45th legislature - STATE OF NEW MEXICO - first session, 2001
RELATING TO MORTGAGES; CHANGING PROVISIONS OF THE MORTGAGE LOAN COMPANY AND LOAN BROKER ACT TO BRING MOST MORTGAGE PRACTITIONERS UNDER THE ACT'S REGISTRATION AND LICENSING REQUIREMENTS; AMENDING, REPEALING AND ENACTING SECTIONS OF THE NMSA 1978.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 58-21-2 NMSA 1978 (being Laws 1983, Chapter 86, Section 2, as amended) is amended to read:
"58-21-2. DEFINITIONS.--As used in the Mortgage Loan Company and Loan Broker Act:
A. "affiliate" means [any] a person who, directly
or indirectly, through one or more intermediaries, controls or
is controlled by or is under common control with another
person;
B. "division" means the financial institutions division of the regulation and licensing department;
C. "director" means the director of the financial institutions division of the regulation and licensing department;
D. "dwelling" means a residential structure, including a home, individual condominium unit, manufactured home or modular home, that contains one to four units and is permanently attached to real property;
[D.] E. "loan broker" means any person who acts as
a finder or agent of a lender or borrower of money for the
purpose of procuring a mortgage loan, or both;
[E.] F. "mortgage loan" means [any] a loan secured
by a [mortgage, deed of trust or other lien on] dwelling
permanently affixed to real [or personal] property; and
[F.] G. "mortgage loan company" means [any] a
person who, directly or indirectly:
(1) holds himself out as being able to serve
as an agent for any person in an attempt to obtain a mortgage
loan [which will be secured by a lien or mortgage on real or
personal property];
(2) holds himself out as being able to serve
as an agent for [any] a person who [has money to lend, which
loan is or will be secured by a lien or mortgage on real or
personal property] makes mortgage loans; or
(3) holds himself out as being able to make
mortgage loans [secured by liens or mortgages on real or
personal property; and
G. "person" means an individual, corporation,
partnership, association, joint-stock company, trust where the
interests of the beneficiaries are evidenced by a security,
unincorporated organization, government or political
subdivision of a government]."
Section 2. Section 58-21-3 NMSA 1978 (being Laws 1983, Chapter 86, Section 3) is amended to read:
"58-21-3. REGISTRATION CERTIFICATE REQUIRED.--It is
unlawful for any person to transact business in the state of
New Mexico, either directly or indirectly, as a mortgage loan
company or loan broker without first filing an application
with the director and obtaining a registration certificate
under the Mortgage Loan Company and Loan Broker Act [unless
such person is exempt from the provisions of the Mortgage Loan
Company and Loan Broker Act under the provisions of Section 6
of that act]."
Section 3. Section 58-21-4 NMSA 1978 (being Laws 1983, Chapter 86, Section 4, as amended) is amended to read:
"58-21-4. APPLICATION FOR REGISTRATION OR RENEWAL.--Each application for registration or renewal as a mortgage loan company or loan broker shall be filed in writing with the director, shall be verified and shall contain the following:
A. the name of the applicant and of each of the applicant's affiliates, engaged in the business of a loan broker or a mortgage loan company, and the name under which the applicant will conduct business in New Mexico, together with the articles of incorporation or articles of partnership;
B. the location of the applicant's principal office and of each branch office in New Mexico;
C. the name, residence and business address of each person having an interest in the business as principal, partner, officer, trustee, director or manager, specifying the capacity and title of each;
D. a [certified] financial statement of the
applicant [and if the applicant is a corporation, the
statement must be prepared by an independent certified public
accountant or registered public accountant] verified by a
principal of the applicant;
E. the length of time the applicant has been engaged in business in other jurisdictions;
F. disclosure of any action or proceeding, civil
or criminal, judicial or administrative, completed or in
progress against the applicant or [any] a director, officer,
employee or affiliate of the applicant;
G. the registration fee; and
H. such other information and documentation as the director may require."
Section 4. Section 58-21-5 NMSA 1978 (being Laws 1983, Chapter 86, Section 5, as amended) is amended to read:
"58-21-5. REGISTRATION FEES--DURATION OF REGISTRATION.--
A. Applicants shall, at the time of application, pay to the division four hundred dollars ($400) for initial registration and three hundred dollars ($300) for each renewal registration. Additionally, the director shall charge and collect from an applicant a fee of ten dollars ($10.00) per day for late filings of a renewal registration or three hundred dollars ($300), whichever is less.
B. A registration shall continue for a period of twelve months from the date of registration. Each registrant shall submit a renewal application at least thirty days before the expiration of his existing registration.
C. [Persons claiming exemption pursuant to
Subsection H of Section 58-21-6 NMSA 1978 shall, at the time
of such claim, pay to the division three hundred dollars
($300). Additionally, the director shall charge and collect
from a claimant a fee of ten dollars ($10.00) per day for late
filings of an exemption certification form or three hundred
dollars ($300), whichever is less.] A registrant shall pay a
replacement license fee of fifty dollars ($50.00)."
Section 5. Section 58-21-6 NMSA 1978 (being Laws 1983, Chapter 86, Section 6, as amended) is amended to read:
"58-21-6. PERSONS EXEMPT FROM REGISTRATION.--The following persons shall be exempt from all provisions of the Mortgage Loan Company and Loan Broker Act:
A. banks, trust companies, savings and loan
associations, credit unions, consumer finance companies,
insurance companies or real estate investment trusts as
defined in [26 U.S.C. Sec. 856] 26 USCA 856;
B. an attorney licensed to practice law in New
Mexico who is not principally engaged in the business of
negotiating loans secured by real or personal property, when
[such] the person renders services in the course of his
practice as an attorney [at law];
C. a New Mexico-licensed real estate broker
rendering service in the performance of his duties as a real
estate broker who obtains financing for a real estate
transaction involving an actual bona fide sale of real estate
or real estate contract handled by [such] the broker and who
receives only the customary real estate broker's commission in
connection with the transaction;
D. [any] a person doing [any] an act under order
of [any] a court;
E. [any] a person making or acquiring a mortgage
loan with his own funds for his own investment without the
intent to resell the mortgage loan;
F. the United States of America, state of New Mexico or any of their branches, agencies, departments, boards, instrumentalities or institutions and all political subdivisions of the state and their agencies, instrumentalities and institutions; and
G. a company [which is] licensed as a small
business investment company under the federal Small Business
Investment Act of 1958 [and
H. any person doing business in New Mexico who has
as one of his principal purposes the brokering, making or
originating of loans secured by real estate mortgages and who
does not place or sell more than ten percent of such loans to
persons other than institutional investors. For purposes of
this subsection, an institutional investor is:
(1) any person exempt from the provisions of
the Mortgage Loan Company and Loan Broker Act pursuant to
Subsection A of this section;
(2) the federal national mortgage
association, the government national mortgage association, the
federal home loan mortgage corporation, the New Mexico
mortgage finance authority and any other entity which is an
instrumentality of or sponsored by the federal government or
the state of New Mexico, and any successors to any of the
foregoing, or the state itself; and
(3) any other person who in the twelve months
immediately preceding any such transaction has acquired real
estate mortgage loans in an aggregate principal amount equal
to at least twenty-five million dollars ($25,000,000).
For the purposes of this subsection, a loan shall be
considered placed or sold if all or a major part of the loan
indebtedness, as evidenced by the delivery of the loan note
itself or a certificate of loan participation, is sold
directly to such institutional investor or is included in a
pass-through certificate, collateralized mortgage obligation
or similar instrument issued by such institutional investor.
In order to claim the exemption provided by this
subsection, a mortgage loan company or loan broker must
certify to the director, on a form acceptable to the director,
on or before the later of June 30, 1985, or thirty days after
the person first transacts business in New Mexico as a
mortgage loan company or loan broker, that such person
qualifies for the exemption. The director may require the
person to identify on the certification form the institutional
investors to whom the person brokers or sells its real estate
mortgage loans. The director may require any person to
recertify for this exemption in January of each calendar year,
beginning with January, 1986 or at any other time as may be
prescribed by rule or regulation.
Notwithstanding the foregoing, no person may rely in any
calendar year on the exemption provided by this subsection if,
during such calendar year, such person makes a loan secured by
a real estate mortgage on the borrower's principal residence,
the annual percentage rate computed in accordance with federal
truth-in-lending laws on which exceeds twice the highest
reported yield during the preceding four weeks from the date
the loan disclosure statement is signed, as reported by the
federal reserve system for the United States treasury
securities calculated at thirty-year constant maturity]."
Section 6. Section 58-21-8 NMSA 1978 (being Laws 1983, Chapter 86, Section 8, as amended) is amended to read:
"58-21-8. DENIAL, SUSPENSION OR REVOCATION OF
REGISTRATION.--The director may deny, suspend or revoke any
registration when the applicant or registrant, or [any] a
director, officer, employee or affiliate of the applicant or
registrant:
A. lacks a good business reputation;
B. has violated [any] a provision of the Mortgage
Loan Company and Loan Broker Act;
C. charges, collects or receives fees for
procuring, negotiating or securing [any] a loan in excess of
the amounts allowed by the Mortgage Loan Company and Loan
Broker Act or by [regulations issued by the director] rules
promulgated pursuant to that act;
D. has committed fraud in connection with [any] a
transaction subject to the Mortgage Loan Company and Loan
Broker Act;
E. has made [any misrepresentations] a
misrepresentation or false [statements] statement to or
concealed [any] an essential or material fact from [any] a
person in the course of the loan broker or mortgage loan
company business;
F. has knowingly made or caused to be made [any] a
false representation of material fact or has suppressed or
withheld from the director [any] information [which] that the
applicant or registrant possesses and which if submitted by
him would have rendered the applicant or registrant ineligible
to be registered under the Mortgage Loan Company and Loan
Broker Act;
G. has violated any provisions of any New Mexico statute relating to escrow agents or escrow companies;
H. has refused to permit an examination by the
director of his books and records or has refused or failed,
within a reasonable time, to furnish [any] information or make
[any] a report that may be required by the director under the
provisions of the Mortgage Loan Company and Loan Broker Act;
[or]
I. has been convicted of a felony or any misdemeanor involving moral turpitude; subject, however, to the provisions of the Criminal Offender Employment Act; or
J. appears to be conducting business in a manner that is injurious to persons."
Section 7. Section 58-21-9 NMSA 1978 (being Laws 1983, Chapter 86, Section 9, as amended) is amended to read:
"58-21-9. POWERS AND DUTIES OF DIRECTOR.--
A. The director shall exercise general supervision and control over mortgage loan companies and loan brokers doing business in New Mexico. In addition to the other duties imposed on him by law, the director shall:
(1) make reasonable rules [and regulations as
may be] necessary for the implementation of the Mortgage Loan
Company and Loan Broker Act; provided that [such] promulgated
rules [and regulations] shall be subject to [the] judicial
review in the manner set forth in Section 12-8-8 NMSA 1978;
(2) conduct [such] investigations [as may be]
necessary to determine whether [any] a person has engaged in
or is about to engage in [any] an act or practice constituting
a violation of [any] a provision of the Mortgage Loan Company
and Loan Broker Act; and
(3) conduct examinations, investigations and
hearings in addition to those specifically provided for by law
[as may be] necessary and proper to the efficient
administration of the Mortgage Loan Company and Loan Broker
Act.
B. The director may conduct an investigation upon
complaint, when it appears that a mortgage loan company or
loan broker is conducting business in a manner injurious to
[consumers or brokers] persons, or when it appears that [any]
a person has improperly claimed an exemption pursuant to
[Subsection E or H of] Section 58-21-6 NMSA 1978."
Section 8. Section 58-21-11 NMSA 1978 (being Laws 1983, Chapter 86, Section 11) is amended to read:
"58-21-11. KEEPING OF RECORDS [AND FILING OF REPORTS].--Every mortgage loan company and loan broker shall make and
keep [such] those accounts, correspondence, memoranda, papers,
books, data and other records as the director by rule
prescribes. All records so required shall be preserved for
six years. [Every mortgage loan company and loan broker shall
file financial reports as the director by rule prescribes. If
the information contained in any document filed with the
director is or becomes inaccurate or incomplete in any
material respect, the registrant shall file a correcting
amendment within thirty days.]"
Section 9. Section 58-21-12 NMSA 1978 (being Laws 1983, Chapter 86, Section 12, as amended) is amended to read:
"58-21-12. EXAMINATION OF RECORDS.--All the records
required to be maintained by the Mortgage Loan Company and
Loan Broker Act are subject to [annual] examinations or
investigations by representatives of the director within or
without New Mexico [together with such special or other
examinations] as the director deems necessary or appropriate
in the public interest or for the protection of investors.
The mortgage loan company or loan broker so examined shall pay
a fee for each such examination at the rate of [one hundred
fifty dollars ($150)] three hundred dollars ($300) per day, or
fraction thereof, for each authorized representative engaged
in the examination. If the examination is conducted outside
the state, the actual cost of travel for the examiners shall
also be reimbursed to the state by the mortgage loan company
or loan broker so examined."
Section 10. Section 58-21-15 NMSA 1978 (being Laws 1983, Chapter 86, Section 15) is amended to read:
"58-21-15. INVESTIGATIONS BY DIRECTOR [INJUNCTIONS].--
[A. When the director has reason to believe that a
mortgage loan company or loan broker is conducting its
business in violation of the Mortgage Loan Company and Loan
Broker Act or that any person is engaging in the mortgage loan
company or loan broker business without being registered under
the provisions of the Mortgage Loan Company and Loan Broker
Act, unless exempt therefrom under the provisions of Section 6
of that act, he may make such an investigation as he deems
necessary.
B. When the director finds upon sufficient
evidence that any mortgage loan company or loan broker has
engaged in or is about to engage in any act or practice in
violation of the Mortgage Loan Company and Loan Broker Act,
the director may:
(1) refer the evidence concerning alleged
violations of the Mortgage Loan Company and Loan Broker Act to
the appropriate district attorney, or to the attorney general,
who may, with or without such reference, institute the
appropriate criminal proceedings under the Mortgage Loan
Company and Loan Broker Act; and
(2) summarily order the mortgage loan company
or loan broker to cease and desist from such act or practice
or apply to any district court having venue to enjoin the act
or practice and to enforce compliance with the Mortgage Loan
Company and Loan Broker Act or both. If the director applies
to the court for relief, upon proper showing, a permanent or
temporary injunction, restraining order or writ of mandamus
shall be granted, a receiver or conservator may be appointed
for the defendant or defendant's assets and the court may
provide such other equitable relief as it may deem
appropriate. The court shall not require the director to post
a bond.]
A. The director may make any public or private investigation, within or outside of this state, as he finds necessary to determine whether a person has violated or is about to violate the Mortgage Loan Company and Loan Broker Act or any rule or order of the director under that act or to aid in enforcement of that act or in the rules under that act.
B. The director may publish information concerning a violation of the Mortgage Loan Company and Loan Broker Act or a rule or order of the director under that act or concerning mortgage loan activities of persons that may operate as a fraud or deceit."
Section 11. Section 58-21-18 NMSA 1978 (being Laws 1983, Chapter 86, Section 18, as amended) is amended to read:
"58-21-18. [PROHIBITED] PERMISSIBLE CHARGES.--In
connection with any loan originated, brokered, negotiated or
made by a registrant [under] pursuant to the Mortgage Loan
Company and Loan Broker Act, [no charges other than interest
shall be made, except the following:
A. the actual and reasonable expenditures for an
abstract of title, title examination, title insurance
premiums, property survey, appraisal fees, notary fees,
preparation of deeds, mortgages or other documents, credit
reports and filing and recording fees;
B. broker's fees not in excess of six percent of
the principal amount of the loan;
C. a one-time charge of an amount not to exceed
fifteen dollars ($15.00) when the loan is made to a natural
person, primarily for personal, family or household purposes,
to help defray the actual cost of preparing truth-in-lending
disclosure statements, equal credit opportunity disclosure
statements and other disclosures required by law; and
D. such other fees as the director by regulation
may permit] a broker may not collect, charge or receive broker
fees in excess of six percent of the principal amount of the
loan. A registrant may charge reasonable settlement,
origination, transaction and other fees or charges not
otherwise prohibited or limited by state or federal laws."
Section 12. Section 58-21-19 NMSA 1978 (being Laws 1983, Chapter 86, Section 19, as amended) is amended to read:
"58-21-19. [PROHIBITED WITHHOLDING AND ESCROWING OF LOAN
PROCEEDS--DISCLOSURE--PENALTY] COMPLIANCE WITH FEDERAL LAW.--In connection with any loan originated, brokered, negotiated
or made by a registrant [under, and which loan is subject]
pursuant to the Mortgage Loan Company and Loan Broker Act
[A. the loan shall not require or provide for the
withholding or escrowing of any portion of the loan proceeds
to cover any future payments, whether principal or interest or
both, to the mortgagee or obligee of such loan;
B. the loan agreement shall not require or provide
for the withholding or escrowing of any portion of the loan
proceeds to cover any payments to be made in the future on any
prior encumbrance or lien, except for a reasonable amount to
be applied toward the next annual payment of property taxes;
C. prepaid interest in the nature of points,
regardless of how characterized, shall not be charged; and
D. at least three business days prior to closing a
loan, the registrant shall provide to the borrower disclosure
in accordance with the provisions of Section 56-8-11.2 NMSA
1978. Any registrant who fails to comply with the disclosure
requirements or who provides information which is
substantially incorrect as to the rate or charge shall forfeit
all interest, charges or other advantage for the loan to the
borrower], registrants shall comply with applicable federal
consumer lending laws."
Section 13. Section 58-21-22 NMSA 1978 (being Laws 1983, Chapter 86, Section 22) is amended to read:
"58-21-22. PENALTIES.--[Any] A person who violates
[Sections 3, 18, 19 or 21 of the Mortgage Loan Company and
Loan Broker Act] Section 58-21-3, 58-21-18, 58-21-19 or
58-21-21 NMSA 1978 or who violates Section [20 of that act]
58-21-20 NMSA 1978, knowing the statement to be false or
misleading in any material respect, [shall be] is guilty of a
fourth degree felony and upon conviction shall be sentenced as
provided for in [the Criminal Sentencing Act] Section 31-18-15
NMSA 1978."
Section 14. Section 58-21-23 NMSA 1978 (being Laws 1983, Chapter 86, Section 23) is amended to read:
"58-21-23. FILING AND DESTRUCTION OF DOCUMENTS.--A document is filed when it is received by the director. The director may permit the destruction of any document filed under the Mortgage Loan Company and Loan Broker Act with the division or the director after
[A.] six years from the date of filing documents
[or
B. the reproduction of documents by photograph or
microphotograph of a permanent nature]."
Section 15. A new Section 58-21-28 NMSA 1978 is enacted to read:
"58-21-28. [NEW MATERIAL] ENFORCEMENT.--
A. If the director reasonably believes, whether or not based upon an investigation conducted under Section 58-21-15 NMSA 1978, that a person has engaged, is engaging or is about to engage in an act or practice constituting a violation of any provision of the Mortgage Loan Company and Loan Broker Act or any rule promulgated pursuant to that act, the director may, subject to the right of that person to obtain a subsequent hearing pursuant to Subsection B of Section 58-21-14 NMSA 1978, issue a cease and desist order without a prior hearing against the person engaged in the prohibited activities directing him to desist and refrain from further illegal activity.
B. When it appears to the director, whether or not based upon an investigation conducted under Section 58-21-15 NMSA 1978, that a person has violated the Mortgage Loan Company and Loan Broker Act or a rule or order of the director under that act, the director, in addition to any specific power granted under that act, may, after notice and hearing in an administrative proceeding unless the right to notice and hearing is waived by the person against whom the sanction is imposed:
(1) issue a cease and desist order against the person;
(2) censure the person if that person is a registered mortgage loan company or loan broker;
(3) bar or suspend that person from registration in this state as a mortgage loan company or loan broker;
(4) issue an order against an applicant, registered person or other person who violates that act, imposing a civil penalty up to a maximum of five thousand dollars ($5,000) for each violation; or
(5) initiate one or more of the actions specified in Section 58-21-29 NMSA 1978, as applicable."
Section 16. A new Section 58-21-29 NMSA 1978 is enacted to read:
"58-21-29. [NEW MATERIAL] POWER OF COURT TO GRANT RELIEF.--
A. Upon a showing by the director that a person has or is about to violate the Mortgage Loan Company and Loan Broker Act or any rule or order of the director under that act, the district court of the first judicial district for Santa Fe county or other appropriate district court in the state may grant or impose one or more of the following appropriate legal or equitable remedies:
(1) a temporary restraining order, permanent or temporary prohibitory or mandatory injunction or a writ of prohibition or mandamus;
(2) a civil penalty up to a maximum of five thousand dollars ($5,000) for each violation;
(3) disgorgement;
(4) declaratory judgment;
(5) restitution to consumers;
(6) the appointment of a receiver or conservator for the defendant or the defendant's assets;
(7) recovery by the director of all costs and expenses for conducting an investigation or the bringing of any enforcement action under that act; or
(8) other relief as the court deems just.
B. In determining the appropriate relief to grant, the court shall consider enforcement actions taken and sanctions imposed by the director under Section 58-21-28 NMSA 1978 in connection with the transactions constituting violations of the Mortgage Loan Company and Loan Broker Act.
C. The court shall not require the director to post bond in an action under this section."
Section 17. REPEAL.--Sections 58-21-24 and 58-21-27 NMSA 1978 (being Laws 1983, Chapter 86, Section 24 and Laws 1987, Chapter 343, Section 1) are repealed.
Section 18. EFFECTIVE DATE.--
A. The effective date of the provisions of Section 5 of this act is January 31, 2002.
B. The effective date of the provisions of Sections 1 through 4 and 6 through 18 of this act is July 1, 2001.