Chapter 160
2009 -- H 5704 SUBSTITUTE A
Enacted 07/16/09
A N A C T
RELATING TO FINANCIAL INSTITUTIONS
Introduced By: Representative Brian P. Kennedy
Date Introduced: February 26, 2009
It is enacted by the
General Assembly as follows:
SECTION 1. Sections 19-14-1, 19-14-3, 19-14-7, 19-14-9,
19-14-22 and 19-14-23 of the
General Laws in Chapter
19-14 entitled "Licensed Activities" are hereby amended to read as
follows:
19-14-1.
Definitions. -- For purposes of this chapter and
Unless otherwise specified, the
following terms shall have the following meanings throughout chapters 14.1, 14.2, 14.3, 14.4,
14.6, 14.8 and 14.10 and 14.7 of this
title:
(1) "Check"
means any check, draft, money order, personal money order, or other
instrument for the transmission or payment of money. For the
purposes of check cashing,
travelers checks or foreign denomination instruments shall not
be considered checks. "Check
cashing" means providing currency for checks;
(2) "Deliver"
means to deliver a check to the first person who in payment for the check
makes or purports to make a remittance of or against the
face amount of the check, whether or not
the deliverer also charges a fee in addition to the face
amount, and whether or not the deliverer
signs the check;
(3) "Electronic
money transfer" means receiving money for transmission within the
United States or to locations abroad by any means
including, but not limited to, wire, facsimile or
other electronic transfer system;
(4) (i) "Lender" means any
person who makes or funds a loan within this state with the
person's own funds, regardless of whether the person is the
nominal mortgagee or creditor on the
instrument evidencing the loan;
(ii) A loan is made or
funded within this state if any of the following conditions exist:
(A) The loan is secured
by real property located in this state;
(B) An application for
a loan is taken by an employee, agent, or representative of the
lender within this state;
(C) The loan closes
within this state;
(D) The loan
solicitation is done by an individual with a physical presence in this state;
or
(E) The lender
maintains an office in this state.
(iii) The term
"lender" shall also include any person engaged in a transaction
whereby
the person makes or funds a loan within this state using
the proceeds of an advance under a line
of credit over which proceeds the person has dominion
and control and for the repayment of
which the person is unconditionally liable. This
transaction is not a table funding transaction. A
person is deemed to have dominion and control over the
proceeds of an advance under a line of
credit used to fund a loan regardless of whether:
(A) The person may,
contemporaneously with or shortly following the funding of the
loan, assign or deliver to the line of credit lender one
or more loans funded by the proceeds of an
advance to the person under the line of credit;
(B) The proceeds of an
advance are delivered directly to the settlement agent by the line
of credit lender, unless the settlement agent is the
agent of the line of credit lender;
(C) One or more loans
funded by the proceeds of an advance under the line of credit is
purchased by the line of credit lender; or
(D) Under the
circumstances as set forth in regulations adopted by the director or the
director's designee pursuant to this chapter;
(5)
"Licensee" means an any
person entity licensed under this chapter;
(6) "Loan"
means any advance of money or credit including, but not limited to:
(i)
Loans secured by mortgages;
(ii) Insurance premium
finance agreements;
(iii) The purchase or
acquisition of retail installment contracts or advances to the holders
of those contracts;
(iv)
Educational loans;
(v) Any other advance
of money; or
(vi)
Any transaction such as those commonly known as "pay day
loans," "pay day
advances," or "deferred presentment loans," in
which a cash advance is made to a customer in
exchange for the customer's personal check, or in exchange for
the customer's authorization to
debit the customer's deposit account, and where the parties
agree either that the check will not be
cashed or deposited, or that customer's deposit account will
not be debited, until a designated
future date.
(7) "Loan
broker" means any person who, for compensation or gain, or in the
expectation
of compensation or gain, either directly or indirectly,
solicits, processes, negotiates, places or sells
a loan within this state for others in the primary
market, or offers to do so. A loan broker shall
also mean any person who is the nominal mortgagee or
creditor in a table funding transaction. A
loan is brokered within this state if any of the following
conditions exist:
(i)
The loan is secured by real property located in this state;
(ii) An application for
a loan is taken or received by an employee, agent or representative
of the loan broker within this state;
(iii) The loan closes
within this state;
(iv)
The loan solicitation is done by an individual with a physical presence
in this state;
or
(v) The loan broker
maintains an office in this state.
(8) "Personal
money order" means any instrument for the transmission or payment of
money in relation to which the purchaser or remitter
appoints or purports to appoint the seller as
his or her agent for the receipt, transmission, or
handling of money, whether the instrument is
signed by the seller or by the purchaser or remitter or some
other person;
(9) "Primary
market" means the market in which loans are made
to borrowers by lenders,
whether or not through a loan broker or other conduit;
(10) "Principal
owner" means any person who owns, controls, votes or has a beneficial
interest in, directly or indirectly, ten percent (10%) or more
of the outstanding capital stock
and/or equity interest of a licensee;
(11) "Sell"
means to sell, to issue, or to deliver a check;
(12) "Small
loan" means a loan of less than five thousand dollars ($5,000), not
secured
by real estate, made pursuant to the provisions of
chapter 14.2 of this title;
(13) "Small loan
lender" means a lender engaged in the business of making small loans
within this state;
(14) "Table
funding transaction" means a transaction in which there is a
contemporaneous advance of funds by a lender and an assignment by the
mortgagee or creditor of
the loan to the lender;
(15) "Check
casher" means a person or entity that, for compensation, engages, in whole
or in part, in the business of cashing checks;
(16) "Deferred
deposit transaction" means any transaction such as those commonly
known as "pay-day loans," "pay-day
advances," or "deferred presentment loans" in which a cash
advance is made to a customer in exchange for the customer's
personal check or in exchange for
the customer's authorization to debit the customer's
deposit account and where the parties agree
either that the check will not be cashed or deposited, or
that the customer's deposit account will
not be debited until a designated future date;
(17) "Insurance
premium finance agreement" means an agreement by which an insured,
or prospective insured, promises to pay to an insurance
premium finance company the amount
advanced or to be advanced, under the agreement to an insurer
or to an insurance producer, in
payment of a premium or premiums on an insurance contract or
contracts, together with interest
and a service charge, as authorized and limited by this
title;
(18) "Insurance
premium finance company" means a person engaged in the business of
making insurance premium finance agreements or acquiring
insurance premium finance
agreements from other insurance premium finance companies;
(19) "Simple
interest" means interest computed on the principal balance outstanding
immediately prior to a payment for the actual number of days
between payments made on a loan
over the life of a loan;
(20) "Nonprofit
organization" means a corporation qualifying as a 26 U.S.C. section
501(c)(3) nonprofit
organization, in the operation of which no member, director, officer, partner,
employee, agent, or other affiliated person profits
financially other than receiving reasonable
salaries if applicable;
(21) "Mortgage
loan originator" means a natural person employee of a lender or loan
broker that is required to be licensed under
a provisional employee as defined herein, and who for
or with the expectation of a fee,
commission or other valuable consideration (i)
advises an applicant about different loan products
and their terms and conditions in order to permit the
applicant to select and apply for a particular
loan product, or (ii) advises persons in completing loan
applications by informing the applicant
regarding the benefits, terms and/or conditions of a loan
product or service, or (iii) negotiates or
offers to negotiate the making of a loan with an applicant.
A person whose activities are
ministerial and clerical is not acting as a mortgage loan
originator has the same meaning
set forth
in subdivision 19-14.10-3(6);
(22) "Mortgage
loan" means a loan secured in whole or in part by real property located
in this state;
(23) "Loan
solicitation" shall mean an effectuation, procurement, delivery and offer,
and
advertisement of a loan. Loan solicitation also includes providing
or accepting loan applications
and assisting persons in completing loan applications
and/or advising, conferring, or informing
anyone regarding the benefits, terms and/or conditions of a
loan product or service. Loan
solicitation does not include loan processing or loan underwriting
as defined in this section. Loan
solicitation does not include telemarketing which is defined for
purposes of this section to mean
contacting a person by telephone with the intention of
collecting such person's name, address and
telephone number for the sole purpose of allowing a mortgage
loan originator to fulfill a loan
inquiry;
(24) "Loan
processing" "Processes" shall mean, with respect
to a loan, any of a series of
acts or functions including the preparation of a loan
application and supporting documents
performed by a person which leads to or results in the
acceptance, approval, denial, and/or
withdrawal of a loan application, including, without limitation,
the rendering of services
including loan underwriting, taking or receiving loan
applications, obtaining verifications, credit
reports or appraisals, communicating with the applicant
and/or the lender or loan broker, and/or
other loan processing and origination services for
consideration by a lender or loan broker. Loan
processing does not include the following:
(A) The providing of
title services, including title searches, title examinations, abstract
preparation, insurability determinations, and the issuance of
title commitments and title insurance
policies, loan closings, preparation of loan closing documents
when performed by or under the
supervision of a licensed attorney, licensed title agency or
licensed title insurance company;
Providing loan closing services;
(B) Rendering of credit
reports by an authorized credit reporting agency; and
(C) Rendering of
appraisal services.
(25) "Loan
underwriting" shall mean a loan process that involves the analysis of risk
with respect to the decision whether to make a loan to a
loan applicant based on credit,
employment, assets, and other factors including evaluating a
loan applicant against a lender's
various lending criteria for creditworthiness, making a
determination for the lender as to whether
the applicant meets the lender's pre-established credit
standards and/or making a recommendation
regarding loan approval;
(26) "Negotiate
a loan Negotiates" shall mean, with respect to a loan,
to confer directly
with or offer advice directly to a loan applicant or
prospective loan applicant for a loan product or
service concerning any of the substantive benefits, terms, or
conditions of the loan product or
service;
(27) "Natural
person employee" shall mean any natural person performing services as a
bona-fide employee for a person licensed under the provisions
of
section 19-14-1, et. seq., in return for a salary, wage, or
other consideration, where such salary,
wage, or consideration is reported by the licensee on a
federal form W-2 payroll record. The term
does not include any natural person or business entity
performing services for a person licensed
under the provisions of
consideration, where such salary, wage, or consideration is
reported by the licensee on a federal
form 1099;
(28) "Bona-fide
employee" shall mean an employee of a licensee who works under the
oversight and supervision of the licensee;
(29) "Oversight
and supervision of the licensee" shall mean that the licensee provides
training to the employee, sets the employee's hours of work,
and provides the employee with the
equipment and physical premises required to perform the
employee's duties;
(30) "Operating
subsidiary" shall mean a majority-owned subsidiary of a financial
institution or banking institution that engages only in
activities permitted by the parent financial
institution or banking institution;
(31) "Provisional
employee" means a natural person who, pursuant to a written
agreement between the natural person and a wholly owned
subsidiary of a financial holding
company, as defined in The Bank Holding Company Act of 1956,
as amended, a bank holding
company, savings bank holding company, or thrift holding
company, is an exclusive agent for the
subsidiary with respect to mortgage loan originations, and the
subsidiary: (a) holds a valid loan
broker's license and (b) enters into a written agreement with
the director or the director's designee
to include:
(i)
An "undertaking of accountability" in a form prescribed by the
director or the
director's designee, for all of the subsidiary's exclusive
agents to include full and direct financial
and regulatory responsibility for the mortgage loan
originator activities of each exclusive agent as
if said exclusive agent was an employee of the
subsidiary;
(ii) A business plan to
be approved by the director or the director's designee, for the
education of the exclusive agents, the handling of consumer
complaints related to the exclusive
agents, and the supervision of the mortgage loan origination
activities of the exclusive agents;
(iii) A restriction of
the exclusive agents' mortgage loan originators' activities to loans to
be made only by the subsidiary's affiliated bank; and
(32) [Effective
December 31, 2008; see contingent effective date note.] "Multi-state
licensing system" means a system involving one or
more states, the
the licensing, application, reporting and payment
processes, by electronic or other means, for
mortgage lenders and loan brokers, and other licensees
required to be licensed under this chapter.
(33) "Negative
equity" means the difference between the value of an asset and the
outstanding portion of the loan taken out to pay for the asset,
when the latter exceeds the former
amount.
(34) "Loan
closing services" means providing title services, including title
searches, title
examinations, abstract preparation, insurability determinations,
and the issuance of title
commitments and title insurance policies, conducting loan
closings, and preparation of loan
closing documents when performed by or under the supervision
of a licensed attorney, licensed
title agency, of licensed title insurance company.
19-14-3.
Application for license. [Effective December 31,
2008.] Application for
license. -- (a)
The application for a license shall be in the form
prescribed by the director and
shall contain the name and address or addresses where the
business of the applicant is located and
if the applicant is a partnership, association,
corporation or other form of business organization,
the names and addresses of each member, director and
principal officer thereof or any individual
acting in the capacity of the manager of an office location.
Such application shall also include a
description of the activities of the applicant, in such detail
and for such periods as the director
may require, as well as such further information as the
director may require. The director may
require a background investigation of each applicant for a
license by means of fingerprint checks
pursuant to
of investigation, or other agency as determined by the
director for state and national criminal
history record checks. If the applicant is a partnership,
association, corporation or other form of
business organization, the director may require a background
investigation by means of
fingerprint checks on each member, director or principal officer
of such applicant or any
individual acting in the capacity of the manager of an office
location. The director will determine
by rule those items of information appearing on a
criminal records check that will constitute
disqualifying information and therefore render the applicant
ineligible for licensing under this
chapter in accordance with the provisions of section 19-14-7.
Receipt of criminal history record
information by a private entity is prohibited. Each application
for a license shall be accompanied
by an investigation fee. The applicant at the time of
making application shall pay to the director
or the director's designee the sum of one half (1/2) of
the annual license fee as a fee for
investigating the application. If the application for license is
approved, the applicant shall pay a
fee equal to the annual license fee as provided in this
chapter. The license shall be continuous and
the license fee shall cover the period through December
31 of each year. Any The annual
license
fee for any
application approved after October November 1 of any given year shall
satisfy the
annual license fee requirement through the end of the next
succeeding calendar year ending
December 31.
pay one half (1/2) of the annual license fee
for the period ending December 31 of
that year as well as a full annual license fee for the
succeeding calendar year ending December
31st. The
director or the director's designee is authorized to participate in a
multi-state licensing
system for licensees. The director may establish
requirements for participation by an applicant for
a license or a person licensed under this chapter. Any
such requirements that may be established
by the director shall be published on the website of the
department of business regulation. Upon
implementation, participation by an applicant for a license or by a
person licensed under the
provisions of this chapter shall be mandatory. The applicant may
be required to an additional fee
for a license or other participation in such multi-state
licensing system.
(b) [Reserved].
(c) [Reserved].
(d) Any license issued
under the provisions of former section 5-66-2 shall remain in full
force and effect until its expiration and shall be subject
to the provisions of this chapter.
(e) An applicant for
issuance of a mortgage loan originator license shall file with the
director or the director's designee evidence acceptable to the
director or the director's designee
that said applicant has complied with the provisions of
sections 19-14.10-5, 19-14.10-7 and 19-
14.10-8:.
(1) Successfully
completed, during the two (2) years immediately preceding the date of
application ,
an entry level training course relative to state and federal statutes, rules
and
regulations applicable to loans, mortgages, real property, deeds
and contracts consisting of a
minimum of twenty-four (24) hours with an approved nationally
recognized training facility or
other facility including in-house programs, as determined
by the director or the director's
designee; or
(2) If the applicant
has been employed as a mortgage loan originator for five (5) or more
years as of January 1, 2009 in this state, the applicant
must file with the director or the director's
designee that applicant has completed a minimum of twelve (12)
hours of education relative to
state and federal statutes, rules and regulations
applicable to loans, mortgages, real property,
deeds and contracts during the two (2) years immediately
preceding January 1, 2009, by an
approved nationally recognized training facility or other
facility including in-house programs, as
determined by the director or the director's designee; or
(3) If the applicant
has been employed as a loan officer of a financial institution, credit
union, bank organized under the laws of another state or
bank organized under the laws of the
United States for between one and five (5) years immediately
preceding applicant's employment
as a mortgage loan originator, applicant shall file an
application for a mortgage loan originator
license on or before his or her date of employment as a
mortgage loan originator and shall file
evidence acceptable to the director or the director's designee
that applicant has completed a
minimum of twenty-four (24) hours of education relative to
state and federal statutes, rules and
regulations applicable to loans, mortgages, real property, deeds
and contracts within one hundred
twenty (120) days of his or her employment as a mortgage
loan originator by an approved
nationally recognized training facility or other facility
including in-house programs, as
determined by the director or the director's designee; or
(4) If the applicant
has been employed as a loan officer of a financial institution, credit
union, bank organized under the laws of another state or
bank organized under the laws of the
United States for five (5) years immediately preceding applicant's
employment as a mortgage
loan originator, applicant shall file an application for a
mortgage loan originator license on or
before his or her date of employment as a mortgage loan
originator and shall file evidence
acceptable to the director or the director's designee that
applicant has completed a minimum of
twelve (12) hours of education relative to state and federal
statues, rules and regulations
applicable to loans, mortgages, real property, deeds and
contracts within twelve (12) months of
his or her employment as a mortgage loan originator by an
approved nationally recognized
training facility or other facility including in-house
programs, as determined by the director or the
director's designee; or
(5) The requirements
that mortgage loan originators obtain licenses as set forth by
section 19-14-2 shall be effective January 1, 2009 however,
all mortgage loan originators shall
register with the department by March 31, 2008 on a form to be
prescribed by the director or the
director's designee along with a registration fee of the same
amount as provided for in section 19-
14-4(8).
(f) The application
for a lender, or loan broker license shall include an application for a
license for each mortgage loan originator of the applicant.
19-14-7.
Issuance or denial of license. -- (a) Upon the filing of a completed application,
the payment of fees and the approval of the bond, the
director or the director's designee shall
commence an investigation of the applicant. The director or
the director's designee shall issue and
deliver approve the license applied for in accordance
with the provisions of this chapter at the
location specified in the application if he or she shall find:
(1) That the financial
responsibility, experience, character, and general fitness of the
applicant, and of the applicant's members and of the applicant's
officers, including the designated
manager of record of a licensed location, if the applicant is
a partnership, limited liability
company or association, or of the officers including the
designated manager of record of a
licensed location, and directors and the principal owner or
owners of the issued and outstanding
capital stock, if the applicant is a corporation, are such as
to command the confidence of the
community and to warrant belief that the business will be
operated honestly, fairly, and efficiently
within the purposes of this title; and
(2) That allowing the
applicant to engage in business will promote the convenience and
advantage of the community in which the business of the
applicant is to be conducted.
(b) A license provided
pursuant to this title shall remain in full force and effect until it is
surrendered by the licensee or revoked or suspended as provided
by law.
(c) If the director or
the director's designee rejects an application for a license, he or she
shall notify the applicant, by certified mail, of the
denial, the reason(s) supporting the denial and
shall afford the applicant the opportunity for a hearing
within a reasonable time period to show
cause why the license should not be denied. When an application
for a license is denied by the
director or the director’s designee or withdrawn by the
applicant, the director or the
director's
designee shall return to the applicant the bond, but shall
retain the investigation fee to cover the
costs of investigating the application. The director or the
director's designee shall approve or deny
every application for license under this section within
sixty (60) days from the date the
application is deemed by the director or the director's designee
to be completed. Upon written
request of the applicant, the director or the director's
designee shall advise the applicant whether
the applicant's application for any such license is
complete and if not, the reason why such
application is not complete.
(d) Any applicant or
licensee aggrieved by the action of the director or the director's
designee in denying a completed application for a license
shall have the right to appeal the action,
order, or decision pursuant to chapter 35 of title 42.
19-14-9. Contents
of license -- Posting. -- The license or branch certificate shall
contain
any information that the director or the director's
designee shall require, including the type of
activity authorized. The With the exception of
licensed mortgage loan originators, the license or
branch certificate shall be kept conspicuously posted in the
place of business of the licensee. The
mortgage loan originator license must be carried by each
mortgage loan originator and presented,
upon request to each applicant or potential applicant with
whom the mortgage loan originator
transacts business in an in-person meeting. When dealing with an applicant or potential applicant
for a mortgage loan or when dealing with any person
providing settlement services (as defined in
the Real Estate Settlement Procedures Act, as amended, or
the regulations promulgated
thereunder from time to time), other than in an in-person meeting, the a mortgage loan originator
shall disclose the mortgage loan originator's nationwide
mortgage licensing system unique
identification number license
number, upon request to the applicant or potential applicant and the
fact that the mortgage loan originator is licensed
by this state. Any licensee who shall lose,
misplace or mutilate the license or branch certificate shall
pay a replacement fee of one hundred
dollars ($100) to the director for the use of the state.
19-14-22.
Reporting requirements. -- (a) Each
licensee shall annually on or before
March 31 file a report with the director or the
director's designee giving any relevant information
that the director or the director's designee may
reasonably require concerning the business and
operations during the preceding calendar year of each licensed
place of business conducted by the
licensee within the state. The report shall be made under oath
and shall be in a form prescribed by
the director or the director's designee. At the time of
filing each report, the sum of fifty-five
dollars ($55.00) per license and fifty-five dollars ($55.00)
per branch certificate shall be paid by
the licensee to the director for the use of the state.
Any licensee who shall delay transmission of
any report required by the provisions of this title
beyond the limit, unless additional time is
granted, in writing, for good cause, by the director or the
director's designee, shall pay a penalty
of twenty-five dollars ($25) for each day of the delay. In
lieu of a report by any licensed mortgage
loan originator, the director or the director's designee
may accept a report by the licensed lender
or licensed loan broker who employed the licensed
mortgage loan originator for the activities of
the licensed mortgage loan originator while employed by
such lender or loan broker during the
applicable calendar year.
(b) Any licensee shall,
within twenty-four (24) hours after actual knowledge, notify the
director or the director's designee, in writing, of the
occurrence of any of the following events: the
institution of bankruptcy, receivership, reorganization or
insolvency proceedings regarding a
licensee, the institution of any adverse government action
against a licensee, or any felony
indictment or conviction of any licensee or any officers,
directors, owners, employees, members
or partners thereof, as the case may be.
(c) Each mortgage loan
originator licensee shall, on or before March 31, 2010 and every
March 31st thereafter, file with the director or the
director's designee evidence acceptable to the
director or the director's designee that said loan originator licensee
has filed with the nationwide
mortgage licensing system and registry a report of condition,
which shall be in such form and
shall contain such information as the nationwide mortgage
licensing system and registry may
require along with evidence that the licensee has successfully completed, during
the twelve (12)
months immediately preceding March 31, satisfied the
requirements of section 19-14.10-10 with
respect to continuing education. a minimum of eight (8) hours of continuing
education relative to
state and federal statutes, rules and regulations
applicable to loans, mortgages, real property,
deeds and contracts provided by an approved nationally
recognized training facility or other
facility including in-house programs, as determined by the
director or the director's designee
(d) Both the mortgage
loan originator and his or her the licensee licensed
employer shall
promptly notify the director or the director's designee, in writing,
within fifteen (15) business
days of the termination of employment or services of a
mortgage loan originator.
19-14-23.
Examinations and investigations. -- (a) For the
purpose of discovering
violations of this title or securing information lawfully
required, the director or the director's
designee(s) may at any time investigate the loans and business
and examine the books, accounts,
records and files used therein, of every licensee and person
who shall be engaged in any activity
that requires a license under this title, the business, whether the person shall act or
claim to act as
principal or agent, or under or without the authority of this
title. For that purpose the director or
the director's designee(s) shall have free access to the
offices and places of business, books,
accounts, paper, records, files, and safes, of all such
persons. The director or the director's
designee(s) shall have authority to require the attendance of and
to examine under oath any
person whose testimony may be required relative to the loans
or the business or to the subject
matter of any examination, investigation, or hearing.
(b) The director or the
director's designee shall make an examination of the affairs,
business, office, and records of each licensee and branch
location at least once every eighteen
(18) months. The director
or the director’s designee may accept in lieu of an examination of the
business of a licensed mortgage loan originator, the
examination by the director or the director’s
designee of the licensed lender(s) or licensed loan broker who
employ the licensed mortgage loan
originator and/or who employed the licensed mortgage loan
originator during the period under
examination. The total
cost of an examination made pursuant to this section shall be paid by the
licensee or person being examined, and shall include the
following expenses:
(1) One hundred fifty
percent (150%) of the total salaries and benefits plus one hundred
percent (100%) for the travel and transportation expenses for
the examining personnel engaged in
the examinations. The cost of an examination of a
mortgage loan originator licensee shall be
limited to twenty-five percent (25%) of the total salary and
benefits for the personnel engaged in
an examination specific to a mortgage loan originator. The fees shall be paid to the director to and
for the use of the state. The examination fees shall be
in addition to any taxes and fees otherwise
payable to the state;
(2) All reasonable
technology costs related to the examination process. Technology costs
shall include the actual cost of software and hardware
utilized in the examination process and the
cost of training examination personnel in the proper use
of the software or hardware; and
(3) All necessary and
reasonable education and training costs incurred by the state to
maintain the proficiency and competence of the examination
personnel. All such costs shall be
incurred in accordance with appropriate state of
procedures.
(c) All expenses
incurred pursuant to subsections (b)(2) and (b)(3) of
this section shall be
allocated equally to each licensee, other than licensed
mortgage loan originators, no more
frequently than annually and shall not exceed an annual average
assessment of fifty dollars
($50.00) per company for any given
three (3) calendar year period.
All revenues collected
pursuant to this section shall be deposited as general
revenues. That assessment shall be in
addition to any taxes and fees otherwise payable to the state.
(d) The provisions of
section 19-4-3 shall apply to records of examinations or
investigations of licensees; however, the director or the director's
designee is authorized to make
public the number of valid consumer complaints as determined
by the director or the director's
designee filed against the licensee for a twelve (12) month
period immediately preceding the
request for the information.
(e) If the director or
his or her designee has reason to believe that any person required to
be licensed under this chapter is conducting a business
without having first obtained a license
under this chapter, or who after the denial, suspension, or
revocation of a license is conducting
that business, the director or his or her designee may
issue an order to that person commanding
him or her to cease and desist from conducting that
business. The order shall provide an
opportunity to request a hearing to be held not sooner than three
(3) days after issuance of that
order to show cause why the order should not become final.
Any order issued pursuant to this
section shall become final if no request for a hearing is
received by the director or his or her
designee within thirty (30) days of the issuance of the order.
The order may be served on any
person by mailing a copy of the order, certified mail,
return receipt requested, and first class mail
to that person at any address at which that person has
done business or at which that person lives.
Any hearing held pursuant to this section shall be
governed in accordance with chapter 35 of title
42. If that person fails to comply with an order of
the director or his or her designee after being
afforded an opportunity for a hearing, the superior court for
upon complaint of the department to restrain and enjoin
that person from violating this chapter.
(f) The director may
impose an administrative assessment, as well as the penalties
provided for under section 19-14-26, against any person named
in an order issued under
subsection (e) or, in accordance with the rules and regulations
promulgated pursuant to section
19-14-30, against any person who violates or
participates in the violation of any of the applicable
provisions of this title, or any regulation promulgated pursuant
to any provisions of this title. The
amount of the administrative assessment may not exceed one
thousand dollars ($1,000) for each
violation of this chapter or each act or omission that
constitutes a basis for issuing the order. Any
person aggrieved by an administrative assessment shall have
the opportunity to request a hearing
to be held in accordance with chapter 35 of title 42
within thirty (30) days of the imposition of
such administrative assessment.
SECTION 2. Section 19-14.1-10 of the General Laws in Chapter
19-14.1 entitled
"Lenders and Loan
Brokers" is hereby amended to read as follows:
19-14.1-10.
Special exemptions. -- (a) The
licensing provisions of chapter 14 of this title
shall not apply to:
(1) Nonprofit
charitable, educational, or religious corporations or associations;
(2) Any person who
makes less than six (6) loans in this state in any consecutive twelve
(12) month period; there is
no similar exemption from licensing for loan brokers for brokering
loans or acting as a loan broker;
(3) Person(s) Any person acting as an agent for a licensee
for the purpose of conducting
closings at a location other than that stipulated in the
license;
(4) Regulated
institutions and banks or credit unions organized under the laws of the
process in the form prescribed by the director or the
director's designee, of any other state within
the United States if the laws of the other state in which
such bank or credit union is organized
authorizes under conditions not substantially more restrictive
than those imposed by the laws of
this state, as determined by the director or the
director's designee, a financial institution or credit
union to engage in the business of originating or brokering
loans in the other state; no bank or
credit union duly organized under the laws of any other
state within the
deposits, pay checks or lend money from any location within
this state unless such bank or credit
union has received approval from the director or the
director's designee for the establishment of
an interstate branch office pursuant to chapter 7 of
title 19 of the general laws; or
(5) Any natural person
employee who is employed by a licensee when acting on the
licensee's behalf; provided that this exemption shall not apply
to a mortgage loan originator
required to be licensed under section 19-14-2 or section
19-14.10-4.
(6) A loan
originator employed by an operating subsidiary of a financial institution or
banking institution organized under the laws of this state or
any state within the
provided, however, that any such operating subsidiary shall
provide an educational program or
course that is relevant to the products and services offered
by its employees who solicit loans on
behalf of such operating subsidiary.
(6) A licensed
attorney when performing loan closing services for a licensee or for an
entity identified in subdivision (4) above.
(b) The provisions of
this chapter and chapter 14 of this title shall not apply to:
(1) Loans to
corporations, joint ventures, partnerships, limited liability companies or
other business entities;
(2) Loans over
twenty-five thousand dollars ($25,000) in amount to individuals for
business or commercial, as opposed to personal, family or
household purposes;
(3) Loans principally
secured by accounts receivable and/or business inventory;
(4) Loans made by a
life insurance company wholly secured by the cash surrender value
of a life insurance policy;
(5) Education-purpose
loans made by the
corporation as vested in chapter 38.1 of title 45 of the
vested in chapter 62 of title 16;
(6) The acquisition of
retail or loan installment contracts by an entity whose
sole
business in this state is acquiring them from federal banks
receivers or liquidators;
(7) Notes evidencing
the indebtedness of a retail buyer to a retail seller of goods,
services or insurance for a part or all of the purchase price;
or
(8) Any state or
federal agency which makes, brokers, or funds loans or acts as a lender
or a loan broker. This exemption includes exclusive
agents or exclusive contractors of the agency
specifically designated by the agency to perform those functions
on behalf of the agency and
which has notified the director, in writing, of the
exclusive agency or contract.
(9) Notes evidencing
the indebtedness of a retail buyer to a retail motor vehicle dealer
that include as part of the amount financed, disclosed in
accordance with 12 C.F.R. 226.18 as
amended, an amount representing negative equity related to
the motor vehicle being traded in as
part of the purchase price of the motor vehicle being
purchased.
(c) No license to make
or fund loans, or to act as a lender or small loan
lender shall be
required of any person who engages in deferred deposit
transactions (commonly known as "pay-
day advance") while holding a valid license to cash
checks pursuant to chapter 14 of this title.
SECTION 3. Title 19 of the General Laws entitled
"FINANCIAL INSTITUTIONS" is
hereby amended by adding thereto the following chapter:
CHAPTER
14.10
AN
ACT ADOPTING THE FEDERAL SECURE AND FAIR ENFORCEMENT FOR
MORTGAGE
LICENSING ACT OF 2009
19-14.10-1.
Short title. -- This chapter shall be known and
may be cited as the "Secure
and Fair Enforcement Mortgage Licensing Act of 2009"
19-14.10-2.
Purpose. -- The activities of mortgage loan
originators and the origination or
offering of financing for residential real property have a
direct, valuable and immediate impact
upon
of
accessibility to mortgage credit is vital to the state’s citizens.
The general assembly also finds
that it is essential for the protection of the citizens of
Island’s economy that reasonable standards for
licensing and regulation of the business practices
of mortgage loan originators be imposed. The general
assembly further finds that the obligations
of mortgage loan originators to consumers in connection
with originating or making residential
mortgage loans are such as to warrant the regulation of the
mortgage lending process. The
purpose of this chapter is to protect consumers seeking
mortgage loans and to ensure that the
mortgage lending industry is operating without unfair,
deceptive, and fraudulent practices on the
part of mortgage loan originators. Therefore the general
assembly establishes within this chapter:
(1) System of
supervision and enforcement--An effective system of supervision and
enforcement of the mortgage lending industry, including:
(i)
The authority to issue licenses to conduct business under this chapter, including
the
authority to write rules or regulations or adopt procedures
necessary to the licensing of persons
covered under this chapter.
(ii) The authority to
deny, suspend, condition or revoke licenses issued
under this chapter.
(iii) The authority
to examine, investigate and conduct enforcement actions as necessary
to carry out the intended purposes of this chapter,
including the authority to subpoena witnesses
and documents, enter orders, including cease and desist
orders, order restitution and monetary
penalties and order the removal and ban of individuals from
office or employment.
(2) Broad
administrative authority--That the director of the department of business
regulation (“director”) or the director’s designee shall have
the broad administrative authority to
administer, interpret and enforce this chapter, and promulgate
rules or regulations implementing
this chapter, in order to carry out the intentions of the
general assembly.
19-14.10-3.
Definitions. -- For purposes of this chapter,
the following definitions shall
apply:
(1) ‘‘Depository
institution’’ has the same meaning as in section 3 of the Federal Deposit
Insurance Act, and includes any credit union.
(2) ‘‘Federal banking
agencies’’ means the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Director
of the Office of Thrift Supervision, the
National Credit Union Administration,
and the Federal Deposit Insurance Corporation.
(3) “Immediate family
member” means a spouse, child, sibling, parent, grandparent, or
grandchild. This includes stepparents, stepchildren,
stepsiblings, and adoptive relationships.
(4) “Individual”
means a natural person.
(5)(i) ‘‘Loan processor or underwriter’’ means an individual
who performs clerical or
support duties as an employee at the direction of and subject
to the supervision and instruction of
a person licensed as a lender or as a loan broker, or
exempt from licensing under chapters 19-14,
or 19-14.1.
(ii) For purposes of
subsection (5)(i),
‘‘clerical or support duties’’ may include
subsequent to the receipt of an application:
(A) The receipt,
collection, distribution, and analysis of information common for the
processing or underwriting of a residential mortgage loan; and
(B) Communicating
with a consumer to obtain the information necessary for the
processing or underwriting of a loan, to the extent that such
communication does not include
offering or negotiating loan rates or terms, or counseling
consumers about residential mortgage
loan rates or terms.
(iii) Representatives
to the public--An individual engaging solely in loan processor or
underwriter activities, shall not represent to the public, through
advertising or other means of
communicating or providing information including the use of
business cards, stationery,
brochures, signs, rate lists, or other promotional items, that
such individual can or will perform
any of the activities of a mortgage loan originator.
(6)(i) ‘‘Mortgage loan originator’’ means:
(A) An individual
who, for compensation or gain or in the expectation of compensation
or gain:
(I) Takes a
residential mortgage loan application; or
(II) Offers or negotiates
terms of a residential mortgage loan;
(B) Does not include
an individual engaged solely as a loan processor or underwriter
except as otherwise provided in subsection 19-14.10-(c);
(C) Does not include
a person or entity that only performs real estate brokerage activities
and is licensed or registered in accordance with
compensated by a lender, a mortgage broker, or other mortgage
loan originator or by any agent of
such lender, mortgage broker, or other mortgage loan
originator;
(D) Does not include
a person or entity solely involved in extensions of credit relating to
timeshare plans, as that term is defined in section 101(53D) of
title 11, United States Code, as
amended; and
(E) Does not include
a person (or its employees) engaged in servicing mortgage loans.
For purposes of this exclusion, "servicing
mortgage loans" means, on behalf of the note holder,
collecting and receiving payments, including payments of
principal, interest, escrow amounts,
and other sums due, on obligations due and owing to the
note holder pursuant to a residential
mortgage loan, and, when the borrower is in default, or in
reasonably foreseeable likelihood of
default, working with the borrower on behalf of the note
holder and pursuant to the contract
between the person servicing mortgage loans and the note
holder, to modify but not refinance,
either temporarily or permanently, the obligations, or
otherwise finalizing collection of the
obligation through the foreclosure process.
(ii) ‘‘Real estate
brokerage activity’’ means any activity that involves offering or
providing real estate brokerage services to the public,
including:
(A) Acting as a real
estate agent or real estate broker for a buyer, seller, lessor,
or lessee
of real property;
(B) Bringing together
parties interested in the sale, purchase, lease, rental, or exchange of
real property;
(C) Negotiating, on
behalf of any party, any portion of a contract relating to the sale,
purchase, lease, rental, or exchange of real property (other
than in connection with providing
financing with respect to any such transaction);
(D) Engaging in any
activity for which a person engaged in the activity is required to be
registered or licensed as a real estate agent or real
estate broker under any applicable law; and
(E) Offering to
engage in any activity, or act in any capacity, described in subparagraphs
(A), (B), (C), or (D) of this
section.
(7) ‘‘Nationwide
Mortgage Licensing System and Registry’’ means a mortgage licensing
system developed and maintained by the conference of state
bank supervisors and the American
association of residential mortgage regulators for the licensing
and registration of licensed
mortgage loan originators.
(8) ‘‘Nontraditional
mortgage product’’ means any mortgage product other than a thirty
(30) year fixed rate
mortgage.
(9) “Person” means a
natural person, corporation, company, limited liability company,
partnership, association, or any other entity however organized.
(10) ‘‘Registered
mortgage loan originator’’ means any individual who:
(i)
Meets the definition of mortgage loan originator and is an employee of:
(A) A depository
institution;
(B) A subsidiary that
is:
(I) Owned and
controlled by a depository institution; and
(II) Regulated by a
Federal banking agency; or
(C) An institution
regulated by the farm credit administration; and
(D) Is registered
with, and maintains a unique identifier through, the nationwide
mortgage licensing system and registry.
(11) ‘‘Residential
mortgage loan’’ means any loan primarily for personal, family, or
household use that is secured by a mortgage, deed of trust, or
other equivalent consensual security
interest on a dwelling (as defined in section 103(v) of the
Truth in Lending Act) or residential real
estate upon which is constructed or intended to be
constructed a dwelling (as so defined).
(12) “Residential
real estate” means any real property located in
which is constructed or intended to be constructed a
dwelling.
(13) ‘‘Unique
identifier’’ means a number or other identifier assigned by protocols
established by the nationwide mortgage licensing system and
registry.
19-14.10-4.
License and registration required. -- (a) An
individual, unless specifically
exempted from this chapter under subsection (b) of this
section, shall not engage in the business
of a mortgage loan originator with respect to any
dwelling located in this state without first
obtaining and maintaining annually a license under this
chapter. Each licensed mortgage loan
originator must register with and maintain a valid unique
identifier issued by the nationwide
mortgage licensing system and registry.
(b) The following
are exempt from this chapter:
(1) Registered
mortgage loan originators, when acting for an entity described in
subparagraphs 19-14.10-3(10) (A), (B), or (C) are exempt from this
chapter.
(2) Any individual
who offers or negotiates terms of a residential mortgage loan with or
on behalf of an immediate family member of the
individual.
(3) Any individual
who offers or negotiates terms of a residential mortgage loan secured
by a dwelling that served as the individual’s residence.
(4) A licensed
attorney who negotiates the terms of a residential mortgage loan on behalf
of a client as an ancillary matter to the attorney’s
representation of the client, unless the attorney
is compensated by a lender, a mortgage broker, or other
mortgage loan originator or by any agent
of such lender, mortgage broker, or other mortgage loan
originator.
(5) A licensed
attorney when performing loan closing services for a licensed lender,
licensed loan broker, or for an entity exempt from licensing
under subdivision 19-14.1-10(a)(4);
(c) A loan processor
or underwriter who is an independent contractor may not engage in
the activities of a loan processor or underwriter unless
such independent contractor loan processor
or underwriter obtains and maintains a license under
chapters 19-14 or 19-14.1. Each
independent contractor loan processor or underwriter licensed as
a mortgage loan originator must
have and maintain a valid unique identifier issued by the
nationwide mortgage licensing system
and registry.
(d) For the purposes
of implementing an orderly and efficient licensing process the
director or the director’s designee may establish licensing
rules or regulations and interim
procedures for licensing and acceptance of applications. For
previously registered or licensed
individuals the director or the director’s designee may establish
expedited review and licensing
procedures as follows:
(1) A mortgage loan
originator applicant whose employer at the time of application for a
mortgage loan originator license is an entity described in
subparagraphs 19-14.10-3(10) (A), (B),
or (C) and who has been assigned a unique identifier
through the nationwide mortgage licensing
system and registry and who has completed and filed with the
director or the director's designee
all information, documents and requirements for licensure
pursuant to this chapter shall be
permitted to continue to act as a mortgage loan originator for
the period prior to action being
taken on his or her application by the director or the
director's designee;
(2) A mortgage loan
originator applicant who has been assigned a unique identifier
through the nationwide mortgage licensing system and registry
and who has completed and filed
with the director or the director's designee all
information, documents and requirements for
licensure pursuant to this chapter and whose employer at the time
of application for a mortgage
loan originator license is a lender or loan broker
licensed under chapter 19-14 and 19-14.1, shall
be permitted to continue to act as a mortgage loan
originator for the period prior to action being
taken on his or her application by the director or
director's designee if the applicant and a senior
officer or principal of such lender or loan broker files
written attestation to the director or the
director's designee that:
(i)
The applicant is currently or has within the six (6) month period prior to the
date of the
application been acting as a registered mortgage loan originator
in this state or as a state-licensed
mortgage loan originator in another state, in either case
under the provisions of Section 1507 of
the SAFE Act;
(ii) The applicant
has never had a mortgage loan license or registration denied, revoked,
or suspended in any governmental jurisdiction; and
(iii) the applicant has not been convicted of a felony that would
otherwise authorize the
director or the director's designee to deny the applicant a
license.
(3) Any provisional
authority to act as a mortgage loan originator issued pursuant to this
subsection (d) shall expire on the earlier of: (i) The date on which the director or the director's
designee issues or denies the application for the license; or
(ii) One hundred twenty (120) days
from the date of application for the license.
(4) The director or
the director's designee may deny or suspend the rights of a lender or
loan broker licensed under chapter 19-14 or 19-14.1 to
employ a mortgage loan originator under
this subsection (d) if the director or the director's
designee finds that such lender or loan broker, a
senior official or principal thereof, or the applicant
failed to exercise due diligence and good faith
when submitting the attestations required in subdivision
(d)(1) or (d)(2) above.
19-14.10-5.
State license and registration application and issuance. –
(a) Applicants
for a license shall apply in a form as prescribed by the
director or the director’s designee. Each
such form shall contain content as set forth by rule,
regulation, instruction or procedure of the
director or the director’s designee and may be changed or
updated as necessary by the director or
the director’s designee in order to carry out the
purposes of this chapter.
(b) In order to
fulfill the purposes of this chapter, the director or the director’s designee
is
authorized to establish relationships or contracts with the
nationwide mortgage licensing system
and registry or other entities designated by the
nationwide mortgage licensing system and registry
to collect and maintain records and process transaction
fees or other fees related to licensees or
other persons subject to this chapter.
(c) In connection
with an application for licensing as a mortgage loan originator, the
applicant shall, at a minimum, furnish to the nationwide
mortgage licensing system and registry
information concerning the applicant’s identity, including:
(1) Fingerprints for
submission to the Federal Bureau of Investigation, and any
governmental agency or entity authorized to receive such
information for a state, national and
international criminal history background check; and
(2) Personal history
and experience in a form prescribed by the nationwide mortgage
licensing system and registry, including the submission of
authorization for the nationwide
mortgage licensing system and registry and the director to
obtain:
(i)
An independent credit report obtained from a consumer reporting agency
described in
section 603(p) of the Fair Credit Reporting Act; and
(ii) Information
related to any administrative, civil or criminal findings by any
governmental jurisdiction.
(d) For the purposes
of this section and in order to reduce the points of contact which the
Federal Bureau of Investigation may have to maintain
for purposes of this section the director or
the director’s designee may use the nationwide mortgage
licensing system and registry as a
channeling agent for requesting information from and
distributing information to the
Department of Justice or any
governmental agency.
(e) For the purposes
of this section and in order to reduce the points of contact which the
director or the director’s designee may have to maintain for
purposes of this section the director
or the director’s designee may use the nationwide
mortgage licensing system and registry as a
channeling agent for requesting and distributing information to
and from any source so directed
by the director or the director’s designee.
19-14.10-6.
Issuance of license. -- The director or the
director’s designee shall not
approve a mortgage loan originator license unless the
director or the director’s designee makes at
a minimum the following findings:
(1) The applicant has
never had a mortgage loan originator license revoked in any
governmental jurisdiction, except that a subsequent formal
vacation of such revocation shall not
be deemed a revocation.
(2) The applicant has
not been convicted of, or pled guilty or nolo contendere to, a felony
in a domestic, foreign, or military court:
(i)
During the seven (7) year period preceding the date of the application for
licensing
and registration; or
(ii) At any time
preceding such date of application, if such felony involved an act of
fraud, dishonesty, or a breach of trust, or money laundering.
(iii) Pardon of a
conviction shall not be a conviction for purposes of this subsection.
(3) The applicant has
demonstrated financial responsibility, character, and general fitness
such as to command the confidence of the community and to
warrant a determination that the
mortgage loan originator will operate honestly, fairly, and
efficiently within the purposes of this
chapter.
(i)
For purposes of this subsection a person has shown that he or she is not
financially
responsible when he or she has shown a disregard in the
management of his or her own financial
condition. A determination that an individual has not shown
financial responsibility may include,
but not be limited to:
(i)
Current outstanding judgments, except judgments solely as a result of medical
expenses;
(ii) Current
outstanding tax liens or other government liens and filings;
(iii) Foreclosures
within the past three years;
(iv)
A pattern of seriously delinquent accounts within the past three
(3) years.
(d) The applicant has
completed the pre-licensing education requirement described in
section 19-14.10-7.
(e) The applicant has
passed a written test that meets the test requirement described in
section 19-14.10-8.
(f) The applicant has
met the net worth or surety bond requirements required pursuant to
19-14.10-14.
19-14.10-7.
Pre-licensing and re-licensing education of loan originators.
-- (a) In
order to meet the pre-licensing education requirement
referred to in this chapter a person shall
complete at least twenty (20) hours of education approved in
accordance with subsection (b) of
this section, which shall include at least:
(1) Three (3) hours
of Federal law and regulations;
(2) Three (3) hours
of ethics, which shall include instruction on fraud, consumer
protection, and fair lending issues;
(3) Two (2) hours of
training related to lending standards for the nontraditional mortgage
product marketplace; and
(4) Three (3) hours
of
(b) For purposes of
subsection (a) of this section, pre-licensing education courses shall be
reviewed, and approved by the nationwide mortgage licensing
system and registry based upon
reasonable standards. Review and approval of a pre-licensing
education course shall include
review and approval of the course provider.
(c) Nothing in this
section shall preclude any pre-licensing education course, as approved
by the nationwide mortgage licensing system and registry
that is provided by the employer of the
applicant or an entity which is affiliated with the applicant
by an agency contract, or any
subsidiary or affiliate of such employer or entity.
(d) Pre-licensing education
may be offered either in a classroom, online or by any other
means approved by the nationwide mortgage licensing system
and registry.
(e) The pre-licensing
education requirements approved by the nationwide mortgage
licensing system and registry for any state shall be accepted
as credit towards completion of pre-
licensing education requirements in
(f) A person
previously licensed under this chapter subsequent to the effective date of this
chapter applying to be licensed again must prove that they
have completed all of the continuing
education requirements for the year in which the license was
last held.
19-14.10-8. Testing of loan originators. -- (a) In order to
meet the written test
requirement referred to in this chapter, an individual shall
pass, in accordance with the standards
established under this subsection, a qualified written test
developed by the nationwide mortgage
licensing system and registry and administered by a test
provider approved by the nationwide
mortgage licensing system and registry based upon reasonable
standards.
(b) A written test
shall not be treated as a qualified written test for purposes of this
section unless the test adequately measures the applicant’s
knowledge and comprehension in
appropriate subject areas, including:
(1) Ethics;
(2) Federal law and
regulation pertaining to mortgage origination;
(3) State law and
regulation pertaining to mortgage origination;
(4) Federal and State
law and regulation, including instruction on fraud, consumer
protection, the nontraditional mortgage marketplace, and fair
lending issues.
(c) Nothing in this
section shall prohibit a test provider approved by the nationwide
mortgage licensing system and registry from providing a test
at the location of the employer of
the applicant or the location of any subsidiary or
affiliate of the employer of the applicant, or the
location of any entity with which the applicant holds an
exclusive arrangement to conduct the
business of a mortgage loan originator.
(d)(1) An individual
shall not be considered to have passed a qualified written test unless
the individual achieves a test score of not less than
seventy-five percent (75%) correct answers to
questions.
(2) An individual may
retake a test three (3) consecutive times with each consecutive
taking occurring at least thirty (30) days after the
preceding test.
(3) After failing
three (3) consecutive tests, an individual shall wait at least six (6) months
before taking the test again.
(4) A licensed
mortgage loan originator who fails to maintain a valid license for a period
of five (5) years or longer shall retake the test, not
taking into account any time during which
such individual is a registered mortgage loan originator.
19-14.10-9.
Standards for license renewal. -- (a) The minimum standards for license
renewal for mortgage loan originators shall include the
following:
(1) The mortgage loan
originator continues to meet the minimum standards for license
issuance under subsection 19-14.10-6.
(2) The mortgage loan
originator has satisfied the annual continuing education
requirements described in section 19-14.10-10.
(3) The mortgage loan
originator has paid all required fees for renewal of the license.
(b) The license of a
mortgage loan originator failing to satisfy the minimum standards for
license renewal shall expire. The director or the director’s
designee may adopt procedures for the
reinstatement of expired licenses consistent with the standards
established by the Nationwide
Mortgage Licensing System and Registry.
19-14.10-10.
Continuing education for mortgage loan originators. --
(a) In order to
meet the annual continuing education requirements referred
to in section 19-14.10-9, a licensed
mortgage loan originator shall complete at least (8) hours of
education approved in accordance
with subsection (2) of this section, which shall include
at least:
(1) Three (3) hours
of Federal law and regulations;
(2) Two (2) hours of
ethics, which shall include instruction on fraud, consumer
protection, and fair lending issues;
(3) Two (2) hours of
training related to lending standards for the nontraditional mortgage
product marketplace; and
(4) One hour of
(b) For purposes of
this section, continuing education courses shall be reviewed, and
approved by the nationwide mortgage licensing system and
registry based upon reasonable
standards. Review and approval of a continuing education course
shall include review and
approval of the course provider.
(c) Nothing in this
section shall preclude any education course, as approved by the
nationwide mortgage licensing system and registry, that is
provided by the employer of the
mortgage loan originator or an entity which is affiliated with
the mortgage loan originator by an
agency contract, or any subsidiary or affiliate of such
employer or entity.
(d) Continuing
education may be offered either in a classroom, online or by any other
means approved by the Nationwide Mortgage Licensing System
and Registry.
(e) A licensed
mortgage loan originator:
(1) Except for
subsection 19-14.10-9 (b) and subsection (i) of this
section, may only
receive credit for a continuing education course in the year
in which the course is taken; and
(2) May not take the
same approved course in the same or successive years to meet the
annual requirements for continuing education.
(f) A licensed
mortgage loan originator who is an approved instructor of an approved
continuing education course may receive credit for the licensed
mortgage loan originator’s own
annual continuing education requirement at the rate of two
(2) hours credit for every one hour
taught.
(g) A person having
successfully completed the education requirements approved by the
nationwide mortgage licensing system and registry in subdivision
(a)(1), (a)(2) and (a)(3) of this
section for any state shall be accepted as credit towards
completion of continuing education
requirements in
satisfy educational requirements specifically related to
(h) A licensed
mortgage loan originator who subsequently becomes unlicensed must
complete the continuing education requirements for the last
year in which the license was held
prior to issuance of a new or renewed license.
(i)
A person meeting the requirements of subdivision 19-14.10-9 (a)(1) and (a)(3) may
make up any deficiency in continuing education as
established by rule or regulation of the
director or the director’s designee.
19-14.10-11.
Authority to require license. – In addition to
any other duties imposed
upon the director or the director’s designee by law, the
director or the director’s designee shall
require mortgage loan originators to be licensed and
registered through the nationwide mortgage
licensing system and registry. In order to carry out this
requirement the director or the director’s
designee is authorized to participate in the nationwide
mortgage licensing system and registry.
For this purpose, the director or the director’s
designee may establish by rule or regulation
requirements as necessary, including but not limited to:
(1) Background checks
for:
(i)
Criminal history through fingerprint or other databases;
(ii) Civil or
administrative records;
(iii) Credit history;
or
(2) Any other
information as deemed necessary by the nationwide mortgage licensing
system and registry.
(3) The payment of
fees to apply for or renew licenses through the nationwide mortgage
licensing system and registry;
(4) The setting or
resetting as necessary of renewal or reporting dates; and
(5) Requirements for
amending or surrendering a license or any other such activities as
the director or the director’s designee deems necessary
for participation in the nationwide
mortgage licensing system and registry.
19-14.10-12. Nationwide mortgage licensing system and registry
information
challenge process. -- The director or the director’s designee shall establish a process
whereby
mortgage loan originators may challenge information entered
into the nationwide mortgage
licensing system and registry by the director or the director’s
designee.
19-14.10-13.
Enforcement authorities, violations and penalties. --
(a) In order to
ensure the effective supervision and enforcement of this
chapter the director or the director’s
designee may, pursuant to chapter 42-35:
(1) Deny, suspend,
revoke, condition or decline to renew a license for a violation of this
chapter, rules or regulations issued under this chapter or
order or directive entered under this
chapter.
(2) Deny, suspend,
revoke, condition or decline to renew a license if an applicant or
licensee fails at any time to meet the requirements of section
19-14.10-6 or 19-14.10-9, or
withholds information or makes a material misstatement in an
application for a license or renewal
of a license.
(3) Order restitution
against persons subject to this chapter for violations of this chapter.
(4) Impose fines on
persons subject to this chapter pursuant to subsections (b), (c) and (d)
of this section.
(5) Issue orders or
directives under this chapter as follows:
(i)
Order or direct persons subject to this chapter to cease and desist from
conducting
business, including immediate temporary orders to cease and
desist.
(ii) Order or direct
persons subject to this chapter to cease any harmful activities or
violations of this chapter, including immediate temporary orders
to cease and desist.
(iii) Enter immediate
temporary orders to cease business under a license or interim
license issued pursuant to the authority granted under this
chapter if the director or the director’s
designee determines that such license was erroneously granted
or the licensee is currently in
violation of this chapter;
(iv)
Order or direct such other affirmative action as the director or
the director’s designee
deems necessary.
(2) The director or
the director’s designee may impose a civil penalty on a mortgage loan
originator and any lender or loan broker licensed under chapter
19-14 or 19-14.1 which employs
such mortgage loan originator, if the director or the
director’s designee finds, on the record after
notice and opportunity for hearing, that such mortgage loan
originator has violated or failed to
comply with any requirement of this chapter or any
regulation prescribed by the director or the
director’s designee under this chapter or order issued under
authority of this chapter. In addition,
the director or the director's designee may impose a
civil penalty on a lender or loan broker
licensed under chapter 19-14 or 19-14.1 which employs any
mortgage loan originator licensed
under this chapter, if the director or the director's
designee finds, on the record after notice and
opportunity for hearing, that such lender or loan broker has
violated or failed to comply with any
requirement of this chapter or any such regulation or order.
(3) The maximum
amount of penalty for each act or omission described in subsection (b)
of this section shall be twenty-five thousand five
hundred dollars ($25,000).
(4) Each violation or
failure to comply with any directive or order of the director or the
director’s designee is a separate and distinct violation or
failure.
19-14.10-14.
Surety bond required. -- (a) Each mortgage
loan originator shall be
covered by a surety bond in accordance with this section. In
the event that the mortgage loan
originator is an employee of a lender or loan broker licensed
under chapter 19-14, the surety bond
of such lender or loan broker as required in accordance
with the provisions of such chapter and
adjusted by the amounts required by this section can be used
in lieu of the mortgage loan
originator’s surety bond requirement.
(1) The surety bond
shall provide coverage for each mortgage loan originator in an
amount as prescribed in subsection (b) of this section.
(2) The surety bond
shall be in a form as prescribed by the director or the director’s
designee.
(3) The director or
the director’s designee may promulgate rules or regulations with
respect to the requirements for such surety bonds as are
necessary to accomplish the purposes of
this chapter.
(b) The penal sum of
the surety bond shall be maintained in an amount that reflects the
dollar amount of loans originated as determined by the
director or the director’s designee by
regulation adopted within one hundred twenty (120) days of the
effective date of this section.
(c) When an action is
commenced on a licensee’s bond the director or the director’s
designee may require the filing of a new bond.
(d) Immediately upon
recovery upon any action on the bond the licensee shall file a new
bond.
(e) A minimum net
worth shall be continuously maintained for mortgage loan originators
in accordance with this section. In the event that the
mortgage loan originator is an employee, a
lender or loan broker licensed under chapter 19-14, the net
worth can be used in lieu of the
mortgage loan originator’s minimum net worth requirement.
In addition:
(1) Minimum net worth
shall be maintained in an amount that reflects the dollar amount
of loans originated as determined by the director or the
director’s designee.
(2) The director or
the director’s designee shall within one hundred twenty (120) days of
the effective date of this section promulgate rules or
regulations with respect to the requirements
for minimum net worth as are necessary to accomplish the
purposes of this chapter.
19-14.10-15.
Confidentiality. –In order to promote more
effective regulation and reduce
regulatory burden through supervisory information sharing:
(1) Except as
otherwise provided in public law 110-289, section 1512, the requirements
under any Federal law or chapter 2 of title 38 of the
general laws of
privacy or confidentiality of any information or material
provided to the nationwide mortgage
licensing system and registry, and any privilege arising under
Federal or state law (including the
rules of any Federal or state court) with respect to such
information or material, shall continue to
apply to such information or material after the information
or material has been disclosed to the
nationwide mortgage licensing system and registry. Such
information and material may be shared
with all state and Federal regulatory officials with
mortgage industry oversight authority without
the loss of privilege or the loss of confidentiality
protections provided by Federal or said chapter
2 of Title 38 of the general laws
of
(2) For these
purposes, the director or the director’s designee is authorized to enter
agreements or sharing arrangements with other governmental
agencies, the Conference of State
Bank Supervisors, the American Association of
Residential Mortgage Regulators or other
associations representing governmental agencies as established by
rule, regulation or order of the
director or the director’s designee.
(3) Information or
material that is subject to a privilege or confidentiality under
subsection (a) of this section shall not be subject to:
(i)
Disclosure under any Federal or state law governing the disclosure to the
public of
information held by an officer or an agency of the Federal
government or the respective state; or
(ii) Subpoena or
discovery, or admission into evidence, in any private civil action or
administrative process, unless with respect to any privilege held by
the nationwide mortgage
licensing system and registry with respect to such information
or material, the person to whom
such information or material pertains waives, in whole or
in part, in the discretion of such person,
that privilege.
(4) Section 19-4-3
relating to the disclosure of confidential supervisory information or
any information or material described in this section
that is inconsistent with this section shall be
superseded by the requirements of this section.
(5) This section
shall not apply with respect to the information or material relating to the
employment history of, and publicly adjudicated disciplinary and
enforcement actions against,
mortgage loan originators that is included in the nationwide
mortgage licensing system and
registry for access by the public.
19-14.10-16.
Investigation and examination authority. -- In
addition to any authority
allowed under this chapter the director or the director’s
designee shall have the authority to
conduct investigations and examinations as follows:
(1) For purposes of
initial licensing, license renewal, license suspension, license
conditioning, license revocation or termination, or general or
specific inquiry or investigation to
determine compliance with this chapter, the director or the
director’s designee shall have the
authority to access, receive and use any books, accounts,
records, files, documents, information or
evidence including but not limited to:
(i)
Criminal, civil and administrative history information, including
non-conviction data,
or other non-public record as specified in subparagraph
38-2-2(4)(D), specifically, or any other
criminal, civil, and administrative record deemed non-public
under section 38-2-1 et seq.,
generally; and
(ii) Personal history
and experience information including independent credit reports
obtained from a consumer reporting agency described in section
603(p) of the Federal Fair Credit
Reporting Act; and
(iii) Any other
documents, information or evidence the director or the director’s designee
deems relevant to the inquiry or investigation regardless
of the location, possession, control or
custody of such documents, information or evidence.
(2) For the purposes
of investigating violations or complaints arising under this chapter,
or for the purposes of examination, the director or the
director’s designee may review,
investigate, or examine any licensee, individual or person
subject to this chapter, as often as
necessary in order to carry out the purposes of this chapter.
The director or the director’s
designee may direct, subpoena, or order the attendance of and
examine under oath all persons
whose testimony may be required about the loans or the
business or subject matter of any such
examination or investigation, and may direct, subpoena, or order
such person to produce books,
accounts, records, files, and any other documents the director
or the director’s designee deems
relevant to the inquiry.
(3) Each licensee,
individual or person subject to this chapter shall make available to the
director or the director’s designee upon request the books and
records relating to the operations of
such licensee, individual or person subject to this
chapter. The director or the director’s designee
shall have access to such books and records and interview
the officers, principals, mortgage loan
originators, employees, independent contractors, agents, and
customers of the licensee, individual
or person subject to this chapter concerning their
business.
(4) Each licensee,
individual or person subject to this chapter shall make or compile
reports or prepare other information as directed by the
director or the director’s designee in order
to carry out the purposes of this section including but
not limited to:
(i)
Accounting compilations;
(ii) Information
lists and data concerning loan transactions in a format prescribed by the
director or the director’s designee; or
(iii) Such other
information deemed necessary to carry out the purposes of this section.
(5) In making any
examination or investigation authorized by this chapter, the director or
the director’s designee may control access to any
documents and records of the licensee or person
under examination or investigation. The director or the
director’s designee may take possession of
the documents and records or place a person in exclusive
charge of the documents and records in
the place where they are usually kept. During the period
of control, no individual or person shall
remove or attempt to remove any of the documents and records
except pursuant to a court order
or with the consent of the director or the director’s
designee. Unless the director or the director’s
designee has reasonable grounds to believe the documents or records
of the licensee have been, or
are at risk of being altered or destroyed for purposes of
concealing a violation of this chapter, the
licensee or owner of the documents and records shall have
access to the documents or records as
necessary to conduct its ordinary business affairs.
(6) In order to carry
out the purposes of this section, the director or the director’s
designee may:
(i) Retain attorneys, accountants, or other
professionals and specialists as examiners,
auditors, or investigators to conduct or assist in the conduct
of examinations or investigations;
(ii) Enter into
agreements or relationships with other government officials or regulatory
associations in order to improve efficiencies and reduce
regulatory burden by sharing resources,
standardize or uniform methods or procedures, and documents,
records, information or evidence
obtained under this section;
(iii)
Use, hire, contract or employ public or privately available analytical systems,
methods or software to examine or investigate the licensee,
individual or person subject to this
chapter;
(iv)
Accept and rely on examination or investigation reports made by
other government
officials, within or without this state; or
(v) Accept audit
reports made by an independent certified public accountant for the
licensee, individual or person subject to this chapter in the
course of that part of the examination
covering the same general subject matter as the audit and may
incorporate the audit report in the
report of the examination, report of investigation or other
writing of the director or the director’s
designee.
(7) The authority of
this section shall remain in effect, whether such a licensee, individual
or person subject to this chapter acts or claims to act
under any licensing or registration law of
this state, or claims to act without such authority.
(8) No licensee,
individual or person subject to investigation or examination under this
section may knowingly withhold, abstract, remove, mutilate,
destroy, or secrete any books,
records, computer records, or other information.
19-14.10-17.
Prohibited acts and practices. -- It is a
violation of this chapter for a
person or individual subject to this chapter to:
(1) Directly or
indirectly employ any scheme, device, or artifice to defraud or mislead
borrowers or lenders or to defraud any person;
(2) Engage in any unfair or deceptive practice toward any
person;
(3) Obtain property
by fraud or misrepresentation;
(4) Solicit or enter
into a contract with a borrower that provides in substance that the
person or individual subject to this chapter may earn a fee
or commission through “best efforts”
to obtain a loan even though no loan is actually
obtained for the borrower;
(5) Solicit,
advertise, or enter into a contract for specific interest rates, points, or
other
financing terms unless the terms are actually available at the
time of soliciting, advertising, or
contracting;
(6) Conduct any
business covered by this chapter without holding a valid license as
required under this chapter, or assist or aide and abet any
person in the conduct of business under
this chapter without a valid license as required under
this chapter;
(7) Fail to make
disclosures as required by this chapter and any other applicable state or
federal law including regulations thereunder;
(8) Fail to comply
with this chapter or rules or regulations promulgated under this
chapter, or fail to comply with any other state or federal
law, including the rules and regulations
thereunder, applicable to any business authorized or conducted
under this chapter;
(9) Make, in any
manner, any false or deceptive statement or representation with regard
to the rates, points, or other financing terms or
conditions for a residential mortgage loan, or
engage in bait and switch advertising;
(10) Negligently make
any false statement or knowingly and willfully make any omission
of material fact in connection with any information or
reports filed with a governmental agency
or the nationwide mortgage licensing system and registry
or in connection with any investigation
conducted by the director or the director’s designee or another
governmental agency;
(11) Make any
payment, threat or promise, directly or indirectly, to any person for the
purposes of influencing the independent judgment of the person
in connection with a residential
mortgage loan, or make any payment threat or promise, directly
or indirectly, to any appraiser of
a property, for the purposes of influencing the
independent judgment of the appraiser with respect
to the value of the property;
(12) Collect, charge,
attempt to collect or charge or use or propose any agreement
purporting to collect or charge any fee prohibited by this
chapter;
(13) Cause or require
a borrower to obtain property insurance coverage in an amount that
exceeds the replacement cost of the improvements as
established by the property insurer.
(14) Fail to
truthfully account for monies belonging to a party to a residential mortgage
loan transaction.
19-14.10-18.
Mortgage call reports. -- Each lender, loan
broker or mortgage loan
originator licensee shall submit to the nationwide mortgage
licensing system and registry reports
of condition, which shall be in such form and shall
contain such information as the nationwide
mortgage licensing system and registry may require.
19-14.10-19.
Report to nationwide mortgage licensing system and registry.
-- Subject
to state privacy law the director or the director’s
designee is required to report regularly violations
of this chapter, as well as enforcement actions and
other relevant information, to the nationwide
mortgage licensing system and registry subject to the
provisions contained in section 19-1-4-3.
19-14.10-20.
Reserved. –
19-14.10-21. Unique identifier shown. -- The name and the
unique identifier of any
person originating a residential mortgage loan shall be
clearly shown on all residential mortgage
loan application forms, solicitations or advertisements,
including business cards or websites, and
any other documents as established by rule, regulation or
order of the director or the director’s
designee.
19-14.10-22.
Severability. -- If any provision of this
chapter or its application to any
person or circumstance is held invalid, the remainder of the
chapter or the application of the
provision to other persons or circumstances is not affected.
SECTION 4. Sections 1 and 2 shall take effect upon passage,
provided that the
amendment to subsection 19-14-3(e) shall not be effective until
the effective date of section 3.
With respect to section 3,
the effective date for persons not licensed as mortgage loan originators
as of the effective date shall be July 31, 2009, and the
effective date for all persons licensed as
mortgage loan originators as of the effective date shall be
January 1, 2010, or such other dates as
approved by the
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LC02048/SUB A/2
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