11 May Vermont Legislative Update
The Vermont legislature recently amended its laws regarding mortgage lending licensing, effective May 1, 2017.
Vermont House Bill 182
A person previously licensed as a mortgage loan originator applying to be licensed must prove that he or she has completed all of the continuing education requirements for the year in which the license was last held. This does not apply to an individual who is required to retake 20 hours of prelicensing education as provided below.
A person who has completed 20 hours of prelicensing education under the federal Secure and Fair Enforcement for Mortgage Licensing Act (“S.A.F.E. Act”) must retake such prelicensing education to be eligible to apply for a Vermont loan originator license if he or she:
- Within three years of completing the prelicensing education, does not acquire a valid mortgage loan originator license in any state or does not become a federally registered mortgage loan originator; or
- Within three years of completing the prelicensing education, obtains a valid mortgage loan originator license in any state or becomes a federally registered mortgage loan originator and subsequently does not maintain an approved mortgage loan originator license in any state or an approved federal registration for a period of three years or more.
A person who has completed two hours of Vermont required prelicense education must retake such prelicensing education to be eligible to apply for a Vermont mortgage loan originator license if he or she:
- Does not acquire a valid Vermont mortgage loan originator license within three years of completing the prelicense education; or
- Obtains a valid Vermont mortgage loan originator license and then subsequently does not maintain an approved Vermont mortgage loan originator license for a period of three years or more.
Upon the filing of an application, payment of the required fees, and approval of the bond, the Vermont Commissioner of Financial Regulation (“Commissioner”) must issue and deliver a license to the applicant upon findings by the Commissioner that, among other things, the applicant is financially responsible. For purposes of assessing whether a person is financially responsible, the Commissioner may consider how the person has managed his or her own financial condition. A determination that a person has not shown financial responsibility may include the following:
- Current outstanding judgments, except judgments solely as a result of medical expenses;
- Current outstanding tax liens or other government liens and filings;
- Foreclosures within the past three years; or
- A pattern of seriously delinquent accounts within the past three years.
Before issuing a license, the Commissioner must also find that the applicant is licensed to engage in such business in its state of domicile and is in good standing in its state of domicile with its state regulator or equivalent financial industry regulator; if such state license third party loan servicers and that the applicant and each officer, director, and control person of the applicant, has never had a third party loan servicer license, lender license, mortgage broker license, mortgage loan originator license, or similar license revoked in any governmental jurisdiction. These two conditions may be waived or modified by the Commissioner for good cause shown and consistent with the purposes of these provisions.
“Employee” means an individual whose manner and means of work are subject to the right of control of, or are controlled by, a person, and whose compensation for federal income tax purposes is reported, or required to be reported, on a W-2 form issued by:
- The controlling person;
- An entity that directly or indirectly owns 100 percent of the controlling person; or
- An entity that is directly or indirectly 100% owned by the same parent company as the controlling person.
“Lead” means any information identifying a potential consumer of a loan.
“Lead Generation” means to:
- Initiate consumer interest or inquiry in a loan by online marketing, direct response advertising, telemarketing, or other similar consumer contact;
- Engage in the business of selling leads for loans;
- Generate or augment leads for other persons for, or with the expectation of, compensation or gain; or
- Refer Vermont borrowers to other persons for loans for, or with the expectation of, compensation or gain.
“Loan Solicitation” does not (emphasis added) apply to residential loans and means, for compensation or gain or with the expectation of compensation or gain, to:
- Offer, solicit, broker, directly or indirectly arrange, place, or find a loan for a prospective Vermont borrower;
- Engage in any activity intended to assist a prospective Vermont borrower in obtaining a loan, including lead generation;
- Arrange, in whole or in part, a loan through a third party, regardless of whether approval, acceptance, or ratification by the third party is necessary to create a legal obligation for the third party, through any method, including mail, telephone, Internet, or any electronic means; or
- Advertise or cause to be advertised in Vermont a loan or any of the services described above.
It is now a violation for a person or individual to, among other things:
- Refer a person to, or receive a fee from, any person who must be licensed as a lender but was not licensed as of the time the licensee’s services were provided;
- Represent to the public that the licensee is able to perform an activity requiring licensure unless such licensee is duly licensed or is exempt from licensure;
- Fail to clearly and conspicuously identify the licensee and the purpose of the contact in its written and oral communications with a consumer; or
- Fail to provide the ability to opt out of any unsolicited advertisement communicated to a consumer via an e-mail address; to initiate an unsolicited advertisement via e-mail to a consumer more than 10 business days after the receipt of a request from such consumer to opt out of such unsolicited advertisements; or to sell, lease, exchange or otherwise transfer or release the e-mail address or telephone number of a consumer who has requested to opt out of future solicitations.