Suitability Deemed a Key to Mortgage Fraud

Suitability is a key point in determining what might be mortgage fraud, the chief of the Florida state attorney general's mortgage fraud task force told attendees Wednesday at the Florida Association of Mortgage Brokers annual convention in Kissimmee, Fla. R. Scott Palmer, who is also the special counsel for antitrust enforcement, said that under his office's definition of suitability, it is a violation of the state's unfair and deceptive practices act to put someone into a loan if the originator knows the borrower cannot repay it. Questioned by an audience member, Mr. Palmer added that suitability is "a developing concept" that is in its infancy and that case law will likely be developed around it. The real issue, he said, is whether the broker is aware that the information is false. Don Saxon, commissioner of the Office of Financial Regulation, said the concept could be similar to what exists in the securities industry, where (while there is no hard and fast rule) practitioners have to consider the consumer's portfolio as a whole to determine suitability.