Montana and Oregon Regulatory Update

Montana and Oregon Regulatory Update

The Montana Department of Administration recently amended its rules to add renewal fees for mortgage servicers and mortgage servicer branches, effective October 27, 2014.  The Oregon Department of Consumer and Business Services, Finance and Corporate Securities (the “Department”) recently amended its mortgage lending licensing rules (the “Rules”), effective January 1, 2015.

 

MONTANA RULES 2.59.1738

 

The renewal fees for the license period January 1 through December 31 are:

 

Mortgage Servicer                    $750.00

Mortgage Servicer Branch        $250.00

 

OREGON RULES CHAPTER 441

 

“Advertising” means any form of sales or promotional materials used in connection with the mortgage banker or mortgage broker business including, but not limited to, materials that may appear (previously distribution of information regarding loan products by or in the name of a mortgage banker or mortgage broker to members of the public):

  • In newspapers, magazines, leaflets, flyers, catalogs, direct mail literature, or other printed material;
  • On radio or television;
  • On an inside or outside sign or display, or a window display;
  • In a facsimile;
  • In point-of-sale literature, price tags, signs, and billboards; or
  • Online, such as on the Internet, email, or via social media.

 

“Mortgage loan originator employed by the mortgage banker or mortgage broker” means every mortgage loan originator operating under the authority or sponsorship of a mortgage banker or mortgage broker’s license, regardless of whether the mortgage loan originator is an employee of the mortgage banker or mortgage broker or purports to act as an agent or independent contractor for the mortgage banker or mortgage broker.

 

With regard to the record retention requirements, an electronically produced or microphotographic duplicate of each document may be substituted for the original document at any time.

 

In addition to the criminal records check required for submission to the National Mortgage Licensing System and Registry (“NMLSR”), a mortgage banker or mortgage broker must conduct a state criminal records check of each individual employed by the mortgage banker or mortgage broker as a mortgage loan originator prior to hire or, for an existing employee not previously engaging in Oregon residential mortgage transactions, prior to sponsoring the loan originator’s Oregon mortgage loan originator license.

 

A mortgage banker or mortgage broker conducting a search of the state criminal records must search all state records going back at least 7 years from the date of application or extension of sponsorship.

 

A mortgage banker or a mortgage broker license will expire on December 31 of each calendar year.  At least 30 days prior to the expiration of a mortgage banker or mortgage broker license, the mortgage banker or mortgage broker must submit a renewal request for the license to the Director of the Department (the “Director”) through the NMLSR and must:

  • Complete a renewal request with an attestation that the records are true and accurate (previously was required to complete a MU1 and provide financial statements); and
  • Pay any applicable renewal fees.

 

A mortgage banker or mortgage broker will be required to notify the Director within 30 days of any conduct violating Oregon laws or rules by a mortgage loan originator.

 

If the mortgage banker or mortgage broker fails to notify the Director of significant developments under the Rules, the Director may take action.

 

For mortgage bankers or mortgage brokers acting as or employing a mortgage loan originator, the sum of the corporate surety bond must be calculated based on the sum of the dollar amount of direct and third party loans reported as closed and funded as reported on the Oregon residential mortgage lending activity reports for quarters two, three, and four of the previous year and the first quarter of the current year, or as many such quarters as have or should have been filed as of September 1 of the current year (previously on the last required residential mortgage lending report submitted).

 

For mortgage bankers not employing mortgage loan originators, the corporate surety bond or irrevocable letter of credit must be calculated based on the previous four quarterly residential reports of condition submitted (previously on the last required residential mortgage lending report submitted).

 

Financial records must now include financial statements prepared in accordance with generally accepted accounting principles, including a balance sheet and a statement of income or operations, dated not more than 90 days following the end of the company’s fiscal year.

 

All mortgage bankers and mortgage brokers must now maintain copies of:

  • All published editions of Internet webpages accessible by borrowers; and
  • All versions of software applications designed to be downloaded and run on a mobile device’s operating system by a borrower.

 

A dishonest, fraudulent, or illegal practice or conduct includes reporting false or incorrect information on a report of condition filed.  A mortgage banker or mortgage broker who corrects an incorrect report of condition to the satisfaction of the Director within 30 days of notice from the Director that it is incorrect is not subject to this provision.

 

Every deposit into a trust account must be made in a form that allows deposit into the trust account, including, but not limited to, cash, check, or any electronic transmission of funds or wire transfers, automated clearinghouse authorizations, credit card, or debit transactions, or online payments through a website (previously must be made with deposit slips or other evidence of deposit identifying each transaction by a written notation of the file identification assigned to the transaction on whose behalf the deposit is made. Compliance with this rule may be satisfied when a mortgage banker or mortgage broker has attached a copy of the client’s check to the deposit slips).

 

All deposits into a trust account must be documented by:

  • A deposit slip that has been validated by bank imprint, or an attached deposit receipt, which bears the signature of an authorized representative of a mortgage banker or mortgage broker indicating that the funds were actually deposited into the proper account(s) for deposits that are not by electronic transmission; or
  • A record of the deposit including a traceable identifying name or number supplied by the federally insured financial institution or transferring entity for electronic submissions of funds or wire transfers, automated clearinghouse authorizations, credit card or debit transactions, or online payments through a website.

 

Compliance with the above provision may be satisfied if a mortgage banker or mortgage broker has attached a copy of the client’s check to the deposit slip or has retained a receipt for the deposit of the funds containing the traceable identifying name or number supplied by the federally insured financial institution or transferring entity for electronic transmissions of funds or wire transfers, automated clearinghouse authorizations, credit card or debit transactions, or online payments through a website along with written documentation that identifies the name of the client, amount of the deposit, and the purpose of the funds for each client whose funds are included in the deposit.

 

Funds disbursed from a trust account must be in a form that allows individual withdrawal from the account including by check or an electronic transmission of funds or wire transfer, automated clearinghouse authorizations, debit transactions, or online payments through a website (previously by checks, which are prenumbered and bear the words “Client Trust Account” upon the face of the check).

 

All withdrawals must be documented by:

  • Checks that are prenumbered and bear the words “Client Trust Account” upon the face of the check.  A mortgage banker or mortgage broker must account for all checks, including voided checks, as part of the books and records maintained by the mortgage banker or mortgage broker.
  • A record of the withdrawal including a traceable identifying name or number supplied by a federally insured financial institution or transferring entity for electronic submissions of funds or wire transfers, automated clearinghouse authorizations, debit transactions, or online payments through a website.

 

Compliance with the above provision may be satisfied if the mortgage banker or mortgage broker can produce an image of the check as well as evidence that it has been negotiated or has retained a receipt for the withdrawal of funds containing the traceable identifying name or number supplied by the federally insured financial institution or transferring entity for electronic transmissions of funds or wire transfers, automated clearinghouse authorizations, credit card or debit transactions, or online payments through a website along with written documentation that identifies the name of the client, amount of the withdrawal, and the purpose of the funds for each client whose funds are included in the withdrawal.

 

In addition to the prior required disclosures, in the case of residential loan applications, escrow instructions and instructions for trust fund disbursement of fees must provide that no trust funds may be disbursed to the mortgage banker or mortgage broker until the mortgage banker or mortgage broker has provided the notice that homeowners with reverse mortgages are not eligible to defer collection of homestead property taxes as allowed under Oregon law.

 

If an applicant fails to correct deficiencies in an application, filing, or amendment or fails to respond to deficiencies within 30 days of being notified of a deficiency, the Director may take action against the licensee.  In addition to any penalties, if an applicant does not correct the deficiencies after the Director takes action, the application will be deemed abandoned.  Any application or renewal fees paid by the mortgage loan originator applicant will not be refunded due to abandonment.  An applicant whose application is abandoned may reapply to obtain a mortgage loan originator license.

 

Each applicant for a new mortgage loan originator license must pass the Uniform State Mortgage Loan Originator examination approved by the NMLSR, which contains a uniform state test and an examination on federal regulation (previously an entry-level examination approved by the NMLSR and an examination on Oregon statutes and rules approved by the Director and the NMLSR) prior to engaging in activities as an Oregon mortgage loan originator.

 

An applicant who violates the rules of conduct governing the Uniform State Mortgage Loan Originator examination or the rules of conduct governing an examination to obtain a loan originator’s license in any state or territory (previously that knowingly acts in a dishonest or deceitful manner in connection with an examination required under this rule) is considered to have engaged in an act, practice or course of business that operates or would operate as a fraud or deceit.  In addition to other remedies available, the Director may refuse to issue the person a license as a mortgage loan originator.

 

A mortgage loan originator license will expire on December 31 of each calendar year.  At least 30 days prior to the expiration of a mortgage loan originator license, a mortgage loan originator must submit all information required to the NMLSR.  The renewal application must include evidence that:

  • The mortgage loan originator attests that all information contained in the renewal request and application is true and accurate;
  • The applicant continues to meet the minimum requirements for a mortgage loan originator license;
  • The applicant paid any required fee; and
  • The applicant completed 20 hours of pre-licensure education or 10 hours of continuing education that comply with the Rules.

 

An applicant for a mortgage loan originator license must complete a minimum of 20 hours pre-licensing education courses approved by the NMLSR before submitting an application to obtain a mortgage loan originator’s license in Oregon.  The 20 hours must include a minimum of:

  • 3 hours of instruction on federal law and regulations;
  • 3 hours of instruction on ethics;
  • 2 hours of instruction relating to lending standards for the nontraditional mortgage product market; and
  • 4 hours of instruction on Oregon laws and rules.

 

A mortgage loan originator must take a continuing education course or courses approved by the NMLSR.  A mortgage loan originator must complete at least 10 hours of continuing education per calendar year.  The 10 hours must include a minimum of:

  • 3 hours of instruction on federal law and regulations;
  • 2 hours of instruction on ethics;
  • 2 hours of instruction relating to lending standards for nontraditional mortgage products; and
  • 2 hours of instruction on Oregon laws and rules.

 

The Director may request additional information regarding any notice of employment status by an employer of the mortgage loan originator.

 

 

The following provisions have been deleted:

 

No later than March 31 of each calendar year, a mortgage banker or a mortgage broker licensed at any time during the preceding calendar year must file a report with the Director concerning the banker’s or broker’s business and operations conducted during the preceding calendar year related to residential mortgage transactions.

A mortgage banker or mortgage broker must report the total number and dollar amount of all loans made or funded by the mortgage banker or mortgage broker in any state and those loans that are Oregon residential mortgage transactions.

For loans made or funded for a property located in Oregon, a mortgage banker or mortgage broker must report the total number and dollar amount of:

  • First-lien mortgage loans.
  • Subordinate-lien mortgage loans including, but not limited to, home equity lines of credit.
  • Mortgage loans having a fixed periodic payment of principal and interest throughout the mortgage term.
  • Interest-only first-lien mortgage loans having a fixed interest rate.
  • Interest-only first-lien mortgage loans having an adjustable interest rate.
  • Negative amortization mortgage loans.
  • Home equity conversion mortgages, commonly known as reverse mortgages.
  • Adjustable rate first-lien mortgage loans.
  • Adjustable rate subordinate-lien mortgage loans.
  • Loans with a prepayment penalty in the contract at the time of closing.
  • Mortgage loans closed for the purchase of a primary owner-occupied residential dwelling.
  • Mortgage loans closed for the purchase of a secondary residence.
  • Mortgage loans closed for the purchase of a non-owner occupied property that is a one-to-four family residential dwelling.
  • Mortgage loans closed for the purpose of refinancing an existing mortgage loan secured by a primary owner-occupied residential dwelling.
  • Mortgage loans closed for the purpose of refinancing an existing mortgage loan secured by a secondary residence.
  • Mortgage loans closed for the purpose of refinancing an existing mortgage loan secured by a non-owner occupied property that is a one-to-four family residential dwelling.
  • Mortgage loans insured or guaranteed by a federal agency.

For loans made or funded for a property located in Oregon, a mortgage banker mortgage broker may report the total number and dollar amount of:

  • Loans that were originated based on all of the following factors:

o       Income documentation;

o       Employment documentation; and

o       Asset documentation.

  • Loans that were originated based on one or two of the following factors:

o        Income documentation;

o       Employment documentation; or

o       Asset documentation.

  • Loans that were not originated based on any of the following factors:

o       Income documentation;

o       Employment documentation; or

o       Asset documentation.

  • Loans with a combined loan-to-value ratio of 80% or lower made to an individual having a middle credit bureau risk score of 620 or above.
  • Loans with a combined loan-to-value ratio of 80% or lower made to an individual having a middle credit bureau risk score below 620.
  • Loans with a loan-to-value ratio of greater than 80% made to an individual having a middle credit bureau risk score of 620 or above.
  • Loans with a loan-to-value ratio of greater than 80% made to an individual having a middle credit bureau risk score below 620.