Mississippi Legislative Update

Mississippi Legislative Update

The Mississippi legislature recently amended certain provisions of the Mississippi S.A.F.E. Mortgage Act (“Act”), effective July 1, 2016.

 MISSISSIPPI SENATE BILL 2504

The restriction on criminal records for applicants has changed.  The Commissioner of the Mississippi Department of Banking and Consumer Finance (“Commissioner”) may not issue a mortgage broker, mortgage lender or loan originator license to an applicant if the Commissioner finds that the applicant has been convicted of, or pled guilty or nolo contendere to a felony in a domestic, foreign or military court during the seven-year period preceding the date of application for licensing or at any time preceding the date of application if such felony involved an act of fraud, dishonesty, a breach of trust or money laundering (previously a misdemeanor of fraud, theft, forgery, bribery, embezzlement or making a fraudulent or false statement in any jurisdiction was also grounds for denial).

In order to meet the annual continuing education requirements, a licensed mortgage loan originator must complete at least eight (previously twelve) hours of approved education, which must include at least:

  • Three hours of federal law and regulations;
  • Two hours of ethics, which must include instruction on fraud, consumer protection and fair lending issues; and
  • Two hours of training related to lending standards for the nontraditional mortgage product marketplace.

Licensed mortgage brokers, mortgage lenders and mortgage loan originators (individually and/or collectively “Licensees”) must maintain the books, accounts and records for individual consumer mortgage files apart and separate from any other personal loan files made by the same consumer.

In the absence of malice, fraud or bad faith a person is not subject to civil liability arising from the filing of a complaint with the Mississippi Department of Banking and Consumer Finance (“Department”), furnishing information required by the Department, or information voluntarily given to the Department related to allegations that a Licensee or prospective Licensee has violated the Act.  Failure of a person to respond to a formal complaint made with the Department by a consumer may result in a violation of the Act, resulting in a civil penalty.

The Commissioner may:

  • Accept and rely on examination or investigation reports made by other government officials, within or without of Mississippi; or
  • Accept audit reports made by an independent certified public accountant for the Licensee, individual or person subject to the Act in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of the examination, report of investigation or other writing of the Commissioner;
  • Rely upon attorneys, accountants, or other professionals and specialists as examiners, auditors or investigators to conduct or assist in the conduct of examinations or investigations; or
  • Enter into agreements or relationships with other government officials or regulatory associations, including, but not limited to, joint enforcement action, by sharing resources, standardized or uniform methods or procedures, and documents, records, information or evidence obtained.

No Licensee, individual or person subject to investigation or examination under the Act may knowingly withhold, abstract, remove, mutilate, destroy, falsify, abandon or secret any books, records, computer records or other information.

Within fifteen (15) days of the occurrence of any of the following events, a company must file with the Nationwide Mortgage Licensing System and Registry (“NMLS”) the applicable change in the disclosure questions and must submit the information through the NMLS or file a written report with the Commissioner describing the event and its expected impact on the activities of the company in Mississippi:

  • The filing for bankruptcy or reorganization by the company;
  • The institution of revocation or suspension proceedings against the company by any state or governmental authority;
  • Any felony indictment of the company or any of its directors, executive officers, qualifying individual or loan originators;
  • Any felony conviction of the company or any of its directors, executive officers, qualifying individual or loan originators;
  • Expiration, termination or default, technical or otherwise, of any existing line of credit or warehouse credit agreement;
  • Suspension or termination of the Licensee’s status as an approved seller or seller/servicer by Fannie Mae, Freddie Mac or Ginnie Mae;
  • Exercise of recourse rights by investors or subsequent assignees of mortgage loans if such loans, in the aggregate, exceed the Licensee’s net worth exclusive of real property and fixed assets; or
  • Existence of negative balances, exceeding $100 in any operation account at any time or the return of checks, exceeding $100 for insufficient funds.

No person required to be licensed as a mortgage broker, lender or loan originator may, in addition to existing prohibitions:

·         Refuse to provide a loan payoff within three business days of an oral or written request from a borrower or third party.  Proof of authorization of the borrower must be submitted for a third-party request.  The payoff statement must be an understandable and accurate statement of the total amount that is required to pay off the mortgage loan as of a specified date.  No borrower may be charged a fee for being informed or receiving a payoff statement or for being provided with a release upon full payment, provided that the licensed mortgage lender may charge a reasonable fee for providing a payoff statement after five or more requests in any calendar year.

·         Sign a consumer’s name to a mortgage loan application or mortgage loan documents on behalf of a consumer.

·         Knowingly falsify income or asset information on a mortgage loan application or mortgage loan documents.

·         Discourage a consumer in a mortgage loan transaction from seeking or obtaining independent legal counsel or legal advice.

The requirement that Licensees include the words “Mississippi Licensed Mortgage Company” or, if the initial license is obtained after July 1, 2007, the words “Licensed by the Mississippi Department of Banking and Consumer Finance” in any advertisement has been deleted.

The address for filing complaints which must appear on the mortgage origination agreement provided to the borrower has been changed to the following:

Mississippi Department of Banking and

Consumer Finance

P.O. Drawer 12129

Jackson, MS 39236-2129

The individual servicer files of a Licensee must contain at least the following:

  • A copy of the original initial loan application signed and dated by the Licensee;
  • A copy of the final loan application signed and dated by the Licensee;
  • A copy of the signed closing statement as required by HUD or documentation of denial or cancellation of the loan application;
  • Modification agreements;
  • Collection/default letters and related documentation;
  • Addendums, riders, assigned note, if applicable;
  • Complete pay history from the time the loan was transferred or boarded;
  • Complete comment/note history from the time the loan was transferred or boarded; and
  • Additional information as required per the rules and regulations of the Act as deemed necessary by the Commissioner.

Each Licensee must maintain a journal of mortgage transactions at the principal place of business as stated on its license for all Mississippi residential loans that the Licensee originated and/or funded. This journal must be separate from non-Mississippi loans. The journal must include at least the following information:

  • Name of applicant and co-applicant, if applicable;
  • Date of application;
  • Disposition of loan application, indicating date of loan closing, loan denial, withdrawal and name of lender if applicable;
  • Property address;
  • Loan amount;
  • Terms;
  • Loan program; and
  • Loan originator.

Each Licensee must maintain a journal of serviced loans at the principal place of business as stated on its license, for all Mississippi residential loans that the Licensee owns and/or services. This journal must be kept separate from non-Mississippi loans. The journal must include at least the following information:

  • The number of mortgage loans the Licensee is servicing;
  • The type and characteristics of the loans;
  • The number of serviced loans in default, along with a breakdown of thirty-, sixty- and ninety-day delinquencies;
  • Information on loss mitigation activities, including details on workout arrangements undertaken and date loss mitigation application was submitted/approved/denied;
  • Information on foreclosures commenced and completed;
  • Name of applicant and co-applicant, if applicable; and
  • Date the loan was boarded/deboarded, if applicable.