Bill Text: MI SB0908 | 2011-2012 | 96th Legislature | Engrossed
Bill Title: Financial institutions; loan officers; regulation of loan modification activities by sponsored mortgage loan originators; clarify. Amends secs. 3, 5, 9, 15 & 29 of 2009 PA 75 (MCL 493.133 et seq.).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2012-05-31 - Assigned Pa 0150'12 With Immediate Effect [SB0908 Detail]
Download: Michigan-2011-SB0908-Engrossed.html
SB-0908, As Passed House, May 10, 2012
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 908
A bill to amend 2009 PA 75, entitled
"Mortgage loan originator licensing act,"
by amending sections 3, 5, 9, 15, and 29 (MCL 493.133, 493.135,
493.139, 493.145, and 493.159), sections 3 and 29 as amended by
2010 PA 356.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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.licensing
and regulatory affairs.
(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) "Exempt company" means a person that meets all of the
following:
(i) Is not required to obtain a license or registration, or is
exempt from licensing or registration, 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.
(ii) Has a unique identifier in the nationwide mortgage
licensing system and registry.
(iii) Has been approved by the commissioner in the nationwide
mortgage licensing system and registry as an exempt company.
(f) (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.
(g) (f)
"Financial licensing
acts" means that term as defined
in section 2 of the consumer financial services act, 1988 PA 161,
MCL 487.2052.
(h) (g)
"Immediate family member"
means a spouse, child,
sibling, parent, grandparent, or grandchild. The term includes
stepparents, stepchildren, stepsiblings, and adoptive
relationships.
(i) (h)
"Individual" means a
natural person.
(j) (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
originates residential mortgage loans and meets all of the
following:
(i) Is not an individual engaged solely as a loan processor or
underwriter except as otherwise provided in section 5(3).
(ii) 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.
(iii) 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) "Originate" means do any of the following for compensation
or gain, or in the expectation of compensation or gain, in
connection with a residential mortgage loan:
(i) Take a residential mortgage loan application.
(ii) Offer or negotiate terms of a residential mortgage loan.
(n) "Mortgage servicer" means a person who directly or
indirectly services or offers to service residential mortgage
loans.
(o) "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.
(p) "Nontraditional mortgage product" means any mortgage
product other than a 30-year fixed rate mortgage.
(q) "Person" means an individual, corporation, limited
liability company, partnership, association, or other legal entity.
(r) "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 subparagraph
(i), (ii), (iii), or
(iv).
(s) "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.
(t) "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.
(u) "Residential real estate" means any real property located
in this state on which a person has constructed or intends to
construct a dwelling.
(v) "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.
(w) "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.
(x) "Sponsor" means a person that meets all of the following:
(i) Has a unique identifier in the nationwide mortgage
licensing system and registry.
(ii) Is approved by the commissioner in the nationwide mortgage
licensing system and registry as an exempt company or as a person
licensed or registered 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.
(iii) Has indicated in the nationwide mortgage licensing system
and registry that an individual will act as a mortgage loan
originator for that person under that person's specific license,
registration, or status as an exempt company.
(y) (x)
"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 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 in section 3(r)(i)(A), 3(s)(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. 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.
(h) The applicant has a sponsor in the nationwide mortgage
licensing system and registry that is approved by the commissioner.
(2) The commissioner shall not consider a conviction for which
a pardon was granted a conviction for purposes of subsection
(1)(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
requirements for license issuance under section 9.9(1)(a)
to (g).
(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.
29. (1) Each Subject to
subsection (2), each mortgage
loan originator must provide to the commissioner or be covered by a
surety
bond that meets the requirements of subsection (4). (5). A
surety bond provided under this subsection shall provide coverage
for the mortgage loan originator in 1 of the following amounts:
(a) If the mortgage loan originator did not originate any
mortgage loans in the preceding calendar year, or the sum of the
principal amounts of mortgage loans originated 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.
(b) If the sum of the principal amounts of mortgage loans
originated 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.
(c) If the sum of the principal amounts of mortgage loans
originated 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.
(2)
If the a mortgage loan originator is an employee or
exclusive
agent of a person subject to this act sponsor and that
person
has provided sponsor provides
the commissioner with a surety
bond
that satisfies the requirements of subsection (4), (5), the
commissioner may accept that surety bond in lieu of the mortgage
loan originator's surety bond obligation under subsection (1). The
principal amount of a surety bond provided under this subsection
shall
provide coverage for all of the person's sponsor's mortgage
loan originators in 1 of the following amounts:
(a) If the sum of the principal amounts of mortgage loans
closed
or modified by the person sponsor
in the preceding calendar
year is less than $12,000,000.00, as determined by the
commissioner, $50,000.00.
(b) If the sum of the principal amounts of mortgage loans
closed
or modified by the person sponsor
in the preceding calendar
year is $12,000,000.00 or more and less than $24,000,000.00, as
determined by the commissioner, $150,000.00.
(c) If the sum of the principal amounts of mortgage loans
closed
or modified by the person sponsor
in the preceding calendar
year is $24,000,000.00 or more, as determined by the commissioner,
$250,000.00.
(3) The license of a mortgage loan originator who fails to
meet the requirements of section 9(1)(g) or (h) is automatically
subject to a condition that he or she may not originate mortgage
loans under this act. A mortgage loan originator who is subject to
a condition described in this subsection shall immediately cease
originating mortgage loans and shall not originate mortgage loans
until that condition is removed by the commissioner.
(4) (3)
Before the end of a calendar
quarter, a person sponsor
that provides a surety bond under subsection (2) for its employees
and exclusive agents shall submit a report to the commissioner that
contains all of the following information about the surety bond in
effect for the next calendar quarter:
(a)
The name and unique identifier of the person.sponsor.
(b) The name of the surety issuing the bond.
(c) For each mortgage loan originator covered by the bond, his
or her legal name, exactly as filed with the nationwide mortgage
licensing system and registry, and unique identifier.
(5) (4)
All of the following apply to a
surety bond provided
under subsection (1) or (2):
(a) The bond shall be in a form as prescribed by the
commissioner.
(b) The commissioner may promulgate rules with respect to the
requirements for surety bonds under this section that the
commissioner determines are necessary to accomplish the purposes of
this act.
(c) 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 or
person
sponsor described in subsection (2) shall immediately
provide to the commissioner a new surety bond that meets the
requirements of this section.
