Florida State Law Assignment 2 of 2

Please read the below case study and respond with the answers to the multiple choice questions that follow in the Comments Section.

Hugh G Pain is a recent college graduate and after going through a simple interview process, has just gone to work for I-always-close Mortgage Company.  He was desperate to get a job, any job, and this small office promised him that he’d be making six figures within six months.  As the first college grad in his family, Hugh was anxious to prove himself and start paying back those college loans.

He had some concerns about the disorder in the shop on his first day but he told himself to just ignore it and focus on learning the business.  His manager told him he would be making loan modification loans for people, and would be helping them get out of bad situations as a result of the terrible economy.

After spending 20 minutes with his manager, Julian, going over the application, he went back to his desk and started answering the phone.  Julian told him he would eventually have to get a license but he wanted to train him first.  That sounded like a good idea to Hugh.

After several weeks training with the company, Hugh is approached by a woman yielding a flyer for I-always-close Mortgage Company advertising ARM mortgages, showing guaranteed interest rates as low as 3%, no matter your situation.  The woman explains her situation and said she is very interested in hearing more about these ARM Mortgages.

Hugh comes on a little strong and promises that he can get her a fixed rate of 3% no problem.  The lady is stunned considering how much lower this rate was from her previous quote at a different mortgage office.  A little curious as to why this office is offering such a low rate she asks Hugh what ARM stands for.  Hugh explains to her that ARM stands for Awesome Rate Mortgage, but tells her she will be receiving a fixed rate.

The woman cannot believe her good luck and decides to move along with Hugh and the Awesome Rate Mortgage.  She asks Hugh how soon they will be able to close.  Hugh tells her that he needs her to fill out a few forms to get her moving in the right direction.  He hands the forms over to her and says as soon as they are filled out he will get the ball rolling. 

When the woman looks down at the forms she notices that they are mostly blank.  Wanting to make sure that there wasn’t a mistake she tells Hugh the forms are blank and asks him what they are used for.  Hugh tells her not to worry about the blanks as he will fill them in for her later and assures her this is standard procedure.  Satisfied with Hugh’s response the woman signs the blank documents and turns them back over to Hugh who says he will get moving on this and that they will be at the closing table in no time at all.

1. Is there anything wrong with Hugh helping the lady achieve her mortgage loan?

A.    No, Hugh is employed at a valid company, therefore he is allowed to help her

B.    No, Florida has no licensing requirements

C.   Yes, Hugh is unlicensed, therefore cannot work on any loans

D.   Yes, Hugh’s company is not licensed, therefore no one at I-always-close can work on loans

2. Is there anything wrong with Hugh offering this Awesome Rate Mortgage?

A.    Yes, there is no such product known as an Awesome Rate Mortgage

B.    No, Hugh may have misquoted the product name, but is still able to offer her what he promised

C.   Yes, he is operating without a license, so shouldn’t be quoting products to anyone

D.   Both A and C

3. Is I-always-close allowed to distribute advertisements that offer a guaranteed interest rate of 3%?

A.    No, it is a violation to advertise a mortgage loan at an expressed interest rate unless the advertisement states that the rate could change or not be available at commitment or closing

B.    Yes, Florida has no laws regarding advertisements

C.   Yes, it is their company discretion to advertise products at certain rates

D.   No, they are only allowed to distribute advertisements that offer adjustable rates

4. Is there anything wrong with Hugh giving the lady blank forms to sign?

A.    No, this is an acceptable practice

B.    Yes, while Florida has no exact language prohibiting this practice, it definitely falls under the umbrella of scheming to defraud

C.   No, Florida allows blank documents

D.   Both A and B

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