SB-0463, As Passed Senate, June 24, 2009

SUBSTITUTE FOR

SENATE BILL NO. 463

     A bill to amend 1987 PA 173, entitled

"Mortgage brokers, lenders, and servicers licensing act,"

by amending the title and sections 1a, 2, 8, 10, 11, 12, 14, 29,

and 33 (MCL 445.1651a, 445.1652, 445.1658, 445.1660, 445.1661,

445.1662, 445.1664, 445.1679, and 445.1683), the title as amended

by 2008 PA 66, section 1a as amended by 2009 PA 13, section 2 as

amended by 2008 PA 328, section 8 as amended by 2008 PA 326,

section 10 as amended by 2008 PA 69, sections 11 and 12 as amended

by 2008 PA 62, section 14 as amended by 2008 PA 63, section 29 as

amended by 2008 PA 529, and section 33 as amended by 2008 PA 324;

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, and mortgage servicers; and their loan officers; to

prescribe the powers and duties of 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:

     (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) "Board" means the mortgage industry advisory board created

in section 33.

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

financial and insurance regulation of the department of energy,

labor, and economic growth or his or her authorized agent.

     (d) "Construction loan" means a mortgage loan to construct a

1-to-4 family dwelling, that is approved and closed before

completion of the construction of the improvement on the real

property.

     (e) "Control person" means a director or executive officer of

a licensee or registrant 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.

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

following:

     (i) Has an employment relationship acknowledged by that

individual and the licensee or registrant that engages that

individual to originate mortgage loans.

     (ii) Is treated as an employee by the licensee or registrant

that engages that individual to originate mortgage loans for

compliance with federal income tax laws.

(h) (g) "Executive officer" means an officer, member, or

partner of a licensee or registrant. The term includes the chief

executive officer, president, vice president, chief financial

officer, controller, or compliance officer or an individual holding

any other similar position.

(i) (h) "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.

(j) (i) "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.

(k) (j) "Individual investor" means a person that resides in

this state or has its principal place of business in this state.

The term does not include 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, 15 USC 80a-1 to 80a-64, pension or profit sharing plan if the

assets of the plan 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, or the uniform securities act (2002),

2008 PA 551, MCL 451.2101 to 451.2703, the federal national

mortgage association, the government national mortgage association,

the federal home loan mortgage corporation, or a mortgage lender or

mortgage servicer.

(l) (k) "License" means a license issued under this act.

     (m) "Licensed loan officer" means a loan officer who is

licensed as a mortgage loan originator under the mortgage loan

originator licensing act.

(n) (l) "Licensee" means a person licensed or required to be

licensed under this act. As used in sections 2a, 2b, and 2c, the

term also includes a licensee under the consumer financial services

act, 1988 PA 161, MCL 487.2051 to 487.2072.

(o) (m) "Loan officer" means an individual who is an employee

or agent of a mortgage broker, mortgage lender, or mortgage

servicer; who originates mortgage loans; and who is not an employee

or agent of a depository financial institution or a subsidiary or

affiliate of a depository financial institution.

     (n) "Loan officer registrant" means an individual who is

currently registered under section 2a.

(p) (o) "Mortgage broker" means a person 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.

(q) (p) "Mortgage lender" means a person who, directly or

indirectly, makes or offers to make mortgage loans.

(r) (q) "Mortgage loan" means a loan secured by a first

mortgage on real property located in this state and used, or

improved for use, 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 for use, 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.

(s) (r) "Mortgage servicer" means a person who, directly or

indirectly, services or offers to service mortgage loans.

(t) (s) "Originate" means any of the following:

     (i) To negotiate, arrange, or offer to negotiate or arrange a

mortgage loan between a mortgage lender and 1 or more individuals.

     (ii) To place, assist in placing, or find a mortgage loan for 1

or more individuals.

(u) (t) "Person" means an individual, corporation, limited

liability company, partnership, association, governmental entity,

or any other legal entity.

(v) (u) "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.

(w) (v) "Real estate salesperson" means a salesperson licensed

under article 25 of the occupational code, 1980 PA 299, MCL

339.2501 to 339.2518.

(x) (w) "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 , or loan

officer 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.

(y) (x) "Registrant" means a person that is registered under

section 6 or required to register under section 6. The term does

not include a loan officer registrant.

     (z) "Secondary mortgage loan act" means the secondary mortgage

loan act, 1981 PA 125, MCL 493.51 to 493.81.

(aa) (y) "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, or mortgage servicer without first obtaining a

license under this act or registering under section 6, unless 1 or

more of the following apply:

     (a) The person is providing loan officer services as an

employee or agent of only 1 mortgage broker, mortgage lender, or

mortgage servicer and is registered as a licensed loan officer

registrant if that registration licensure is required under this

the mortgage loan originator licensing act.

     (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 113 of the

Michigan business tax act, 2007 PA 36, MCL 208.1113, 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. This subsection does not apply after March 31, 2009.

(3) (4) Beginning April 1, 2009, a A loan officer shall not

directly or indirectly receive any compensation, commission, fee,

points, or other remuneration or benefits for originating a

mortgage loan unless both of the following are met:

     (a) The loan officer is a licensed loan officer. registrant.

     (b) The compensation, commission, fee, points, or other

remuneration or benefits are paid by the licensee or registrant for

which the loan officer originated that mortgage loan.

     (5) 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. This subsection does

not apply after March 31, 2009.

(4) (6) Beginning April 1, 2009, a A mortgage broker, mortgage

lender, or mortgage servicer shall not directly or indirectly pay

any compensation, commission, fee, points, or other remuneration or

benefits to any of the following:

     (a) A loan officer who is not a licensed loan officer.

registrant.

     (b) A licensed loan officer registrant who is not an employee

or agent of that mortgage broker, mortgage lender, or mortgage

servicer.

(5) (7) A mortgage broker, mortgage lender, or mortgage

servicer that is 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) (8) 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.

(7) (9) As used in this section, "employee" means that term as

defined in section 3401 of the internal revenue code, 26 USC 3401.

     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, an applicant for licensure under this act shall pay to the

commissioner a fee for investigating the applicant and the minimum

annual operating fee established by the commissioner in subsection

(3). To renew a license that is not suspended or revoked, the

applicant shall only pay to the commissioner the annual operating

fee established in subsection (3). At the time of filing a

registration or a renewal of a registration, a registrant shall pay

to the commissioner an annual operating fee established in

subsection (3).

     (2) If an initial or renewed license or registration described

in subsection (1) will have an effective date within 6 months of

the expiration date described in section 7, the initial or renewal

annual operating fee for that license or registration is 1/2 of the

annual operating fee.

     (3) The commissioner shall annually establish a schedule of

fees that are sufficient to pay, but not to exceed, the office of

financial and insurance regulation's reasonably anticipated costs

of administering and enforcing this act. Subject to subsection (2),

the fees are as follows:

     (a) For the investigation of an applicant for a license, a fee

of not less than $400.00 or more than $1,000.00.

     (b) Except as set forth in subdivision (c), 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. In the 1-year period

beginning July 2, 1996, the operating fee shall be not less than

$250.00 and not more than $2,500.00. Beginning July 2, 1997, in the

discretion of the commissioner, subject to the limitation set forth

in this subsection, the commissioner may increase the maximum

operating fee at an annual rate of not more than 10% in the second,

third, and fourth 1-year periods after the 1-year period beginning

July 2, 1996, and in the fifth and subsequent years, 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.

     (c) For amending or reissuing a license , or registration, or

loan officer registration, a fee of not less than $15.00 or more

than $200.00.

     (d) A licensee or registrant 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

examine the records of the licensee or investigate the licensee or

registrant and the cost of independent investigators employed under

section 20(1)(e).

     (e) An annual fee for each loan officer registrant 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 loan officer registration

provisions of this act.

     (4) Fees received under 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 under 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 December 31 is subject to

a penalty of $25.00 for each day the fee is delinquent or

$1,000.00, whichever is less.

     (8) The department of treasury shall establish and administer

a restricted account in the general fund named the MBLSLA fund. The

department of treasury shall credit to the account all fees

collected under this act or under the commissioner's authority

under this act, fees described in section 6a of the secondary

mortgage loan act, 1981 PA 125, MCL 493.56a, fees established under

the mortgage loan originator licensing act, and money appropriated

or received from any source. The department of treasury shall use

the money in the account only to provide money to the commissioner

to administer and enforce this act, and the secondary mortgage loan

act, 1981 PA 125, MCL 493.51 to 493.81, and the mortgage loan

originator licensing act and to pay other costs associated with the

commissioner's regulatory obligations. Money in the account at the

end of a state fiscal year shall not revert to the general fund but

shall be carried over in the account to the next state fiscal year.

     (9) The annual operating fee set by the commissioner under

subsection (3)(b) shall be based upon information in reports filed

under section 21.

     Sec. 10. (1) A licensee , or registrant , or loan officer

registrant may surrender a license , or registration , or loan

officer registration by delivering to the commissioner the license

, or registration , or loan officer registration with written

notice that the licensee , or registrant , or loan officer

registrant surrenders the license , or registration. , or loan

officer registration. The surrender, revocation, or suspension of a

license , or registration , or loan officer registration under this

act does not affect the licensee's , or registrant's , or loan

officer registrant's civil or criminal liability for acts committed

before the surrender, revocation, or suspension. The surrender of a

license , or registration , or loan officer registration does not

affect a proceeding to suspend or revoke a license , or

registration. , or loan officer registration.

     (2) Except as otherwise provided by law, a revocation,

suspension, or surrender of a license , or registration , or loan

officer registration does not impair or affect the obligation of a

preexisting contract between the licensee , or registrant , or loan

officer registrant and another person.

     (3) A licensee , or registrant , or loan officer registrant

whose license , or registration , or loan officer registration has

been destroyed or lost may comply with this section by submitting

to the commissioner a notarized affidavit of the loss accompanied

by written notice that the licensee , or registrant , or loan

officer registrant surrenders the license , or registration. , or

loan officer registration.

     Sec. 11. (1) The commissioner shall exercise general

supervision and control over mortgage brokers, mortgage lenders,

and mortgage servicers doing business in this state. and loan

officers originating mortgage loans 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 , or registration. ,

or loan officer registration.

     (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 a county in which a mortgage broker, mortgage lender, or

mortgage servicer is conducting business or in which a loan officer

resides that the commissioner believes a licensee, registrant, loan

officer registrant, or other person is violating this act. The

attorney general or prosecuting attorney may take appropriate legal

action to enjoin the operation of the business of the mortgage

broker, mortgage lender, or mortgage servicer or the originating of

mortgages by the loan officer 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 a licensee,

registrant, loan officer registrant, or any other person who that

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 under section 16.

     (g) To suspend or revoke a license , or registration , or loan

officer registration under section 29.

     (h) To require that restitution be made under section 29.

     (i) To assess a civil fine under section 29.

     (j) To censure a licensee , or registrant. , or loan officer

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

under section 18a.

     Sec. 12. (1) The commissioner shall give notice to a licensee

, or registrant , or loan officer registrant of intention to enter

an order suspending or revoking that person's license , or

registration, or loan officer registration, or notice to an

applicant of a refusal to issue a license , or registration, or

loan officer registration, in writing and served personally or sent

by certified mail to the licensee, registrant, loan officer

registrant, or applicant.

     (2) Within 20 days after the notice of the intention to enter

an order suspending or revoking a license , or registration, or

loan officer registration, or a refusal to issue a license , or

registration , or loan officer registration under subsection (1),

the licensee, registrant, loan officer registrant, or applicant may

request a hearing to contest the order or refusal. If a hearing

regarding suspension or revocation is not requested, the

commissioner shall enter a final order regarding the suspension or

revocation. A hearing shall be conducted under the provisions of

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

to 24.328.

     Sec. 14. All of the following shall apply to an investigation

conducted under section 13:

     (a) The employees or agents of the office of financial and

insurance services regulation shall complete the investigation

within a reasonable period of time.

     (b) If the investigation does not disclose evidence of a

violation of this act or a rule promulgated or an order issued

under this act, the commissioner shall not use the complaint in any

subsequent decision to issue, renew, suspend, or revoke the license

or loan officer registration or suspend or revoke the registration

of the person against which the complaint was filed. The

commissioner shall forward the results of the investigation to the

complainant and the person against whom the complaint was filed.

     (c) In addition to any other action authorized by law, if the

investigation discloses evidence of a violation of this act or a

rule promulgated or an order issued under this act, the

commissioner or the attorney general may prepare a formal complaint

to be served on the person against which the allegations are made

and shall provide a copy of the formal complaint to the

complainant.

     Sec. 29. (1) An owner, partner, member, officer, director,

trustee, employee, agent, broker, or other person, or a

representative acting on the authority of that person that

willfully or intentionally does any of the following is guilty of a

misdemeanor punishable by a fine of not more than $15,000.00 or

imprisonment for not more than 1 year, or both:

     (a) Engages in this state in the business of a mortgage

broker, mortgage lender, or mortgage servicer without a license or

registration required under this act or acts as a loan officer in

this state without and is not a licensed loan officer registration

if licensure is required under this the mortgage loan originator

licensing 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, 1964 PA 265, MCL 451.501 to 451.818, or the uniform

securities act (2002), 2008 PA 551, MCL 451.2101 to 451.2703.

     (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 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 is not considered to 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 mortgage loans or securities

representing an interest in 1 or more mortgage loans, 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 the

uniform securities act, 1964 PA 265, MCL 451.501 to 451.818, or the

uniform securities act (2002), 2008 PA 551, MCL 451.2101 to

451.2703, 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.

     (d) Coerces or induces a real estate appraiser to inflate the

value of real property used as collateral for a mortgage loan,

including, but not limited to, by doing any of the following:

     (i) Representing or implying that a real estate appraiser will

not be selected to conduct an appraisal of the real property or

selected for future appraisal work unless the appraiser agrees in

advance to a value, range of values, or minimum value for the real

property.

     (ii) Representing or implying that a real estate appraiser will

not be paid for an appraisal unless the appraiser agrees in advance

to a value, range of values, or minimum value for the real

property.

     (2) Subject to subsections (4) and (5), if the commissioner

finds that a licensee , or registrant, or loan officer registrant

has violated, or directly or indirectly counseled, aided, or

abetted in a violation, of 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 , or registrant ,

or loan officer registrant or a person who controls the licensee ,

or registrant , or loan officer registrant of not more than

$3,000.00 for each violation, except that the licensee , or

registrant , or loan officer registrant or the person shall not be

fined more than $30,000.00 for a transaction resulting in more than

1 violation, plus the costs of investigation.

     (b) Suspend or revoke a license , or registration , or loan

officer registration or refuse to issue a license or renew a

license , or registration. , or loan officer registration.

     (c) Require the licensee , or registrant , or loan officer

registrant or a person who controls the licensee , or registrant ,

or loan officer 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 is a separate violation. In determining under subsection (2)

the amount of a fine, whether to suspend or revoke a license , or

registration, or loan officer registration, whether to refuse to

issue or renew a license, or loan officer registration, 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 , or loan

officer registrant to ensure that the violation will not be

repeated, and the record of the licensee , or registrant , or loan

officer registrant in complying with this act. Any proceedings

under this subsection are subject to the procedures of the

administrative procedures act of 1969, 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.

     (5) If a loan officer registrant violates section 22b(e)(ii),

the commissioner shall revoke his or her loan officer registration.

Revocation of a loan officer registration under this subsection

does not affect the commissioner's authority to pursue any other

remedy available under subsection (2) for that violation.

     Sec. 33. (1) The mortgage industry advisory board is created.

     (2) All of the following apply to the board:

     (a) The board shall consist of 7 individuals, appointed by the

commissioner as follows:

     (i) Two individuals who are employees of, are directors of, or

have at least a 25% ownership interest in a licensee or registrant,

selected by the commissioner from a list of at least 3 nominees

provided to the commissioner by the Michigan mortgage brokers

association.

     (ii) Two individuals who are employees of, are directors of, or

have at least a 25% ownership interest in a licensee or registrant,

selected by the commissioner from a list of at least 3 nominees

provided to the commissioner by the Michigan mortgage lenders

association.

     (iii) One employee who is an employee of, a director of, or who

has at least a 25% ownership interest in a licensee or registrant

that is a member of any trade association operating in this state

that represents mortgage brokers, mortgage lenders, or mortgage

servicers. The trade associations may recommend candidates for this

position to the commissioner.

     (iv) Two individuals who are employees of, are directors of, or

have at least a 25% ownership interest in business entities that

provide services to or purchase services from licensees or

registrants.

     (b) The term of a board member is 4 years, except that for the

first board, the commissioner shall appoint 3 individuals for 2-

year terms so that the terms of office of board members are

staggered.

     (c) An individual may not serve more than 2 consecutive 4-year

terms, and the commissioner may not reappoint an individual who

serves 2 consecutive 4-year terms on the board for at least 12

months after the end of those consecutive terms.

     (d) The board shall not include more than 1 member who is

employed by, is a director of, or has more than a 1% ownership

interest in the same licensee, registrant, affiliate, or other

person.

     (e) Each member of the board shall serve without compensation.

However, the office of financial and insurance services shall

reimburse a member of the board for his or her travel and other

expenses incurred in the performance of an official board function

pursuant to the standard travel regulations of the department of

management and budget.

     (f) The board shall retain minutes of its meetings and any

other records of the board for at least 10 years. The board shall

make its minutes and any other records prepared, owned, used, in

the possession of, or retained by the board in the performance of

an official function available to the commissioner immediately on

request and make those minutes and records available to the public

in compliance with the freedom of information act, 1976 PA 442, MCL

15.231 to 15.246.

     (3) The board shall communicate to the commissioner issues of

concern to the residential mortgage industry and shall review and

make recommendations to the commissioner concerning all of the

following:

     (a) Course sponsors or providers, course instructors, and the

content of and materials for courses provided to loan officers and

loan officer applicants under section 2a or 2b or section 2a or 2c

of the secondary mortgage loan act, MCL 493.52a and 493.52c.

     (b) Content and procedures for examinations given to loan

officers under section 2a or section 2a of the secondary mortgage

loan act, MCL 493.52a.

(a) (c) Rules proposed under this act, or the secondary

mortgage loan act, or the mortgage loan originator licensing act.

     (d) Procedures to verify attendance at and participation in

courses conducted electronically under section 2b(3)(e) or under

section 2c(3)(e) of the secondary mortgage loan act, MCL 493.52c.

(b) (e) Procedures for maintaining the confidentiality of

personal identifying information and other information concerning

all of the following:

     (i) Licensees, registrants, and loan officer registrants.

     (ii) Applicants applicants for licensure , or registration. ,

or loan officer registration.

(ii) (iii) Licensees, registrants, and secondary mortgage loan

officer registrants under the secondary mortgage loan act.

     (iv) Applicants applicants for licensure , or registration , or

secondary mortgage loan officer registration under the secondary

mortgage loan act.

     (iii) Licensees or applicants for licensure under the mortgage

loan originator licensing act.

(c) (f) Any other issue referred to the board by the

commissioner. (4) As used in this section, "secondary mortgage loan

act" means the secondary mortgage loan act, 1981 PA 125, MCL 493.51

to 493.81.

     Enacting section 1. Sections 2a, 2b, 2c, and 22b of the

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

173, MCL 445.1652a, 445.1652b, 445.1652c, and 445.1672b, are

repealed effective July 31, 2010.

     Enacting section 2. This amendatory act takes effect July 31,

2010.

     Enacting section 3. This amendatory act does not take effect

unless Senate Bill No. 462 of the 95th Legislature is enacted into

law.