H.B. 102

1

RESIDENTIAL MORTGAGE PRACTICES
2 AMENDMENTS
3 2004 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Eric K. Hutchings
6
7 LONG TITLE
8 General Description:
9 This bill modifies provisions of the Utah Residential Mortgage Practices Act related to
10 the scope of the act and prohibited conduct.
11 Highlighted Provisions:
12 This bill:
13 . applies the provisions of the Utah Residential Mortgage Practices Act to a state
14 chartered depository institution and its affiliates;
15 . prohibits an act that would constitute a violation of the federal Real Estate
16 Settlement Procedures Act of 1974; and
17 . makes technical changes.
18 Monies Appropriated in this Bill:
19 None
20 Other Special Clauses:
21 None
22 Utah Code Sections Affected:
23 AMENDS:
24 61-2c-105, as last amended by Chapters 159 and 204, Laws of Utah 2002
25 61-2c-301, as last amended by Chapter 243, Laws of Utah 2003
26
27 Be it enacted by the Legislature of the state of Utah:

28 Section 1. Section 61-2c-105 is amended to read:
29 61-2c-105. Scope of chapter.
30 (1) (a) This chapter applies to a closed-end residential mortgage loan secured by a first
31 lien or equivalent security interest on a dwelling.
32 (b) This chapter does not apply to a transaction covered by Title 70C, Utah Consumer
33 Credit Code.
34 (2) The following are exempt from this chapter:
35 (a) the federal government;
36 (b) a state;
37 (c) a political subdivision of a state;
38 (d) an agency of or entity created by a governmental entity described in Subsections
39 (2)(a) through (c) including:
40 (i) the Utah Housing Corporation created in Title 9, Chapter 4, Part 9, Utah Housing
41 Corporation Act;
42 (ii) the Federal National Mortgage Corporation;
43 (iii) the Federal Home Loan Mortgage Corporation;
44 (iv) the Federal Deposit Insurance Corporation;
45 (v) the Resolution Trust Corporation;
46 (vi) the Government National Mortgage Association;
47 (vii) the Federal Housing Administration;
48 (viii) the National Credit Union Administration;
49 (ix) the Farmers Home Administration; and
50 (x) the Department of Veterans Affairs;
51 (e) a federally chartered depository institution;
52 (f) an affiliate of a federally chartered depository institution;
53 (g) an employee or agent of an entity described in Subsections (2)(a) through (f) when
54 that person acts on behalf of the entity described in Subsections (2)(a) through (f);
55 (h) an individual or entity:
56 (i) that makes a loan:
57 (A) secured by an interest in real property;
58 (B) with the individual's or the entity's own money; and

59 (C) for the individual's or entity's own investment; and
60 (ii) that does not engage in the business of making loans secured by an interest in real
61 property;
62 (i) an individual or entity who receives a mortgage, deed of trust, or lien interest on real
63 property if the individual or entity:
64 (i) is the seller of real property; and
65 (ii) receives the mortgage, deed of trust, or lien interest on real property as security for
66 a separate money obligation;
67 (j) an individual or entity who receives a mortgage, deed of trust, or lien interest on real
68 property if:
69 (i) the individual or entity receives the mortgage, deed of trust, or lien interest as
70 security for an obligation payable on an installment or deferred payment basis;
71 (ii) the obligation described in Subsection (2)(j)(i) arises from an individual or entity
72 providing materials or services used in the improvement of the real property that is the subject
73 of the mortgage, deed of trust, or lien interest; and
74 (iii) the mortgage, deed of trust, or lien interest was created without the consent of the
75 owner of the real property that is the subject of the mortgage, deed of trust, or lien interest;
76 (k) a nonprofit corporation that:
77 (i) is exempt from paying federal income taxes;
78 (ii) is certified by the United States Small Business Administration as a small business
79 investment company;
80 (iii) is organized to promote economic development in this state; and
81 (iv) has as its primary activity providing financing for business expansion;
82 (l) a court appointed fiduciary; or
83 (m) an attorney admitted to practice law in this state:
84 (i) if the attorney is not principally engaged in the business of negotiating residential
85 mortgage loans; and
86 (ii) when the attorney renders services in the course of the attorney's practice as an
87 attorney.
88 (3) (a) Notwithstanding Subsection (2)(m), an attorney exempt from this chapter may
89 not engage in conduct described in Section 61-2c-301 when transacting business of residential

90 mortgage loans.
91 (b) If an attorney exempt from this chapter violates Subsection (3)(a), the attorney:
92 (i) is not subject to enforcement by the division under Part 4, Enforcement; and
93 (ii) is subject to disciplinary action generally applicable to an attorney admitted to
94 practice law in this state.
95 (c) If the division receives a complaint alleging an attorney exempt from this chapter is
96 in violation of Subsection (3)(a), the division shall forward the complaint to the Utah State Bar
97 for disciplinary action.
98 Section 2. Section 61-2c-301 is amended to read:
99 61-2c-301. Prohibited conduct -- Violations of the chapter.
100 (1) An individual or entity transacting the business of residential mortgage loans in this
101 state may not:
102 (a) give or receive compensation or anything of value in exchange for a referral of
103 residential mortgage loan business unless the compensation or thing of value is de minimis as
104 defined by the division;
105 (b) charge a fee in connection with a residential mortgage loan transaction:
106 (i) that is excessive; or
107 (ii) if the individual or entity does not comply with Section 70D-1-6 ;
108 (c) give or receive compensation or anything of value in exchange for a referral of
109 settlement or loan closing services related to a residential mortgage loan transaction;
110 (d) make a false statement or representation for purposes of inducing a lender to extend
111 credit as part of a residential mortgage loan transaction;
112 (e) give or receive compensation or anything of value to influence the independent
113 judgment of an appraiser in reaching a value conclusion in a residential mortgage loan
114 transaction;
115 (f) violate or not comply with:
116 (i) this chapter;
117 (ii) an order of the commission or division; or
118 (iii) a rule made by the division;
119 (g) fail to respond within the required time period to:
120 (i) a notice or complaint of the division; or

121 (ii) a request for information from the division;
122 (h) make false representations to the division, including in a licensure statement;
123 (i) for any residential mortgage loan transaction beginning on or after January 1, 2004,
124 engage in the business of residential mortgage loans with respect to the transaction if the
125 individual or entity also acts in any of the following capacities with respect to the same
126 residential mortgage loan transaction:
127 (i) appraiser;
128 (ii) escrow agent;
129 (iii) real estate agent; or
130 (iv) general contractor;
131 (j) order a title insurance report or hold a title insurance policy unless the individual or
132 entity provides to the title insurer a copy of a valid, current license under this chapter;
133 (k) commit an act with respect to a residential mortgage loan, regardless of whether the
134 residential mortgage loan is a federally related mortgage loan as defined in 12 U.S.C. Sec.
135 2602, that would be a violation of the Real Estate Settlement Procedures Act of 1974, 12
136 U.S.C. Sec. 2601 et seq., if the residential mortgage loan were a federally related mortgage loan
137 as defined in 12 U.S.C. Sec. 2602;
138 [(k)] (l) engage in unprofessional conduct as defined by rule; or
139 [(l)] (m) engage in an act or omission in transacting the business of residential
140 mortgage loans that constitutes dishonesty, fraud, or misrepresentation.
141 (2) Whether or not the crime is related to the business of residential mortgage loans, it
142 is a violation of this chapter for a licensee or a control person of a licensee to do any of the
143 following with respect to a criminal offense which involves moral turpitude:
144 (a) be convicted;
145 (b) plead guilty or nolo contendere;
146 (c) enter a plea in abeyance; or
147 (d) be subjected to a criminal disposition similar to the ones described in Subsections
148 (2)(a) through (c).

Legislative Review Note
as of 1-20-04 11:39 AM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel