SB-0462, As Passed Senate, June 24, 2009

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 462

 

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to provide for the licensing of mortgage loan

 

originators; to regulate the business practices of mortgage loan

 

originators; to establish certain obligations of employees and

 

principals of mortgage loan originators; to prescribe the powers

 

and duties of certain state agencies and officials; and to provide

 

remedies and prescribe penalties.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"mortgage loan originator licensing act".

 

     Sec. 3. As used in this act:

 

     (a) "Commissioner" means the commissioner of the office of

 

financial and insurance regulation in the department of energy,

 

labor, and economic growth.

 

     (b) "Depository institution" means that term as defined in


 

section 3 of the federal deposit insurance act, 12 USC 1813, or a

 

credit union.

 

     (c) "Dwelling" means that term as defined in section 103(v) of

 

the truth in lending act, 15 USC 1602.

 

     (d) "Employee" means an individual who meets both of the

 

following:

 

     (i) Has an employment relationship acknowledged by that

 

individual and the person that engages that individual to originate

 

mortgage loans.

 

     (ii) Is treated as an employee by the person that engages that

 

individual to originate mortgage loans for compliance with federal

 

income tax laws.

 

     (e) "Federal banking agencies" means the board of governors of

 

the federal reserve system, the comptroller of the currency, the

 

director of the office of thrift supervision, the national credit

 

union administration, and the federal deposit insurance

 

corporation.

 

     (f) "Financial licensing acts" means that term as defined in

 

section 2 of the consumer financial services act, 1988 PA 161, MCL

 

487.2052.

 

     (g) "Immediate family member" means a spouse, child, sibling,

 

parent, grandparent, or grandchild. The term includes stepparents,

 

stepchildren, stepsiblings, and adoptive relationships.

 

     (h) "Individual" means a natural person.

 

     (i) "Licensed mortgage loan originator" means a mortgage loan

 

originator who holds a valid license issued by the commissioner

 

under this act.


 

     (j) "Loan modification activities" means any of the following:

 

     (i) Collecting or receiving payments, including payments of

 

principal, interest, escrow amounts, and other amounts due, on

 

existing residential mortgage loans due and owing to a mortgagor or

 

mortgage servicer, when the borrower is in default or in reasonably

 

foreseeable likelihood of default.

 

     (ii) Working with a borrower described in subparagraph (i) to

 

collect data concerning the borrower's residential mortgage loan or

 

loans.

 

     (iii) Making any decisions necessary to modify, either

 

temporarily or permanently, certain terms of the residential

 

mortgage loan or loans of a borrower described in subparagraph (i)

 

or to otherwise finalize collection through the foreclosure

 

process. These decisions may include changing the principal amount,

 

the rate of annual interest charged, or the term of a residential

 

mortgage loan; waiving any fees or charges, including late charges,

 

a borrower is obligated to pay; deferring residential mortgage loan

 

payments; or making similar adjustments to a borrower's residential

 

mortgage loan or the borrower's obligations under the loan.

 

     (k) "Loan processor or underwriter" means an individual who

 

performs clerical or support duties as an employee at the direction

 

of and subject to the supervision and instruction of a person

 

licensed or designated as exempt from licensing under the mortgage

 

brokers, lenders, and servicers licensing act, 1987 PA 173, MCL

 

445.1651 to 445.1684; the secondary mortgage loan act, 1981 PA 125,

 

MCL 493.51 to 493.81; or the consumer financial services act, 1988

 

PA 161, MCL 487.2051 to 487.2072. For purposes of this subdivision,


 

"clerical or support duties" may include any of the following after

 

an application is received:

 

     (i) The receipt, collection, distribution, and analysis of

 

information common for the processing or underwriting of a

 

residential mortgage loan.

 

     (ii) Communicating with a consumer to obtain the information

 

necessary for the processing or underwriting of a loan, to the

 

extent that the communication does not include offering or

 

negotiating loan rates or terms, or counseling consumers about

 

residential mortgage loan rates or terms.

 

     (l) "Mortgage loan originator" means an individual who meets

 

all of the following:

 

     (i) For compensation or gain or in the expectation of

 

compensation or gain, does any of the following:

 

     (A) Takes a residential mortgage loan application.

 

     (B) Offers or negotiates terms of a residential mortgage loan.

 

     (ii) Is not an individual engaged solely as a loan processor or

 

underwriter except as otherwise provided in section 5(3).

 

     (iii) Is not a person who only performs real estate brokerage

 

activities and is licensed or registered under the laws of this

 

state, unless the person is compensated by a lender, a mortgage

 

broker, or other mortgage loan originator or by any agent of a

 

lender, mortgage broker, or other mortgage loan originator.

 

     (iv) Is not a person solely involved in extensions of credit

 

relating to timeshare plans, as that term is defined in 11 USC

 

101(53D).

 

     (m) "Mortgage servicer" means a person who directly or


 

indirectly services or offers to service residential mortgage

 

loans.

 

     (n) "Nationwide mortgage licensing system and registry" means

 

a mortgage licensing system developed and maintained by the

 

conference of state bank supervisors and the American association

 

of residential mortgage regulators for the licensing and

 

registration of licensed mortgage loan originators.

 

     (o) "Nontraditional mortgage product" means any mortgage

 

product other than a 30-year fixed rate mortgage.

 

     (p) "Person" means an individual, corporation, limited

 

liability company, partnership, association, or other legal entity.

 

     (q) "Real estate brokerage activity" means any activity that

 

involves offering or providing real estate brokerage services to

 

the public, including, but not limited to, any of the following:

 

     (i) Acting as a real estate agent or real estate broker for a

 

buyer, seller, lessor, or lessee of real property.

 

     (ii) Bringing together parties interested in the sale,

 

purchase, lease, rental, or exchange of real property.

 

     (iii) On behalf of any party, negotiating any portion of a

 

contract relating to the sale, purchase, lease, rental, or exchange

 

of real property, other than in connection with providing financing

 

with respect to that contract.

 

     (iv) Engaging in any activity for which a person engaged in the

 

activity is required to be registered or licensed as a real estate

 

agent or real estate broker under any applicable law.

 

     (v) Offering to engage in any activity, or act in any

 

capacity, described in subparagraphs (i), (ii), (iii), or (iv).


 

     (r) "Registered mortgage loan originator" means an individual

 

who meets all of the following:

 

     (i) Is a mortgage loan originator and is an employee of any of

 

the following:

 

     (A) A depository institution.

 

     (B) A subsidiary of a depository institution that is owned and

 

controlled by that depository institution and is regulated by a

 

federal banking agency.

 

     (C) An institution regulated by the farm credit

 

administration.

 

     (ii) Is registered with, and maintains a unique identifier

 

through, the nationwide mortgage licensing system and registry.

 

     (s) "Residential mortgage loan" means any loan primarily for

 

personal, family, or household use that is secured by a mortgage,

 

deed of trust, or other equivalent consensual security interest on

 

a dwelling or residential real estate on which a person has

 

constructed or intends to construct a dwelling.

 

     (t) "Residential real estate" means any real property located

 

in this state on which a person has constructed or intends to

 

construct a dwelling.

 

     (u) "SAFE act" means the secure and fair enforcement for

 

mortgage licensing act of 2008, title V of the housing and economic

 

recovery act of 2008, Public Law 110-289, 12 USC 5101 to 5116.

 

     (v) "Service" means the collection or remittance for a lender,

 

noteowner, or noteholder or a person's own account of 4 or more

 

installment payments of the principal of, interest of, or an amount

 

placed in escrow under a residential mortgage loan, mortgage


 

servicing agreement, or an agreement with a mortgagor.

 

     (w) "Unique identifier" means a number or other identifier

 

assigned by protocols established by the nationwide mortgage

 

licensing system and registry.

 

     Sec. 5. (1) Subject to subsection (5), unless specifically

 

exempted under subsection (2), beginning July 31, 2010, an

 

individual shall not engage in the business of a mortgage loan

 

originator with respect to any dwelling located in this state

 

without first obtaining and maintaining annually a license under

 

this act. Each licensed mortgage loan originator must register with

 

and maintain a valid unique identifier issued by the nationwide

 

mortgage licensing system and registry.

 

     (2) Each of the following is exempt from this act:

 

     (a) A registered mortgage loan originator, when acting for an

 

entity described section 3(p)(i)(A), (B), or (C).

 

     (b) An individual who offers or negotiates terms of a

 

residential mortgage loan with or on behalf of an immediate family

 

member of that individual.

 

     (c) An individual who offers or negotiates terms of a

 

residential mortgage loan secured by a dwelling that served as his

 

or her residence.

 

     (d) A licensed attorney who negotiates the terms of a

 

residential mortgage loan on behalf of a client as an ancillary

 

matter to the attorney's representation of the client, unless the

 

attorney is compensated by a lender, mortgage broker, or other

 

mortgage loan originator or by any agent of a lender, mortgage

 

broker, or other mortgage loan originator.


 

     (3) A loan processor or underwriter who is an independent

 

contractor may not engage in the activities of a loan processor or

 

underwriter unless that independent contractor loan processor or

 

underwriter obtains and maintains a license under subsection (1).

 

Each independent contractor loan processor or underwriter licensed

 

as a mortgage loan originator must have and maintain a valid unique

 

identifier issued by the nationwide mortgage licensing system and

 

registry.

 

     (4) The commissioner may establish licensing rules and interim

 

procedures for licensing and acceptance of applications. For

 

previously registered or licensed individuals, the commissioner may

 

establish expedited review and licensing procedures.

 

     (5) An individual engaged in the business of a mortgage loan

 

originator is not required to obtain and maintain a license under

 

this act until July 31, 2011 if that individual is employed

 

exclusively by a mortgage servicer; if that individual is

 

authorized to perform loan modification activities concerning

 

existing residential mortgage loans, and not to originate new

 

residential mortgage loans or perform any other activities of a

 

mortgage loan originator, on behalf of that mortgage servicer; and

 

if this extension of time is not inconsistent with any guideline,

 

rule, regulation, or interpretative letter of the United States

 

department of housing and urban development concerning the

 

interpretation of the SAFE act and its applicability to loan

 

modification activities.

 

     Sec. 7. (1) An applicant for a license under this act shall

 

apply in a form as prescribed by the commissioner. The applicant


 

shall include with the application the fee required under section

 

19 and the criminal history check required under subsection (2).

 

Each application form shall contain the content established by

 

rule, instruction, or procedure of the commissioner. The

 

commissioner may change or update the application form and its

 

contents as necessary by the commissioner in order to carry out the

 

purposes of this act.

 

     (2) A person that employs or offers to employ, or engages or

 

offers to engage as an agent, an individual as a mortgage loan

 

originator, to originate mortgage loans on or after July 31, 2010,

 

shall conduct a criminal history check of that individual and the

 

applicant shall submit the results of that criminal history check

 

with his or her application for license. All of the following apply

 

to the criminal history check of an individual required under this

 

subsection:

 

     (a) The federal bureau of investigation shall perform the

 

criminal history check.

 

     (b) The individual who is the subject of the criminal history

 

check shall have his or her fingerprints taken by a law enforcement

 

agency or by another person that the commissioner determines is

 

qualified to take fingerprints; shall pay the agency or person the

 

fees as required by the federal bureau of investigation for

 

processing fingerprints and completing a criminal history check;

 

and shall request that the agency or person forward the

 

fingerprints and appropriate fee to the federal bureau of

 

investigation for a national criminal history check.

 

     (c) After receiving a proper request and the required fees


 

under this subsection, the federal bureau of investigation shall

 

conduct the criminal history check and provide the commissioner and

 

the applicant with the results of the criminal history check. The

 

results shall contain any criminal history record information

 

concerning the individual maintained by the federal bureau of

 

investigation's criminal history check.

 

     (d) A criminal history check required under this subsection

 

may be conducted, requested of and performed by the federal bureau

 

of investigation, and submitted to the commissioner at any time on

 

or after July 31, 2009.

 

     (3) The commissioner is authorized to establish relationships

 

or contracts with the nationwide mortgage licensing system and

 

registry or other entities designated by the nationwide mortgage

 

licensing system and registry to collect and maintain records and

 

process transaction fees or other fees related to licensed mortgage

 

loan originators or other persons subject to this act.

 

     (4) In connection with an application for licensing as a

 

mortgage loan originator, an applicant shall at a minimum furnish

 

to the nationwide mortgage licensing system and registry

 

information concerning the applicant's identity, including, but not

 

limited to, all of the following:

 

     (a) The results of the criminal history check conducted under

 

subsection (2).

 

     (b) The applicant's personal history and experience in a form

 

prescribed by the nationwide mortgage licensing system and

 

registry, including the submission of authorization for the

 

nationwide mortgage licensing system and registry and the


 

commissioner to obtain all of the following concerning the

 

applicant:

 

     (i) An independent credit report obtained from a consumer

 

reporting agency, as defined in 603 of the fair credit reporting

 

act, 15 USC 1681a.

 

     (ii) Information related to any administrative, civil, or

 

criminal findings by any governmental jurisdiction.

 

     (5) For the purposes of this section, the commissioner may use

 

the nationwide mortgage licensing system and registry for any of

 

the following:

 

     (a) Requesting information from and distributing information

 

to the department of justice or any governmental agency.

 

     (b) Requesting and distributing information to and from any

 

source as directed by the commissioner.

 

     Sec. 9. (1) The commissioner shall not issue a mortgage loan

 

originator license unless the commissioner makes at a minimum the

 

following findings:

 

     (a) The applicant is not subject to a prohibition order issued

 

by the commissioner under section 27 or under any of the financial

 

licensing acts.

 

     (b) The applicant has never had a mortgage loan originator

 

license revoked in any governmental jurisdiction, except that the

 

commissioner shall not consider a revocation that is formally

 

vacated as a revocation for purposes of this subdivision.

 

     (c) Subject to subsection (2), the applicant has not been

 

convicted of, or pled guilty or no contest to, any of the following

 

in a domestic, foreign, or military court:


 

     (i) Within the 10-year period preceding the date of the license

 

application, a felony other than a felony described in subparagraph

 

(ii).

 

     (ii) At any time preceding the date of the license application,

 

any felony or misdemeanor involving fraud, dishonesty, or a breach

 

of trust, money laundering, embezzlement, forgery, a financial

 

transaction, or securities.

 

     (d) The applicant has demonstrated financial responsibility,

 

character, and general fitness that commands the confidence of the

 

community and warrants a determination that the mortgage loan

 

originator will operate honestly, fairly, and efficiently within

 

the purposes of this act.

 

     (e) The applicant has completed the prelicensing education

 

requirement described in section 11.

 

     (f) The applicant has passed a written test that meets the

 

test requirement described in section 13.

 

     (g) The applicant has met the surety bond requirement

 

described in section 29.

 

     (2) The commissioner shall not consider a conviction for which

 

a pardon was granted a conviction for purposes of subsection

 

(1)(c).

 

     Sec. 11. (1) To meet the prelicensing education requirement

 

under section 9(1)(e), except as provided in subsection (6), the

 

applicant shall complete at least 20 hours of education approved

 

under subsection (2), including at least all of the following:

 

     (a) Three hours of federal law and regulations.

 

     (b) Three hours of ethics, including instruction on fraud,


 

consumer protection, and fair lending issues.

 

     (c) Two hours of training related to lending standards for the

 

nontraditional mortgage product marketplace.

 

     (2) Only prelicensing education courses reviewed and approved

 

by the nationwide mortgage licensing system and registry may be

 

used to satisfy the requirements of subsection (1). Review and

 

approval of a prelicensing education course shall include review

 

and approval of the course provider.

 

     (3) If approved by the nationwide mortgage licensing system

 

and registry, a prelicensing education course may be provided by

 

the employer of the applicant, an entity that is affiliated with

 

the applicant by an agency contract, or a subsidiary or affiliate

 

of that employer or entity.

 

     (4) Prelicensing education may be offered in a classroom,

 

online, or by any other means approved by the nationwide mortgage

 

licensing system and registry.

 

     (5) If a person completes any prelicensing education

 

requirements described in subsection (1)(a), (b), or (c) that are

 

approved by the nationwide mortgage licensing system and registry

 

for any state, the commissioner shall accept those hours of

 

education as credit toward completion of the prelicensing education

 

requirements under this section.

 

     (6) For an application for a mortgage loan originator license

 

submitted before July 31, 2010, completion of the classroom

 

instruction requirement described in section 2a(4)(d) of the

 

mortgage brokers, lenders, and servicers licensing act, 1987 PA

 

173, MCL 445.1652a, or section 2a(4)(d) of the secondary mortgage


 

loan act, 1981 PA 125, MCL 493.52a, satisfies the prelicensing

 

education requirement described in subsection (1). An applicant

 

described in this subsection shall provide proof in the form of a

 

certificate of completion or other evidence acceptable to the

 

commissioner.

 

     (7) If an unlicensed individual who formerly held a license

 

issued under this act applies for a new license under this act, he

 

or she must prove that he or she completed all of the continuing

 

education requirements of section 17 for the year in which the

 

previous license was last held to be eligible for a new or renewed

 

license.

 

     Sec. 13. (1) To meet the written test requirement under

 

section 9(1)(f), except as provided in subsection (5), an

 

individual shall pass a qualified written test developed by the

 

nationwide mortgage licensing system and registry and administered

 

by a test provider approved by the nationwide mortgage licensing

 

system and registry based on reasonable standards.

 

     (2) A written test is not considered a qualified written test

 

for purposes of subsection (1) unless the test adequately measures

 

the applicant's knowledge and comprehension in appropriate subject

 

areas, including all of the following:

 

     (a) Ethics.

 

     (b) Federal law and regulation pertaining to mortgage

 

origination and to mortgage lending, including, but not limited to,

 

fraud, consumer protection, and fair lending issues and the

 

nontraditional mortgage marketplace.

 

     (c) State law and regulation pertaining to mortgage


 

origination and to mortgage lending, including, but not limited to,

 

fraud, consumer protection, and fair lending issues and the

 

nontraditional mortgage marketplace.

 

     (3) If the test provider is approved by the nationwide

 

mortgage licensing system and registry, the test provider may

 

provide a test at the location of the employer of the applicant,

 

the location of any subsidiary or affiliate of the employer of the

 

applicant, or the location of any entity with which the applicant

 

holds an exclusive arrangement to conduct the business of a

 

mortgage loan originator.

 

     (4) All of the following apply to a test under this section:

 

     (a) An individual is not considered to have passed a qualified

 

written test unless the individual achieves a test score of 75% or

 

more correct answers to questions.

 

     (b) An individual may retake a test 3 consecutive times, if

 

each consecutive retaking occurs at least 30 days after the

 

preceding test.

 

     (c) If an individual fails 3 consecutive tests, the individual

 

must wait at least 6 months before taking the test again.

 

     (d) If an unlicensed individual who formerly held a license

 

issued under this act applies for a new license under this act, he

 

or she must retake the test if it has been at least 5 years since

 

he or she last held a valid license under this act.

 

     (5) If an applicant for a mortgage loan originator license has

 

met the testing requirement described in section 2a(4)(e) of the

 

mortgage brokers, lenders, and servicers licensing act, 1987 PA

 

173, MCL 445.1652a, or section 2a(4)(e) of the secondary mortgage


 

loan act, 1981 PA 125, MCL 493.52a, in the 5-year period preceding

 

the date of the application, and provides evidence acceptable to

 

the commissioner that he or she met that testing requirement, the

 

applicant is considered to have met that part of the written test

 

requirement under section 9(1)(f) applicable to the state law and

 

regulation described in subsection (2)(c).

 

     Sec. 15. (1) The commissioner shall annually renew the license

 

of a licensed mortgage loan originator if all of the following are

 

met before his or her current license expires:

 

     (a) The mortgage loan originator continues to meet the minimum

 

standards for license issuance under section 9.

 

     (b) The mortgage loan originator has satisfied the annual

 

continuing education requirements described in section 17.

 

     (c) The mortgage loan originator has paid the fee required

 

under section 19.

 

     (2) If a mortgage loan originator fails to satisfy the

 

requirements of subsection (1) for renewal of his or her license,

 

the license shall expire. The commissioner may adopt procedures for

 

the reinstatement of expired licenses consistent with the standards

 

established by the nationwide mortgage licensing system and

 

registry.

 

     Sec. 17. (1) To meet the annual continuing education

 

requirements described in section 15(1)(b), a licensed mortgage

 

loan originator shall complete at least 8 hours of education

 

approved under subsection (2), including at least all of the

 

following:

 

     (a) Three hours of federal law and regulations.


 

     (b) Two hours of ethics, including instruction on fraud,

 

consumer protection, and fair lending issues.

 

     (c) Two hours of training related to lending standards for the

 

nontraditional mortgage product marketplace.

 

     (2) Only continuing education courses reviewed and approved by

 

the nationwide mortgage licensing system and registry, based on

 

reasonable standards, may be used to satisfy the requirements of

 

subsection (1). Review and approval of a continuing education

 

course shall include review and approval of the course provider.

 

     (3) If approved by the nationwide mortgage licensing system

 

and registry, a continuing education course may be provided by the

 

employer of the mortgage loan originator, an entity that is

 

affiliated with the mortgage loan originator by an agency contract,

 

or a subsidiary or affiliate of that employer or entity.

 

     (4) Continuing education may be offered in a classroom,

 

online, or by any other means approved by the nationwide mortgage

 

licensing system and registry.

 

     (5) Both of the following apply to the continuing education

 

requirements of a licensed mortgage loan originator:

 

     (a) Except for section 15(2) and subsection (9), he or she may

 

only receive credit for a continuing education course in the year

 

in which the course is taken.

 

     (b) He or she may not take the same approved course in the

 

same or successive years to meet the annual requirements for

 

continuing education.

 

     (6) A licensed mortgage loan originator who is an approved

 

instructor of an approved continuing education course may receive


 

credit for the licensed mortgage loan originator's own annual

 

continuing education requirement at the rate of 2 hours credit for

 

every 1 hour taught.

 

     (7) If a person successfully completes any continuing

 

education requirements described in subsection (1)(a), (b), or (c)

 

that are approved by the nationwide mortgage licensing system and

 

registry for any state, the commissioner shall accept those hours

 

of education as credit toward completion of the continuing

 

education requirements under this section.

 

     (8) If an unlicensed individual who formerly held a license

 

issued under this act applies for a new license under this act, he

 

or she must complete the continuing education requirements for the

 

last year in which the license was held to be eligible for a new or

 

renewed license.

 

     (9) The commissioner by rule may establish a procedure by

 

which an individual who meets the requirements of section 15(1)(a)

 

and (c) may make up any deficiency in continuing education.

 

     Sec. 19. (1) At the time of making an initial application for

 

a mortgage loan originator license under this act, the applicant

 

shall pay to the commissioner the annual operating fee established

 

by the commissioner under subsection (2).

 

     (2) The commissioner shall annually establish a schedule of

 

fees that are sufficient to pay, but not to exceed, the reasonably

 

anticipated costs of the office of financial and insurance

 

regulation for administering and enforcing this act. The fee

 

schedule shall include all of the following:

 

     (a) An annual fee for each licensed mortgage loan originator


 

in an amount established by the commissioner. For purposes of this

 

subdivision, the commissioner shall establish an amount for the

 

annual fee that is sufficient to defray the estimated cost of

 

administering and enforcing the provisions of this act.

 

     (b) For amending or reissuing a mortgage loan originator

 

license, a fee of not less than $15.00 or more than $200.00.

 

     (c) A licensed mortgage loan originator shall pay the actual

 

travel, lodging, and meal expenses incurred by employees of the

 

office of financial and insurance regulation who travel out of

 

state to conduct an examination or investigation of a licensed

 

mortgage loan originator and the cost of independent investigators

 

employed under section 33(6)(a).

 

     (3) Fees received under this act are not refundable.

 

     (4) If any fees or penalties provided for in this act are not

 

paid when required, the attorney general may maintain an action

 

against the delinquent licensed mortgage loan originator for the

 

recovery of the fees and penalties together with interest and

 

costs.

 

     (5) A licensed mortgage loan originator who fails to submit to

 

the commissioner the reports required under section 33(3) is

 

subject to a penalty of $25.00 for each day a required report is

 

delinquent or $1,000.00, whichever is less.

 

     (6) A mortgage loan originator license renewal fee that is not

 

received on or before December 31 is subject to a penalty of $25.00

 

for each day the fee is delinquent or $1,000.00, whichever is less.

 

     (7) Money received from the fees described in this section

 

shall be deposited in the MBLSLA fund. As used in this subsection,


 

"MBLSLA fund" means the restricted account created under section

 

8(8) of the mortgage brokers, lenders, and servicers licensing act,

 

1987 PA 173, MCL 445.1658.

 

     (8) The annual operating fees set by the commissioner shall

 

not exceed the levels needed to cover the estimated cost of

 

enforcement of this act.

 

     Sec. 21. In addition to any other duties imposed on the

 

commissioner under this act, the commissioner shall require

 

mortgage loan originators to be licensed and registered through the

 

nationwide mortgage licensing system and registry. To carry out

 

this requirement, the commissioner is authorized to participate in

 

the nationwide mortgage licensing system and registry and may by

 

rule establish other requirements that he or she considers

 

necessary, including, but not limited to, any of the following:

 

     (a) Background checks for any of the following:

 

     (i) The criminal history of a licensed mortgage loan originator

 

or license applicant through fingerprint or other databases.

 

     (ii) Information about a licensed mortgage loan originator or

 

license applicant in civil or administrative records.

 

     (iii) A licensed mortgage loan originator's or license

 

applicant's credit history.

 

     (iv) Any other information about a licensed mortgage loan

 

originator or license applicant considered necessary by the

 

nationwide mortgage licensing system and registry.

 

     (b) The payment of fees to apply for or renew licenses through

 

the nationwide mortgage licensing system and registry.

 

     (c) The setting or resetting as necessary of renewal or


 

reporting dates.

 

     (d) Requirements for amending or surrendering a license or any

 

other activities that the commissioner considers necessary for

 

participation in the nationwide mortgage licensing system and

 

registry.

 

     Sec. 23. The commissioner shall establish a process through

 

which mortgage loan originators may challenge information entered

 

into the nationwide mortgage licensing system and registry by the

 

commissioner.

 

     Sec. 25. (1) To ensure the effective supervision and

 

enforcement of this act, the commissioner may do any of the

 

following, in a manner consistent with the requirements of the

 

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

24.328:

 

     (a) Deny, suspend, revoke, condition, or decline to renew a

 

license for a violation of this act, rules issued under this act,

 

or an order or directive entered under this act.

 

     (b) Deny, suspend, revoke, condition or decline to renew a

 

license if a licensed mortgage loan originator or license applicant

 

fails at any time to meet the requirements of section 9 or 15 or

 

withholds information or makes a material misstatement in an

 

application for a license or renewal of a license.

 

     (c) Order restitution against a person that is subject to this

 

act for a violation of this act.

 

     (d) Subject to subsections (2), (3), and (4), impose a civil

 

fine on a person that is subject to this act.

 

     (e) Issue any of the following orders or directives under this


 

act:

 

     (i) Order or direct a person that is subject to this act to

 

cease and desist from conducting business, including an immediate

 

temporary order to cease and desist.

 

     (ii) Order or direct a person that is subject to this act to

 

cease any harmful activities or violations of this act, including

 

an immediate temporary order to cease and desist.

 

     (iii) Enter an immediate temporary order to cease business under

 

a license or interim license issued pursuant to the authority

 

granted under section 5(4), if the commissioner determines that the

 

license or interim license was erroneously granted or the licensed

 

mortgage loan originator is currently in violation of this act.

 

     (iv) Issue an order under section 27.

 

     (v) Order or direct any other affirmative action that the

 

commissioner considers necessary.

 

     (2) The commissioner may impose a civil fine on a mortgage

 

loan originator or other person subject to this act, if the

 

commissioner finds, on the record after notice and opportunity for

 

hearing, that the mortgage loan originator or other person has

 

violated or failed to comply with a requirement of this act, a rule

 

promulgated by the commissioner under this act, or an order issued

 

under the authority of this act.

 

     (3) The maximum fine for each violation or failure to comply

 

described in subsection (2) is $25,000.00.

 

     (4) Each violation or failure to comply described in

 

subsection (2) is a separate and distinct violation or failure.

 

     Sec. 27. (1) If in the opinion of the commissioner an


 

individual has engaged in fraud, the commissioner may serve on that

 

person a written notice of intention to prohibit that individual

 

from being licensed under this act, licensed or registered under

 

any of the financial licensing acts, or employed by, an agent of,

 

or a control person of a licensee or registrant under any of the

 

financial licensing acts.

 

     (2) A notice issued under subsection (1) shall contain a

 

statement of the facts supporting the prohibition and, except as

 

provided under subsection (7), shall set a hearing on a date within

 

60 days after the date of the notice. If the individual does not

 

appear at the hearing, he or she is considered to have consented to

 

the issuance of an order in accordance with the notice.

 

     (3) If after a hearing held under subsection (2) the

 

commissioner finds that any of the grounds specified in the notice

 

have been established, the commissioner may issue an order of

 

suspension or prohibition from being licensed under this act,

 

licensed or registered under any of the financial licensing acts,

 

or employed by, an agent of, or a control person of a licensee or

 

registrant under any of the financial licensing acts.

 

     (4) An order issued under subsection (2) or (3) is effective

 

when served on an individual. The commissioner shall also serve a

 

copy of the order upon the licensee of which the individual is an

 

employee or agent. The order remains in effect until it is stayed,

 

modified, terminated, or set aside by the commissioner or a

 

reviewing court.

 

     (5) After 5 years from the date of an order issued under

 

subsection (2) or (3), the individual subject to the order may


 

apply to the commissioner to terminate the order.

 

     (6) If the commissioner considers that an individual served a

 

notice under subsection (1) poses an imminent threat of financial

 

loss to customers, the commissioner may serve on that individual an

 

order of suspension from being employed by, an agent of, or a

 

control person of a licensee or registrant under any of the

 

financial licensing acts. The suspension is effective on the date

 

the order is issued and, unless stayed by a court, remains in

 

effect until the commissioner completes the review required under

 

this section and the commissioner has dismissed the charges

 

specified in the order.

 

     (7) Unless otherwise agreed to by the commissioner and the

 

individual served with an order issued under subsection (6), the

 

commissioner shall hold the hearing required under subsection (2)

 

to review the suspension not earlier than 5 days or later than 20

 

days after the date of the notice.

 

     (8) If an individual is convicted of a felony involving fraud,

 

dishonesty, or breach of trust, the commissioner may issue an order

 

suspending or prohibiting him or her from being licensed under this

 

act, licensed or registered under any of the financial licensing

 

acts, or employed by, an agent of, or a control person of a

 

licensee or registrant under any of the financial licensing acts.

 

After 5 years from the date of the order, the individual subject to

 

the order may apply to the commissioner to terminate the order.

 

     (9) The commissioner shall mail a copy of any notice or order

 

issued under this section to the employer or principal of the

 

individual subject to the notice or order.


 

     (10) Within 30 days after the commissioner has notified the

 

parties that the case has been submitted to him or her for final

 

decision, the commissioner shall render a decision that includes

 

findings of fact supporting the decision and serve on each party to

 

the proceeding a copy of the decision and an order consistent with

 

the decision.

 

     (11) Except for a consent order, a party to the proceeding or

 

a person affected by an order issued under this section may obtain

 

a judicial review of the order. A consent order may be reviewed as

 

provided under the administrative procedures act of 1969, 1969 PA

 

306, MCL 24.201 to 24.328. Except for an order under judicial

 

review, the commissioner may terminate or set aside any order. The

 

commissioner may terminate or set aside an order under judicial

 

review with the permission of the court.

 

     (12) Unless ordered by the court, the commencement of

 

proceedings for judicial review under subsection (11) does not stay

 

the commissioner's order.

 

     (13) The commissioner may apply to the circuit court of Ingham

 

county for the enforcement of any outstanding order issued under

 

this section.

 

     (14) Any individual who violates a final order issued under

 

this section is guilty of a misdemeanor punishable by a fine of not

 

more than $5,000.00 or imprisonment for not more than 1 year, or

 

both.

 

     (15) As used in this section, "fraud" includes actionable

 

fraud, actual or constructive fraud, criminal fraud, extrinsic or

 

intrinsic fraud, fraud in the execution, in the inducement, in


 

fact, or in law, or any other form of fraud.

 

     Sec. 29. (1) Each mortgage loan originator must provide to the

 

commissioner or be covered by a surety bond that meets the

 

requirements of this section.

 

     (2) If the mortgage loan originator is an employee or

 

exclusive agent of a person subject to this act and that person has

 

provided the commissioner with a surety bond that satisfies the

 

requirements of this section, the commissioner may accept that

 

surety bond in lieu of the mortgage loan originator's surety bond

 

obligation under subsection (1).

 

     (3) All of the following apply to a surety bond described in

 

subsection (1) or (2):

 

     (a) A surety bond described in subsection (2) must provide

 

coverage for each mortgage loan originator covered by that bond in

 

1 of the following amounts:

 

     (i) If the mortgage loan originator did not close any mortgage

 

loans in the preceding calendar year, or the sum of the principal

 

amounts of mortgage loans closed by the mortgage loan originator in

 

the preceding calendar year is less than $12,000,000.00, as

 

determined by the commissioner, $10,000.00.

 

     (ii) If the sum of the principal amounts of mortgage loans

 

closed by the mortgage loan originator in the preceding calendar

 

year is $12,000,000.00 or more and less than $24,000,000.00, as

 

determined by the commissioner, $25,000.00.

 

     (iii) If the sum of the principal amounts of mortgage loans

 

closed by the mortgage loan originator in the preceding calendar

 

year is $24,000,000.00 or more, as determined by the commissioner,


 

$50,000.00.

 

     (b) The surety bond shall be in a form as prescribed by the

 

commissioner.

 

     (c) The commissioner may promulgate rules with respect to the

 

requirements for surety bonds under this section that are necessary

 

to accomplish the purposes of this act.

 

     (4) If an action is commenced on a bond described in this

 

section, the commissioner may require the filing of a new bond. If

 

there is a recovery in that action, the mortgage loan originator

 

shall immediately provide to the commissioner a new surety bond

 

that meets the requirements of this section.

 

     Sec. 31. (1) Except as otherwise provided in section 1512 of

 

the SAFE act, 12 USC 1511, the requirements of the freedom of

 

information act, 1976 PA 442, MCL 15.231 to 15.246, or any federal

 

law concerning the privacy or confidentiality of any information or

 

material provided to the nationwide mortgage licensing system and

 

registry, and any privilege arising under federal or state law or

 

the rules of any federal or state court concerning that information

 

or material shall continue to apply to that information or material

 

after the information or material is disclosed to the nationwide

 

mortgage licensing system and registry. Any information or material

 

described in this section may be shared with any state and federal

 

regulatory official with mortgage industry oversight authority

 

without the loss of privilege or the loss of confidentiality

 

protections provided by federal law or the freedom of information

 

act, 1976 PA 442, MCL 15.231 to 15.246.

 

     (2) For purposes of this section, the commissioner may enter


 

into agreements or sharing arrangements with other governmental

 

agencies, the conference of state bank supervisors, the American

 

association of residential mortgage regulators, or other

 

associations representing governmental agencies, as established by

 

rule or order of the commissioner.

 

     (3) Any information or material that is subject to a privilege

 

or confidentiality under subsection (1) shall not be subject to any

 

of the following:

 

     (a) Disclosure under any federal or state law governing the

 

disclosure to the public of information held by an officer or an

 

agency of the federal government or the respective state.

 

     (b) Subpoena or discovery, or admission into evidence, in any

 

private civil action or administrative process, unless with respect

 

to any privilege held by the nationwide mortgage licensing system

 

and registry with respect to the information or material, the

 

person to which the information or material pertains waives, in

 

whole or in part, in that person's discretion, that privilege.

 

     (4) This section does not apply to any information or material

 

relating to the employment history of, and publicly adjudicated

 

disciplinary and enforcement actions against, a mortgage loan

 

originator that is included in the nationwide mortgage licensing

 

system and registry for access by the public.

 

     Sec. 33. (1) In addition to any authority provided under this

 

act, the commissioner may conduct any of the following

 

investigations and examinations:

 

     (a) For purposes of initial licensing, license renewal,

 

license suspension, license conditioning, license revocation or


 

termination, or general or specific inquiry or investigation to

 

determine compliance with this act, the commissioner may access,

 

receive, and use any books, accounts, records, files, documents,

 

information, or evidence, including, but not limited to, any of the

 

following:

 

     (i) Criminal, civil, and administrative history information.

 

     (ii) Personal history and experience information, including

 

independent credit reports obtained from a consumer reporting

 

agency, as defined in 603 of the fair credit reporting act, 15 USC

 

1681a.

 

     (iii) Any other documents, information, or evidence the

 

commissioner considers relevant to the inquiry or investigation,

 

regardless of the location, possession, control, or custody of

 

those documents, information, or evidence.

 

     (b) For purposes of investigating violations or complaints

 

arising under this act, or for the purposes of examination, the

 

commissioner may review, investigate, or examine any licensed

 

mortgage loan originator or other person subject to this act as

 

often as necessary in order to carry out the purposes of this act.

 

The commissioner may direct, subpoena, or order the attendance of

 

and examine under oath any person whose testimony may be required

 

about the loans or the business or subject matter of that

 

examination or investigation and may direct, subpoena, or order

 

that person to produce books, accounts, records, files, and any

 

other documents that the commissioner considers relevant to the

 

inquiry.

 

     (2) Each licensed mortgage loan originator or other person


 

subject to this act shall make available to the commissioner on

 

request the books and records relating to the operations of that

 

licensed mortgage loan originator or other person. The commissioner

 

shall have access to those books and records and may interview the

 

officers, principals, mortgage loan originators, employees,

 

independent contractors, agents, and customers of the licensed

 

mortgage loan originator or other person concerning the business of

 

the licensed mortgage loan originator or other person.

 

     (3) Each licensed mortgage loan originator or other person

 

subject to this act shall make or compile reports or prepare other

 

information requested by the commissioner in order to carry out the

 

purposes of this section, including, but not limited to, any of the

 

following:

 

     (a) Accounting compilations.

 

     (b) Information lists and data concerning loan transactions,

 

in a format prescribed by the commissioner.

 

     (c) Any other information the commissioner considers necessary

 

to carry out the purposes of this section.

 

     (4) In making any examination or investigation authorized by

 

this act, the commissioner may control access to any documents and

 

records of the licensed mortgage loan originator or other person

 

under examination or investigation. The commissioner may take

 

possession of the documents and records or place a person in

 

exclusive charge of the documents and records in the place where

 

they are usually kept.

 

     (5) If the commissioner is controlling access to documents or

 

records under subsection (4), a person shall not remove or attempt


 

to remove any of the documents and records except pursuant to a

 

court order or with the consent of the commissioner. Unless the

 

commissioner has reasonable grounds to believe that the documents

 

or records of the licensed mortgage loan originator or other person

 

have been or are at risk of being altered or destroyed for purposes

 

of concealing a violation of this act, the licensed mortgage loan

 

originator or other person or the owner of the documents and

 

records shall have access to the documents or records as necessary

 

to conduct its ordinary business affairs.

 

     (6) For purposes of this section, the commissioner may do any

 

of the following:

 

     (a) Retain attorneys, accountants, or other professionals and

 

specialists as examiners, auditors, or investigators to conduct or

 

assist in the conduct of examinations or investigations.

 

     (b) Enter into agreements or relationships with other

 

government officials or regulatory associations in order to improve

 

efficiencies and reduce regulatory burden by sharing resources,

 

standardized or uniform methods or procedures, and documents,

 

records, information, or evidence obtained under this section.

 

     (c) Use, hire, contract, or employ public or privately

 

available analytical systems, methods, or software to examine or

 

investigate a licensed mortgage loan originator or other person

 

subject to this act.

 

     (d) Accept and rely on examination or investigation reports

 

made by other state or federal government officials.

 

     (e) Accept audit reports prepared by an independent certified

 

public accountant for the licensed mortgage loan originator or


 

other person subject to this act in the course of that part of the

 

examination covering the same general subject matter as the audit

 

and incorporate the audit report in the report of the examination,

 

report of investigation, or other writing of the commissioner.

 

     (7) The commissioner's authority under this section remains in

 

effect whether a licensed mortgage loan originator or other person

 

subject to this act acts or claims to act under any licensing or

 

registration law of this state or claims to act without that

 

authority.

 

     (8) A licensed mortgage loan originator or other person

 

subject to investigation or examination under this section shall

 

not knowingly withhold, abstract, remove, mutilate, destroy, or

 

secrete any books, records, computer records, or other information

 

from the commissioner.

 

     Sec. 35. A licensed mortgage loan originator shall not do any

 

of the following:

 

     (a) Engage in fraud, deceit, or material misrepresentation in

 

connection with any transaction governed by this act.

 

     (b) Intentionally, or due to gross or wanton negligence,

 

repeatedly fail to provide borrowers with any material disclosures

 

of information required by law.

 

     (c) Directly or indirectly make a false, misleading, or

 

deceptive advertisement regarding mortgage loans or the

 

availability of mortgage loans.

 

     (d) Suppress or withhold from the commissioner any information

 

that he or she possesses and that, if submitted, would have made

 

him or her ineligible for licensure or license renewal under this


 

act at the time of application and would have allowed the

 

commissioner to refuse to license him or her.

 

     (e) Be convicted of, or plead no contest to, any of the

 

following:

 

     (i) A misdemeanor involving fraud, dishonesty, or a breach of

 

trust, money laundering, embezzlement, forgery, a financial

 

transaction, or securities.

 

     (ii) A felony.

 

     (f) Refuse or fail to furnish any information or make any

 

report required by the commissioner to issue or renew a license

 

under this act, or otherwise required by the commissioner, within a

 

reasonable period of time, as determined by the commissioner, after

 

requested by the commissioner.

 

     Sec. 37. A licensed mortgage loan originator, or employer or

 

principal of a licensed mortgage loan originator on his or her

 

behalf, shall submit to the nationwide mortgage licensing system

 

and registry reports of condition. The reports of condition shall

 

be in the form and shall contain the information required by the

 

nationwide mortgage licensing system and registry.

 

     Sec. 39. (1) Subject to section 31, the commissioner shall

 

regularly report violations of this act, and enforcement actions

 

and other relevant information, to the nationwide mortgage

 

licensing system and registry.

 

     (2) The commissioner shall comply with the administrative

 

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, in

 

promulgating any rules under this act.

 

     Sec. 41. The unique identifier of any person originating a


 

residential mortgage loan in this state shall be clearly shown on

 

all residential mortgage loan application forms, solicitations, or

 

advertisements, including business cards or websites, and any other

 

documents, as established by rule or order of the commissioner.

 

     Enacting section 1. This act takes effect July 31, 2009.

 

     Enacting section 2. This act does not take effect unless all

 

of the following bills of the 95th Legislature are enacted into

 

law:

 

     (a) Senate Bill No. 463.

 

     (b) Senate Bill No. 464.

 

     (c) Senate Bill No. 465.