This
matter is before the Administrative Law Court (“ALC”) upon a petition filed May 20, 2008 by the South Carolina Department of Consumer Affairs (“Department”) seeking,
among other relief, an order from this court enjoining Respondents Lakeside
Mortgage Services, LLC, and Billy Joe Estes (“Respondents”) from employing,
compensating, or appointing as their agent unlicensed originators in violation
of the Licensing Requirements Act of Certain Brokers of Mortgage on Residential
Real Property (“Act”) (S.C. Code Ann. § 40-58-10 et seq.) (2001 & Supp.
2007). The court issued an Order dated June 4, 2008 requiring Respondent Lakeside Mortgage Services, LLC to obtain legal counsel on or before July 2, 2008, and warning that failure to comply with the Order could result in a
default. This Order was served on both Respondents at each of the following
addresses that were on file with the Department:
Respondent
Lakeside Mortgage Services, LLC failed to obtain legal counsel, and this court
entered an Order of default against Respondent Lakeside Mortgage Services, LLC
on July 16, 2008.
Additionally,
the court’s July 16, 2008 Order required Respondent Billy Joe Estes to file an Answer to the Department’s Petition no later than August 15, 2008 and warned that failure to comply with the Order could result in a default. This Order was
served on Respondent Estes at both addresses listed above. Respondent Estes failed to file an Answer, and the court entered an Order of default against Respondent Estes dated August 26, 2008. The court now finds that the Respondents should be permanently
enjoined from further violations of the Act and grants other relief sought by
Department as stated below.
BACKGROUND
On
February 14, 2008, the Department conducted a compliance review at the
Respondents’ licensed location at 54 Marina Drive, Suite 103, Lake Wylie, South Carolina 29710 to determine whether the Respondents were in compliance with the Act.
Based on the results of the review, the Department determined that the Respondents
were not complying with the Act in regard to the employment of John Franklin
and James Jeffery. The Department sent a letter to the Respondents dated March 4, 2008 regarding employing unlicensed originators, identifying the above violation
and requesting that the Respondents furnish the Department with broker fee
agreements and settlement statements for all loans originated by unlicensed originators.
The Respondents did not respond to the Department’s letter. The Department
filed a petition with this court based on the above violations, dated May 19, 2008 requesting that the court issue an order:
(1) Requiring Respondent Lakeside Mortgage Services,
LLC, their 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 Lakeside Mortgage Services,
LLC, their 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 at or through their office
at 54 Marina Drive, Suite 103, Lake Wylie, SC 29710 location.
(3) Requiring Respondent Lakeside Mortgage
Services, LLC, their 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. This includes any monies paid by the
lender for these contracts or mortgages to respondent.
(4) Assessing Respondent Lakeside Mortgage
Services, LLC, 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 Lakeside Mortgage Services,
LLC from violating the Act;
(6) That this Order [sic] take effect immediately; and
(7) Granting such other relief as may be necessary,
just and appropriate.
Petr.’s Pet. at
2-3.
DISCUSSION
Jurisdiction
over this case is vested with the South Carolina Administrative Law Court pursuant
to S.C. Code Ann. § 40-58-80 (Supp. 2007), S.C. Code Ann. § 1-23-600(A), (F) (as
amended by S.C. Act No. 334). 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. 2007). 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. 2007). 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. 2007). Based on the
Department’s Petition and the Respondents’ default, the court finds that the
Department’s Petition should be granted.
ORDER
Accordingly,
it is hereby
ORDERED that Respondent Lakeside Mortgage Services, LLC and its agents and assigns SHALL
IMMEDIATELY CEASE AND DESIST from employing, compensating, or appointing as
their agent unlicensed originators in violation of the Act. It is further
ORDERED that Respondent Lakeside Mortgage Services, LLC and its agents and assigns SHALL
PROVIDE the Department, within thirty (30) days of the date of this Order,
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 February 14, 2008, at or through their office at 54 Marina
Drive, Suite 103, Lake Wylie, South Carolina 29710 or at or through other
locations. It is further
ORDERED that the Respondent Lakeside Mortgage Services, LLC and its agents and assigns SHALL
BE ASSESSED by the Department an administrative fine of five hundred
dollars ($500.00) for each violation of the Act, not to exceed five thousand
dollars ($5,000.00).
IT
IS SO ORDERED.
________________________________
PAIGE J. GOSSETT
Administrative Law Judge
October 16, 2008
Columbia, South Carolina
