Download Zipped Introduced WordPerfect HB0053S01.ZIP
[Status][Bill Documents][Fiscal Note][Bills Directory]

First Substitute H.B. 53

Representative Ryan D. Wilcox proposes the following substitute bill:


             1     
FORECLOSURE RESCUE AND LOAN

             2     
MODIFICATION AMENDMENTS

             3     
2010 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Ryan D. Wilcox

             6     
Senate Sponsor: J. Stuart Adams

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies provisions related to licensure and prohibited conduct for those
             11      engaging in foreclosure rescue or loan modification assistance.
             12      Highlighted Provisions:
             13          This bill:
             14          .    modifies definitions related to real estate licensing;
             15          .    modifies prohibited conduct by real estate licensees;
             16          .    modifies definitions related to mortgage officer licensing;
             17          .    modifies prohibited conduct by a mortgage officer licensee; and
             18          .    makes technical and conforming amendments.
             19      Monies Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          None
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          61-2-2, as last amended by Laws of Utah 2005, Chapter 257


             26          61-2-3, as last amended by Laws of Utah 2009, Chapter 356
             27          61-2-10, as last amended by Laws of Utah 2009, Chapter 352
             28          61-2-11, as last amended by Laws of Utah 2009, Chapter 352
             29          61-2c-102, as last amended by Laws of Utah 2009, Chapter 372
             30          61-2c-301, as last amended by Laws of Utah 2009, Chapters 72 and 372
             31     
             32      Be it enacted by the Legislature of the state of Utah:
             33          Section 1. Section 61-2-2 is amended to read:
             34           61-2-2. Definitions.
             35          As used in this chapter:
             36          (1) "Associate real estate broker" and "associate broker" means [any] a person who:
             37          (a) is employed or engaged as an independent contractor by or on behalf of a licensed
             38      principal real estate broker to perform [any] an act set out in Subsection [(12)] (15) for valuable
             39      consideration[, who]; and
             40          (b) has qualified under this chapter as a principal real estate broker.
             41          (2) "Branch office" means a principal broker's real estate brokerage office other than
             42      the principal broker's main office.
             43          (3) "Business day" means a day other than:
             44          (a) a Saturday;
             45          (b) a Sunday; or
             46          (c) a federal or state holiday.
             47          [(3)] (4) "Commission" means the Real Estate Commission established under this
             48      chapter.
             49          [(4)] (5) "Concurrence" means the entities given a concurring role must jointly agree
             50      for action to be taken.
             51          [(5)] (6) "Condominium" or "condominium unit" is as defined in Section 57-8-3 .
             52          [(6)] (7) "Condominium homeowners' association" means all of the condominium unit
             53      owners acting as a group in accordance with declarations and bylaws.
             54          [(7)] (8) (a) "Condominium hotel" means one or more condominium units that are
             55      operated as a hotel.
             56          (b) "Condominium hotel" does not mean a hotel consisting of condominium units, all


             57      of which are owned by a single entity.
             58          [(8)] (9) "Director" means the director of the Division of Real Estate.
             59          [(9)] (10) "Division" means the Division of Real Estate.
             60          [(10)] (11) "Executive director" means the director of the Department of Commerce.
             61          (12) "Foreclosure rescue" means, for compensation or with the expectation of receiving
             62      valuable consideration, to:
             63          (a) engage, or offer to engage, in an act that:
             64          (i) the person represents will assist a borrower in preventing a foreclosure; and
             65          (ii) relates to a transaction involving the transfer of title to residential real property; or
             66          (b) as an employee or agent of another person:
             67          (i) solicit, or offer that the other person will engage in an act described in Subsection
             68      (12)(a); or
             69          (ii) negotiate terms in relationship to an act described in Subsection (12)(a).
             70          (13) "Loan modification assistance" means, for compensation or with the expectation
             71      of receiving valuable consideration, to:
             72          (a) act, or offer to act, on behalf of a person to:
             73          (i) obtain a loan term of a residential mortgage loan that is different from an existing
             74      loan term including:
             75          (A) an increase or decrease in an interest rate;
             76          (B) a change to the type of interest rate;
             77          (C) an increase or decrease in the principal amount of the residential mortgage loan;
             78          (D) a change in the number of required period payments;
             79          (E) an addition of collateral;
             80          (F) a change to, or addition of, a prepayment penalty;
             81          (G) an addition of a cosigner; or
             82          (H) a change in persons obligated under the existing residential mortgage loan; or
             83          (ii) substitute a new residential mortgage loan for an existing residential mortgage loan;
             84      or
             85          (b) as an employee or agent of another person:
             86          (i) solicit, or offer that the other person will engage in an act described in Subsection
             87      (13)(a); or


             88          (ii) negotiate terms in relationship to an act described in Subsection (13)(a).
             89          [(11)] (14) "Main office" means the address which a principal broker designates with
             90      the division as the principal broker's primary brokerage office.
             91          [(12)] (15) "Principal real estate broker" and "principal broker" means [any person] an
             92      individual who:
             93          (a) (i) [who] sells or lists real estate for sale[,];
             94          (ii) buys, exchanges, or auctions real estate, options on real estate, or improvements on
             95      real estate with the expectation of receiving valuable consideration; or
             96          [(ii) who] (iii) advertises, offers, attempts, or otherwise holds [himself] the person out
             97      to be engaged in the business described in Subsection [(12)(a)(i)] (15)(a)(i) or (ii);
             98          (b) is employed by or on behalf of the owner of real estate or by a prospective
             99      purchaser of real estate [who performs any of the acts] and performs an act described in
             100      Subsection [(12)] (15)(a), whether the person's compensation is at a stated salary, a
             101      commission basis, upon a salary and commission basis, or otherwise;
             102          (c) (i) [who,] with the expectation of receiving valuable consideration, manages
             103      property owned by another person; or [who]
             104          (ii) advertises or otherwise holds [himself] the person out to be engaged in property
             105      management;
             106          (d) [who,] with the expectation of receiving valuable consideration, assists or directs in
             107      the procurement of prospects for or the negotiation of [the transactions] a transaction listed in
             108      Subsections [(12)] (15)(a) and (c); [and]
             109          (e) except for [mortgage lenders, title insurance agents, and their employees, who] a
             110      mortgage lender, title insurance agent, or an employee of a mortgage lender or title insurance
             111      agent, assists or directs in the closing of [any] a real estate transaction with the expectation of
             112      receiving valuable consideration[.]; or
             113          (f) (i) engages in foreclosure rescue; or
             114          (ii) advertises, offers, attempts, or otherwise holds the person out as being engaged in
             115      foreclosure rescue.
             116          [(13)] (16) (a) "Property management" means engaging in, with the expectation of
             117      receiving valuable consideration, the management of property owned by another person, or
             118      advertising or otherwise claiming to be engaged in property management by:


             119          (i) advertising for, arranging, negotiating, offering, or otherwise attempting or
             120      participating in a transaction calculated to secure the rental or leasing of real estate;
             121          (ii) collecting, agreeing, offering, or otherwise attempting to collect rent for the real
             122      estate and accounting for and disbursing the money collected; or
             123          (iii) authorizing expenditures for repairs to the real estate.
             124          (b) "Property management" does not include:
             125          (i) hotel or motel management;
             126          (ii) rental of tourist accommodations, including hotels, motels, tourist homes,
             127      condominiums, condominium hotels, mobile home park accommodations, campgrounds, or
             128      similar public accommodations for any period of less than 30 consecutive days, and the
             129      management activities associated with these rentals; or
             130          (iii) the leasing or management of surface or subsurface minerals or oil and gas
             131      interests, if the leasing or management is separate from a sale or lease of the surface estate.
             132          [(14)] (17) "Real estate" includes leaseholds and business opportunities involving real
             133      property.
             134          [(15)] (18) "Real estate sales agent" and "sales agent" mean [any person] an individual
             135      affiliated with a licensed principal real estate broker, either as an independent contractor or an
             136      employee as provided in Section 61-2-25 , to perform for valuable consideration any act set out
             137      in Subsection [(12)] (15).
             138          [(16)] (19) (a) "Regular salaried employee" means an individual who performs a
             139      service for wages or other remuneration, whose employer withholds federal employment taxes
             140      under a contract of hire, written or oral, express or implied.
             141          (b) "Regular salaried employee" does not include [a person] an individual who
             142      performs services on a project-by-project basis or on a commission basis.
             143          [(17)] (20) "Reinstatement" means restoring a license that has expired or has been
             144      suspended.
             145          [(18)] (21) "Reissuance" means the process by which a licensee may obtain a license
             146      following revocation of the license.
             147          [(19)] (22) "Renewal" means extending a license for an additional licensing period on
             148      or before the date the license expires.
             149          [(20)] (23) (a) "Undivided fractionalized long-term estate" means an ownership interest


             150      in real property by two or more persons that is a:
             151          (i) tenancy in common; or
             152          (ii) any other legal form of undivided estate in real property including:
             153          (A) a fee estate;
             154          (B) a life estate; or
             155          (C) other long-term estate.
             156          (b) "Undivided fractionalized long-term estate" does not include a joint tenancy.
             157          Section 2. Section 61-2-3 is amended to read:
             158           61-2-3. Exempt persons and transactions.
             159          (1) (a) Except as provided in Subsection (1)(b), a license under this chapter is not
             160      required for:
             161          (i) a person who as owner or lessor performs the acts described in Subsection
             162      61-2-2 [(12)](15) with reference to property owned or leased by that person;
             163          (ii) a regular salaried employee of the owner or lessor of real estate who, with reference
             164      to nonresidential real estate owned or leased by the employer, performs the acts enumerated in
             165      Subsections 61-2-2 [(12)](15)(a) and (b);
             166          (iii) a regular salaried employee of the owner of real estate who performs property
             167      management services with reference to real estate owned by the employer, except that the
             168      employee may only manage property for one employer;
             169          (iv) a person who performs property management services for the apartments at which
             170      that person resides in exchange for free or reduced rent on that person's apartment;
             171          (v) a regular salaried employee of a condominium homeowners' association who
             172      manages real property subject to the declaration of condominium that established the
             173      homeowners' association, except that the employee may only manage property for one
             174      condominium homeowners' association; and
             175          (vi) a regular salaried employee of a licensed property management company who
             176      performs support services, as prescribed by rule, for the property management company.
             177          (b) Subsection (1)(a) does not exempt from licensing:
             178          (i) an employee engaged in the sale of properties regulated under:
             179          (A) Title 57, Chapter 11, Utah Uniform Land Sales Practices Act; and
             180          (B) Title 57, Chapter 19, Timeshare and Camp Resort Act;


             181          (ii) an employee engaged in the sale of cooperative interests regulated under Title 57,
             182      Chapter 23, Real Estate Cooperative Marketing Act; or
             183          (iii) a person whose interest as an owner or lessor is obtained by that person or
             184      transferred to that person for the purpose of evading the application of this chapter, and not for
             185      any other legitimate business reason.
             186          (2) A license under this chapter is not required for:
             187          (a) an isolated transaction by a person holding a duly executed power of attorney from
             188      the owner;
             189          (b) services rendered by an attorney in performing the attorney's duties as an attorney;
             190          (c) a receiver, trustee in bankruptcy, administrator, executor, or a person acting under
             191      order of any court;
             192          (d) a trustee or employee of a trustee under a deed of trust or a will;
             193          (e) a public utility, officer of a public utility, or regular salaried employee of a public
             194      utility, unless performance of any of the acts set out in Subsection 61-2-2 [(12)](15) is in
             195      connection with the sale, purchase, lease, or other disposition of real estate or investment in
             196      real estate unrelated to the principal business activity of that public utility;
             197          (f) a regular salaried employee or authorized agent working under the oversight of the
             198      Department of Transportation when performing an act on behalf of the Department of
             199      Transportation in connection with one or more of the following:
             200          (i) the acquisition of real property pursuant to Section 72-5-103 ;
             201          (ii) the disposal of real property pursuant to Section 72-5-111 ;
             202          (iii) services that constitute property management; or
             203          (iv) the leasing of real property;
             204          (g) a regular salaried employee of a county, city, or town when performing an act on
             205      behalf of the county, city, or town:
             206          (i) in accordance with:
             207          (A) if a regular salaried employee of a city or town:
             208          (I) Title 10, Utah Municipal Code; or
             209          (II) Title 11, Cities, Counties, and Local Taxing Units; and
             210          (B) if a regular salaried employee of a county:
             211          (I) Title 11, Cities, Counties, and Local Taxing Units; and


             212          (II) Title 17, Counties; and
             213          (ii) in connection with one or more of the following:
             214          (A) the acquisition of real property, including by eminent domain;
             215          (B) the disposal of real property;
             216          (C) services that constitute property management; or
             217          (D) the leasing of real property.
             218          (3) A license under this chapter is not required for a person registered to act as a
             219      broker-dealer, agent, or investment adviser under the Utah and federal securities laws in the
             220      sale or the offer for sale of real estate if:
             221          (a) (i) the real estate is a necessary element of a "security" as that term is defined by the
             222      Securities Act of 1933 and the Securities Exchange Act of 1934; and
             223          (ii) the security is registered for sale:
             224          (A) pursuant to the Securities Act of 1933; or
             225          (B) by Title 61, Chapter 1, Utah Uniform Securities Act; or
             226          (b) (i) it is a transaction in a security for which a Form D, described in 17 C.F.R. Sec.
             227      239.500, has been filed with the Securities and Exchange Commission pursuant to Regulation
             228      D, Rule 506, 17 C.F.R. Sec. 230.506; and
             229          (ii) the selling agent and the purchaser are not residents of this state.
             230          Section 3. Section 61-2-10 is amended to read:
             231           61-2-10. Restriction on commissions -- Affiliation with more than one broker --
             232      Specialized licenses -- Designation of agents or brokers.
             233          (1) (a) Except as provided in Subsection (1)(b), an associate broker or sales agent may
             234      not accept valuable consideration for the performance of an act specified in this chapter from a
             235      person except the principal broker with whom the associate broker or sales agent is affiliated
             236      and licensed.
             237          (b) An associate broker or sales agent may receive valuable consideration for the
             238      performance of an act specified in this chapter from a person other than the principal broker
             239      with whom the associate broker or sales agent is affiliated if:
             240          (i) the valuable consideration is paid with a payment instrument prepared by a title
             241      insurance agent;
             242          (ii) the title insurance agent provides the payment instrument to the principal broker;


             243          (iii) the title insurance agent complies with the written instructions of the principal
             244      broker:
             245          (A) in preparing the payment instrument; and
             246          (B) delivering the payment instrument to the principal broker; and
             247          (iv) the principal broker directly delivers the payment instrument to the associate
             248      broker or sales agent.
             249          (c) The commission, with the concurrence of the division, shall make rules in
             250      accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act:
             251          (i) defining what constitutes a "payment instrument" for purposes of this Subsection
             252      (1); or
             253          (ii) the form and contents of the written instructions required by Subsection (1)(b),
             254      including providing that the contents of the written instructions indicate that the payment
             255      instrument process is an assignment to the associate broker or sales agent by the principal
             256      broker of a portion of the consideration the title insurance agent is obligated to pay the
             257      principal broker.
             258          (2) An inactive associate broker or sales agent may not conduct a real estate transaction
             259      until the inactive associate broker or sales agent becomes affiliated with a licensed principal
             260      broker and submits the required documentation to the division. An inactive principal broker
             261      may not conduct a real estate transaction until the principal broker's license is activated with
             262      the division.
             263          (3) A sales agent or associate broker may not affiliate with more than one principal
             264      broker at the same time.
             265          (4) (a) Except as provided by rule, a principal broker may not be responsible for more
             266      than one real estate brokerage at the same time.
             267          (b) (i) In addition to issuing principal broker, associate broker, and sales agent licenses
             268      authorizing the performance of all of the acts set forth in Subsection 61-2-2 [(12)](15), the
             269      division may issue specialized sales licenses and specialized property management licenses
             270      with the scope of practice limited to the specialty.
             271          (ii) An individual may hold a specialized license in addition to a license to act as a
             272      principal broker, an associate broker, or a sales agent.
             273          (iii) The commission may adopt rules pursuant to Title 63G, Chapter 3, Utah


             274      Administrative Procedures Act, for the administration of this Subsection (4), including:
             275          (A) prelicensing and postlicensing education requirements;
             276          (B) examination requirements;
             277          (C) affiliation with real estate brokerages or property management companies; and
             278          (D) other licensing procedures.
             279          (c) An individual may not be a principal broker of a brokerage and a sales agent or
             280      associate broker for a different brokerage at the same time.
             281          (5) An owner, purchaser, lessor, or lessee who engages the services of a principal
             282      broker may designate which sales agents or associate brokers affiliated with that principal
             283      broker will also represent that owner, purchaser, lessor, or lessee in the purchase, sale, lease, or
             284      exchange of real estate, or in exercising an option relating to real estate.
             285          Section 4. Section 61-2-11 is amended to read:
             286           61-2-11. Grounds for disciplinary action.
             287          The following acts are unlawful for a person required to be licensed under this chapter:
             288          (1) making a substantial misrepresentation;
             289          (2) making a false promise of a character likely to influence, persuade, or induce;
             290          (3) pursuing a continued and flagrant course of misrepresentation, or of making false
             291      promises through agents, sales agents, advertising, or otherwise;
             292          (4) acting for more than one party in a transaction without the informed consent of all
             293      parties;
             294          (5) (a) acting as an associate broker or sales agent while not licensed with a licensed
             295      principal broker;
             296          (b) representing or attempting to represent a broker other than the principal broker with
             297      whom the person is affiliated; or
             298          (c) representing as sales agent or having a contractual relationship similar to that of
             299      sales agent with other than a licensed principal broker;
             300          (6) (a) failing, within a reasonable time, to account for or to remit monies coming into
             301      the person's possession that belong to others;
             302          (b) commingling the monies described in Subsection (6)(a) with the person's own
             303      monies; or
             304          (c) diverting the monies described in Subsection (6)(a) from the purpose for which they


             305      were received;
             306          (7) paying or offering to pay valuable consideration, as defined by the commission, to a
             307      person not licensed under this chapter, except that valuable consideration may be shared:
             308          (a) with a licensed principal broker of another jurisdiction; or
             309          (b) as provided under:
             310          (i) Title 16, Chapter 10a, Utah Revised Business Corporation Act;
             311          (ii) Title 16, Chapter 11, Professional Corporation Act; or
             312          (iii) Title 48, Chapter 2c, Utah Revised Limited Liability Company Act;
             313          (8) being unworthy or incompetent to act as a principal broker, associate broker, or
             314      sales agent in such manner as to safeguard the interests of the public;
             315          (9) failing to voluntarily furnish a copy of a document to all parties executing the
             316      document;
             317          (10) failing to keep and make available for inspection by the division a record of each
             318      transaction, including:
             319          (a) the names of buyers and sellers or lessees and lessors;
             320          (b) the identification of the property;
             321          (c) the sale or rental price;
             322          (d) monies received in trust;
             323          (e) agreements or instructions from buyers and sellers or lessees and lessors; and
             324          (f) any other information required by rule;
             325          (11) failing to disclose, in writing, in the purchase, sale, or rental of property, whether
             326      the purchase, sale, or rental is made for that person or for an undisclosed principal;
             327          (12) regardless of whether the crime is related to real estate, being convicted of a
             328      criminal offense involving moral turpitude within five years of the most recent application,
             329      including:
             330          (a) a conviction based upon a plea of nolo contendere; or
             331          (b) a plea held in abeyance to a criminal offense involving moral turpitude;
             332          (13) advertising the availability of real estate or the services of a licensee in a false,
             333      misleading, or deceptive manner;
             334          (14) in the case of a principal broker or a licensee who is a branch manager, failing to
             335      exercise reasonable supervision over the activities of the principal broker's or branch manager's


             336      licensee or unlicensed staff;
             337          (15) violating or disregarding:
             338          (a) this chapter;
             339          (b) an order of the commission; or
             340          (c) the rules adopted by the commission and the division;
             341          (16) breaching a fiduciary duty owed by a licensee to the licensee's principal in a real
             342      estate transaction;
             343          (17) any other conduct which constitutes dishonest dealing;
             344          (18) unprofessional conduct as defined by statute or rule;
             345          (19) on the basis of misconduct in a professional capacity that relates to character,
             346      honesty, integrity, or truthfulness, having one of the following suspended, revoked,
             347      surrendered, or cancelled:
             348          (a) a real estate license issued by another jurisdiction; or
             349          (b) another professional license issued by this or another jurisdiction;
             350          (20) failing to respond to a request by the division in an investigation authorized under
             351      this chapter, including:
             352          (a) failing to respond to a subpoena;
             353          (b) withholding evidence; or
             354          (c) failing to produce documents or records;
             355          (21) in the case of a dual licensed title licensee as defined in Section 31A-2-402 :
             356          (a) providing a title insurance product or service without the approval required by
             357      Section 31A-2-405 ; or
             358          (b) knowingly providing false or misleading information in the statement required by
             359      Subsection 31A-2-405 (2); [or]
             360          (22) violating an independent contractor agreement between a principal broker and a
             361      sales agent as evidenced by a final judgment of a court[.];
             362          (23) (a) engaging in a foreclosure rescue if not licensed under this chapter;
             363          (b) engaging in an act of loan modification assistance that requires licensure as a
             364      mortgage officer under Chapter 2c, Utah Residential Mortgage Practices and Licensing Act,
             365      without being licensed under that chapter;
             366          (c) requesting or requiring a person to pay a fee if:


             367          (i) the person is required to pay the fee before entering into a written agreement
             368      specifying what one or more acts of foreclosure rescue will be completed if the fee is paid; or
             369          (ii) in a case when the financing that is the subject of the foreclosure rescue is
             370      foreclosed within one year from the day on which the person enters into a written agreement,
             371      the person is required to forfeit the fee for any reason;
             372          (d) inducing a person who is at risk of foreclosure to hire the licensee to engage in an
             373      act of foreclosure rescue by:
             374          (i) suggesting to the person that the licensee has a special relationship with the person's
             375      lender or loan servicer; or
             376          (ii) falsely representing or advertising that the licensee is acting on behalf of:
             377          (A) a government agency;
             378          (B) the person's lender or loan servicer; or
             379          (C) a nonprofit or charitable institution; or
             380          (e) recommending or participating in a foreclosure rescue that requires a person to:
             381          (i) transfer title to real property to the licensee or to a third party with whom the
             382      licensee has a business relationship or financial interest;
             383          (ii) make a mortgage payment to a person other than the person's loan servicer; or
             384          (iii) refrain from contacting the person's:
             385          (A) lender;
             386          (B) loan servicer;
             387          (C) attorney;
             388          (D) credit counselor; or
             389          (E) housing counselor; or
             390          (24) for an agreement for foreclosure rescue entered into on or after May 11, 2010,
             391      engaging in an act of foreclosure rescue without offering in writing to the person entering into
             392      the agreement for foreclosure rescue a right to cancel the agreement within three business days
             393      after the day on which the person enters the agreement.
             394          Section 5. Section 61-2c-102 is amended to read:
             395           61-2c-102. Definitions.
             396          (1) As used in this chapter:
             397          (a) "Affiliate" means a person who directly, or indirectly through one or more


             398      intermediaries, controls or is controlled by, or is under common control with, a specified
             399      individual or entity.
             400          (b) "Applicant" means a person applying for a license under this chapter.
             401          (c) "Approved examination provider" means a person approved by the nationwide
             402      database as an approved test provider.
             403          (d) "Associate lending manager" means an individual who:
             404          (i) qualifies under this chapter as a principal lending manager; and
             405          (ii) works by or on behalf of another principal lending manager in transacting the
             406      business of residential mortgage loans.
             407          (e) "Branch office" means a licensed entity's office:
             408          (i) for the transaction of the business of residential mortgage loans regulated under this
             409      chapter;
             410          (ii) other than the main office of the licensed entity; and
             411          (iii) that operates under the same business name as the licensed entity.
             412          (f) "Business day" means a day other than:
             413          (i) a Saturday;
             414          (ii) a Sunday; or
             415          (iii) a federal or state holiday.
             416          [(f)] (g) (i) "Business of residential mortgage loans" means for compensation or in the
             417      expectation of compensation to:
             418          (A) engage in an act that makes an individual a loan originator;
             419          (B) make or originate a residential mortgage loan;
             420          (C) directly or indirectly solicit a residential mortgage loan for another; [or]
             421          (D) unless excluded under Subsection (1)[(f)](g)(ii), render services related to the
             422      origination of a residential mortgage loan including:
             423          (I) preparing a loan package;
             424          (II) communicating with the borrower and lender; or
             425          (III) advising on a loan term[.]; or
             426          (E) engage in loan modification assistance.
             427          (ii) "Business of residential mortgage loans" does not include:
             428          (A) if working as an employee under the direction of and subject to the supervision and


             429      instruction of a person licensed under this chapter, the performance of a clerical or support duty
             430      such as:
             431          (I) the receipt, collection, or distribution of information common for the processing or
             432      underwriting of a loan in the mortgage industry other than taking an application;
             433          (II) communicating with a consumer to obtain information necessary for the processing
             434      or underwriting of a residential mortgage loan;
             435          (III) word processing;
             436          (IV) sending correspondence; or
             437          (V) assembling files;
             438          (B) ownership of an entity that engages in the business of residential mortgage loans if
             439      the owner does not personally perform the acts listed in Subsection (1)[(f)](g)(i); or
             440          (C) except if an individual will engage in an activity as a loan originator, acting in one
             441      or more of the following capacities:
             442          (I) a loan wholesaler;
             443          (II) an account executive for a loan wholesaler;
             444          (III) a loan underwriter;
             445          (IV) a loan closer; or
             446          (V) funding a loan[.]; or
             447          (D) if employed by a person who owns or services an exiting residential mortgage loan,
             448      as defined in Section 70D-2-102 , the direct negotiation with the borrower for the purpose of
             449      loan modification.
             450          [(g)] (h) "Certified education provider" means a person who is certified under Section
             451      61-2c-204.1 to provide one or more of the following:
             452          (i) prelicensing education; or
             453          (ii) continuing education.
             454          [(h)] (i) "Closed-end" means a loan:
             455          (i) with a fixed amount borrowed; and
             456          (ii) that does not permit additional borrowing secured by the same collateral.
             457          [(i)] (j) "Commission" means the Residential Mortgage Regulatory Commission
             458      created in Section 61-2c-104 .
             459          [(j)] (k) "Compensation" means anything of economic value that is paid, loaned,


             460      granted, given, donated, or transferred to an individual or entity for or in consideration of:
             461          (i) services;
             462          (ii) personal or real property; or
             463          (iii) another thing of value.
             464          [(k)] (l) "Continuing education" means education taken by an individual licensed under
             465      this chapter in order to meet the education requirements imposed by Sections 61-2c-204.1 and
             466      61-2c-205 to renew a license under this chapter.
             467          [(l)] (m) "Control," as used in Subsection (1)(a), means the power to directly or
             468      indirectly:
             469          (i) direct or exercise a controlling interest over:
             470          (A) the management or policies of an entity; or
             471          (B) the election of a majority of the directors, officers, managers, or managing partners
             472      of an entity;
             473          (ii) vote 20% or more of a class of voting securities of an entity by an individual; or
             474          (iii) vote more than 5% of a class of voting securities of an entity by another entity.
             475          [(m)] (n) "Depository institution" is as defined in Section 7-1-103 .
             476          [(n)] (o) "Director" means the director of the division.
             477          [(o)] (p) "Division" means the Division of Real Estate.
             478          [(p)] (q) "Dwelling" means a residential structure attached to real property that contains
             479      one to four units including any of the following if used as a residence:
             480          (i) a condominium unit;
             481          (ii) a cooperative unit;
             482          (iii) a manufactured home; or
             483          (iv) a house.
             484          [(q)] (r) "Entity" means:
             485          (i) a corporation;
             486          (ii) a limited liability company;
             487          (iii) a partnership;
             488          (iv) a company;
             489          (v) an association;
             490          (vi) a joint venture;


             491          (vii) a business trust;
             492          (viii) a trust; or
             493          (ix) another organization.
             494          [(r)] (s) "Executive director" means the executive director of the Department of
             495      Commerce.
             496          (t) "Foreclosure rescue" means, for compensation or with the expectation of receiving
             497      valuable consideration, to:
             498          (i) engage, or offer to engage, in an act that:
             499          (A) the person represents will assist a borrower in preventing a foreclosure; and
             500          (B) relates to a transaction involving the transfer of title to residential real property; or
             501          (ii) as an employee or agent of another person:
             502          (A) solicit, or offer that the other person will engage in an act described in Subsection
             503      (1)(t)(i); or
             504          (B) negotiate terms in relationship to an act described in Subsection (1)(t)(i).
             505          [(s)] (u) "Inactive status" means a dormant status into which an unexpired license is
             506      placed when the holder of the license is not currently engaging in the business of residential
             507      mortgage loans.
             508          [(t)] (v) "Licensee" means a person licensed with the division under this chapter.
             509          [(u)] (w) "Licensing examination" means the examination required by Section
             510      61-2c-204.1 or 61-2c-206 for an individual to obtain a license under this chapter.
             511          (x) "Loan modification assistance" means, for compensation or with the expectation of
             512      receiving valuable consideration, to:
             513          (i) act, or offer to act, on behalf of a person to:
             514          (A) obtain a loan term of a residential mortgage loan that is different from an existing
             515      loan term including:
             516          (I) an increase or decrease in an interest rate;
             517          (II) a change to the type of interest rate;
             518          (III) an increase or decrease in the principal amount of the residential mortgage loan;
             519          (IV) a change in the number of required period payments;
             520          (V) an addition of collateral;
             521          (VI) a change to, or addition of, a prepayment penalty;


             522          (VII) an addition of a cosigner; or
             523          (VIII) a change in persons obligated under the existing residential mortgage loan; or
             524          (B) substitute a new residential mortgage loan for an existing residential mortgage
             525      loan; or
             526          (ii) as an employee or agent of another person:
             527          (A) solicit, or offer that the other person will engage in an act described in Subsection
             528      (1)(x)(i); or
             529          (B) negotiate terms in relationship to an act described in Subsection (1)(x)(i).
             530          [(v)] (y) (i) Except as provided in Subsection (1)[(v)](y)(ii), "loan originator" means an
             531      individual who for compensation or in expectation of compensation:
             532          (A) takes a residential mortgage loan application; or
             533          (B) offers or negotiates terms of a residential mortgage loan[.] for the purpose of:
             534          (I) a purchase;
             535          (II) a refinance;
             536          (III) loan modification assistance; or
             537          (IV) a foreclosure rescue.
             538          (ii) "Loan originator" does not include a person who:
             539          (A) is described in Subsection (1)[(v)](y)(i), but who performs exclusively
             540      administrative or clerical tasks as described in Subsection (1)[(f)](g)(ii)(A);
             541          (B) unless compensated by a lender, a principal lending manager, or an agent of a
             542      lender or principal lending manager:
             543          (I) only performs real estate brokerage activities; and
             544          (II) is licensed under Chapter 2, Division of Real Estate; and
             545          (C) is solely involved in extension of credit relating to a timeshare plan, as defined in
             546      11 U.S.C. Sec. 101(53D).
             547          [(w)] (z) "Mortgage officer" means an individual who is licensed with the division to
             548      transact the business of residential mortgage loans through a principal lending manager.
             549          [(x)] (aa) "Nationwide database" means the Nationwide Mortgage Licensing System
             550      and Registry, authorized under Secure and Fair Enforcement for Mortgage Licensing, 12
             551      U.S.C. Sec. 5101, et seq.
             552          [(y)] (bb) "Nontraditional mortgage product" means a mortgage product other than a


             553      30-year fixed rate mortgage.
             554          [(z)] (cc) "Person" means an individual or entity.
             555          [(aa)] (dd) "Prelicensing education" means education taken by an individual seeking to
             556      be licensed under this chapter in order to meet the education requirements imposed by Section
             557      61-2c-204.1 or 61-2c-206 for an individual to obtain a license under this chapter.
             558          [(bb)] (ee) (i) "Principal lending manager" means an individual licensed as a principal
             559      lending manager under Section 61-2c-206 to transact the business of residential mortgage
             560      loans.
             561          (ii) An individual licensed as a principal lending manager may transact the business of
             562      residential mortgage loans as a mortgage officer.
             563          [(cc)] (ff) "Record" means information that is:
             564          (i) prepared, owned, received, or retained by a person; and
             565          (ii) (A) inscribed on a tangible medium; or
             566          (B) (I) stored in an electronic or other medium; and
             567          (II) retrievable in perceivable form.
             568          [(dd)] (gg) "Residential mortgage loan" means an extension of credit, if:
             569          (i) the loan or extension of credit is secured by a:
             570          (A) mortgage;
             571          (B) deed of trust; or
             572          (C) consensual security interest;
             573          (ii) the mortgage, deed of trust, or consensual security interest described in Subsection
             574      (1)[(dd)](gg)(i):
             575          (A) is on a dwelling located in the state; and
             576          (B) is created with the consent of the owner of the residential real property; and
             577          (iii) solely for the purposes of defining "loan originator," the extension of credit is
             578      primarily for personal, family, or household use.
             579          [(ee)] (hh) "State" means:
             580          (i) a state, territory, or possession of the United States;
             581          (ii) the District of Columbia; or
             582          (iii) the Commonwealth of Puerto Rico.
             583          [(ff)] (ii) "Unique identifier" is as defined in 12 U.S.C. Sec. 5102.


             584          (2) (a) If a term not defined in this section is defined by rule, the term shall have the
             585      meaning established by the division by rule made in accordance with Title 63G, Chapter 3,
             586      Utah Administrative Rulemaking Act.
             587          (b) If a term not defined in this section is not defined by rule, the term shall have the
             588      meaning commonly accepted in the business community.
             589          Section 6. Section 61-2c-301 is amended to read:
             590           61-2c-301. Prohibited conduct -- Violations of the chapter.
             591          (1) A person transacting the business of residential mortgage loans in this state may
             592      not:
             593          (a) give or receive compensation or anything of value in exchange for a referral of
             594      residential mortgage loan business;
             595          (b) charge a fee in connection with a residential mortgage loan transaction:
             596          (i) that is excessive; or
             597          (ii) if the person does not comply with Section 70D-2-305 ;
             598          (c) give or receive compensation or anything of value in exchange for a referral of
             599      settlement or loan closing services related to a residential mortgage loan transaction;
             600          (d) do any of the following to induce a lender to extend credit as part of a residential
             601      mortgage loan transaction:
             602          (i) make a false statement or representation;
             603          (ii) cause false documents to be generated; or
             604          (iii) knowingly permit false information to be submitted by any party;
             605          (e) give or receive compensation or anything of value, or withhold or threaten to
             606      withhold payment of an appraiser fee, to influence the independent judgment of an appraiser in
             607      reaching a value conclusion in a residential mortgage loan transaction, except that it is not a
             608      violation of this section for a licensee to withhold payment because of a bona fide dispute
             609      regarding a failure of the appraiser to comply with the licensing law or the Uniform Standards
             610      of Professional Appraisal Practice;
             611          (f) violate or not comply with:
             612          (i) this chapter;
             613          (ii) an order of the commission or division; or
             614          (iii) a rule made by the division;


             615          (g) fail to respond within the required time period to:
             616          (i) a notice or complaint of the division; or
             617          (ii) a request for information from the division;
             618          (h) make false representations to the division, including in a licensure statement;
             619          (i) for a residential mortgage loan transaction beginning on or after January 1, 2004,
             620      engage in the business of residential mortgage loans with respect to the transaction if the
             621      person also acts in any of the following capacities with respect to the same residential mortgage
             622      loan transaction:
             623          (i) appraiser;
             624          (ii) escrow agent;
             625          (iii) real estate agent;
             626          (iv) general contractor; or
             627          (v) title insurance agent;
             628          (j) order a title insurance report or hold a title insurance policy unless the person
             629      provides to the title insurer a copy of a valid, current license under this chapter;
             630          (k) engage in unprofessional conduct as defined by rule;
             631          (l) engage in an act or omission in transacting the business of residential mortgage
             632      loans that constitutes dishonesty, fraud, or misrepresentation;
             633          (m) engage in false or misleading advertising;
             634          (n) (i) fail to account for monies received in connection with a residential mortgage
             635      loan;
             636          (ii) use monies for a different purpose from the purpose for which the monies are
             637      received; or
             638          (iii) except as provided in Subsection (4), retain monies paid for services if the services
             639      are not performed;
             640          (o) fail, within 90 calendar days of a request from a borrower who has paid for an
             641      appraisal, to give a copy of an appraisal ordered and used for a transaction to the borrower;
             642          (p) engage in an act that is performed to:
             643          (i) evade this chapter; or
             644          (ii) assist another person to evade this chapter;
             645          (q) recommend or encourage default, delinquency, or continuation of an existing


             646      default or delinquency, by a mortgage applicant on an existing indebtedness before the closing
             647      of a residential mortgage loan that will refinance all or part of the indebtedness;
             648          (r) in the case of the principal lending manager of an entity or a branch office of an
             649      entity, fail to exercise reasonable supervision over the activities of:
             650          (i) unlicensed staff; and
             651          (ii) a mortgage officer who is licensed with the principal lending manager;
             652          (s) pay or offer to pay an individual who does not hold a license under this chapter for
             653      work that requires the individual to hold a license under this chapter;
             654          (t) in the case of a dual licensed title licensee as defined in Section 31A-2-402 :
             655          (i) provide a title insurance product or service without the approval required by Section
             656      31A-2-405 ; or
             657          (ii) knowingly provide false or misleading information in the statement required by
             658      Subsection 31A-2-405 (2); [or]
             659          (u) represent to the public that the person can or will perform any act of a loan
             660      originator if that person is not licensed under this chapter because the person is exempt under
             661      Subsection 61-2c-102 (1)[(f)](g)(ii)(A), including through:
             662          (i) advertising;
             663          (ii) a business card;
             664          (iii) stationary;
             665          (iv) a brochure;
             666          (v) a sign;
             667          (vi) a rate list; or
             668          (vii) other promotional item[.]; or
             669          (v) (i) engage in an act of loan modification assistance without being licensed under
             670      this chapter;
             671          (ii) engage in an act of foreclosure rescue that requires licensure as a real estate agent
             672      or real estate broker under Chapter 2, Division of Real Estate, without being licensed under
             673      that chapter;
             674          (iii) request or require a person to pay a fee if:
             675          (A) the person is required to pay the fee before entering into a written agreement
             676      specifying what one or more acts of loan modification assistance will be completed if the fee is


             677      paid; or
             678          (B) in a case when the residential mortgage loan that is the subject of the loan
             679      modification assistance is foreclosed within one year of the day on which the person enters into
             680      a written agreement, the person is required to forfeit the fee for any reason;
             681          (iv) induce a person seeking a loan modification to hire the licensee to engage in an act
             682      of loan modification assistance by:
             683          (A) suggesting to the person that the licensee has a special relationship with the
             684      person's lender or loan servicer; or
             685          (B) falsely representing or advertising that the licensee is acting on behalf of:
             686          (I) a government agency;
             687          (II) the person's lender or loan servicer; or
             688          (III) a nonprofit or charitable institution;
             689          (v) recommend or participate in a loan modification that requires a person to:
             690          (A) transfer title to real property to the licensee or to a third party with whom the
             691      licensee has a business relationship or financial interest;
             692          (B) make a mortgage payment to a person other than the person's loan servicer; or
             693          (C) refrain from contacting the person's:
             694          (I) lender;
             695          (II) loan servicer;
             696          (III) attorney;
             697          (IV) credit counselor; or
             698          (V) housing counselor; or
             699          (vi) for an agreement for loan modification assistance entered into on or after May 11,
             700      2010, engage in an act of loan modification assistance without offering in writing to the person
             701      entering into the agreement for loan modification assistance a right to cancel the agreement
             702      within three business days after the day on which the person enters the agreement.
             703          (2) Whether or not the crime is related to the business of residential mortgage loans, it
             704      is a violation of this chapter for a licensee or a person who is a certified education provider to
             705      do any of the following with respect to a criminal offense that involves moral turpitude:
             706          (a) be convicted;
             707          (b) plead guilty or nolo contendere;


             708          (c) enter a plea in abeyance; or
             709          (d) be subjected to a criminal disposition similar to the ones described in Subsections
             710      (2)(a) through (c).
             711          (3) A principal lending manager does not violate Subsection (1)(r) if:
             712          (a) in contravention of the principal lending manager's written policies and
             713      instructions, an affiliated licensee of the principal lending manager violates:
             714          (i) this chapter; or
             715          (ii) rules made by the division under this chapter;
             716          (b) the principal lending manager established and followed reasonable procedures to
             717      ensure that affiliated licensees receive adequate supervision;
             718          (c) upon learning of a violation by an affiliated licensee, the principal lending manager
             719      attempted to prevent or mitigate the damage;
             720          (d) the principal lending manager did not participate in or ratify the violation by an
             721      affiliated licensee; and
             722          (e) the principal lending manager did not attempt to avoid learning of the violation.
             723          (4) Notwithstanding Subsection (1)(n)(iii), a licensee may, upon compliance with
             724      Section 70D-2-305 , charge a reasonable cancellation fee for work done originating a mortgage
             725      if the mortgage is not closed.


[Bill Documents][Bills Directory]