Mortgage Brokers, Mortgage Lenders & Mortgage Servicers are Regulated by what Laws & Statutes?

*MBLSLA (The Act) Mortgage Brokers, Lenders & Servicers Act

*Secondary Mortgage Loan Act

*Consumer Mortgage Protection Act

*Consumer Financial Services Act

MBLSLA

(THE ACT)

Mortgage Brokers, Lenders, and Servicing Act

*regulates Mortgage Brokers, Mortgage Lenders and Mortgage Servicers.

*amended April 2008 to add loan officers & loan originators as a regulated profession

Michigan Mortgage Brokers Association

Monitors and regulates activities of mortgage professionals in Michigan.

Affiliate of NAMB  National Association of Mortgage Brokers

Affiliate

Refers to a person or group that controls or is controlled by an intermediary & engages in the business of lending, brokering or servicing loans.

Board

Michigan's Mortgage Industry Advisory Board

Commissioner

Commissioner of the Office of Financial and Insurance Regulation of the Michigan Department of Labor and Economic Growth

Control Person

defined as: "an executive officer of a licensee or registrant or a person who has the authority to participate in the direction, directly or indirectly through one or more other persons, off the managemetn or policies of a licensee or registrant."  An executive officer includes a CEO, president, VP, CFO, controller, compliance officer or an individual holding a similar position.

Licensee

Individual or entity that is licensed under the Act.

Loan Officer

defined as:  " an individual who is an employee or agent of a mortgage broker, mortgage lender, or mortgage servicer, who originates mortgage loans; and who is not an employee or agent of a depository financial institution or a subsidiary or affiliate of a depository financial institution."

Mortgage Broker

A broker is defined under Michigan law as a perosn who does either or both of the following:

1. Serves as an agent for a person in an attempt to obtain a mortgage loan.

2. Serves as an agent for a person who makes mortgage loans.

Mortgage Lender

Michigan law defines a lender as a person who directly or indirectly, makes or offers to make loans.

Mortgage Loan

Mortgage loan defined as meeting the following requirements:

1. Secured by a first mortgage on real property

2. Located in the state of Michigan

3. Used as a dwelling for one to four families

(Land Contracts for one to four family dwellings in MI also fall in this catagory)

Originate

Michigan defines the act of originating loans as negotiating or arranging  a loan between a lender and borrower, or finding a loan for the borrower.

Person

refers to an individual but also includes corporations, LLCs, partnerships, associations, and other legal entities.

Registration

Registration means to file a notice with the Commissioner to notify him of an intent of a loan officer to engage in activities covered by the MBLSLA. Registrations should not be confused with licensing-loan officers must register with the Commissioner, while brokers, lenders and servicers may be required to both register and hold a license.

Secondary Mortgage Loan

MI identifies a 2nd mortgage loan subject to the requirements of the Secondary Mortgage Loan Act. Must meet  the following:

*A loan that is not meant to be repaid within 90 days

*Is made to a person for personal, family or household purposes.

*Secured by a mortgage on real property used as a dwelling that is located in MI

*Property is also subject to a lien of one or more prior mtgs.

A secondary mtg. loan may be secured by other collateral in addition to real property.

Office of Financial Insurance and Regulation

OFIR is charged with regulating brokers, lenders, servicers and loan officers conductiong business in MI.

Commissioner & his designees are responsible for enforcing regulations. Commissioner's duty is to administer and regulate laws and to protect consumers from unfair practices of mortgage professionals. Also oversees the licensing requirements established by legislature.

Charged with but no limited to the following:

*Conduct background investigations*Investigating Complaints*Issuing Orders*Examining Records

*Issuing, denying, revoking, suspending and reinstating licenses*Collecting renewal fees and fines*Administering disciplinary actions*Promulgating rules and regulations*Advising the Atty General on matters related to violating state law provisions pertaining to mtg. lending*Bringing legal action in the Ingham County Circuit Court on behalf of the state against those who violate mortgage lending laws

MORTGAGE PROFESSIONALS REGULATED BY LAW: WHO MUST BE LICENSED AND REGISTERED?

State law provides that any person who holds himself out as being able to negotiate, sell, or arrange mortgages secured by real property must be licensed and/or registered unless they are exempt. NO continuing education requirements or eximations regulations for mortgage brokers, mortgage lenders and mortgage servicers. HOWEVER loan officers MUST statisfy pre-registration educations and continuing education requirements.

Laws To Which Mortgage Loans Are Subject?

Regardless of it's place of execution, a mortgage loans is subject to the Mortgage Loan Broker , Lender and Servicer's Licensing Act (MLBLSLA) or the Secondary Mortgage Lending Act and all other applicable laws if the real property is loacted in the state of MI.

Exemptions to the MLBLSLA

*Depository financial institutions

*salesperson acting as agent for residential builder or residential maintenance and alteration contractor.

*RE Broker or RE salesperson who acts as a mtg. broker only in connection with RE sale or lease, is not a mtg. broker, lender or service and only recieves commission no additional compensation.

*Any person licensed pursuant to the Secondary Mtg Loan Act who doesn't make, broker or service mtg. loans in a 12m period from Jan1st to Dec 31st.

*State, Federal and local Gov't Agencies

*Mtg. lenders in conjunction with affilliates that {make/service/ or service 75 or fewer land contracts of which 10 or less require $ collected for the pmt of taxes or insurance}10 or less mtg. loans in a 12m period from Jan1st to Dec 31

*Atty licensed to practice law in MI and do not regularly engage in the business of making mtg loans secured by real property and render service in the course of their legal practice.

*Any person who makes mtg loans exclusively for the benefit of an employee of that person & the proceeds of the loan are used to assist the employee in meeting his or her housing needs.

*Fiduciaries to a qualified employee pension benefit plan pursuant to the Internal Revenue Code and who make mtg loans solely to plan participants from plan assets.

*Mtg brokers, lenders or servicers that are subsidiaries of a depository financial institution or holding co of a depository financial institution that maintain its main office or branch office in MI

*Nonprofit corporations engaging in mtg lending, brokering and servicing activity in connection witha  neighborhood housing program assisted under the Neighborhood Reinvestment Corporation Act.

*Any other person as determined by the Commissioner that meets the exemption qualifications.

Exemption Filings

Not automatic. must submit application to the Commissioner,provide documentation supporting your exemption and you must file affidavit every 2nd yr stating that they continue to meet the exemption standards.

Commissioner may grant exemptions for:

-state or federal gov't agencies

-Charitable, religious or non-profit organizations as identified by the Internal Revenue Code

-Programs targeted to groups that would not otherwise have access to affordable mtg loans from traditional mtg lending sources

-Lenders or programs in which mtg lending activity is limited to a defined geographic area in MI, not larger than a county in the case of a metropolitan statistical area

-Lenders that do not directly or indirectly share with another person an portion of fees paid to an organization in connection with a mtg. loan

-A person or entitiy that the commissioner thinks will comply with state and federal law and with the spirit and intent of section and does not service mtg loans.

New Loan Officer Registration Law

Enacted April 3, 2008. Requires that loan officers register with the OFIR (Office of Financial and Insurancr Regulations) by April 1st, 2009.

Loan officers do not have to get licensed...thy are required to become registrant

Loan Officer Registrant

"is a loan officer that has completed the required registration process and who has rec'd a registration certificate from the Commissioner"

term "licensee" and "registrant" is used to describes brokers, lenders and services

"loan officer registrant" is used to describe LO's that are registered

Temporary Loan Origination

LO's may operate w/o a registration certificate for 90 days while waiting for an employer to conduct criminal records cks and to submit info to the OFIR or while waiting to receive notification from the OFIR regarding registration status. If a completed registration application has been submitted and the operating fee has been paid, a LO may operate beyond the 90 day period pending notification from the OFIR.

Limitation on Origination Activity

Lo's may originate loans exclusively for one licensee or registrant, unles the LO is also licensed or registered as a mortgage broker.

Registration Applications for Loan Officer's that is used?

Application form that is used for registration is the National Mortgage Licensing System Form MU4

Nationwide Mortgage Licensing System

NMLS...purpose fo the system is to provide uniformity in the way the state regulatory agencies collect information for licensing applicants and to bring uniformity to the processing of applications and licenses.  Registration applications must be completed and submitted through the NMLS.

Applications available online at: www.stateregulatoryregistry.org/nmls

Web-based system will allow applicants to apply for a license, amend a license, update or renew licenses.

Licensing Fees

Loan Officer Registrant Fee     $350

NMLS Fee  $30

Loan officer registrants will be assessed an annual fee that will be established by the Commissioner. Purpose of fee is to defray the cost associated with administering and regulating the registration process. Fee paid will be non-refundable. If a fee is unpaid the Atty General may institute an action for the recovery of the fee, plus any penalties, interest and costs incurred.

Loan Officer Licensing Requirements

Must complete the following for the Commissioner to issue a LO Registration:

-complete loan officer registrant application

-pay the required registration fee

-submit to a background ck

-complete 24hr of classroom instruction

-satisfy the examination requirements (passing score of 75%)

-Applicant's information must not include criteria for immediate denial

24 Hr Classroom requirement will be waived for:

-satisfy examination requirements within 8 m. of the effective date of the new registration law

-submit verification of employment as a LO for at least 4 1/2 yrs of the past 5 yrs preceeding the new law.

-not subject to a prohibition within the 5 yrs preceeding the new law

-submit a complete LO registration application and satisfy the above requirements

-pay the required registration fee

-submit to a background ck

-applicant's information must not include criteria for immediate denial

Reasons for Denial of License

-conviction or a no contest plea to any felony or misdemeanor involving embezzlement, forgery, fraud, financial transactions or securities.

-conviction or a no contest plea to any felony within the 10 yrs preceding the date of registration application

-failure to submit to a criminal records ck

-the applicant has rec'd a prohibition order

Loan Officer Renewal Requirements

- registrations terminate on 12/31 of each year unless renewed

-renewal applications and annual operating fees are due by 12/1 each year

-renewal applications must include:

a. Name and address of the LO renewal applicant

b.Current license and registration number

c.signed certificate of completion of at least six hrs of continuing education

d. an affidavit disclosing any criminal convictions or o contest pleas

Display of Registration

Once LO is registered the registration certificate will be delivered to the LO's employer. The employing mtg broker or lender will be required to display the registration at its place of business

Unlicensed Activity

If the license of a mtg broker or lender that employes an LO is revoked, the employee LO's registration will also be automatically suspended. The LO may apply for a new registration without charge.

It is a misdemeanor for an individual to act as a LO without being registered. Such activity is subject to a fine up to $5,000 or imprisonment of up to three yrs or both

Prohibited Conduct for Loan OFficer Registrants

State Law prohibits the following conduct:

-Failing to conduct business according to state law and mortgage lending laws.

-Engaging in activity that is fraudulent, deceitful, or behavior that is a material misrepresentation in connection with any mtg transaction governed by the MBMLMS Act.

-repeatedly failin gto provide borrowers with material disclosures as required by law

-suppressing or withholding material inforamtion from the Commissioner that if submitted, would cause denial of registration

-refusing or failing to provide the Commissioner with an information required to obtain or renew a loan officer registration

-refusing or failing to provide Commissioner with any information that may be required at his request within a reasonable time.

-being convicted of, or pleading no contest to, any of the the following:

a. Misdemeanor involving embezzlement, forgery, fraud, a financial transaction, or securities.

b. Any Felony

Mortgage Industry Advisory Board

Addresses issues related to the residential mortgage industry.  Primary focus is to research, educate and advise on industry matters.

Responsible for:

-Advising the Commissioner on matters related to mtg industry

-Reveiwing and making recommendations regarding mtg educational course content, course approvals and course providers

-Making recommendations for content and procedures for the examination of LO's

-Developing procedures for verifying attendance and participation for courses administered electronically

-Developing or suggesting procedures for maintaining confidential inforamtion related to licensees, registrants, licensing applications and registration applications

-Communicating issues related to rules proposed under the state mortgage laws

-Any other issue that the COmmissioner may request

Board consists of 7 members and serves for a term of 4 yrs.