Licensing of loan workers-Napolitano signs bill
July 10th, 2008 categories: Mortgage and Lending, Real Estate News
As we might expect with the current mortgage meltdown and foreclosure crisis in Phoenix and with the arrests of many involved in the mortgage industry the demand for some sense of regulation should be expected. Today the govenor of Arizona signed into law a bill requiring state licensing of mortgage loan workers.
The Associated Press
Arizona Gov. Janet Napolitano on Monday signed into law a bill requiring state licensing of mortgage loan workers. While the state already regulates mortgage brokers and mortgage bankers, the law will require licensing of an estimated 10,000 loan originators and front-line employees of mortgage brokers and other lenders who typically interview loan applicants and act as middlemen between lenders and consumers. Supporters say it will help weed out fraud, prevent abuses and protect consumers. Opponents questioned whether it would burden business and said it won’t prevent buyers from lying about their income. The issue came before the Legislature while the mortgage industry faced scrutiny because of foreclosures and other problems associated with the subprime loan crisis. The law goes into effect Jan. 1, 2010.
From an email I received today from Amy Swaney of Artisan Mortgage:
There has been no rulemaking process so there are not many details. Here are excepts from the bill as submitted to the Governor, so far this is some of what is known but this list is not inclusive…
1. Requires an applicant for a license to do all of the following:
a) complete a loan originator course approved by the Superintendent during the year preceding the time of application or have at least three years of loan origination experience immediately preceding the time of application.
b) pass a loan originator examination approved by DFI within the year preceding the granting of the license.
c) submit an application in writing as prescribed by DFI with any additional information as requested.
d) submit a nonrefundable application fee, as determined by the Superintendent.
2. Requires the mortgage broker or banker who hires a loan originator to:
a) submit a written notice from an officer or other authorized person to the Superintendent.
b) provide the written notice before the originator begins employment.
c) date, sign and notarize a written request for the originator’s license.
Exemptions
Provides a licensing exemption for the following groups:a) a person employed by a person who does business under any other law of Arizona or another state relating to banks, savings banks, trust companies, savings and loan associations, profit sharing and pension trusts, credit unions, insurance companies or consumer lenders or receiverships.
b) a person who is licensed as a mortgage broker, mortgage banker or commercial mortgage banker.
c) a person who is a resident of this state, is in an active management position over the activities of a mortgage broker, mortgage banker or commercial mortgage banker and who does not act as a loan originator.
d) an employee of a commercial mortgage banker.
e) an employee of a person who is licensed and who affirms in writing that the person will not make or negotiate a mortgage loan for a residential dwelling of one to four units.
f) a person who, as seller of real property, receives one or more mortgages or deeds of trust as security for a purchase money obligation.
g) any entity subject to regulation and supervision by a federal banking agency, and any operating subsidiary or affiliate of the entity.
Prohibited Acts
1. Prohibits, beginning January 1, 2010, a loan originator from:a) acting on the originator’s own behalf, accepting any monies or documents in connection with an application for a mortgage loan.
b) receiving compensation in connection with negotiating or arranging a mortgage loan if the person is not licensed.
c) contracting with an unlicensed independent party who acts as a loan originator.
d) being employed by more than one mortgage broker or banker at any one time.
e) collecting compensation as a real estate broker or salesman unless the originator is licensed as such, and the originator discloses to the consumer that the originator will receive compensation for both the origination and real estate services.
f) making a false promise or misrepresentation or concealing an essential or material fact in the course of business.
g) failing to truthfully account for the monies belonging to the party to a mortgage loan transaction or failing to disburse monies in accordance with an agreement.
h) engaging in illegal or improper business practices.
i) advertising or soliciting mortgage business in any manner without using the name and license number of the employing mortgage broker or banker.
Licensure Renewal
Renewal will require a loan originator application for license renewal to be submitted with certificates evidencing the successful completion of six continuing education units during the preceding year.Examination
1. Requires DFI to approve and supervise the issuance of the examination.2. Requires DFI to administer a loan originator examination at least once every six months.
