No. 28903 (Amendment): R162-205-1. Residential Mortgage Unprofessional Conduct

DAR File No.: 28903
Filed: 07/28/2006, 09:37
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose for the rule change is to give notice to mortgage licensees of the acts that they are prohibited by the real estate licensing law from performing unless they hold real estate licenses.

 

Summary of the rule or change:

Mortgage officers are prohibited from assisting buyers or sellers of real estate to determine what the sales price of a property should be, negotiating the terms of a real estate transaction, or performing any other duties that require a real estate sales agent or broker license under Title 61, Chapter 2.

 

State statutory or constitutional authorization for this rule:

Subsection 61-2c-103(3)(d)

 

Anticipated cost or savings to:

the state budget:

None--State government does not act in the capacity of a residential mortgage loan officer, and therefore, the rules that regulate the conduct of loan officers do not impact State government.

 

local governments:

None--Local governments do not act as loan officers regulated by the Division of Real Estate and therefore, are not impacted by these rules.

 

other persons:

The only other persons who would be affected by this rule are those few mortgage loan officers who are performing acts that they should not be performing without a real estate license, and the buyers or sellers of real estate who may be currently benefiting from the illegal services that those mortgage loan officers are providing to them. The mortgage officers who are illegally acting as real estate agents may lose money on signs or other advertising materials that they will be explicitly prohibited from using by this rule. Buyers and sellers may have to pay other properly licensed professionals to perform services for them that mortgage loan officers may have been illegally performing for them without a charge, other than the mortgage officer's commission on the loan on the transaction. However, any cost to these persons is attributable to the real estate licensing statute, Title 61, Chapter 2, and not to this rule that merely provides guidance to mortgage loan officers about what they can and cannot do under the provisions of the real estate licensing statute.

 

Compliance costs for affected persons:

It will not cost mortgage loan officers anything to comply with this rule. They may lose money on advertising materials they already have purchased that they will not be able to use. However, the loan officers should not have been engaging in activity that requires a real estate license, so any investment they made in order to engage in that activity was at their own risk.

 

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

This rule filing clarifies for the mortgage industry certain practices that require a license as a real estate agent which constitute unprofessional conduct by a mortgage officer. Because it is a clarification of existing standards, no fiscal impact to businesses is anticipated as a result of this 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 801-530-6761, by FAX at 801-530-6749, 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:

09/14/2006

 

This rule may become effective on:

09/22/2006

 

Authorized by:

Derek Miller, Director

 

 

RULE TEXT

R162. Commerce, Real Estate.

R162-205. Residential Mortgage Unprofessional Conduct.

R162-205-1. Residential Mortgage Unprofessional Conduct.

Unprofessional conduct includes the following acts:

(a) conducting the business of residential mortgage lending under any name other than a name under which the entity or individual conducting such business is licensed with the Division;

(b) failing to remit to the appropriate third parties appraisal fees, inspection fees, credit reporting fees, insurance premiums, or similar fees which have been collected from a borrower;

(c) charging for services not actually performed;

(d) charging a borrower more for third party services than the actual cost of those services;

(e) filling out or altering any Real Estate Purchase Contract or other contract for the sale of real property, or any addenda thereto;

(f) making any alteration to any appraisal of real property;[ and]

(g) in the case of a principal lending manager, failing to exercise reasonable supervision over the activities of any unlicensed staff of the entity[.]; and

(h) unless acting as a real estate licensee and not as a mortgage licensee:

(i) providing a buyer or seller of real estate with comparative market analysis or otherwise assisting a buyer or seller to determine the offering price or sales price of real estate;

(ii) representing or assisting a buyer or seller of real estate in negotiations concerning a possible sale of real estate, except that a mortgage licensee may advise a borrower about the consequences that the terms of a purchase agreement may have on the terms and availability of various mortgage products;

(iii) performing any other acts that require a real estate license under Title 61, Chapter 2;

(iv) advertising the sale of real estate by use of any advertising medium, except that a mortgage licensee may:

(1) advertise real estate owned by the licensee as a "for sale by owner";

(2) provide advertising to a property owner who has not signed an agency agreement with a real estate licensee and is selling the real estate "for sale by owner", so long as the advertising provides clear and distinguishable identification, contact information, function and responsibility of both the property owner and the mortgage licensee; or

(3) advertise in conjunction with a real estate brokerage, so long as the advertising provides clear and distinguishable identification, contact information, function and responsibility of both the real estate licensee and the mortgage licensee.

 

KEY: residential mortgage loan origination

Date of Enactment or Last Substantive Amendment: [April 5, ]2006

Authorizing, and Implemented or Interpreted Law: 61-2c-301(1)(k)