No. 34097 (Amendment): Section R162-2c-202. Qualifications for Licensure

(Amendment)

DAR File No.: 34097
Filed: 09/16/2010 07:19:02 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This amendment is proposed to outline the factors that the Division will consider in evaluating whether an applicant for licensure demonstrates the financial responsibility required by the S.A.F.E. Act and by Subsection 61-2c-203(1)(a).

Summary of the rule or change:

In evaluating an applicant's financial responsibility, the division will consider outstanding civil judgments and tax liens, foreclosures, multiple social security numbers attached to the applicant's name, child support arrearages, and bankruptcies.

State statutory or constitutional authorization for this rule:

• Subsection 61-2c-103(3)

Anticipated cost or savings to:

the state budget:

Because the Division will be able to use the Nationwide Mortgage Licensing System (NMLS) database to access the information it needs in order to evaluate an applicant's financial responsibility, it will incur no costs in this process. Therefore, no impact to the state budget is anticipated.

local governments:

Local governments do not license with the division, nor do they implement the rules that govern mortgage licensing. No fiscal impact to local government is anticipated.

small businesses:

An applicant for licensure is required to pay $15 to the NMLS to cover the costs of a credit check. A small business that chooses to pay this cost on behalf of an applicant will be affected by this charge. This minimal cost is imposed by the NMLS, not by the Division.

persons other than small businesses, businesses, or local governmental entities:

An applicant for licensure is required to pay $15 to the NMLS to cover the costs of a credit check. This minimal cost is imposed by the NMLS, not by the Division.

Compliance costs for affected persons:

Affected persons will pay $15 to comply with the NMLS requirement that they pay for a credit check.

Comments by the department head on the fiscal impact the rule may have on businesses:

This rule filing allows the Division to consider an applicant's financial responsibility in reviewing the applicant's fitness for licensure. No fiscal impact to businesses is anticipated, as applicants already provide a fee to the NMLS database for a credit check.

Francine A. Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Real Estate
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Jennie Jonsson at the above address, by phone at 801-530-6706, by FAX at 801-526-4387, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

11/15/2010

This rule may become effective on:

11/22/2010

Authorized by:

Deanna Sabey, Director

RULE TEXT

R162. Commerce, Real Estate.

R162-2c. Utah Residential Mortgage Practices and Licensing Rules.

R162-2c-202. Qualifications for Licensure.

(1) Character. Individual applicants and control persons shall evidence good moral character, honesty, integrity, and truthfulness.

(a) An applicant shall be denied a license for:

(i) criminal history as outlined in Section 61-2c-203(1)(a)-(f);

(ii) any misdemeanor involving fraud, misrepresentation, theft, or dishonesty that resulted in:

(A) a conviction occurring within three years of the date of application;

(B) a plea agreement occurring within three years of the date of application; or

(C) a jail or prison release date falling within three years of the date of application.

(b) An applicant may be denied a license or issued a restricted license for incidents in the applicant's past that reflect negatively on the applicant's moral character, honesty, integrity, and truthfulness. In evaluating an applicant for these qualities, the division and commission may consider any evidence, including the following:

(i) criminal convictions or plea agreements entered more than three years prior to the date of application, with particular consideration given to convictions or plea agreements relative to charges that involve moral turpitude;

(ii) the circumstances that led to any criminal conviction or plea agreement under consideration;

(iii) past acts related to honesty or moral character, with particular consideration given to any such acts involving the business of residential mortgage loans;

(iv) dishonest conduct that would be grounds under Utah law for sanctioning an existing licensee;

(v) civil judgments in lawsuits brought on grounds of fraud, misrepresentation, or deceit;

(vi) court findings of fraudulent or deceitful activity;

(vii) evidence of non-compliance with court orders or conditions of sentencing;

(viii) evidence of non-compliance with:

(A) terms of a diversion agreement still subject to prosecution;

(B) a probation agreement; or

(C) a plea in abeyance; or

(ix) failure to pay taxes or child support obligations.

(2) Competency. Individual applicants and control persons shall evidence competency to transact the business of residential mortgage loans. In evaluating an applicant for competency, the division and commission may consider any evidence that reflects negatively on an applicant's competency, including:

(a) civil judgments, with particular consideration given to any such judgments involving the business of residential mortgage loans;

(b) failure to satisfy a civil judgment that has not been discharged in bankruptcy;

(c) failure of any previous mortgage loan business in which the individual was engaged, as well as the circumstances surrounding that failure;

(d) evidence as to the applicant's business management and employment practices, including the payment of employees, independent contractors, and third parties;

(e) the extent and quality of the applicant's training and education in mortgage lending;

(f) the extent and quality of the applicant's training and education in business management;

(g) the extent of the applicant's knowledge of the Utah Residential Mortgage Practices Act;

(h) evidence of disregard for licensing laws;

(i) evidence of drug or alcohol dependency;

(j) sanctions placed on professional licenses; and

(k) investigations conducted by regulatory agencies relative to professional licenses.

(3) Financial responsibility. Individual applicants shall evidence financial responsibility. To evaluate an applicant for financial responsibility, the division shall:

(a) access the credit information available through the NMLS of:

(i) an applicant for initial licensure, beginning October 18, 2010; and

(ii) a licensee who requests renewal during the 2010 renewal period, unless the licensee's credit report was reviewed in issuing the initial license; and

(b) give particular consideration to:

(i) outstanding civil judgments;

(ii) outstanding tax liens;

(iii) foreclosures;

(iv) multiple social security numbers attached to the individual's name;

(v) child support arrearages; and

(vi) bankruptcies.

[(3)](4) Age. An applicant shall be at least 18 years of age.

[(4)](5) Minimum education. An applicant shall have a high school diploma, GED, or equivalent education as approved by the commission.

 

KEY: residential mortgage, loan origination, licensing, enforcement

Date of Enactment or Last Substantive Amendment: [ August 23 ], 2010

Authorizing, and Implemented or Interpreted Law: 61-2c-103(3); 61-2c-402(4)

 

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