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First Substitute S.B. 178

This document includes Senate Committee Amendments incorporated into the bill on Fri, Feb 20, 2004 at 3:38 PM by rday. --> This document includes House Floor Amendments incorporated into the bill on Tue, Mar 2, 2004 at 6:45 PM by chopkin. -->

Senator Michael G. Waddoups proposes the following substitute bill:


             1     
MORTGAGE BROKER AMENDMENTS

             2     
2004 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Michael G. Waddoups

             5     

             6      LONG TITLE
             7      General Description:
             8          This bill modifies the Utah Residential Mortgage Practices Act.
             9      Highlighted Provisions:
             10          This bill:
             11          .    defines terms;
             12          .    enacts provisions related to records inspections conducted by the Division of Real
             13      Estate;
             14          .    modifies the duties of the Residential Mortgage Regulatory Commission;
             15          .    modifies the scope of the Utah Residential Mortgage Practices Act;
             16          .    allows an individual exempt from the chapter to voluntarily obtain a license;
             17          .    exempts certain individuals with an ownership interest in a licensed entity from the
             18      requirements of the chapter;
             19          .    establishes license categories of mortgage officer and principal lending manager,
             20      and enacts provisions related to those license categories;
             21          .    modifies certain provisions related to obtaining and revoking a license;
             22          .    enacts prelicensing education requirements;
             23          .    repeals provisions related to requirements for bonding, letter of credit, and deposit
             24      of assets;
             25          .    makes certain actions of the Residential Mortgage Regulatory Commission subject



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             26
     to the concurrence of the division;
             27          .    modifies the scope of the Utah Residential Mortgage Practices Act;
             28          .    allows reciprocal licensure for applicants licensed in another state;
             29          .    enacts provisions related to activation and inactivation of a license;
             30          .    modifies certain operational restrictions;
             31          .    modifies the persons subject to an investigation by the Division of Real Estate;
             32          .    enacts provisions related to record retention requirements;
             33          .    enacts provisions governing civil actions;
             34          .    provides for the establishment and operation of the Residential Mortgage Loan
             35      Education, Research, and Recovery Fund to pay certain claims under this chapter;
             36          .    provides uses for excess monies in the Residential Mortgage Loan Education,
             37      Research, and Recovery Fund, including:
             38              .    providing educational courses and materials;
             39              .    contracting for research projects; and
             40              .    funding salaries and training expenses for certain Division of Real Estate staff;
             41      and
             42          .    makes technical changes.
             43      Monies Appropriated in this Bill:
             44          None
             45      Other Special Clauses:
             46          This bill provides an effective date.
             47      Utah Code Sections Affected:
             48      AMENDS:
             49          61-2c-102, as last amended by Chapter 243, Laws of Utah 2003
             50          61-2c-103, as last amended by Chapter 243, Laws of Utah 2003
             51          61-2c-104 (Superseded 07/01/04), as last amended by Chapter 243, Laws of Utah 2003
             52          61-2c-104 (Effective 07/01/04), as last amended by Chapters 145 and 243, Laws of
             53      Utah 2003
             54          61-2c-105, as last amended by Chapters 159 and 204, Laws of Utah 2002
             55          61-2c-106, as last amended by Chapter 243, Laws of Utah 2003
             56          61-2c-201, as last amended by Chapter 243, Laws of Utah 2003



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             57
         61-2c-202, as last amended by Chapter 243, Laws of Utah 2003
             58          61-2c-203, as last amended by Chapter 243, Laws of Utah 2003
             59          61-2c-205, as last amended by Chapter 243, Laws of Utah 2003
             60          61-2c-301, as last amended by Chapter 243, Laws of Utah 2003
             61          61-2c-302, as last amended by Chapter 243, Laws of Utah 2003
             62          61-2c-401, as last amended by Chapter 243, Laws of Utah 2003
             63          61-2c-402, as last amended by Chapter 243, Laws of Utah 2003
             64          61-2c-403, as last amended by Chapter 204, Laws of Utah 2002
             65          70D-1-10, as last amended by Chapter 204, Laws of Utah 2002
             66      ENACTS:
             67          61-2c-206, Utah Code Annotated 1953
             68          61-2c-207, Utah Code Annotated 1953
             69          61-2c-208, Utah Code Annotated 1953
             70          61-2c-404, Utah Code Annotated 1953
             71          61-2c-501, Utah Code Annotated 1953
             72          61-2c-502, Utah Code Annotated 1953
             73          61-2c-503, Utah Code Annotated 1953
             74          61-2c-504, Utah Code Annotated 1953
             75          61-2c-505, Utah Code Annotated 1953
             76          61-2c-506, Utah Code Annotated 1953
             77          61-2c-507, Utah Code Annotated 1953
             78          61-2c-508, Utah Code Annotated 1953
             79          61-2c-509, Utah Code Annotated 1953
             80          61-2c-510, Utah Code Annotated 1953
             81      REPEALS:
             82          61-2c-204, as last amended by Chapter 243, Laws of Utah 2003
             83     

             84      Be it enacted by the Legislature of the state of Utah:
             85          Section 1. Section 61-2c-102 is amended to read:
             86           61-2c-102. Definitions.
             87          As used in this chapter:



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             88
         (1) "Affiliate" means an individual or an entity that directly, or indirectly through one
             89      or more intermediaries, controls or is controlled by, or is under common control with, a
             90      specified individual or entity.
             91          (2) "Applicant" means an individual or entity applying for a license under this chapter.
             92          (3) "Associate lending manager" means a person who:
             93          (a) has qualified under this chapter as a principal lending manager; and
             94          (b) works by or on behalf of another principal lending manager in transacting the
             95      business of residential mortgage loans.
             96          (4) "Branch office" means a licensed entity's office:
             97          (a) for the transaction of the business of residential mortgage loans regulated under this
             98      chapter; and
             99          (b) other than the main office of the licensed entity.
             100          [(3)] (5) (a) "Business of residential mortgage loans" means for compensation to:
             101          (i) make or originate a residential mortgage loan;
             102          (ii) directly or indirectly solicit, place, or negotiate a residential mortgage loan for
             103      another; or
             104          (iii) render services related to the origination or funding of a residential mortgage loan
             105      including:
             106          (A) taking applications; and
             107          (B) communicating with the borrower and lender.
             108          (b) "Business of residential mortgage loans" does not include:
             109          (i) the performance of clerical functions such as:
             110          [(i)] (A) gathering information related to a residential mortgage loan on behalf of the
             111      prospective borrower or a person licensed under this chapter; or
             112          [(ii)] (B) requesting or gathering information, word processing, sending
             113      correspondence, or assembling files by an individual who works under the instruction of a
             114      person licensed under this chapter[.]; or
             115          (ii) ownership of an entity that engages in the business of residential mortgage loans if
             116      the owner does not personally perform the acts listed in Subsection (5)(a).
             117          [(4)] (6) "Closed-end" means a loan with a fixed amount borrowed and which does not
             118      permit additional borrowing secured by the same collateral.



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             119
         [(5)] (7) "Commission" means the Residential Mortgage Regulatory Commission
             120      created in Section 61-2c-104 .
             121          [(6)] (8) "Compensation" means anything of economic value that is paid, loaned,
             122      granted, given, donated, or transferred to an individual or entity for or in consideration of:
             123          (a) services;
             124          (b) personal or real property; or
             125          (c) other thing of value.
             126          [(7) "Control" means the power, directly or indirectly, to:]
             127          [(a) direct or exercise a controlling influence over:]
             128          [(i) the management or policies of an entity; or]
             129          [(ii) the election of a majority of the directors, officers, managers, or managing partners
             130      of an entity;]
             131          [(b) vote 20% or more of any class of voting securities of an entity by an individual; or]
             132          [(c) vote more than 5% of any class of voting securities of an entity by another entity.]
             133          [(8)] (9) "Control person" means [any] an individual [or] who is designated by an
             134      entity [which] as the individual who directly manages or controls [another] the entity's
             135      transaction of the business of residential mortgage loans secured by Utah dwellings.
             136          [(9)] (10) "Depository institution" is as defined in Section 7-1-103 .
             137          [(10)] (11) "Director" means the director of the division.
             138          [(11)] (12) "Division" means the Division of Real Estate.
             139          [(12)] (13) "Dwelling" means a residential structure attached to real property that
             140      contains one to four units including any of the following if used as a residence:
             141          (a) a condominium unit;
             142          (b) a cooperative unit;
             143          (c) a manufactured home; or
             144          (d) a house.
             145          [(13)] (14) "Entity" means any corporation, limited liability company, partnership,
             146      company, association, joint venture, business trust, trust, or other organization.
             147          [(14)] (15) "Executive director" means the executive director of the Department of
             148      Commerce.
             149          (16) "Inactive status" means a dormant status into which an unexpired license is placed



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             150
     when the holder of the license is not currently engaging in the business of residential mortgage
             151      loans.
             152          (17) "Lending manager" or "principal lending manager" means a person licensed as a
             153      principal lending manager under Section 61-2c-206 .
             154          [(15)] (18) "Licensee" means an individual or entity licensed with the division under
             155      this chapter.
             156          (19) (a) Except as provided in Subsection (19)(b), "mortgage officer" means an
             157      individual who is licensed with the division to transact the business of residential mortgage
             158      loans through a principal lending manager.
             159          (b) "Mortgage officer" does not include a principal lending manager.
             160          [(16)] (20) "Record" means information that is:
             161          (a) prepared, owned, received, or retained by an individual or entity; and
             162          (b) (i) inscribed on a tangible medium; or
             163          (ii) (A) stored in an electronic or other medium; and
             164          (B) retrievable in perceivable form.
             165          [(17)] (21) "Residential mortgage loan" means a closed-end, first mortgage loan or
             166      extension of credit, if:
             167          (a) the loan or extension of credit is secured by a:
             168          (i) mortgage;
             169          (ii) deed of trust; or
             170          (iii) lien interest; and
             171          (b) the mortgage, deed of trust, or lien interest described in Subsection [(17)] (21)(a):
             172          (i) is on a dwelling located in the state; and
             173          (ii) created with the consent of the owner of the residential real property.
             174          [(18)] (22) "State" means:
             175          (a) a state, territory, or possession of the United States;
             176          (b) the District of Columbia; or
             177          (c) the Commonwealth of Puerto Rico.
             178          Section 2. Section 61-2c-103 is amended to read:
             179           61-2c-103. Powers and duties of the division.
             180          (1) The division shall administer this chapter.



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             181
         (2) In addition to any power or duty expressly provided in this chapter, the division
             182      may:
             183          (a) receive and act on complaints including:
             184          (i) taking action designed to obtain voluntary compliance with this chapter; or
             185          (ii) commencing administrative or judicial proceedings on the division's own initiative;
             186          (b) establish programs for the education of consumers with respect to residential
             187      mortgage loans;
             188          (c) (i) make studies appropriate to effectuate the purposes and policies of this chapter;
             189      and
             190          (ii) make the results of the studies described in Subsection (2)(c)(i) available to the
             191      public; [and]
             192          (d) S [ (i) ] s visit and investigate an entity licensed under this chapter, regardless of whether
             193      the entity is located in Utah; and
             194           S [ (ii) assess investigation fees established under Section 63-38-3.2 to a licensee for the
             195      reasonable costs, including reasonable travel costs, incurred by the division in conducting a
             196      records inspection;
] s

             197          [(d)] (e) employ any necessary hearing examiners, investigators, clerks, and other
             198      employees and agents.
             199          (3) The division shall make rules for the administration of this chapter in accordance
             200      with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, including:
             201          (a) licensure procedures for:
             202          (i) individuals and entities required by this chapter to obtain a license with the division;
             203      and
             204          (ii) the establishment of a branch office by an entity;
             205          (b) proper handling of funds received by licensees;
             206          (c) record-keeping requirements by licensees; and
             207          (d) standards of conduct for licensees.
             208          (4) (a) The division shall make available to the public a list of the names and addresses
             209      of all licensees.
             210          (b) The division may charge a fee established by the division in accordance with
             211      Section 63-38-3.2 for obtaining the list described in Subsection (4)(a).



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             212
         (5) The division shall:
             213          (a) certify education providers who offer:
             214          (i) prelicensing education to candidates for licensure under this chapter; or
             215          (ii) continuing education to individuals licensed under this chapter; and
             216          (b) make available to the public, licensees, and candidates for licensure a list of the
             217      names and addresses of all education providers certified under this Subsection (5).
             218          (6) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             219      division shall make rules establishing:
             220          (a) certification criteria and procedures for providers of prelicensing education and
             221      continuing education; and
             222          (b) standards of conduct for certified education providers.
             223          Section 3. Section 61-2c-104 (Superseded 07/01/04) is amended to read:
             224           61-2c-104 (Superseded 07/01/04). Residential Mortgage Regulatory Commission.
             225          (1) There is created within the division the Residential Mortgage Regulatory
             226      Commission consisting of:
             227          (a) the following members appointed by the executive director with the approval of the
             228      governor:
             229          (i) three members having at least three years of experience in transacting the business of
             230      residential mortgage loans and who are currently licensed under this chapter; and
             231          (ii) one member from the general public; and
             232          (b) the commissioner of the Department of Financial Institutions or the commissioner's
             233      designee.
             234          (2) (a) Except as required by Subsection (2)(b), the executive director shall appoint
             235      each new member or reappointed member subject to appointment by the executive director to a
             236      four-year term ending June 30.
             237          (b) Notwithstanding the requirements of Subsection (2)(a), the executive director shall,
             238      at the time of appointment or reappointment, adjust the length of terms to ensure that the terms
             239      of commission members are staggered so that approximately half of the commission is
             240      appointed every two years.
             241          (c) If a vacancy occurs in the membership of the commission for any reason, the
             242      replacement shall be appointed for the unexpired term.



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             243
         (3) Members of the commission shall annually select one member to serve as chair.
             244          (4) (a) The commission shall meet at least quarterly.
             245          (b) The director may call a meeting in addition to the meetings required by Subsection
             246      (4)(a):
             247          (i) at the discretion of the director;
             248          (ii) at the request of the chair of the commission; or
             249          (iii) at the written request of three or more commission members.
             250          (5) (a) Three members of the commission constitute a quorum for the transaction of
             251      business.
             252          (b) The action of a majority of a quorum present is an action of the commission.
             253          (6) (a) (i) Members who are not government employees shall receive no compensation
             254      or benefits for their services, but may receive per diem and expenses incurred in the
             255      performance of the member's official duties at the rates established by the Division of Finance
             256      under Sections 63A-3-106 and 63A-3-107 .
             257          (ii) Members who are not government employees may decline to receive per diem and
             258      expenses for their service.
             259          (b) (i) State government officer and employee members who do not receive salary, per
             260      diem, or expenses from their agency for their service may receive per diem and expenses
             261      incurred in the performance of their official duties from the commission at the rates established
             262      by the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             263          (ii) State government officer and employee members may decline to receive per diem
             264      and expenses for their service.
             265          (7) The commission shall:
             266          (a) concur in the licensure or denial of licensure of individuals and entities under this
             267      chapter in accordance with Part 2, Licensure;
             268          (b) take disciplinary action with the concurrence of the director in accordance with Part
             269      4, Enforcement;
             270          (c) advise the division concerning matters related to the administration and
             271      enforcement of this chapter; and
             272          (d) with the concurrence of the division, determine the requirements for:
             273          (i) the examination required under Section 61-2c-202 , covering at least:



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             274
         (A) the fundamentals of the English language;
             275          (B) arithmetic;
             276          (C) the provisions of this chapter;
             277          (D) rules adopted by the division;
             278          (E) basic residential mortgage principles and practices; and
             279          (F) any other aspect of Utah law the commission determines is appropriate; [and]
             280          (ii) with the concurrence of the division, the continuing education requirements under
             281      Section 61-2c-205 , including:
             282          (A) except as provided in Subsection 61-2c-206 (2)(c) S AND SUBSECTION
             282a      61-2c-202(4)(a)(i)(C) s , the appropriate number of hours
             283      of required prelicensing education and continuing education; and
             284          (B) the subject matter of courses the division may accept for continuing education
             285      purposes[.];
             286          (iii) with the concurrence of the division, the prelicensing education required under
             287      Sections 61-2c-202 and 61-2c-206 ; and
             288          (iv) the examination required under Section 61-2c-206 covering:
             289          (A) advanced residential mortgage principles and practices; and
             290          (B) other aspects of Utah law the commission, with the concurrence of the division,
             291      determines appropriate.
             292          (8) The commission may appoint a committee to make recommendations to the
             293      commission concerning approval of prelicensing and continuing education courses.
             294          (9) The commission and the division shall make the examination and prelicensing and
             295      continuing education requirements described in this section available through the Internet or
             296      other distance education methods approved by the commission and division when reasonably
             297      practicable.
             298          (10) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             299      the commission shall make rules establishing procedures under which a licensee may be
             300      exempted from continuing education requirements:
             301          (a) for a period not to exceed four years; and
             302          (b) upon a finding of reasonable cause.
             303          Section 4. Section 61-2c-104 (Effective 07/01/04) is amended to read:
             304           61-2c-104 (Effective 07/01/04). Residential Mortgage Regulatory Commission.



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             305
         (1) There is created within the division the Residential Mortgage Regulatory
             306      Commission consisting of:
             307          (a) the following members appointed by the executive director with the approval of the
             308      governor:
             309          (i) three members having at least three years of experience in transacting the business of
             310      residential mortgage loans and who are currently licensed under this chapter; and
             311          (ii) one member from the general public; and
             312          (b) the commissioner of the Department of Financial Institutions or the commissioner's
             313      designee.
             314          (2) (a) Except as required by Subsection (2)(b), the executive director shall appoint
             315      each new member or reappointed member subject to appointment by the executive director to a
             316      four-year term ending June 30.
             317          (b) Notwithstanding the requirements of Subsection (2)(a), the executive director shall,
             318      at the time of appointment or reappointment, adjust the length of terms to ensure that the terms
             319      of commission members are staggered so that approximately half of the commission is
             320      appointed every two years.
             321          (c) If a vacancy occurs in the membership of the commission for any reason, the
             322      replacement shall be appointed for the unexpired term.
             323          (3) Members of the commission shall annually select one member to serve as chair.
             324          (4) (a) The commission shall meet at least quarterly.
             325          (b) The director may call a meeting in addition to the meetings required by Subsection
             326      (4)(a):
             327          (i) at the discretion of the director;
             328          (ii) at the request of the chair of the commission; or
             329          (iii) at the written request of three or more commission members.
             330          (5) (a) Three members of the commission constitute a quorum for the transaction of
             331      business.
             332          (b) The action of a majority of a quorum present is an action of the commission.
             333          (6) (a) (i) Members who are not government employees shall receive no compensation
             334      or benefits for their services, but may receive per diem and expenses incurred in the
             335      performance of the member's official duties at the rates established by the Division of Finance



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             336
     under Sections 63A-3-106 and 63A-3-107 .
             337          (ii) Members who are not government employees may decline to receive per diem and
             338      expenses for their service.
             339          (b) (i) State government officer and employee members who do not receive salary, per
             340      diem, or expenses from their agency for their service may receive per diem and expenses
             341      incurred in the performance of their official duties from the commission at the rates established
             342      by the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             343          (ii) State government officer and employee members may decline to receive per diem
             344      and expenses for their service.
             345          (7) The commission shall:
             346          (a) concur in the licensure or denial of licensure of individuals and entities under this
             347      chapter in accordance with Part 2, Licensure;
             348          (b) take disciplinary action with the concurrence of the director in accordance with Part
             349      4, Enforcement;
             350          (c) advise the division concerning matters related to the administration and
             351      enforcement of this chapter; and
             352          (d) with the concurrence of the division, determine the requirements for:
             353          (i) the examination required under Section 61-2c-202 , covering at least:
             354          (A) the fundamentals of the English language;
             355          (B) arithmetic;
             356          (C) the provisions of this chapter;
             357          (D) rules adopted by the division;
             358          (E) basic residential mortgage principles and practices; and
             359          (F) any other aspect of Utah law the commission determines is appropriate; [and]
             360          (ii) with the concurrence of the division, the continuing education requirements under
             361      Section 61-2c-205 , including:
             362          (A) except as provided in Subsection 61-2c-206 (2)(c), the appropriate number of hours
             363      of prelicensing education and required continuing education; and
             364          (B) the subject matter of courses the division may accept for continuing education
             365      purposes[.];
             366          (iii) with the concurrence of the division, the prelicensing education required under



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             367
     Sections 61-2c-202 and 61-2c-206 H INCLUDING ON LINE EDUCATION OR DISTANCE LEARNING
             367a      OPTIONS h ; and
             368          (iv) the examination required under Section 61-2c-206 covering:
             369          (A) advanced residential mortgage principles and practices; and
             370          (B) other aspects of Utah law the commission, with the concurrence of the division,
             371      determines appropriate.
             372          (8) The commission may appoint a committee to make recommendations to the
             373      commission concerning approval of prelicensing education and continuing education courses.
             374          (9) The commission and the division shall make the examination and prelicensing
             375      education and continuing education requirements described in this section available through
             376      the Internet or other distance education methods approved by the commission and division
             377      when reasonably practicable.
             378          (10) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             379      the commission shall make rules establishing procedures under which a licensee may be
             380      exempted from continuing education requirements:
             381          (a) for a period not to exceed four years; and
             382          (b) upon a finding of reasonable cause.
             383          Section 5. Section 61-2c-105 is amended to read:
             384           61-2c-105. Scope of chapter.
             385          (1) (a) This chapter applies to a closed-end residential mortgage loan secured by a first
             386      lien or equivalent security interest on a one to four unit dwelling.
             387          (b) This chapter does not apply to a transaction covered by Title 70C, Utah Consumer
             388      Credit Code.
             389          (2) The following are exempt from this chapter:
             390          (a) the federal government;
             391          (b) a state;
             392          (c) a political subdivision of a state;
             393          (d) an agency of or entity created by a governmental entity described in Subsections
             394      (2)(a) through (c) including:
             395          (i) the Utah Housing Corporation created in Title 9, Chapter 4, Part 9, Utah Housing
             396      Corporation Act;
             397          (ii) the Federal National Mortgage Corporation;



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             398
         (iii) the Federal Home Loan Mortgage Corporation;
             399          (iv) the Federal Deposit Insurance Corporation;
             400          (v) the Resolution Trust Corporation;
             401          (vi) the Government National Mortgage Association;
             402          (vii) the Federal Housing Administration;
             403          (viii) the National Credit Union Administration;
             404          (ix) the Farmers Home Administration; and
             405          (x) the Department of Veterans Affairs;
             406          (e) a depository institution;
             407          (f) an affiliate of a depository institution;
             408          (g) an employee or agent of an entity described in Subsections (2)(a) through (f) when
             409      that person acts on behalf of the entity described in Subsections (2)(a) through (f);
             410          (h) an individual or entity:
             411          (i) that makes a loan:
             412          (A) secured by an interest in real property;
             413          (B) with the individual's or the entity's own money; and
             414          (C) for the individual's or entity's own investment; and
             415          (ii) that does not engage in the business of making loans secured by an interest in real
             416      property;
             417          (i) an individual or entity who receives a mortgage, deed of trust, or lien interest on real
             418      property if the individual or entity:
             419          (i) is the seller of real property; and
             420          (ii) receives the mortgage, deed of trust, or lien interest on real property as security for
             421      a separate money obligation;
             422          (j) an individual or entity who receives a mortgage, deed of trust, or lien interest on real
             423      property if:
             424          (i) the individual or entity receives the mortgage, deed of trust, or lien interest as
             425      security for an obligation payable on an installment or deferred payment basis;
             426          (ii) the obligation described in Subsection (2)(j)(i) arises from an individual or entity
             427      providing materials or services used in the improvement of the real property that is the subject
             428      of the mortgage, deed of trust, or lien interest; and



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             429
         (iii) the mortgage, deed of trust, or lien interest was created without the consent of the
             430      owner of the real property that is the subject of the mortgage, deed of trust, or lien interest;
             431          (k) a nonprofit corporation that:
             432          (i) is exempt from paying federal income taxes;
             433          (ii) is certified by the United States Small Business Administration as a small business
             434      investment company;
             435          (iii) is organized to promote economic development in this state; and
             436          (iv) has as its primary activity providing financing for business expansion;
             437          (l) a court appointed fiduciary; or
             438          (m) an attorney admitted to practice law in this state:
             439          (i) if the attorney is not principally engaged in the business of negotiating residential
             440      mortgage loans; and
             441          (ii) when the attorney renders services in the course of the attorney's practice as an
             442      attorney.
             443          (3) (a) Notwithstanding Subsection (2)(m), an attorney exempt from this chapter may
             444      not engage in conduct described in Section 61-2c-301 when transacting business of residential
             445      mortgage loans.
             446          (b) If an attorney exempt from this chapter violates Subsection (3)(a), the attorney:
             447          (i) is not subject to enforcement by the division under Part 4, Enforcement; and
             448          (ii) is subject to disciplinary action generally applicable to an attorney admitted to
             449      practice law in this state.
             450          (c) If the division receives a complaint alleging an attorney exempt from this chapter is
             451      in violation of Subsection (3)(a), the division shall forward the complaint to the Utah State Bar
             452      for disciplinary action.
             453          (4) (a) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             454      the division shall, by rule, determine a date, on or after December 31, 2004, after which an
             455      individual who is exempt under Subsection (2) may voluntarily obtain a license pursuant to
             456      Subsection (4)(b).
             457          (b) (i) After the date described in Subsection (4)(a), an individual who is exempt under
             458      Subsection (2) may voluntarily obtain a license under this chapter by complying with Part 2,
             459      Licensure.



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             460
         (ii) An individual who voluntarily obtains a license pursuant to this Subsection (4)(b)
             461      shall comply with all the provisions of this chapter.
             462          Section 6. Section 61-2c-106 is amended to read:
             463           61-2c-106. Addresses provided the division.
             464          (1) In providing an address to the division under this chapter, a physical location or
             465      street address shall be provided.
             466          (2) An individual or entity licensed under this chapter will be considered to have
             467      received any notification that is mailed to the last address furnished to the division by the
             468      individual, or by [a control person] the principal lending manager of the entity, licensed under
             469      this chapter.
             470          Section 7. Section 61-2c-201 is amended to read:
             471           61-2c-201. Licensure required of individuals and entities engaged in the business
             472      of residential mortgage loans -- Mortgage officer -- Principal lending manager.
             473          (1) Unless exempt from this chapter under Section 61-2c-105 , an individual or entity
             474      may not transact the business of residential mortgage loans, as defined in Section 61-2c-102 ,
             475      without obtaining a license under this chapter.
             476          (2) For purposes of this chapter, an individual or entity transacts business in this state
             477      if:
             478          (a) (i) the individual or entity engages in an act that constitutes the business of
             479      residential mortgage loans; and
             480          (ii) (A) the act described in Subsection (2)(a)(i) is directed to or received in this state;
             481      and
             482          (B) the real property that is the subject of the act described in Subsection (2)(a)(i) is
             483      located in this state; or
             484          (b) a representation is made by the individual or entity that the individual or entity
             485      transacts the business of residential mortgage loans in this state.
             486          (3) An individual who has an ownership interest in an entity required to be licensed
             487      under this chapter is not required to obtain an individual license under this chapter unless the
             488      individual transacts the business of residential mortgage loans.
             489          [(3)] (4) Unless otherwise exempted under this chapter, licensure under this chapter is
             490      required of both:



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             491
         (a) the individual who directly transacts the business of residential mortgage loans; and
             492          (b) if the individual transacts business as an employee or agent of an entity or
             493      individual, the entity or individual for whom the employee or agent transacts the business of
             494      residential mortgage loans.
             495           (5) (a) On or after January 1, S [2005] 2006 s , a license issued under this chapter to an individual
             496      who has not obtained a license as a principal lending manager automatically converts to a
             497      mortgage officer license.
             498          (b) A mortgage officer license issued pursuant to Subsection (5)(a) shall be placed on
             499      inactive status until the holder of the license has submitted to the division the forms required to
             500      activate the license with a principal lending manager.
             501          [(4)] (6) (a) An individual licensed under this chapter may not engage in the business
             502      of residential mortgage loans on behalf of more than one entity at the same time.
             503          (b) This Subsection (6) does not restrict the number of:
             504          (i) different lenders an individual or entity may use as a funding source for residential
             505      mortgage loans; or
             506          (ii) entities in which an individual may have an ownership interest, regardless of
             507      whether the entities are:
             508          (A) licensed under this chapter; or
             509          (B) exempt under Section 61-2c-105 .
             510          (7) An individual licensed under this chapter may not transact the business of
             511      residential mortgage loans for the following at the same time:
             512          (a) an entity licensed under this chapter; and
             513          (b) an entity that is exempt from licensure under Section 61-2c-105 .
             514          (8) On or after January 1, S [ 2005 ] 2006 s , except as provided under Title 16, Chapter 11,
             515      Professional Corporation Act or under Title 48, Chapter 2c, Utah Revised Limited Liability
             516      Company Act, a mortgage officer may not receive consideration for transacting the business of
             517      residential mortgage loans from any person or entity except the principal lending manager with
             518      whom the mortgage officer is licensed.
             519          (9) On or after January 1, S [ 2005 ] 2006 s , a mortgage officer shall conduct all business of
             520      residential mortgage loans:
             521          (a) through the principal lending manager with which the individual is licensed;



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             522
         (b) in the business name under which the principal lending manager is authorized by
             523      the division to do business.
             524          (10) (a) (i) If an individual who is authorized by this chapter to transact the business of
             525      residential mortgage loans as an individual transacts the business of residential mortgage loans
             526      under an assumed business name, the individual shall:
             527          (A) register the assumed business name with the division; and
             528          (B) furnish to the division proof that the assumed business name has been filed with
             529      the Division of Corporations and Commercial Code pursuant to Title 42, Chapter 2,
             530      Conducting Business Under Assumed Name.
             531          (ii) This Subsection (10)(a) does not apply to an individual who transacts the business
             532      of residential mortgage loans as an employee or agent of another individual or entity.
             533          (b) The division may charge a fee established in accordance with Section 63-38-3.2 for
             534      registering an assumed name pursuant to this Subsection (10).
             535          (11) (a) A licensee whose license is in inactive status may not transact the business of
             536      residential mortgage loans.
             537          (b) On or after January 1, S [ 2005 ] 2006 s , a mortgage officer whose license has been
             537a      placed in
             538      inactive status may not transact the business of residential mortgage loans until the mortgage
             539      officer has licensed with a principal lending manager by following the procedures established
             540      by the division by rule made in accordance with Title 63, Chapter 46a, Utah Administrative
             541      Rulemaking Act, including submission of all required forms and payment of all required
             542      activation fees.
             543          (12) (a) On or after May 3, 2004 and before January 1, S [ 2005 ] 2006 s , if a licensed entity
             544      terminates its control person, or if the control person of a licensed entity resigns, dies, or
             545      becomes unable to act as control person due to disability, the entity shall cease all business of
             546      residential mortgage loans until the entity has submitted all forms and fees to the division that
             547      are required to affiliate another control person with the licensed entity.
             548          (b) On or after January 1, S [ 2005 ] 2006 s , if a licensed entity terminates its principal lending
             549      manager, or if the principal lending manager of a licensed entity resigns, dies, or becomes
             550      unable to act as a principal lending manager due to disability, the entity may not transact the
             551      business of residential mortgage loans until the entity has submitted all forms and fees to the
             552      division that are required to affiliate another principal lending manager with the entity.



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             553
         Section 8. Section 61-2c-202 is amended to read:
             554           61-2c-202. Licensure procedures.
             555          (1) To apply for licensure under this chapter an [individual or entity] applicant shall:
             556          (a) submit to the division a licensure statement that:
             557          (i) lists any name under which the individual or entity will transact business in this
             558      state;
             559          (ii) lists the address of the principal business location of the applicant;
             560           (iii) on or after May 3, 2004 and before January 1, S [2005] 2006 s , if the applicant is an entity[,]:
             561          (A) lists the control [persons] person of the applicant; and
             562          (B) contains the signature of the control person;
             563          (iv) on or after January 1, S [ 2005 ] 2006 s , if the applicant is an entity:
             564          (A) lists the principal lending manager of the entity; and
             565          (B) contains the signature of the principal lending manager;
             566          [(iv)] (v) demonstrates to the satisfaction of the division with the concurrence of the
             567      commission that the applicant meets the qualifications listed in Section 61-2c-203 ; [and]
             568          (vi) if the applicant is an entity, lists:
             569          (A) all jurisdictions in which the entity is registered, licensed, or otherwise regulated in
             570      the business of residential mortgage loans; and
             571          (B) the history of any disciplinary action or adverse administrative action taken against
             572      the entity by any regulatory agency within the ten years preceding the application; and
             573          [(v)] (vii) includes any information required by the division by rule;
             574          (b) pay to the division:
             575          (i) an application fee established by the division in accordance with Section 63-38-3.2 ;
             576      and
             577          (ii) the reasonable expenses incurred in processing the application for licensure
             578      including the costs incurred by the division under Subsection (4); and
             579          [(c) meet the requirements under Section 61-2c-204 for:]
             580          [(i) obtaining a surety bond;]
             581          [(ii) depositing assets; or]
             582          [(iii) providing a letter of credit; and]
             583          [(d)] (c) comply with Subsection (4).



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             584
         (2) The division, with the concurrence of the commission, shall grant a license to an
             585      applicant if the division finds that the applicant:
             586          (a) meets the qualifications of [Sections] Section 61-2c-203 [and 61-2c-204 ]; and
             587          (b) complies with this section.
             588          (3) In accordance with Title 63, Chapter 46b, Administrative Procedures Act, an
             589      applicant who is denied licensure under this chapter may submit a request for agency review to
             590      the executive director within 30 days following the issuance of the order denying the licensure.
             591          (4) (a) (i) An individual applying for a license under this chapter and any control
             592      person of the applicant shall:
             593          (A) submit a fingerprint card in a form acceptable to the division at the time the
             594      licensure statement is filed;
             595          (B) consent to a fingerprint background check by:
             596          (I) the Utah Bureau of Criminal Identification; and
             597          (II) the Federal Bureau of Investigation; [and]
             598          (C) on or after January 1, 2005, provide proof using methods approved by the division
             599      of having successfully completed S [ the number of ] 20 s hours of approved prelicensing education
             600      required by the commission under Section 61-2c-104 ; and
             601          [(C)] (D) provide proof using methods approved by the division of having successfully
             602      [completed] passed an examination approved by the commission under Section 61-2c-104 .
             603          (ii) Notwithstanding [Subsection] Subsections (4)(a)(i)(C) and (4)(a)(i)(D), an
             604      individual who was registered with the division under this chapter prior to January 1, 2004 may
             605      engage in the business of residential mortgage loans until January 1, 2005 [without having
             606      passed the examination described in Subsection (4)(a)(i)(C).] without having:
             607          (A) completed the prelicensing education described in Subsection (4)(a)(i)(C); and
             608          (B) passed the examination described in Subsection (4)(a)(i)(D).
             609          (b) The division shall request the Department of Public Safety to complete a Federal
             610      Bureau of Investigation criminal background check for each applicant and each control person
             611      of an applicant through a national criminal history system.
             612          (c) The applicant shall pay the cost of:
             613          (i) the fingerprinting required by this section; and
             614          (ii) the background check required by this section.



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             615
         (d) (i) A license under this chapter is conditional pending completion of the criminal
             616      background check required by this Subsection (4).
             617          (ii) If a criminal background check discloses that an applicant or an applicant's control
             618      person failed to accurately disclose a criminal history, the license shall be immediately and
             619      automatically revoked.
             620          (iii) An individual or entity whose conditional license is revoked under Subsection
             621      (4)(d)(ii) may appeal the revocation in a hearing conducted:
             622          (A) after the revocation; and
             623          (B) in accordance with Title 63, Chapter 46b, Administrative Procedures Act.
             624          (iv) Relief from a revocation may be granted only if:
             625          (A) the criminal history upon which the division based the revocation:
             626          (I) did not occur; or
             627          (II) was the criminal history of another person;
             628          (B) (I) the revocation was based on a failure to accurately disclose a criminal history;
             629      and
             630          (II) the applicant had a reasonable good faith belief at the time of application that there
             631      was no criminal history to be disclosed; or
             632          (C) the division failed to follow the prescribed procedure for the revocation.
             633          Section 9. Section 61-2c-203 is amended to read:
             634           61-2c-203. Qualifications for licensure.
             635          (1) To qualify for licensure under this chapter, an individual [shall]:
             636          (a) shall have good moral character and the competency to transact the business of
             637      residential mortgage loans;
             638          (b) shall demonstrate honesty, integrity, and truthfulness;
             639          [(b)] (c) may not have been convicted of a felony or misdemeanor involving moral
             640      turpitude in the [ten] five years preceding the date the individual applies for a license, except as
             641      provided in Subsection (3);
             642          [(c)] (d) may not have had a license or registration suspended, revoked, surrendered,
             643      canceled, or denied in the five years preceding the date the individual applies for licensure
             644      except as provided in Subsection (3), if:
             645          (i) the registration or license is issued by this state or another jurisdiction; and



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             646
         (ii) the suspension, revocation, surrender, probation, fine, cancellation, or denial is
             647      based on misconduct in a professional capacity that relates to [good] moral character, honesty,
             648      integrity, truthfulness, or the competency to transact the business of residential mortgage
             649      loans[.];
             650          (e) except as provided in Subsection (3), may not have been the subject of a bar by the
             651      Securities and Exchange Commission, the New York Stock Exchange, or the National
             652      Association of Securities Dealers within the five years preceding the date the individual applies
             653      for registration; and
             654          (f) may not have had any temporary or permanent injunction entered against the
             655      individual:
             656          (i) by a court or licensing agency; and
             657          (ii) based on:
             658          (A) conduct or a practice involving the business of residential mortgage loans; or
             659          (B) conduct involving fraud, misrepresentation, or deceit.
             660          (2) To qualify for licensure under this chapter an entity may not have:
             661          (a) any of the following individuals in management who fails to meet the requirements
             662      of Subsection (1):
             663          (i) a manager or a managing partner;
             664          (ii) a director;
             665          (iii) an executive officer; or
             666          (iv) an individual occupying a position or performing functions similar to those
             667      described in Subsections (2)(a)(i) through (iii); [and] or
             668          [(b) a control person who fails to meet the requirements of Subsection (1).]
             669          (b) (i) before January 1, S [ 2005 ] 2006 s , a control person who fails to meet the
             669a      requirements of
             670      Subsection (1); or
             671          (ii) on or after January 1, S [ 2005 ] 2006 s , a principal lending manager who fails to meet the
             672      requirements of Subsection (1).
             673          (3) [If] Notwithstanding the failure to meet the requirements of Subsections (1)(c)
             674      through (f), the division may permit an individual or [a control person of an] entity to be
             675      licensed under this chapter if the individual applicant or a person listed in Subsection (2):
             676          (a) fails to meet the requirements of [Subsection (1)(b) or (c), but] Subsections (1)(c)



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             677
     through (f);
             678          (b) otherwise meets the qualifications for licensure[,]; and
             679          (c) provides evidence satisfactory to the division with the concurrence of the
             680      commission that the individual applicant or [control] person [has] described in Subsection (2):
             681          (i) is of good moral character [and];
             682          (ii) is honest;
             683          (iii) has integrity;
             684          (iv) is truthful; and
             685          (v) has the competency to transact the business of residential mortgage loans[,
             686      notwithstanding the failure to meet the requirements of Subsection (1)(b) or (c) the division
             687      may permit that individual or entity to be licensed under this chapter].
             688          Section 10. Section 61-2c-205 is amended to read:
             689           61-2c-205. Term of licensure -- Renewal -- Reporting of changes.
             690          (1) (a) A license under this chapter is valid for a two-year period.
             691          (b) Notwithstanding Subsection (1)(a), the time period of a license may be extended or
             692      shortened by as much as one year to maintain or change a renewal cycle established by rule by
             693      the division.
             694          (2) To renew a license, no later than [30 days before] the date the license expires, a
             695      licensee shall:
             696          (a) file a licensure statement meeting the requirements of Section 61-2c-202 ;
             697          (b) pay a fee to the division established by the division in accordance with Section
             698      63-38-3.2 ; and
             699          (c) if the licensee is an individual and the individual's license is in active status at the
             700      time of application for renewal, submit proof using forms approved by the division of having
             701      completed during the two years prior to application the continuing education required by the
             702      commission under Section 61-2c-104 .
             703          (3) (a) A licensee under this chapter shall amend its licensure statement filed with the
             704      division within ten days of the date on which there is a change in:
             705          (i) a name under which the licensee transacts the business of residential mortgage loans
             706      in this state;
             707          (ii) (A) if the licensee is an entity, the business location of the licensee; or



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             708
         (B) if the licensee is an individual, the home and business addresses of the individual;
             709          (iii) (A) on or after May 3, 2004 and before January 1, S [ 2005 ] 2006 s , the control [persons]
             710      person of the licensee; or
             711          (B) on or after January 1, S [ 2005 ] 2006 s , the principal lending manager of the entity; or
             712          (iv) any other information that is defined as material by rule made by the division.
             713          (b) Failure to notify the division of a change described in Subsection (3)(a) is separate
             714      grounds for disciplinary action against a licensee.
             715          (4) A licensee shall notify the division by sending the division a signed statement
             716      within ten business days of:
             717          (a) (i) a conviction of any criminal offense;
             718          (ii) the entry of a plea in abeyance to any criminal offense; or
             719          (iii) the potential resolution of any criminal case by:
             720          (A) a diversion agreement; or
             721          (B) any other agreement under which criminal charges are held in suspense for a period
             722      of time;
             723          (b) filing a personal bankruptcy or bankruptcy of a business that transacts the business
             724      of residential mortgage loans; [or]
             725          (c) the suspension, revocation, surrender, cancellation, or denial of a professional
             726      license or professional registration of the licensee, whether the license or registration is issued
             727      by this state or another jurisdiction[.]; or
             728          (d) the entry of a cease and desist order or a temporary or permanent injunction:
             729          (i) against the licensee by a court or licensing agency; and
             730          (ii) based on:
             731          (A) conduct or a practice involving the business of residential mortgage loans; or
             732          (B) conduct involving fraud, misrepresentation, or deceit.
             733          (5) (a) A license under this chapter expires if the licensee does not apply to renew the
             734      license on or before the expiration date of the license.
             735          (b) Within 30 calendar days after the expiration date, a licensee whose license has
             736      expired may apply to reinstate the expired license upon:
             737          (i) payment of a renewal fee and a late fee determined by the division under Section
             738      63-38-3.2 ; and



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             739
         (ii) if the licensee is an individual and is applying to reinstate a license to active status,
             740      providing proof using forms approved by the division of having completed, during the two
             741      years prior to application, the continuing education required by the commission under Section
             742      61-2c-104 .
             743          (c) After the 30 calendar days described in Subsection (5)(b) and within six months
             744      after the expiration date, a licensee whose license has expired may apply to reinstate an expired
             745      license upon:
             746          (i) payment of a renewal fee and a late fee determined by the division under Section
             747      63-38-3.2 ;
             748          (ii) if the licensee is an individual and is applying to reinstate a license to active status,
             749      providing proof using forms approved by the division of having completed, during the two
             750      years prior to application, the continuing education required by the commission under Section
             751      61-2c-104 ; and
             752          (iii) in addition to the continuing education required for a timely renewal, completing
             753      an additional 12 hours of continuing education approved by the commission under Section
             754      61-2c-104 .
             755          (d) A licensee whose license has been expired for more than [one year may apply to
             756      reinstate an expired license upon:] six months shall be relicensed as prescribed for an original
             757      application under Section 61-2c-202 .
             758          [(i) satisfying the requirements of Subsection (5)(c); and]
             759          [(ii) passing the examination approved by the commission under Section 61-2c-104 .]
             760          Section 11. Section 61-2c-206 is enacted to read:
             761          61-2c-206. Lending manager licenses.
             762           S [ (1) On or after January 1, 2005 and before January 1, 2006, to qualify as a principal
             763      lending manager under this chapter, an individual shall, in addition to meeting the standards in
             764      Section 61-2c-203 :
             765          (a) submit an application on a form approved by the division;
             766          (b) pay fees determined by the division under Section 63-38-3.2 ; and
             767          (c) if the individual is not licensed under this chapter at the time of application, submit
             768      to the criminal background check required by Subsection 61-2c-202 (4).
             769          (2)
] (1) s
Except as provided in Subsection (3), on or after S [ January 1, 2006 ] SEPTEMBER
             769a      1, 2005 s , to qualify as a



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             770
     principal lending manager under this chapter, an individual shall, in addition to meeting the
             771      standards in Section 61-2c-203 :
             772          (a) submit an application on a form approved by the division;
             773          (b) pay fees determined by the division under Section 63-38-3.2 ;
             774          (c) submit proof of having successfully completed S [ 80 ] 40 s hours of prelicensing
             774a      education
             775      approved by the commission under Section 61-2c-104 ;
             776          (d) submit proof of having successfully completed the principal lending manager
             777      examination approved by the commission under Section 61-2c-104 ;
             778          (e) submit proof on forms approved by the division of three years of full-time active
             779      experience as a mortgage officer, or its equivalent as approved by the commission; and
             780          (f) if the individual is not licensed under this chapter at the time of application, submit
             781      to the background check required by Subsection 61-2c-202 (4).
             782           S [ (3) ] (2) s (a) Notwithstanding Subsection (2), an individual described in Subsection (3)(b)
             783      may qualify as a principal lending manager without:
             784          (i) meeting the requirements of Subsection (2)(c); and
             785          (ii) completing the portions of the principal lending manager examination described in
             786      Subsection (3)(d) that:
             787          (A) relate to federal law; and
             788          (B) do not relate to Utah law.
             789          (b) An individual may qualify as a principal lending manager pursuant to Subsection
             790      (3)(a) if the individual:
             791          (i) submits to the division an affidavit that the individual has five years of experience
             792      in the business of residential mortgage loans;
             793          (ii) establishes that the individual's experience described in Subsection (3)(a)(i) was
             794      under requirements substantially equivalent to the licensing requirements of this chapter; and
             795          (iii) provides any other information required by the division by rule under Subsection
             796      (3)(c).
             797          (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             798      division shall define the information an individual shall provide to the division pursuant to
             799      Subsection (3)(b).
             800           S [ (4) On or after January 1, 2006, the principal lending manager license of an individual ] s



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             801
     S [ who has not submitted proof to the division of successful completion of the education,
             802      examination, and experience requirements of Subsection (2) shall be automatically inactivated
             803      by the division until the individual provides proof of having successfully completed the
             804      education, examination, and experience requirements of Subsection (2).
             805          (5)
] (3) s
A principal lending manager may not engage in the business of residential
             806      mortgage loans on behalf of more than one entity at the same time.
             807          Section 12. Section 61-2c-207 is enacted to read:
             808          61-2c-207. Reciprocal licensure.
             809          (1) The division may enter into a reciprocity agreement with another state and issue a
             810      reciprocal license to a licensee of that state if the division determines that the:
             811          (a) state has substantially equivalent licensing laws;
             812          (b) state requires a licensing examination that is substantially equivalent to the
             813      examination required by this chapter; and
             814          (c) licensee has not had:
             815          (i) formal charges alleging a violation of state mortgage laws filed against the licensee;
             816      or
             817          (ii) disciplinary action or license restriction taken by the licensee's state of domicile.
             818          (2) The division may issue a reciprocal license to a licensee of a state with which the
             819      division does not have a reciprocity agreement if the individual:
             820          (a) submits to the division an affidavit that the individual has five years of experience
             821      in the business of residential mortgage loans;
             822           S [ (ii) ] (b) s establishes that the individual's experience described in Subsection (2)(a) was
             823      under requirements substantially equivalent to the licensing requirements of this chapter; and
             824           S [ (iii) ] (c) s provides any other information required by the division by rule under
             824a      Subsection
             825      (3).
             826          (3) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             827      division shall define the information an individual shall provide to the division pursuant to
             828      Subsection (2).
             829          Section 13. Section 61-2c-208 is enacted to read:
             830          61-2c-208. Activation and inactivation of license.
             831          (1) (a) A licensee may request that the division place the license on inactive status by



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             832
     submitting an inactivation form approved by the division.
             833          (b) On or after January 1, S [ 2005 ] 2006 s , if the license of a principal lending manager is
             834      revoked, suspended, or expires, the license of any mortgage officer licensed with that principal
             835      lending manager shall automatically convert to inactive status.
             836          (2) To activate a license that has been placed on inactive status, a licensee shall:
             837          (a) submit an activation form approved by the division;
             838          (b) pay an activation fee established by the division under Section 63-38-3.2 ; and
             839          (c) if the licensee is an individual whose license was in inactive status at the time of the
             840      previous renewal, the licensee shall supply the division with proof of the successful completion
             841      of the number of hours of continuing education that the licensee would have been required to
             842      complete under Section 61-2c-205 (2)(c) if the licensee's license had been on active status, up to
             843      a maximum of the number of hours required for two licensing periods.
             844          (3) On or after January 1, S [ 2005 ] 2006 s , in addition to the requirements of Subsection (2), a
             845      mortgage officer whose license has been placed on inactive status shall obtain the signature of
             846      the principal lending manager with whom the mortgage officer will be actively licensed on the
             847      form required by the division.
             848          (4) (a) On or after May 3, 2004 and before January 1, S [ 2005 ] 2006 s , in addition to the
             849      requirements of Subsection (2), an entity whose license has been placed on inactive status
             850      because of the termination, death, disability, or departure of its control person shall submit the
             851      forms required by the division to affiliate the license of another control person with the entity.
             852          (b) On or after January 1, S [ 2005 ] 2006 s , in addition to the requirements of Subsection
             852a      (2), an
             853      entity whose license has been placed on inactive status because of the termination, death,
             854      disability, or departure of its principal lending manager shall submit the forms required by the
             855      division to affiliate the license of another principal lending manager with the entity.
             856          Section 14. Section 61-2c-301 is amended to read:
             857           61-2c-301. Prohibited conduct -- Violations of the chapter.
             858          (1) An individual or entity transacting the business of residential mortgage loans in this
             859      state may not:
             860          (a) give or receive compensation or anything of value in exchange for a referral of
             861      residential mortgage loan business [unless the compensation or thing of value is de minimis as
             862      defined by the division];



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             863
         (b) charge a fee in connection with a residential mortgage loan transaction:
             864          (i) that is excessive; or
             865          (ii) if the individual or entity does not comply with Section 70D-1-6 ;
             866          (c) give or receive compensation or anything of value in exchange for a referral of
             867      settlement or loan closing services related to a residential mortgage loan transaction;
             868          (d) [make a false statement or representation for purposes of inducing] do any of the
             869      following to induce a lender to extend credit as part of a residential mortgage loan
             870      transaction[;]:
             871          (i) make a false statement or representation;
             872          (ii) cause false documents to be generated; or
             873          (iii) knowingly permit false information to be submitted by any party;
             874          (e) (i) give or receive compensation or anything of value, or withhold or threaten to
             875      withhold payment of an appraiser fee, to influence the independent judgment of an appraiser in
             876      reaching a value conclusion in a residential mortgage loan transaction, except that it is not a
             877      violation of this section for a licensee to withhold payment because of a bona fide dispute
             878      regarding a failure of the appraiser to comply with the licensing law or the Uniform Standards
             879      of Professional Appraisal Practice;
             880          (f) violate or not comply with:
             881          (i) this chapter;
             882          (ii) an order of the commission or division; or
             883          (iii) a rule made by the division;
             884          (g) fail to respond within the required time period to:
             885          (i) a notice or complaint of the division; or
             886          (ii) a request for information from the division;
             887          (h) make false representations to the division, including in a licensure statement;
             888          (i) for any residential mortgage loan transaction beginning on or after January 1, 2004,
             889      engage in the business of residential mortgage loans with respect to the transaction if the
             890      individual or entity also acts in any of the following capacities with respect to the same
             891      residential mortgage loan transaction:
             892          (i) appraiser;
             893          (ii) escrow agent;



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             894
         (iii) real estate agent; or
             895          (iv) general contractor;
             896          (j) order a title insurance report or hold a title insurance policy unless the individual or
             897      entity provides to the title insurer a copy of a valid, current license under this chapter;
             898          (k) engage in unprofessional conduct as defined by rule; [or]
             899          (l) engage in an act or omission in transacting the business of residential mortgage
             900      loans that constitutes dishonesty, fraud, or misrepresentation[.];
             901          (m) engage in false or misleading advertising;
             902          (n) (i) fail to account for all funds received in connection with a residential mortgage
             903      loan;
             904          (ii) use funds for a different purpose from the purpose for which the funds were
             905      received; or
             906          (iii) (A) except as provided in Subsection (1)(n)(iii)(B), retain funds paid for services if
             907      the services were not actually performed;
             908          (B) notwithstanding Subsection (1)(n)(iii)(A), a licensee may, upon compliance with
             909      Section 70D-1-6 , charge a reasonable cancellation fee for work done originating a mortgage if
             910      the mortgage is not closed;
             911          (o) fail, within S [ 30 ] 90 s calendar days of a request from a borrower who has paid for an
             912      appraisal, to give a copy of an appraisal ordered and used for a transaction to the borrower;
             913          (p) engage in an act that is performed to:
             914          (i) evade this chapter; or
             915          (ii) assist another person to evade this chapter;
             916          (q) recommend or encourage default or delinquency, or continuation of an existing
             917      default or delinquency, by a mortgage applicant on an existing indebtedness prior to the closing
             918      of a residential mortgage loan that will refinance all or part of the indebtedness;
             919          (r) in the case of a control person of an entity, fail to exercise reasonable supervision
             920      over the activities of:
             921          (i) the individuals engaged in the business of residential mortgage loans on behalf of
             922      the entity; or
             923          (ii) any unlicensed staff;
             924          (s) on or after January 1, S [ 2005 ] 2006 s , in the case of the principal lending manager of an
             924a      entity



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             925
     or a branch office of an entity, fail to exercise reasonable supervision over the activities of the
             926      mortgage officers who are licensed with the principal lending manager; or
             927          (t) pay or offer to pay an individual who does not hold a license under this chapter for
             928      work that requires the individual to hold a license under this chapter.
             929          (2) Whether or not the crime is related to the business of residential mortgage loans, it
             930      is a violation of this chapter for a licensee [or], a control person of a licensee, or a person who
             931      is a certified education provider to do any of the following with respect to a criminal offense
             932      which involves moral turpitude:
             933          (a) be convicted;
             934          (b) plead guilty or nolo contendere;
             935          (c) enter a plea in abeyance; or
             936          (d) be subjected to a criminal disposition similar to the ones described in Subsections
             937      (2)(a) through (c).
             938          (3) A principal lending manager does not violate Subsection (1)(s) if:
             939          (a) in contravention of the principal lending manager's written policies and
             940      instructions, an affiliated licensee of the principal lending manager violates a provision of:
             941          (i) this chapter; or
             942          (ii) rules made by the division under this chapter;
             943          (b) the principal lending manager established and followed reasonable procedures to
             944      ensure that affiliated licensees receive adequate supervision;
             945          (c) upon learning of a violation by an affiliated licensee, the principal lending manager
             946      attempted to prevent or mitigate the damage;
             947          (d) the principal lending manager did not participate in or ratify the violation by an
             948      affiliated licensee; and
             949          (e) the principal lending manager did not attempt to avoid learning of the violation.
             950          Section 15. Section 61-2c-302 is amended to read:
             951           61-2c-302. Record requirements.
             952          (1) For the time period specified in Subsection (2), a licensee shall make or possess any
             953      record required for that licensee by a rule made by the division.
             954          (2) A licensee shall maintain in its possession a record described in Subsection (1) until
             955      the later of four years from the last to occur of the following:



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             956
         (a) the final entry on a residential mortgage loan is made by that licensee;
             957          (b) if the residential mortgage loan is serviced by the licensee:
             958          (i) the residential mortgage loan is paid in full; or
             959          (ii) the licensee ceases to service the residential mortgage loan; or
             960          (c) if the residential mortgage loan is not serviced by the licensee, the residential
             961      mortgage loan is closed.
             962          (3) A licensee shall:
             963          (a) make available to the division for inspection during normal business hours all
             964      records required to be maintained under this chapter; and
             965          (b) upon reasonable notice from the division to a licensee, produce all records
             966      described in Subsection (3)(a) that are related to an investigation being conducted by the
             967      division at the division office for inspection and copying by the division.
             968          (4) A licensed entity shall maintain and produce for inspection by the division a current
             969      list of all individuals whose licenses are affiliated with the entity.
             970          Section 16. Section 61-2c-401 is amended to read:
             971           61-2c-401. Investigations -- Subpoena power of division.
             972          (1) The division may investigate or cause to be investigated the actions of:
             973          (a) (i) a licensee [and the control persons of any licensee]; or
             974          (ii) the following with respect to an entity that is a licensee:
             975          (A) a control person;
             976          (B) a manager;
             977          (C) a managing partner;
             978          (D) a director;
             979          (E) an executive officer; or
             980          (F) an individual who performs a function similar to an individual listed in this
             981      Subsection (1)(a)(ii);
             982          (b) (i) an applicant for licensure under this chapter[, and the control persons of any
             983      applicant]; or
             984          (ii) the following with respect to an entity that has applied for a license under this
             985      chapter:
             986          (A) a control person;



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             987
         (B) a manager;
             988          (C) a managing partner;
             989          (D) a director;
             990          (E) an executive officer; or
             991          (F) an individual who performs a function similar to an individual listed in this
             992      Subsection (1)(b)(ii); or
             993          (c) any individual or entity that transacts the business of residential mortgage loans
             994      within this state, and the control persons of any such entity.
             995          (2) In conducting investigations, records inspections, and adjudicative proceedings, the
             996      division may:
             997          (a) subpoena witnesses;
             998          (b) take evidence;
             999          (c) require by subpoena duces tecum the production of books, papers, contracts,
             1000      records, other documents, or information considered relevant to an investigation; and
             1001          (d) serve a subpoena by certified mail.
             1002          (3) A failure to respond to a subpoena served by the division is considered as a separate
             1003      violation of this chapter.
             1004          (4) The division may inspect all records related to the business of residential mortgage
             1005      loans by a licensee under this chapter, regardless of whether the records are maintained at a
             1006      business location in Utah, in conducting:
             1007          (a) investigations of complaints; or
             1008          (b) inspections of the records required to be maintained under:
             1009          (i) this chapter; or
             1010          (ii) rules adopted by the division under this chapter.
             1011          (5) (a) If a licensee maintains the records required by this chapter and the rules adopted
             1012      by the division under this chapter outside Utah, the licensee is responsible for all reasonable
             1013      costs, including reasonable travel costs, incurred by the division in inspecting those records.
             1014          (b) Upon receipt of notification from the division that records maintained outside Utah
             1015      are to be examined in connection with an investigation or an examination, the licensee shall
             1016      deposit with the division a deposit of $500 to cover the division's expenses in connection with
             1017      the examination of the records.



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             1018
         (c) If the deposit described in Subsection (5)(b) is insufficient to meet the estimated
             1019      costs and expenses of examination of the records, the licensee shall make an additional deposit
             1020      to cover the estimated costs and expenses of the division.
             1021          (d) (i) All deposits under this Subsection (5) shall be deposited in the General Fund as
             1022      a dedicated credit to be used by the division under Subsection (5)(a).
             1023          (ii) The division, with the concurrence of the executive director, may use the deposit
             1024      monies deposited in the General Fund under this Subsection (5)(d) as a dedicated credit for the
             1025      records inspection costs under Subsection (5)(a).
             1026          (iii) A deposit under this Subsection (5) shall be refunded to the licensee to the extent it
             1027      is not used, together with an itemized statement from the division of all amounts it has used.
             1028          (e) All deposits under this Subsection (5) shall be nonlapsing.
             1029          (6) Failure to deposit with the division a deposit required to cover the costs of
             1030      examination of records that are maintained outside Utah shall result in automatic suspension of
             1031      a license until the deposit is made.
             1032          Section 17. Section 61-2c-402 is amended to read:
             1033           61-2c-402. Disciplinary action -- Reinstatement.
             1034          (1) Subject to the requirements of this section, if an individual or entity required to be
             1035      licensed under this chapter violates this chapter, or an education provider certified under this
             1036      chapter, the commission, with the concurrence of the director, may:
             1037          (a) impose a civil penalty against the individual or entity in an amount not to exceed
             1038      $2,500 per violation;
             1039          (b) do any of the following to a license under this chapter:
             1040          (i) suspend;
             1041          (ii) revoke;
             1042          (iii) place on probation;
             1043          (iv) deny renewal; or
             1044          (v) deny reinstatement; or
             1045          (c) do both Subsections (1)(a) and (b).
             1046          (2) (a) Before the commission and the division may take an action described in
             1047      Subsection (1), the division shall:
             1048          (i) give notice to the individual or entity; and



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             1049
         (ii) schedule an adjudicative proceeding.
             1050          (b) If after the adjudicative proceeding scheduled under Subsection (2)(a), the
             1051      commission and the director determine that an individual or entity required to be licensed
             1052      under this chapter has violated this chapter, the commission may take an action described in
             1053      Subsection (1) by written order.
             1054          (3) In accordance with Title 63, Chapter 46b, Administrative Procedures Act, an
             1055      individual or entity against whom disciplinary action is taken under this section may seek
             1056      review by the executive director of the disciplinary action.
             1057          (4) If an individual or entity prevails in a judicial appeal and the court finds that the
             1058      state action was undertaken without substantial justification, the court may award reasonable
             1059      litigation expenses to that individual or entity as provided under Title 78, Chapter 27a, Small
             1060      Business Equal Access to Justice Act.
             1061          (5) (a) An order issued under this section takes effect 30 days after the service of the
             1062      order unless otherwise provided in the order.
             1063          (b) If an appeal of an order issued under this section is taken by an individual or entity,
             1064      the division may stay enforcement of the commission's order in accordance with Section
             1065      63-46b-18 .
             1066          (6) If ordered by the court of competent jurisdiction, the division shall promptly take an
             1067      action described in Subsection (1)(b) against a license granted under this chapter.
             1068          (7) (a) If a license under this chapter is revoked, the individual or entity may apply to
             1069      have the license reinstated by complying with the requirements of Section 61-2c-202 for
             1070      licensure.
             1071          (b) Notwithstanding Subsection (7)(a), if a license under this chapter is revoked, the
             1072      individual or entity may not apply for reinstatement of the license sooner than five years after
             1073      the date the license is revoked in accordance with this section.
             1074          (c) If an individual or entity whose license has been revoked applies for reinstatement
             1075      in accordance with Subsection (7)(b), the commission and the division may grant the
             1076      application for reinstatement if they find that:
             1077          (i) there has been good conduct on the part of the applicant subsequent to the events
             1078      that led to the revocation, and that the subsequent good conduct outweighs the events which led
             1079      to the revocation; and



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             1080
         (ii) the interest of the public is not likely to be harmed by the granting of the license.
             1081          Section 18. Section 61-2c-403 is amended to read:
             1082           61-2c-403. Cease and desist orders.
             1083          (1) (a) The director may issue and serve by certified mail, or by personal service, on an
             1084      individual or entity an order to cease and desist if:
             1085          (i) the director has reason to believe that the individual or entity has been or is
             1086      engaging in acts constituting a violation of this chapter; and
             1087          (ii) it appears to the director that it would be in the public interest to stop the acts.
             1088          (b) Within ten days after service of the order, the party named in the order may request
             1089      an adjudicative proceeding to be held in accordance with Title 63, Chapter 46b, Administrative
             1090      Procedures Act.
             1091          (c) Pending the hearing, the cease and desist order shall remain in effect.
             1092          (2) (a) After the hearing described in Subsection (1), if the director finds that the acts
             1093      of the individual or entity violate this chapter, the director shall issue an order making the cease
             1094      and desist order permanent.
             1095          (b) (i) The director may file suit in the name of the division to enjoin and restrain an
             1096      individual or entity on whom an order is served under this section from violating this chapter
             1097      if:
             1098          (A) (I) the individual or entity did not request a hearing under Subsection (1); or
             1099          (II) a permanent cease and desist order is issued against the individual or entity
             1100      following a hearing or stipulation; and
             1101          (B) (I) the individual or entity fails to cease the acts; or
             1102          (II) after discontinuing the acts, the individual or entity again commences the acts.
             1103          (ii) The suit described in Subsection (2)(b)(i) shall be filed in the district court in the
             1104      county:
             1105          (A) in which the acts occurred;
             1106          (B) where the individual resides; or
             1107          (C) where the individual or entity carries on business.
             1108          (3) The cease and desist order issued under this section may not interfere with or
             1109      prevent the prosecution of a remedy or action enforcement under this chapter.
             1110          (4) An individual [or a control person of an entity] who violates a cease and desist order



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             1111
     issued under this section is guilty of a class A misdemeanor.
             1112          Section 19. Section 61-2c-404 is enacted to read:
             1113          61-2c-404. Civil actions.
             1114          (1) (a) A person who violates this chapter is liable for an additional penalty, as
             1115      determined by the court, of at least the amount the person received in consequence of a
             1116      violation of this chapter as:
             1117          (i) commission;
             1118          (ii) compensation; or
             1119          (iii) profit.
             1120          (b) A person aggrieved by a violation of this chapter may:
             1121          (i) bring an action for a penalty described in Subsection (1)(a); and
             1122          (ii) use a penalty obtained under Subsection (1)(a) for the person's own use and benefit.
             1123          (2) A person who is not licensed under this chapter at the time of an act or service that
             1124      requires a license under this chapter may not bring an action in court for the recovery of a
             1125      commission, fee, or compensation for that act or service.
             1126          (3) On or after January 1, S [ 2005 ] 2006 s :
             1127          (a) a mortgage officer may not bring an action in the mortgage officer's own name for
             1128      the recovery of a fee, commission, or compensation for transacting the business of residential
             1129      mortgage loans unless the action is brought against the principal lending manager with whom
             1130      the mortgage officer was licensed at the time of the act or service that is the subject of the
             1131      action; and
             1132          (b) an action by an entity for the recovery of a fee, commission, or other compensation
             1133      shall be brought by:
             1134          (i) an entity; or
             1135          (ii) the principal lending manager of an entity on behalf of the entity.
             1136          (4) On or after January 1, S [ 2005 ] 2006 s , a principal lending manager who transacts the
             1136a      business
             1137      of residential mortgage loans on the principal lending manager's own behalf may sue in the
             1138      principal lending manager's own name for the recovery of a fee, commission, or compensation
             1139      for transacting the business of residential mortgage loans.
             1140          Section 20. Section 61-2c-501 is enacted to read:
             1141     
Part 5. Residential Mortgage Loan Education, Research, and Recovery Fund



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             1142
         61-2c-501. Fund created -- Minimum balance.
             1143          (1) There is created a restricted special revenue fund known as the "Residential
             1144      Mortgage Loan Education, Research, and Recovery Fund."
             1145          (2) The interest earned on the fund shall be deposited into the fund.
             1146          (3) At the beginning of each state fiscal year, $100,000 shall remain available in the
             1147      fund to satisfy judgments rendered against individuals and entities licensed under this chapter.
             1148          Section 21. Section 61-2c-502 is enacted to read:
             1149          61-2c-502. Additional license fee.
             1150          (1) An individual who applies for or renews a license shall pay, in addition to the
             1151      application or renewal fee, a reasonable annual fee:
             1152          (a) determined by the division with the concurrence of the commission; and
             1153          (b) not to exceed $18.
             1154          (2) An entity that applies for or renews an entity license shall pay, in addition to the
             1155      application or renewal fee, a reasonable annual fee:
             1156          (a) determined by the division with the concurrence of the commission; and
             1157          (b) not to exceed $25.
             1158          (3) Notwithstanding Section 13-1-2 , the fees provided in this section shall be paid into
             1159      the fund to be used as provided in this part.
             1160          (4) If the balance in the fund that is available to satisfy judgments against licensees
             1161      decreases to less than $100,000, the division may make additional assessments to licensees to
             1162      maintain the balance available at $100,000 to satisfy judgments.
             1163          Section 22. Section 61-2c-503 is enacted to read:
             1164          61-2c-503. Notice to division -- Judgment against mortgage licensee -- Fraud,
             1165      misrepresentation, or deceit -- Verified petition for order directing payment from fund --
             1166      Limitations and procedure.
             1167          (1) (a) A person may bring a claim against the fund if the person sends a signed
             1168      notification to the division at the time the person files an action:
             1169          (i) against a licensee; and
             1170          (ii) alleging fraud, misrepresentation, or deceit.
             1171          (b) Within 30 calendar days of receipt of the notice described in Subsection (1)(a), the
             1172      division may intervene in the action.



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             1173
         (c) If a person making a claim against the fund obtains a final judgment in a court of
             1174      competent jurisdiction in Utah against a licensee based on fraud, misrepresentation, or deceit in
             1175      a residential mortgage loan transaction, the person making the claim may, upon termination of
             1176      all proceedings including appeals, file a verified petition in the court where the judgment was
             1177      entered for an order directing payment from the fund for the uncollected actual damages
             1178      included in the judgment.
             1179          (d) A recovery from the fund may not include punitive damages, interest, or court
             1180      costs.
             1181          (e) Regardless of the number of claimants or number of loans involved in a transaction,
             1182      the liability of the fund may not exceed:
             1183          (i) $15,000 for a single transaction;
             1184          (ii) $45,000 for an individual licensee; or
             1185          (iii) $45,000 for an entity.
             1186          (2) A person making a claim against the fund shall:
             1187          (a) serve a copy of the petition on the division; and
             1188          (b) file a copy of the affidavit of the service of the petition described in Subsection
             1189      (2)(a) with the court.
             1190          (3) (a) The court shall conduct a hearing on the petition within 30 calendar days after
             1191      service.
             1192          (b) The petitioner shall recover from the fund only if the petitioner shows:
             1193          (i) that the petitioner is not:
             1194          (A) the spouse of the judgment debtor; or
             1195          (B) the personal representative of the spouse of the judgment debtor;
             1196          (ii) that the petitioner has complied with this chapter;
             1197          (iii) that the petitioner has obtained a final judgment in the manner prescribed under
             1198      this section, indicating the amount of the judgment awarded;
             1199          (iv) that the petitioner has proved the amount still owing on the judgment at the date of
             1200      the petition;
             1201          (v) (A) that:
             1202          (I) the petitioner has a writ of execution issued upon the judgment; and
             1203          (II) the officer executing the writ has made a return showing that no property subject to



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             1204
     execution in satisfaction of the judgment could be found; and
             1205          (B) if execution is levied against the property of the judgment debtor, that:
             1206          (I) the amount realized was insufficient to satisfy the judgment; and
             1207          (II) a balance remains on the judgment after application of the amount realized; and
             1208          (vi) that the petitioner has:
             1209          (A) made reasonable searches and inquiries to ascertain whether the judgment debtor
             1210      has any interest in property, real or personal, that may satisfy the judgment; and
             1211          (B) has exercised reasonable diligence to secure payment of the judgment from the
             1212      assets of the judgment debtor.
             1213          (4) If the petitioner satisfies the court that it is not practicable for the petitioner to
             1214      comply with one or more of the requirements in Subsections (3)(b)(v) and (3)(b)(vi), the court
             1215      may waive those requirements.
             1216          (5) (a) A judgment that is the basis for a claim against the fund may not have been
             1217      discharged in bankruptcy.
             1218          (b) In the case of a bankruptcy proceeding that is open or that is commenced during the
             1219      pendency of the claim, the claimant shall, prior to obtaining a claim against the fund, obtain an
             1220      order from the bankruptcy court declaring the judgment and debt to be nondischargeable.
             1221          Section 23. Section 61-2c-504 is enacted to read:
             1222          61-2c-504. Authority to act on receipt of petition.
             1223          (1) Upon receipt of a petition meeting the requirements of Section 61-2c-503 , the
             1224      division may answer, initiate review proceedings, or appear in a proceeding:
             1225          (a) in the name of the defendant to the action; or
             1226          (b) on behalf of the fund.
             1227          (2) The division may settle a claim subject to:
             1228          (a) the application of a petitioner; and
             1229          (b) court approval.
             1230          Section 24. Section 61-2c-505 is enacted to read:
             1231          61-2c-505. Court determination and order.
             1232          If the court determines that a claim should be levied against the portion of the fund
             1233      allocated to carry out the provisions of this chapter, the court shall enter an order requiring the
             1234      division to pay from the fund the portion of the petitioner's judgment that is payable from the



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             1235
     fund under Section 61-2c-503 .
             1236          Section 25. Section 61-2c-506 is enacted to read:
             1237          61-2c-506. Insufficient funds to satisfy judgment -- Procedure and interest.
             1238          If the money deposited in the fund and allotted for satisfying judgments against
             1239      licensees is insufficient to satisfy an authorized claim for payment, the division shall, when
             1240      sufficient money has been deposited in the fund, satisfy the unpaid claims in the order they
             1241      originally were filed, together with accumulated interest at the rate allowable on judgments
             1242      under Section 15-1-4 .
             1243          Section 26. Section 61-2c-507 is enacted to read:
             1244          61-2c-507. Division subrogated to judgment creditor -- Authority to revoke
             1245      license.
             1246          (1) If the division pays a judgment creditor from the fund:
             1247          (a) the division is subrogated to the rights of the judgment creditor for the amounts
             1248      paid out of the fund; and
             1249          (b) any amount and interest recovered by the division shall be deposited in the fund.
             1250          (2) The license of a licensee for whom payment from the fund is made under this part
             1251      is automatically revoked.
             1252          (3) A licensee whose license is revoked pursuant to Subsection (2) may not apply for a
             1253      new license until the licensee has paid into the fund:
             1254          (a) the amount paid out of the fund on behalf of the licensee; and
             1255          (b) interest at a rate determined by the division with the concurrence of the
             1256      commission.
             1257          Section 27. Section 61-2c-508 is enacted to read:
             1258          61-2c-508. Failure to comply.
             1259          The failure of a person to comply with this part is a waiver of any right provided under
             1260      this part.
             1261          Section 28. Section 61-2c-509 is enacted to read:
             1262          61-2c-509. Disciplinary actions.
             1263          (1) This part does not limit the authority of the director to take disciplinary action
             1264      against a licensee for a violation of:
             1265          (a) this chapter; or



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             1266
         (b) rules made by the division under this chapter.
             1267          (2) The repayment in full of all obligations to the fund by a licensee does not nullify or
             1268      modify the effect of a disciplinary proceeding brought under:
             1269          (a) this chapter; or
             1270          (b) rules made by the division under this chapter.    
             1271          Section 29. Section 61-2c-510 is enacted to read:
             1272          61-2c-510. Moneys accumulated -- Purpose.
             1273          The division may use monies accumulated in the fund in excess of the amount
             1274      necessary to satisfy claims to advance education and research in the field of residential
             1275      mortgage loans, including:
             1276          (1) courses sponsored by the division;
             1277          (2) courses offered by the division in conjunction with a university or college in Utah;
             1278          (3) contracting for a research project for the state in the field of residential mortgage
             1279      loans;
             1280          (4) funding the salaries and training expenses of division staff members who are
             1281      employed in positions related to the education of mortgage licensees;
             1282          (5) funding the training expenses of division staff members who are employed in
             1283      positions conducting investigations of complaints under this chapter; and
             1284          (6) publishing and distributing educational materials to:
             1285          (a) licensees; and
             1286          (b) applicants for licensure.
             1287          Section 30. Section 70D-1-10 is amended to read:
             1288           70D-1-10. Notification of department -- Exemptions.
             1289          (1) Except as provided in Subsection (2), no person may engage in the business of
             1290      making mortgage loans nor may any person engage in the business of being a mortgage loan
             1291      broker or servicer, without first filing written notification with the department and paying the
             1292      fees required by this chapter.
             1293          (2) The following persons are exempt from the notification requirements contained in
             1294      this chapter and from the annual fee imposed in Subsection 70D-1-12 (1):
             1295          (a) all persons authorized under Utah law or under federal law to do business as a
             1296      depository institution in this state;



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             1297
         (b) all wholly-owned subsidiaries of depository institutions described in Subsection
             1298      (2)(a); and
             1299          (c) all persons that:
             1300          (i) are required to [register] license with the Utah Division of Real Estate pursuant to
             1301      Title 61, Chapter 2c, Utah Residential Mortgage Practices Act; and
             1302          (ii) are not engaged in the business of being a mortgage loan servicer.
             1303          Section 31. Repealer.
             1304          This bill repeals:
             1305          Section 61-2c-204, Requirements for bonding, letter of credit, or deposit of assets.
             1306          Section 32. Effective date.
             1307          This bill takes effect on May 3, 2004, except that:
             1308          (1) the amendments to Section 61-2c-106 take effect on January 1, S [ 2005 ] 2006 s ; and
             1309          (2) the amendments to Section 62-2c-104 (Effective 07/01/04) take effect on July 1,
             1310      2004.





Legislative Review Note
    as of 2-16-04 7:44 AM


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

Office of Legislative Research and General Counsel


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