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Second Substitute H.B. 249

This document includes House Floor Amendments incorporated into the bill on Wed, Feb 26, 2003 at 3:33 PM by kholt. -->

Representative Brent D. Parker proposes the following substitute bill:


             1     
LICENSING MORTGAGE LOAN OFFICERS

             2     
2003 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Brent D. Parker

             5      This act modifies the Utah Residential Mortgage Practices Act to modify the definition of
             6      the business of residential mortgage loans, to require licensing, prelicensing
             7      examinations, and continuing education of persons engaging in the business of residential
             8      mortgage loans, and to modify other licensing requirements. The act modifies the
             9      membership of the Residential Mortgage Regulatory Commission. The act prohibits
             10      persons from acting in certain multiple capacities with respect to a residential mortgage
             11      loan. The act makes technical changes. This act takes effect January 1, 2004.
             12      This act affects sections of Utah Code Annotated 1953 as follows:
             13      AMENDS:
             14          61-2c-102, as last amended by Chapter 204, Laws of Utah 2002
             15          61-2c-103, as last amended by Chapter 204, Laws of Utah 2002
             16          61-2c-104, as last amended by Chapter 204, Laws of Utah 2002
             17          61-2c-106, as last amended by Chapter 204, Laws of Utah 2002
             18          61-2c-201, as last amended by Chapter 204, Laws of Utah 2002
             19          61-2c-202, as last amended by Chapter 204, Laws of Utah 2002
             20          61-2c-203, as last amended by Chapter 204, Laws of Utah 2002
             21          61-2c-204, as last amended by Chapter 204, Laws of Utah 2002
             22          61-2c-205, as last amended by Chapter 204, Laws of Utah 2002
             23          61-2c-301, as last amended by Chapter 204, Laws of Utah 2002
             24          61-2c-302, as last amended by Chapter 204, Laws of Utah 2002
             25          61-2c-401, as last amended by Chapter 204, Laws of Utah 2002



             26          61-2c-402, as last amended by Chapter 204, Laws of Utah 2002
             27      Be it enacted by the Legislature of the state of Utah:
             28          Section 1. Section 61-2c-102 is amended to read:
             29           61-2c-102. Definitions.
             30          As used in this chapter:
             31          (1) "Affiliate" means an individual or an entity that directly, or indirectly through one
             32      or more intermediaries, controls or is controlled by, or is under common control with, a
             33      specified individual or entity.
             34          (2) "Applicant" means an individual or entity applying for [registration] a license
             35      under this chapter.
             36          (3) (a) "Business of residential mortgage loans" means for compensation to:
             37          (i) make or originate a residential mortgage loan;
             38          (ii) directly or indirectly solicit, [process,] place, or negotiate a residential mortgage
             39      loan for another; or
             40          (iii) render services related to the origination[, processing,] or funding of a residential
             41      mortgage loan including:
             42          (A) taking applications; and
             43          [(B) obtaining verifications and appraisals; and]
             44          [(C)] (B) communicating with the borrower and lender.
             45          (b) "Business of residential mortgage loans" does not include the performance of
             46      clerical functions such as:
             47          (i) gathering information related to a residential mortgage loan on behalf of the
             48      prospective borrower or a person [registered] licensed under this chapter; or
             49          (ii) requesting or gathering information, word processing, sending correspondence, or
             50      assembling files by an individual who works under the instruction of a person [registered]
             51      licensed under this chapter.
             52          (4) "Closed-end" means a loan with a fixed amount borrowed and which does not
             53      permit additional borrowing secured by the same collateral.
             54          (5) "Commission" means the Residential Mortgage Regulatory Commission created in
             55      Section 61-2c-104 .
             56          (6) "Compensation" means anything of economic value that is paid, loaned, granted,


             57      given, donated, or transferred to an individual or entity for or in consideration of:
             58          (a) services;
             59          (b) personal or real property; or
             60          (c) other thing of value.
             61          (7) "Control" means the power, directly or indirectly, to:
             62          (a) direct or exercise a controlling influence over:
             63          (i) the management or policies of an entity; or
             64          (ii) the election of a majority of the directors, officers, managers, or managing partners
             65      of an entity;
             66          (b) vote 20% or more of any class of voting securities of an entity by an individual; or
             67          (c) vote more than 5% of any class of voting securities of an entity by another entity.
             68          (8) "Control person" means any individual or entity which directly manages or controls
             69      another entity's transaction of the business of residential mortgage loans secured by Utah
             70      dwellings.
             71          (9) "Depository institution" is as defined in Section 7-1-103 .
             72          (10) "Director" means the director of the division.
             73          (11) "Division" means the Division of Real Estate.
             74          (12) "Dwelling" means a residential structure attached to real property that contains
             75      one to four units including any of the following if used as a residence:
             76          (a) a condominium unit;
             77          (b) a cooperative unit;
             78          (c) a manufactured home; or
             79          (d) a house.
             80          (13) "Entity" means any corporation, limited liability company, partnership, company,
             81      association, joint venture, business trust, trust, or other organization.
             82          (14) "Executive director" means the executive director of the Department of
             83      Commerce.
             84          [(16)] (15) ["Registrant"] "Licensee" means an individual or entity [registered] licensed
             85      with the division under this chapter.
             86          [(15)] (16) "Record" means information that is:
             87          (a) prepared, owned, received, or retained by an individual or entity; and


             88          (b) (i) inscribed on a tangible medium; or
             89          (ii) (A) stored in an electronic or other medium; and
             90          (B) retrievable in perceivable form.
             91          (17) "Residential mortgage loan" means a closed-end, first mortgage loan or extension
             92      of credit, if:
             93          (a) the loan or extension of credit is secured by a:
             94          (i) mortgage;
             95          (ii) deed of trust; or
             96          (iii) lien interest; and
             97          (b) the mortgage, deed of trust, or lien interest described in Subsection (17)(a):
             98          (i) is on a dwelling located in the state; and
             99          (ii) created with the consent of the owner of the residential real property.
             100          (18) "State" means:
             101          (a) a state, territory, or possession of the United States;
             102          (b) the District of Columbia; or
             103          (c) the Commonwealth of Puerto Rico.
             104          Section 2. Section 61-2c-103 is amended to read:
             105           61-2c-103. Powers and duties of the division.
             106          (1) The division shall administer this chapter.
             107          (2) In addition to any power or duty expressly provided in this chapter, the division
             108      may:
             109          (a) receive and act on complaints including:
             110          (i) taking action designed to obtain voluntary compliance with this chapter; or
             111          (ii) commencing administrative or judicial proceedings on the division's own initiative;
             112          (b) establish programs for the education of consumers with respect to residential
             113      mortgage loans;
             114          (c) (i) make studies appropriate to effectuate the purposes and policies of this chapter;
             115      and
             116          (ii) make the results of the studies described in Subsection (2)(c)(i) available to the
             117      public; and
             118          (d) employ any necessary hearing examiners, investigators, clerks, and other employees


             119      and agents.
             120          (3) The division shall make rules for the administration of this chapter in accordance
             121      with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, including:
             122          (a) [registration] licensure procedures for individuals and entities required by this
             123      chapter to [register] obtain a license with the division;
             124          (b) proper handling of funds received by [registrants] licensees;
             125          (c) record-keeping requirements by [registrants; and] licensees; and
             126          (d) standards of conduct for [registrants.] licensees.
             127          (4) (a) The division shall make available to the public a list of the names and addresses
             128      of all [registrants] licensees.
             129          (b) The division may charge a fee established by the division in accordance with
             130      Section 63-38-3.2 for obtaining the list described in Subsection (4)(a).
             131          Section 3. Section 61-2c-104 is amended to read:
             132           61-2c-104. Residential Mortgage Regulatory Commission.
             133          (1) There is created within the division the Residential Mortgage Regulatory
             134      Commission consisting of:
             135          (a) the following members appointed by the executive director with the approval of the
             136      governor:
             137          (i) [two] three members having at least three years of experience in transacting the
             138      business of residential mortgage loans and who are currently licensed under this chapter; and
             139          (ii) [two members] one member from the general public; and
             140          (b) the commissioner of the Department of Financial Institutions or the commissioner's
             141      designee.
             142          (2) (a) Except as required by Subsection (2)(b), the executive director shall appoint
             143      each new member or reappointed member subject to appointment by the executive director to a
             144      four-year term ending June 30.
             145          (b) Notwithstanding the requirements of Subsection (2)(a), the executive director shall,
             146      at the time of appointment or reappointment, adjust the length of terms to ensure that the terms
             147      of commission members are staggered so that approximately half of the commission is
             148      appointed every two years.
             149          (c) If a vacancy occurs in the membership of the commission for any reason, the


             150      replacement shall be appointed for the unexpired term.
             151          (3) Members of the commission shall annually select one member to serve as chair.
             152          (4) (a) The commission shall meet at least quarterly.
             153          (b) The director may call a meeting in addition to the meetings required by Subsection
             154      (4)(a):
             155          (i) at the discretion of the director;
             156          (ii) at the request of the chair of the commission; or
             157          (iii) at the written request of three or more commission members.
             158          (5) (a) Three members of the commission constitute a quorum for the transaction of
             159      business.
             160          (b) The action of a majority of a quorum present is an action of the commission.
             161          (6) (a) (i) Members who are not government employees shall receive no compensation
             162      or benefits for their services, but may receive per diem and expenses incurred in the
             163      performance of the member's official duties at the rates established by the Division of Finance
             164      under Sections 63A-3-106 and 63A-3-107 .
             165          (ii) Members who are not government employees may decline to receive per diem and
             166      expenses for their service.
             167          (b) (i) State government officer and employee members who do not receive salary, per
             168      diem, or expenses from their agency for their service may receive per diem and expenses
             169      incurred in the performance of their official duties from the commission at the rates established
             170      by the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             171          (ii) State government officer and employee members may decline to receive per diem
             172      and expenses for their service.
             173          (7) The commission shall:
             174          (a) concur in the [registration] licensure or denial of [registration] licensure of
             175      individuals and entities under this chapter in accordance with Part 2, [Registration] Licensure;
             176          (b) take disciplinary action with the concurrence of the director in accordance with Part
             177      4, Enforcement; [and]
             178          (c) advise the division concerning matters related to the administration and
             179      enforcement of this chapter[.]; and
             180          (d) determine the requirements for:


             181          (i) the examination required under Section 61-2c-202 , covering at least:
             182          (A) the fundamentals of the English language;
             183          (B) arithmetic;
             184          (C) the provisions of this chapter;
             185          (D) rules adopted by the division;
             186          (E) basic residential mortgage principles and practices; and
             187          (F) any other aspect of Utah law the commission determines is appropriate; and
             188          (ii) the continuing education requirements under Section 61-2c-205 , including:
             189          (A) the appropriate number of hours of required continuing education; and
             190          (B) the subject matter of courses the division may accept for continuing education
             191      purposes.
             192          (8) The commission may appoint a committee to make recommendations to the
             193      commission concerning approval of continuing education courses.
             194          (9) The commission shall make the examination and continuing education
             195      requirements described in this Section available through the Internet when reasonably
             196      practicable.
             197          Section 4. Section 61-2c-106 is amended to read:
             198           61-2c-106. Addresses provided the division.
             199          (1) In providing an address to the division under this chapter, a physical location or
             200      street address shall be provided.
             201          (2) An individual or entity [registered] licensed under this chapter will be considered to
             202      have received any notification that is mailed to the last address furnished to the division by the
             203      individual, or by a control person of the entity, [registered] licensed under this chapter.
             204          Section 5. Section 61-2c-201 is amended to read:
             205     
Part 2. Licensure

             206           61-2c-201. Licensure required of individuals and entities engaged in the business
             207      of residential mortgage loans.
             208          (1) Unless exempt from this chapter under Section 61-2c-105 , an individual or entity
             209      may not transact the business of residential mortgage loans, as defined in Section 61-2c-102 ,
             210      without [registering] obtaining a license under this chapter.
             211          (2) For purposes of this chapter, an individual or entity transacts business in this state


             212      if:
             213          (a) (i) the individual or entity engages in an act that constitutes the business of
             214      residential mortgage loans; and
             215          (ii) (A) the act described in Subsection (2)(a)(i) is directed to or received in this state;
             216      and
             217          (B) the real property that is the subject of the act described in Subsection (2)(a)(i) is
             218      located in this state; or
             219          (b) a representation is made by the individual or entity that the individual or entity
             220      transacts the business of residential mortgage loans in this state.
             221          (3) Unless otherwise exempted under this chapter, [registration] licensure under this
             222      chapter is required of both:
             223          (a) the individual who directly transacts the business of residential mortgage loans; and
             224          (b) if the individual transacts business as an employee or agent of an entity or
             225      individual, the entity or individual for whom the employee or agent transacts the business of
             226      residential mortgage loans.
             226a           h (4) AN INDIVIDUAL LICENSED UNDER THIS CHAPTER MAY NOT ENGAGE IN THE
             226b      BUSINESS OF RESIDENTIAL MORTGAGE LOANS ON BEHALF OF MORE THAN ONE ENTITY AT THE
             226c      SAME TIME. h
             227          Section 6. Section 61-2c-202 is amended to read:
             228           61-2c-202. Licensure procedures.
             229          (1) To apply for [registration] licensure under this chapter an individual or entity shall:
             230          (a) submit to the division a [registration] licensure statement that:
             231          (i) lists any name under which the individual or entity will transact business in this
             232      state;
             233          (ii) lists the address of the principal business location of the applicant;
             234          (iii) if the applicant is an entity, lists the control persons of the applicant;
             235          (iv) demonstrates to the satisfaction of the division with the concurrence of the
             236      commission that the applicant meets the qualifications listed in Section 61-2c-203 ; and
             237          (v) includes any information required by the division by rule;
             238          (b) pay to the division:
             239          (i) an application fee established by the division in accordance with Section 63-38-3.2 ;
             240      and
             241          (ii) the reasonable expenses incurred in processing the application for [registration]


             242      licensure including the costs incurred by the division under Subsection (4);


             243          (c) meet the requirements under Section 61-2c-204 for:
             244          (i) obtaining a surety bond;
             245          (ii) depositing assets; or
             246          (iii) providing a letter of credit; and
             247          (d) comply with Subsection (4).
             248          (2) The division, with the concurrence of the commission, shall grant a [registration]
             249      license to an applicant if the division finds that the applicant:
             250          (a) meets the qualifications of Sections 61-2c-203 and 61-2c-204 ; and
             251          (b) complies with this section.
             252          (3) In accordance with Title 63, Chapter 46b, Administrative Procedures Act, an
             253      applicant who is denied [registration] licensure under this chapter may submit a request for
             254      agency review to the executive director within 30 days following the issuance of the order
             255      denying the [registration] licensure.
             256          (4) (a) (i) An individual applying for h [ registration ] A LICENSE h under this chapter and
             256a      any control
             257      person of the applicant shall:
             258          [(i)] (A) submit a fingerprint card in a form acceptable to the division at the time the
             259      h [ registration ] LICENSURE h statement is filed; [and]
             260          [(ii)] (B) consent to a fingerprint background check by:
             261          [(A)] (I) the Utah Bureau of Criminal Identification; and
             262          [(B)] (II) the Federal Bureau of Investigation[.]; and
             263          (C) provide proof using methods approved by the division of having successfully
             264      completed an examination approved by the commission under Section 61-2c-104 .
             265          (ii) Notwithstanding Subsection (4)(a)(i)(C), an individual who was registered with the
             266      division under this chapter prior to January 1, 2004 may engage in the business of residential
             267      mortgage loans until January 1, 2005 without having passed the examination described in
             268      Subsection (4)(a)(i)(c).
             269          (b) The division shall request the Department of Public Safety to complete a Federal
             270      Bureau of Investigation criminal background check for each applicant and each control person
             271      of an applicant through a national criminal history system.
             272          (c) The applicant shall pay the cost of:
             273          (i) the fingerprinting required by this section; and



             274          (ii) the background check required by this section.
             275          (d) (i) A [registration] license under this chapter is conditional pending completion of
             276      the criminal background check required by this Subsection (4).
             277          (ii) If a criminal background check discloses that an applicant or an applicant's control
             278      person failed to accurately disclose a criminal history, the [registration] license shall be
             279      immediately and automatically revoked.
             280          (iii) An individual or entity whose conditional [registration] license is revoked under
             281      Subsection (4)(d)(ii) may appeal the revocation in a hearing conducted:
             282          (A) after the revocation; and
             283          (B) in accordance with Title 63, Chapter 46b, Administrative Procedures Act.
             284          Section 7. Section 61-2c-203 is amended to read:
             285           61-2c-203. Qualifications for licensure.
             286          (1) To qualify for [registration] licensure under this chapter, an individual shall:
             287          (a) have good moral character and the competency to transact the business of
             288      residential mortgage loans;
             289          (b) not have been convicted of a felony or misdemeanor involving moral turpitude in
             290      the [five] ten years preceding the date the individual applies for [registration] a license, except
             291      as provided in Subsection (3);
             292          (c) not have had a license or registration suspended, revoked, surrendered, canceled, or
             293      denied in the five years preceding the date the individual applies for [registration,] licensure
             294      except as provided in Subsection (3), if:
             295          (i) the registration or license is issued by this state or another jurisdiction; and
             296          (ii) the suspension, revocation, surrender, cancellation, or denial is based on
             297      misconduct in a professional capacity that relates to good moral character or the competency to
             298      transact the business of residential mortgage loans.
             299          (2) To qualify for [registration] licensure under this chapter an entity may not have:
             300          (a) any of the following individuals in management who fails to meet the requirements
             301      of Subsection (1):
             302          (i) a manager or a managing partner;
             303          (ii) a director;
             304          (iii) an executive officer; or


             305          (iv) an individual occupying a position or performing functions similar to those
             306      described in Subsections (2)(a)(i) through (iii); and
             307          (b) a control person who fails to meet the requirements of Subsection (1).
             308          (3) If an individual or a control person of an entity fails to meet the requirements of
             309      Subsection (1)(b) or (c), but otherwise meets the qualifications for [registration] licensure, and
             310      provides evidence satisfactory to the division with the concurrence of the commission that the
             311      individual or control person has good moral character and the competency to transact the
             312      business of residential mortgage loans, notwithstanding the failure to meet the requirements of
             313      Subsection (1)(b) or (c) the division may permit that individual or entity to be [registered]
             314      licensed under this chapter.
             315          Section 8. Section 61-2c-204 is amended to read:
             316           61-2c-204. Requirements for bonding, letter of credit, or deposit of assets.
             317          (1) If an applicant is an individual, the applicant shall:
             318          (a) file with the division a surety bond:
             319          (i) that meets the requirements of Subsection (3); and
             320          (ii) in the amount not less than $10,000; or
             321          (b) demonstrate to the satisfaction of the division that:
             322          (i) the applicant is an employee or agent of an entity [registered] licensed under this
             323      chapter; and
             324          (ii) the acts of the applicant are covered by a surety bond filed with the division under
             325      Subsection (2) by the entity [registered] licensed under this chapter for which the applicant is
             326      an employee or agent.
             327          (2) If the applicant is an entity, the applicant shall file with the division a surety bond:
             328          (a) that meets the requirements of Subsection (4); and
             329          (b) in an amount not less than $25,000.
             330          (3) A surety bond filed under this section shall name as beneficiaries:
             331          (a) the state, for payment of costs incurred and charges made in connection with an
             332      enforcement action under Part 4, Enforcement, against the applicant including costs and
             333      charges relating to an examination or investigation; and
             334          (b) after all claims and charges of the state have been paid in full, any person who has a
             335      claim against the surety on the bond based on any default or violation of any duty or obligation


             336      of the applicant.
             337          (4) If an applicant is an entity, a surety bond filed under this section shall:
             338          (a) comply with Subsection (3); and
             339          (b) cover the acts of:
             340          (i) the entity [registered] licensed under this chapter;
             341          (ii) any control person of the entity [registered] licensed under this chapter; and
             342          (iii) any agent or employee of the entity [registered] licensed under this chapter.
             343          (5) If an individual [registered] licensed under this chapter does not file a surety bond
             344      under this section because at the time of applying for [registration] licensure that person met
             345      the requirements of Subsection (1)(b), the individual shall post a surety bond meeting the
             346      requirements of Subsections (1) and (3) by no later than 30 days from the day on which the
             347      person is not covered by a surety bond in accordance with Subsection (1)(b).
             348          (6) Notwithstanding the other provisions of this section, an applicant can comply with
             349      the requirements of this section, if the applicant deposits assets with or provides a letter of
             350      credit to the division:
             351          (a) in the amounts required for a surety bond; and
             352          (b) subject to the same surety conditions of Subsections (3) and (4).
             353          Section 9. Section 61-2c-205 is amended to read:
             354           61-2c-205. Term of licensure -- Renewal -- Reporting of changes.
             355          (1) (a) A [registration] license under this chapter is valid for a two-year period.
             356          (b) Notwithstanding Subsection (1)(a), the time period of a [registration] license may
             357      be extended or shortened by as much as one year to maintain or change a renewal cycle
             358      established by rule by the division.
             359          (2) To renew a [registration] license, no later than 30 days before the date the
             360      [registration] license expires, a [registrant] licensee shall:
             361          (a) file a [registration] licensure statement meeting the requirements of Section
             362      61-2c-202 ; [and]
             363          (b) pay a fee to the division established by the division in accordance with Section
             364      63-38-3.2 [.]; and
             365          (c) if the licensee is an individual, submit proof using forms approved by the division
             366      of having completed during the two years prior to application the continuing education required


             367      by the commission under Section 61-2c-104 .
             368          (3) (a) A [registrant] licensee under this chapter shall amend its [registration] licensure
             369      statement filed with the division within ten days of the date on which there is a change in:
             370          (i) a name under which the [registrant] licensee transacts the business of residential
             371      mortgage loans in this state;
             372          (ii) the location of the [registrant] licensee;
             373          (iii) the control persons of the [registrant] licensee; or
             374          (iv) any other information that is defined as material by rule made by the division.
             375          (b) Failure to notify the division of a change described in Subsection (3)(a) is separate
             376      grounds for disciplinary action against a [registrant] licensee.
             377          (4) A [registrant] licensee shall notify the division by sending the division a signed
             378      statement within ten business days of:
             379          (a) a conviction of any criminal offense;
             380          (b) filing a personal bankruptcy or bankruptcy of a business that transacts the business
             381      of residential mortgage loans; or
             382          (c) the suspension, revocation, surrender, cancellation, or denial of a professional
             383      license or professional registration of the [registrant] licensee, whether the license or
             384      registration is issued by this state or another jurisdiction.
             385          (5) (a) A license under this chapter expires if the licensee does not apply to renew the
             386      license on or before the expiration date of the license.
             387          (b) Within 30 calendar days after the expiration date, a licensee whose license has
             388      expired may apply to reinstate the expired license upon:
             389          (i) payment of a renewal fee and a late fee determined by the division under Section
             390      63-38-3.2 ; and
             391          (ii) providing proof using forms approved by the division of having completed the
             392      continuing education required by the commission under Section 61-2c-104 .
             393          (c) After the 30 calendar days described in Subsection (5)(b) and within six months
             394      after the expiration date, a licensee whose license has expired may apply to reinstate an expired
             395      license upon:
             396          (i) payment of a renewal fee and a late fee determined by the division under Section
             397      63-38-3.2 ;


             398          (ii) providing proof using forms approved by the division of having completed the
             399      continuing education required by the commission under Section 61-2c-104 ; and
             400          (iii) completing an additional 12 hours of continuing education approved by the
             401      commission under Section 61-2c-104 .
             402          (d) A licensee whose license has been expired for more than one year may apply to
             403      reinstate an expired license upon:
             404          (i) satisfying the requirements of Subsection (5)(c); and
             405          (ii) passing the examination approved by the commission under Section 61-2c-104 .
             406          Section 10. Section 61-2c-301 is amended to read:
             407           61-2c-301. Prohibited conduct -- Violations of the chapter.
             408          (1) An individual or entity transacting the business of residential mortgage loans in this
             409      state may not:
             410          (a) give or receive compensation or anything of value in exchange for a referral of
             411      residential mortgage loan business unless the compensation or thing of value is de minimis as
             412      defined by the division;
             413          (b) charge a fee in connection with a residential mortgage loan transaction:
             414          (i) that is excessive; or
             415          (ii) if the individual or entity does not comply with Section 70D-1-6 ;
             416          (c) give or receive compensation or anything of value in exchange for a referral of
             417      settlement or loan closing services related to a residential mortgage loan transaction;
             418          (d) make a false statement or representation for purposes of inducing a lender to extend
             419      credit as part of a residential mortgage loan transaction;
             420          (e) give or receive compensation or anything of value to influence the independent
             421      judgment of an appraiser in reaching a value conclusion in a residential mortgage loan
             422      transaction;
             423          (f) violate or not comply with:
             424          (i) this chapter;
             425          (ii) an order of the commission or division; or
             426          (iii) a rule made by the division;
             427          (g) fail to respond within the required time period to:
             428          (i) a notice or complaint of the division; or


             429          (ii) a request for information from the division;
             430          (h) make false representations to the division, including in a [registration] licensure
             431      statement;
             432          (i) for any residential mortgage loan transaction beginning on or after January 1, 2004,
             433      engage in the business of residential mortgage loans with respect to the transaction if the
             434      individual or entity also acts in any of the following capacities with respect to the same
             435      residential mortgage loan transaction:
             436          (i) appraiser;
             437          (ii) escrow agent;
             438          (iii) real estate agent; or
             439          (iii) general contractor;
             440          (j) order a title insurance report or hold a title insurance policy unless the individual or
             441      entity provides to the title insurer a copy of a valid, current license under this chapter.
             442          [(i)] (k) engage in unprofessional conduct as defined by rule; or
             443          [(j)] (l) engage in an act or omission in transacting the business of residential mortgage
             444      loans that constitutes dishonesty, fraud, or misrepresentation.
             445          (2) Whether or not the crime is related to the business of residential mortgage loans, it
             446      is a violation of this chapter for a [registrant] licensee or a control person of a [registrant]
             447      licensee to do any of the following with respect to a criminal offense which involves moral
             448      turpitude:
             449          (a) be convicted;
             450          (b) plead guilty or nolo contendere;
             451          (c) enter a plea in abeyance; or
             452          (d) be subjected to a criminal disposition similar to the ones described in Subsections
             453      (2)(a) through (c).
             454          Section 11. Section 61-2c-302 is amended to read:
             455           61-2c-302. Record requirements.
             456          (1) For the time period specified in Subsection (2), a [registrant] licensee shall make or
             457      possess any record required for that [registrant] licensee by a rule made by the division.
             458          (2) A [registrant] licensee shall maintain in its possession a record described in
             459      Subsection (1) until the later of four years from the last to occur of the following:


             460          (a) the final entry on a residential mortgage loan is made by that [registrant] licensee;
             461          (b) if the residential mortgage loan is serviced by the [registrant] licensee:
             462          (i) the residential mortgage loan is paid in full; or
             463          (ii) the [registrant] licensee ceases to service the residential mortgage loan; or
             464          (c) if the residential mortgage loan is not serviced by the [registrant] licensee, the
             465      residential mortgage loan is closed.
             466          Section 12. Section 61-2c-401 is amended to read:
             467           61-2c-401. Investigations -- Subpoena power of division.
             468          (1) The division may investigate or cause to be investigated the actions of:
             469          (a) a [registrant] licensee and the control persons of any [registrant] licensee;
             470          (b) an applicant for [registration] licensure under this chapter, and the control persons
             471      of any applicant; or
             472          (c) any individual or entity that transacts the business of residential mortgage loans
             473      within this state, and the control persons of any such entity.
             474          (2) In conducting investigations and adjudicative proceedings, the division may:
             475          (a) subpoena witnesses;
             476          (b) take evidence;
             477          (c) require by subpoena duces tecum the production of books, papers, contracts,
             478      records, other documents, or information considered relevant to an investigation; and
             479          (d) serve a subpoena by certified mail.
             480          (3) A failure to respond to a subpoena served by the division is considered as a separate
             481      violation of this chapter.
             482          Section 13. Section 61-2c-402 is amended to read:
             483           61-2c-402. Disciplinary action -- Reinstatement.
             484          (1) Subject to the requirements of this section, if an individual or entity required to be
             485      [registered] licensed under this chapter violates this chapter, the commission with the
             486      concurrence of the director, may:
             487          (a) impose a civil penalty against the individual or entity in an amount not to exceed
             488      [$500] $2,500 per violation;
             489          (b) do any of the following to a [registration] license under this chapter:
             490          (i) suspend;


             491          (ii) revoke;
             492          (iii) place on probation;
             493          (iv) deny renewal; or
             494          (v) deny reinstatement; or
             495          (c) do both Subsections (1)(a) and (b).
             496          (2) (a) Before the commission and the division may take an action described in
             497      Subsection (1), the division shall:
             498          (i) give notice to the individual or entity; and
             499          (ii) schedule an adjudicative proceeding.
             500          (b) If after the adjudicative proceeding scheduled under Subsection (2)(a), the
             501      commission and the director determine that an individual or entity required to be [registered]
             502      licensed under this [section] chapter has violated this chapter, the commission may take an
             503      action described in Subsection (1) by written order.
             504          (3) In accordance with Title 63, Chapter 46b, Administrative Procedures Act, an
             505      individual or entity against whom disciplinary action is taken under this section may seek
             506      review by the executive director of the disciplinary action.
             507          (4) If an individual or entity prevails in a judicial appeal and the court finds that the
             508      state action was undertaken without substantial justification, the court may award reasonable
             509      litigation expenses to that individual or entity as provided under Title 78, Chapter 27a, Small
             510      Business Equal Access to Justice Act.
             511          (5) (a) An order issued under this section takes effect 30 days after the service of the
             512      order unless otherwise provided in the order.
             513          (b) If an appeal of an order issued under this section is taken by an individual or entity,
             514      the division may stay enforcement of the commission's order in accordance with Section
             515      63-46b-18 .
             516          (6) If ordered by the court of competent jurisdiction, the division shall promptly take an
             517      action described in Subsection (1)(b) against a [registration] license granted under this chapter.
             518          (7) (a) If a [registration] license under this chapter is revoked, the individual or entity
             519      may apply to have the [registration] license reinstated by complying with the requirements of
             520      Section 61-2c-202 for [registration] licensure.
             521          (b) Notwithstanding Subsection (7)(a), if a [registration] license under this chapter is


             522      revoked, the individual or entity may not apply for reinstatement of the [registration] license
             523      sooner than five years after the date the [registration] license is revoked in accordance with this
             524      section.
             525          (c) If an individual or entity whose [registration] license has been revoked applies for
             526      reinstatement in accordance with Subsection (7)(b), the commission and the division may grant
             527      the application for reinstatement if they find that:
             528          (i) there has been good conduct on the part of the applicant subsequent to the events
             529      that led to the revocation, and that the subsequent good conduct outweighs the events which led
             530      to the revocation; and
             531          (ii) the interest of the public is not likely to be harmed by the granting of the
             532      [registration] license.
             533          Section 14. Effective date.
             534          This act takes effect on January 1, 2004.
             535          Section 15. Coordination clause.
             536          If this bill and H.B. 203, Residential Mortgage Regulatory Commission, both pass, it is
             537      the intent of the Legislature that the Office of Legislative Research and General Counsel, in
             538      preparing the Utah Code database for publication, shall replace the phrase "and are currently
             539      registered as a mortgage lender with the division" in Subsection 61-2c-104 (1)(a)(i) of H.B. 203
             540      with the phrase "and who are currently licensed under this chapter".


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