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RESOLUTION URGING THE FLORIDA LEGISLATURE TO REINSTATE AND FUND THE MORTGAGE BROKERAGE GUARANTY FUND; TO STRENGTHEN LAWS RELATED TO LICENSING AND REGULATION OF MORTGAGE BROKERS; AND TO BEGIN LICENSING AND REGULATING LOAN ORIGINATORS

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WHEREAS, mortgage fraud continues to be an escalating problem, with suspicious activity reports from financial institutions increasing 31 percent from 2006 to 2007, according to the 2007 Mortgage Fraud Report by the Federal Bureau of Investigation (FBI); and
WHEREAS, in 2007, the State of Florida had the highest mortgage loan fraud rate in the U.S. for the second consecutive year; and
WHEREAS, Florida has nearly twice as many reported fraudulent loans per loan originations as the national average; and
WHEREAS, Florida was recently identified as the state with the most properties with reported material misrepresentations for loans originated during the first quarter of 2008; and
WHEREAS, during the first quarter of 2008, 24 percent of all reported fraudulent loans nationally were for properties in Florida, with nearly half of Florida�s reported mortgage fraud associated with properties in Miami-Dade and Broward Counties; and
WHEREAS, prior to 1991, Florida maintained a Mortgage Brokerage Guaranty Fund that provided a fund for people who had been victims of mortgage fraud; and

WHEREAS, Florida Legislature passed a bill discontinuing the Mortgage Brokerage Guaranty Fund in 1991; and
WHEREAS, since 1991, $24.7 million has accumulated in a fund that could be used to help victims of mortgage fraud, but there is no longer any statutory authority to disperse the funds; and
WHEREAS, most other states require mortgage brokers either to pay into a fund that reimburses mortgage fraud victims or buy insurance that pays fraud victims; and
WHEREAS, currently Florida does not have a fund or require mortgage brokers to buy insurance; and
WHEREAS, the Florida Office of Financial Regulation (OFI) has statutory oversight over mortgage brokers and lenders within the State of Florida; and
WHEREAS, a September 15, 2008 report by Florida�s Chief Inspector General�s Office found that existing Florida laws were insufficient to protect the public from fraudulent mortgage brokers, and also found that OFI was not complying with those laws that were in place governing mortgage brokers, Case No. 200807290003; and
WHEREAS, the Florida Inspector General�s report followed a Miami Herald investigative series that concluded that the State of Florida was not adequately protecting the public from unscrupulous or unlicensed mortgage brokers; and
WHEREAS, the Inspector General�s report found that since 2003, OFI had issued mortgage broker licenses to at least 588 people with criminal records that may have prohibited them from obtaining such a license; and

WHEREAS, the report also found that OFI had a practice of encouraging applicants who were denied a mortgage broker license to become loan originators, who are employed by a mortgage lender or correspondent lender and who perform many of the same tasks as mortgage brokers; and
WHEREAS, the State of Florida stopped regulating loan originators in 1991, and loan originators have gone unregulated since then in Florida,
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that this Board:
Section 1. Urges the Florida Legislature to pass legislation that would:
a. Reinstate and fund the Mortgage Brokerage Guaranty Fund with the $24.7 million currently held in reserve by the Office of Financial Regulation for payment to victims of mortgage fraud;
b. Strengthen laws related to the licensing and regulation of mortgage brokers, including requirements that brokers� licenses be suspended if they are arrested for mortgage fraud or other related fraudulent offense, and revoked if convicted of such offenses;
c. Begin to license and regulate loan originators, including requirements that originators� licenses be suspended if they are arrested for mortgage fraud or other related fraudulent offense, and revoked if convicted of such offenses.
Section 2. Directs the Clerk of the Board to transmit a certified copy of this resolution to the Governor, Senate President, House Speaker, and the Chair and Members of the Miami-Dade County State Legislative Delegation.
Section 3. Directs the County's state lobbyists to advocate for the passage of legislation as set forth in Section 1 above, and directs the Office of Intergovernmental Affairs to include this item in the 2009 State Legislative Package.