April 12, 2007, Introduced by Rep. Jackson and referred to the Committee on Banking and Financial Services.
A bill to amend 1987 PA 173, entitled
"Mortgage brokers, lenders, and servicers licensing act,"
by amending the title and sections 1a, 2, 3, 4, 5, 6, 8, 9, 11, 21,
23, 25, 27, and 29 (MCL 445.1651a, 445.1652, 445.1653, 445.1654,
445.1655, 445.1656, 445.1658, 445.1659, 445.1661, 445.1671,
445.1673, 445.1675, 445.1677, and 445.1679), sections 1a and 11 as
amended by 2002 PA 391, section 2 as amended by 2005 PA 113,
sections 3, 4, 5, 6, 8, 23, and 29 as amended by 1996 PA 210,
section 21 as amended by 1992 PA 206, and section 25 as amended by
1998 PA 371, and by adding sections 5a, 5b, 6a, 7a, and 29a; and to
repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to define and regulate mortgage brokers, mortgage
lenders, mortgage loan officers, and mortgage servicers; to
prescribe
the powers and duties of the financial institutions
bureau
office of financial and
insurance services and certain
public officers and agencies; to provide for the promulgation of
rules; and to provide remedies and penalties.
Sec. 1a. As used in this act, unless the context requires
otherwise:
(a) "Affiliate" means a person or group of persons that
directly or indirectly through 1 or more intermediaries controls,
is controlled by, or is under common control with another person
and engaged in a business or transaction regulated by this act.
(b)
"Commissioner" means the commissioner of the office of
financial
and insurance services of the department
of consumer and
industry
services or his or her authorized
agent.
(c) "Construction loan" means a mortgage loan for the purpose
of constructing a 1-to-4 family dwelling, which loan is approved
and closed before completion of the construction of the improvement
on the real property.
(d) "Control person" means a director or executive officer of
a licensee or a person who has the authority to participate in the
direction, directly or indirectly through 1 or more other persons,
of the management or policies of a licensee or registrant.
(e) "Department" means the office of financial and insurance
services of the department of labor and economic growth.
(f) (e)
"Depository financial
institution" means a state or
nationally chartered bank, a state or federally chartered savings
and loan association, savings bank, or credit union, or an entity
of the federally chartered farm credit system.
(g) (f)
"Executive officer" means
an officer, member, or
partner of a licensee or registrant, including chief executive
officer, president, vice president, chief financial officer,
controller, compliance officer, or any other similar position.
(h) (g)
"Financial licensing act"
means the consumer financial
services act, 1988 PA 161, MCL 487.2051 to 487.2072, and any of the
acts listed in section 2 of the consumer financial services act,
1988 PA 161, MCL 487.2052.
(i) (h)
"Firm commitment" means
an underwriting in which a
broker-dealer commits to buy the mortgage loan or the entire issue
of securities based upon or backed by 1 or more mortgage loans and
assumes all financial responsibility for any unsold securities.
(j) (i)
"Individual investor"
means a person residing in this
state or having its principal place of business in this state,
other than a bank, savings bank, savings and loan association,
credit union, trust company, insurance company, investment company
as
defined in the investment company act of 1940, title I of
chapter
686, 54 Stat. 789, 15 U.S.C. USC 80a-1
to 80a-3 and 80a-4
to
80a-64, pension or profit sharing
plan, the assets of which are
managed by a bank or trust company or other institutional manager,
financial institution, institutional manager, broker-dealer that is
a member of the New York stock exchange or registered under the
uniform securities act, 1964 PA 265, MCL 451.501 to 451.818, the
federal national mortgage association, the government national
mortgage association, the federal home loan mortgage corporation,
or a mortgage lender or mortgage servicer.
(k) (j)
"License" means a license
issued under this act.
(l) (k)
"Licensee" means a person
licensed or required to be
licensed under this act.
(m) (l) "Mortgage
broker" means a person who
is not a mortgage
loan
officer and who , directly or indirectly , does 1 or both of
the following:
(i) Serves or offers to serve as an agent for a person in an
attempt to obtain a mortgage loan.
(ii) Serves or offers to serve as an agent for a person who
makes or offers to make mortgage loans.
(n) (m)
"Mortgage lender" means a
person who is not a mortgage
loan
officer and who , directly or indirectly , makes or offers to
make mortgage loans.
(o) (n)
"Mortgage loan" means a
loan secured by a first
mortgage on real property located in this state and used, or
improved to be used, as a dwelling and designed for occupancy by 4
or fewer families or a land contract covering real property located
in this state used, or improved to be used, as a dwelling and
designed for occupancy by 4 or fewer families. A mortgage loan does
not include a home improvement installment contract under the home
improvement finance act, 1965 PA 332, MCL 445.1101 to 445.1431.
(p) "Mortgage loan officer" means an individual who directly
or indirectly makes or offers to make mortgage loans, serves or
offers to serve as an agent of a person in an attempt to obtain a
mortgage loan, or serves or offers to serve as an agent for a
person who makes or offers to make mortgage loans, and meets 1 of
the following:
(i) Is an employee of only 1 mortgage broker or mortgage
lender.
(ii) Is an employee of a professional employer organization and
is acting as a mortgage loan officer for only a mortgage broker or
mortgage lender pursuant to a contract between the professional
employer organization and the mortgage broker or lender.
(q) (o)
"Mortgage servicer" means
a person who , directly
or
indirectly , services or offers to service mortgage loans.
(r) (p)
"Person" means an
individual, corporation, limited
liability company, partnership, association, governmental entity,
or any other legal entity.
(s) "Professional employer organization" means that term as
defined in section 4 of the single business tax act, 1975 PA 228,
MCL 208.4.
(t) (q)
"Real estate broker"
means a broker or associate
broker licensed under article 25 of the occupational code, 1980 PA
299, MCL 339.2501 to 339.2518.
(u) (r)
"Real estate salesperson"
means a salesperson licensed
under article 25 of the occupational code, 1980 PA 299, MCL
339.2501 to 339.2518.
(v) (s)
"Register" means filing a
notice with the commissioner
on a form prescribed by the commissioner that notifies the
commissioner of the intent to engage in the activities of a
mortgage broker, mortgage lender, or mortgage servicer in this
state and the payment of any fees required under this act, along
with the other documents, proofs, and fees required by the
commissioner.
(w) (t)
"Registrant" means a
person registered or required to
be registered under this act.
(x) (u)
"Service" means the
collection or remittance, or the
right or obligation to collect or remit, for a lender, noteowner,
noteholder, mortgage servicer, or the licensee's or registrant's
own account of 4 or more installment payments of the principal,
interest, or an amount placed in escrow under a mortgage loan,
mortgage servicing agreement, or an agreement with the mortgagor.
Sec. 2. (1) A person shall not act as a mortgage broker,
mortgage lender, mortgage loan officer, or mortgage servicer
without first obtaining a license or registering under this act,
unless 1 or more of the following apply:
(a) The person is solely performing services as an employee of
only 1 mortgage broker, mortgage lender, or mortgage servicer and
is not a mortgage loan officer.
(b) The person is exempted from the act under section 25.
(c) The person is licensed as a class I licensee under the
consumer financial services act, 1988 PA 161, MCL 487.2051 to
487.2072.
(d)
The individual is an employee of a professional employer
organization,
as that term is defined in section 4 of the single
business
tax act, 1975 PA 228, MCL 208.4, solely acting as a
residential
mortgage originator of only 1 mortgage broker or
mortgage
lender. The mortgage broker or mortgage lender shall do
all
of the following:
(i) Direct and control the activities of the
individual under
this
act.
(ii) Be responsible for all activities of the
individual and
assume
responsibility for the individual’s actions that are covered
by
the proof of financial responsibility deposit required under
section
4.
(2) A person that is licensed to make regulatory loans under
the regulatory loan act, 1939 PA 21, MCL 493.1 to 493.24, or is
licensed to make secondary mortgage loans under the secondary
mortgage loan act, 1981 PA 125, MCL 493.51 to 493.81, and is
registered with the commissioner shall file with the commissioner
an application for a license under section 3(1) or shall
discontinue all activities that are subject to this act.
(3) Unless a residential mortgage originator is otherwise
licensed or registered under this act, a residential mortgage
originator shall not receive directly or indirectly any
compensation, commission, fee, points, or other remuneration or
benefits from a mortgage broker, mortgage lender, or mortgage
servicer other than the employer of the residential mortgage
originator.
(4) Unless a residential mortgage originator is otherwise
licensed or registered under this act, a mortgage broker, mortgage
lender, or mortgage servicer shall not pay directly or indirectly
any compensation, commission, fee, points, or other remuneration or
benefits to a residential mortgage originator other than an
employee of the mortgage broker, mortgage lender, or mortgage
servicer. As used in this subsection and subsection (3),
"residential mortgage originator" means a person who assists
another person in obtaining a mortgage loan.
(5) A mortgage broker, mortgage lender, or mortgage servicer
that was exempt from regulation under this act and is a subsidiary
or affiliate of a depository financial institution or a depository
financial institution holding company that does not maintain a main
office or branch office in this state, shall register under section
6 or shall discontinue all activities subject to this act.
(6) Except for a state or nationally chartered bank, savings
bank, or an affiliate of a bank or savings bank, the person subject
to this act shall not include in its name or assumed name, the
words "bank", "banker", "banking", "banc", "bankcorp", "bancorp",
or any other words or phrases that would imply that the person is a
bank, is engaged in the business of banking, or is affiliated with
a bank or savings bank. It is not a violation of this subsection
for a licensee or registrant to use the term "mortgage banker" or
"mortgage banking" in its name or assumed name. A person subject to
this act whose name or assumed name on January 1, 1995 contained a
word prohibited by this section may continue to use the name or
assumed name.
Sec. 3. (1) An application for, or renewal of, a license shall
be made in writing to the commissioner on a form prescribed by the
commissioner. If the commissioner determines after investigation
that the experience, character, business reputation, and general
fitness of the applicant and its officers, directors, shareholders,
partners, and affiliates command the confidence of the public and
warrant the belief that the applicant and its officers, directors,
shareholders, partners, and affiliates will comply with the law and
that grounds for revoking, suspending, or denying a license under
this act do not exist, the commissioner shall issue a license to,
or renew the license of, the applicant to act as a mortgage broker,
mortgage lender, mortgage loan officer, or mortgage servicer.
(2) A license issued under this section does not approve the
use of or indemnify the licensee against claims for the improper
use of the business name stated in the license.
(3) This section does not apply to a mortgage loan officer
license or an application for a mortgage loan officer license or
renewal of that license.
Sec. 4. (1) Except as otherwise provided in this section, at
the time of filing an application for a license or renewal of a
license, the applicant shall do all of the following:
(a) Provide proof of financial responsibility in the following
amounts:
(i) $25,000.00 for For an
applicant who acts as a mortgage
broker and who receives funds from a prospective borrower before
the
closing of the mortgage loan, or $25,000.00.
(ii) For an applicant who acts as a mortgage lender,
$25,000.00.
(iii) (ii) $125,000.00 for For an applicant who acts as
a
mortgage servicer, $125,000.00.
(b) Provide proof of financial responsibility by 1 of the
following:
(i) A corporate surety bond payable to the commissioner,
executed by a corporate surety approved by the commissioner, which
expires no earlier than the date the license shall expire.
(ii) An irrevocable letter of credit upon which the applicant
is the obligor, which expires no earlier than the date the license
shall expire, issued by a bank, savings bank, savings and loan
association, or credit union the deposits of which are insured by
an agency of the federal government, and the terms of which letter
of credit are approved by the commissioner.
(2) The bond or letter of credit deposited under subsection
(1) shall be conditioned upon the conduct of the business in
accordance with the provisions of this act and all rules
promulgated by the commissioner, and the payment of all money that
becomes due.
(3) In place of depositing a bond or letter of credit, an
applicant may pay a nonrefundable administrative fee established by
the commissioner not to exceed $100.00 and furnish 1 of the
following as proof of financial responsibility:
(a) Deposit with the state treasurer, under terms prescribed
by the commissioner, obligations of the United States, or
obligations which are guaranteed fully as to principal and interest
by the United States, or any general obligations of any state or
any political subdivision of the United States, with a maturity
date of 3 years or less, in an amount equal to, or greater than,
the amount of the required bond. Interest earned under obligations
shall accrue to the account of the applicant.
(b) Deposit with the state treasurer, under terms prescribed
by the commissioner, a certificate of deposit of a federally
insured financial institution with a maturity date of 3 years or
less for an amount payable which is equal to, or greater than, the
amount of the required bond and which is not available for
withdrawal except by direct order of the commissioner. Interest
earned under the certificate shall accrue to the account of the
applicant.
(4) Upon application as prescribed by the commissioner, the
commissioner may reduce, waive, or modify the requirements under
this section for a mortgage servicer who services not more than 300
mortgage loans and who does not collect money for the purpose of
paying taxes or insurance pursuant to the mortgage loan.
(5) The commissioner shall waive the requirements of this
section and section 5 upon application by a mortgage servicer who
is a licensed real estate broker or real estate salesperson,
services more than 75 land contracts, has a satisfactory record of
compliance with applicable state and federal law, and does not
engage in any other activity regulated by this act.
(6) This section does not apply to an applicant applying for a
mortgage loan officer license or renewal of that license.
Sec.
5. (1) A licensee
who acts as described in this
subsection must maintain a net worth that meets 1 of the following,
as applicable:
(a)
If the licensee is a mortgage broker
and who receives
funds from a prospective borrower before the closing of the
mortgage
loan, shall maintain a net worth of not less than
$25,000.00.
A licensee who acts as
(b)
If a licensee is a mortgage lender, shall
maintain a net
worth
of not less than $25,000.00. A licensee who acts as
(c)
If a licensee is a mortgage servicer, shall
maintain a net
worth in an amount determined by the commissioner not exceeding
$100,000.00.
Net
(2)
For purposes of this section, net worth
shall be is
determined at the conclusion of the fiscal year of the licensee
immediately
preceding the date an application for a license , or a
renewal
of a license , is
submitted to the commissioner. Net worth
shall
be disclosed
(3) A licensee shall disclose his or her net worth on a form
prescribed by the commissioner or on a form prepared or reviewed by
a
certified public accountant. and
(4) For purposes of this section, net worth shall be computed
in
accordance with generally accepted accounting principles .
The
and the following assets shall be excluded in the computation of
net worth:
(a) That portion of an applicant's assets pledged to secure
obligations of any person other than that of the applicant.
(b) Any asset, except a construction loans receivable, that is
secured
by first mortgages from related companies , and is due
from
officers or stockholders of the applicant or persons in which the
applicant's officers or stockholders have an interest.
(c) An amount in excess of the lower of the cost or market
value of mortgage loans in foreclosure, or real property acquired
through foreclosure.
(d) An investment shown on the balance sheet in joint
ventures,
subsidiaries, or affiliates, which that is greater than
the market value of the assets.
(e) Good will or value placed on insurance renewals or
property management contract renewals or other similar intangible
value.
(f) Organization costs.
Sec. 5a. (1) Before receiving a mortgage loan officer license,
an applicant must submit an application as prescribed by the
commissioner and must successfully complete at least 24 clock hours
of live approved classroom courses that include at least all of the
following:
(a) Four hours of instruction concerning state and federal
mortgage lending laws, including at least 2 hours on this act.
(b) Four hours of instruction concerning appraisal of real
property.
(c) Four hours of instruction concerning the mortgage loan
application process.
(d) Two hours of instruction concerning the mortgage loan
underwriting process.
(e) Two hours of instruction concerning tax laws affecting
mortgages.
(f) Four hours of instruction concerning the mortgage loan
closing process.
(g) Two hours of instruction covering basic mortgage financing
concepts and terms.
(h) Two hours of instruction concerning the ethical
responsibilities of a licensee, including, but not limited to,
confidentiality, consumer counseling, and the duties and
obligations of a licensee created in the consumer mortgage
protection act, 2002 PA 660, MCL 445.1631 to 445.1645.
(2) Before being permitted to renew a mortgage loan officer
license, a licensee must within the 12-month period preceding the
application have successfully completed at least 6 clock hours of
continuing education approved by the department involving any
topics relevant to the management, operation, and practice of
mortgage brokers and mortgage lenders and covering changes in
economic conditions, law, rules, court cases, and interpretations,
or any combination of those changes, relating to mortgages that are
pertinent to the activities of a mortgage loan officer.
(3) The department may reissue a mortgage loan officer license
without examination to a licensee whose license has lapsed for less
than 3 years if the licensee shows proof of completion of at least
6 clock hours of continuing education for each year the license was
lapsed on topics described in subsection (2).
(4) The department may reissue a mortgage loan officer license
to a licensee whose license has lapsed for 3 or more continuous
years if the licensee provides proof of the successful completion
of 1 of the following:
(a) Six clock hours of continuing education for each of the
years the license was lapsed on topics described in subsection (2).
(b) Twenty-four clock hours of instruction described in
subsection (1).
(c) Passing the examination required for licensure under
section 5b.
(5) The department shall not apply the course credits used to
meet continuing education requirements provided in subsections (2)
through (4) toward the mortgage loan officer license education
requirements provided in subsection (1) and shall not apply course
credits taken under the mortgage loan officer license education
requirements toward the continuing education requirements. The
department shall apportion the approved course credits eligible for
education requirements in subsection (1) and subsections (2)
through (4) to meet either requirement if requested by the
licensee.
(6) A person who offers or conducts a course or courses of
study represented to meet the educational requirements of this
section must first obtain approval from the department and shall
comply with the rules of the department concerning curriculum,
instructor qualification, grading system, and other related
matters. In addition to other requirements imposed under rule, in
order to receive approval a course shall be designed to be taught
for not less than 1 clock hour, not including time spent on breaks,
meals, or other unrelated activities, provided the course is only
approved for less than 2 clock hours if, based upon the subject
matter, course outline, instructional materials, methodology, and
other considerations consistent with rules of the department, the
department determines that the course objectives can be effectively
met in the proposed time period. The department may suspend or
revoke the approval of a person for a violation of this section or
of the rules promulgated under this section. A person offering or
conducting a course shall not represent that its students are
assured of passing an examination required by the department. A
person shall not represent that the issuance of departmental
approval is a recommendation or endorsement of the person to which
it is issued or of a course of instruction given by it. A
prelicensure course approved under this section shall be conducted
by a local public school district, a community college, an
institution of higher education authorized to grant degrees, or a
proprietary school licensed by the department of career development
under 1943 PA 148, MCL 395.101 to 395.103.
(7) A person that violates subsection (6) in offering courses
is subject to the penalties set forth in section 29.
(8) The department may conduct, hold, or assist in conducting
or holding mortgage law clinics, meetings, courses, or institutes,
that are open to any individual licensed as a mortgage loan
officer, and may incur the necessary expenses in connection with a
clinic, meeting, course, or institute. The department in the public
interest may assist educational institutions in this state in
sponsoring studies, research, and programs for the purpose of
raising the standards of professional practice in mortgage lending
and brokering and the competence of mortgage loan officers.
Sec. 5b. (1) An applicant for a mortgage loan officer license
must file an application with the commissioner that meets all of
the following:
(a) Is in writing, on a form prescribed by the commissioner.
(b) Includes the applicant's present residential address, and
the complete address of each place where the applicant has resided
for a period of 60 days or more in the 5-year period preceding the
date of application.
(c) The name and business address of the mortgage broker or
mortgage lender that is employing or engaging the applicant to act
as a mortgage loan officer, and the name and business address of
each mortgage broker, mortgage lender, or other person that has
employed or engaged the applicant as a mortgage loan officer in the
5-year period preceding the date of application.
(d) If the mortgage loan officer is an employee of a
professional employer organization, the name and business address
of the professional employer organization.
(e) Is signed by the applicant, by an authorized
representative of the mortgage broker or lender that is employing
or engaging the applicant, and if the mortgage loan officer is an
employee of a professional employer organization, by an authorized
representative of the professional employer organization.
(2) The department shall not issue a mortgage loan officer
license to a new applicant who has been convicted of embezzlement
or misappropriation of funds.
(3) The department may require and procure satisfactory proof
of the business experience, competence, and good moral character of
an applicant for a mortgage loan officer license before issuing a
license to him or her.
(4) The department shall require an applicant for a mortgage
loan officer license to pass an examination developed by the
department or contracted for with a recognized outside testing
agency establishing, in a manner satisfactory to the department,
that the applicant has a fair knowledge of the English language,
including reading, writing, spelling, and elementary arithmetic; a
satisfactory understanding of the fundamentals of mortgage lending
and brokering practice and of the laws and principles of mortgages;
the obligations of a mortgage loan officer to a mortgage broker or
lender; the obligations of mortgage loan officers, mortgage
brokers, and mortgage lenders to the public; and the law defining,
regulating, and licensing mortgage loan officers. The department
may require written examination or written reexamination of a
mortgage loan officer and require a passing score satisfactory to
the department as a condition precedent to reissuing a license to a
mortgage loan officer.
(5) The department shall require proof that an applicant for a
mortgage loan officer license has the equivalent of 3 years of
full-time experience in the business of mortgage lending or
brokering or in a field that is determined by the department to be
relevant and related to the business of mortgage lending or
brokering before issuing a license.
Sec. 6. (1) The following shall register with the commissioner
on a form prescribed by the commissioner:
(a) A mortgage broker, mortgage lender, or mortgage servicer
approved as a seller or servicer by the federal national mortgage
association or the federal home loan mortgage corporation.
(b) A mortgage broker, mortgage lender, or mortgage servicer
approved as an issuer or servicer by the government national
mortgage association.
(c) A real estate broker or real estate salesperson licensed
under
article 25 of the occupational code, Act No. 299 of the
Public
Acts of 1980, being sections 339.2501 to 339.2518 of the
Michigan
Compiled Laws 1980 PA 299,
MCL 339.2501 to 339.2518, who
acts as a mortgage broker for not more than 1 licensee or 1
registrant, or who acts as a mortgage broker, mortgage lender, or
mortgage servicer only in connection with real estate sales in
which the real estate broker or salesperson affiliated with the
real
estate broker is engaged and who receives for such those
services additional compensation beyond the customary commission on
real estate sales.
(d) A mortgage broker, mortgage lender, or mortgage servicer
which
that is a subsidiary or affiliate of a depository
financial
institution or a depository financial institution holding company
if the depository financial institution or depository financial
institution holding company does not maintain a main office or a
branch office in this state.
(2) A registrant is not required to comply with section 3, 4,
or 5 and is not subject to annual examination by the commissioner.
(3) A mortgage broker, mortgage lender, or a mortgage servicer
which
that is a subsidiary or affiliate of a depository
financial
institution or a subsidiary or affiliate of a holding company of a
depository
financial institution shall not be is not subject to
section 29(1)(b) or (c).
(4) Notwithstanding section 25(m), a mortgage broker, mortgage
lender,
or a mortgage servicer which that
is a subsidiary or
affiliate of a depository financial institution or a subsidiary or
affiliate of a holding company of a depository financial
institution may register and become subject to the provisions of
the act applicable to registrants.
(5) If a real estate broker or real estate salesperson acts as
a mortgage broker, mortgage lender, mortgage loan officer, or
mortgage servicer not in connection with real estate sales in which
the real estate broker or real estate salesperson affiliated with
the real estate broker is engaged, the real estate broker or real
estate salesperson shall be licensed or registered as otherwise
required under this act.
(6) A real estate broker or real estate salesperson, in
connection with real estate sales in which the real estate broker
or real estate salesperson affiliated with the real estate broker
is engaged, who acts as a mortgage broker on 10 or fewer mortgage
loans in any 12-month period from July 1 to June 30 and who
receives
for such those services additional compensation beyond the
customary
commission on real estate sales shall be is exempt from
the registration or licensing requirements of this act for that 12-
month period. If the broker and all real estate salespersons
affiliated
with the broker in the aggregate brokered broker more
than 30 mortgage loans as described in this subsection in the same
12-month
period from July 1 to June 30, then such that broker shall
obtain a license or shall register as required by this act.
(7) A registration accepted by the commissioner under this
section does not approve the use of or indemnify the registrant
against claims for the improper use of the business name stated in
the registration.
Sec. 6a. (1) The department shall deliver the license of a
mortgage loan officer to the mortgage broker or mortgage lender
that is employing or engaging the mortgage loan officer.
(2) A mortgage broker or mortgage lender shall conspicuously
display the license of each mortgage loan officer employed or
engaged by the mortgage broker or mortgage lender in that place of
business.
(3) If the department determines that it will be unable to
issue a mortgage loan officer license under subsection (1) within 2
weeks after the department determines that the applicant for the
license has met all requirements for licensure, or the department
is in fact unable to issue the mortgage loan officer license within
2 weeks, the department shall issue a temporary license to the
applicant without payment of an additional fee and the applicant
may act as a mortgage loan officer under that temporary license
until the department issues or refuses to issue his or her license.
Sec. 7a. If a mortgage loan officer's employment or engagement
with a mortgage broker or mortgage lender is terminated, the
mortgage broker or mortgage lender shall within 5 days deliver or
mail by certified mail the mortgage loan officer license to the
department. A mortgage loan officer shall not perform an act
regulated by this act either directly or indirectly under authority
of the license after the date of the department's receipt of the
license from a mortgage broker or mortgage lender.
Sec. 8. (1) At the time of making an initial application for a
license under this act, and at the time of making the first
application for a license after the suspension or revocation of a
license,
the an applicant shall pay to the commissioner a fee for
investigating the applicant and the minimum annual operating fee
established by the commissioner under subsection (3). To renew a
license that has not been suspended or revoked, the applicant shall
only pay to the commissioner the annual operating fee. At the time
of filing a registration or a renewal of a registration, a
registrant shall pay to the commissioner an annual operating fee as
provided
by in subsection (3).
(2) If the initial or renewed license or registration as
provided in subsection (1) would have an effective date within 6
months of the expiration date provided for in section 7, the
initial or renewal annual operating fee for that license or
registration
shall be is 1/2 of the annual operating fee.
(3) The commissioner shall annually establish the schedule of
fees
sufficient to pay, but not to exceed, the bureau's
department's reasonably anticipated costs of administering this
act.
The fees are as follows established
by the commissioner shall
meet the following requirements:
(a)
For Except as provided in
subdivision (b), for the
investigation of an applicant for a license, not less than $400.00
or more than $1,000.00.
(b) For the investigation of an applicant for a license as a
mortgage loan officer, not less than $400.00 or more than
$1,000.00.
(c) (b)
Except as set forth in subdivision
(c) subdivisions
(d) and (e), a licensee or registrant annually shall pay an
operating fee based upon the number of closed mortgage loans the
licensee or registrant brokered to other parties, the number of
mortgage loans closed by the licensee or registrant during the
previous calendar year, and the dollar volume of loans serviced by
the licensee or registrant as of December 31 of the previous
calendar
year. The Before July 2,
1997, the operating fee during
the
first year after enactment of this amendatory language shall be
not
less than $250.00 and not more than $2,500.00. Thereafter, in
the
discretion of the commissioner, subject Subject to the
limitation
set forth in this subsection, the maximum operating fee
may
be increased commissioner in
his or her discretion may increase
the
maximum operating fee at an annual rate
of not more than 10% in
the
second, third, and fourth years following enactment, and in the
fifth
and subsequent years for the
1-year periods ending July 1,
1998, July 1, 1999, and July 1, 2000, and for the 1-year period
ending July 1, 2001 and for each subsequent 1-year period, at an
annual rate of not more than the annual increase for the
immediately preceding 12-month period in the Detroit consumer price
index as reported by the United States department of labor. For
purposes of this subdivision, "mortgage loan" includes only
mortgage loans subject to this act.
(d) The annual operating fee for a mortgage loan officer shall
not be less than $250.00 or more than $2,500.00.
(e) (c)
For amending or reissuing a license
or registration,
not less than $50.00 or more than $200.00.
(f) (d)
A licensee or registrant shall pay
the actual travel,
lodging,
and meal expenses incurred by bureau department employees
who travel out of state to examine the records of the licensee or
investigate the licensee or registrant and the cost of independent
investigators employed under section 20(1)(e).
(4) Fees received pursuant to this act are not refundable.
(5) 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 licensee or registrant for the recovery of
the fees or penalties together with interest and costs.
(6) A licensee or registrant who fails to submit to the
commissioner a report required by section 7 or section 21 is
subject to a penalty of $25.00 for each day the report is
delinquent or $1,000.00, whichever is less.
(7) A licensee or registrant whose license or registration
renewal fee is not received on or before June 30 is subject to a
penalty of $25.00 for each day the fee is delinquent or $1,000.00,
whichever is less.
(8) Money received under this act shall be deposited in the
state
treasury and credited to the financial institutions bureau
department
to be used only for the operation of
the financial
institutions
bureau department.
(9) The annual operating fee set by the commissioner under
subsection
(3)(b) (3)(c) shall be based upon information in reports
filed under section 21.
Sec. 9. (1) A person shall not transfer or assign a license
shall
not be transferred or assigned issued
to that person under
this act without the consent of the commissioner. The sale,
transfer, assignment, or conveyance of more than 25% of the
outstanding
voting stock of a licensee which that is a corporation,
more than 25% of the membership interest in a licensee that is a
limited liability company, or more than 25% of the interest in a
licensee
which that is a partnership or other unincorporated
association,
shall be is considered to be a transfer of the
license.
(2)
A person shall not transfer or assign a registration shall
not
be transferred or assigned under
this act.
Sec. 11. (1) The commissioner shall exercise general
supervision and control over mortgage brokers, mortgage lenders,
mortgage loan officers, and mortgage servicers doing business in
this state.
(2) In addition to the other powers granted to the
commissioner by this act, the commissioner shall have all of the
following powers:
(a) To promulgate reasonable rules under the administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, as
necessary to implement and administer this act.
(b) To deny an application for a license.
(c) To conduct examinations and investigations of any person
as necessary for the efficient enforcement of this act and the
rules promulgated under this act.
(d) To advise the attorney general or the prosecuting attorney
of the county in which the business is conducted that the
commissioner believes a licensee, registrant, or person is
violating this act. The attorney general or prosecuting attorney
may take appropriate legal action to enjoin the operation of the
business or prosecute violations of this act.
(e) To bring an action in the Ingham county circuit court in
the name and on behalf of this state against the licensee,
registrant, or any other person who is participating in, or about
to participate in, any unsafe or injurious practice or act in
violation of this act or a rule promulgated under this act, to
enjoin the person from participating in or continuing the practice
or engaging in the act.
(f) To order a person to cease and desist from a violation of
this
act or a rule promulgated under this act in accordance with
under section 16.
(g)
To suspend or revoke a license or registration in
accordance
with under section 29.
(h)
To require that restitution be made in accordance with
under section 29.
(i)
To assess a civil fine in accordance with under section
29.
(j) To censure a licensee or registrant.
(k) To issue an order to prohibit a person from being employed
by,
an agent of, or control person of a licensee or registrant as
provided
under section 18a.
Sec.
21. (1) A Except as
provided in subsection (4), a
licensee or registrant shall maintain books, accounts, records, and
documents of the business, as prescribed by the commissioner,
conducted under the license or registration to enable the
commissioner to determine whether the business of the licensee or
registrant is conducted pursuant to this act and the rules
promulgated under this act. The preservation of records by
reproduction
pursuant to under the records media reproduction act,
1992 PA 116, MCL 24.401 to 24.406, constitutes compliance with this
section. If the books, accounts, records, and documents are not
made available in this state, the licensee or registrant shall pay
the reasonable travel, lodging, and meal expenses of the examiner
as provided in section 8.
(2)
A Except as provided in
subsection (4), a licensee or
registrant shall preserve and keep available for examination by the
commissioner each mortgage loan document in its possession or
control, including, but not limited to, the application, credit
report, employment verification, loan disclosure statement, and
settlement statement, until the mortgage loan is transferred or
assigned, or the expiration of 3 years after the date the mortgage
loan is closed, whichever occurs first. If the mortgage loan is
transferred or assigned, the licensee or registrant shall preserve
and keep available for examination by the commissioner copies of
the promissory note, mortgage, land contract, truth-in-lending
disclosure statements, and settlement statements in its possession
or control for 3 years after the date the mortgage loan is
transferred or assigned. Notwithstanding any other provision of
this act, each licensee or registrant shall preserve and keep
available for examination by the commissioner all documents
pertaining to a rejected application for a mortgage loan for the
period of time required by state or federal law. A licensee or
registrant shall preserve all other books, accounts, records, and
documents pertaining to the licensee's or registrant's business and
keep them available for examination by the commissioner for not
less than 3 years after the conclusion of the fiscal year of the
licensee or registrant in which the book, account, record, or
document was created.
(3) On or before a date to be determined by the commissioner,
a licensee or registrant shall annually file with the commissioner
a report giving information, as required by the commissioner,
concerning the business and operations of the licensee or
registrant under this act during the immediately preceding calendar
year. In addition, the commissioner may require a licensee or
registrant to file special reports as the commissioner considers
reasonably necessary for the proper supervision of licensees or
registrants under this act. Reports required pursuant to this
section shall be in the form prescribed by the commissioner,
signed, and affirmed. A person who willfully and knowingly
subscribes and affirms a false statement in a report required
pursuant to this subsection is guilty of a felony, punishable by
imprisonment for not more than 15 years.
(4) For a licensee who is a mortgage loan officer, the record-
keeping and reporting obligations described in this section are the
obligations of the mortgage broker or mortgage lender on whose
behalf the mortgage loan officer was employed or engaged.
Sec. 23. (1) A licensee or registrant may require a borrower
to
pay reasonable and necessary charges which that are
the actual
expenses incurred by the licensee or registrant in connection with
the making, closing, disbursing, extending, readjusting, or
renewing of a mortgage loan and a loan processing fee. The charges
shall be in addition to interest authorized by law, and are not a
part of the interest collected or agreed to be paid on the mortgage
loan within the meaning of the law of this state which limits the
rate of interest which may be exacted in a transaction. The charges
shall be paid only once by the borrower to the licensee or
registrant. This section is not intended to override the federal
preemption of state usury laws contained in the depository
institutions deregulation and monetary control act of 1980, Public
Law 96-221.
(2)
A licensee or registrant which that
assesses or accepts a
fee to guarantee a specified rate of interest on a mortgage loan
shall specify the terms and conditions of the guarantee in writing.
The terms and conditions of the guarantee shall not extend beyond
the expiration of the guarantee unless extended in writing by all
the parties.
(3) This section does not apply to a licensee who is a
mortgage loan officer.
Sec. 25. This act does not apply to any of the following:
(a) A depository financial institution whether or not the
depository financial institution is acting in a capacity of a
trustee or fiduciary.
(b) A salesperson acting as an agent for a residential builder
or residential maintenance and alteration contractor, or a
residential builder or residential maintenance and alteration
contractor licensed under article 24 of the occupational code, 1980
PA 299, MCL 339.2401 to 339.2412, when a mortgage is made or
negotiated in connection with the sale or financing of a
residential structure or improvement constructed or improved by
that residential builder or residential maintenance and alteration
contractor.
(c) A real estate broker or real estate salesperson who is not
a mortgage broker, mortgage lender, mortgage loan officer, or
mortgage servicer, or who only acts as a mortgage broker in
connection with a real estate sale or lease and acts without
additional compensation beyond the customary commission on the
sales or leases.
(d) A real estate salesperson who acts for a real estate
broker as a mortgage broker, mortgage lender, mortgage loan
officer, or mortgage servicer and who receives for the services
compensation only from the real estate broker for which the
salesperson is an agent or employee.
(e) A person licensed under the secondary mortgage loan act,
1981 PA 125, MCL 493.51 to 493.81, not making, brokering, or
servicing mortgage loans as described in this act in a 12-month
period from July 1 to June 30.
(f) Agencies or corporate instrumentalities of the United
States and of this state and its political subdivisions, including
the public employees' retirement system.
(g) A mortgage lender that in the aggregate with any
affiliates makes 10 or fewer mortgage loans in a 12-month period
from July 1 to June 30 and any mortgage loan officer employed or
engaged by that mortgage lender.
(h) A mortgage servicer that in the aggregate with any
affiliates services 10 or fewer mortgage loans in a 12-month period
from July 1 to June 30.
(i) A mortgage servicer that in the aggregate with any
affiliates services only 75 or fewer land contracts, of which 10 or
fewer require the collection of money for the payment of taxes or
insurance. This subdivision and subdivision (h) do not exempt a
mortgage servicer who collects money for the payment of taxes or
insurance from the provisions of 1966 PA 125, MCL 565.161 to
565.164. All fees shall be returned to any mortgage servicer
described in this subdivision who applied for a license and paid
the fees required by this act and who on December 27, 1988 is
exempted from licensing.
(j) An individual licensed to practice law in this state and
not engaged in the business of negotiating loans secured by real
property, when the individual renders services in the course of his
or her practice as an attorney-at-law.
(k) A person who makes mortgage loans exclusively for the
benefit of employees of that person if the proceeds of the loan are
used to assist the employee in meeting his or her housing needs.
(l) A person acting as a fiduciary with respect to any employee
pension benefit plan qualified under the internal revenue code who
makes mortgage loans solely to plan participants from plan assets.
(m) A mortgage broker, mortgage lender, or a mortgage servicer
which
that is a subsidiary or affiliate of a depository
financial
institution or a subsidiary or affiliate of a holding company of a
depository
financial institution which if
the depository financial
institution maintains its main office or a branch office in this
state.
(n) A nonprofit corporation that makes, brokers, or services
mortgage loans in connection with a neighborhood housing program
assisted
under the neighborhood reinvestment corporation act, title
VI
of Public Law 95-557, 42 U.S.C. USC 8101
to 8107.
(o) A person determined by the commissioner to meet the
qualifications established under section 25a.
Sec. 27. (1) Any mortgage broker, mortgage lender, or mortgage
servicer engaged in activities covered by this act on the effective
date
of this act shall have has
90 days after the effective date of
this act in which to file an application for a license together
with proof of financial responsibility as required by section 4,
and to pay any required fees, or to register and pay any required
registration fee. During the 90-day period, and until the
commissioner
acts on the application, the applicant shall be is
entitled
to operate without a license but shall must otherwise
comply with all other provisions of this act.
(2) A mortgage loan officer engaged in activities covered by
this act on the effective date of the amendatory act that added
this subsection has 90 days after the effective date of this act in
which to file an application for a license, together with proof of
financial responsibility as required by section 4, and to pay any
required fees. During the 90-day period, and until the commissioner
acts on the application, the applicant is entitled to operate
without a license but must otherwise comply with all other
provisions of this act.
Sec. 29. (1) A person, or any owner, partner, member, officer,
director, trustee, employee, agent, broker, or their representative
acting
on the authority of such that
person, who willfully or
intentionally does any of the following is guilty of a misdemeanor
punishable by a fine of not more than $5,000.00, or imprisonment
for not more than 3 years, or both:
(a) Engages in this state in the business of a mortgage
broker, mortgage lender, mortgage loan officer, or mortgage
servicer without a license or registration required under this act.
(b) Transfers or assigns a mortgage loan or a security
directly representing an interest in 1 or more mortgage loans
before the disbursement of 75% or more of the proceeds of the
mortgage loan to, or for the benefit of, the borrower. This
subdivision does not apply to any of the following:
(i) A land contract not considered to be an equitable mortgage.
(ii) A loan made under a state or federal government program
that allows the lender to escrow more than 25% of the loan proceeds
for a limited period of time.
(iii) A construction loan.
(iv) A loan that provides in writing that the loan proceeds
shall be disbursed to or for the benefit of the borrower in
installments or upon the request of the borrower or upon the
completion of renovations or repairs to the dwelling situated on
the real property subject to the mortgage loan.
(c) Transfers or assigns a mortgage loan or a security
representing an interest in 1 or more mortgage loans to an
individual investor unless 1 or more of the following apply:
(i) The transfer or assignment is made through a broker-dealer
which is a member of the New York stock exchange.
(ii) The transfer or assignment is made through a broker-dealer
who meets all of the following criteria:
(A) The broker-dealer is registered under the uniform
securities
act, Act No. 265 of the Public Acts of 1964, being
sections
451.501 to 451.818 of the Michigan Compiled Laws 1964 PA
265, MCL 451.501 to 451.818.
(B) The broker-dealer is not an affiliate of the mortgage
lender unless the person acquired the broker-dealer registration,
directly
or indirectly, before September 1, 1987 under Act No. 265
of
the Public Acts of 1964 the
uniform securities act, 1964 PA 265,
MCL 451.501 to 451.818, was affiliated with a mortgage lender
before September 1, 1987, and has continuously maintained that
registration subsequent to September 1, 1987. For purposes of this
subparagraph, if an aggregate of more than 10% of the outstanding
voting stock or interest in a corporation, unincorporated
organization, partnership, or other legal entity that is a broker-
dealer or mortgage lender is sold, transferred, assigned, or
otherwise conveyed subsequent to September 1, 1987, the
registration shall be considered to not have been continuously
maintained.
(C) The broker-dealer acquired the mortgage loan or security
on a firm commitment.
(iii) The transfer or assignment is made to a person who the
transferor or assignor believes, or has reasonable grounds to
believe, is 1 of the following:
(A) A business entity having either net income from operations
after taxes in excess of $100,000.00 in its last fiscal year or its
latest 12-month period, or a net worth in excess of $1,000,000.00
at the time of purchase.
(B) An individual who, after the purchase, has an investment
of
more than $50,000.00 in such loans or securities described in
this subdivision, including installment payments to be made within
1 year after purchase by the individual, has either personal income
before taxes in excess of $100,000.00 for his or her last fiscal
year or latest 12-month period and is capable of bearing the
economic risk, or net worth in excess of $1,000,000.00, and has the
knowledge and experience in financial and business matters that he
or she is capable of evaluating the merits and risks of the
prospective investment, or has obtained the advice of an attorney,
certified public accountant, or investment adviser registered under
the investment advisers act of 1940, or an investment adviser
registered
under Act No. 265 of the Public Acts of 1964 the uniform
securities act, 1964 PA 265, MCL 451.501 to 451.818, with respect
to the merits and risks of the prospective investment.
(iv) A transferor or assignor does not maintain its principal
place of business in this state and the transferee or assignee is
not a resident of this state and does not maintain its principal
place of business in this state.
(2) If the commissioner finds that a licensee or registrant
has violated this act or the rules promulgated under this act, the
commissioner may do 1 or more of the following:
(a) Assess a civil fine against the licensee, registrant, or a
person who controls the licensee or registrant of not more than
$1,000.00 for each violation, except that the licensee, registrant,
or a person shall not be fined more than $10,000.00 for a
transaction resulting in more than 1 violation, plus the costs of
investigation.
(b) Suspend or revoke a license or registration or refuse to
issue a license or renew a license or registration.
(c) Require the licensee or registrant or a person who
controls the licensee or registrant to make restitution to each
injured individual, if the commissioner finds that the violation of
this act or a rule promulgated under this act resulted in an injury
to 1 or more individuals.
(3) A civil fine assessed under subsection (2) may be sued for
and recovered by and in the name of the commissioner and may be
collected and enforced by summary proceedings by the attorney
general. Each individual injured by a violation of this act or a
rule
shall constitute constitutes
a separate violation. In
determining under subsection (2) the amount of a fine, whether to
suspend or revoke a license or registration, whether to refuse to
issue or renew a license, or the amount of restitution, the
commissioner shall consider the extent to which the violation was a
knowing and willful violation, the extent of the injury suffered
because of the violation, the corrective action taken by the
licensee or registrant to ensure that the violation will not be
repeated, and the record of the licensee or registrant in complying
with
this act. Any proceedings under this subsection shall be is
subject to the procedures of the administrative procedures act of
1969,
Act No. 306 of the Public Acts of 1969, being sections 24.201
to
24.328 of the Michigan Compiled Laws 1969 PA 306, MCL 24.201 to
24.328.
(4) Subsection (2) does not apply to a violation of this act
that results from a bona fide error that occurs notwithstanding the
adoption and observance of reasonable procedures intended to
prevent the occurrence of the error.
Sec. 29a. If the license of a mortgage broker or mortgage
lender is revoked, the license of each mortgage loan officer
employed or engaged by the mortgage broker or mortgage lender is
automatically suspended. If a mortgage loan officer license is
suspended under this section and he or she applies for and is
issued a new license for the same term as his or her original
suspended license, the department shall issue the new license
without charge.
Enacting section 1. Section 33 of the mortgage brokers,
lenders, and servicers licensing act, 1987 PA 173, MCL 445.1683, is
repealed.