Borrowers Betrayed

About the Herald investigation

The Miami Herald spent eight months examining the Office of Financial Regulation, the state agency responsible for regulating the mortgage industry in Florida.

To assess the agency's performance this decade -- a period marked by Florida's largest housing boom -- reporters looked at two key functions: the licensing of mortgage professionals entering the industry each year, and the investigating and disciplining of those professionals and mortgage companies accused of breaking the law.

To do this, the newspaper carried out more than 200,000 individual background checks using an array of federal, state and county criminal databases, licensing records, civil-court filings and bankruptcy records.

To calculate the number of people who entered the mortgage industry with criminal histories, The Miami Herald entered into an agreement with the Florida Department of Law Enforcement to cross-reference several lists of mortgage professionals maintained by the OFR with the FDLE's Computerized Criminal History database, with all identifying information replaced by a unique number provided by the FDLE.

The state uses this database to determine the criminal backgrounds of mortgage professionals by submitting fingerprint cards for review. The newspaper looked at fields provided by the FDLE indicating matches based on names, dates of birth and Social Security numbers.

Because the FDLE data occasionally contain multiple Social Security numbers for individuals, the newspaper required matches on Social Security numbers to also match other fields.

The Herald found that of the 222,844 mortgage professionals who entered the industry this decade, 10,529 -- 4.7 percent -- committed crimes before or during their time in the business.

To assess the agency's policing of the industry, the newspaper examined the agency's own records, including nearly 2,000 administrative orders, hundreds of investigative files and examinations, a database containing more than 8,000 consumer complaints, and internal performance reports.

The Miami Herald conducted hundreds of interviews with fraud victims, regulators, mortgage brokers, customers, industry leaders, prisoners and prosecutors. In addition, the newspaper examined police reports, arrest affidavits, indictments and depositions, and inspected hundreds of mortgage loans -- including application files, appraisals and loan contracts.

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