South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
SCDCA vs. JMAC Mortgage and James Berry, Individually

AGENCY:
South Carolina Department of Consumer Affairs

PARTIES:
Petitioner:
South Carolina Department of Consumer Affairs

Respondents:
JMAC Mortgage and James Berry, Individually
 
DOCKET NUMBER:
07-ALJ-30-0211-IJ

APPEARANCES:
For the Petitioner:
Charles M. Knight, Esquire

For the Respondents:
No Appearance
 

ORDERS:

CEASE AND DESIST ORDER

STATEMENT OF THE CASE

This matter is before the Administrative Law Court (“ALC”) upon a petition filed May 2, 2007 by the South Carolina Department of Consumer Affairs (“Department”) seeking, among other relief, an order from this court enjoining Respondents JMAC Mortgage and James Berry (“Respondents”) from employing, compensating, or appointing as their agent unlicensed originators in violation of the Licensing Requirements Act of Certain Brokers of Mortgages on Residential Real Property (“Act”), S.C. Code Ann. §§ 40-58-10 et seq. (Supp. 2006). The court issued a Notice of Hearing scheduling a hearing for June 7, 2007 at 10:00 a.m. The Notice of Hearing provided a deadline by which the Respondents could file a response to the Petition. Additionally, the Notice of Hearing stated that a failure to appear at the hearing may result in a finding that the party that fails to appear does not object to the relief of which notice is given.

Respondents failed to file a return to the Petition. Further, the Respondents did not appear at the scheduled hearing and did not notify the court that they would not be sending a representative to the hearing. At the hearing, the Department presented evidence in support of its Petition. After carefully weighing the evidence, the court finds that the Respondents should be permanently enjoined from further violations of the Act.


FINDINGS OF FACT

Having observed the witness and exhibits presented at the hearing and closely passed upon their credibility, the court makes the following Findings of Fact by a preponderance of the evidence.

In March 2007, an advertisement promoting Josh Collins as a “mortgage consultant” was sent to the Department. The advertisement contained a JMAC Mortgage logo and provided a contact e-mail address with a domain name of jmac.mortgage.com. Department staff investigated and confirmed that Josh Collins was not licensed as an originator for Respondents, nor has he ever been licensed. Testimony showed that the Department considers a mortgage consultant and an originator as definitionally equivalent. Respondent James Berry is a licensed mortgage broker and is the sole owner of JMAC Mortgage.

The Department sent a certified letter, return receipt requested, to Respondents dated April 4, 2006 (which contained a typographical error and should have been 2007). The letter referenced “Employing Unlicensed Originators” and identified the above suspected violation. In the letter, the Department requested that the Respondents furnish broker fee agreements and settlement statements for all loans originated by unlicensed originators. The return receipt was signed and date stamped April 5, 2007. The Respondents have not, as of this date, responded to the Department’s letter. The Department filed a petition with this court based on the above alleged violations requesting that the court issue an order:

(1) Requiring Respondent JMAC Mortgage, its agents, or assigns to cease and desist from employing, compensating, or appointing as its agents unlicensed originators in violation of the Act;

(2) Requiring Respondent JMAC Mortgage, its agents, or assigns to provide copies of all contracts, files, and documents related to mortgages that were originated by unlicensed originators on residential real estate located in South Carolina after January 13, 2005, at or through its office at 107-A Vista Oaks Drive, Lexington, South Carolina 29072 or at or through other locations;

(3) Requiring JMAC Mortgage, its agents, or assigns to refund all monies collected under any contracts entered into or mortgages originated by unlicensed originators with consumers on residential real property located in South Carolina after January 13, 2005, at or through its office at 107-A Vista Oaks Drive, Lexington, South Carolina 29072 or at or through other locations. This includes any monies paid by the lender for these contracts or mortgage to respondent;

(4) Assessing Respondent JMAC Mortgage an administrative fine of five hundred ($500.00) dollars for each violation of the Act, pursuant to S.C. Code Ann. § 40-58-80(C);

(5) Restraining the Respondent JMAC Mortgage from violating the Act;

(6) That this Order take effect immediately; and

(7) Granting such other relief as may be necessary, just, and appropriate.

CONCLUSIONS OF LAW

Based on the forgoing Findings of Fact, the court concludes the following as a matter of law.

Jurisdiction over this case is vested with the South Carolina Administrative Law Court pursuant to S.C. Code Ann. § 40-58-80 (Supp. 2006) and S.C. Code Ann. § 1-23-600(E) (Supp. 2006).

Under the South Carolina Licensing Requirements Act of Certain Brokers of Mortgages on Residential Real Property, a mortgage broker or an originator may not engage in the business of processing, placing, or negotiating a mortgage or offering to process, place, or negotiate a mortgage in this State without first being licensed with the administrator of the Department. S.C. Code Ann. § 40-58-30(A) (Supp. 2006). Additionally, a mortgage broker cannot employ or compensate an originator or appoint an originator as its agent unless the originator is licensed. S.C. Code Ann. § 40-58-30(B) (Supp. 2006). The Act further provides that “[t]he [D]epartment may examine the books and records of a mortgage broker and other specified documents to determine whether there has been substantial compliance with this chapter.” S.C. Code Ann. § 40-58-65(D) (Supp. 2006).

After carefully weighing the evidence and applying the law as discussed above, the court finds that the Department’s petition should be granted in part at this time. The Department has presented uncontested evidence that the Respondents have violated the provisions of the Licensing Requirements Act of Certain Brokers of Mortgages on Residential Real Property by employing, compensating, or appointing as their agent an unlicensed originator that has offered to process, place, or negotiate a mortgage. See S.C. Code Ann. § 40-58-30(B) (Supp. 2006) (prohibiting a person from employing, compensating, or appointing as its agent an unlicensed originator). The court finds that the Respondents have employed, compensated, or appointed as their agent at least one person who is not licensed as an originator with the Department but who has solicited borrowers and offered to accept applications for mortgages. See S.C. Code Ann. § 40-58-20(14) (Supp. 2006) (defining “originator”). Accordingly, the court finds that the Department’s petition for a cease and desist order should be granted.

The Department also requested that the Respondents be assessed an administrative fine of five hundred ($500.00) dollars for each violation of the Act. The court finds that the penalty for these violations would be more appropriately imposed by the court after the Department has had an opportunity, based upon a review of the Respondents’ contracts and files, to more precisely determine the number of violations of the Act to be sanctioned with fines. See S.C. Code Ann. § 40-58-80(C) (Supp. 2006) (authorizing administrative law judges to assess a fine of “not more than five hundred dollars for each offense or not more than five thousand dollars for the same set of transactions or occurrences” and providing that “[e]ach violation constitutes a separate offense.”).

The Department has further requested that the court order the Respondents to refund all monies collected under any contracts entered into or mortgages originated by unlicensed originators with consumers on residential real property located in South Carolina after January 13, 2005, at or through their office at 107-A Vista Oaks Drive, Lexington, South Carolina 29072 or at or through other locations. Because the statute providing for sanctions and penalties against licensees does not authorize administrative law judges to order the disgorgement of profits or refund of monies unlawfully collected by a mortgage broker, the court finds that it would not be appropriate to order such refunds as a penalty. See S.C. Code Ann. § 40-58-80 (Supp. 2006) (permitting ALJs to issue cease and desist orders, revoke licenses, increase bonds, and impose administrative fines); Calhoun Life Ins. Co. v. Gambrell, 245 S.C. 406, 411, 140 S.E.2d 774, 776 (1965) (stating that an administrative agency is a creation of the legislature and, as such, possesses only such powers as are conferred, expressly or by reasonably necessary implication); Pa. Nat’l Mut. Cas. Ins. Co. v. Parker, 282 S.C. 546, 320 S.E.2d 458 (Ct. App. 1984) (“A well-established rule of statutory construction is ‘expressio unius est exclusio alterius,’ which means that the enumeration of particular things excludes the idea of something else not mentioned.”); cf. S.C. Code Ann. § 37-6-108(E)(3) (Supp. 2006) (specifically stating in the Consumer Protection Act that the penalties of this subsection are “in addition to any other penalties provided by law or any other remedies provided by law”). However, it is unclear whether any other provision of law would authorize this court to grant such relief. Therefore, the court finds it appropriate to allow the Department to renew its request for such relief by motion properly supported by law and fact once it has obtained the information described above from the licensee.

ORDER

Based on the Findings of Fact and Conclusions of Law stated above, it is hereby

ORDERED that the Respondents JMAC Mortgage and James Berry and their agents and assigns SHALL IMMEDIATELY CEASE AND DESIST from employing, compensating, or appointing as their agents unlicensed originators in violation of the Act. It is further

ORDERED that the Respondents JMAC Mortgage and James Berry and their agents and assigns SHALL PROVIDE the Department, within thirty (30) days of the date of this order, with copies of all contracts, files, and documents related to mortgages that were originated by unlicensed originators on residential real estate located in South Carolina after January 13, 2005, at or through their office at 107-A Vista Oaks Drive, Lexington, South Carolina 29072 or at or through other locations. It is further

ORDERED that, within thirty (30) days of its receipt of the Respondents’ documents, the Department may file an affidavit with this court supporting its request for the assessment of a sum certain penalty and may renew its request for other relief by appropriately supported motion.

IT IS SO ORDERED.

_________________________________

PAIGE J. GOSSETT

Administrative Law Judge

June 28, 2007

Columbia, South Carolina


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