17-003750 Office Of Financial Regulation vs. National Foreclosure Rescue Center, Inc., F/K/A Save Your Home Help Center, Inc.; R. Jason De Groot; And Carey Clements Status: Closed Recommended Order on Monday, April 9, 2018.

Summary: The foreclosure-related rescue services provided by Respondents do not fall within the purview of chapter 494, and therefore complaint should be dismissed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE OF FINANCIAL REGULATION,

Petitioner,

vs. Case No. 17 - 3750

NATIONAL FORECLOSURE RESCUE

CENTER, INC., f/k/a SAVE YOUR

HOME HELP CENTER, INC.; R. JASON

DE GROOT; AND CAREY CLEMENTS,

Respondents.

____ ___________________________/

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this

matter before W. David Watkins, the assigned Administrative Law

Judge (ALJ) of the Division of Administrative Hearings (DOAH),

on November 29, 2017 , in Deland, Florida.

APPEARANCES

For Petitioner: Scott R. Fransen, Esquire

Office of Financial Regulation

1313 N orth Tampa St reet, Suite 615

Tampa, Florida 33602

For Respondent s : R . Jason de Groot, Esquire

P ost O ffice Box 5775

Deltona, F lorida 32728 - 5775

STATEMENT OF THE ISSUE S

The threshold issue is whether, as a prerequisite to the

operation of their foreclosure - related rescue business,

Respondents were required to be licensed as mortgage brokers and

as loan originators p ursuant to chapter 494, Florida Statutes

(2017) . 1/ A secondary issue is whether Respondents solicited,

charged, received, or attempted to collect or secure payment for

loan modification services without the borrower receiving a

material benefit prior to b eing charged for services.

PRELIMINARY STATEMENT

National Foreclosure Rescue Center, Inc. , commenced

operations in 2008 or 2009 under the name Save Your Home Law

Center. It subsequently changed its name to Save Your Home Help

Center, Inc. (SYHHC) , and the n became known as National

Foreclosure Rescue Center, Inc. (National). The companyÓs home

office , where work was performed , was in Deltona, Florida.

On April 3, 2012, the Office of Financial Regulation (OFR)

issued an administrative complaint against Sa ve Your Home Help

Center, Inc., f/k/a Save Your Home Law Center, and Carey

Clements, in Administrative Proceeding No. 2996 - F - 2/11. The

complaint alleged unlicensed mortgage activity and the

collection of advance fees, and sought entry of a cease and

desis t order and an administrative fine. On November 2, 2012,

OFR entered a Final Order (OFR 2012 - 285 FOF) on the violations

charged. The Order directed Respondents to cease and desist

from any loan modification activities under chapter 494, ordered

Responden ts to refund all advance fees for any loan modification

cases in which such fees were charged, and imposed an

administrative fine of $25,000.

OFR subsequently received additional complaints about

National, and on September 8, 2016, OFR concluded an examina tion

of National for the period of Ja nuary 16, 2013 , through

February 9, 2016. It is the results of that examination that

are at issue in this proceeding.

On March 29, 2017, following its review of NationalÓs

records for the above period, OFR issued the s ubject

administrative complaint (Complaint) against National, R. Jason

de Groot, and Carey Clements. The Complaint alleged Respondents

were acting as a loan originator, mortgage broker, or mortgage

lender without a license by performing loan modification

services ; collecting advance fees ; violating the cease and

desist Order of 2012 by continuing to act as a loan originator,

mortgage broker, or mortgage lender without a license ; and for

failure to pay the administ rative fine imposed by the

2012 Order.

On J une 1, 2017, R. Jason de Groot, Esquire (de Groot) ,

filed an Election of Proceeding form with OFR, stating that

National disputed one or more of the factual allegations

contained in the Complaint. On June 30, 2017, OFR referred the

matter to DOAH for the assignment of an ALJ and the conduct of a

formal hearing pursuant to section 120.57(1), Florida Statutes.

By Order dated August 4, 2017, the final hearing was

scheduled for October 3 and 4, 2017. However, as a result of

the disruptions caused by Hurricane Irma, OFR requested a

continuance of the scheduled hearing, which was granted, and the

matter was rescheduled for hearing on November 29, 2017.

On November 22, 2017, each party filed a unilateral pre -

hearing stipulation in lieu of a joint stipulation.

The final hearing was convened as sc heduled on November 29,

2017. OFR called the following witnesses to testify on its

behalf: Greg Oaks, d irector, Division of Consumer Finance, OFR;

Cathleen Bermudez - Gutierrez, f inancial s pecialist, Bureau of

Enforcement, Division of Consumer Finance, OFR; and Alba Mayor,

f inancial a nalyst, Bureau of Enforcement, Division of Consumer

Finance, OFR. OFR offered exhibits P - 6, and P - 7A through P - 7E

into evidence. The undersigned took official recognition of

OFRÓs Exhibit P - 1, a prior F inal O rder (OFR 2012 - 285 FOF) ,

issued by OFR against Respondents in 2012.

For their part, Respondents called Edward Darrell Traylor,

an o wner of National ; and Carey Clements, Director, Officer , and

Manager of National, as its witnesses, and offer ed one exhibit

in evidence.

The two - volume T ranscript of the hearing was filed with

DOAH on December 14, 2017, and by prior agreement of the

parties, proposed orders were to be filed not later than

January 13, 2018. However, on January 11, 2018, the parti es

filed a Joint Motion for Enlargement of Time to File Proposed

Recommended Orders, which was granted, extending the time for

filing to January 26, 2018. Thereafter, the parties timely

filed P roposed R ecommended O rders, which have been carefully

consider ed in the preparation of this Recommended Order.

FINDING S OF FACT

Based upon the demeanor and credibility of the witnesses ,

other evidence presented at the final hearing , and on the entire

record of this proceeding, the following Findings of Fact 2/ are

mad e:

Background

1 . Pursuant to sections 494.0011 and 494.0012, Petitioner

is the state agency charged with the regulation and enforcement

of c hapter 494, relating to mortgage brokering, mortgage

lending, and loan origination.

2 . Respondents are charged b y administrative complaint

with: (a) offering loan modification services for compensation

without a license, in violation of chapter 494; (b) charging up -

front fees from consumers for loan modification services before

completing or performing all services included in the agreement

for loan modification services, i n violation of chapter 494;

(c) failing to obey a final order of OFR ; and (d) failure to pay

a fine imposed by OFR .

3 . Respondent National was originally named Save Your Home

Law Center, Inc. , w hen organized i n 2009. Respondent R. Jason

de Groot served as corporate president and a director of

National until February 2, 2016. Respondent Carey Clements

served as secretary and a director of National, supervised the

employees, and generally managed National throughout NationalÓs

corporate existence. Carey Clements has not held a loan

originator license pursuant to chapter 494, since December 31,

2010. At no time has National held a mortgage broker or

mortgage lender license.

4 . As explained by E dward Traylor, National was formed at

the height of the national housing market crisis in order to

assist persons whose homes were in default and at risk of

foreclosure.

5 . National operated as a Ðforeclosure - rescue consultantÑ

and provided Ðforeclosure - related rescue servicesÑ to persons

who had defaulted on their mortgage payments and whose homes

were in the foreclosure process.

6 . Section 501.1377(2)(b) , Florida Statutes, defines a

foreclosure - rescue consultant as Ða person who directly or

indirectly makes a solicitation, representation, or offer to a

homeowner to provide or perform, in return for payment of money

or other valuable consideration, foreclosure - related rescue

services. The statutory definition expressly excludes:

6. A licensed mortgage broker or mortgage

lender that provides mortgage counseling or

advice regarding residential real property

in foreclosure, which counseling or advice

is within the scope of services set forth in

chapter 494 and is provided without payment

of money or other consideration other than a

loan origination fee.

7 . ÐForeclosure - related rescue servicesÑ is defined by

section 501.1377(2)(c) as follows:

(c) ÐForeclosure - related rescue servicesÑ

means any good or service related to, or

promising assistance in conn ection with:

1. Stopping, avoiding, or delaying

foreclosure proceedings concerning

residential real property; or

2. Curing or otherwise addressing a default

or failure to timely pay with respect to a

residential mortgage loan obligation.

The Mortgage Rescue Process

8 . Edward Traylor, an owner of National, described the

steps his company took when approached by a client seeking

foreclosure - related rescue services. According to Mraylor,

the initial step was to meet face - to - face with the client an d

obtain authorization for National to talk directly to the

clientÓs lender.

9 . Next, National would contact the lender to confirm that

the client was in default on his or her mortgage. National

would only accept clients whose mortgage loans were in de fault.

Upon confirming that the client was in default, National would

determine whether the matter had been referred to the lenderÓs

loss mitigation department, foreclosure department, or assigned

to an attorney. Loans in default would be assigned to the loss

mitigation department, and if the default was not cured, then to

the foreclosure department (or attorney).

10 . Once National determined which of the lenderÓs

departments had been assigned the matter, that department was

contacted by National to det ermine the following:

• current term and interest rate of the

loan ;

• type of loan (conventional? FHA? Fannie

Mae? Freddie Mac? Home equity line of

credit?) .

• H as the loan been approved for a home

retention program trial? Has the loan

been in a home retentio n program

previously? Is the lender currently

evaluating the loan for a retention

workout program?

• Is the home in foreclosure? If so, has a

sale date been set? If so, is it possible

to postpone the sale date?

• If a sale date has been set and

postponeme nt is possible, what is required

from the borrower to postpone the sale?

What is the deadline for the borrower to

meet those requirements?

• Does the lender require a current

financial package from the borrower in

order to consider whether to offer a

Ð work out plan? Ñ

11 . If the lender was willing to consider offering the

borrower a workout plan, but required updated financial

information from the borrower, that information was gathered by

National and provided to the lender. However, not all lenders

requ ired updated financial information from borrowers as a

prerequisite to offering a workout plan.

12 . The majority of the borrowers assisted by National had

obtained their mortgages through sub - prime lending practices

with minimal loan qualifications requi red. These mortgages were

then sold to investors as Ðmortgage backed securities , Ñ usually

in blocks of a billion dollars each.

13 . With the national collapse of the housing market in

2007 and 2008, tens of thousands of borrowers in Florida

defaulted on their mortgages, resulting in their homes going

into foreclosure. Since many of these homes were bundled as

mortgage backed securities, the investors in those securities

retained banks and other institutions as servicers of those

defaulted loans. Those s ervicers included Wells Fargo,

Beneficial Finance, Merrill Lynch, and Bank of America, among

others.

14 . Each servicer established its own criteria for

offering workout plans to lenders. Depending upon the servicer,

the workout plan might include a red uction in interest rate,

reduction of principal owed, and/or waiver of fees and

penalties.

15 . The terms of the workout plans offered by the

lenders/servicers were nonnegotiable. National did not have the

ability to counteroffer the terms of a workout pl an. In other

words, if the lenderÓs workout plan was a two - percent reduction

in the interest rate, National could not negotiate a higher

percentage reduction. In essence, the workout plan was a Ðtake

it or leave itÑ offer to the borrower. However, some

lenders/servicers did include several options that the borrower

could choose from to incorporate into the workout plan. Those

options might include a reduction in the interest rate, term , or

principal deferment , or reduction to the current principal

balan ce.

16 . In those instances where the lender/servicer was

willing to offer options to avoid foreclosure, including a

workout plan, National would communicate those options to the

borrower, along with a recommendation as to the terms of the

workout plan. T hat recommendation would be based, at least in

part, on NationalÓs evaluation of the borrowerÓs financial

condition and ability as reported to National.

17 . In the same letter containing NationalÓs workout plan

recommendation, the borrower was also inform ed of the necessity

to enter into an Enrollment Agreement with National if the

borrower wished to continue receiving services from National.

That Enrollment Agreement set forth the scope of services to be

provided to the borrower by National, which includ ed four phases

of work, identified as Parts I through IV in the agreement:

PART 1:

1. SYHHC has conducted the first interview

with the Client, prepared a Client

Information Form and r eceived authorization

to speak to the Lender/Servicer and/or their

coun sel.

2. SYHHC has made initial contact with the

Lender/Servicer to determine if the above

loan qualifies for a workout program which

will avoid foreclosure and if the Lender

will accept a workout offer from the Client.

3. SYHHC has conducted a second i nterview

to compile financial information to help

Client determine if they can qualify and

what kind of offer they can make.

4. Based upon preliminary information

obtained from the Lender/Servicer and

Client, SYHHC has prepared a preliminary

proposal/off er which Client believes to be

reasonable for the Lender/Servicer to

consider.

5. SYHHC conducted a third interview with

the Client and went over the proposal offer

to make sure the Client wishes to proceed

with this offer. Client was advised that

they could present the offer themselves and

no monies were due SYHHC.

PART II:

1. SYHHC will collect and verify all

information from Client to prepare a

reasonable workout plan for Client to

present to the Lender/Servicer to avoid

foreclosure.

2. SYHHC wil l contact Client and review the

proposed workout with Client. Client may

reject any proposed workout option prepared

by Save Your Home Help Center and decide not

to proceed and cancel this Enrollment

Agreement and any monies that have been paid

for servic es rendered as outlined in Part I

shall not be refunded and this agreement is

cancelled.

3. If Client agrees and accepts in writing

the proposed workout offer a payment of

$700.00 is due and payable for services

rendered.

4. SYHHC shall submit ClientÓs file to the

Lender/Servicer no later than 30 days after

receipt of said payment.

PART III:

1. Submit ClientÓs formal workout

offer/propos al to Lender/Servicer within

30 days.

2. Weekly contact or as needed with the

Lender/Servicer updating file per

L ender/Servicer request.

3. Weekly contact or as needed with Client.

4. When ClientÓs workout/offer is received

and processed by Lender/Servicer and is in

review for consideration and advises SYHHC

that all requested documents have been

received a fee o f $795.00 is due.

5. Client understands once file is

submitted to Lender/Servicer and the above

payment is not received within (5) five days

following the request for payment the file

shall be withdrawn from the Lender/Servicer.

PART IV:

1. Continue to update file as requested

from Lender/Servicer.

2. Con ti nue providing foreclosure related

services until an offer to avoid foreclosure

has been provided to Client.

3. SYHHC will review any offer/option

provided by Lender/Ser vicer/Counsel with

Client and at the sole discretion of SYHHC

may resubmit any count er proposal on behalf

of Client until a final offer is presented

to Client. If ClientÓs [ sic ] declines the

latest offer from Lender/Servicer/Counsel

an d C lientÓs circumstances have not changed

SYHH C reserves the right not to resubmit.

4. If Client receives an offer from

Lender/Servicer including a trial period

which avoids foreclosure it is agreed that

SYHHC has completed this Agreement.

18 . No payment was due from borrower to National until

aft er the completion of each of the four phases of work.

Was National Providing Unlicensed Loan Modification Services ?

19 . Count 1 of the Complaint charges Respondents with

offering loan modification services for compensation without a

license, in violation of section 494.00255(1)(p). Specifically,

the Count alleges that ÐRespondents offered loan modification

services, which is acting as a loan originator, mortgage broker,

or mortgage lender, and which therefore requires a license from

the Office.Ñ

20 . T he referenced statutory provision prohibits Ð [a] cting

as a loan originator, mortgage broker, or mortgage lender

without a current license issued under part II or part III of

this chapter.Ñ

21 . Section 494.001(15) defines Ðloan modificationÑ to

mean a modi fication to an existing loan, and specifically does

not include a refinancing transaction.

22 . OFR conducted a review of NationalÓs operations from

the period of January 16, 2013 , through February 9, 2016,

consisting of 26 sample files, and based upon tha t review

concluded that National was providing loan modification

services.

23 . OFRÓs conclusion that National was offering loan

modification services was primarily based upon several of the

Ðbest optionsÑ letters (PetitionerÓs Ex. 7A) referenced above

th at were sent by National to borrowers. As noted, those

letters included recommendations as to the best options offered

by lenders/service rs for incorporation in a workout plan.

24 . OFR also based its conclusion on a series of

communications from National to lenders/service r s proposing a

Ðloan modification or workout optionÑ in order for the borrower

to avoid foreclosure. (PetitionerÓs Ex. 7B) .

25 . While on their face, NationalÓs letters to

lenders/servicers proposing new terms to the defaulted loans

wou ld appear to constitute offers to modify the loans, it is

more likely the letters simply identify the options of the

workout plan offered by the lender/servicer that were acceptable

to the borrower. This inference is consistent with the finding

that the t erms of the workout plans offered by lenders/servicers

were nonnegotiable. In other words, while a loan originator or

broker would have the ability to negotiate the terms and

conditions of a loan, National, as a rescue consultant could

not, since the para meters of the workout plan were established

solely by the lenders/servicers.

26 . Competent substantial evidence of record established

that Respondents were not offering loan modification services

and were not acting as loan originators or brokers.

Collect ion of Advance Fees for Loan Modification Services

27 . Count II of the Complaint alleges that Respondents

solicited, received, or attempted to collect one or more

payments, directly or indirectly, for loan modification services

before completing or perfo rming all services included in the

agreement for loan modification services.

28 . Section 494.00296 provides as follows:

(1) PROHIBITED ACTS. -- When offering or

providing loan modification services, a loan

originator, mortgage broker, or mortgage

lender may not:

* * *

(c) Solicit, charge, receive, or attempt to

collect or secure payment, directly or

indirectly, for loan modif ication services

before completing or performing all services

included in the agreement for loan

modification services. A fee may be charged

only if the loan modification results in a

material benefit to the borrower. The

commission may adopt rules to pr ovide

guidance on what constitutes a material

benefit to the borrower.

29 . Upon qualifying the borrower, Respondents provided a

contract to the borrower for services. The contract included a

standard fee of $2,495 to complete the entire process. Only

p art of the total fee was collected from the borrower at the

time Respondents were retained.

30 . Contemporaneous with signing the contract, Respondents

provided an invoice to the borrower, which showed a total due at

the bottom of the page for those future services that were to be

rendered through conclusion of the Enrollment Agreement.

31 . As noted, the first step in the process was to contact

the lender; the next step was to gather documents and

information required by the lender; the third step was to s ubmit

the information as a package to the lender; the final step was

to assist the customer with obtaining approval from the lender.

32 . The fees to be charged f or the above services were

$500 , which was due at the time the Enrollment Agreement was

execut ed. The remaining fees were $700, to be paid when the

proposed workout offer is agreed to and accepted by the

borrower; and $795, for preparing the file, updating the file,

reviewing the file with the borrower and obtaining signatures,

and submitting the file to the lender.

33 . Given the finding that Respondents were not providing

loan modification services, and were not acting as loan

originators, mortgage brokers, or mortgage lenders, section

494.00296 is inapplicable. However, even if this provision

a pplied, borrowers received a material benefit from the services

provided by National in Part 1 of the Enrollment Agreement,

since they were advised of the options available to them to

avoid foreclosure.

34 . While section 494.00296 does not apply to the

fo reclosure - related rescue services being provided by

Respondents, section 501.1377 does apply. That section sets

forth very detailed requirements and language that must be

included in all written agreements for foreclosure - related

rescue services. There i s no evidence of record that the

Enrollment Agreement used by National did not comply with those

requirements.

35 . Section 501.1377 also identifies practices that are

prohibited. The pertinent section provides:

(3) Prohibited acts. -- In the course of

off ering or providing foreclosure - related

rescue services, a foreclosure - rescue

consultant may not:

(a) Engage in or initiate foreclosure -

related rescue services without first

executing a written agreement with the

homeowner for foreclosure - related rescue

s ervices; or

(b) Solicit, charge, receive, or attempt to

collect or secure payment, directly or

indirectly, for foreclosure - related rescue

services before completing or performing all

services contained in the agreement for

foreclosure - related rescue serv ices.

36 . While it could be argued that National was in

violation of section 501.1377(3)(b) for collecting payments

before all services contained in the Enrollment Agreement were

completed, this section was not cited in the Complaint, nor does

OFR have jurisdiction to bring an enforcement action for

violation of the above provision.

Failure to Comply with Prior Final Order

37 . Count III alleges that Respondents continued to act as

loan originators, mortgage brokers, or mortgage lenders without

a licens e, and in violation of the OFRÓs Final Order in OFR Case

2012 - 285 FOF entered on November 2, 2012. Count IV alleges that

Respondents failed to pay the $25,000 fine imposed in the Final

Order.

38 . The procedural history resulting in the entry of the

pr ior Final Order reveals that the allegations contained in the

underlying Administrative Complaint were never resolved on their

merits. Rather, when Respondents failed to respond to discovery

requests propounded on them by OFR, including 13 requests for

ad missions, those requests for admissions were deemed admitted

by the ALJ, and OFRÓs motion to relinquish jurisdiction, based

upon the matters deemed admitted, was granted. The Final Order ,

upon which OFR grounds Count III and IV of the instant

Complaint, w as then entered.

39 . Respondents in the prior proceeding were represented

by A ttorney John Baum. According to Mr. TraylorÓs unrebutted

testimony, Respondents were advised by Mr. Baum that the matter

had been settled or dismissed, and that Respondents ha d won the

case. Respondents were not informed until early 2014 that, in

fact, an adverse Final Order had been entered against them, when

they received a letter from a collections agency seeking

collection of the $25,000 fine.

40 . Mr. Baum was disbarred on July 15, 2013, for reasons

not of record.

41 . The substantive allegations contained in the prior

Administrative Complaint are indistinguishable from the

allegations at bar. Both assert that Respondents were providing

loan modification services witho ut proper licensure, and that

payments were received for loan modification services before all

services had been provided.

42 . Given the findings herein that Respondents have not

been improperly providing loan modification services, and lack

of adjudicat ion on the merits that Respondents ever improperly

provided such services, OFRÓs Final Order in OFR Case 2012 - 285

FOF may not form the basis of the new allegations set forth in

Counts III and IV of the instant Complaint. 3/

CONCLUSIONS OF LAW

43 . The Divis ion of Administrative Hearings has

jurisdiction over the subject matter and parties to this

proceeding pursuant to section 120.57(1), Florida Statutes.

44 . OFR is charged with administering and enforcing the

provisions of chapter 494, and conducting exami nations and

investigations to determine whether any provision of chapter 494

has been violated . §§ 494.0011(1) and 494.0012(3), Fla. Stat.

45 . Section 494.00255 states, Ð [e] ach of the following

acts constitutes a ground for which the disciplinary actions

specified in subsection (2) may be taken against a person

licensed or required to be licensed under part II or part III of

this chapter.Ñ Part II governs mortgage brokers and loan

originators, part III governs mortgage le nders. Section

494.00255(1)(u) l ists Ðfailure to comply with, or violations of,

any provision of this chapterÑ as a ground for disciplinary

action.

46 . OFR has the burden of proving its allegations by the

clear and convincing evidentiary standard. See Ferris v.

Turlington , 510 So. 2d 2 92 (Fla. 1987). This means that the

weight of the evidence must produce in the mind of the trier of

fact a firm belief or conviction, without hesitancy, that the

allegations of the administrative complaint are true. Slomowitz

v. Walker , 429 So. 2d 797, 8 00 (Fla. 4th DCA 1983).

47 . Slomowitz stands for the proposition that Ðclear and

convincingÑ evidence:

[M] ust be found to be credible; the facts to

which the witnesses testify must be

distinctly remembered; the testimony must be

precise and explicit and t he witnesses must

be lacking in confusion as to the facts in

issue. The evidence must be of such weight

that it produces in the mind of the trier of

fact a firm belief or conviction, without

hesitancy, as to the truth of the

allegations sought to be estab lished.

429 So. 2d 797, 800.

48 . Applying Slomowitz to the facts of this case, and for

the reasons discussed below, OFR has failed to persuasively

establish, by clear and convincing evidence, the factual

allegations set forth in the Complaint.

49 . Both parties agree that this is a matter of first

impression. And the independent research of the undersigned has

failed to uncover any judicial or administrative precedent

addressing the interplay between chapter 494 and section

501.1377.

National was not En gaged in Unlicensed Loan Modification

50 . Section 494.0025(1) and (2), Florida Statutes,

Prohibited Practices, states that it is unlawful for any person

to act as a loan originator or mortgage broker in this state

without an active license. A loan origi nator is defined as

someone who Ðnegotiates or offers to negotiate the terms or

conditions of a new or existing mortgage loan on behalf of a

borrower or lender.Ñ § 494.001(17), Fla. Stat. A mortgage

broker is defined as a person who is Ðconducting loan o riginator

activities through one or more licensed loan originators

employed by the mortgage broker.Ñ § 494.001(22), Fla. Stat.

51 . It is undisputed that neither National nor any of its

controlling persons or employees were licensed by OFR in any

capacit y. The evidence established that National, through its

employees, sent correspondence to borrowers and to lenders (or

lenders Ó agents) that requested substantive changes to mortgage

terms, and advised borrowers whether to accept either

modification or res tructure of their mortgage. NationalÓs

standard letter to lenders stated a re - capitulation of current

mortgage terms and proposed revised terms that, in most cases,

included reducing the rate of interest, extending the

amortization, and reducing the princ ipal balance. Therefore,

argues OFR, NationalÓs employees were acting as loan

originators, and, ipso jure , as mortgage brokers.

52 . Contrary to OFRÓs assertion, the evidence established

that National was not engaged in negotiating mortgage

modifications. Rather, the credible evidence of record

established that the lenders/servicers set the terms and

conditions for changes to mortgages they owned, and Respondents

were merely fitting their clients into the lenderÓs

predetermined programs that established w hat changes were

acceptable to the lender. National would discuss with the

lenders/servicers the availability of workout plans and the

various options that might be offered to borrowers to stop,

avoid, or delay foreclosure proceedings. After evaluating a

clientÓs financial condition and the existing terms of the loan

at issue, National would then make a recommendation to the

client as to which of the workout plan options would best work

for the client. The correspondence National sent to

lenders/servicer s that requested changes to mortgage terms

merely served to identify the specifics of the workout plan that

were acceptable to the borrower.

There is N o Conflict Between Chapter 494 and Section 501.1377

53 . The Legislative Findings and Intent of section

501.1377 provide as follows:

(1) Legislative findings and intent. -- The

Legislature finds that homeowners who are in

default on their mortgages, in foreclosure,

or at risk of losing their homes due to

nonpayment of taxes may be vulnerable to

fraud, decepti on, and unfair dealings with

foreclosure - rescue consultants or equity

purchasers. The intent of this section is

to provide a homeowner with information

necessary to make an informed decision

regarding the sale or transfer of his or her

home to an equity p urchaser. It is the

further intent of this section to require

that foreclosure - related rescue services

agreements be expressed in writing in order

to safeguard homeowners against deceit and

financial hardship; to ensure, foster, and

encourage fair dealing in the sale and

purchase of homes in foreclosure or default;

to prohibit representations that tend to

mislead; to prohibit or restrict unfair

contract terms; to provide a cooling - off

period for homeowners who enter into

contracts for services related to s aving

their homes from foreclosure or preserving

their rights to possession of their homes;

to afford homeowners a reasonable and

meaningful opportunity to rescind sales to

equity purchasers; and to preserve and

protect home equity for the homeowners of

th is state.

54 . Section 501.1377(2)(b), which defines Ðforeclosure -

rescue consultant , Ñ specifically exempts from that definition

Ð [a] licensed mortgage broker or mortgage lender that provides

mortgage counseling or advice regarding residential real

propert y in foreclosure, which counseling or advice is within

the scope of services set forth in chapter 494 and is provided

without payment of money or other consideration other than a

loan origination fee.Ñ

55 . In specifically exempting mortgage brokers or l enders

from the definition of foreclosure rescue consultant, the

legislature implicitly recognized that foreclosure - related

rescue services might be provided by mortgage brokers or

lenders, but that foreclosure - related rescue services could also

be provide d by persons or entities other than mortgage brokers

or lenders. Indeed, there are six additional categories of

persons or entities that are also excluded from the definition

of foreclosure - rescue consultant , 4/ but none of those other

six categories apply to National. If the legislature did not

wish to sanction the provision of foreclosure - related rescue

services by entities like National, they would have required

that such services be provided only by the seven categories of

entities excluded by the defi nition of foreclosure - rescue

consultant.

56 . As found, neither National nor the two other

Respondent s were acting as mortgage brokers, and therefore the

foreclosure - related rescue services they were providing do not

fall within the purview of chapter 494. Rather, given the

evidence adduced at hearing, section 501.1377 is the controlling

statute. And while there may be some overlap in the entities

regulated by chapter 494 and section 501.1377, in this instance ,

Respondents are not subject to regulation pu rsuant to

chapter 494.

57 . Given the finding that Respondents are not subject to

regulation under chapter 494, Count II of the Complaint alleging

improper advance collection of fees, in violation of s ection

494.00296, also must fail.

Count III is N ot Su pported by the Evidence

58 . Count III of the Complaint alleges that Respondents

continued to act as loan originators, mortgage brokers, or

mortgage lenders without a license, and in violation of the

OFRÓs Final Order in OFR Case 2 012 - 285 FOF entered on

N ovember 2, 2012.

59 . For the reasons set forth above, Count III is not

supported by the competent substantial evidence of record.

Respondents are not in violation of chapter 494, and therefore

there can be no continuing violation of the prior Final Or der.

Count IV is N ot Properly B efore this Tribunal

60 . Count IV alleges that Respondents failed to pay the

$25,000 fine imposed in the Final Order.

61 . While through unfortunate circumstances a Final Order

was entered finding Respondents in violation of chapter 494 and

imposing a fine, the undersigned declines the invitation to

enforce the prior Final Order in the context of this proceeding.

62 . The cited statutory provision authorizing OFR to

pursue the $25,000 fine in this proceeding is section

494.00 255(1)(x), which allows OFR to impose administrative

penalties for Ð [f] ailure to timely pay any fee, charge, or fine

imposed or assessed pursuant to this chapter or related rules.Ñ

However, this provision applies only to Ða person licensed or

required to be licensed under part II or part III of this

chapter.Ñ As found, Respondents are not required to be licensed

pursuant to chapter 494.

63 . Should OFR wish to seek enforcement of the prior Final

Order, the proper recourse is through the process establish ed in

section 120.69.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Office of Financial Regulation

enter a f inal o rder dismissi ng Administrative Complaint

No. 69868.

DONE AND ENTERED this 9 th day of April , 2018 , in

Tallahassee, Leon County, Florida.

S

W. DAVID WATKINS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9 675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 9 th day of April , 2018 .

ENDNOTE S

1/ Statutory references herein are to the 2017 version of the

Florida Statutes.

2 / The majority of the relevant facts are not in dispute

3 / Notwithstanding this finding, OFR is free to pursue

enforcement of its Final Order in Case No. OFR Case 2012 - 285 FOF

through any appropriate means, in cluding as set forth in

section 120.69.

4 / The other six c ategories of persons and entities excluded

from the definition of foreclosure - rescue consultant are:

1. A person excluded under s. 501.212.

2. A person acting under the express

authority or written approval of the United

States Department of Housing an d Urban

Development or other department or agency of

the United States or this state to provide

foreclosure - related rescue services.

3. A charitable, not - for - profit agency or

organization, as determined by the United

States Internal Revenue Service under

s. 501(c)(3) of the Internal Revenue Code,

which offers counseling or advice to an owner

of residential real property in foreclosure

or loan default if the agency or organization

does not contract for foreclosure - related

rescue services with a for - profit lender or

person facilitating or engaging in

foreclosure - rescue transactions.

4. A person who holds or is owed an

obligation secured by a lien on any

residential real property in foreclosure if

the person performs foreclosure - related

rescue services in c onnection with this

obligation or lien and the obligation or lien

was not the result of or part of a proposed

foreclosure reconveyance or foreclosure -

rescue transaction.

5. A financi al institution as defined in

s. 655.005 and any parent or subsidiary of

the financial institution or of the parent or

subsidiary.

* * *

7. An attorney licensed to practice law in

this state who provides foreclosure rescue -

related services as an ancillary matter to

the attorneyÓs representation of a homeowner

as a client.

C OPIES FURNISHED:

Scott R. Fransen, Esquire

Office of Financial Regulation

Suite 615

1313 North Tampa Street

Tampa, Florida 33602

(eServed)

Carey E. Clements

1155 Private Road

Deland, Florida 32720

R . Jason de Groot, Esquire

Post Office Box 5775

Delton a, Florida 32728 - 5775

(eServed)

Drew J. Breakspear, Commissioner

Office of Financial Regulation

200 East Gaines Street

Tallahassee, Florida 32399 - 0350

(eServed)

Anthony Cammarat a , General Counsel

Office of Financial Regulation

The Fletcher Building, S uite 118

200 East Gaines Street

Tallahassee, Florida 32399 - 0370

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recom mended Order should be filed with the agency that

will issue the Final Order in this case.