CHAPTER 333
HB 1286-FN – FINAL VERSION
04Jun2008… 2187eba
2008 SESSION
08/09
HOUSE BILL 1286-FN
AN ACT relative to the licensing of mortgage bankers, mortgage brokers, and mortgage originators.
SPONSORS: Rep. Reardon, Merr 11; Sen. D'Allesandro, Dist 20
This bill makes various changes to the law regarding licenses for mortgage bankers, mortgage brokers, and mortgage originators.
This bill is a request of the banking department.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
04Jun2008… 2187eba
08-2180
08/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eight
AN ACT relative to the licensing of mortgage bankers, mortgage brokers, and mortgage originators.
Be it Enacted by the Senate and House of Representatives in General Court convened:
333:1 Mortgage Originator Licenses. Amend RSA 397-A:3 to read as follows:
397-A:3 License Required.
I. Any person not exempt under RSA 397-A:4 that, in its own name or on behalf of other persons, engages in the business of making or brokering mortgage loans secured by real property located in this state shall be required to obtain a license from the department. Persons licensed as mortgage bankers may engage in the mortgage broker business without obtaining a separate license.
II. It is unlawful for any individual to transact business in this state as an originator unless such individual is licensed under this chapter. Under this chapter, an originator’s license is only in effect when such originator is associated with a particular licensed mortgage banker or broker.
III. It is unlawful for any mortgage banker or mortgage broker to employ, retain, or otherwise engage an originator unless the originator is licensed. No originator shall at any time represent more than one mortgage banker or mortgage broker. Before an individual begins activities that require licensure as an originator in this state, the originator and the mortgage banker or mortgage broker who employs or retains the originator shall file an application with the commissioner to license the originator in this state. When an individual ceases to be employed or retained as an originator by a mortgage banker or mortgage broker, the originator’s license shall terminate and the mortgage banker or mortgage broker shall notify the commissioner within 15 calendar days. If the mortgage banker or mortgage broker ceases to be licensed under this chapter for any reason, the licenses of originators employed or retained by the mortgage banker or mortgage broker shall terminate unless an originator’s license is suspended, revoked or transferred to another licensed mortgage banker or mortgage broker.
333:2 Mortgage Bankers and Mortgage Brokers; License Applications. Amend RSA 397-A:5, I to read as follows:
I. To be considered for mortgage banker or mortgage broker licensing, each person shall complete and file with the department one verified application prescribed by the commissioner. At a minimum, the application shall state the primary business address of the applicant, the applicant’s tax identification number, the address of its principal office and all branch offices located or to be located within the state, and a list of the principals of the applicant. Each principal shall provide his or her social security number and shall authorize the commissioner to conduct a background check. The applicant shall submit any other information that the commissioner may require including, but not limited to, the applicant’s form and place of organization, the applicant’s proposed method of doing business, the qualifications and business history of the applicant and its principals, and the applicant’s financial condition and history. The applicant shall disclose whether the applicant or any of its principals has ever been issued or been the subject of an injunction or administrative order, has ever been convicted of a misdemeanor involving the lending industry or any aspect of the lending business or has ever been convicted of any felony.
333:3 Mortgage Bankers and Mortgage Brokers; License Applications. Amend RSA 397-A:5, II(a) to read as follows:
(a) Unless the mortgage banker or mortgage broker applicant is a publicly traded corporation, the department shall complete a background investigation and criminal history records check on the applicant’s principals and any person in a similar position or performing similar functions. If the applicant is a subsidiary, the department shall complete a background investigation and criminal history records check on the individuals who are indirect owners.
333:4 Mortgage Bankers and Mortgage Brokers; License Applications. Amend RSA 397-A:5, III to read as follows:
III.(a) The mortgage banker or mortgage broker license issued for the licensee’s principal place of business shall be referred to as a “principal office license.’’ Each additional license issued for mortgage lending or brokering activity occurring in a location in this state that is separate from the licensee’s principal place of business shall be referred to as a ““branch office license.’’ If the applicant or licensee desires to make or broker mortgage loans in more than one location, the commissioner, upon favorable action on the applicant’s principal office license, shall issue a branch office license for each location where the business of making or brokering mortgage loans is to be conducted.
(b) Each mortgage banker or mortgage broker license application shall be accompanied by a nonrefundable application fee of $500 for each separate office location to be licensed. Sums collected under this chapter shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the commissioner, consumer credit administration division.
(c) Each mortgage banker or mortgage broker applicant shall be required to submit to the department detailed financial information sufficient for the commissioner to determine the applicant’s ability to conduct the business of a mortgage banker or a mortgage broker with financial integrity. The application shall include a statement of net worth. An applicant or licensee shall demonstrate and maintain a positive net worth. Net worth statements provided in connection with a license application under this section shall be subject to review and verification during the course of any examination or investigation conducted under the authority of RSA 397-A:12. Each mortgage banker applicant shall demonstrate a net worth at all times of at least $100,000 or increase their posted continuous surety bond to a total amount of $100,000. Each mortgage banker and broker shall post a continuous surety bond in the amount of $20,000 to the commissioner. Surety bonds shall include a provision requiring the surety to give written notice to the commissioner 20 days in advance of the cancellation or termination of the bond. Every bond shall provide that no recovery may be made against the bond unless the state makes a claim for recovery or the person brings suit naming the licensee within 6 years after the act upon which the recovery or suit is based.
(d) [Each applicant shall provide a list of all individuals, and the address of the work location of each such individual, who will act as originators for the licensee.
(e)] No person shall be issued or continue to hold a mortgage banker or mortgage broker license unless at least one person employed full-time in a supervisory capacity at the company’s principal office shall have been actively engaged in the mortgage business in a similar supervisory capacity for a minimum of 3 of the preceding 5 years.
333:5 Mortgage Bankers and Mortgage Brokers; License Application. Amend the introductory paragraph of RSA 397-A:5, IV to read as follows:
IV. Every applicant for mortgage banker or mortgage broker licensing under this chapter shall file with the commissioner, in such form as the commissioner prescribes by rule, irrevocable consent appointing the commissioner to receive service of any lawful process in any non-criminal suit, action, or proceeding against the applicant or the applicant’s successor, executor, or administrator which arises under this chapter or any rule or order under this chapter after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. A person who has filed such a consent in connection with a previous registration need not file another. When any person, including any nonresident of this state, engages in conduct prohibited or made actionable by this chapter or any rule or order under this chapter, and such person has not filed a consent to service of process under this section and personal jurisdiction over such person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to such person’s appointment of the commissioner to receive service of any lawful process. Service may be made by leaving a copy of the process in the office of the commissioner along with $5, but is not effective unless:
333:6 New Paragraph; Mortgage Bankers and Mortgage Brokers; License Application; Filing. Amend RSA 397-A:5 by inserting after paragraph IV the following new paragraph:
IV-a. To be considered for originator licensing, the applicant shall complete and file with the department one verified application prescribed by the commissioner. The application shall be signed under oath by both the originator applicant and by the licensed mortgage banker or mortgage broker for whom the individual will originate mortgage loans. At a minimum, the application shall state the primary business address of the applicant and the applicant’s social security number and shall authorize the commissioner to conduct a background check. The applicant shall submit any other information that the commissioner may require including, but not limited to, the applicant’s residential and employment history. The applicant shall disclose his or her financial, criminal, regulatory civil, arbitration, civil litigation, and employment termination history, including but not limited to, whether the applicant has ever been issued or been the subject of an injunction or administrative order or has ever been charged with or convicted of a misdemeanor or any felony. Each license application shall be accompanied by a nonrefundable license fee of $100. A mortgage originator’s license may be transferred during a calendar year from one mortgage banker or mortgage broker to another upon payment of a $50 fee and approval by the commissioner. Sums collected under this chapter shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the commissioner, consumer credit administration division.
333:7 Mortgage Bankers and Mortgage Brokers; License Application. Amend RSA 397-A:5, V(b) to read as follows:
(b) The commissioner shall determine whether the mortgage banker or mortgage broker applicant’s proposed interest rates and fees are in accordance with the interest rates and fees charged by other first or second mortgage lenders, and whether said rates and fees will promote a free and competitive market.
333:8 Mortgage Bankers and Mortgage Brokers; License Grant. Amend RSA 397-A:6 to read as follows:
397-A:6 License Grant.
I. If the commissioner determines that the applicant meets the requirements of this chapter, then the commissioner shall forthwith issue a license or licenses permitting the applicant to engage in the business of originating, making, or brokering mortgage loans in accordance with the laws of this state. Licensees shall be responsible for the supervision of their employees, agents, loan originators, and branch offices. Licensees shall conduct background checks, including checking the list of entities issued by the Office of Foreign Assets Control (OFAC) whose assets were frozen by executive order, on all of their loan originators.
II. No mortgage banker or mortgage broker license shall be issued to any person whose principal place of business is located outside of this state unless that person designates an agent residing within this state for service of process.
III. Each mortgage banker or mortgage broker license issued under the provisions of this chapter shall state the name and address of the principal office of the licensee and, if the license is a branch office license, the name and address of the branch office location for which that license is issued.
IV. If a mortgage banker or mortgage broker licensee is a person other than a natural person, the license issued to it shall entitle all officers, directors, members, partners, trustees, agents, originators, and employees of the licensed corporation, partnership, entity, or trust to engage in the business of making or brokering mortgage loans; provided that all individuals who engage in the origination process are licensed as originators and that one officer, director, member, partner, employee, or trustee of such person shall be designated in the license application as the individual to be contacted under the provisions of this chapter.
V. If the mortgage banker or mortgage broker licensee is a natural person, the license shall entitle all employees, agents, and originators of the licensee to engage in the business of making or brokering mortgage loans, provided that all individuals who engage in the origination process are licensed as originators.
VI. A license issued under this chapter shall not be transferable or assignable between persons unless, in the case of mortgage bankers and mortgage brokers, the approval of the commissioner is first secured at least 10 calendar days prior to said assignment or transfer.
333:9 License Termination. Amend RSA 397-A:8, I to read as follows:
I. Each license shall remain in force until it has been surrendered, revoked, suspended, terminates or expires in accordance with the provisions of this chapter. Each license shall expire on December 31 of each calendar year.
333:10 Mortgage Bankers and Mortgage Brokers; License Renewal Fees. Amend RSA 397-A:8, III to read as follows:
III. A mortgage banker or mortgage broker renewal fee of $500 for the principal office license and each branch office license shall be submitted with the application for license renewal. An originator renewal fee of $100 shall be submitted with the application for license renewal.
333:11 Mortgage Bankers and Mortgage Brokers; License Surrender. Amend RSA 397-A:10-a, I(a) to read as follows:
I.(a) A licensee who ceases to engage in the business of a mortgage banker [or], mortgage broker, or originator, at any time during a license year for any cause, including, but not limited to, bankruptcy, license revocation, or voluntary dissolution, shall surrender such paper license in person or by registered or certified mail to the commissioner within 15 calendar days of such cessation, and mortgage banker and mortgage broker licensees shall cause to be published in a newspaper of general circulation in the licensee’s market area a notice to such effect. The commissioner shall adopt rules, in accordance with RSA 541-A, relative to such notice and final reports to the commissioner.
333:12 Mortgage Bankers and Mortgage Brokers; Annual Report. Amend RSA 397-A:13, I-II to read as follows:
I. Each mortgage banker or mortgage broker licensee shall file, under oath, an annual report with the banking department on or before March 31 each year concerning operations for the preceding year or license period ending December 31 upon the form prescribed by the banking department. [The annual report shall include a list of all individuals, and the address of the work location or an undertaking to provide the address immediately upon the department’s request, of each such individual, who act as originators for the licensee.]
I-a. A person who surrenders, withdraws, or does not renew a mortgage banker or mortgage broker license shall file the annual report as required in paragraph I, notwithstanding the fact that he or she is not licensed on the date that the report is due.
II. Each mortgage banker or mortgage broker licensee shall also file, under oath, its financial statement with the commissioner within 90 days from the date of its fiscal year end. The financial statement shall be prepared in accordance with generally accepted accounting principles with appropriate note disclosures. A mortgage banker’s financial statement shall include a balance sheet, income statement, statement of changes in owners’ equity, and a cash flow statement. A mortgage broker’s financial statement shall include a balance sheet or a statement of net worth. If the financial statement filed under this section is not audited, a certification statement shall be attached and signed by a duly authorized officer of the licensee. The certification statement shall state that the financial statement is true and accurate to the best of the officer’s belief and knowledge.
333:13 Mortgage Bankers and Mortgage Brokers; Annual Report. Amend RSA 397-A:13, V-VI to read as follows:
V. In addition to the annual report and financial statement, the banking department may require such additional regular or special reports as it may deem necessary to the proper supervision of mortgage banker, mortgage broker, and originator licensees under this chapter.
VI. Any originator, officer, owner, manager, or agent of any licensee and any person controlling or having a contract under which he or she has a right to control such a licensee, whether exclusively or otherwise, and any person with executive authority over or in charge of any segment of such a licensee’s affairs, shall reply promptly in writing, or in other designated form, to any written inquiry from the commissioner requesting a reply. The commissioner may require that any communication made to him or her under this section be verified.
333:14 Mortgage Bankers and Mortgage Brokers; Compliance at Closings. Amend RSA 397-A:14-b to read as follows:
397-A:14-b Compliance With Requirements for Funding of Loans at Real Estate Closings. A mortgage banker or mortgage broker licensee shall comply with the provisions of RSA 477:52 relative to requirements for the funding of loans at real estate closings. At a minimum, a closing requires the delivery of a deed if the transaction is a conveyance, the signing of a note, and the disbursement of the mortgage loan funds.
333:15 Mortgage Originators; Commissions. Amend RSA 397-A:16, IV to read as follows:
IV. Pursuant to RSA 397-A:3, only mortgage brokers [and], mortgage bankers, and mortgage originators licensed under the provisions of this chapter shall be entitled to retain commissions for services rendered.
333:16 Mortgage Originators; License Revocation. Amend RSA 397-A:17, VII to read as follows:
VII. If the commissioner finds that any licensee or applicant for license is no longer in existence or has ceased to do business as a mortgage broker [or], mortgage banker, or mortgage originator, cannot be located after reasonable search, the commissioner may by order revoke the license, impose penalties, or deny the application. The commissioner may deem abandoned and withdraw any application for licensure made pursuant to this chapter, if any applicant fails to respond in writing within 180 calendar days to a written request from the commissioner requesting a response. Such request shall be sent via certified mail to the last known address of the applicant that is on file with the commissioner.
333:17 Effective Date Correction. Amend paragraph IV of section 13 of HB 359-FN of the 2008 legislative session to read as follows:
IV. The remainder of this act shall take effect [60 days after its passage] July 1, 2008.
333:18 Contingency. If HB 359-FN of the 2008 legislative session becomes law, section 17 of this act shall take effect July 1, 2008. If HB 359-FN does not become law, section 17 of this act shall not take effect.
333:19 Effective Date.
I. Section 17 of this act shall take effect as provided in section 18 of this act.
II. Section 18 of this act shall take effect upon its passage.
III. The remainder of this act shall take effect April 1, 2009.
Approved: July 7, 2008
Effective Date: I. Section 17 shall take effect as provided in section 18.
II. Section 18 shall take effect July 7, 2008.
III. Remainder shall take effect April 1, 2009.