No. 33097 (New Rule): Rule R343-5. Mortgage Loan Originator Surety Bond Requirements

(New Rule)

DAR File No.: 33097
Filed: 10/26/2009 11:31:19 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule establishes surety bond requirements for mortgage loan originator licensees.

Summary of the rule or change:

This rule applies to mortgage loan originators who are required to license with the department under Title 70D and establishes surety bond requirements for licensees.

State statutory or constitutional authorization for this rule:

• Section 70D-3-205

Anticipated cost or savings to:

the state budget:

The proposed new rule will not require additional appropriations.

local governments:

Local governments are not involved in regulating mortgage loan originators and are therefore not subject to this rule.

small businesses:

The costs for conducting business as a mortgage loan originator, for those who were not previously required to license in the State of Utah, will increase. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ("SAFE Act"), was passed by Congress on 07/30/2008. The SAFE Act gave states one year to pass legislation requiring the licensure of mortgage loan originators according to national standards and the participation of state agencies on the Nationwide Mortgage Licensing System and Registry (NMLS). As a result, the 2009 General Session of the Utah Legislature, passed H.B. 286 which requires individuals who transact business under Title 70D to be licensed to meet the requirements of the federal mandate. (DAR NOTE: H.B. 286 (2009) is found at Chapter 72, Laws of Utah 2009, and was effective 05/12/2009.)

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

The costs for conducting business as a mortgage loan originator, for those who were not previously required to license in the State of Utah, will increase. The SAFE Act was passed by Congress on 07/30/2008. The SAFE Act gave states one year to pass legislation requiring the licensure of mortgage loan originators according to national standards and the participation of state agencies on the NMLS. As a result, the 2009 General Session of the Utah Legislature, passed H.B. 286 which requires individuals who transact business under Title 70D to be licensed to meet the requirements of the federal mandate.

Compliance costs for affected persons:

The costs for conducting business as a mortgage loan originator, for those who were not previously required to license in the State of Utah, will increase. The SAFE Act was passed by Congress on 07/30/2008. The SAFE Act gave states one year to pass legislation requiring the licensure of mortgage loan originators according to national standards and the participation of state agencies on the NMLS. As a result, the 2009 General Session of the Utah Legislature, passed H.B. 286 which requires individuals who transact business under Title 70D to be licensed to meet the requirements of the federal mandate.

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

The costs for conducting business as a mortgage loan originator, for those who were not previously required to license in the State of Utah, will increase. The SAFE Act was passed by Congress on 07/30/2008. The SAFE Act gave states one year to pass legislation requiring the licensure of mortgage loan originators according to national standards and the participation of state agencies on the NMLS. As a result, the 2009 General Session of the Utah Legislature, passed H.B. 286 which requires individuals who transact business under Title 70D to be licensed to meet the requirements of the federal mandate.

Edward Leary, Commissioner

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

Financial Institutions
Nondepository Lenders
324 S STATE ST
SALT LAKE CITY, UT 84111-2393

Direct questions regarding this rule to:

• Paul Allred at the above address, by phone at 801-538-8854, by FAX at 801-538-8894, 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:

12/15/2009

This rule may become effective on:

12/22/2009

Authorized by:

Edward Leary, Commissioner

RULE TEXT

R343. Financial Institutions, Nondepository Lenders.

R343-5. Mortgage Loan Originator Surety Bond Requirements.

R343-5-1. Authority, Scope and Purpose.

(1) This rule is issued pursuant to Section 70D-3-205.

(2) This rule applies to mortgage loan originators who are required to license with the department.

(3) This rule establishes surety bond requirements for mortgage loan originator licensees.

 

R343-5-2. Surety Bond Requirements.

(1) An individual who applies for a mortgage loan originator license must be covered by a surety bond satisfactory to the department in a sum based on the dollar amount of loans originated, as shown below, to reimburse the state for expenses it may incur in connection with any administrative or judicial proceeding against a current or former licensee relating to mortgage lending activity in Utah.

(2) The annual origination volume for each individual residential mortgage loan originator is the basis for determining that individual's required bond amount. Annual origination volume is the sum of the amounts of all loans the individual originated, arranged, booked, brokered, funded, made, or otherwise included in the individual's personal loan production volume during the prior calendar year.

(3) If the annual origination volume for the individual was:

(a) up to $5 million, the required bond amount is $12,500; or

(b) $5 to $15 million, the required bond amount is $25,000; or

(c) over $15 million, the required bond amount is $50,000.

 

R343-5-3. Business Entity Surety Bond Requirements.

(1) This section does not require business entities to be licensed or bonded, but qualified business entities may elect to provide bond coverage on behalf of mortgage loan originators working exclusively for the entity instead of the individual originator providing a separate surety bond. To be eligible for this option:

(a) A business entity must file an acceptable notification or register with the department in accordance with Chapter 70C, Utah Consumer Credit Code; Chapter 70D, Financial Institution Mortgage Financing Regulation Act; or, other Utah statutes or rules administered by the department, and

(b) the bond must cover the activities of the licensed mortgage loan originator.

(2) The annual residential mortgage loan origination volume for the business entity is the basis for determining an entity's required bond amount. Annual origination volume is the sum of the amounts of all Utah loans the entity originated, arranged, booked, brokered, funded, made, or otherwise included in the entity's loan production volume during the prior calendar year.

(3) If the annual origination volume for the business entity was:

(a) up to $10 million, the required bond amount is $25,000; or

(b) $10 to $30 million, the required bond amount is $50,000; or

(c) over $30 million, the required bond amount is $100,000.

 

KEY: mortgage

Date of Enactment or Last Substantive Amendment: 2009

Authorizing, and Implemented or Interpreted Law: 70D-3-205

 

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