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Louisiana Office of Financial Institutions

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Title: Louisiana Office of Financial Institutions


1
Louisiana Office of Financial Institutions
  • Orientation to the
  • Louisiana Secure and Fair Enforcement of Mortgage
    Licensing Act of 2009
  • Or
  • Louisiana S.A.F.E. Residential Mortgage Lending
    Act
  • Updated10-09

2
SAFE Residential Mortgage Lending Act
  • LSA-R.S. 61081 through 61099
  • Enacted effective July 31, 2009
  • Provides for licensure of mortgage originators,
    brokers, and lenders

3
Residential Mortgage Lending Act
  • Subdivided into three parts
  • PART I. GENERAL PROVISIONS
  • Definitions
  • Prohibitions
  • Promulgation of Rules
  • PART II. LICENSURE, REGISTRATION,
    CERTIFICATION
  • Licensure Requirements
  • Applications
  • Recordkeeping OFI Rule RML 01-01
  • Examination and Investigation of Complaints
  • Suspension and Revocation of Licenses and
    Registrations
  • PART III. RESIDENTIAL MORTGAGE LOANS
  • Fees and Charges
  • Mortgage Loan Origination Agreements
  • Criminal Penalties

4
Residential Mortgage Lending Act
  • Who must be licensed
  • Originators
  • (including contract processors and underwriters)
  • Brokers
  • Lenders
  • Wholesale Lenders
  • which are not otherwise exempt

5
Definitions
  • Mortgage Loan Originator means an individual
    who for compensation or gain or with the
    expectation of compensation or gain takes a
    residential mortgage loan application or offers
    or negotiates terms of a residential mortgage
    loan.

6
Definitions
  • Mortgage Broker or Residential Mortgage Broker
  • any person who, directly or indirectly, for
    compensation or expectation of compensation,
    negotiates, places, or finds, or offers to
    negotiate, place or find a residential mortgage
    loan for another person
  • includes FHA loan correspondents and lenders who
    table fund loans

7
Definitions
  • Mortgage Lender or Residential Mortgage Lender
  • any person who, directly or indirectly,
    originates or makes, or offers to originate or
    make, a residential mortgage loan for another
    person

8
Definitions
  • Residential Mortgage Lending Activity
  • any activity, including electronic activity,
    engaged in for compensation or with the
    expectation of compensation in connection with a
    residential loan transaction including
    origination or funding, negotiation or placement,
    or offering to negotiate,place or fund a
    residential mortgage loan for a person

9
Definitions
  • Residential Mortgage Loan
  • 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 Reg Z or
    residential immovable property upon which is
    constructed or intended to be constructed a
    dwelling as defined in Reg Z

10
Residential Mortgage Loan
  • Now covers all loans secured by a persons
    dwelling including
  • Mobile home loans without a security interest in
    the land
  • Motor homes used as the persons dwelling
  • Boats if used as the persons dwelling
  • Vacant land if to be used to construct or move a
    persons residence on it

11
Definitions
  • Registered Mortgage Loan Originator
  • An individual who meets the definition of a
    mortgage loan originator and is an employee of a
    depository institution or a subsidiary that is
    either owned and controlled by a depository
    institution and regulated by a federal banking
    agency or an institution regulated by the Farm
    Credit Administration and is registered with, and
    maintains a unique identifier through, the
    Nationwide Mortgage Licensing System registry.

12
R.S. 61084
  • No person, directly or indirectly, shall engage
    in a residential mortgage lending activity
    without complying with the Louisiana S.A.F.E.
    Residential Mortgage Lending Act or rules and
    regulations promulgated pursuant to thereof

13
R.S. 61086
  • Beginning July 31, 2009, unless otherwise exempt,
    no person shall engage in residential mortgage
    lending activity without first obtaining and
    maintaining annually
  • A license and registration as a mortgage loan
    originator, or a license as a mortgage lender or
    broker
  • A unique identifier in the NMLSR

14
R.S. 61086
  • The following persons shall have until July 31,
    2010 to obtain a license in compliance with the
    Act
  • A person whose activities were not subject to the
    licensing provisions of this Act on July 30, 2009
  • A person engaged in residential mortgage lending
    activities which was subject to an exemption
    provided by this Chapter on July 30, 2009

15
Originator Exemptions
  • Registered mortgage loan originators, when acting
    for a depository institution
  • An individual who offers or negotiates terms of a
    residential mortgage loan with or on behalf of an
    immediate family member
  • A licensed attorney who negotiates the terms of a
    residential mortgage loan on behalf of a client
    as an ancillary matter to the representation of
    the client unless the attorney is compensated by
    a lender, a mortgage broker, or other mortgage
    originator including any agents of such

16
Originator Exemptions
  • Any individual who performs only real estate
    brokerage activities and is licensed provided
    they are not compensated by a lender, mortgage
    broker, or other mortgage originator or any of
    their agents
  • Any individual engaged solely in extensions of
    credit involving timeshares
  • Individuals who are employees of a retailer of
    manufactured or modular homes performing only
    clerical duties which receive no compensation or
    gain from a mortgage broker or lender
  • An individual who offers or negotiates terms of a
    mortgage loan secured by a dwelling that is owned
    by and serves as the individuals residence

17
Originator Exemptions Loan Processor or
Underwriter
  • An individual engaging solely in loan processor
    or underwriting activities, who does not
    represent to the public, through advertising or
    other means including the use of business cards,
    stationary, brochures, signs, rate lists, or
    other promotional items, that such individual can
    or sill perform any of the activities of a
    mortgage originator.
  • Defined as a person who performs clerical or
    support duties as an employee at the direction of
    and subject to the supervision of a person
    license or exempt from the Act.

18
Originator Exemptions Loan Processor or
Underwriter
  • Clerical or Support Duties include subsequent to
    receipt of an application
  • Receipt, collection, distribution, and analysis
    or information common for the processing or
    underwriting of a residential mortgage loan
  • 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 loan rates or terms

19
Originator Exemptions Loan Processor or
Underwriter
  • DO NOT APPLY TO
  • Independent contractor loan processors or
    underwriters
  • They must obtain an originator license and a
    unique identifier issued by the NMLSR

20
Mortgage Broker/Lender Exemptions
  • Depository Institutions or direct or indirect
    subsidiaries including their employees
  • Exempt from licensure
  • Still subject to requirement of Part III

21
Direct Indirect Subsidiaries Depository
Institutions
  • Proposed definitions
  • Direct Subsidiary - any firm, corporation,
    association, trust, or legal entity which is 100
    percent owned by a bank, savings bank, savings
    and loan association, or credit union.
  • Indirect Subsidiary - any firm, corporation,
    association, trust, or legal entity which is 100
    percent owned by a direct subsidiary as defined
    above, and any firm, corporation, association,
    trust, legal entity, partnership, or limited
    liability company which is 100 percent owned by a
    bank, savings bank, savings and loan association,
    or credit union, and one or more direct
    subsidiaries as defined above.

22
Mortgage Broker/Lender Exemptions
  • Mortgagees which are the former owner of the
    dwelling or residential immovable property
  • Insurance company or agent which holds a current
    producer license and brokers loans exclusively to
    an insurer
  • Both still subject to Part III of Act

23
Mortgage Broker/Lender Exemptions
  • Licensed Attorneys
  • When activity is incidental to providing legal
    services
  • Exempt from licensure
  • Still subject to Part III

24
Mortgage Broker/Lender Exemptions
  • Any not for profit 501(c) corporation making
    loans to promote home ownership or improvements
    for the disadvantaged
  • Exempt from licensure
  • Still subject to Part III

25
Mortgage Broker/Lender Exemptions
  • Any Real Estate Investment Trust
  • Small Business investment Companies licensed by
    SBA
  • Both Still subject to Part III

26
Requirements for Licensing
  • Fingerprints and fee for background check
  • Personal history and experience submitted through
    the NMLSR
  • Authorization and fee for obtaining a credit
    report
  • Information required for owners, members, or
    partners
  • For corporation each 10 or greater shareholder

27
Requirements for Licensing
  • Demonstrate financial responsibility, character,
    and general fitness to warrant a determination
    that the applicant will operate honestly, fairly
    and efficiently within the purposes of this
    Chapter.
  • Complete 24 hours of pre-licensing education
    approved by NMLSR (4 hours must also be approved
    by either NAMB or MBA) also a minimum of each of
    the following
  • 3 hours of federal law and regulations
  • 3 hours of ethics including fraud, consumer
    protection, and fair lending
  • 2 hours of training relating to non-traditional
    mortgage marketplace
  • Pass a written examination with both national and
    state components
  • Obtain and maintain a surety bond
  • Originators may be covered by a Surety Bond
    obtained by their employer

28
Restrictions on granting Licenses
  • Paid all fees due to OFI
  • Never had a mortgage related license revoked in
    any governmental jurisdiction
  • Never convicted, pled guilty, or nolo contendere
    to a felony involving fraud, dishonesty, breach
    of trust, or money laundering
  • Not convicted, pled guilty, or nolo contendere to
    any felony within the last seven years

29
Surety Bond / Deposit
  • Each applicant for licensure must provide one of
    the following in amount which determined by loan
    volume
  • Surety Bond based upon loan volume from the
    previous year
  • 0 to 99,999,999 bond amount of 25,000
  • 100,000,000 or greater bond amount of 50,000
  • Employer may obtain coverage for employees
  • Pledged deposit in federally insured institution
    located in Louisiana in the amount of Surety Bond
    otherwise required
  • For initial license bond or deposit must be at
    least 25,000

30
Nationwide Mortgage Licensing System and Registry
(NMLSR)
  • Effective June 18, 2007 Act 36 of the 2007
    legislature authorized the Office of Financial
    Institutions participation in a nationwide
    online licensing system.
  • The licensing system collects application data
    from individuals and companies and submit it to
    each jurisdiction (state) where they are licensed
    or applying for a license.

31
Nationwide Mortgage Licensing System and Registry
(NMLSR)
  • Office of Financial Institutions began utilizing
    the system on August 1, 2008.
  • Beginning August 1, 2008, all application filings
    and notifications with OFI were required to be
    made through the licensing system.

32
Nationwide Mortgage Licensing System and Registry
(NMLSR)
  • All persons utilizing the nationwide licensing
    system shall be required to pay user fees in
    addition to any applicable license, renewal,
    notification, or late fees.
  • The Commissioner may share any information
    disclosed to the system with any state or federal
    regulatory agencies having authority over
    residential mortgage lending activities

33
Application Fees
  • Mortgage Broker, Lender 400
  • Each Branch (other than main office) 100
  • Renewal Fee 300
  • Originators 100
  • Renewal Fee 100

34
RENEWALS
  • Renewals in the NMLSR begin November 1st each
    year. Licensees must attest to the accuracy of
    their records.
  • Late after December 31st and before March 1st
  • Broker/Lender late fee 200
  • Originator late fee 50
  • Licenses Expire January 1 unless all requirements
    satisfied before March 1

35
Requirements for Renewal
  • Must continue to meet all requirements for
    obtaining a license
  • Must satisfy the continuing educational
    requirements
  • Must be in compliance with all uncontested orders
    or consent agreements including payment of fees,
    penalties, or refunds
  • NOTE failing to meet requirements will result in
    license expiring on December 31

36
LSA-R.S. 61089
  • No residential mortgage lender or originator may
    conduct lending activities under any name other
    than in their current record on the NMLSR
  • Commissioner must be notified prior to changes
    in name or location and pay 100 fee
  • Must notify Commissioner of office closure within
    30 days
  • A late notification results in an additional 100
    late fee

37
LSA-R.S. 61089 B.
  • Whenever employment of an originator changes,
    Commissioner must be notified within 30 days
  • Employer and Employee must give notification
    through NMLSR
  • Employee must pay 50 transfer fee to change
    sponsorship of their license to another broker or
    lender
  • Failure to notify within 30 days results in a
    100 late notification fee per occurrence
  • Upon leaving employment remove relationship and
    sponsorship through NMLSR

38
R.S. 61090
  • No license may be sold or transferred
  • No person shall acquire control (51) of licensee
    without obtaining prior written approval of OFI
    after submitting an application and 300 fee
  • Failure to obtain approval constitutes operating
    without a license and subjects the acquirer to
    the associated penalties

39
R.S. 61090
  • A mortgage broker can only broker loans to a
    mortgage lender
  • Brokering to a Broker is prohibited

40
R.S. 61090
  • Licensees may only engage in residential mortgage
    lending through natural persons licensed as a
    mortgage broker, mortgage lender, or originator,
    or who are exempt from Part II

41
NET BRANCHING
  • Prohibited by LSA-R.S. 61090 G.
  • Except as provided by Rule
  • OFI in process of drafting rule currently
    allowing
  • net compensation of branch employees only
  • all contracts, leases, accounts must be in name
    of licensed
  • employer indemnification agreements not
    permissible

42
Restrictions on Employment after denial or
revocation
  • No person who has been denied a license or had a
    license revoked whether they failed to request an
    administrative hearing or the decision was
    affirmed in an administrative hearing, may be
    employed as a processor of mortgage loans or hold
    a position responsible for the operation of the
    principal place of business or any branch

43
R.S. 61090 (I)
  • No person licensed pursuant to the Residential
    Mortgage Lending Act, R.S. 61081 et seq., shall
    engage in or be financially compensated for any
    loan transaction in which such person, for a fee,
    commission, or other valuable consideration, is
    acting as a licensee under the Louisiana Real
    Estate License Law, R.S. 371430 et seq., in
    connection with the same residential loan
    transaction.

44
RECORD RETENTION
  • Requirements set forth by Rule and Policy
  • See http//www.ofi.louisiana.gov

45
EXAMINATIONS FEES
  • Fee not to exceed 400 per location visited
  • Due within 30 days of assessment
  • Late fee of up to 50 per day not paid timely
  • Other expenses may apply where records must be
    reviewed at an out-of-state location.

46
Suspension Revocation of License
  • After an opportunity to be heard in
    Administrative hearing, Commissioner may revoke
    or suspend license of person who
  • Violates any of the provisions of this Chapter or
    any Rule or Regulation promulgated, or any order,
    including but not limited to a cease and desist
    order or subpoena
  • Violates any provision of a voluntary consent
    agreement
  • Has knowingly provided or caused to be provided
    false or fraudulent information or financial
    statements or withheld information which would
    have resulted in denial of license
  • Refuses to permit examination of books and
    records or fails to furnish required information

47
Suspension Revocation
  • Fails to maintain records required after given
    written notice
  • Continues in office any individual with power to
    direct management or policies of a licensee upon
    conviction of any felony
  • Violates any provision of a regulatory or
    prohibitory statute and has been found to have
    violated such by the governmental agency
    responsible for determining such
  • Misrepresents or conceals material facts or makes
    false promises to influence an applicant or
    mortgagor
  • Knowingly engages in any transaction, practice,
    or course of business which perpetrates a fraud
    upon any person in connection with the making,
    purchasing, sale or brokering of any mortgage
    loan.

48
Suspension Revocation
  • Misrepresents or conceals material facts terms,
    conditions, etc. of a transaction to which he is
    a party, pertinent to an applicant or mortgagor
  • Failure to account for or deliver personal
    property which has come into their hands which is
    not their property or which they are not entitled
    to retain
  • Fails to disburse without cause any funds in
    accordance with any agreements with a residential
    mortgage loan
  • Fails to pay any fee or assessment imposed by the
    Chapter or Rule
  • Violates written restriction or conditions of
    license
  • Fails, after notice without lawful excuse, to
    obey any order or subpoena issued by the
    Commissioner
  • Commissioner discovers any fact or condition that
    currently exists which if it had existed at the
    time of the original application, would have
    warranted denial of the application

49
Reapplication upon revocation
  • A person whose license has been revoked for any
    reason may not reapply for a license until at
    least five years have elapsed from the date of
    the order of revocation, unless the commissioner,
    in his sole discretion, prescribes an earlier or
    later date

50
Immediate Suspension
  • The Commissioner may order an immediate
    suspension of the license of any person who
  • Fails to maintain bond or pledged deposit
  • Commits serious violations of the Act such that,
    in the opinion of the Commissioner, the public
    safety and welfare demand emergency action
  • Submits a check covering the fee for any
    application, notification, examination, late fee,
    or penalty which is returned by the licensees
    depository institution

51
Immediate Suspension
  • Is convicted of a felony which would have
    prohibited issuance or renewal of the license
  • Has license suspended or revoked in another
    jurisdiction

52
Appeal of Immediate Suspension
  • A person for whom a license has been suspended
    shall have thirty days from the date of the order
    to request a hearing in accordance with the
    Administrative Procedure Act
  • Failure to timely request a hearing shall
    constitute a waiver of appeal rights regarding
    the suspension

53
Fines Penalties
  • Upon being found guilty of violating any
    provision of the RMLA or Rule brokers, and/or
    originators may be fined
  • Up to 1,000 per violation
  • Up to 1,000 per day the person acts as a
    residential mortgage broker, lender, or
    originator without complying with the RMLA or any
    rules promulgated thereunder
  • Refunds may also be ordered for any unauthorized
    fee or charge

54
Prohibitions
  • It shall be a violation for any person engaged in
    residential mortgage lending activity subject to
    this Chapter to
  • Directly or indirectly employ any scheme, device,
    or artifice to defraud or mislead borrowers,
    lenders, or any person, when such person or
    individual knew or should have known that such
    was defrauding or misleading
  • Engage in any unfair or deceptive practice toward
    any person
  • Obtain property by fraud or misrepresentation

55
Prohibitions
  • With intent to defraud, solicit or enter into a
    contract with a consumer providing for payment of
    an unlawful fee or commission to a person subject
    to this Chapter even though no loan is actually
    obtained for the consumer
  • Solicit, advertise, or enter into a contract for
    specific interest rates, points, or other terms
    when the person or individual knew or should have
    known that such terms are not actually available
    at the time of soliciting, advertising, or
    contracting.

56
Prohibitions
  • Conduct any business covered by this Chapter
    without holding a license or knowingly assist or
    aid and abet any person in the conduct of
    business under this Chapter without a valid
    license as required
  • As determined by the commissioner, structure a
    residential loan transaction in such a manner as
    to circumvent the provisions of this Chapter
  • Fail to comply with this Chapter or rules or
    regulations promulgated under it, or fail to
    comply with any other state or federal law,
    including rules and regulations issued
    thereunder, applicable to any residential
    mortgage lending activity

57
Prohibitions
  • Make in any manner, any false or deceptive
    statement or representation with regard to the
    rates, points, or terms or conditions for a
    residential mortgage loan when such person or
    individual knew or should have known that such
    was false or deceptive, or engage in bait and
    switch advertising
  • 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 NMLSR, or in connection with any
    investigation conducted by the commissioner or
    any other governmental agency

58
Prohibitions
  • Make any payment, threat, or promise, directly,
    to any person or appraiser of a property for the
    purpose of influencing the independent judgment
    of the person in connection with a residential
    mortgage loan, or influencing the independent
    judgment of the appraiser with respect to the
    value of the property
  • Collect, charge, or attempt to collect or charge,
    or use or propose any agreement purporting to
    collect or charge any fee prohibited by this
    Chapter
  • Engage in loan processing or underwriting
    activities as an independent contractor without
    obtaining a license to act as a residential
    mortgage loan originator

59
Prohibitions
  • Fail to truthfully account for monies belonging
    to a party to a residential mortgage loan
    transaction
  • Represent to the public through advertising or
    other means of communicating or providing
    information including the use of business cards,
    stationary, brochures, signs, rate lists, or
    other promotional items, that such an individual
    can or will perform any activities of a mortgage
    loan originator, while such individual engages in
    activities solely as a loan processor or
    underwriter

60
Forfeiture of Compensation
  • R.S. 61092 G.
  • Any person who acts as a mortgage broker, lender,
    or originator without complying with licensing
    provisions shall be subject to forfeiture of
    compensation attributable to residential mortgage
    lending activity conducted after August 15, 2001
  • This shall not impair the validity of note or
    mortgage

61
Public Information R.S. 6103 B. R.S. 61092 J.
  • The Commissioner may make public the following
  • Orders Requiring Refunds
  • Civil Money Penalty Assessments
  • License Suspension
  • License Revocation
  • Application Denials
  • Consent Agreements
  • Status of Applications, legal action taken
    pertaining to them, and legal grounds for taking
    such action

62
Continuing Education
  • Each licensed originator must take 10 hours of
    NMLSR approved continuing education each year
    prior to renewal
  • 3 hours of education pertaining to federal laws
    and regulations
  • 2 hours of ethics, which shall include
    instruction on fraud, consumer protection, and
    fair lending issues
  • 2 hours related to lending standards for the
    nontraditional mortgage product marketplace
  • 2 hours of the remaining required in addition to
    being approved by the NMLSR must also be
    approved by either NAMB or MBA

63
Continuing Education for 2009
  • Specific content will not be required until
    Commissioner determines that NMLSR is adequately
    available for all Louisiana licensees to become
    compliant
  • Anticipated in early 2010
  • Any 10 hours of education approved by OFI will be
    sufficient for renewal of an originator license
    for 2010
  • Do NOT go through NMLSR in 2009 for cont ed

64
Testing Requirements
  • All licensed originators must obtain a passing
    grade on both the National and State Components
    of the test developed by the NMLSR
  • All new applicants on or after July 31, 2009 must
    obtain a passing grade on both components of the
    test before obtaining a license
  • Originators which were licensed on or before July
    30, 2009 must obtain a passing grade on both
    components by December 31, 2010

65
Testing Requirements State Component Exemption
  • Originators which obtained a passing grade on or
    after January 1, 2004 on the Louisiana
    pre-licensing test previously administered by PSI
    Exams
  • Will be exempt from taking the state component of
    the test but must obtain a passing grade on the
    national component by December 31, 2010
  • A passing score is 75 correct answers

66
Testing Requirements Failing Grades
  • An individual may retake one or both of the
    components of the test up to three consecutive
    times after waiting at least thirty days between
    tests
  • After failing three consecutive tests the
    individual must wait at least six months before
    taking a test again

67
Requirement to Retake Examinations
  • An originator who fails to maintain a license for
    a period of five years or longer will be required
    to obtain a passing grade on both components
    prior to obtaining a license

68
Prepayment Penalties
  • Are limited as follows
  • 5 of unpaid principal during first year
  • 4 of unpaid principal during second year
  • 3 of unpaid principal during third year
  • 2 of unpaid principal during fourth year
  • 1 of unpaid principal during fifth year
  • No prepayment penalty allowed after fifth year

69
Prepayment Penalties Continued
  • No prepayment penalty may be charged or collected
    if all or part of the prepayment of all or part
    of the outstanding loan is made from insurance
    proceeds received for damage to the property
    securing the loan in connection with a
    Gubernatorial declared disaster

70
Allowable Up Front Fees By Brokers
  • Appraisal
  • Title Search
  • Credit Report
  • Actual cost of Loan Prospector or Desktop
    Underwriter fees not to exceed 25
  • Licensed brokers may collect up to a 500
    application fee provided
  • Prior to collecting the consumer is provided a
    written disclosure of the amount of the fee and
  • The application fee shall be refundable at any
    time prior to ordering any service required by
    the lender or is the lender is unable to approve
    the loan after all requested documentation has
    been provided

71
Allowable Up Front Fees By Brokers (cont)
  • amount collected cannot exceed good faith
    estimate of actual cost
  • any portion which exceeds actual cost must be
    refunded to borrower or credited to their account
    at closing

72
Originator Requirements
  • Originator is required to sign the initial
    application and include their NMLSR unique
    identifier
  • Originator may only originate loans for one
    employer

73
Lender Fees
  • Lenders prohibited from collecting advance
    expense fees for third party settlement services
    that exceed Good Faith Estimate of actual cost
  • Any portion of excess collected over actual cost
    must be refunded or credited to borrower at
    closing

74
Lender Fees (cont)
  • Licensed lenders may collect up to a 500
    application fee provided
  • Prior to collecting the consumer is provided a
    written disclosure of the amount of the fee and
  • The application fee shall be refundable at any
    time prior to ordering any service required by
    the lender or is the lender is unable to approve
    the loan after all requested documentation has
    been provided
  • NOTE RESPA and TILA prohibit until disclosures
    are given

75
Limits on Fees and Charges
  • Late Fees limited to 5 of unpaid amount
  • Collection fees limited to 25 when referred to
    an attorney
  • NSF the greater of 5 of the amount of check or
    25

76
Prohibition on Finance of Single Premium Insurance
  • No mortgage lender shall finance or include in
    the loan amount any single premium credit life,
    dismemberment, health and accident, mortgage life
    and disability, involuntary unemployment, or debt
    cancellation insurance sold in connection with a
    residential mortgage loan transaction
  • Financing of Single Premium Private Mortgage
    Insurance Not Prohibited

77
Exceptions To Prohibition on Finance of Single
Premium Insurance
  • The prohibition on financing of single premium
    credit insurance does not apply to the following
  • Loans with a principal balance of 50,000 or less
  • Loans where the portion of the original principal
    balance attributable to the insurance premiums is
    scheduled to be fully amortized no later than the
    coverage expiration date of the insurance
    product.

78
Request for Payoff Amount
  • Must be provided with 5 days of written request
    of consumer
  • Consumer entitled to one statement per year at no
    charge
  • thereafter, lender may charge a reasonable fee
    provided that the fee is disclosed to the
    consumer before furnishing the statement

79
Mortgage Loan Origination Agreement
  • Must be provided by broker within 3 days of the
    initial application
  • Must describe the nature of brokers relationship
    with borrower and the manner in which they will
    be compensated
  • name, address, phone number, and NMLSR unique
    identifier of originator
  • name, address, phone number, and unique
    identifier of mortgage lender (mortgage broker)

80
Mortgage Loan Origination Agreement
  • Failure to provide a copy of the agreement
    subjects broker to a refund of any brokerage fees
    collected

81
Criminal Penalties
  • Broker or lender knowingly collects excessive
    advance expense deposits
  • Any person who knowingly provides false or
    misleading information on an application
  • Any licensee or registrant who fails to disburse
    funds belonging a borrower
  • Any lender, broker, or originator knowingly
    operating without a license

82
Criminal Penalties
  • Upon Conviction for these, person may be
    sentenced to
  • a fine of not less than 500 nor more than
    1,000, imprisonment not exceeding one year, or
    both
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