MO Supreme Court Rules Against Loan Originator

Roy Garozzo has been originating mortgages since 1985. He operated for more than two decades without being subject to state licensing requirements.

But with the passage of the Secure and Fair Enforcement Mortgage Licensing Act of 2008, all mortgage originators became subject to licensing requirements.

In Garozzo’s home state of Missouri, the Missouri Secure and Fair Enforcement Mortgage Licensing Act passed in 2010.

So Garozzo submitted his license application in July 2010 to the Missouri Department of Insurance, Financial Institutions & Professional Registration, Division of Finance.

But, as required in the federal SAFE act, Missouri law prohibits the issuance of a license to an applicant who has pleaded guilty to a felony during the prior seven years.

Garozzo had pleaded guilty in 2006 to a class C felony possession of a controlled substance and received a suspended imposition of sentence conditioned on the completion of several provisions — which he accomplished.

After his application for a license was denied, Garozzo unsuccessfully appealed to residential mortgage board then filed a petition for review in the circuit court.

The circuit court found that section 443.713(2)(a) of the Missouri SAFE act was unconstitutional as applied to Garozzo in that the statute constituted a bill of attainder — which is a legislative act that punishes someone or finds them guilty of a felony without a trial. The court also found that the law violated a ban on retrospective laws and violated Garozzo’s rights to substantive and procedural due process.

The state was ordered to issue Garozzo’s mortgage license.

Subsequently, the director of the division of finance filed an appeal with the Supreme Court of Missouri.