No. 29545 (Amendment): R162-202-5. Determining Fitness for Licensure

DAR File No.: 29545
Filed: 02/23/2007, 09:29
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose for this rule change is to set forth the qualifications for mortgage officer licenses related to past criminal conduct by the applicants, and to turn into rule a policy of the Utah Residential Mortgage Regulatory Commission and the Utah Division of Real Estate. This rule will give notice to potential applicants of the types of recent criminal convictions that will prevent them from receiving a license from the Utah Residential Mortgage Regulatory Commission and the Division of Real Estate.

Summary of the rule or change:

The rule change provides that a first-time applicant for a license may not have had a felony conviction in the five years preceding application, and may not have had a misdemeanor conviction or plea in a case involving theft or dishonesty in the three years preceding application.

State statutory or constitutional authorization for this rule:

Subsection 61-2c-103(3)(a)(i)

Anticipated cost or savings to:

the state budget:

This rule change will eliminate an unknown number of the license application hearings before the Utah Residential Mortgage Regulatory Commission since it will deter applications from applicants who would only be turned down after a hearing because of the Commission's and the Division's policy concerning licensing applicants with recent criminal convictions. Fewer applications will result in fewer license application hearings before the Commission, resulting in fewer or shorter Commission meetings. This will result in a savings to the State budget in the per diem payments to Commissioners. It is difficult to calculate how many meetings will be avoided and how many meetings will be shortened from a full-day meeting to a half-day meeting, and therefore, the anticipated cost savings cannot be calculated.

local governments:

None--Local governments do not act as licensed mortgage loan officers, nor do they license mortgage loan officers. Therefore, local governments are not affected by the qualification requirements to obtain mortgage officer licenses.

other persons:

The only persons who are affected by the qualification requirements for mortgage licensure are the applicants for those licenses. By explicitly stating the types of crimes and the time periods that will disqualify an applicant from receiving a license, this rule will give notice to potential applicants if their criminal history will disqualify them and therefore will save them from spending money on prelicensing education and examinations for a license that they will not receive.

Compliance costs for affected persons:

None--The only persons affected by this rule are license applicants with recent criminal convictions that will disqualify them from licensure if they apply for a license. It will not cost these persons any money to comply with this rule, and it will actually save them from spending money since the rule will give them clear notice that they will not receive a license if they apply for a license too soon after their convictions.

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

There appears to be no fiscal impact to businesses beyond the cost savings discussed in the rule filing. 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
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY UT 84111-2316

Direct questions regarding this rule to:

Shelley Wismer at the above address, by phone at 801-366-0145, by FAX at 801-366-0315, 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:

04/16/2007

This rule may become effective on:

04/24/2007

Authorized by:

Derek Miller, Director

RULE TEXT

R162. Commerce, Real Estate.

R162-202. Initial Application.

R162-202-5. Determining Fitness for Licensure.

202.5.1 Qualifications of Applicants. All mortgage officer and principal lending manager applicants, and all directors, executive officers, and managing partners of any entity applicant, and anyone who occupies a position or performs functions similar to a director, executive officer, manager or managing partner of an entity applicant, shall meet the following qualifications. None of these persons may have:

(a) been convicted of, entered a plea in abeyance to, or completed any sentence of confinement on account of, any felony within five years preceding the application; or

(b) been convicted of, entered a plea in abeyance to, or completed any sentence of confinement on account of, any misdemeanor involving fraud, misrepresentation, theft, or dishonesty within three years preceding the application.

202.5.2 [Good Moral Character.] In determining whether an individual who has not been disqualified by Subsection 202.5.1[The Commission and the Division will consider information necessary to determine whether an applicant for a license or a director, executive officer, manager, or a managing partner of an entity that has applied for a license, or anyone who occupies a position or performs functions similar to a director, executive officer, manager or managing partner of an entity that has applied for a license,] meets the requirements of good moral character, honesty, integrity, and truthfulness, the Commission and the Division will consider information which may include the following in addition to whether the individual has been convicted of a felony or misdemeanor involving moral turpitude in the ten years preceding the application:

(a) The circumstances that led to any criminal convictions considered by the Commission and the Division;

(b) The amount of time that has passed since the individual's last criminal conviction;

(c) Any character testimony presented at the hearing and any character references submitted by the individual;

(d) Past acts related to honesty or moral character involving the business of residential mortgage loans;

(e) Whether the individual has been guilty of dishonest conduct in the five years preceding the application that would have been grounds under Utah law for revocation or suspension of a registration or license had the individual then been registered or licensed;

(f) Whether a civil judgment based on fraud, misrepresentation, or deceit has been entered against the individual, or whether a finding of fraud, misrepresentation or deceit by the individual has been made in a civil suit, regardless of whether related to the residential mortgage loan business, and whether any money judgment has been fully satisfied;

(g) Whether fines and restitution ordered by a court in a criminal proceeding have been fully satisfied, and whether the individual has complied with court orders in the criminal proceeding;

(h) Whether a probation agreement, plea in abeyance, or diversion agreement entered into in a criminal proceeding in the ten years preceding the application has been successfully completed;

(i) Whether any tax and child support arrearages have been paid; and

(j) Whether there has been good conduct on the part of the individual subsequent to the individual's offenses.

202.5.[2]3 Competency to Transact the Business of Residential Mortgage Loans. The Commission and the Division will consider information necessary to determine whether an applicant for a license or director, executive officer, manager, or a managing partner of an entity that has applied for a license, or anyone who occupies a position or performs functions similar to a director, executive officer, manager or managing partner of an entity that has applied for a license, meets the requirement of competency to transact the business of residential mortgage loans, which shall include the following:

(a) Past acts related to competency to transact the business of residential mortgage loans;

(b) Whether a civil judgment involving the business of mortgage loans has been entered against the individual, and whether the judgment has been fully satisfied, unless the judgment has been discharged in bankruptcy;

(c) The failure of any previous mortgage loan business in which the individual engaged, and the reasons for any failure;

(d) The individual's management and employment practices in any previous mortgage loan business, including whether or not employees were paid the amounts owed to them;

(e) The individual's training and education in mortgage lending, if any was available to the applicant;

(f) The individual's training, education, and experience in the mortgage loan business or in management of a mortgage loan business, if any was available to the individual;

(g) A lack of knowledge of the Utah Residential Mortgage Practices Act on the part of the individual;

(h) A history of disregard for licensing laws;

(i) A prior history of drug or alcohol dependency within the last five years, and any subsequent period of sobriety; and

(j) Whether the individual has demonstrated competency in business subsequent to any past incompetence by the individual in the mortgage loan business.

202.5.[3]4 Age. All mortgage officer and principal lending manager applicants shall be at least 18 years old.

 

KEY: residential mortgage loan origination

Date of Enactment or Last Substantive Amendment: [January 24, ]2007

Notice of Continuation: December 13, 2006

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