7 LONG TITLE
8 General Description:
9 This bill amends the Utah Residential Mortgage Practices and Licensing Act.
10 Highlighted Provisions:
11 This bill:
12 ▸ defines terms;
13 ▸ exempts certain nonprofit corporations from licensing requirements under the Utah
14 Residential Mortgage Practices and Licensing Act; and
15 ▸ makes technical changes.
16 Money Appropriated in this Bill:
18 Other Special Clauses:
20 Utah Code Sections Affected:
22 61-2c-102, as last amended by Laws of Utah 2017, Chapter 182
23 61-2c-105, as last amended by Laws of Utah 2017, Chapter 182
25 Be it enacted by the Legislature of the state of Utah:
26 Section 1. Section 61-2c-102 is amended to read:
27 61-2c-102. Definitions.
28 (1) As used in this chapter:
29 (a) "Affiliation" means that a mortgage loan originator is associated with a principal
30 lending manager in accordance with Section 61-2c-209.
31 (b) "Applicant" means a person applying for a license under this chapter.
32 (c) "Approved examination provider" means a person approved by the nationwide
33 database or by the division as an approved test provider.
34 (d) "Associate lending manager" means an individual who:
35 (i) qualifies under this chapter as a principal lending manager; and
36 (ii) works by or on behalf of another principal lending manager in transacting the
37 business of residential mortgage loans.
38 (e) "Balloon payment" means a payment in a mortgage transaction:
39 (i) that the creditor requires the debtor to make during the term of the mortgage;
40 (ii) that represents the entire amount of the outstanding balance of the mortgage; and
41 (iii) the entire amount of which is due no later than a date on which the aggregate
42 amount of the remaining minimum periodic payments required under the mortgage would not
43 fully amortize the outstanding balance of the mortgage.
45 (i) licensed as a lending manager; and
46 (ii) designated in the nationwide database by the individual's sponsoring entity as being
47 responsible to work from a branch office and to supervise the business of residential mortgage
48 loans that is conducted at the branch office.
50 (i) for the transaction of the business of residential mortgage loans regulated under this
52 (ii) other than the main office of the licensed entity; and
53 (iii) that operates under:
54 (A) the same business name as the licensed entity; or
55 (B) another trade name that is registered with the division under the entity license.
57 (i) a Saturday;
58 (ii) a Sunday; or
59 (iii) a federal or state holiday.
61 expectation of compensation to:
62 (A) engage in an act that makes an individual a mortgage loan originator;
63 (B) make or originate a residential mortgage loan;
64 (C) directly or indirectly solicit a residential mortgage loan for another;
65 (D) unless exempt under Section 61-2c-105 or excluded under Subsection
67 (I) preparing a loan package;
68 (II) communicating with the borrower or lender;
69 (III) advising on a loan term;
70 (IV) receiving, collecting, or distributing information common for the processing or
71 underwriting of a loan in the mortgage industry; or
72 (V) communicating with a consumer to obtain information necessary for the processing
73 or underwriting of a residential mortgage loan; or
74 (E) engage in loan modification assistance.
75 (ii) "Business of residential mortgage loans" does not include:
76 (A) ownership of an entity that engages in the business of residential mortgage loans if
77 the owner does not personally perform the acts listed in Subsection (1)[
78 (B) acting in one or more of the following capacities:
79 (I) a loan wholesaler;
80 (II) an account executive for a loan wholesaler;
81 (III) a loan closer; or
82 (IV) funding a loan; or
83 (C) if employed by a person who owns or services an existing residential mortgage
84 loan, the direct negotiation with the borrower for the purpose of loan modification.
86 61-2c-204.1 to provide one or more of the following:
87 (i) Utah-specific prelicensing education; or
88 (ii) Utah-specific continuing education.
90 (i) with a fixed amount borrowed; and
91 (ii) that does not permit additional borrowing secured by the same collateral.
93 created in Section 61-2c-104.
95 is defined in 12 U.S.C. Sec. 4702.
97 granted, given, donated, or transferred to an individual or entity for or in consideration of:
98 (i) services;
99 (ii) personal or real property; or
100 (iii) another thing of value.
102 for the action to be taken.
104 under this chapter in order to meet the education requirements imposed by Sections
105 61-2c-204.1 and 61-2c-205 to renew a license under this chapter.
107 or indirectly:
108 (i) direct or exercise a controlling interest over:
109 (A) the management or policies of an entity; or
110 (B) the election of a majority of the directors, officers, managers, or managing partners
111 of an entity;
112 (ii) vote 20% or more of a class of voting securities of an entity by an individual; or
113 (iii) vote more than 5% of a class of voting securities of an entity by another entity.
115 the nationwide database as being an individual directing the management or policies of the
117 (ii) "Control person" may include one of the following who is identified as provided in
118 Subsection (1)[
119 (A) a manager;
120 (B) a managing partner;
121 (C) a director;
122 (D) an executive officer; or
123 (E) an individual who performs a function similar to an individual listed in this
124 Subsection (1)[
130 one to four family units including any of the following if used as a residence:
131 (i) a condominium unit;
132 (ii) a cooperative unit;
133 (iii) a manufactured home; or
134 (iv) a house.
136 (i) means an individual:
137 (A) whose manner and means of work performance are subject to the right of control
138 of, or are controlled by, another person; and
139 (B) whose compensation for federal income tax purposes is reported, or is required to
140 be reported, on a W-2 form issued by the controlling person; and
141 (ii) does not include an independent contractor who performs duties other than at the
142 direction of, and subject to the supervision and instruction of, another person.
144 (i) a corporation;
145 (ii) a limited liability company;
146 (iii) a partnership;
147 (iv) a company;
148 (v) an association;
149 (vi) a joint venture;
150 (vii) a business trust;
151 (viii) a trust; or
152 (ix) another organization.
156 Mortgage Licensing, 12 U.S.C. Sec. 5101 et seq.
158 receiving valuable consideration, to:
159 (i) engage, or offer to engage, in an act that:
160 (A) the person represents will assist a borrower in preventing a foreclosure; and
161 (B) relates to a transaction involving the transfer of title to residential real property; or
162 (ii) as an employee or agent of another person:
163 (A) solicit, or offer that the other person will engage in an act described in Subsection
165 (B) negotiate terms in relationship to an act described in Subsection (1)[
167 placed when the holder of the license is not currently engaging in the business of residential
168 mortgage loans.
170 under Section 61-2c-206 to transact the business of residential mortgage loans.
173 61-2c-204.1 or 61-2c-206 for an individual to obtain a license under this chapter.
175 expectation of receiving valuable consideration, to:
176 (i) act, or offer to act, on behalf of a person to:
177 (A) obtain a loan term of a residential mortgage loan that is different from an existing
178 loan term including:
179 (I) an increase or decrease in an interest rate;
180 (II) a change to the type of interest rate;
181 (III) an increase or decrease in the principal amount of the residential mortgage loan;
182 (IV) a change in the number of required period payments;
183 (V) an addition of collateral;
184 (VI) a change to, or addition of, a prepayment penalty;
185 (VII) an addition of a cosigner; or
186 (VIII) a change in persons obligated under the existing residential mortgage loan; or
187 (B) substitute a new residential mortgage loan for an existing residential mortgage
188 loan; or
189 (ii) as an employee or agent of another person:
190 (A) solicit, or offer that the other person will engage in an act described in Subsection
192 (B) negotiate terms in relationship to an act described in Subsection (1)[
194 in expectation of compensation:
195 (A) (I) takes a residential mortgage loan application;
196 (II) offers or negotiates terms of a residential mortgage loan for the purpose of:
197 (Aa) a purchase;
198 (Bb) a refinance;
199 (Cc) a loan modification assistance; or
200 (Dd) a foreclosure rescue; or
201 (III) directly or indirectly solicits a residential mortgage loan for another person; and
202 (B) is licensed as a mortgage loan originator in accordance with this chapter.
203 (ii) "Mortgage loan originator" does not include a person who:
204 (A) is described in Subsection (1)[
205 administrative or clerical tasks as described in Subsection (1)[
206 (B) (I) is licensed under Chapter 2f, Real Estate Licensing and Practices Act;
207 (II) performs only real estate brokerage activities; and
208 (III) receives no compensation from:
209 (Aa) a lender;
210 (Bb) a lending manager; or
211 (Cc) an agent of a lender or lending manager; or
212 (C) is solely involved in extension of credit relating to a timeshare plan, as defined in
213 11 U.S.C. Sec. 101(53D).
215 and Registry, authorized under federal licensing requirements.
217 30-year fixed rate mortgage.
220 be licensed under this chapter in order to meet the education requirements imposed by Section
221 61-2c-204.1 or 61-2c-206 for an individual to obtain a license under this chapter.
223 (i) licensed as a lending manager under Section 61-2c-206; and
224 (ii) identified in the nationwide database by the individual's sponsoring entity as the
225 entity's principal lending manager.
227 person who is required to be licensed under this chapter.
229 (i) prepared, owned, received, or retained by a person; and
230 (ii) (A) inscribed on a tangible medium; or
231 (B) (I) stored in an electronic or other medium; and
232 (II) in a perceivable and reproducible form.
234 (i) means any fee, kickback, other compensation, or thing of value tendered for a
235 referral of business or a service incident to or part of a residential mortgage loan transaction;
237 (ii) does not include:
238 (A) a payment made by a licensed entity to an individual employed by the entity under
239 a contractual incentive program according to rules made by the division in accordance with
240 Title 63G, Chapter 3, Utah Administrative Rulemaking Act; or
241 (B) a payment made for reasonable promotional and educational activities that is not
242 conditioned on the referral of business and is not used to pay expenses that a person in a
243 position to refer settlement services or business related to the settlement services would
244 otherwise incur.
246 (i) the loan or extension of credit is secured by a:
247 (A) mortgage;
248 (B) deed of trust; or
249 (C) consensual security interest; and
250 (ii) the mortgage, deed of trust, or consensual security interest described in Subsection
252 (A) is on a dwelling located in the state; and
253 (B) is created with the consent of the owner of the residential real property.
255 (i) the borrower and, if applicable, the seller sign and deliver to each other or to the
256 escrow or closing office each document required by:
257 (A) the real estate purchase contract;
258 (B) the lender;
259 (C) the title insurance company;
260 (D) the escrow or closing office;
261 (E) the written escrow instructions; or
262 (F) applicable law;
263 (ii) the borrower delivers to the seller, if applicable, or to the escrow or closing office
264 any money, except for the proceeds of any new loan, that the borrower is required to pay; and
265 (iii) if applicable, the seller delivers to the buyer or to the escrow or closing office any
266 money that the seller is required to pay.
268 estate settlement, including a title search, a title examination, the provision of a title certificate,
269 services related to title insurance, services rendered by an attorney, preparing documents, a
270 property survey, rendering a credit report or appraisal, a pest or fungus inspection, services
271 rendered by a real estate agent or broker, the origination of a federally related mortgage loan,
272 and the processing of a federally related mortgage.
274 between an individual licensed under this chapter and an entity licensed under this chapter.
276 (i) a state, territory, or possession of the United States;
277 (ii) the District of Columbia; or
278 (iii) the Commonwealth of Puerto Rico.
280 written test developed by the nationwide database.
284 relates specifically to Utah.
285 (2) (a) If a term not defined in this section is defined by rule, the term shall have the
286 meaning established by the division by rule made in accordance with Title 63G, Chapter 3,
287 Utah Administrative Rulemaking Act.
288 (b) If a term not defined in this section is not defined by rule, the term shall have the
289 meaning commonly accepted in the business community.
290 Section 2. Section 61-2c-105 is amended to read:
291 61-2c-105. Scope of chapter -- Exemptions.
292 (1) (a) Except as to an individual who will engage in an activity as a mortgage loan
293 originator, this chapter applies to a closed-end residential mortgage loan secured by a first lien
294 or equivalent security interest on a dwelling.
295 (b) This chapter does not apply to a transaction covered by Title 70C, Utah Consumer
296 Credit Code.
297 (2) The following are exempt from this chapter:
298 (a) the federal government;
299 (b) a state;
300 (c) a political subdivision of a state;
301 (d) an agency of or entity created by a governmental entity described in Subsections
302 (2)(a) through (c) including:
303 (i) the Utah Housing Corporation created in Section 63H-8-201;
304 (ii) the Federal National Mortgage Corporation;
305 (iii) the Federal Home Loan Mortgage Corporation;
306 (iv) the Federal Deposit Insurance Corporation;
307 (v) the Resolution Trust Corporation;
308 (vi) the Government National Mortgage Association;
309 (vii) the Federal Housing Administration;
310 (viii) the National Credit Union Administration;
311 (ix) the Farmers Home Administration; and
312 (x) the United States Department of Veterans Affairs;
313 (e) a depository institution;
314 (f) an entity that controls, is controlled by, or is under common control with a
315 depository institution;
316 (g) an employee or agent of an entity described in Subsections (2)(a) through (f):
317 (i) when that person acts on behalf of the entity described in Subsections (2)(a) through
318 (f); and
319 (ii) including an employee of:
320 (A) a depository institution;
321 (B) a subsidiary of a depository institution that is:
322 (I) owned and controlled by the depository institution; and
323 (II) regulated by a federal banking agency, as defined in 12 U.S.C. Sec. 5102; or
324 (C) an institution regulated by the Farm Credit Administration;
325 (h) except as provided in Subsection (3), a person who:
326 (i) makes a loan:
327 (A) secured by an interest in real property;
328 (B) with the person's own money; and
329 (C) for the person's own investment; and
330 (ii) that does not engage in the business of making loans secured by an interest in real
332 (i) except as provided in Subsection (3), a person who receives a mortgage, deed of
333 trust, or consensual security interest on real property if the individual or entity:
334 (i) is the seller of real property; and
335 (ii) receives the mortgage, deed of trust, or consensual security interest on real property
336 as security for a separate money obligation;
337 (j) a person who receives a mortgage, deed of trust, or consensual security interest on
338 real property if:
339 (i) the person receives the mortgage, deed of trust, or consensual security interest as
340 security for an obligation payable on an installment or deferred payment basis;
341 (ii) the obligation described in Subsection (2)(j)(i) arises from a person providing
342 materials or services used in the improvement of the real property that is the subject of the
343 mortgage, deed of trust, or consensual security interest; and
344 (iii) the mortgage, deed of trust, or consensual security interest is created without the
345 consent of the owner of the real property that is the subject of the mortgage, deed of trust, or
346 consensual security interest;
347 (k) a nonprofit corporation that:
348 (i) (A) is exempt from paying federal income taxes;
349 (B) is certified by the United States Small Business Administration as a small business
350 investment company;
351 (C) is organized to promote economic development in this state; and
352 (D) has as [
353 business expansion; [
354 (ii) is a community development financial institution; or
355 (iii) (A) is exempt from paying federal income taxes;
356 (B) has as the nonprofit corporation's primary purpose serving the public by helping
357 low-income individuals and families build, repair, or purchase housing;
358 (C) does not require, under the terms of a mortgage, a balloon payment;
359 (D) to perform loan originator activities, uses only unpaid volunteers or employees
360 whose compensation is not based on the number or size of the mortgage transactions that the
361 employees originate; and
362 (E) does not charge a loan origination fee in connection with a mortgage transaction;
363 (l) an employee or volunteer for a nonprofit corporation described in Subsection
364 (1)(k)(ii) or (iii), working within the scope of the nonprofit corporation's business;
367 (i) if the attorney is not principally engaged in the business of negotiating residential
368 mortgage loans when considering the attorney's ordinary practice as a whole for all the
369 attorney's clients; and
370 (ii) when the attorney engages in loan modification assistance in the course of the
371 attorney's practice as an attorney.
372 (3) An individual who will engage in an activity as a mortgage loan originator is
373 exempt from this chapter only if the individual is an employee or agent exempt under
374 Subsection (2)(g).
375 (4) (a) A loan processor or loan underwriter who is not a mortgage loan originator is
376 not required to obtain a license under this chapter when the loan processor or loan underwriter
378 (i) employed by, and acting on behalf of, a person or entity licensed under this chapter;
380 (ii) under the direction of and subject to the supervision of a person licensed under this
382 (b) A loan processor or loan underwriter who is an independent contractor is not
383 exempt under Subsection (4)(a).
384 (5) (a) Notwithstanding Subsection (2)(m), an attorney exempt from this chapter may
385 not engage in conduct described in Section 61-2c-301 when transacting business of residential
386 mortgage loans.
387 (b) If an attorney exempt from this chapter violates Subsection (5)(a), the attorney:
388 (i) is not subject to enforcement by the division under Part 4, Enforcement; and
389 (ii) may be subject to disciplinary action generally applicable to an attorney admitted to
390 practice law in this state.
391 (c) If the division receives a complaint alleging an attorney exempt from this chapter is
392 in violation of Subsection (5)(a) or that an attorney subject to this chapter has violated this
393 chapter, the division shall forward the complaint to the Utah State Bar for disciplinary action.
394 (6) (a) An individual who is exempt under Subsection (2), (3), or (4) may voluntarily
395 obtain a license under this chapter by complying with Part 2, Licensure.
396 (b) An individual who voluntarily obtains a license under this Subsection (6) shall
397 comply with all the provisions of this chapter.
Legislative Review Note
Office of Legislative Research and General Counsel