Herald investigation revealed that thousands of criminals -- including some found guilty of bank robbery, cocaine trafficking and racketeering -- received licenses.
"I am concerned about the serious issues raised in the recent media investigation, " Saxon wrote. "I am committed to investigate the concerns and fully address all issues identified."
The Financial Services Commission, which oversees OFR, will address the agency's performance Tuesday. Chief Financial Officer Alex Sink, who sits on the four-person commission, called for Saxon's resignation on Sunday -- and asked for an emergency order to stop the OFR from issuing licenses to felons.
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Gov. Charlie Crist, Agriculture Commissioner Charles Bronson and Attorney General Bill McCollum, the other members of the panel, have expressed concerns about the newspaper's revelations about criminals in the industry but have yet to weigh in on Saxon's fate.
It would take votes from three of the four Cabinet members to force Saxon out.
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.
Saxon also said his agency will "research the feasibility and fiscal impact" of performing criminal background checks each time a mortgage broker license is renewed -- every two years.
The Miami Herald found dozens of brokers who were allowed to keep their licenses even after being convicted of serious financial crimes, including at least 20 who had been found guilty of mortgage fraud.
A Bonanno crime family associate renewed his license from federal prison, after a conviction for racketeering.
Saxon said his agency had no way of knowing about brokers who went on to commit crimes after getting their licenses.
The Miami Herald investigation also found that 5,306 people with criminal histories became loan originators between 2000 and 2007. Loan originators sell home loans like mortgage brokers but are not licensed and are not required to undergo criminal background checks.
Saxon proposed licensing all loan originators -- a move his agency has long resisted, according to internal e-mails and interviews with industry leaders.
Last week, in an interview with The Miami Herald, Saxon said he never tried to change the law because he didn't think it would pass. But when asked who would have opposed such legislation, he couldn't think of anyone. "I don't have any specific names, " he said.
In his report Tuesday, Saxon also promised an "audit" of any licensed mortgage broker who had a criminal record at the time of their approval.
Saxon addressed several individual cases reported by The Miami Herald, including the agency's licensing of Anthony Hollis, of Orlando. Despite convictions for car theft and passing bad checks, Hollis was granted a license to own a brokerage in 2003.
Saxon said Hollis' background check came back with a confusing alias, and his staff granted a license without further review.
Saxon also brought up the case of Donald Smith, who was sentenced to 17 years in prison for strangling his wife and dumping her body in Tampa Bay. Saxon said staff did not "timely review" information submitted by Smith and had to issue the license because an administrative deadline expired.
In the case of Richard Crowder, who went on to commit $37 million in mortgage fraud, Saxon pointed out that Crowder's grand theft and burglary charges dated back to 1984. But Crowder had no convictions since then.
The Miami Herald reported that between 2000 and 2007 only 29 applicants were denied based on their criminal records, after reviewing thousands of final orders issued by the agency. Last spring, OFR attorney Peter Fisher told two Miami Herald reporters that reviewing final orders is the only way to determine that number.
On Tuesday, Saxon said there had been a misunderstanding. In fact, his staff had persuaded 316 people with criminal records to withdraw their applications. "This process is employed by OFR, which has been dealing with an average of 20,000 applications per year, because it is time and resource efficient, " he said.
Rep. Dan Gelber, House minority leader, said Saxon should have made the proposals years ago and not waited for a newspaper investigation.
"It's a little late, " said Gelber, D-Miami Beach. "He was the guy on the ground who was supposed to see what's going on and was expected to ring the bell."
The state chapter of the American Association for Retired Persons joined the call for Saxon's resignation, saying it was "deeply disappointed in the state's lax oversight of mortgage brokers."
While Saxon is proposing reforms on the state level, a bill in Congress could impose the changes nationwide.
On Wednesday, legislation was passed by the U.S. House that includes provisions to license everyone selling home loans. The bill would require states to conduct competency exams and criminal background checks and deny a license to anyone convicted of a felony in the past seven years.