06 Apr Utah Legislative Update
The Utah legislature recently amended the Utah Residential Mortgage Practices and Licensing Act (the “Practices Act”) and the Mortgage Lending and Servicing Act (the “Lending and Servicing Act”). The legislation is effective May 11, 2015.
UTAH SENATE BILL 24
“Nationwide Database” means the Nationwide Mortgage Licensing System and Registry authorized under the SAFE Act for federal licensing of mortgage loan originators.
A person may not engage in business as a lender, broker, or servicer in Utah before the day on which the person provides evidence satisfactory to the Commissioner of the Department of Financial Institutions (the “Commissioner”) that the person is registered with the Nationwide Database (previously files written notification with the Commissioner).
The Commissioner may by rule provide for the transition of persons registering with the Nationwide Database.
A person required to register under the Lending and Servicing Act must pay to the Commissioner an annual fee on or before December 31 (previously January 31) of each year.
The provisions requiring a person to file notification with the Commissioner have been repealed.
UTAH HOUSE BILL 227
“Approved examination provider” means a person approved by the Nationwide Database or by the Division of Financial Institutions (the “Division”) as an approved test provider.
“Business of residential mortgage loans” now includes for compensation or in the expectation of compensation to render services related to the origination of a residential mortgage loan, including acting as a loan underwriter without being employed by a licensed entity.
“Business of residential mortgage loans” now does not include if working as an employee under the direction of and subject to the supervision and instruction of a person licensed under the Practices Act, the performance of a clerical or support duty, including acting as a loan underwriter.
“Community development financial institution” means a person (other than an individual) that:
- Has a primary mission of promoting community development;
- Serves an investment area or targeted population;
- Provides development services in conjunction with equity investments or loans, directly or through a subsidiary or affiliate;
- Maintains, through representation on its governing board or otherwise, accountability to residents of its investment area or targeted population; and
- Is not an agency or instrumentality of the United States, or of any state or political subdivision of a state.
“Prospective borrower” means a person applying for a mortgage from a person who is required to be licensed under the Practices Act.
“Referral fee” now does not include a payment for reasonable promotional and educational activities that is not conditioned on the referral of business and is not used to pay expenses that a person in a position to refer settlement services or business related to the settlement services would otherwise incur.
“Settlement” means the time at which each of the following is complete:
- The borrower and, if applicable, the seller sign and deliver to each other or to the escrow or closing office each document required by:
- The real estate purchase contract;
- The lender;
- The title insurance company;
- The escrow or closing office;
- The written escrow instructions; or
- Applicable law;
- The borrower delivers to the seller, if applicable, or to the escrow or closing office any money, except for the proceeds of any new loan, that the borrower is required to pay; and
- If applicable, the seller delivers to the buyer or to the escrow or closing office any money that the seller is required to pay.
“Settlement services” means a service provided in connection with a real estate settlement, including a title search, a title examination, the provision of a title certificate, services related to title insurance, services rendered by an attorney, preparing documents, a property survey, rendering a credit report or appraisal, a pest or fungus inspection, services rendered by a real estate agent or broker, the origination of a federally related mortgage loan, and the processing of a federally related mortgage.
A nonprofit organization that is a community development financial institution is exempt from the Practices Act.
To apply for licensure, an applicant that is an entity must in a manner provided by the Division by rule:
- Submit through the Nationwide Database a licensure statement that:
- Lists any name under which the entity will transact business in Utah;
- Lists the address of the principal business location of the entity;
- Identifies each control person for the entity;
- Identifies each jurisdiction in which the entity is registered, licensed, or otherwise regulated in the business of residential mortgage loans;
- Discloses any adverse administrative action taken by an administrative agency against the entity or a control person for the entity; and
- Discloses any history of criminal proceedings that involves a control person of the entity; and
- A notarized letter to the Division that:
- Is on the entity’s letterhead;
- Is signed by the entity’s owner, director, or president;
- Authorizes the principal lending manager to do business under the entity’s name and under each of the entity’s licensed trade names, if any; and
- Includes any information required by the Division by rule.
A person transacting the business of residential mortgage loans in Utah may not fail to provide a prospective borrower a copy of each appraisal and any other valuation developed in connection with an application for credit that is to be secured by a first lien on a dwelling (previously fail, within 90 days of a request from a borrower who has paid for an appraisal, to give a copy of an appraisal ordered and used for a transaction to the borrower).
The following prohibited practice has been deleted: order a title insurance report or hold a title insurance policy unless the person provides to the title insurer a copy of a valid, current license.
A person transacting the business of residential mortgage loans in this state must provide a prospective borrower a copy of each appraisal and any other written valuation developed in connection with an application for credit that is to be secured by a first lien on a dwelling on or before the earlier of:
- As soon as reasonably possible after the appraisal or other valuation is complete; or
- 3 business days before the day of settlement.
Unless otherwise prohibited by law, a prospective borrower may waive the timing requirement described above and agree to receive each appraisal and any other written valuation:
- Less than 3 business days before the day of the settlement; or
- At the settlement.
A prospective borrower must submit a waiver at least 3 business days before the day of the settlement. The waiver requirement does not apply if the waiver only pertains to a copy of an appraisal or other written valuation that contains only clerical changes from a previous version of the appraisal or other written valuation and the prospective borrower received a copy of the original appraisal or other written valuation at least three business days before the day of the settlement.
If a prospective borrower submits a waiver and the transaction never completes, the person transacting the business of residential mortgage loans must provide a copy of each appraisal or any other written valuation to the applicant no later than 30 days after the day on which the person knows the transaction will not complete.