Oklahoma Legislative Update

Oklahoma Legislative Update

Oklahoma House Bill 1828 amended the Oklahoma Secure and Fair Enforcement for Mortgage Licensing Act (the “Act”), effective November 1, 2013.

 

 

The Act now applies to mortgage lenders.  “Mortgage lender” means an entity that takes an application for a residential mortgage loan, makes a residential mortgage loan or services a residential mortgage loan and is an approved or authorized:

  • Lender with direct endorsement underwriting authority granted by the United States Department of Housing and Urban Development;
  • Seller or servicer of Fannie Mae or Freddie Mac, or
  • Issuer for Ginnie Mae.

 

 

A new license issued on or after November 1 is effective through December 31 of the following calendar year.

 

 

A late renewal fee is as prescribed by rule of the Commission on Consumer Credit.

 

 

The Administrator of Consumer Credit (the “Administrator”) may authorize an entity exempt from the requirements of the Act to sponsor an applicant that is an independent contractor of the exempt entity.

 

 

The Administrator will not issue a mortgage lender license unless the Administrator makes at a minimum the following findings:

  • The applicant or any owner, officer, director, or partner has never had a mortgage lender, mortgage broker, or mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation is not considered a revocation;
  • Any owner, officer, director, or partner of the applicant has not been convicted of, or pled guilty or no contest to a felony in a domestic, foreign, or military court:
    • During the 7-year period preceding the date of the application for licensing and registration, or
    • At any time preceding the date of application, if the felony involved an act of fraud, dishonesty, a breach of trust, or money laundering.  Any pardon of a conviction is not considered a conviction;
  • The applicant and the applicant’s owners, officers, directors, or partners have demonstrated financial responsibility, character, and general fitness to command the confidence of the community and to warrant a determination that the mortgage lender will operate honestly, fairly, and efficiently within the purposes of the Act.  An applicant’s owners, officers, directors, or partners have shown they are not financially responsible when they have shown a disregard in the management of their own financial condition.  A determination that an owner, officer, director, or partner has not shown financial responsibility may include, but is not limited to:
    • Current outstanding judgments, except judgments only resulting from medical expenses;
    • Current outstanding tax liens or other government liens and filings;
    • Foreclosures within the past 3 years, or
    • A pattern of seriously delinquent accounts within the past 3 years;
  • The applicant has filed a bond in the amount of $100,000 securing the applicant’s or licensee’s faithful performance of all duties and obligations of a licensee.  The bond must meet the following requirements:
    • The bond must be in a form acceptable to the Administrator;
    • The bond must be issued by an insurance company authorized to conduct business in Oklahoma;
    • The bond must be payable to the Oklahoma Department of Consumer Credit;
    • The bond is continuous in nature and must be maintained at all times as a condition of licensure;
    • The bond may not be terminated without 30 days prior written notice to the Administrator and approval of the Administrator;
    • The bond must be available for the recovery of expenses, civil penalties and fees assessed according to the Act and for losses or damages which are determined by the Administrator to have been incurred by any borrower as a result of the applicant’s or licensee’s failure to comply with the requirements of the Act;
    • When an action is commenced on a licensee’s bond, the Administrator may require the filing of a new bond, and
    • Whenever the principal sum of the bond is reduced by one or more recoveries or payments, the licensee must furnish a new or additional bond so that the total or aggregate principal sum of the bond or bonds will equal $100,000 or must furnish an endorsement duly executed by the corporate surety reinstating the bond to the required principal sum;
  • The applicant has a net worth of at least $25,000 as reflected by an audited financial statement prepared by a certified public accountant in accordance with generally accepted accounting principles that is accompanied by an opinion acceptable to the Administrator and is dated within 15 months of the date of application;
  • The applicant has paid all required fees for issuance of the license.  The license fees for a mortgage lender will be in the same amount as license fees applicable to a mortgage broker;
  • Each mortgage lender applicant must designate and maintain a principal place of business for the transaction of business.  If the mortgage lender applicant engages in activity that satisfies the definition of a mortgage broker, the mortgage lender must designate a licensed mortgage loan originator to oversee the mortgage loan origination operations of the principal place of business and any branch office location where the mortgage lender applicant engages in activity that satisfies the definition of a mortgage broker.  If an applicant wishes to maintain one or more locations for the transaction of business in addition to a principal place of business, the applicant must first obtain a branch office license from the Administrator.  The applicant must submit a fee for each branch office license issued.  If the Administrator determines that the applicant is qualified, the Administrator will issue a branch office license indicating the address of the branch office.  If the address of the principal place of business or of any branch office is changed, the licensee must immediately notify the Administrator of the change and the Administrator must endorse the change of address on the license for a fee; and
  • A separate mortgage broker license is not required for a mortgage lender that engages in activity that satisfies the definition of a mortgage broker as provided in the Act.  A mortgage lender that engages in activity that satisfies the definition of a mortgage broker must comply with all requirements of the Act regarding mortgage brokers.

 

The minimum standards for license renewal for mortgage lenders include the following:

  • The mortgage lender continues to meet the minimum standards for license issuance under the Act; and
  • The mortgage lender has paid all required fees for renewal of the license.

 

The license of a mortgage lender expires upon the failure to satisfy the minimum standards for license renewal.  The Administrator may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the Nationwide Mortgage Licensing System and Registry.

 

 

Any person aggrieved by a final agency order of the Administrator may obtain judicial review.  The venue of the action is in the district court of Oklahoma County.

 

 

A licensed mortgage loan originator must complete annual continuing education requirements in a classroom setting at least every 2 years.

 

 

In addition to any authority allowed under the Act, the Administrator has the authority to conduct investigations and examinations of the financial condition and internal management policies and procedures of any entity licensed or required to be licensed as a mortgage lender for purposes of determining that the entity is operating honestly, fairly, and efficiently within the purposes of the Act.

 

 

The Administrator will require a licensee or an entity or individual subject to the requirements of the Act to pay travel costs for conducting examinations or investigations outside of Oklahoma.

 

 

The Administrator may participate in multi-state mortgage examinations as scheduled by the Multi-State Mortgage Committee established by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators to carry out the purposes of the Act.