24 Sep Montana Regulatory Update
The Montana Department of Administration (the “Department”) recently amended its rules, effective September 7, 2012 under the Montana Mortgage Act (the “Act”).
Montana Rules 2.59.1701 – 2.59.1731
A mortgage servicer licensee must compile and submit a report to the Department 45 days after the end of each quarter containing the information described below for the preceding quarter. The quarter end dates are March 31, June 30, September 30, and December 31. The Quarterly Statement for Mortgage Servicing Activity is available on the Department’s website at www.banking.mt.gov.
The mortgage servicer report must contain the following information:
- The number of Montana mortgage loans the servicer is servicing;
- The type of loans (such as FHA-guaranteed or private label) and characteristics of the loans in Montana (fixed, variable, home equity lines of credit [HELOCs], reverse mortgages, high-cost loans, higher-priced loans, option-adjustable-rate mortgages [ARMs], and negative-amortization loans);
- The number of mortgage loans the servicer is servicing that are in payment default and a breakdown of these mortgage loans by length of payment delinquency, including 30-day, 60-day, 90-day, and longer delinquencies;
- For each loan in payment default, the unique identifier of the mortgage loan originator and the broker who originated the loan;
- Information on loss-mitigation activities undertaken, including, but not limited to, the following:
- The number of workout arrangements entered into by the servicer in connection with mortgage loan;
- A description of the types of workout arrangements, including mortgage loan modifications, and the percentage of each type of workout arrangement entered into;
- The ratio of loan modifications requested by the borrower to the actual number granted by the mortgage servicer; and
- The proactive steps taken by the mortgage servicer to identify borrowers at a heightened risk of default, such as those with impending interest rate resets, including, but not limited to, contacts with borrowers to assess their ability to repay their mortgage loan obligations; and
- The number of foreclosure actions commenced in Montana in connection with mortgage loans the mortgage servicer is servicing and where the loan is in the foreclosure process.
A mortgage servicer must create and retain a file for each Montana residential mortgage loan, which it services. The file must contain, if applicable:
- The borrower(s)’ name(s);
- A copy of the original note and deed of trust or mortgage;
- A copy of any disclosure or notifications provided to the borrower required by a state or federal law or rule or regulation;
- A copy of all written requests for information received from the borrower and mortgage servicer’s response to the requests as required by state or federal law;
- A record of all payments received from the borrower containing all information required to be provided to a borrower upon request;
- A copy of any bankruptcy plan approved in a proceeding filed by the borrower or a co-owner of the property subject to the mortgage;
- A communications log documenting all verbal communication with the borrower or the borrower’s representative;
- A record of all efforts by the mortgage servicer to comply with the duties required under the Act, including all information utilized in the mortgage servicer’s determination regarding loss-mitigation proposals offered to the borrower;
- A copy of all notices sent to the borrower related to any foreclosure proceeding filed against the encumbered property;
- Records regarding the final disposition of the loan, including a copy of any collateral-release document, records of servicing transfers, charge-off information, or real estate owned (REO) disposition; and
- Copies of all contracts, agreements, and escrow instructions to or with any depository institution, any mortgage lender, mortgage servicer, or mortgage broker, any warehouse lender or other funding facility, and servicer of mortgage loans, and any investor, for a period of not less than 5 years after expiration of any such contract or agreement.
Applications for renewal of licenses may be submitted to the Department through the NMLS during the annual renewal period from November 1 to December 31. The Department will process all completed applications submitted to the Department in the order received. The holder of an expired license may not conduct any business in Montana until becoming properly licensed.
Records may be maintained electronically if the storage system complies with the federal Fair and Accurate Credit Transactions Act, the Gramm-Leach-Bliley Act, and the regulations adopted under the Gramm-Leach-Bliley Act.
A licensed entity must make all records available to the Department in a usable format. An individual who terminates sponsorship with an entity must relinquish to the entity any records in the individual’s possession at the time of termination. A person who disposes of records at the end of the retention period must destroy personal information by shredding, burning, erasing, or otherwise making the information indecipherable.
If a licensed entity is actively engaged in the business of residential mortgage loans, the entity’s designated manager is responsible for proper retention, maintenance, safeguarding, and disposal of records for the whole entity. The designated manager of each branch is responsible for proper retention, maintenance, safeguarding, and disposal of records for the branch managed.
If a licensed entity ceases doing business in Montana, the entity’s designated manager, as of the entity’s last day of operation as designated on the NMLS Company Form, is responsible for proper retention, maintenance, safeguarding, and disposal of records. The designated manager’s failure to properly fulfill this duty may result in revocation or suspension of his or her license or civil penalties.
A mortgage servicer must:
- Establish an escrow fund specifically for Montana residential mortgage loans being serviced. The escrow fund must contain only money related to Montana residential mortgage loans; or
- Elect to provide to the Department loan account histories of the residential mortgage loans located in Montana along with the escrow account statements or reports showing how, when, and where those payments were held, applied, and distributed for the period the servicer has serviced the loan.
The definition of dwelling has been deleted.
“Material change” means:
- A change in the physical location of the principal location and/or branch office;
- A change in the phone number;
- A change in the nature of the business;
- A change in the board of directors or the principal officers;
- A change in the share ownership of the company of 10% or more;
- The acquisition or disposition of another company; or
- Any change which would have authorized the Department not to issue a license, if it had occurred before licensure.
“Personal information” means an individual’s name, signature, address, or telephone number, in combination with one or more additional pieces of information about the individual, consisting of the individual’s passport number, driver’s license, or state identification number, insurance policy number, bank account number, credit card number, debit card number, password, or personal identification number required to obtain access to the individual’s finances. A social security number, in and of itself, constitutes personal information.
“Safeguard” means to prevent unauthorized access, use, disclosure, or dissemination.
To transfer an individual mortgage loan originator license, the individual mortgage loan originator must request sponsorship through the NMLS by the new entity. The new entity must accept sponsorship of the individual through the NMLS. The request for sponsorship must be accompanied by a nonrefundable processing fee of $ 50.
A surety bond must be continuous. The provision allowing the surety to cancel the bond upon the surety giving 30 days written notice has been deleted.
A licensee may offer to surrender a license by submitting an offer of surrender or withdrawal of a license through the NMLS. An offer of surrender or accepted surrender does not affect the licensee’s civil or criminal liability for acts initiated or committed while licensed. A revocation, suspension, or surrender of a license does not impair or affect the obligation of a preexisting lawful contract between the licensee and any person, including a borrower. In the event of a revoked, suspended, or surrendered mortgage broker, mortgage lender, or loan originator license, the Department will not refund any fees.
A consumer complaint form is provided by the Department at http://www.banking.mt.gov.
Any fee for an exempt registration is set by the NMLS and is payable as directed by the NMLS.
If an individual fails a mortgage loan originator licensing examination for the third time, he or she must wait 180 days (previously 30 days) to retake the exam. If the individual fails the examination after the third time, the cycle starts over at 30 days.
In addition to the trade associations specifically named in the Act, the Department may enter into agreements or sharing arrangements allowing the sharing of information and material with the following governmental agencies and associations representing governmental agencies:
- State Regulatory Registry, LLC;
- Multi-State Mortgage Committee;
- Federal Housing Administration;
- Consumer Financial Protection Bureau;
- United States Department of Housing and Urban Development;
- Federal Trade Commission; and
- Financial Crimes Enforcement Network (FinCEN).
An expired license may be reinstated provided certain requirements are met by the last the day of February following expiration of the license (previously within 30 days of the date of expiration).
An expired license that is not reinstated by the last day of February is “Terminated-Failed to Renew” (previously canceled).
The requirements for a military member or reservist whose license status is “Terminated-Failed to Renew” to be reinstated have been amended. The sponsorship request from the licensee’s employing mortgage broker or mortgage lender must include a full year renewal fee (previously allowed a half year renewal fee if the application was submitted on or after July 1) and proof of completion of 8 hours of continuing education (previously 12 hours).
The following rules have been repealed: the net worth requirements for mortgage brokers, unacceptable assets, proof of net worth, mortgage call reports, and deadline for conditionally licensed mortgage loan originators to complete the Montana exam. These provisions, except for the mortgage call reports provision, were repealed because they have been deleted from the Act. The mortgage call reports provision was repealed because it is now provided in the Act.