Today's Trends in Credit Regulation

Missouri Supreme Court Rules on Constitutionality of SAFE Act Provision
By Catharine S. Andricos

These days, the consumer financial services industry is abuzz with questions regarding the constitutionality of Richard Cordray’s recess appointment to lead the Consumer Financial Protection Bureau. However, in my day-to-day practice, it is rare that I have the opportunity to address issues of constitutionality. My ears perked up when I heard that a mortgage loan originator recently challenged the constitutionality of a provision of the Missouri Secure and Fair Enforcement Mortgage Licensing Act. At issue was the SAFE Act requirement that, to be eligible for a mortgage loan originator license, an individual may not have been convicted of any felony within the preceding seven years or convicted of certain types of felonies at any time prior to application. The case reached the Missouri Supreme Court, which upheld the provision as constitutional.

The challenger, Ray Garozzo, had been working as a mortgage loan originator in Missouri since 1985. In 2006 (four years before Missouri enacted its version of the SAFE Act), Garozzo pleaded guilty to a class C felony of possession of a controlled substance. After Missouri enacted the SAFE Act in 2010, Garozzo was unable to obtain a mortgage loan originator license due to his previous guilty plea. Based on these facts, Garozzo sued the Missouri Division of Finance, alleging that the SAFE Act provision was unconstitutional as applied to him. The Circuit Court of St. Louis County entered a declaratory judgment finding that the provision was an unconstitutional bill of attainder, as applied to Garozzo. The circuit court also found that the provision violated Garozzo’s rights to substantive and procedural due process, and ordered the Division of Finance to issue a license to Garozzo. The Director of the Division of Finance appealed.

The Missouri Supreme Court reversed. In reaching its conclusion, the high court first considered whether the Missouri SAFE Act provision was an unconstitutional bill of attainder. A bill of attainder is a legislative enactment that inflicts punishment on a specific person or group without trial or judicial action. Noting that the provision was not designed to be punitive, the high court concluded that the provision was not a bill of attainder because it did not inflict punishment. The high court also concluded that the provision did not apply retroactively to divest Garozzo of a vested right. The high court viewed holding a professional license as a privilege, not a vested right. Finally, the high court found no violation of Garozzo’s due process rights. The denial of a mortgage loan originator license to Garozzo based on the fact that he pleaded guilty to a felony was not a violation of a deeply rooted fundamental right implicit in the concept of ordered liberty.

So, in the end, the Missouri Supreme Court concluded that the SAFE Act provision did not violate the Missouri Constitution. I am not aware that this provision has been challenged in other states, but the fact that this provision exists in other states leaves open the possibility that a court in a different state could reach a different conclusion.

Catharine S. Andricos is a partner in the Washington, D.C., office of Hudson Cook, LLP. Catharine can be reached at 202-327-9706 or by email at

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