Bill Text: MI SB0462 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: Financial institutions; loan officers; mortgage loan officer licensing; adopt statute that complies with federal SAFE act requirements. Creates new act. TIE BAR WITH: SB 0463'09, SB 0464'09, SB 0465'09
Spectrum: Slight Partisan Bill (Republican 7-3)
Status: (Passed) 2009-08-05 - Assigned Pa 0075'09 With Immediate Effect [SB0462 Detail]
Download: Michigan-2009-SB0462-Engrossed.html
SB-0462, As Passed House, July 15, 2009
SUBSTITUTE FOR
SENATE BILL NO. 462
A bill to provide for the licensing of mortgage loan
originators; to regulate the business practices of mortgage loan
originators; to establish certain obligations of employees and
principals of mortgage loan originators; to prescribe the powers
and duties of certain state agencies and officials; and to provide
remedies and prescribe penalties.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"mortgage loan originator licensing act".
Sec. 3. As used in this act:
(a) "Commissioner" means the commissioner of the office of
financial and insurance regulation in the department of energy,
labor, and economic growth.
(b) "Depository institution" means that term as defined in
section 3 of the federal deposit insurance act, 12 USC 1813, or a
credit union.
(c) "Dwelling" means that term as defined in section 103(v) of
the truth in lending act, 15 USC 1602.
(d) "Employee" means an individual who meets both of the
following:
(i) Has an employment relationship acknowledged by that
individual and the person that engages that individual to originate
mortgage loans.
(ii) Is treated as an employee by the person that engages that
individual to originate mortgage loans for compliance with federal
income tax laws.
(e) "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.
(f) "Financial licensing acts" means that term as defined in
section 2 of the consumer financial services act, 1988 PA 161, MCL
487.2052.
(g) "Immediate family member" means a spouse, child, sibling,
parent, grandparent, or grandchild. The term includes stepparents,
stepchildren, stepsiblings, and adoptive relationships.
(h) "Individual" means a natural person.
(i) "Licensed mortgage loan originator" means a mortgage loan
originator who holds a valid license issued by the commissioner
under this act.
(j) "Loan modification activities" means any of the following:
(i) Collecting or receiving payments, including payments of
principal, interest, escrow amounts, and other amounts due, on
existing residential mortgage loans due and owing to a mortgagor or
mortgage servicer, when the borrower is in default or in reasonably
foreseeable likelihood of default.
(ii) Working with a borrower described in subparagraph (i) to
collect data concerning the borrower's residential mortgage loan or
loans.
(iii) Making any decisions necessary to modify, either
temporarily or permanently, certain terms of the residential
mortgage loan or loans of a borrower described in subparagraph (i)
or to otherwise finalize collection through the foreclosure
process. These decisions may include changing the principal amount,
the rate of annual interest charged, or the term of a residential
mortgage loan; waiving any fees or charges, including late charges,
a borrower is obligated to pay; deferring residential mortgage loan
payments; or making similar adjustments to a borrower's residential
mortgage loan or the borrower's obligations under the loan.
(k) "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 or designated as exempt from licensing under the mortgage
brokers, lenders, and servicers licensing act, 1987 PA 173, MCL
445.1651 to 445.1684; the secondary mortgage loan act, 1981 PA 125,
MCL 493.51 to 493.81; or the consumer financial services act, 1988
PA 161, MCL 487.2051 to 487.2072. For purposes of this subdivision,
"clerical or support duties" may include any of the following after
an application is received:
(i) The receipt, collection, distribution, and analysis of
information common for the processing or underwriting of a
residential mortgage loan.
(ii) Communicating with a consumer to obtain the information
necessary for the processing or underwriting of a loan, to the
extent that the communication does not include offering or
negotiating loan rates or terms, or counseling consumers about
residential mortgage loan rates or terms.
(l) "Mortgage loan originator" means an individual who meets
all of the following:
(i) For compensation or gain or in the expectation of
compensation or gain, does any of the following:
(A) Takes a residential mortgage loan application.
(B) Offers or negotiates terms of a residential mortgage loan.
(ii) Is not an individual engaged solely as a loan processor or
underwriter except as otherwise provided in section 5(3).
(iii) Is not a person who only performs real estate brokerage
activities and is licensed or registered under the laws of this
state, unless the person is compensated by a lender, a mortgage
broker, or other mortgage loan originator or by any agent of a
lender, mortgage broker, or other mortgage loan originator.
(iv) Is not a person solely involved in extensions of credit
relating to timeshare plans, as that term is defined in 11 USC
101(53D).
(m) "Mortgage servicer" means a person who directly or
indirectly services or offers to service residential mortgage
loans.
(n) "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.
(o) "Nontraditional mortgage product" means any mortgage
product other than a 30-year fixed rate mortgage.
(p) "Person" means an individual, corporation, limited
liability company, partnership, association, or other legal entity.
(q) "Real estate brokerage activity" means any activity that
involves offering or providing real estate brokerage services to
the public, including, but not limited to, any of the following:
(i) Acting as a real estate agent or real estate broker for a
buyer, seller, lessor, or lessee of real property.
(ii) Bringing together parties interested in the sale,
purchase, lease, rental, or exchange of real property.
(iii) On behalf of any party, negotiating 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 that contract.
(iv) 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.
(v) Offering to engage in any activity, or act in any
capacity, described in subparagraphs (i), (ii), (iii), or (iv).
(r) "Registered mortgage loan originator" means an individual
who meets all of the following:
(i) Is a mortgage loan originator and is an employee of any of
the following:
(A) A depository institution.
(B) A subsidiary of a depository institution that is owned and
controlled by that depository institution and is regulated by a
federal banking agency.
(C) An institution regulated by the farm credit
administration.
(ii) Is registered with, and maintains a unique identifier
through, the nationwide mortgage licensing system and registry.
(s) "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 or residential real estate on which a person has
constructed or intends to construct a dwelling.
(t) "Residential real estate" means any real property located
in this state on which a person has constructed or intends to
construct a dwelling.
(u) "SAFE act" means the secure and fair enforcement for
mortgage licensing act of 2008, title V of the housing and economic
recovery act of 2008, Public Law 110-289, 12 USC 5101 to 5116.
(v) "Service" means the collection or remittance for a lender,
noteowner, or noteholder or a person's own account of 4 or more
installment payments of the principal of, interest of, or an amount
placed in escrow under a residential mortgage loan, mortgage
servicing agreement, or an agreement with a mortgagor.
(w) "Unique identifier" means a number or other identifier
assigned by protocols established by the nationwide mortgage
licensing system and registry.
Sec. 5. (1) Subject to subsection (5), unless specifically
exempted under subsection (2), beginning July 31, 2010, an
individual 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 act. Each licensed mortgage loan originator must register with
and maintain a valid unique identifier issued by the nationwide
mortgage licensing system and registry.
(2) Each of the following is exempt from this act:
(a) A registered mortgage loan originator, when acting for an
entity described section 3(p)(i)(A), (B), or (C).
(b) An individual who offers or negotiates terms of a
residential mortgage loan with or on behalf of an immediate family
member of that individual.
(c) An individual who offers or negotiates terms of a
residential mortgage loan secured by a dwelling that served as his
or her residence.
(d) 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, mortgage broker, or other
mortgage loan originator or by any agent of a lender, mortgage
broker, or other mortgage loan originator.
(3) A loan processor or underwriter who is an independent
contractor may not engage in the activities of a loan processor or
underwriter unless that independent contractor loan processor or
underwriter obtains and maintains a license under subsection (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.
(4) The commissioner may establish licensing rules and interim
procedures for licensing and acceptance of applications. For
previously registered or licensed individuals, the commissioner may
establish expedited review and licensing procedures.
(5) An individual engaged in the business of a mortgage loan
originator is not required to obtain and maintain a license under
this act until July 31, 2011 if that individual is employed
exclusively by a mortgage servicer; if that individual is
authorized to perform loan modification activities concerning
existing residential mortgage loans, and not to originate new
residential mortgage loans or perform any other activities of a
mortgage loan originator, on behalf of that mortgage servicer; and
if this extension of time is not inconsistent with any guideline,
rule, regulation, or interpretative letter of the United States
department of housing and urban development concerning the
interpretation of the SAFE act and its applicability to loan
modification activities.
Sec. 7. (1) An applicant for a license under this act shall
apply in a form as prescribed by the commissioner. The applicant
shall include with the application the fee required under section
19 and the criminal history check required under subsection (2).
Each application form shall contain the content established by
rule, instruction, or procedure of the commissioner. The
commissioner may change or update the application form and its
contents as necessary by the commissioner in order to carry out the
purposes of this act.
(2) A person that employs or offers to employ, or engages or
offers to engage as an agent, an individual as a mortgage loan
originator, to originate mortgage loans on or after July 31, 2010,
shall conduct a criminal history check of that individual and the
applicant shall submit the results of that criminal history check
with his or her application for license. All of the following apply
to the criminal history check of an individual required under this
subsection:
(a) The federal bureau of investigation shall perform the
criminal history check.
(b) The individual who is the subject of the criminal history
check shall have his or her fingerprints taken by a law enforcement
agency or by another person that the commissioner determines is
qualified to take fingerprints; shall pay the agency or person the
fees as required by the federal bureau of investigation for
processing fingerprints and completing a criminal history check;
and shall request that the agency or person forward the
fingerprints and appropriate fee to the federal bureau of
investigation for a national criminal history check.
(c) After receiving a proper request and the required fees
under this subsection, the federal bureau of investigation shall
conduct the criminal history check and provide the commissioner and
the applicant with the results of the criminal history check. The
results shall contain any criminal history record information
concerning the individual maintained by the federal bureau of
investigation's criminal history check.
(d) A criminal history check required under this subsection
may be conducted, requested of and performed by the federal bureau
of investigation, and submitted to the commissioner at any time on
or after July 31, 2009.
(3) The commissioner 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 licensed mortgage
loan originators or other persons subject to this act.
(4) In connection with an application for licensing as a
mortgage loan originator, an applicant shall at a minimum furnish
to the nationwide mortgage licensing system and registry
information concerning the applicant's identity, including, but not
limited to, all of the following:
(a) The results of the criminal history check conducted under
subsection (2).
(b) The applicant's 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
commissioner to obtain all of the following concerning the
applicant:
(i) An independent credit report obtained from a consumer
reporting agency, as defined in 603 of the fair credit reporting
act, 15 USC 1681a.
(ii) Information related to any administrative, civil, or
criminal findings by any governmental jurisdiction.
(5) For the purposes of this section, the commissioner may use
the nationwide mortgage licensing system and registry for any of
the following:
(a) Requesting information from and distributing information
to the department of justice or any governmental agency.
(b) Requesting and distributing information to and from any
source as directed by the commissioner.
Sec. 9. (1) The commissioner shall not issue a mortgage loan
originator license unless the commissioner makes at a minimum the
following findings:
(a) The applicant is not subject to a prohibition order issued
by the commissioner under section 27 or under any of the financial
licensing acts.
(b) The applicant has never had a mortgage loan originator
license revoked in any governmental jurisdiction, except that the
commissioner shall not consider a revocation that is formally
vacated as a revocation for purposes of this subdivision.
(c) Subject to subsection (2), the applicant has not been
convicted of, or pled guilty or no contest to, any of the following
in a domestic, foreign, or military court:
(i) Within the 10-year period preceding the date of the license
application, a felony other than a felony described in subparagraph
(ii).
(ii) At any time preceding the date of the license application,
any felony or misdemeanor involving fraud, dishonesty, or a breach
of trust, money laundering, embezzlement, forgery, a financial
transaction, or securities.
(d) The applicant has demonstrated financial responsibility,
character, and general fitness that commands the confidence of the
community and warrants a determination that the mortgage loan
originator will operate honestly, fairly, and efficiently within
the purposes of this act.
(e) The applicant has completed the prelicensing education
requirement described in section 11.
(f) The applicant has passed a written test that meets the
test requirement described in section 13.
(g) The applicant has met the surety bond requirement
described in section 29.
(2) The commissioner shall not consider a conviction for which
a pardon was granted a conviction for purposes of subsection
(1)(c).
Sec. 11. (1) To meet the prelicensing education requirement
under section 9(1)(e), except as provided in subsection (6), the
applicant shall complete at least 20 hours of education approved
under subsection (2), including at least all of the following:
(a) Three hours of federal law and regulations.
(b) Three hours of ethics, including instruction on fraud,
consumer protection, and fair lending issues.
(c) Two hours of training related to lending standards for the
nontraditional mortgage product marketplace.
(2) Only prelicensing education courses reviewed and approved
by the nationwide mortgage licensing system and registry may be
used to satisfy the requirements of subsection (1). Review and
approval of a prelicensing education course shall include review
and approval of the course provider.
(3) If approved by the nationwide mortgage licensing system
and registry, a prelicensing education course may be provided by
the employer of the applicant, an entity that is affiliated with
the applicant by an agency contract, or a subsidiary or affiliate
of that employer or entity.
(4) Prelicensing education may be offered in a classroom,
online, or by any other means approved by the nationwide mortgage
licensing system and registry.
(5) If a person completes any prelicensing education
requirements described in subsection (1)(a), (b), or (c) that are
approved by the nationwide mortgage licensing system and registry
for any state, the commissioner shall accept those hours of
education as credit toward completion of the prelicensing education
requirements under this section.
(6) For an application for a mortgage loan originator license
submitted before July 31, 2010, completion of the classroom
instruction requirement described in section 2a(4)(d) of the
mortgage brokers, lenders, and servicers licensing act, 1987 PA
173, MCL 445.1652a, or section 2a(4)(d) of the secondary mortgage
loan act, 1981 PA 125, MCL 493.52a, satisfies the prelicensing
education requirement described in subsection (1). An applicant
described in this subsection shall provide proof in the form of a
certificate of completion or other evidence acceptable to the
commissioner.
(7) If an unlicensed individual who formerly held a license
issued under this act applies for a new license under this act, he
or she must prove that he or she completed all of the continuing
education requirements of section 17 for the year in which the
previous license was last held to be eligible for a new or renewed
license.
Sec. 13. (1) To meet the written test requirement under
section 9(1)(f), except as provided in subsection (5), an
individual shall pass 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 on reasonable standards.
(2) A written test is not considered a qualified written test
for purposes of subsection (1) unless the test adequately measures
the applicant's knowledge and comprehension in appropriate subject
areas, including all of the following:
(a) Ethics.
(b) Federal law and regulation pertaining to mortgage
origination and to mortgage lending, including, but not limited to,
fraud, consumer protection, and fair lending issues and the
nontraditional mortgage marketplace.
(c) State law and regulation pertaining to mortgage
origination and to mortgage lending, including, but not limited to,
fraud, consumer protection, and fair lending issues and the
nontraditional mortgage marketplace.
(3) If the test provider is approved by the nationwide
mortgage licensing system and registry, the test provider may
provide a test at the location of the employer of the applicant,
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.
(4) All of the following apply to a test under this section:
(a) An individual is not considered to have passed a qualified
written test unless the individual achieves a test score of 75% or
more correct answers to questions.
(b) An individual may retake a test 3 consecutive times, if
each consecutive retaking occurs at least 30 days after the
preceding test.
(c) If an individual fails 3 consecutive tests, the individual
must wait at least 6 months before taking the test again.
(d) If an unlicensed individual who formerly held a license
issued under this act applies for a new license under this act, he
or she must retake the test if it has been at least 5 years since
he or she last held a valid license under this act.
(5) If an applicant for a mortgage loan originator license has
met the testing requirement described in section 2a(4)(e) of the
mortgage brokers, lenders, and servicers licensing act, 1987 PA
173, MCL 445.1652a, or section 2a(4)(e) of the secondary mortgage
loan act, 1981 PA 125, MCL 493.52a, in the 5-year period preceding
the date of the application, and provides evidence acceptable to
the commissioner that he or she met that testing requirement, the
applicant is considered to have met that part of the written test
requirement under section 9(1)(f) applicable to the state law and
regulation described in subsection (2)(c).
Sec. 15. (1) The commissioner shall annually renew the license
of a licensed mortgage loan originator if all of the following are
met before his or her current license expires:
(a) The mortgage loan originator continues to meet the minimum
standards for license issuance under section 9.
(b) The mortgage loan originator has satisfied the annual
continuing education requirements described in section 17.
(c) The mortgage loan originator has paid the fee required
under section 19.
(2) If a mortgage loan originator fails to satisfy the
requirements of subsection (1) for renewal of his or her license,
the license shall expire. The commissioner may adopt procedures for
the reinstatement of expired licenses consistent with the standards
established by the nationwide mortgage licensing system and
registry.
Sec. 17. (1) To meet the annual continuing education
requirements described in section 15(1)(b), a licensed mortgage
loan originator shall complete at least 8 hours of education
approved under subsection (2), including at least all of the
following:
(a) Three hours of federal law and regulations.
(b) Two hours of ethics, including instruction on fraud,
consumer protection, and fair lending issues.
(c) Two hours of training related to lending standards for the
nontraditional mortgage product marketplace.
(2) Only continuing education courses reviewed and approved by
the nationwide mortgage licensing system and registry, based on
reasonable standards, may be used to satisfy the requirements of
subsection (1). Review and approval of a continuing education
course shall include review and approval of the course provider.
(3) If approved by the nationwide mortgage licensing system
and registry, a continuing education course may be provided by the
employer of the mortgage loan originator, an entity that is
affiliated with the mortgage loan originator by an agency contract,
or a subsidiary or affiliate of that employer or entity.
(4) Continuing education may be offered in a classroom,
online, or by any other means approved by the nationwide mortgage
licensing system and registry.
(5) Both of the following apply to the continuing education
requirements of a licensed mortgage loan originator:
(a) Except for section 15(2) and subsection (9), he or she may
only receive credit for a continuing education course in the year
in which the course is taken.
(b) He or she may not take the same approved course in the
same or successive years to meet the annual requirements for
continuing education.
(6) 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 2 hours credit for
every 1 hour taught.
(7) If a person successfully completes any continuing
education requirements described in subsection (1)(a), (b), or (c)
that are approved by the nationwide mortgage licensing system and
registry for any state, the commissioner shall accept those hours
of education as credit toward completion of the continuing
education requirements under this section.
(8) If an unlicensed individual who formerly held a license
issued under this act applies for a new license under this act, he
or she must complete the continuing education requirements for the
last year in which the license was held to be eligible for a new or
renewed license.
(9) The commissioner by rule may establish a procedure by
which an individual who meets the requirements of section 15(1)(a)
and (c) may make up any deficiency in continuing education.
Sec. 19. (1) At the time of making an initial application for
a mortgage loan originator license under this act, the applicant
shall pay to the commissioner the annual operating fee established
by the commissioner under subsection (2).
(2) The commissioner shall annually establish a schedule of
fees that are sufficient to pay, but not to exceed, the reasonably
anticipated costs of the office of financial and insurance
regulation for administering and enforcing this act. The fee
schedule shall include all of the following:
(a) An annual fee for each licensed mortgage loan originator
in an amount established by the commissioner. For purposes of this
subdivision, the commissioner shall establish an amount for the
annual fee that is sufficient to defray the estimated cost of
administering and enforcing the provisions of this act.
(b) For amending or reissuing a mortgage loan originator
license, a fee of not less than $15.00 or more than $200.00.
(c) A licensed mortgage loan originator shall pay the actual
travel, lodging, and meal expenses incurred by employees of the
office of financial and insurance regulation who travel out of
state to conduct an examination or investigation of a licensed
mortgage loan originator and the cost of independent investigators
employed under section 33(6)(a).
(3) Fees received under this act are not refundable.
(4) If any fees or penalties provided for in this act are not
paid when required, the attorney general may maintain an action
against the delinquent licensed mortgage loan originator for the
recovery of the fees and penalties together with interest and
costs.
(5) A licensed mortgage loan originator who fails to submit to
the commissioner the reports required under section 33(3) is
subject to a penalty of $25.00 for each day a required report is
delinquent or $1,000.00, whichever is less.
(6) A mortgage loan originator license renewal fee that is not
received on or before December 31 is subject to a penalty of $25.00
for each day the fee is delinquent or $1,000.00, whichever is less.
(7) Money received from the fees described in this section
shall be deposited in the MBLSLA fund. As used in this subsection,
"MBLSLA fund" means the restricted account created under section
8(8) of the mortgage brokers, lenders, and servicers licensing act,
1987 PA 173, MCL 445.1658.
(8) The annual operating fees set by the commissioner shall
not exceed the levels needed to cover the estimated cost of
enforcement of this act.
Sec. 21. In addition to any other duties imposed on the
commissioner under this act, the commissioner shall require
mortgage loan originators to be licensed and registered through the
nationwide mortgage licensing system and registry. To carry out
this requirement, the commissioner is authorized to participate in
the nationwide mortgage licensing system and registry and may by
rule establish other requirements that he or she considers
necessary, including, but not limited to, any of the following:
(a) Background checks for any of the following:
(i) The criminal history of a licensed mortgage loan originator
or license applicant through fingerprint or other databases.
(ii) Information about a licensed mortgage loan originator or
license applicant in civil or administrative records.
(iii) A licensed mortgage loan originator's or license
applicant's credit history.
(iv) Any other information about a licensed mortgage loan
originator or license applicant considered necessary by the
nationwide mortgage licensing system and registry.
(b) The payment of fees to apply for or renew licenses through
the nationwide mortgage licensing system and registry.
(c) The setting or resetting as necessary of renewal or
reporting dates.
(d) Requirements for amending or surrendering a license or any
other activities that the commissioner considers necessary for
participation in the nationwide mortgage licensing system and
registry.
Sec. 23. The commissioner shall establish a process through
which mortgage loan originators may challenge information entered
into the nationwide mortgage licensing system and registry by the
commissioner.
Sec. 25. (1) To ensure the effective supervision and
enforcement of this act, the commissioner may do any of the
following, in a manner consistent with the requirements of the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328:
(a) Deny, suspend, revoke, condition, or decline to renew a
license for a violation of this act, rules issued under this act,
or an order or directive entered under this act.
(b) Deny, suspend, revoke, condition or decline to renew a
license if a licensed mortgage loan originator or license applicant
fails at any time to meet the requirements of section 9 or 15 or
withholds information or makes a material misstatement in an
application for a license or renewal of a license.
(c) Order restitution against a person that is subject to this
act for a violation of this act.
(d) Subject to subsections (2), (3), and (4), impose a civil
fine on a person that is subject to this act.
(e) Issue any of the following orders or directives under this
act:
(i) Order or direct a person that is subject to this act to
cease and desist from conducting business, including an immediate
temporary order to cease and desist.
(ii) Order or direct a person that is subject to this act to
cease any harmful activities or violations of this act, including
an immediate temporary order to cease and desist.
(iii) Enter an immediate temporary order to cease business under
a license or interim license issued pursuant to the authority
granted under section 5(4), if the commissioner determines that the
license or interim license was erroneously granted or the licensed
mortgage loan originator is currently in violation of this act.
(iv) Issue an order under section 27.
(v) Order or direct any other affirmative action that the
commissioner considers necessary.
(2) The commissioner may impose a civil fine on a mortgage
loan originator or other person subject to this act, if the
commissioner finds, on the record after notice and opportunity for
hearing, that the mortgage loan originator or other person has
violated or failed to comply with a requirement of this act, a rule
promulgated by the commissioner under this act, or an order issued
under the authority of this act.
(3) The maximum fine for each violation or failure to comply
described in subsection (2) is $25,000.00.
(4) Each violation or failure to comply described in
subsection (2) is a separate and distinct violation or failure.
Sec. 27. (1) If in the opinion of the commissioner an
individual has engaged in fraud, the commissioner may serve on that
person a written notice of intention to prohibit that individual
from being licensed under this act, licensed or registered under
any of the financial licensing acts, or employed by, an agent of,
or a control person of a licensee or registrant under any of the
financial licensing acts.
(2) A notice issued under subsection (1) shall contain a
statement of the facts supporting the prohibition and, except as
provided under subsection (7), shall set a hearing on a date within
60 days after the date of the notice. If the individual does not
appear at the hearing, he or she is considered to have consented to
the issuance of an order in accordance with the notice.
(3) If after a hearing held under subsection (2) the
commissioner finds that any of the grounds specified in the notice
have been established, the commissioner may issue an order of
suspension or prohibition from being licensed under this act,
licensed or registered under any of the financial licensing acts,
or employed by, an agent of, or a control person of a licensee or
registrant under any of the financial licensing acts.
(4) An order issued under subsection (2) or (3) is effective
when served on an individual. The commissioner shall also serve a
copy of the order upon the licensee of which the individual is an
employee or agent. The order remains in effect until it is stayed,
modified, terminated, or set aside by the commissioner or a
reviewing court.
(5) After 5 years from the date of an order issued under
subsection (2) or (3), the individual subject to the order may
apply to the commissioner to terminate the order.
(6) If the commissioner considers that an individual served a
notice under subsection (1) poses an imminent threat of financial
loss to customers, the commissioner may serve on that individual an
order of suspension from being employed by, an agent of, or a
control person of a licensee or registrant under any of the
financial licensing acts. The suspension is effective on the date
the order is issued and, unless stayed by a court, remains in
effect until the commissioner completes the review required under
this section and the commissioner has dismissed the charges
specified in the order.
(7) Unless otherwise agreed to by the commissioner and the
individual served with an order issued under subsection (6), the
commissioner shall hold the hearing required under subsection (2)
to review the suspension not earlier than 5 days or later than 20
days after the date of the notice.
(8) If an individual is convicted of a felony involving fraud,
dishonesty, or breach of trust, the commissioner may issue an order
suspending or prohibiting him or her from being licensed under this
act, licensed or registered under any of the financial licensing
acts, or employed by, an agent of, or a control person of a
licensee or registrant under any of the financial licensing acts.
After 5 years from the date of the order, the individual subject to
the order may apply to the commissioner to terminate the order.
(9) The commissioner shall mail a copy of any notice or order
issued under this section to the employer or principal of the
individual subject to the notice or order.
(10) Within 30 days after the commissioner has notified the
parties that the case has been submitted to him or her for final
decision, the commissioner shall render a decision that includes
findings of fact supporting the decision and serve on each party to
the proceeding a copy of the decision and an order consistent with
the decision.
(11) Except for a consent order, a party to the proceeding or
a person affected by an order issued under this section may obtain
a judicial review of the order. A consent order may be reviewed as
provided under the administrative procedures act of 1969, 1969 PA
306, MCL 24.201 to 24.328. Except for an order under judicial
review, the commissioner may terminate or set aside any order. The
commissioner may terminate or set aside an order under judicial
review with the permission of the court.
(12) Unless ordered by the court, the commencement of
proceedings for judicial review under subsection (11) does not stay
the commissioner's order.
(13) The commissioner may apply to the circuit court of Ingham
county for the enforcement of any outstanding order issued under
this section.
(14) Any individual who violates a final order issued under
this section is guilty of a misdemeanor punishable by a fine of not
more than $5,000.00 or imprisonment for not more than 1 year, or
both.
(15) As used in this section, "fraud" includes actionable
fraud, actual or constructive fraud, criminal fraud, extrinsic or
intrinsic fraud, fraud in the execution, in the inducement, in
fact, or in law, or any other form of fraud.
Sec. 29. (1) Each mortgage loan originator must provide to the
commissioner or be covered by a surety bond that meets the
requirements of this section.
(2) If the mortgage loan originator is an employee or
exclusive agent of a person subject to this act and that person has
provided the commissioner with a surety bond that satisfies the
requirements of this section, the commissioner may accept that
surety bond in lieu of the mortgage loan originator's surety bond
obligation under subsection (1).
(3) All of the following apply to a surety bond described in
subsection (1) or (2):
(a) A surety bond described in subsection (2) must provide
coverage for each mortgage loan originator covered by that bond in
1 of the following amounts:
(i) If the mortgage loan originator did not close any mortgage
loans in the preceding calendar year, or the sum of the principal
amounts of mortgage loans closed by the mortgage loan originator in
the preceding calendar year is less than $12,000,000.00, as
determined by the commissioner, $10,000.00.
(ii) If the sum of the principal amounts of mortgage loans
closed by the mortgage loan originator in the preceding calendar
year is $12,000,000.00 or more and less than $24,000,000.00, as
determined by the commissioner, $25,000.00.
(iii) If the sum of the principal amounts of mortgage loans
closed by the mortgage loan originator in the preceding calendar
year is $24,000,000.00 or more, as determined by the commissioner,
$50,000.00.
(b) The surety bond shall be in a form as prescribed by the
commissioner.
(c) The commissioner may promulgate rules with respect to the
requirements for surety bonds under this section that are necessary
to accomplish the purposes of this act.
(4) If an action is commenced on a bond described in this
section, the commissioner may require the filing of a new bond. If
there is a recovery in that action, the mortgage loan originator
shall immediately provide to the commissioner a new surety bond
that meets the requirements of this section.
Sec. 31. (1) Except as otherwise provided in section 1512 of
the SAFE act, 12 USC 1511, the requirements of the freedom of
information act, 1976 PA 442, MCL 15.231 to 15.246, or any federal
law concerning the 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 or
the rules of any federal or state court concerning that information
or material shall continue to apply to that information or material
after the information or material is disclosed to the nationwide
mortgage licensing system and registry. Any information or material
described in this section may be shared with any state and federal
regulatory official with mortgage industry oversight authority
without the loss of privilege or the loss of confidentiality
protections provided by federal law or the freedom of information
act, 1976 PA 442, MCL 15.231 to 15.246.
(2) For purposes of this section, the commissioner may enter
into 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 or order of the commissioner.
(3) Any information or material that is subject to a privilege
or confidentiality under subsection (1) shall not be subject to any
of the following:
(a) 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.
(b) 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 the information or material, the
person to which the information or material pertains waives, in
whole or in part, in that person's discretion, that privilege.
(4) This section does not apply to any information or material
relating to the employment history of, and publicly adjudicated
disciplinary and enforcement actions against, a mortgage loan
originator that is included in the nationwide mortgage licensing
system and registry for access by the public.
Sec. 33. (1) In addition to any authority provided under this
act, the commissioner may conduct any of the following
investigations and examinations:
(a) 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 act, the commissioner may access,
receive, and use any books, accounts, records, files, documents,
information, or evidence, including, but not limited to, any of the
following:
(i) Criminal, civil, and administrative history information.
(ii) Personal history and experience information, including
independent credit reports obtained from a consumer reporting
agency, as defined in 603 of the fair credit reporting act, 15 USC
1681a.
(iii) Any other documents, information, or evidence the
commissioner considers relevant to the inquiry or investigation,
regardless of the location, possession, control, or custody of
those documents, information, or evidence.
(b) For purposes of investigating violations or complaints
arising under this act, or for the purposes of examination, the
commissioner may review, investigate, or examine any licensed
mortgage loan originator or other person subject to this act as
often as necessary in order to carry out the purposes of this act.
The commissioner may direct, subpoena, or order the attendance of
and examine under oath any person whose testimony may be required
about the loans or the business or subject matter of that
examination or investigation and may direct, subpoena, or order
that person to produce books, accounts, records, files, and any
other documents that the commissioner considers relevant to the
inquiry.
(2) Each licensed mortgage loan originator or other person
subject to this act shall make available to the commissioner on
request the books and records relating to the operations of that
licensed mortgage loan originator or other person. The commissioner
shall have access to those books and records and may interview the
officers, principals, mortgage loan originators, employees,
independent contractors, agents, and customers of the licensed
mortgage loan originator or other person concerning the business of
the licensed mortgage loan originator or other person.
(3) Each licensed mortgage loan originator or other person
subject to this act shall make or compile reports or prepare other
information requested by the commissioner in order to carry out the
purposes of this section, including, but not limited to, any of the
following:
(a) Accounting compilations.
(b) Information lists and data concerning loan transactions,
in a format prescribed by the commissioner.
(c) Any other information the commissioner considers necessary
to carry out the purposes of this section.
(4) In making any examination or investigation authorized by
this act, the commissioner may control access to any documents and
records of the licensed mortgage loan originator or other person
under examination or investigation. The commissioner 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.
(5) If the commissioner is controlling access to documents or
records under subsection (4), a person shall not remove or attempt
to remove any of the documents and records except pursuant to a
court order or with the consent of the commissioner. Unless the
commissioner has reasonable grounds to believe that the documents
or records of the licensed mortgage loan originator or other person
have been or are at risk of being altered or destroyed for purposes
of concealing a violation of this act, the licensed mortgage loan
originator or other person or the owner of the documents and
records shall have access to the documents or records as necessary
to conduct its ordinary business affairs.
(6) For purposes of this section, the commissioner may do any
of the following:
(a) Retain attorneys, accountants, or other professionals and
specialists as examiners, auditors, or investigators to conduct or
assist in the conduct of examinations or investigations.
(b) Enter into agreements or relationships with other
government officials or regulatory associations in order to improve
efficiencies and reduce regulatory burden by sharing resources,
standardized or uniform methods or procedures, and documents,
records, information, or evidence obtained under this section.
(c) Use, hire, contract, or employ public or privately
available analytical systems, methods, or software to examine or
investigate a licensed mortgage loan originator or other person
subject to this act.
(d) Accept and rely on examination or investigation reports
made by other state or federal government officials.
(e) Accept audit reports prepared by an independent certified
public accountant for the licensed mortgage loan originator or
other person subject to this act in the course of that part of the
examination covering the same general subject matter as the audit
and incorporate the audit report in the report of the examination,
report of investigation, or other writing of the commissioner.
(7) The commissioner's authority under this section remains in
effect whether a licensed mortgage loan originator or other person
subject to this act acts or claims to act under any licensing or
registration law of this state or claims to act without that
authority.
(8) A licensed mortgage loan originator or other person
subject to investigation or examination under this section shall
not knowingly withhold, abstract, remove, mutilate, destroy, or
secrete any books, records, computer records, or other information
from the commissioner.
Sec. 35. A licensed mortgage loan originator shall not do any
of the following:
(a) Engage in fraud, deceit, or material misrepresentation in
connection with any transaction governed by this act.
(b) Intentionally, or due to gross or wanton negligence,
repeatedly fail to provide borrowers with any material disclosures
of information required by law.
(c) Directly or indirectly make a false, misleading, or
deceptive advertisement regarding mortgage loans or the
availability of mortgage loans.
(d) Suppress or withhold from the commissioner any information
that he or she possesses and that, if submitted, would have made
him or her ineligible for licensure or license renewal under this
act at the time of application and would have allowed the
commissioner to refuse to license him or her.
(e) Be convicted of, or plead no contest to, any of the
following:
(i) A misdemeanor involving fraud, dishonesty, or a breach of
trust, money laundering, embezzlement, forgery, a financial
transaction, or securities.
(ii) A felony.
(f) Refuse or fail to furnish any information or make any
report required by the commissioner to issue or renew a license
under this act, or otherwise required by the commissioner, within a
reasonable period of time, as determined by the commissioner, after
requested by the commissioner.
Sec. 37. A licensed mortgage loan originator, or employer or
principal of a licensed mortgage loan originator on his or her
behalf, shall submit to the nationwide mortgage licensing system
and registry reports of condition. The reports of condition shall
be in the form and shall contain the information required by the
nationwide mortgage licensing system and registry.
Sec. 39. (1) Subject to section 31, the commissioner shall
regularly report violations of this act, and enforcement actions
and other relevant information, to the nationwide mortgage
licensing system and registry.
(2) The commissioner shall comply with the administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, in
promulgating any rules under this act.
Sec. 41. The unique identifier of any person originating a
residential mortgage loan in this state 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 or order of the commissioner.
Enacting section 1. This act takes effect July 31, 2009.
Enacting section 2. This act does not take effect unless all
of the following bills of the 95th Legislature are enacted into
law:
(a) Senate Bill No. 463.
(b) Senate Bill No. 464.
(c) Senate Bill No. 465.
