ORDERS:
FINAL ORDER AND DECISION
STATEMENT
OF THE CASE
This is a contested case brought by Petitioner
James Ira Ruff challenging the
decision of the South Carolina Department of Consumer Affairs (Department)
which denied Petitioner’s Originator License for Mortgage Broker Company
Originators based on Petitioner’s application and the Department’s evaluation
of the circumstances surrounding that application. A hearing was held before
me on July 25, 2006 at the offices of the Administrative Law Court (“ALC” or
“Court”) in Columbia, South Carolina.
FINDINGS OF FACT
Having
observed the witnesses and exhibits presented at the hearing and closely passed
upon their credibility, taking into consideration the burden of persuasion of
parties, I make the following findings of fact by a preponderance of evidence:
1. Notice
of the time, date, place and subject matter of the hearing was given to
Petitioner and Respondent.
2. Petitioner
Ruff, in completing his application, Supplemental Form O for an originator’s
license, submitted a sworn statement that all information contained in the
application is true, current and correct. Petitioner answered “YES” to the
question on the form, “Have you ever surrendered, resigned, cancelled or been
denied a professional license or other credential in any jurisdiction?” Petitioner
also answered “YES” to the question on the form, “Has any licensing or other
credentialing agency ever taken any disciplinary action against you, including
but not limited to, any warning, reprimand, suspension, probation, limitation
or revocation?”
3. Petitioner
was indefinitely suspended from the practice of law in the State of South Carolina in September, 2005. Petitioner surrendered his certificate of admission to
practice law in the State of South Carolina pursuant to Opinion No. 26044
issued by the South Carolina Supreme Court.
4. Petitioner
Ruff was suspended from the practice of law in the State of South Carolina for
conduct involving mismanagement of his trust account, mismanagement of client
funds, and improper bookkeeping and recordkeeping procedures.
5. On
February 15, 2006, the Department denied Petitioner’s Originator License for
Mortgage Broker Company Originators, citing S.C. Code Ann. 40-58-60.
CONCLUSIONS
OF LAW
Based
upon the above findings of fact, I conclude the following as a matter of law:
1. This
Court has jurisdiction over this contested case proceeding pursuant to S.C.
Code Ann. § 37-6-414 (Supp. 2005), S.C. Code Ann. § 40-58-55(A) (Supp. 2005),
and S.C. Code Ann. § 1-23-600(B) (Supp. 2005).
2. In
presiding over this contested case, this Court serves as the finder of fact and
makes a de novo determination regarding the licensing matters at issue. See S.C. Code Ann. § 1-23-600(B) (Supp. 2005); Marlboro Park Hosp. v. S.C. Dep’t of Health & Envtl. Control, 358 S.C. 573, 577-79, 595
S.E.2d 851, 853-854 (Ct. App. 2004); Brown v. S.C. Dep’t of Health &
Envtl. Control, 348 S.C. 507, 512, 560 S.E.2d 410, 413 (2002).
3. In
order to be licensed as a mortgage loan originator, an applicant must be at
least eighteen years of age and must have at least six months of experience in
residential mortgage lending or complete eight hours of continuing education
within ninety days of employment. S.C. Code Ann. § 40-58-50(D) (Supp. 2005).
Further, before issuing a license to a mortgage loan originator, the licensing
authority must find that the applicant’s “financial responsibility, experience,
character, and general fitness…are such as to command the confidence of the
community and to warrant belief that the business may be operated honestly,
fairly, and efficiently according to the purposes of this chapter [i.e.,
Chapter 58 of Title 40, which pertains to the licensing of mortgage loan
brokers].” S.C. Code Ann. § 40-58-60(A) (Supp. 2005). In determining whether
an applicant has the requisite character and fitness to be licensed as a
mortgage loan originator, the licensing authority may consider such factors as
whether the applicant has “(1) violated a provision of this chapter or an order
of the [D]epartment; (2) withheld material information in connection with an
application for a license or its renewal, or made a material misstatement in
connection with the application; [or] (3) been convicted of a felony or of an
offense involving breach of trust, moral turpitude, fraud, or dishonest dealing
within the past ten years.” See S.C. Code Ann. § 40-58-55(A) (Supp.
2005).
4. Petitioner argues that when the Department, and
therefore the Court, evaluates an application for an Originator License
for Mortgage Broker Company Originators, the
evaluation is limited to looking at the three criteria listed in S.C.
Code Ann. § 40-58-55(A). Petitioner argues that to conclude otherwise would
give the Department unfettered discretion to impose character and fitness
standards above and beyond what is contemplated in Section 40-58-55(A).
Petitioner also argues that S.C. Code Ann. § 40-58-60 (pertaining to character
and fitness) is not applicable to applicants for Mortgage Originator Licenses
because the intent behind this section is to determine the character and
fitness of an entity.
5. I
find Petitioner’s arguments to be without merit. At best, if read literally
and in a vacuum, S.C. Code Ann. § 40-58-55 would limit only the Administrative Law Court’s review. If read literally and in a vacuum, the ALC could only
review a denial of a license if the Department denied it for one or more of the
three reasons enumerated in Section 40-58-55. Any denial for any other reason
could not be reviewed under this interpretation. However, since this Court
makes a de novo determination regarding licensing matters, this Court
has jurisdiction over all licensing denials properly before this Court, and
this Court makes its own findings of fact and conclusions of law, and does so
utilizing all of the statutes available to the Department in making its
decisions.
6. As
for Petitioner’s argument that S.C. Code Ann. § 40-58-60 applies only to entities,
a reading of the section makes it clear that it applies to all applicants. See S.C. Code Ann. § 40-58-60 (Supp. 2005) (stating “…if the
department finds that the financial responsibility, experience, character, and
general fitness of the applicant, and of the members if the applicant is a copartnership, association, or limited liability company,
and of the officers and directors if the applicant is a
corporation…”) (Emphasis added.). Therefore, it is proper for the Department,
and thus this Court, to consider financial responsibility, experience,
character, and general fitness of applicants for Mortgage Originator Licenses
when determining whether licensure is proper.
7. Petitioner
Ruff was indefinitely suspended from the practice of law in the State of South Carolina in September, 2005 for conduct involving mismanagement of his trust account,
mismanagement of client funds, and improper bookkeeping and recordkeeping
procedures. This conduct is a direct indicator of Petitioner Ruff’s financial
responsibility and general fitness. Since the duties as a mortgage loan
originator involve many of the skills that Petitioner Ruff did not competently
handle in his law practice, I find that Petitioner Ruff does not possess the
financial responsibility and general fitness necessary to secure licensure as a
mortgage loan originator.
ORDER
Based upon the above Findings of Fact and Conclusions of
Law state above,
IT IS HEREBY ORDERED that Petitioner
Ruff’s application for licensure as a mortgage loan originator is DENIED.
AND
IT IS SO ORDERED.
_________________________________
John D. McLeod
Administrative
Law Judge
August 3, 2006
Columbia, South Carolina |