12 Nov Colorado, New York and Virginia Regulatory Update
The Colorado Department of Regulatory Agencies, Division of Real Estate, recently amended its rules governing mortgage loan originators and mortgage companies and professional standards, effective November 14, 2013. The New York Department of Financial Services (“DFS”) extended two sets of emergency regulations effective September 5 and September 23, 2013. The Virginia State Corporation Commission (“Commission”) amended its rules governing mortgages loan originators effective September 15, 2013.
COLORADO RULES 4 CCR 725-3 CHAPTER 1 AND CHAPTER 5
“Advertisement” means any commercial message that promotes consumer credit. Advertisements may appear:
- In newspapers, magazines, leaflets, flyers, catalogs, direct mail literature, or other printed material;
- On radio, television, or a public address system;
- On an inside or outside sign or display, or a window display;
- In point-of-sale literature, price tags, signs, and billboards; or
- Online, such as on the internet.
“Business day” means all calendar days except Sundays and federal holidays.
“Consumer credit” means either closed-end or open-end credit that is extended primarily for personal, family, or household purposes. It excludes business and agricultural loans, and loans exceeding $25,000 that are not secured by real property or a dwelling. It also must be extended by a “creditor”.
“Creditor” means a person or organization that regularly extends consumer credit for which a finance charge is required or that is repayable in more than 4 installments even without a finance charge, and to whom the obligation is initially payable. For example, the finance company, bank, or other lender identified on the face of the credit agreement. A person or organization is considered to extend credit “regularly” if it has extended credit more than 25 times during the preceding year or more than 5 times for transactions secured by dwellings.
“Finance charge” means the dollar amount charged for credit. It includes interest and other costs, such as service charges, transaction charges, buyer’s points, loan fees, and mortgage insurance. It also includes the premiums for credit life, accident, and health insurance, if required, and for property insurance, unless the buyer may select the insurer.
“Safe and secure manner” means reasonable measures are taken to minimize the risk of loss, damage, or theft.
All contracts between a mortgage loan originator and a borrower must be in writing and must contain the entire agreement of the parties. A contract is not required between a mortgage loan originator and a borrower; however, if a contract does exist, the contract must be in writing.
A mortgage loan originator must have a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public. Mortgage loan originators are compliant with applicable rules and Colorado law if they adhere to one of the following requirements:
- They individually have a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public;
- They are an officer, partner, member, exclusive agent, or employee of a company that has a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public;
- They are acting as an independent contractor and maintain a contractual agreement with a company that has a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public; or
- They are an employee of a lender before any solicitation of, or contracting with, any member of the public.
NEW YORK EMERGENCY RULES PART 418 AND SUPERVISORY PROCEDURES MB 109 and 110
Our July 21, 2009, October 27, 2009, January 25, 2010, March 22, 2010, August 10, 2010, December 16, 2010, March 24, 2011, June 30, 2011, September 29, 2011, January 25, 2012, April 11, 2012, July 11, 2012, October 17, 2012, April 1, 2013, and June 20, 2013 Compliance Memoranda discussed Emergency Regulations issued by the DFS addressing mortgage loan originator licensing and application requirements and mortgage loan servicer registration and financial responsibility requirements. The DFS recently extended all of the Emergency Regulations through December 2, 2013.
NEW YORK EMERGENCY RULES PART 419
Our August 23, 2010, December 8, 2010, March 24, 2011, May 20, 2011, August 23, 2011, November 18, 2011, January 25, 2012, May 8, 2012, August 15, 2012, December 3, 2012, January 17, 2013, May 7, 2013, and July 19, 2013 Compliance Memoranda discussed New York Emergency Regulations addressing the servicing of mortgage loans, which were effective October 1, 2010, November 1, 2010, February 1, 2011, May 2, 2011, July 22, 2011, October 20, 2011, January 17, 2012, April 17, 2012, July 12, 2012, October 7, 2012, December 13, 2012, and June 26, 2013 respectively. The DFS recently extended the Emergency Regulations through December 18, 2013.
VIRGINIA ADMINISTRATIVE CODE 10 VAC 5-161
“Exclusive agent” means an individual who engages in the business of a mortgage loan originator only on behalf of a particular mortgage broker or mortgage lender, and not on his or her own behalf or on behalf of any other person. The term does not include an employee of a mortgage broker or a mortgage lender.
Any term or phrase not defined in the mortgage loan originator rules must be construed in accordance with the federal SAFE Act regulations.
Unless exempt from licensure, individuals who engage in the business of mortgage loan originators must obtain and maintain annually a mortgage loan originator license, including individuals who are employees or exclusive agents of licensed mortgage lenders and mortgage brokers. Individuals whose wages or other compensation are paid by either professional employer organizations or organizations that provide staffing services must become and remain exclusive agents of a person licensed as a mortgage lender or mortgage broker.
In the case of individuals who are exclusive agents of a person licensed as a mortgage lender or mortgage broker, the individuals and person licensed as a mortgage lender or mortgage broker must comply with the conditions the Commissioner of the Commission (“Commissioner”) may prescribe.
Each mortgage loan originator licensee must ensure that all residential mortgage loans that close as a result of the licensee engaging in the business of a mortgage loan originator are included in reports of condition submitted to the Nationwide Mortgage Licensing System and Registry (“NMLS”). Reports of condition must be in the form, contain the information, and be submitted with the frequency and by the dates that the NMLS may require.
The Commissioner must establish a process whereby mortgage loan originators may challenge information entered into the NMLS by the Bureau of Financial Institutions (“Bureau”).
An organization may request that the Commission designate it as a bona fide nonprofit organization by:
· Submitting its request on a form prescribed by the Commissioner;
· Paying a nonrefundable fee of $200; and
· Furnishing other information that the Commissioner may require.
If the NMLS is capable of processing these requests, the organization must submit its request through the NMLS and pay or cause to be paid any fees imposed by the NMLS in addition to the fee payable to the Commission.
The Commission must designate an organization as a bona fide nonprofit organization only if the organization has satisfied applicable mortgage loan originator licensure requirements and the Commission finds that the organization:
- Is tax-exempt as a charitable organization;
- Promotes affordable housing or provides homeownership education or similar services;
- Conducts its activities in a manner that serves public or charitable purposes rather than commercial purposes;
- Charges fees and receives funding and revenue in a manner that does not incentivize it or its employees to act other than in the best interests of its clients;
- Compensates its employees in a manner that does not incentivize employees to act other than in the best interests of its clients;
- Provides or identifies for a borrower residential mortgage loans with terms that are favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs. Loan terms are considered favorable to the borrower if the terms are consistent with loan origination in a public or charitable context rather than a commercial context; and
- Meets any other criteria that the Commission finds relevant.
If the Commission is unable to make all of the required findings, the Commission will notify the organization in writing and provide the basis for its determination.
A bona fide nonprofit organization must give written notice to the Bureau within 5 days of any change in, or revocation of, the organization’s tax-exempt status as a charitable organization or any change in the organization’s mission, policies, or practices that is inconsistent with any of the criteria above.
When the Bureau requests a written response, books, records, documentation, or other information from a bona fide nonprofit organization, the organization must deliver a written response as well as any requested books, records, documentation, or information within the time period specified in the Bureau’s request or, if no time period is specified, not later than 30 days from the date of the request. In determining the specified time period for responding to the Bureau and when considering a request for an extension of time to respond, the Bureau will take into consideration the volume and complexity of the requested written response, books, records, documentation or information, and other factors as the Bureau determines to be relevant under the circumstances. Requests made by the Bureau are in furtherance of its investigation and examination authority.
The Commission may, at its discretion, waive or grant exceptions to any provision of the rules for good cause shown.