Idaho Legislative Update

Idaho Legislative Update

The Idaho legislature recently amended the Idaho Residential Mortgage Practices Act (the “Act”) with regard to mortgage brokers and mortgage lenders and the Idaho S.A.F.E. Mortgage Licensing Act (the “Idaho SAFE Act”) with regard to mortgage loan originators, effective July 1, 2013.

IDAHO HOUSE BILL 10

 

Idaho Residential Mortgage Practices Act

 

 

“Control person” means a person who:

  • Is a person who has the power, directly or indirectly, to direct the management or policies of a company, including a managing member, general partner, director, executive officer or other person occupying a similar position or performing similar functions, or in the case of a limited liability company, is a managing member;
  • Directly or indirectly has the right to vote 10% or more of a class of a voting security of a mortgage broker or mortgage lender;
  • Is a qualified person in charge of a licensed location of a licensed mortgage broker or mortgage lender; or
  • Is an individual identified as a manager of a location for which an applicant is applying for a license to be a mortgage broker or mortgage lender.

 

“Deficiency” means information contained in, or omitted from, an application for a mortgage broker, mortgage lender or mortgage loan originator license that causes the application to be inaccurate, incomplete or otherwise not in conformance with the Act, any rule promulgated or order issued under the Act, application instructions published by the Director (the “Director”) of the Department of Finance (the “Department”) or the provisions of the Nationwide Mortgage Licensing System and Registry (“NMLSR”) policy guidebook.

 

“Financial services” means any activity pertaining to securities, commodities, banking, insurance, consumer lending, money services businesses, consumer debt management or real estate including, but not limited to, acting as or being associated with a bank or savings association, credit union, farm credit system institution, mortgage lender, mortgage broker, real estate salesperson or agent, appraiser, closing agent, title company, escrow agent, payday lender, money transmitter, check casher, pawnbroker, collection agent, debt management company, title lender or credit repair organization.

 

 

“Housing finance agency” means any entity that is:

  • Chartered by a state to help meet the affordable housing needs of the residents of the state;
  • Supervised directly or indirectly by the state government; and
  • Subject to audit and review by the state in which it operates.

 

“NMLSR policy guidebook” means the Conference of State Bank Supervisor’s and the American Association of Residential Mortgage Regulator’s NMLSR policy guidebook for licensees, published by the NMLSR, as identified by administrative rule.

 

 

The Director is authorized to require a background investigation of each control person of an applicant.

 

 

The provisions applicable to mortgage brokers and mortgage lenders do not apply to attorneys authorized to practice in Idaho and accountants with an active license, to the extent that they are retained by their clients to engage in activities authorized by such provisions and the activities provide necessary support to the representation of the client.

 

 

The Director must appoint a volunteer advisory board of up to five individual mortgage industry participants who are licensed or registered through the NMLSR.  At least two of the board must represent licensed mortgage brokers and at least two of the board must represent licensed mortgage lenders.

 

 

An application for a license to do business as a mortgage broker or mortgage lender may be denied if the Director finds that:

  • The financial responsibility, character, and fitness of the control persons do not warrant the belief that the business will be operated honestly and fairly;
  • The qualified person in charge of the applicant’s places of business has not been issued a mortgage loan originator license or does not have a minimum of three years’ experience in residential mortgage brokering or mortgage lending; or
  • A control person of the applicant has:
    • Pled no contest to any felony, or has been convicted of or pled no contest to a misdemeanor involving any aspect of financial services, or a court has accepted a finding of guilt on the part of any control person of the applicant of any felony, or of a misdemeanor involving fraud, false statement or omission, any theft or wrongful taking of property, bribery perjury, forgery, counterfeiting, extortion or conspiracy to commit any of these offenses;
    • Had a license to conduct financial services issued by a government agency revoked or suspended under the laws enforced by such agency;
    • Filed an application for a license which is false or misleading with respect to any material fact;
    • Violated the Act or an applicable rule or order;
    • Violated any Idaho or federal law, rule or regulation relating to financial services; or
    • Not provided information on the application as reasonably required by the Director or has provided materially false information.

 

A license application is considered withdrawn and void if an applicant submits an incomplete license application and, after receipt of a written notice of the application deficiency, fails to provide the Director with information necessary to complete the application within 60 days of receipt of the deficiency notice.  A written deficiency notice is considered received by a license applicant when:

  • Placed in regular U.S. mail by the Director or his or her agent using an address provided by the applicant on the license application;
  • E-mailed to the applicant using an e-mail address provided by the applicant on the license application; or
  • Posted by the Director or his or her agent on the NMLSR.

 

The provisions regarding the revocation or suspension of a mortgage broker or mortgage lender license now apply to control persons.

 

 

The Director may, after any required proceedings, suspend the license for a period not to exceed six months or revoke the license if he or she finds that:

  • The mortgage broker or mortgage lender licensee has failed to designate a new qualified person in charge and notify the Director of the same through the NMLSR within 30 days following a change in the qualified person in charge; or
  • The licensee has failed to notify the Director of the appointment or employment of a control person within 30 days of the occurrence.

 

The mortgage broker and mortgage lender annual license renewal fee is nonrefundable.  The license automatically expires if not timely renewed.  Branch licenses expire upon the expiration, relinquishment, or revocation of a license issued to a licensee’s designated home office.

 

 

The Director may reinstate an expired license during the time period of January 1 through February 28 immediately following license expiration if the Director finds that the applicant meets the requirements for licensure after submission to the Director of:

  • A complete application for renewal;
  • The fees required to apply for license renewal unless previously paid for the period for which the license renewal applies; and
  • A reinstatement fee of $200.

 

Within 45 days of the end of each calendar quarter and 45 days of the end of each calendar year, each mortgage broker and mortgage lender licensee must submit quarterly mortgage call reports and an annual report of financial condition, respectively, through the NMLSR, which must be in the form and contain the information that the Director may require.

 

 

If the Director has a reasonable basis to believe that an unlicensed person is engaging in activities requiring a license, the Director may subpoena the person or any employee, member, officer, representative, or agent that has possession, custody, or care of the books and records of the person to compel their attendance, cite evidence, and require the production of any matter that is relevant to the investigation, including the existence, description, nature, custody, condition and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of relevant facts or any other matter reasonably calculated to lead to the discovery of admissible evidence.

 

 

A mortgage broker or mortgage lender licensee must not employ or appoint as a qualified person in charge any person who the Director has found to have violated standards of conduct adopted by the NMLSR applicable to a person taking a mortgage loan originator test or who has obtained or attempted to obtain credit for education required of mortgage loan originators by means of false pretenses or representations.

 

 

The following provisions have been deleted from the Act:

 

Each license mortgage broker or mortgage lender must display in plain view the certificate of licensure issued by the Department in its principal office and in each branch office.

 

On or before March 31 of each year, or other date established by the Director by rule, every mortgage broker and mortgage lender licensee must file with the Director a composite annual report containing the information as the Director may require for the residential mortgage loans made or brokered by it for the preceding calendar year.

 

Idaho SAFE Act

 

 

“Expungement” means, with respect to a record of criminal conviction entered in Idaho, that no one, including law enforcement, can be permitted access to the record even by court order.  With respect to criminal convictions entered in another state, such state’s definition of expungement will apply.

 

 

“Mortgage loan originator” does not include an individual who is an employee of a federal, state or local government agency or housing finance agency and who acts as a loan originator only according to his or her official duties as an employee of the federal, state or local government agency or housing finance agency.

 

 

A license application will be considered withdrawn and void if an applicant submits an incomplete license application and, after receipt of a written notice of the application deficiency, fails to provide the Director with information necessary to complete the application within 60 days of receipt of the deficiency notice.  A written deficiency notice is considered received by a license applicant when:

  • Placed in regular U.S. mail by the Director or his or her agent using an address provided by the applicant on the license application;
  • E-mailed to the applicant using an e-mail address provided by the applicant on the license application; or
  • Posted by the Director or his or her agent on the NMLSR.

 

Any pardon or expungement of a conviction will not necessarily result in an automatic denial or revocation of a mortgage loan originator license.  The Director may consider the underlying crime, facts or circumstances of a pardoned or expunged felony conviction when determining the eligibility of an applicant for such a license.

 

 

A mortgage loan originator license is not assignable or transferable.

 

 

A mortgage loan originator whose license is placed on inactive status must not act as a mortgage loan originator in Idaho until the license is activated.

 

 

The Director will place a mortgage loan originator license on inactive status upon the occurrence of any of the following:

  • A mortgage loan originator license application is submitted and approved prior to the filing and approval of a loan originator’s relationship and sponsorship by an employing licensed mortgage broker or mortgage lender or by an exempt entity;
  • Receipt of a notice from either the licensed mortgage broker, mortgage lender, registrant, exempt entity or mortgage loan originator that the mortgage loan originator’s sponsored relationship as an employee or independent agent of a licensed mortgage broker, mortgage lender or exempt entity has been terminated; or
  • The surrender, expiration, suspension or revocation of the employing licensed mortgage broker’s, mortgage lender’s, or exempt entity’s license.

 

If a mortgage loan originator license is designated as inactive, then it will remain in that status unless and until it is surrendered, revoked, suspended, expired, or is activated.

 

 

A mortgage loan originator who holds an inactive mortgage loan originator license may renew the inactive license if he or she remains otherwise eligible for renewal.  A renewal will not activate the license from an inactive status.

 

 

The Director may activate a mortgage loan originator license upon receipt of a filing through the NMLSR indicating that the mortgage loan originator licensee has been employed and sponsored as a mortgage loan originator by a licensed mortgage broker, mortgage lender or by an exempt entity registrant and if the mortgage loan originator meets the conditions for licensing.

 

 

An individual may retake a qualified written test two (previously three) times.  If an individual does not pass the test upon retake number two (previously three), then the individual must wait at least six months before retaking the test.

 

 

The Director may reinstate an expired license during the time period of January 1 through February 28 immediately following license expiration if the Director finds that the former licensee meets the requirements for mortgage loan originator licensure after submission to the Director of:

  • A complete renewal application;
  • The fees required to apply for license renewal unless previously paid for the period for which the license renewal applies; and
  • A reinstatement fee of $100.

 

It is a violation of the Idaho SAFE Act for a person or individual in connection with mortgage loan origination activity in Idaho to:

  • Violate standards of conduct adopted by the NMLSR applicable to a person taking a written mortgage loan originator test, as found by the Director; or
  • Obtain or attempt to obtain credit for education required for mortgage loan originators by means of false pretenses or representations.

 

The unique identifier of any person engaged in the origination of a residential mortgage loan must be clearly displayed on solicitations or advertisements including on other forms of media in addition to websites.

 

 

The following provision has been deleted from the Idaho SAFE Act:

 

 

“Mortgage loan originator” does not include a person that only performs the activities of a manufactured housing resale broker, responsible managing employee, retailer or salesman, unless the person is compensated by a lender, a mortgage broker or other mortgage loan originator, or by any agent of the lender, mortgage broker or other mortgage loan originator.  This paragraph does not apply if the United States Department of Housing and Urban Development finds, through guideline, rule, regulation, or interpretive letter, that it is inconsistent with the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.