Bill Text: MI SB1525 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: Financial institutions; loan officers; surety bond requirements for mortgage loan originators; modify. Amends secs. 3 & 29 of 2009 PA 75 (MCL 493.133 & 493.159).
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Passed) 2010-12-29 - Assigned Pa 0356'10 With Immediate Effect [SB1525 Detail]
Download: Michigan-2009-SB1525-Engrossed.html
SB-1525, As Passed House, December 15, 2010
SUBSTITUTE FOR
SENATE BILL NO. 1525
A bill to amend 2009 PA 75, entitled
"Mortgage loan originator licensing act,"
by amending sections 3 and 29 (MCL 493.133 and 493.159).
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.
(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
originates residential mortgage loans and 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.
(i) (ii) Is not
an individual engaged solely as a loan processor
or underwriter except as otherwise provided in section 5(3).
(ii) (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.
(iii) (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) "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) (m)
"Mortgage servicer" means
a person who directly or
indirectly services or offers to service residential mortgage
loans.
(o) (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.
(p) (o)
"Nontraditional mortgage
product" means any mortgage
product other than a 30-year fixed rate mortgage.
(q) (p)
"Person" means an
individual, corporation, limited
liability company, partnership, association, or other legal entity.
(r) (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).
(s) (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.
(t) (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.
(u) (t)
"Residential real estate"
means any real property
located in this state on which a person has constructed or intends
to construct a dwelling.
(v) (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.
(w) (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.
(x) (w)
"Unique identifier" means
a number or other identifier
assigned by protocols established by the nationwide mortgage
licensing system and registry.
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 subsection
(4). 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 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 subsection
(4), 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 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 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 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 in the preceding calendar year is
$24,000,000.00 or more, as determined by the commissioner,
$250,000.00.
(3) Before the end of a calendar quarter, a person 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.
(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.
(4) (3)
All of the following apply to a
surety bond described
in
provided under 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.
(a) (b)
The surety bond shall be in
a form as prescribed by
the commissioner.
(b) (c)
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) (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 or
person described in subsection (2) shall immediately provide to the
commissioner a new surety bond that meets the requirements of this
section.
