Upon review of some recent legislation regarding extended notice periods before acceleration of amounts owed under the foreclosure statute I noticed that an additional section of the law was passes pertaining to loan originators in Massachusetts. It appears that as of July of 2008 all loan originators conducting business in Massachusetts will need to be licensed (mush like teh real estate sale person's licensing procedure) I have attached a copy of the law and would appreciate any comments on this new section and what it may mean for the mortgage industry MA.
I would also be curious to know if there are any loan originators out there who have attempted to become licensed under the new law.
I intend to call the applicable MA agency to find out directly what the new law provides and what the application process will be if not already in place.
Please send your comments to my attention. Thank You:
Chapter 206 of the Acts of 2007
AN ACT PROTECTING AND PRESERVING HOME OWNERSHIP.
Whereas, The deferred operation of this act would tend to defeat its purpose, which is to provide forthwith mortgage protection for existing and new home owners, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same as follows:
*** I have omitted the sections pertaining to foreclosures and a pilot program for consumer home loss mitigation that was also enacted at teh same time.***
SECTION 15. The General Laws are hereby amended by inserting after chapter 255E the following chapter:-
CHAPTER 255F.
LICENSING OF MORTGAGE LOAN ORIGINATORS.
Section 1. As used in this chapter, the following words shall, unless the context otherwise requires, have the following meanings:-
"Commissioner", the commissioner of banks.
"Division", the division of banks.
"Entity", a person or entity that is a licensee under chapter 255E, as regulated by the division.
"Mortgage loan originator", a natural person who:- (a) is employed by or associated with 1 and not more than 1 entity; and (b) negotiates, solicits, arranges, provides or accepts residential mortgage loan applications, or assists consumers in completing such applications, except that employees whose responsibilities are limited to clerical and administrative tasks and who do not solicit borrowers, accept applications or negotiate the terms of residential mortgage loans on behalf of the employer shall not be considered mortgage loan originators and do not require licenses.
"Mortgage loan", a loan or an extension of credit including, but not limited to, an extension of credit pursuant to a contract or an assigned contract for the sale of goods or services, made to a natural person, the proceeds of which are to be used primarily for personal, family or household purposes, and which is secured wholly or partially by a mortgage on residential property.
"Residential property", real property located in the commonwealth having thereon a dwelling house with accommodations for 4 or less separate households and occupied, or to be occupied, in whole or in part by the obligor on the mortgage debt.
Section 2. No natural person shall act as a mortgage loan originator unless such person has first obtained a mortgage loan originator license from the commissioner. An entity shall not knowingly employ or retain a mortgage loan originator unless the mortgage loan originator is licensed under this chapter.
Section 3. (a) The application for a mortgage loan originator license shall be in the form prescribed by the commissioner and shall contain the name, address and license number of the entity with whom a mortgage loan originator is or will be employed or associated with and other information as the commissioner may require, including evidence of compliance with subsection (b). The application shall also include a description of the activities of the applicant, in such detail and for such periods as the commissioner may require, and such further information as the commissioner may require. The commissioner may obtain, pursuant to section 172J of chapter 6 all available criminal offender record information from the criminal history systems board on an applicant for a mortgage loan originator license by means of fingerprint checks, and from the Federal Bureau of Investigation for a national criminal history records check. The information obtained thereby may be used by the commissioner to determine the applicant's eligibility for licensing under this chapter. Receipt of criminal history record information by a private entity is prohibited. Each application for a license shall be accompanied by an investigation fee. Investigation and license fees shall be determined annually by the secretary of administration under section 3B of chapter 7, but such total annual fees shall be not less than $500; provided, that such investigation and license fees shall not apply to any community development corporation as defined in section 1 of chapter 40F and organized under the General Laws.
(b) An applicant shall have completed a residential mortgage lending course, approved by the division, not later than the 2 year period immediately preceding the date of the application.
Section 4. If the commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant is such as to warrant belief that the applicant will act honestly, fairly, soundly and efficiently in the public interest, consistent with the purposes of this chapter, the commissioner shall issue the applicant a license to engage in the business of a mortgage loan originator upon payment of the required fees. If the commissioner shall not so find, or if the applicant's criminal history demonstrates any felony convictions or other convictions or admissions to sufficient facts involving fraud or if the applicant has had any adverse civil judgments involving fraudulent dealings, the commissioner shall not issue a license and shall notify the applicant of the denial. Within 20 days thereafter, the commissioner shall enter upon the division's records a written decision and findings containing the reasons supporting the denial and shall forthwith give written notice thereof by registered mail to the applicant. Within 30 days after receipt of such notice, the applicant may seek judicial review of the denial in accordance with section 14 of chapter 30A.
Section 5. A mortgage loan originator may transact business only for an employing entity. Each original license issued to a mortgage loan originator must be provided to and maintained by the employing entity at the entity's main office. If the employment of a mortgage loan originator is terminated, the employing entity shall return the mortgage loan originator's license to the division within 5 business days after termination. The reason for termination shall be given in a format determined by rules and regulations of the commissioner. For a period of 1 year after the termination of employment, the mortgage loan originator may request the re-assignment of the license to another entity by submitting an application to the division, along with a fee established by the division by rule. The return of the license of any mortgage loan originator to the division that is not re-assigned to another entity terminates the right of the mortgage loan originator to engage in any residential mortgage loan origination activity until division procedures have been followed to reactivate such license. The license of any mortgage loan originator that has been returned to the division and not re-assigned to another entity within 1 year of termination of employment shall be cancelled.
Each license shall state the name of the mortgage loan originator licensee and the name and main office address of the entity employing such mortgage loan originator.
The commissioner may establish an expedited re-assignment process of a mortgage loan originator's license to another entity if the reason for such re-assignment is directly related to increased responsibilities or compensation.
The commissioner may adopt, amend or repeal rules and regulations to aid in the administration and enforcement of this chapter.
Section 6. Each application for a license shall be accompanied by an investigation fee. Investigation and license fees shall be determined annually by the secretary of administration under section 3B of chapter 7 provided that such total annual fees shall be not less than $500; provided further, that such investigation and license fees shall not apply to any community development corporation as defined in section 1 of chapter 40F and organized under the General Laws. The license of a mortgage loan originator shall expire annually. Each licensee, shall annually, on or before a date to be determined by the commissioner, submit a license renewal application. The license renewal application shall be on a form prescribed by the commissioner, signed under the pains and penalties of perjury, containing such information as the commissioner may require.
As determined by the commissioner, licensees shall complete at least 8 hours of residential mortgage lending continuing education courses every 3 years. Failure of the licensee to satisfy the continuing education requirement shall render the mortgage loan originator ineligible for renewal and such license shall be deemed to be inactive. A mortgage loan originator who neglects to file an application or fails to amend the same within 15 days of notice from the commissioner directing that the application be amended shall be deemed inactive. Inactive mortgage loan originators shall be prohibited from engaging in business as a mortgage loan originator.
Section 7. The commissioner may suspend, revoke or refuse to renew any license issued pursuant to this chapter if the commissioner finds that:- (1) the licensee has violated this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; (2) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license; or (3) the licensee has committed any fraud, misappropriated funds or misrepresented any of the material particulars of a mortgage loan transaction.
Except as provided in section 8, no license shall be revoked or suspended except after notice and a hearing thereon pursuant to chapter 30A. Any order issued pursuant to this section shall be subject to judicial review in accordance with section 14 of said chapter 30A.
A licensee may surrender his license by delivering to the commissioner written notice that he hereby surrenders such license, but such surrender shall not affect the civil or criminal liability of the licensee for acts committed before such surrender.
Section 8. (a) If the commissioner determines, after giving notice of and opportunity for a hearing, that a licensee has engaged in an act or practice constituting a violation of this chapter or a rule, regulation or order promulgated hereunder, the commissioner may order such licensee to cease and desist from such unlawful act or practice and take such affirmative action as in the commissioner's judgment will affect the purposes of this chapter.
(b) If the commissioner makes written findings of fact that the public interest will be irreparably harmed by delay in issuing an order under subsection (a), the commissioner may issue a temporary cease and desist order. Upon the entry of a temporary cease and desist order, the commissioner shall promptly notify, in writing, the licensee and the employing entity affected thereby that such order has been so entered, the reasons therefore, and that, within 20 days after the receipt of a written request from such licensee, the matter will be scheduled for hearing to determine whether such temporary order shall become permanent and final. If no such hearing is requested and none is ordered by the commissioner, the order shall remain in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after giving notice of and opportunity for a hearing to the licensee and the employing entity subject to said order shall, by written findings of fact and conclusions of law, vacate, modify or make permanent the order.
(c) No order issued pursuant to this section, except an order issued pursuant to subsection (b), may be entered without prior notice of and opportunity for a hearing. The commissioner may vacate or modify an order under this section upon finding that the conditions which required such an order have changed and that it is in the public interest to so vacate or modify.
Any order issued pursuant to this section shall be subject to judicial review in accordance with section 14 of chapter 30A.
Section 9. The commissioner may enforce this chapter, or restrain any violations thereof, by filing a civil action in any court of competent jurisdiction.
Section 10. Whoever violates section 2 or any rule or regulation promulgated thereunder shall be punished by a fine of not more than $2,000 or by imprisonment in the house of correction for not more than 2 ½ or by imprisonment in state prison for not more than 5 years, or by both such fine and imprisonment. Each day such violation occurs or continues shall be deemed a separate offense. The penalty provision of this section shall be in addition to any other law applicable to a licensee or other person for violating section 2 or any rule or regulation made thereunder.
Section 11. (a) Whenever the commissioner finds that any licensee has violated this chapter or any rule or regulation promulgated thereunder, or any other law of the commonwealth applicable to the conduct of a mortgage loan originator on residential property in the commonwealth, the commissioner may, by order, in addition to any other action authorized under this chapter or any rule or regulation made thereunder, impose a penalty upon the person which shall not exceed $5,000 for each violation up to a maximum of $100,000 for such violation plus the costs of investigation. The commissioner may impose a penalty which shall not exceed $5,000 for each violation of this chapter, or any rule or regulation promulgated hereunder, by a person other than a licensee, plus the costs of investigation.
(b) Nothing in this section shall limit the right of any individual or entity who has been injured as a result of any violation of this chapter by a licensee, or any person other than a licensee, to bring an action to recover damages or restitution in a court of competent jurisdiction.
(c) Any findings or orders issued by the commissioner pursuant to this section shall be subject to review as provided in chapter 30A.
Section 12. (a) Whenever the commissioner determines that any person has, directly or indirectly, violated this chapter or any rule or regulation promulgated hereunder, applicable to the conduct of a mortgage loan originator on residential property in the commonwealth, any order issued by the commissioner pursuant to this chapter or any written agreement entered between the licensee and the commissioner, the commissioner may serve upon that person a written notice of intention:-
(1) to prohibit the person from performing in the capacity of a principal employee on behalf of any licensee for a period of time that the commissioner considers necessary;
(2) to prohibit the person from applying for or obtaining a license from the commissioner for a period up to 36 months following the effective date of an order issued under subsection (b) or (c); or
(3) to prohibit the person from any further participation, in any manner, as a mortgage loan originator in the commonwealth or to prohibit the person from being employed by, as agent of, or operating on behalf of a licensee under this chapter or any other business which requires a license from the commissioner.
(b) A written notice issued under subsection (a) shall contain a written statement of the facts that support the prohibition and shall give notice of an opportunity for a hearing to be held thereon. The hearing shall be fixed for a date not more than 30 days after the date of service upon the commissioner of the request for a hearing. If the person fails to submit a request for a hearing within 20 days of service of notice under subsection (a), or otherwise fails to appear in person or by a duly authorized representative, the party shall be considered to have consented to the issuance of an order of prohibition in accordance with the notice.
(c) In the event that consent is granted by operation of subsection (b), or if after a hearing the commissioner finds that any of the grounds specified in the notice have been established, the commissioner may issue an order of prohibition in accordance with subsection (a) as the commissioner finds appropriate.
(d) An order issued under subsection (b) or (c) shall be effective upon service upon the person. The commissioner shall also serve a copy of the order upon the licensee of which the person is an employee or on whose behalf the person is performing. The order shall remain in effect and enforceable until it is modified, terminated, suspended or set aside by the commissioner or a court of competent jurisdiction.
(e) Except as consented to in writing by the commissioner, any person who, pursuant to an order issued under subsection (b) or (c), has been prohibited from participating in whole or in part as a mortgage loan originator may not, while the order is in effect, continue or commence to perform in the capacity of a mortgage loan originator, or otherwise participate in any manner, if so prohibited by order of the commissioner, in the conduct of the affairs of:-
(1) any licensee under this chapter;
(2) any other business which requires a license from the commissioner; or
(3) any bank as defined under section 1 of chapter 167 or any subsidiary thereof.
Section 13. The commissioner may suspend, revoke or refuse to renew the license of the entity employing any licensed mortgage originator if the commissioner finds that: (a) the entity knew or should have known that the mortgage loan originator violated this chapter or any rule or regulation promulgated hereunder, or any other law applicable to the conduct of its business; (b) the entity knew of any fact or condition to exist which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license; (c) the mortgage loan originator committed any fraud, misappropriated funds or misrepresented any of the material particulars of a mortgage loan transaction approved by the entity; or (d) The entity has failed to comply with the reporting requirements set forth in section 15.
Section 14. Each licensee shall, when directed by the commissioner, permit the commissioner or a duly authorized representative to inspect its relevant records and evidence of compliance with this chapter or any rule or regulation issued hereunder and with any other law, rule and regulation applicable to the conduct of a mortgage loan originator licensed under this chapter.
Section 15. An entity employing any licensed mortgage originator shall annually report the following to the commissioner of banks:- (1) the total number of loans originated by all such licensees; (2) the geographic distribution of such loans; (3) the number of defaults of such loans; and (4) any such other information the commissioner may require consistent with this chapter.
*** This next section is out of order, but indicates the date that the law goes into effect:
SECTION 22. Section 15 shall take effect on July 1, 2008.
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