SENATE CORPORATIONS AND TRANSPORTATION COMMITTEE SUBSTITUTE FOR
SENATE BILL 445
48th legislature - STATE OF NEW MEXICO - second session, 2008
AN ACT
RELATING TO LICENSURE; ENACTING THE MORTGAGE LOAN ORIGINATOR LICENSING ACT; CREATING LICENSING REQUIREMENTS FOR MORTGAGE LOAN ORIGINATORS; PROVIDING PENALTIES; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 16 of this act may be cited as the "Mortgage Loan Originator Licensing Act".
Section 2. [NEW MATERIAL] DEFINITIONS.--As used in the Mortgage Loan Originator Licensing Act:
A. "applicant" means any person seeking to be licensed as a mortgage loan originator;
B. "director" means the director of the division;
C. "division" means the financial institutions division of the regulation and licensing department;
D. "license" means a license issued by the director pursuant to the Mortgage Loan Originator Licensing Act;
E. "licensee" means a person who obtains a license issued by the director pursuant to the Mortgage Loan Originator Licensing Act;
F. "mortgage loan" means a loan or agreement to extend credit made to a natural person that is secured by a mortgage, deed of trust, contract for deed or other similar instrument or document representing a security interest or lien upon any lot intended for residential purposes or a one-to-four family dwelling, located in this state, including the renewal or refinancing of any such loan;
G. "mortgage loan origination" means engaging in, or holding out to the public as being willing to engage in, for compensation or in the expectation of compensation, directly or indirectly, all of the following activities:
(1) soliciting, accepting or offering to accept an application for a mortgage loan;
(2) reviewing a borrower's application for a mortgage loan or assisting a borrower or offering to assist a borrower in the preparation of an application for a mortgage loan;
(3) negotiating or offering to negotiate with or on behalf of a borrower the terms or conditions of a mortgage loan;
(4) quoting mortgage loan payments, rates or terms; and
(5) counseling a borrower or offering to counsel a borrower on the availability of, qualifications for and features and benefits of a mortgage loan;
H. "mortgage loan originator" means a natural person who engages in mortgage loan origination activities;
I. "primary market" means the market wherein mortgage loans are originated between a lender and a borrower, whether or not through a mortgage broker or other means; and
J. "registrant" means a person who is registered as a mortgage loan company or loan broker pursuant to the Mortgage Loan Company and Loan Broker Act.
Section 3. [NEW MATERIAL] LICENSE EXEMPTIONS.--The following are exempt from the licensing requirements of the Mortgage Loan Originator Licensing Act:
A. a person employed by a bank, savings bank, savings and loan association or credit union that is authorized to make loans and to receive deposits and that is chartered under the laws of the United States, the state of New Mexico or any other state or by a subsidiary of any such bank, savings bank, savings and loan association or credit union; and
B. the United States, the state of New Mexico, any other state of the United States or an agency or instrumentality of any such state government.
Section 4. [NEW MATERIAL] LICENSE REQUIRED TO ORIGINATE MORTGAGE LOANS.--
A. Mortgage loan origination shall only be conducted by a licensee.
B. A licensee shall only engage in mortgage loan origination on behalf of one registrant.
C. A person found to be in violation of the Mortgage Loan Originator Licensing Act shall be subject to a fine not to exceed five thousand dollars ($5,000) or revocation of that person's license for a period of not less than three years, or both.
Section 5. [NEW MATERIAL] APPLICATION FOR LICENSE.--
A. An applicant shall submit to the director an application and required fees for licensing on forms prescribed and provided by the director. The application shall contain information that the director deems necessary to identify adequately the location where the person engages in mortgage loan origination activities, the registrants for whom the licensee will originate mortgage loans and other information that the director requires to evaluate the condition, character, qualifications and fitness of the applicant and the applicant's compliance with the provisions of the Mortgage Loan Originator Licensing Act. Each application shall be accompanied by a nonrefundable fee pursuant to the Mortgage Loan Originator Licensing Act.
B. An application shall be approved and a license shall be issued to the applicant if the director:
(1) has received the complete application and fee required by this subsection; and
(2) determines that the character, qualifications and fitness of the applicant warrant a belief that the business of the applicant will be conducted competently, honestly, fairly and in accordance with all applicable state and federal laws.
C. An applicant shall complete satisfactorily a course of mortgage lending study approved by the director and shall pass a written examination approved by the director to ensure the applicant has sufficient knowledge to conduct mortgage business in compliance with state and federal law. D. An applicant shall satisfy a background check authorized and approved by the director.
Section 6. [NEW MATERIAL] RENEWAL OF LICENSE.--
A. A license shall become effective as of the date specified on the face of the license.
B. A license shall be renewed every two years by filing with the director, at least thirty days prior to the expiration of the license, a renewal application containing information that the director requires to determine the existence of material changes from the information contained in the applicant's original license application or prior renewal applications. An applicant for renewal shall submit every two years evidence of satisfactory completion of a minimum of twelve hours of continuing professional education approved by the director.
C. Each renewal application shall be accompanied by a nonrefundable fee pursuant to Section 14 of the Mortgage Loan Originator Licensing Act.
Section 7. [NEW MATERIAL] APPLICATION DENIAL--APPEAL.--If the director denies an initial license application or a license renewal application, the applicant may make a written request for a hearing. The director shall conduct a hearing to determine if the denial was warranted.
Section 8. [NEW MATERIAL] DENIAL, SUSPENSION, REVOCATION AND NONRENEWAL OF LICENSE--NOTICE.--The director may deny, suspend, revoke or refuse to renew a license issued pursuant to the Mortgage Loan Originator Licensing Act if the director finds, after notice and opportunity for a hearing, that:
A. the applicant or licensee has violated a section of the Mortgage Loan Originator Licensing Act or a rule promulgated pursuant to that act;
B. facts or conditions exist that would have justified the denial of the license or renewal application had those facts or conditions existed or been known to exist at the time the application for an initial license or license renewal was made;
C. the applicant or licensee has filed with the division a document or statement containing a false representation of a material fact or fails to state a material fact;
D. the applicant or licensee, or an employee of the applicant or licensee, has been convicted of a crime involving fraud, dishonesty or deceit;
E. the applicant or licensee, or an employee of the applicant or licensee, has engaged in or is engaging in deceptive business practices;
F. the applicant or licensee, or an employee of the applicant or licensee, has been the subject of a disciplinary action by the division or any other state or federal regulatory agency;
G. a final judgment has been entered against the applicant or licensee, or an employee of the applicant or licensee, in a civil action and the director finds, based upon the conduct on which the judgment is based, that the licensing of that applicant or licensee would be contrary to the public interest;
H. the applicant or licensee, or an employee of the applicant or licensee, has been convicted of engaging in mortgage business activity without authorization pursuant to the Mortgage Loan Originator Licensing Act or a substantially similar offense in another state; or
I. the applicant or licensee has refused to furnish information required by the director within a reasonable period of time as established by the director.
Section 9. [NEW MATERIAL] LICENSE DISPLAY.--A licensee shall prominently display the licensee's original license in a way that reasonably ensures recognition by customers and members of the general public who enter the licensee's place of business.
Section 10. [NEW MATERIAL] SURETY BONDS.--
A. A licensee who originates mortgage loans only from a location within the state shall post and maintain with the director a corporate surety bond in the amount of twenty thousand dollars ($20,000). A licensee who originates mortgage loans from a location outside the state shall post and maintain with the director a corporate surety bond in the amount of fifty thousand dollars ($50,000). Every bond shall provide for suit thereon by any person who has a cause of action under the Mortgage Loan Originator Licensing Act. In no event shall the total liability of the surety to all persons, cumulative or otherwise, exceed the amount specified in the bond. Every bond shall provide that no suit shall be maintained to enforce any liability on the bond unless brought within three years after the act upon which it is based.
B. Bonds shall be in substantially the form as the director prescribes.
Section 11. [NEW MATERIAL] DUTIES OF THE DIRECTOR.--In addition to the powers of the director as set forth in Section 8 of the Mortgage Loan Originator Licensing Act, the director shall:
A. promulgate rules necessary to carry out the intent and purpose of the Mortgage Loan Originator Licensing Act;
B. order a licensee to cease any activity or practice that the director deems to be deceptive, dishonest, violative of state or federal law or unduly harmful to the interests of the public;
C. exchange any information regarding the administration of the Mortgage Loan Originator Licensing Act with an agency of the United States or an agency of any state that regulates the licensee or administers statutes, rules or programs related to mortgage loans;
D. disclose that an applicant's or licensee's application or license has been denied, suspended, revoked or refused renewal;
E. require or permit a person to file a written statement, under oath or otherwise as the director may direct, setting forth all the facts and circumstances concerning any apparent violation of the Mortgage Loan Originator Licensing Act or any rule promulgated pursuant to that act; and
F. follow the procedures set forth in the Uniform Licensing Act in carrying out the director's duties pursuant to the Mortgage Loan Originator Licensing Act.
Section 12. [NEW MATERIAL] DUTIES OF LICENSEES--UNFAIR PRACTICE.--
A. A licensee shall:
(1) conduct the licensee's business with reasonable skill, care and diligence;
(2) act in good faith and engage in fair dealing in any transaction, practice or course of business regarding mortgage loans; and
(3) comply with the provisions of the federal Real Estate Settlement Procedure Act of 1974 and the federal Truth in Lending Act.
B. A licensee shall not:
(1) originate a mortgage loan that would violate the provisions of the Home Loan Protection Act;
(2) coerce, extort, induce, bribe or intimidate an appraiser to value property in excess of its fair market value;
(3) misrepresent or conceal facts;
(4) make false promises;
(5) make false advertisements; or
(6) receive or accept payment of any commission, fee or other compensation for a mortgage loan, the payment or receipt of which would be in violation of state or federal law.
C. A violation of Subsection A or B of this section shall constitute an unfair trade practice pursuant to the Unfair Practices Act.
Section 13. [NEW MATERIAL] CEASE AND DESIST ORDER--CIVIL FINES.--
A. If the director determines after notice and opportunity for a hearing that a person has engaged, is engaging or is about to engage in any act or practice constituting a violation of any provision of the Mortgage Loan Originator Licensing Act or any rule pursuant to that act, the director by order may require any or all of the following:
(1) that the person cease and desist from the unlawful act or practice;
(2) that the person pay a fine not to exceed five thousand dollars ($5,000) per incident for the unlawful act or practice; and
(3) that the person take such affirmative action as in the judgment of the director will carry out the purposes of the Mortgage Loan Originator Licensing Act.
B. Whenever it appears to the director that a person has engaged, is engaging or is about to engage in any act or practice constituting a violation of a provision of the Mortgage Loan Originator Licensing Act or any rule pursuant to that act, the director may bring an action in any court of competent jurisdiction to enjoin the acts or practices and to require compliance with that act or any rule pursuant to that act. Upon a proper showing, a permanent or temporary injunction, restraining order, restitution, writ of mandamus or other equitable relief shall be granted and a receiver or conservator may be appointed for the defendant or the defendant's assets.
Section 14. [NEW MATERIAL] MORTGAGE LOAN ORIGINATOR FEES.--At the time of filing any application, an applicant, licensee or registrant shall pay to the division the following nonrefundable fees as may be applicable:
Application for licensing as mortgage loan
originator. . . . . . . . . . . . . . . . . . . . . . .$200
Renewal application for licensing as mortgage loan
originator. . . . . . . . . . . . . . . . . . . . . . .$250
Amendment of any license. . . . . . . . . . . . . $50.00.
Section 15. [NEW MATERIAL] LOAN ORIGINATOR FUND--CREATED--APPROPRIATION.--
A. The "loan originator fund" is created as a nonreverting fund in the state treasury and shall be administered by the division. The fund shall consist of licensing or renewal fees received pursuant to Section 14 of the Mortgage Loan Originator Licensing Act and money that is appropriated or donated or that otherwise accrues to the fund. Money in the fund shall be invested by the state investment officer in the manner that land grant permanent funds are invested pursuant to Chapter 6, Article 8 NMSA 1978. Income from investment of the fund shall be credited to the fund.
B. Money in the loan originator fund is appropriated to the division to carry out the provisions of the Mortgage Loan Originator Licensing Act. Money shall be disbursed from the loan originator fund only on warrant of the secretary of finance and administration upon vouchers signed by the director or the director's authorized representative. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert to the general fund.
Section 16. [NEW MATERIAL] CONTINUING PROFESSIONAL EDUCATION--REQUIREMENTS--WAIVER.--A licensee shall every two years complete at least twelve hours of approved continuing professional education as a condition of licensing renewal as follows:
A. each continuing professional education course shall first be approved by the director;
B. continuing professional education courses shall focus on issues of mortgage business or related industry topics;
C. evidence of satisfactory completion of approved continuing professional education courses shall be submitted on forms provided by the director. The form may be submitted by the licensee seeking continuing professional education credit or the person sponsoring the continuing professional education course. A licensee shall be ultimately responsible for ensuring that continuing professional education credit has been properly submitted to the director and shall maintain verification records in the form of completion certificates or other documents supporting evidence of attendance at approved continuing professional education courses;
D. the continuing professional education requirement shall run concurrently with the licensee's renewal year;
E. continuing professional education hours shall not be carried forward from one renewal period to the next renewal period;
F. a licensee who fails to renew a license pursuant to the provisions of the Mortgage Loan Originator Licensing Act shall obtain all delinquent continuing professional education hours before receiving a new license, unless a period of twelve months has elapsed from the expiration date of the license. In that case, the licensee shall pay a late fee, complete a minimum of twelve hours of continuing education and pass the required examination as established by the director;
G. renewal notices shall be mailed to the last known address on file with the director. It is the responsibility of the licensee to keep the director informed of changes in the licensee's address and phone numbers. Failure to receive a renewal notice shall not relieve a licensee of the responsibility of renewing a license before the expiration date;
H. a license that is not renewed on or before the expiration date of the license shall be considered expired and no longer valid;
I. a license shall expire and no longer be valid if the licensee fails to meet the continuing education requirement for renewal before the license expiration deadline;
J. a person engaged in mortgage loan origination whose license has expired is prohibited from mortgage loan origination until the expired license has been renewed;
K. the requirement for completion of continuing professional education may be waived or the deadline for completion may be extended by the director if the licensee is called to active duty in the armed forces of the United States for a period exceeding one hundred twenty consecutive days in any continuing professional education year; and
L. proprietary and alternate professional credit hours and curricula may be approved by the director in lieu of the initial and continuing professional education hours required pursuant to the Mortgage Loan Originator Licensing Act.
Section 17. A new section of the Mortgage Loan Company and Loan Broker Act is enacted to read:
"[NEW MATERIAL] PROHIBITED PRACTICES.--A person required to be registered pursuant to Section 58-21-3 NMSA 1978 shall not pay compensation to, contract with or employ a person in the capacity of a mortgage loan originator as defined in Subsection H of Section 2 of the Mortgage Loan Originator Licensing Act who does not have a license in good standing pursuant to that act."
Section 18. SEVERABILITY.--If any part or application of this act is held invalid, the remainder or its application to other situations or persons shall not be affected.
Section 19. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2009.
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