No. 30200 (Amendment): R162-204-1. Residential Mortgage Record Keeping Requirements

DAR File No.: 30200
Filed: 07/17/2007, 09:33
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this amendment is to include additional records in the list of records that must be maintained in a mortgage loan file and to specify who is required to maintain the records of a defunct entity.

Summary of the rule or change:

Notices of adverse action are added to the list of records that mortgage licensees are required to maintain in loan files. A new provision is also added specifying that it is the owners and directors of a defunct entity who are required to maintain the entity files and make them available to the Division of Real Estate instead of the Principal Lending Manager for the entity.

State statutory or constitutional authorization for this rule:

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

Anticipated cost or savings to:

the state budget:

None--Specifying additional forms that must be placed in a loan file by a licensed mortgage officer neither costs nor saves the state any money. It neither costs nor saves the state any money if it is the owners and directors of a defunct entity who are responsible to maintain loan files instead of the person who was the principal lending manager for the entity when it was in operation.

local governments:

None--Local governments do not act as mortgage brokers or mortgage loan officers. Therefore, the rules governing what is to be maintained in loan files and who is supposed to maintain the files have no impact on local government.

small businesses and persons other than businesses:

The only persons who are affected by the mortgage record keeping requirements are the mortgage licensees themselves. No cost or savings to mortgage licensees is expected as a result of requiring notices of adverse action to be kept in the mortgage loan file as opposed to somewhere else. The rule change on who keeps the records of a defunct entity should result in a savings to principal lending managers because they will not be required to maintain the mortgage loan files of a defunct entity once the entity has gone out of business and they are no longer its principal lending manager. The Division does not know how many defunct entities and their former principal lending managers will be affected by this rule and therefore cannot estimate the cost savings to the principal lending managers.

Compliance costs for affected persons:

Mortgage licensees will be required to keep in the loan file any notices of adverse action from the loan underwriter instead of keeping them in a separate place. There will be no additional cost incurred in connection with this requirement. The change in who keeps the records of a defunct entity will not cost the entity's former principal lending manager; it will actually save the principal lending manager money. When a licensed entity goes out of business, the loan files generally stay in the possession of the entity, so no increased cost for entities is predicted.

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

This rule filing adds to the list of records that must be maintained in loan files, and it clarifies that with respect to a defunct entity, the owners and directors of the entity are responsible to maintain the entity files and make them available to the Division of Real Estate. No fiscal impact to businesses is anticipated beyond those discussed in the rule summary. 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:

09/14/2007

This rule may become effective on:

09/22/2007

Authorized by:

Derek Miller, Director

RULE TEXT

R162. Commerce, Real Estate.

R162-204. Residential Mortgage Record Keeping Requirements.

R162-204-1. Residential Mortgage Record Keeping Requirements.

204.1.1 Entity Requirements. An entity licensed under the Utah Residential Mortgage Practices Act must maintain for the period set forth in Utah Code Section 61-2c-302 the following records:

(a) Application forms;

(b) Disclosure forms;

(c) Truth-in-Lending forms;

(d) Credit reports and the explanations therefor;

(e) Conversation logs;

(f) Verifications of employment, paycheck stubs, and tax returns;

(g) Proof of legal residency, if applicable;

(h) Appraisals, appraisal addenda, and records of communications between the appraiser and the registrant or lender;

(i) Underwriter denials;

(j) Notices of adverse action;

(k) Loan approval; and

[(k)](l) All other records required by underwriters involved with the transaction.

204.1.2. Principal Lending Manager Requirements. Except as provided in Subsection 204.1.2.1, [T]the principal lending manager of an entity shall be responsible to make the records set forth in Section 204.1.1 available to the Division as provided in Section 61-2c-302(3).

204.1.2.1. Defunct entity. If a licensed entity ceases doing business in Utah, the owners and directors of the entity are responsible to make the records set forth in Section 204.1.1 available to the Division instead of the principal lending manager(s) who were affiliated with the entity during the period of time for which the records are sought.

 

KEY: residential mortgage loan origination

Date of Enactment or Last Substantive Amendment: [April 5, 2006]2007

Notice of Continuation: December 13, 2006

Authorizing, and Implemented or Interpreted Law: 61-2c-302