09 Aug New Hampshire Legislative Update
The New Hampshire legislature recently amended its laws governing the licensing of nondepository first mortgage bankers and brokers (the “laws”) and the regulation of mortgage loan servicers, effective September 22, 2013.
NEW HAMPSHIRE HOUSE BILL 594
“Affiliate” means a relationship between 2 or more persons if either person has the power to control the other, or where a third person controls or has the power to control such persons.
The definition of a “mortgage broker” now includes a person not exempt under the laws who for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly offers to act as an intermediary, finder, or agent of a lender or borrower for the purpose of negotiating, arranging, finding, or procuring mortgage loans, or commitments for mortgage loans.
An individual may not act as an originator for more than one mortgage broker, mortgage servicer, mortgage banker, or other financial institution at the same time, unless the entities are affiliates.
An individual may not act as a mortgage banker or broker for more than one mortgage broker, mortgage servicer, mortgage banker, or other financial institution at the same time, unless the entities are affiliates.
The laws do not apply to federal, state, or local governmental agencies, instrumentalities, and corporations and the employees of such entities who act as loan originators according to their official duties as employees of the entities provided that, limited to activities that would otherwise be within the scope of the laws:
- The government entity operates:
- To promote affordable housing, housing improvement assistance, or to provide homeownership education, or similar services;
- To conduct its activities in a manner that serves public or charitable purposes;
- To receive funding and revenues and to charge fees in a manner that does not incentivize the organization or its employees to act other than in the best interests of its clients;
- To compensate employees in a manner that does not incentivize employees to act other than in the best interests of its clients; and
- Absent a commercial context and without a pecuniary interest; and
- The government employees who act as loan originators as employees of government entities and according to government funded and regulated housing assistance programs do so:
- For public or charitable purposes, and not for the profit of another individual or entity; and
- Not within a commercial context.
The licensee must maintain its records that enable the Banking Department (the “Department”) to determine whether the licensee’s business is in compliance in a readily accessible location and made available for examination at the licensee’s New Hampshire principal office, its New Hampshire branch office location, or the office of its New Hampshire agent for a period of at least 3 years after the licensee’s final transaction on a loan or application file (previously for 3 years after the loan is paid in full, if the loan is retained in the licensee’s loan portfolio).
Any advertisement, printing, display, publication, distribution, or broadcast offering loans must clearly and conspicuously contain the disclosure in substantially the following form:
“Licensed by the New Hampshire Banking Department.”
A “mortgage servicer” shares the definition of a “mortgage servicing company.”
Mortgage servicers and mortgage loan originators acting on behalf of mortgage servicers must abide by the laws and the rules adopted by the Department where such provisions and rules apply to mortgage origination and lending activities.
Mortgage servicing companies and mortgage bankers must designate an individual contact person, who will be a control person of the entity, to communicate with Department personnel on foreclosure avoidance procedures. The contact person may facilitate foreclosure workouts and foreclosure avoidance procedures. The license application must name the contact person, and the mortgage banker must update the Department whenever the designated contact person changes within 7 business days of the change.
The registrant must maintain records to enable the Department to determine whether the registrant’s business is in compliance with the laws and the rules adopted by the Department. The records must be maintained in a readily accessible location and made available for examination at the registrant’s New Hampshire principal office, its New Hampshire branch office location, or the office of its New Hampshire agent for a period of at least 3 years after the registrant’s last transaction on a loan file.
Registrants that maintain their files and business records in another state must return the files to their principal or branch New Hampshire office, to the Department, or to the office of their New Hampshire agent for examination no later than 21 calendar days after being requested to do so by the Department. When the Bank Commissioner (the “Commissioner”) requests a loan list or other similar summary document from a registrant from which to select particular files for review, the registrant must ensure that the list or information is received by the Commissioner within 7 calendar days, and then must provide the files and information selected by the Commissioner to the Commissioner within 14 calendar days to ensure compliance with the 21 day requirement. Failure to provide files and documents within such time subjects a registrant or person to a fine of $50 per day for each day after 21 days the files and documents are not produced. Failure to provide files and documents within 60 days after being requested to do so by the Department is sufficient cause for registration revocation, suspension, or denial.
A registrant must keep and use business records in the form and at the location that the Commissioner determines by rule. The records must enable the Commissioner to determine whether the registrant is complying with the laws and any other law, rule, or regulation applicable to the conduct of the business for which it is registered. The rules may contain provisions for records to be recorded, copied, or reproduced by any process that accurately reproduces or forms a durable medium for reproducing the original record or document, or in any other form or manner authorized by the Commissioner.
For their own business purposes, a registrant may maintain photocopies, microfilm, microfiche, or digital copies of original documents. The provisions above do not permit a registrant to destroy original records or documents. Each registrant must preserve all business records for as long a period as the Commissioner prescribes by rule.
If the Commissioner or examiner finds any records to be inadequate, or kept or posted in a manner not in accordance with generally accepted accounting principles, the Commissioner may employ experts to reconstruct, rewrite, post, or balance them at the expense of the person being examined if the person has failed to maintain, complete, or correct the records after the Commissioner or examiner has given him or her written notice and a reasonable opportunity to do so.
A person that funds a mortgage loan while the person is exempt from licensure as a nondepository first mortgage banker or broker, and that retains the mortgage loan in its, his, or her own portfolio, may perform mortgage servicing activities limited to the collection of interest and principal, foreclosure procedures, loan negotiation and modification activity, without obtaining a mortgage servicing registration or mortgage loan originator license.
The definition of a “yield spread premium” has been deleted from the laws.
Every field on the U.S. Department of Housing and Urban Development’s Good Faith Estimate (“GFE”) form must be completed before it is given to a borrower. The Tradeoff Table on the instruction page of the GFE must be completed when the originating company is not funding the loan (previously where a yield spread premium is to be paid in connection with a mortgage transaction).
The following provision has been deleted from the laws:
Governmental entities may not be required to obtain a mortgage banker or mortgage broker license when the entity only provides the funds and the residential mortgage loan is originated and effected exclusively by a New Hampshire licensed mortgage broker and its duly licensed originators.