STATE OF IDAHO

Is a license required? Yes. House Bill 169(Attached as Schedule A)
State specific loan modification law? HB 169 Section 26-31-201-4 states that mortgage brokering activities means “means for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, accepting or offering to accept an application for a residential mortgage loan, assisting or offering to assist in the preparation of an application for a residential mortgage loan on behalf of a borrower, negotiating or offering to negotiate the terms or conditions of a residential mortgage loan with any person making residential mortgage loans or engaging in loan modification activities on behalf of a borrower.”

 

Advantages of becoming a licensed Mortgage Broker? None, it is mandatory.

 

Penalties for operating in the state without a license:

 

HB 169 Section 26-31-203 states that “Any person, except a person exempt under section 26-31-202 Idaho Code, who engages in mortgage brokering activities or mortgage lending activities without first obtaining a license from the department in accordance with this part, shall upon conviction be guilty of a felony.”

 

Is an advanced fee permitted?

 

No, but heavily restricted. HB 169 Section 26-31-210 states 31 “(1) A person subject to this part shall not require a borrower or person seeking a loan modification to pay any fees or charges prior to a residential mortgage loan closing, or prior to the completion of a loan modification, except: (a) Charges actually incurred by the person subject to this part on behalf of the borrower or person seeking a loan modification for services which have been rendered by third parties. These fees may include, but are not limited to, fees for credit reports, flood insurance certifications, property inspections, title insurance commitments, UCC4 lien searches and appraisals; (b) An application fee; (c) A ratelock fee; (d) A commitment fee upon approval of the residential mortgage loan; (e) A cancellation fee which may be charged and collected by a person subject to this part at any time either prior to the scheduled closing of a residential mortgage loan transaction, completion of a loan modification or subsequent thereto. (2) Any fees charged under the authority of this section”

 

Is a written agreement required? Yes. HB 169 Section 26-31-211-11 prohibits that anyone from “Receiving a fee for engaging in loan modification activities except pursuant to a written agreement between the person subject to this part and a person seeking a loan modification. The written agreement must specify the amount of the fee that will be charged to the person seeking a loan modification, specify the terms of the loan for which modification will be sought and disclose the expected impact of the loan modification on the monthly payment and length of the loan.”

 

Other noteworthy information? House Bill 169 went into effect on July 1st. It is not yet in the general state statutes, but it is law in Idaho.
Idaho Statutes

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House Bill 169:

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License application:

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SCHEDULE A

 

LEGISLATURE OF THE STATE OF IDAHO

Sixtieth Legislature First Regular Session 2009

IN THE HOUSE OF REPRESENTATIVES

HOUSE BILL NO. 169

BY BUSINESS COMMITTEE

1 AN ACT

2 RELATING TO THE RESIDENTIAL MORTGAGE PRACTICES ACT; REPEALING

3 CHAPTER 31, TITLE 26, IDAHO CODE; AMENDING TITLE 26, IDAHO CODE,

4 BY THE ADDITION OF A NEW CHAPTER 31, TITLE 26, IDAHO CODE, TO

5 PROVIDE A SHORT TITLE AND SCOPE, TO PROVIDE GENERAL DEFINITIONS,

6 TO PROVIDE THE DIRECTOR’S AUTHORITY UNDER THE NMLSR, TO PROVIDE

7 THAT A BORROWER’S REMEDIES ARE NOT AFFECTED, TO PROVIDE THE

8 RELATIONSHIP TO OTHER LAWS, TO PROVIDE FOR FUNDS COLLECTED,

9 TO PROVIDE CHARGES FOR PARTICIPATION IN THE NMLSR, TO PROVIDE

10 REPORTING REQUIREMENTS TO THE NMLSR, TO PROVIDE A MORTGAGE

11 RECOVERY FUND, TO PROVIDE FUNDING FOR THE MORTGAGE RECOVERY

12 FUND, TO PROVIDE A STATUTE OF LIMITATIONS, TO PROVIDE A PROCEDURE

13 FOR RECOVERY FROM THE MORTGAGE RECOVERY FUND, TO PROVIDE

14 RECOVERY LIMITS FROM THE MORTGAGE RECOVERY FUND, TO PROVIDE

15 FOR THE REVOCATION OF A LICENSE FOR PAYMENT FROM THE MORTGAGE

16 RECOVERY FUND, TO PROVIDE DEFINITIONS FOR PART 2, TO PROVIDE

17 EXEMPTIONS TO PART 2, TO PROVIDE FOR UNLAWFUL ACTS RELATING TO

18 MORTGAGE BROKERING OR MORTGAGE LENDING ACTIVITIES, TO PROVIDE

19 THE POWERS AND DUTIES OF THE DIRECTOR, TO PROVIDE REMEDIES

20 AVAILABLE TO THE DEPARTMENT, TO PROVIDE FOR THE LICENSE TO DO

21 BUSINESS AS A MORTGAGE BROKER OR MORTGAGE LENDER, TO PROVIDE

22 FOR THE REVOCATION OR SUSPENSION OF A MORTGAGE BROKER OR

23 MORTGAGE LENDER LICENSE, TO PROVIDE REQUIREMENTS RELATING TO

24 RECORDS, ANNUAL REPORTS AND RENEWAL OF A MORTGAGE BROKER

25 OR MORTGAGE LENDER LICENSE, TO PROVIDE FOR EXAMINATION

26 AND INVESTIGATIONS, TO PROVIDE FOR RESTRICTIONS ON FEES AND

27 CHARGES, TO PROVIDE THE PROHIBITED PRACTICES OF MORTGAGE

28 BROKERS AND MORTGAGE LENDERS, TO PROVIDE REQUIREMENTS

29 RELATING TO THE CONTINUING EDUCATION OF QUALIFIED PERSONS IN

30 CHARGE, TO PROVIDE A TITLE, TO PROVIDE FOR THE PURPOSE OF PART

31 3, TO PROVIDE DEFINITIONS FOR PART 3, TO PROVIDE REQUIREMENTS

32 RELATING TO THE LICENSE AND REGISTRATION OF MORTGAGE LOAN

33 ORIGINATORS AND FOR EXEMPTIONS, TO PROVIDE FOR THE LICENSE

34 AND REGISTRATION APPLICATION OF MORTGAGE LOAN ORIGINATORS, TO

35 PROVIDE REQUIREMENTS RELATING TO THE ISSUANCE OF A MORTGAGE

36 LOAN ORIGINATOR LICENSE, TO PROVIDE PRELICENSING AND RELICENSING

37 EDUCATION REQUIREMENTS FOR MORTGAGE LOAN ORIGINATORS, TO

38 PROVIDE FOR TESTING OF MORTGAGE LOAN ORIGINATORS, TO PROVIDE

39 LICENSE RENEWAL REQUIREMENTS FOR MORTGAGE LOAN ORIGINATORS,

40 TO PROVIDE CONTINUING EDUCATION REQUIREMENTS FOR MORTGAGE

41 LOAN ORIGINATORS, TO PROVIDE THE DIRECTOR WITH THE AUTHORITY

2

1 TO REQUIRE MORTGAGE LOAN ORIGINATORS TO BE LICENSED AND

2 REGISTERED THROUGH THE NMLSR, TO PROVIDE A NMLSR INFORMATION

3 CHALLENGE PROCESS, TO PROVIDE FOR ENFORCEMENT AUTHORITY,

4 VIOLATIONS AND PENALTIES, TO PROVIDE THE REMEDIES AVAILABLE TO

5 THE DEPARTMENT, TO PROVIDE FOR THE CONFIDENTIALITY OF CERTAIN

6 INFORMATION, TO PROVIDE THE DIRECTOR WITH INVESTIGATION AND

7 EXAMINATION AUTHORITY, TO PROVIDE FOR PROHIBITED ACTS AND

8 PRACTICES OF MORTGAGE LOAN ORIGINATORS, TO PROVIDE FOR THE

9 UNLAWFUL ACTS OF MORTGAGE LOAN ORIGINATORS, TO PROVIDE

10 REQUIREMENTS FOR NONFEDERALLY INSURED CREDIT UNIONS AND TO

11 PROVIDE DISCLOSURE REQUIREMENTS RELATING TO UNIQUE IDENTIFIERS

12 AND PROVIDING SEVERABILITY; AND PROVIDING AN EFFECTIVE DATE.

13 Be It Enacted by the Legislature of the State of Idaho:

14 SECTION 1. That Chapter 31, Title 26, Idaho Code, be, and the same is hereby repealed.

15 SECTION 2. That Title 26, Idaho Code, be, and the same is hereby amended by the

16 addition thereto of a NEW CHAPTER, to be known and designated as Chapter 31, Title 26,

17 Idaho Code, and to read as follows:

18 CHAPTER 31

19 IDAHO RESIDENTIAL MORTGAGE PRACTICES ACT

20 PART 1.

21 GENERAL PROVISIONS

22 2631101.

SHORT TITLE AND SCOPE. This chapter shall be known and may be

23 cited as the “Idaho Residential Mortgage Practices Act,” and is organized into three (3) parts.

24 Part 1 includes provisions that apply to the entire chapter. Part 2 includes provisions for

25 the regulation of mortgage brokers and mortgage lenders. Part 3 includes provisions for the

26 regulation of individual mortgage loan originators.

27 2631102.

GENERAL DEFINITIONS. As used in this chapter and in rules

28 promulgated pursuant to this chapter:

29 (1) “Borrower” means the person who has applied for a residential mortgage loan from

30 a licensee, or person required to be licensed, under this chapter, or on whose behalf the

31 activities set forth in section 2631201(

3), (5) or (7), or section 2631303(

6), Idaho Code, are

32 conducted.

33 (2) “Department” means the department of finance of the state of Idaho.

34 (3) “Director” means the director of the department of finance.

35 (4) “Licensee” means a person licensed pursuant to this chapter to engage in the activities

36 regulated by this chapter.

37 (5) “Nationwide mortgage licensing system and registry” or “NMLSR” means a mortgage

38 licensing system developed and maintained by the conference of state bank supervisors and

39 the American association of residential mortgage regulators for the licensing and registration of

40 mortgage brokers, mortgage lenders and mortgage loan originators.

3

1 (6) “Person” means a natural person, corporation, company, limited liability company,

2 partnership or association;

3 (7) “Real estate settlement procedures act” means the act set forth in 12 U.S.C. section

4 2601 et seq., as identified by administrative rule.

5 (8) “Regulation X” means regulation X as promulgated by the U.S. department of

6 housing and urban development and codified in 24 CFR part 3500 et seq., as identified by

7 administrative rule.

8 (9) “Regulation Z” means regulation Z as promulgated by the board of governors of the

9 federal reserve system and codified in 12 CFR part 226 et seq., as identified by administrative

10 rule.

11 (10) “Residential mortgage loan” means any loan that is secured by a mortgage, deed of

12 trust, or other equivalent consensual security interest on a dwelling, as defined in section 103(v)

13 of the truth in lending act, located in Idaho, or on residential real estate.

14 (11) “Residential real estate” means any real property located in Idaho, upon which is

15 constructed or intended to be constructed a dwelling as defined in section 103(v) of the truth in

16 lending act.

17 (12) “Truth in lending act” means the act set forth in 15 U.S.C. section 1601 et seq., as

18 identified by administrative rule.

19 (13) “Unique identifier” means a number or other identifier assigned by protocols

20 established by the NMLSR.

21 2631103.

DIRECTOR’S AUTHORITY UNDER THE NATIONWIDE MORTGAGE

22 LICENSING SYSTEM AND REGISTRY. (1) The legislature has determined that a nationwide

23 mortgage licensing system and registry for mortgage brokers, mortgage lenders and mortgage

24 loan originators is consistent with both the public interest and the purposes of this chapter.

25 (2) For the sole purpose of participating in the nationwide mortgage licensing system and

26 registry, the director is authorized to:

27 (a) Modify by rule the license renewal dates under this chapter;

28 (b) Establish by rule such new requirements as are necessary for the state of Idaho to

29 participate in the nationwide mortgage licensing system and registry upon the director’s

30 finding that each new requirement is consistent with both the public interest and the

31 purposes of this chapter; and

32 (c) Require a background investigation of each applicant for a mortgage broker,

33 mortgage lender or mortgage loan originator license by means of fingerprint checks by

34 the Idaho state police and the FBI for state and national criminal history record checks.

35 The information obtained thereby may be used by the director to determine the applicant’s

36 eligibility for licensing under this chapter. The fee required to perform the criminal

37 history record check shall be borne by the license applicant. Information obtained or

38 held by the director pursuant to this subsection shall be considered confidential personal

39 information and shall be exempt from disclosure pursuant to section 9340C(

8) and (9),

40 Idaho Code.

41 2631104.

BORROWER’S REMEDIES NOT AFFECTED. The grant of powers to the

42 director in this chapter does not limit remedies available to borrowers under this chapter or

43 under other principles of law or equity.

4

1 2631105.

RELATIONSHIP TO OTHER LAWS. (1) All political subdivisions of this

2 state shall be prohibited from enacting and enforcing ordinances, resolutions, regulations and

3 rules pertaining to the financial or lending activities of persons who:

4 (a) Are subject to the jurisdiction of the department, including those whose activities are

5 subject to this chapter;

6 (b) Are subject to the jurisdiction or regulatory supervision of the board of governors

7 of the federal reserve system, the office of the comptroller of the currency, the office of

8 thrift supervision, the national credit union administration, the federal deposit insurance

9 corporation, the federal trade commission or the United States department of housing and

10 urban development; or

11 (c) Originate, purchase, sell, assign, securitize or service property interests or obligations

12 created by financial transactions or loans made, executed or originated by persons referred

13 to in paragraph (a) or (b) of this subsection or who assist or facilitate such transactions.

14 (2) The requirements of this section shall apply to all ordinances, resolutions and rules

15 pertaining to financial or lending activities, including any ordinances, resolutions or rules

16 disqualifying persons from doing business with a political subdivision based upon financial or

17 lending activities or imposing reporting requirements or any other obligations upon persons

18 regarding financial or lending activities.

19 (3) In the event that the United States department of housing and urban development

20 pursuant to the authority granted to it under section 1508, P.L. 110289,

determines that a

21 provision of this chapter does not meet the requirements of section 1508, P.L. 110289,

the

22 director may, in his discretion, for the sole purpose of complying with the determination, refrain

23 from enforcing the provision found by the department of housing and urban development to

24 not meet the requirements of section 1508, P.L. 110289,

until the adjournment of the session

25 of the legislature next following the determination by the department of housing and urban

26 development.

27 2631106.

FUNDS COLLECTED UNDER THIS CHAPTER. Except as provided in

28 section 2631110

of this chapter pertaining to the mortgage recovery fund, the director shall

29 deposit all funds collected by the department under this chapter into the finance administrative

30 account pursuant to section 672702,

Idaho Code.

31 2631107.

CHARGES FOR PARTICIPATION IN THE NMLSR. Mortgage brokers,

32 mortgage lenders and mortgage loan originators who seek to obtain or retain a license under

33 this chapter shall pay the charges imposed and retained by the NMLSR to fund the expenses

34 associated with an applicant’s or licensee’s participation in the NMLSR.

35 2631108.

REPORT TO NATIONWIDE MORTGAGE LICENSING SYSTEM AND

36 REGISTRY. The director shall regularly report to the NMLSR violations of this chapter, as

37 well as enforcement actions and other relevant information, subject to the provisions of section

38 2631315,

Idaho Code.

39 2631109.

MORTGAGE RECOVERY FUND. (1) There is hereby created in the state

40 treasury the mortgage recovery fund.

41 (2) As provided in section 2631112,

Idaho Code, the mortgage recovery fund shall be

42 used to reimburse persons to whom an Idaho court awards actual damages resulting from acts

43 constituting violations of this chapter by a mortgage broker, mortgage lender or mortgage loan

5

1 originator who was licensed, or required to be licensed, under this chapter at the time that the

2 act was committed.

3 (3) A recovery from the mortgage recovery fund shall not include punitive damages

4 awarded by a court.

5 (4) Payments from the mortgage recovery fund may not be made to:

6 (a) Any lender whose acts, or the acts of its agent, were found by a court to be violations

7 of this chapter and a basis of the court’s award of a money judgment to a person injured

8 by such violations;

9 (b) Any person who acquires a mortgage loan where acts associated with the origination

10 of such loan are found by a court to be violations of this chapter and a basis for a

11 judgment obtained by a person injured by such violations; or

12 (c) The spouse, the personal representative of the spouse of the judgment debtor or the

13 personal representative of the judgment debtor.

14 2631110.

FUNDING. (1) Upon application for a mortgage broker, mortgage lender or

15 mortgage loan originator license, and upon renewal of such licenses issued under this chapter,

16 the applicant or person seeking renewal shall, in addition to paying the license application or

17 renewal fee required under this chapter, pay a fee to the department through the NMLSR for

18 deposit in the mortgage recovery fund as follows:

19 (a) Two hundred fifty dollars ($250) for home office locations of mortgage brokers and

20 mortgage lenders licensed under part 2 of this chapter;

21 (b) One hundred fifty dollars ($150) for each branch office location of a mortgage broker

22 or mortgage lender licensed under part 2 of this chapter; and

23 (c) One hundred dollars ($100) for each mortgage loan originator licensed under part 3

24 of this chapter.

25 (2) With respect to mortgage recovery fund fees payable at the time of annual license

26 renewal for licensees under this chapter, the director may adjust the fees within the limits

27 of subsection (1) of this section on a pro rata basis as necessary to maintain a balance of

28 one million five hundred thousand dollars ($1,500,000) in the mortgage recovery fund, plus

29 an additional amount of fifty thousand dollars ($50,000) as set forth in subsection (4) of this

30 section.

31 (3) All interest that accrues in the mortgage recovery fund shall be added to the balance

32 of the mortgage recovery fund.

33 (4) On an annual basis, the department may apply up to fifty thousand dollars ($50,000)

34 of moneys accumulated in the mortgage recovery fund in excess of one million five hundred

35 thousand dollars ($1,500,000) to:

36 (a) Fund the department’s expenses in administering the mortgage recovery fund;

37 (b) Develop and implement consumer education concerning the residential mortgage

38 industry;

39 (c) Contract for research projects for the state concerning the residential mortgage

40 industry;

41 (d) Fund the training expenses of department staff members and its attorneys concerning

42 the residential mortgage industry; and

43 (e) Publish and distribute educational materials to licensees and applicants for licensure

44 under this chapter.

6

1 2631111.

STATUTE OF LIMITATIONS. The filing of a verified claim with the court

2 pursuant to section 2631112,

Idaho Code, that is the basis of a claim against the mortgage

3 recovery fund may not be instituted more than one (1) year after termination of all court

4 proceedings concerning such judgment, including appeals.

5 2631112.

PROCEDURE FOR RECOVERY. (1) A person who obtains against a

6 mortgage broker, mortgage lender or mortgage loan originator a money judgment in an Idaho

7 court that includes findings of violations of this chapter occurring on or after July 1, 2009,

8 after final judgment has been entered, execution returned unsatisfied and the judgment has been

9 recorded, may file a verified claim with the court in which the judgment was entered, and on

10 twenty (20) days’ written notice to the director and to the judgment debtor, may apply to the

11 court for an order directing payment from the mortgage recovery fund of any unpaid amount on

12 such judgment, subject to section 2631111,

Idaho Code.

13 (2) At a hearing on the application, the person seeking recovery from the mortgage

14 recovery fund must show:

15 (a) That the judgment has not been discharged in bankruptcy and is based on facts

16 allowing recovery under section 2631109(

2), Idaho Code;

17 (b) That the person is not a spouse of the judgment debtor, or the personal representative

18 of the spouse;

19 (c) That the person is not a mortgage broker, mortgage lender or mortgage loan

20 originator as defined by this chapter who is seeking to recover any compensation

21 regarding the mortgage loan transaction which is the subject of the money judgment upon

22 which a claim against the mortgage recovery fund is based; and

23 (d) That, based on the best available information, the judgment debtor lacks sufficient

24 nonexempt assets in this state or any other state to satisfy the judgment.

25 (3) Any recovery on the money judgment received by the judgment creditor before

26 payment from the mortgage recovery fund shall be applied by the judgment creditor to reduce

27 the judgment creditor’s actual damages which were awarded in the judgment.

28 (4) After giving notice and the opportunity for a hearing to the person seeking recovery,

29 to the judgment debtor and to the department, the court may enter an order requiring the

30 director to pay from the mortgage recovery fund the amount the court finds payable on the

31 claim, pursuant to and in accordance with the limitations contained in this section, if the court

32 is satisfied as to the proof of all matters required to be shown under subsection (2) of this

33 section, and that the person seeking recovery from the mortgage recovery fund has satisfied all

34 of the requirements of this section.

35 (5) When the director receives notice that a hearing is scheduled under this section,

36 the director may enter an appearance, file a response, appear at the hearing or take any other

37 appropriate action as he deems necessary to protect the mortgage recovery fund from spurious

38 or unjust claims and to ensure compliance with the requirements for recovery under this

39 section.

40 (6) If the court finds that the aggregate amount of claims against a mortgage broker,

41 mortgage lender or mortgage loan originator exceeds the limits set forth in section 2631113,

42 Idaho Code, the court shall reduce proportionately the amount the court finds payable on the

43 claim.

44 (7) The department shall provide the court with information concerning the mortgage

45 recovery fund necessary to enable the court to carry out its duties under this section.

7

1 2631113.

RECOVERY LIMITS. (1) A person entitled to receive payment from the

2 mortgage recovery fund may receive reimbursement of actual damages, which shall not include

3 post judgment interest, reasonable attorney’s fees and court costs as determined by the court,

4 subject to the limitations in subsection (2) of this section and subject to the availability of

5 sufficient funds in the mortgage recovery fund at the time payment is ordered.

6 (2) A payment from the mortgage recovery fund may be made by the director only

7 pursuant to a court order as provided by section 2631112,

Idaho Code, in an amount equal

8 to the unsatisfied portion of the creditor’s judgment or judgments or fifty thousand dollars

9 ($50,000), whichever is less.

10 (3) Payments from the mortgage recovery fund shall be limited in the aggregate to

11 two hundred fifty thousand dollars ($250,000) against any one (1) licensee. If the total

12 claims against such licensee exceed the aggregate limit of two hundred fifty thousand dollars

13 ($250,000), the court shall prorate payment based on the ratio that a person’s claim bears to the

14 other claims filed against such licensee.

15 2631114.

REVOCATION OF LICENSE FOR PAYMENT FROM MORTGAGE

16 RECOVERY FUND. (1) The director may summarily revoke a license issued under this chapter

17 if the director is required by court order under section 2631112,

Idaho Code, to make a

18 payment from the mortgage recovery fund based on a money judgment that includes findings

19 of violations of this chapter by such licensee.

20 (2) A person whose license has been revoked under subsection (1) of this section is not

21 eligible to be considered for the issuance of a new license under this chapter until the person

22 has repaid in full, plus interest at the current legal rate, the amount paid from the mortgage

23 recovery fund resulting from that person’s violation of this chapter.

24 (3) This section does not limit the authority of the director to take disciplinary action

25 against a licensee under this chapter for a violation of this chapter or of rules promulgated or

26 orders issued pursuant to this chapter. The repayment in full to the mortgage recovery fund of

27 all obligations of a licensee under this chapter does not nullify or modify the effect of any other

28 disciplinary proceeding brought under this chapter.

29 PART 2.

30 PROVISIONS APPLICABLE TO MORTGAGE BROKERS AND MORTGAGE LENDERS

31 2631201.

DEFINITIONS. As used in this part and in rules promulgated pursuant to

32 this chapter and pertinent to this part:

33 (1) “Agent” means a person who acts with the consent and on behalf of a licensee and is

34 subject to the licensee’s direct or indirect control, and may include an independent contractor.

35 (2) “Loan modification” means an adjustment or compromise of an existing residential

36 mortgage loan. The term “loan modification” does not include a refinancing transaction.

37 (3) “Loan modification activities” means for compensation or gain, or in the expectation

38 of compensation or gain, engaging in or offering to engage in effecting loan modifications in

39 this state. The definition of “debt counselor” or “credit counselor” in section 262222(

9), Idaho

40 Code, shall not apply to loan modification activities.

41 (4) “Mortgage broker” means any nonexempt organization that performs the activities

42 described in subsection 5 of this section, with respect to a residential mortgage loan.

43 (5) “Mortgage brokering activities” means for compensation or gain, or in the expectation

44 of compensation or gain, either directly or indirectly, accepting or offering to accept an

8

1 application for a residential mortgage loan, assisting or offering to assist in the preparation of

2 an application for a residential mortgage loan on behalf of a borrower, negotiating or offering

3 to negotiate the terms or conditions of a residential mortgage loan with any person making

4 residential mortgage loans or engaging in loan modification activities on behalf of a borrower.

5 (6) “Mortgage lender” means any nonexempt organization that makes residential

6 mortgage loans to borrowers and performs the activities described in subsection (7) of this

7 section.

8 (7) “Mortgage lending activities” means for compensation or gain, or in the expectation

9 of compensation or gain, either directly or indirectly, accepting or offering to accept

10 applications for residential mortgage loans, assisting or offering to assist in the preparation of

11 an application for a residential mortgage loan.

12 (8) “Organization” means a person that is not a natural person.

13 (9) “Qualified person in charge” means the person designated, pursuant to section

14 2631206,

Idaho Code, as being in charge of a licensed location of a mortgage broker or

15 mortgage lender licensed under this part.

16 2631202.

EXEMPTIONS. The provisions of this part do not apply to:

17 (1) Agencies of the United States and agencies of this state and its political subdivisions;

18 (2) An owner of real property who offers credit secured by a contract of sale, mortgage

19 or deed of trust on the property sold;

20 (3) A loan that is made by a person to an employee of that person if the proceeds of the

21 loan are used to assist the employee in meeting his housing needs;

22 (4) Regulated lenders licensed under the Idaho credit code and regularly engaged

23 in making regulated consumer loans other than those secured by a security interest in real

24 property;

25 (5) Trust companies as defined in section 263203,

Idaho Code;

26 (6) Any person licensed or chartered under the laws of any state or of the United States

27 as a bank, savings and loan association, credit union or industrial loan company. The terms

28 “bank,” “savings and loan association,” “credit union” and “industrial loan company” shall

29 include employees and agents of such organizations as well as wholly owned subsidiaries of

30 such organizations, provided that the subsidiary is regularly examined by the chartering state or

31 federal agency for consumer compliance purposes;

32 (7) Attorneys, or persons licensed under chapter 2, title 54, Idaho Code, provided that the

33 license held by such attorneys or persons is in an active status;

34 (8) Persons employed by, or who contract with, a licensee under this part to perform only

35 clerical or administrative functions on behalf of such licensee, and who do not solicit borrowers

36 or negotiate the terms of loans on behalf of the licensee;

37 (9) Any person not making more than five (5) loans primarily for personal, family or

38 household use and primarily secured by a security interest on residential real property, with his

39 own funds for his own investment, in any period of twelve (12) consecutive months; nor

40 (10) Any person who funds a residential mortgage loan which has been originated and

41 processed by a licensee under this part or by an exempt person under this part, who does

42 not directly or indirectly solicit borrowers in this state for the purpose of making residential

43 mortgage loans, and who does not participate in the negotiation of residential mortgage loans

44 with the borrower. For the purpose of this subsection, “negotiation of residential mortgage

9

1 loans” does not include setting the terms under which a person may buy or fund a residential

2 mortgage loan originated by a licensee under this part or an exempt person under this part.

3 2631203.

UNLAWFUL ACTS. (1) Any person, except a person exempt under section

4 2631202,

Idaho Code, who engages in mortgage brokering activities or mortgage lending

5 activities without first obtaining a license from the department in accordance with this part,

6 shall upon conviction be guilty of a felony.

7 (2) No person, except a person exempt under section 2631202,

Idaho Code, shall

8 engage in mortgage brokering activities or mortgage lending activities without first obtaining

9 a license from the department in accordance with this part.

10 2631204.

POWERS AND DUTIES OF DIRECTOR. In addition to any other duties

11 imposed upon the director by law, the director shall:

12 (1) Administer and enforce the provisions and requirements of this part;

13 (2) Conduct investigations and issue subpoenas as necessary to determine whether a

14 person has violated any provision of this part or rules promulgated pursuant to this chapter and

15 pertinent to this part;

16 (3) Conduct examinations of the books and records of mortgage broker and mortgage

17 lender licensees and conduct investigations as necessary and proper for the enforcement of the

18 provisions of this part and the rules promulgated pursuant to this chapter and pertinent to this

19 part;

20 (4) Appoint a volunteer advisory board which shall consist of two (2) individuals who

21 represent mortgage lenders and two (2) individuals who represent mortgage brokers;

22 (5) Pursuant to chapter 52, title 67, Idaho Code, issue orders and promulgate rules that,

23 in the opinion of the director, are necessary to execute, enforce and effectuate the purposes of

24 this part;

25 (6) Be authorized to set, by annual written notification to mortgage broker and mortgage

26 lender licensees, limits on the fees and charges which are set forth in subsections (1) and (2) of

27 section 2631210,

Idaho Code; and

28 (7) Review and approve forms used by mortgage broker and mortgage lender licensees

29 prior to their use as prescribed by the director.

30 2631205.

REMEDIES AVAILABLE TO THE DEPARTMENT. (1) Whenever it

31 appears to the director that any person subject to this part has engaged in or is about to engage

32 in any act or practice constituting a violation of any provision of the truth in lending act, the

33 real estate settlement procedures act, regulation X, regulation Z or of this part or any rule

34 promulgated or order issued under this act and pertinent to this part, he may in his discretion

35 bring an action in any court of competent jurisdiction, and upon a showing of any violation,

36 there shall be granted any or all of the following:

37 (a) A writ or order restraining or enjoining, temporarily or permanently, any act or

38 practice violating any provision of this part or any rule promulgated or order issued under

39 this chapter and pertinent to this part, and to enforce compliance with this part or any rule

40 promulgated or order issued under this chapter and pertinent to this part;

41 (b) An order that the person violating any provision of this part, or a rule promulgated

42 or order issued under this chapter and pertinent to this part pay a civil penalty to the

43 department in an amount not to exceed twentyfive

thousand dollars ($25,000) for each

44 violation;

10

1 (c) An order allowing the director to recover costs which may include investigative

2 expenses and attorney’s fees;

3 (d) An order granting a declaratory judgment that a particular act, practice or method is a

4 violation of the provisions of this part;

5 (e) An order granting other appropriate remedies including restitution to borrowers for

6 excess charges or actual damages.

7 (2) If the director finds that a person subject to this part has violated, is violating, or

8 that there is reasonable cause to believe that a person is about to violate the provisions of this

9 part, or any rule promulgated or order issued under this chapter and pertinent to this part, the

10 director may, in his discretion, order the person to cease and desist from the violations.

11 2631206.

LICENSE TO DO BUSINESS AS A MORTGAGE BROKER OR

12 MORTGAGE LENDER. (1) The director shall receive and act on all applications for licenses

13 to do business as a mortgage broker or mortgage lender. Applications shall be filed through

14 the NMLSR, or as otherwise prescribed by the director, shall contain such information as

15 the director may reasonably require, shall be updated through the NMLSR, or as otherwise

16 prescribed by the director, as necessary to keep the information current, and shall be

17 accompanied by a nonrefundable application fee of three hundred fifty dollars ($350).

18 (2) An application for license may be denied if the director finds that:

19 (a) The financial responsibility, character and fitness of the license applicant, or of the

20 officers and directors thereof, if the applicant is a corporation, partners thereof if the

21 applicant is a partnership, members or managers thereof if the applicant is a limited

22 liability company and individuals designated in charge of the applicant’s places of

23 business, are not such as to warrant belief that the business will be operated honestly and

24 fairly within the purposes of this part;

25 (b) The qualified person in charge of the applicant’s places of business does not have

26 a minimum of three (3) years’ experience in residential mortgage brokering or mortgage

27 lending;

28 (c) The applicant has been convicted of any felony, or of a misdemeanor involving any

29 aspect of the financial services business, or a court has accepted a finding of guilt on

30 the part of the applicant of any felony, or of a misdemeanor involving any aspect of the

31 financial services business;

32 (d) The applicant has had a license, substantially equivalent to a license under this part

33 and issued by any state, denied, revoked or suspended under the law of such state;

34 (e) The applicant has filed an application for a license which is false or misleading with

35 respect to any material fact;

36 (f) The applicant or any partner, officer, director, manager, member, employee or agent of

37 the applicant has violated this chapter or any rule promulgated or order issued under this

38 chapter and pertinent to this part;

39 (g) The applicant or any partner, officer, director, manager, member, employee or agent

40 of the applicant has violated any state or federal law, rule or regulation pertaining to the

41 financial services industry; or

42 (h) The applicant has not provided information on the application as reasonably required

43 by the director pursuant to subsection (1) of this section, or has provided materially false

44 information.

11

1 (3) The director is empowered to conduct investigations as he may deem necessary, to

2 enable him to determine the existence of the requirements set out in subsection (2) of this

3 section.

4 (4) Upon written request to the director, an applicant is entitled to a hearing on the

5 question of his qualifications for a license if:

6 (a) The director has notified the applicant in writing that his application has been denied;

7 (b) The director has not issued a license within sixty (60) days after the application for

8 the license was filed. If a hearing is held, the applicant shall reimburse, pro rata, the

9 director for his reasonable and necessary expenses incurred as a result of the hearing. A

10 request for hearing may not be made more than fifteen (15) days after the director has

11 mailed a writing to the applicant notifying him that the application has been denied and

12 stating in substance the director’s finding supporting denial of the application.

13 (5) Every licensee under this part shall maintain a home office licensed under this part as

14 the licensee’s principal location for the transaction of mortgage business. The director may, on

15 application through the NMLSR, or as otherwise prescribed by the director, issue additional

16 branch licenses to the same licensee upon compliance with all the provisions of this part

17 governing the issuance of a single license. A separate license shall be required for each place

18 of business from which mortgage brokering activities or mortgage lending activities are directly

19 or indirectly conducted. The individual in charge of each place of business shall satisfy the

20 requirements of subsections (2)(b), (c) and (d) of this section. Each license under this part shall

21 remain in full force and effect unless the licensee does not satisfy the renewal requirements

22 of section 2631208(

3), Idaho Code, or the license is relinquished, suspended or revoked;

23 provided however, branch licenses shall terminate upon the relinquishment or revocation of a

24 home office license.

25 (6) No licensee under this part shall change the location of any place of business,

26 consolidate two (2) or more locations or close any home office location without giving the

27 director at least fifteen (15) days’ prior written notice. A licensee under this part shall give

28 written notice to the director within three (3) business days of the closure of any branch

29 location licensed under this part. Written notice of the closure of a home or branch office

30 location shall include a detailed explanation of the disposition of all loan applications pending

31 at the time of closure of the licensed location.

32 (7) No licensee under this part shall engage in the business of making or brokering

33 residential mortgage loans at any place of business for which he does not hold a license nor

34 shall he engage in business under any other name than that on the license.

35 (8) The director may suspend action upon a mortgage broker or mortgage lender

36 license application pending resolution of any criminal charges before any court of competent

37 jurisdiction against an applicant which could disqualify that applicant if convicted.

38 (9) The director may suspend action upon a mortgage broker or mortgage lender license

39 application pending resolution of any civil action or administrative proceeding against an

40 applicant in which the civil action or administrative proceeding involves any aspect of a

41 financial service business and the outcome of which could disqualify the applicant.

42 (10) A license applicant under this part shall make complete disclosure of all information

43 required in the license application, including information concerning officers, directors,

44 partners, members, managers, employees or agents. A license applicant, or person acting on

45 behalf of the applicant, is not liable in any civil action other than a civil action brought by a

12

1 governmental agency, related to an alleged untrue statement made pursuant to this part, unless it

2 is shown by clear and convincing evidence that:

3 (a) The license applicant, or person acting on behalf of the license applicant, knew at the

4 time that the statement was made that it was false in any material respect; or

5 (b) The license applicant, or person acting on behalf of the applicant, acted in reckless

6 disregard as to the statement’s truth or falsity.

7 (11) Each mortgage broker or mortgage lender licensed under this part shall display in

8 plain view the certificate of licensure issued by the department in its principal office and in

9 each branch office.

10 (12) Notwithstanding any other provision of this part, an individual licensed under part 3

11 of this chapter may apply for a license under this section.

12 2631207.

REVOCATION OR SUSPENSION OF LICENSE. (1) If the department has

13 reason to believe that grounds exist for revocation or suspension of a license issued pursuant to

14 this part, the department may initiate a contested case against a mortgage broker or mortgage

15 lender, and any partner, officer, director, manager, member, employee or agent whose activities

16 constitute the basis for revocation or suspension, in accordance with chapter 52, title 67,

17 Idaho Code. The director may, after proceedings pursuant to chapter 52, title 67, Idaho Code,

18 suspend the license for a period not to exceed six (6) months, or revoke the license, if he finds

19 that:

20 (a) The licensee or any partner, officer, director, manager, member, employee or agent of

21 the licensee has violated this chapter or any rule promulgated or order issued under this

22 chapter and pertinent to this part; or

23 (b) The licensee or any partner, officer, director, manager, member, employee or agent of

24 the licensee has violated any state or federal law, rule or regulation pertaining to mortgage

25 brokering, mortgage lending, or mortgage loan origination activities; or

26 (c) Facts or conditions exist which would clearly have justified the director in refusing to

27 grant a license had these facts or conditions been known to exist at the time the license

28 was issued; or

29 (d) The licensee or any partner, officer, director, manager, member, employee or agent of

30 the licensee has been convicted of any felony, or of a misdemeanor involving any aspect

31 of the financial services business, or a court has accepted a finding of guilt on the part

32 of the licensee or partner, officer, director, manager, member, employee or agent of the

33 licensee, of any felony, or of a misdemeanor involving any aspect of the financial services

34 business; or

35 (e) The licensee or any partner, officer, director, manager, member, employee or agent

36 of the licensee has had a license substantially equivalent to a license under this act, and

37 issued by another state, denied, revoked or suspended under the laws of such state; or

38 (f) The licensee has filed an application for a license which as of the date the license

39 was issued, or as of the date of an order denying, suspending or revoking a license, was

40 incomplete in any material respect or contained any statement that was, in light of the

41 circumstances under which it was made, false or misleading with respect to any material

42 fact; or

43 (g) The mortgage broker or mortgage lender licensee has failed to notify the director

44 of the employment or termination of, or the entering into or termination of a contractual

13

1 relationship with, a licensed mortgage loan originator pursuant to section 2631208(

2),

2 Idaho Code; or

3 (h) The mortgage broker or mortgage lender licensee has failed to supervise diligently

4 and control the mortgagerelated

activities of a mortgage loan originator as defined in part

5 3 of this chapter and that is employed by the licensee.

6 (2) If the director finds that good cause exists for revocation of a license issued under

7 this part, and that enforcement of this chapter and the public interest require immediate

8 suspension of the license pending investigation, he may, after a hearing upon five (5) days’

9 written notice, enter an order suspending the license for not more than thirty (30) days.

10 (3) Any mortgage broker or mortgage lender licensee may relinquish its license by

11 notifying the department in writing of its relinquishment, but this relinquishment shall not affect

12 its liability for acts previously committed, and may not occur after the filing of a complaint for

13 revocation of the license.

14 (4) The director may, in his discretion, reinstate a license issued under this part, terminate

15 a suspension or grant a new license under this part to a person whose license issued under this

16 part has been revoked or suspended, if no fact or condition then exists which clearly would

17 justify the department in refusing to grant a license.

18 2631208.

RECORDS – ANNUAL REPORTS – RENEWAL OF LICENSE. (1) Every

19 licensee under this part shall maintain records, including financial records in conformity with

20 generally accepted accounting principles, in a manner that will enable the director to determine

21 whether the licensee is complying with the provisions of this part. The recordkeeping system

22 of the licensee shall be sufficient if it makes the required information reasonably available to

23 the director. The records need not be kept in the place of business where residential mortgage

24 loans are made, if the director is given free access to the records wherever located. The records

25 pertaining to any loan need not be preserved for more than three (3) years after making the final

26 entry relating to the loan.

27 (2) Every mortgage broker or mortgage lender licensed under this part that employs or

28 contracts with a mortgage loan originator licensed under part 3 of this chapter, for the purpose

29 of conducting mortgage loan origination activities in Idaho, shall:

30 (a) Notify the director through the NMLSR, or as otherwise prescribed by the director, of

31 the employment of, or contractual relationship with, a mortgage loan originator licensee

32 within thirty (30) days of such employment or contract;

33 (b) Notify the director through the NMLSR, or as otherwise prescribed by the director,

34 of the termination of employment of, or contractual relationship with, a mortgage loan

35 originator licensee within thirty (30) days of such termination; and

36 (c) Maintain any records relating to the employment of, or contractual relationship with,

37 a mortgage loan originator licensee, for a period not to exceed three (3) years.

38 (3) On or before December 31 of each year, every mortgage broker and mortgage

39 lender licensee under this part shall pay through the NMLSR, or as otherwise prescribed by

40 the director, an annual license renewal fee of one hundred fifty dollars ($150), and file with

41 the director through the NMLSR, or as otherwise prescribed by the director, a renewal form

42 containing such information as the director may require.

43 (4) On or before March 31 of each year, or other date established by the director by

44 rule, every mortgage broker and mortgage lender licensee under this part shall file with the

14

1 director a composite annual report containing such information as the director may require for

2 the residential mortgage loans made or brokered by it for the preceding calendar year.

3 (5) Each mortgage broker and mortgage lender licensee under this part shall, as required

4 by the NMLSR, submit to the NMLSR reports of condition, which shall be in such form and

5 shall contain such information as the NMLSR may require.

6 2631209.

EXAMINATION AND INVESTIGATIONS. (1) The director shall examine

7 periodically at intervals he deems appropriate, the loans and business records of each licensee

8 under this part. In addition, for the purpose of discovering violations of the provisions of this

9 part or securing information lawfully required pursuant to this part, the director may at any time

10 investigate the loans, business, books and records of any such licensee. For these purposes,

11 the director shall have free and reasonable access to the offices, places of business and books

12 and records of the licensee. The director, for purposes of examination of licensees under this

13 part, shall be paid the actual cost of examination by such licensee within thirty (30) days of the

14 completion of the examination.

15 (2) If the records of a licensee under this part are located outside of this state, the

16 licensee shall have the option to make such records available to the director at a convenient

17 location within this state, or pay the reasonable and necessary expenses for the director or his

18 representative to examine such records at the place where they are maintained. The director

19 may designate representatives, including comparable officials of the state in which the records

20 are located, to inspect such records on his behalf.

21 (3) For the purposes of this section, the director may administer oaths or affirmations,

22 and upon his own motion or upon request of any party, may subpoena witnesses, compel their

23 attendance, adduce evidence and require the production of any matter which is relevant to the

24 investigation, including the existence, description, nature, custody, condition, and location of

25 any books, documents, or other tangible things and the identity and location of persons having

26 knowledge of relevant facts, or any other matter reasonably calculated to lead to the discovery

27 of admissible evidence.

28 (4) Upon failure to obey a subpoena or to give testimony and upon reasonable notice to

29 all persons affected thereby, the director may apply to the district court for an order compelling

30 compliance.

31 2631210.

RESTRICTIONS ON FEES AND CHARGES. (1) A person subject to this

32 part shall not require a borrower or person seeking a loan modification to pay any fees or

33 charges prior to a residential mortgage loan closing, or prior to the completion of a loan

34 modification, except:

35 (a) Charges actually incurred by the person subject to this part on behalf of the borrower

36 or person seeking a loan modification for services which have been rendered by third

37 parties. These fees may include, but are not limited to, fees for credit reports, flood

38 insurance certifications, property inspections, title insurance commitments, UCC4

lien

39 searches and appraisals;

40 (b) An application fee;

41 (c) A ratelock

fee;

42 (d) A commitment fee upon approval of the residential mortgage loan;

15

1 (e) A cancellation fee which may be charged and collected by a person subject to this

2 part at any time either prior to the scheduled closing of a residential mortgage loan

3 transaction, completion of a loan modification or subsequent thereto.

4 (2) Any fees charged under the authority of this section must be reasonable and

5 customary as to the type and the amount of the fee charged.

6 2631211.

PROHIBITED PRACTICES OF MORTGAGE BROKERS AND

7 MORTGAGE LENDERS. No mortgage broker or mortgage lender licensee under this part or

8 person required under this part to have such license shall:

9 (1) Obtain any exclusive dealing or exclusive agency agreement from any borrower;

10 (2) Delay closing of any residential mortgage loan for the purpose of increasing interest,

11 costs, fees or charges payable by the borrower;

12 (3) Accept any fees at closing which were not previously disclosed fully to the borrower;

13 (4) Obtain any agreement or instrument in which blanks are left to be filled in after

14 signing by a borrower;

15 (5) Engage in any misrepresentation or omission of a material fact in connection with a

16 residential mortgage loan;

17 (6) Make payment, whether directly or indirectly, of any kind to any inhouse

or fee

18 appraiser for the purpose of influencing the independent judgment of the appraiser with respect

19 to the value of any residential real property which is to be covered by a residential mortgage

20 loan;

21 (7) Make any false promise likely to influence or persuade, or pursue a course of

22 misrepresentations and false promises through mortgage loan originators or other agents, or

23 through advertising or otherwise;

24 (8) Misrepresent, circumvent or conceal, through whatever subterfuge or device, any of

25 the material terms of a residential mortgage loan transaction;

26 (9) Enter into any agreement, with or without the payment of a fee, to fix in advance a

27 particular interest rate or other term in a residential mortgage loan unless written confirmation

28 of the agreement is delivered to the borrower as required by rule promulgated pursuant to this

29 chapter and pertinent to this part;

30 (10) Engage in mortgage loan origination activity through any person who at the time of

31 such mortgage loan origination activity does not hold a mortgage loan originator license issued

32 by the department pursuant to this chapter; nor

33 (11) Receive a fee for engaging in loan modification activities except pursuant to

34 a written agreement between the person subject to this part and a person seeking a loan

35 modification. The written agreement must specify the amount of the fee that will be charged

36 to the person seeking a loan modification, specify the terms of the loan for which modification

37 will be sought and disclose the expected impact of the loan modification on the monthly

38 payment and length of the loan.

39 2631212.

CONTINUING EDUCATION OF QUALIFIED PERSONS IN

40 CHARGE. The continuing education requirements set forth in section 2631310,

Idaho Code,

41 shall apply to each qualified person in charge designated by a mortgage broker or mortgage

42 lender licensed under this part.

16

1 PART 3.

2 PROVISIONS APPLICABLE TO MORTGAGE LOAN ORIGINATORS

3 2631301.

TITLE. This part 3 of the chapter may be cited as the “Idaho Secure and

4 Fair Enforcement for Mortgage Licensing Act of 2009″ or the “Idaho S.A.F.E. Mortgage

5 Licensing Act of 2009.”

6 2631302.

PURPOSE OF THIS PART. (1) The activities of mortgage loan originators

7 and the origination or offering of financing for residential real property have a direct, valuable

8 and immediate impact upon Idaho consumers, Idaho’s economy, the neighborhoods and

9 communities of Idaho, and the housing and real estate industry. The legislature finds that

10 accessibility to mortgage credit is vital to the state’s citizens. The legislature also finds that

11 it is essential for the protection of the citizens of Idaho and the stability of Idaho’s economy

12 that reasonable standards for licensing and regulation of the business practices of mortgage

13 loan originators be imposed. The legislature further finds that the obligations of mortgage loan

14 originators to consumers in connection with originating or making residential mortgage loans

15 are such as to warrant the regulation of the mortgage loan origination process. The purpose

16 of this part is to protect consumers seeking mortgage loans and to ensure that the mortgage

17 industry is operating without unfair, deceptive, and fraudulent practices on the part of mortgage

18 loan originators. Therefore, the legislature establishes within this part an effective system of

19 supervision of mortgage loan originators and enforcement authority, including:

20 (a) The authority of the director to issue licenses to conduct business under this part,

21 and the authority to promulgate rules and adopt procedures necessary to the licensing of

22 persons covered under this part;

23 (b) The authority of the director to deny, suspend, condition or revoke licenses issued

24 under this part;

25 (c) The authority of the director to examine, investigate and conduct enforcement actions

26 as necessary to carry out the intended purposes of this part, including the authority to

27 subpoena witnesses and documents, enter orders, including cease and desist orders, order

28 restitution and monetary penalties, and order the removal and ban of individuals from

29 office or employment.

30 (2) The director shall have broad administrative authority to administer, interpret and

31 enforce this part, and to promulgate rules and issue orders implementing this part, to carry out

32 the intention of the legislature under this part.

33 2631303.

DEFINITIONS. For purposes of this part, the following definitions shall

34 apply:

35 (1) “Depository institution” has the same meaning as in section 3 of the federal deposit

36 insurance act, and includes any credit union.

37 (2) “Federal banking agency” means the board of governors of the federal reserve

38 system, the comptroller of the currency, the director of the office of thrift supervision, the

39 national credit union administration and the federal deposit insurance corporation.

40 (3) “Immediate family member” means a spouse, child, sibling, parent, grandparent or

41 grandchild, and includes stepparents, stepchildren, stepsiblings and adoptive relationships.

42 (4) “Individual” means a natural person.

17

1 (5) “Loan processor or underwriter” means an individual who performs clerical or

2 support duties as an employee at the direction of and subject to the supervision and instruction

3 of a person licensed, or exempt from licensing under this chapter.

4 (a) For the purposes of this subsection clerical or support duties may include, subsequent

5 to the receipt of an application:

6 (i) The receipt, collection, distribution and analysis of information common for

7 the processing or underwriting of a residential mortgage loan; and

8 (ii) Communicating with a consumer to obtain the information necessary for the

9 processing or underwriting of a loan, to the extent that such communication does

10 not include offering or negotiating loan rates or terms or counseling consumers

11 about residential mortgage loan rates or terms.

12 (b) An individual engaging solely in loan processor or underwriter activities shall not

13 represent to the public, through advertising or other means of communicating or providing

14 information, including the use of business cards, stationery, brochures, signs, rate lists or

15 other promotional items, that such individual can or will perform any of the activities of a

16 mortgage loan originator.

17 (6) “Mortgage loan originator” means an individual who for compensation or gain or in

18 the expectation of compensation or gain takes a residential mortgage loan application, or offers

19 or negotiates terms of a residential mortgage loan.

20 (a) Mortgage loan originator does not mean the following:

21 (i) An individual engaged solely as a loan processor or underwriter except as

22 otherwise provided in section 2631304(

4), Idaho Code;

23 (ii) A person or entity that only performs real estate brokerage activity and is

24 licensed or registered in accordance with Idaho law, unless the person or entity is

25 compensated by a lender, a mortgage broker or other mortgage loan originator, or

26 by any agent of such lender, mortgage broker or other mortgage loan originator;

27 (iii) A person or entity solely involved in extensions of credit relating to timeshare

28 plans, as that term is defined in 11 U.S.C. section 101(53D); and

29 (iv) A person that only performs the activities of a manufactured housing resale

30 broker, responsible managing employee, retailer or salesman as defined in and

31 licensed under chapter 21, title 44, Idaho Code, unless the person is compensated

32 by a lender, a mortgage broker or other mortgage loan originator, or by any

33 agent of such lender, mortgage broker or other mortgage loan originator. This

34 subparagraph shall not apply if the United States department of housing and urban

35 development finds, through guideline, rule, regulation or interpretive letter, that it

36 is inconsistent with the requirements of P.L. 110289,

title V.

37 (b) For the purposes of this section, “real estate brokerage activity” means any activity

38 that involves offering or providing real estate brokerage services to the public, including:

39 (i) Acting as a real estate agent or real estate broker for a buyer, seller, lessor or

40 lessee of real property;

41 (ii) Bringing together parties interested in the sale, purchase, lease, rental or

42 exchange of real property;

43 (iii) Negotiating, on behalf of any party, any portion of a contract relating to the

44 sale, purchase, lease, rental or exchange of real property, other than in connection

45 with providing financing with respect to any such transaction;

18

1 (iv) Engaging in any activity for which a person is required to be registered or

2 licensed as a real estate agent or real estate broker under law; and

3 (v) Offering to engage in any activity, or act in any capacity, described in

4 subparagraphs (i) through (iv) of this paragraph.

5 (7) “Nontraditional mortgage product” means any mortgage product other than a thirty

6 (30) year fixed rate mortgage.

7 (8) “Registered mortgage loan originator” means any individual who is registered with,

8 and maintains a unique identifier through the NMLSR, who meets the definition of mortgage

9 loan originator and who is an employee of one (1) of the following:

10 (a) A depository institution;

11 (b) A subsidiary that is owned and controlled by a depository institution and regulated by

12 a federal banking agency; or

13 (c) An institution regulated by the farm credit administration.

14 2631304.

LICENSE AND REGISTRATION REQUIRED — EXEMPTIONS. (1)

15 Unless specifically exempt under subsection (3) of this section, an individual shall not engage

16 in the business of a mortgage loan originator with respect to any dwelling located in this

17 state without first obtaining and maintaining annually a license under this part. Each licensed

18 mortgage loan originator shall register with and maintain a valid unique identifier issued by the

19 NMLSR.

20 (2) In order to facilitate an orderly transition to licensing and minimize disruption in the

21 mortgage marketplace, the effective dates for subsection (1) of this section are as follows:

22 (a) For all individuals other than those described in subsection (2)(b) of this section, the

23 effective date is July 31, 2010, or such later date approved by the secretary of the U.S.

24 department of housing and urban development, pursuant to the authority granted under

25 P.L. 110289,

section 1508(a).

26 (b) For all individuals licensed as mortgage loan originators at the time of the enactment

27 of this part, the effective date is January 1, 2011, or such later date approved by the

28 secretary of the U.S. department of housing and urban development, pursuant to the

29 authority granted under P.L. 110289,

section 1508(a).

30 (3) The following are exempt from this part:

31 (a) Registered mortgage loan originators when acting on behalf of an entity described in

32 section 2631303(

8)(a) through (c), Idaho Code;

33 (b) Any individual who offers or negotiates terms of a residential mortgage loan with or

34 on behalf of an immediate family member of the individual;

35 (c) Any individual who offers or negotiates terms of a residential mortgage loan that is

36 secured by a dwelling that serves as the individual’s residence; and

37 (d) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf

38 of a client as an ancillary matter to the attorney’s representation of the client, unless the

39 attorney is compensated by a lender, a mortgage broker or other mortgage loan originator

40 or by any agent of such lender, mortgage broker or other mortgage loan originator.

41 (4) A loan processor or underwriter who is an independent contractor may not engage

42 in the activities of a loan processor or underwriter unless such independent contractor loan

43 processor or underwriter obtains and maintains a license under subsection (1) of this section.

44 Each independent contractor loan processor or underwriter licensed as a mortgage loan

19

1 originator must have and maintain a valid unique identifier issued by the nationwide mortgage

2 licensing system and registry.

3 (5) For the purpose of implementing an orderly and efficient application and licensing

4 process the director may establish licensing rules and interim procedures for licensing and

5 acceptance of applications. For previously registered or licensed individuals the director may

6 establish expedited review and licensing procedures.

7 2631305.

LICENSE AND REGISTRATION APPLICATION. (1) Applicants for a

8 license under this part shall apply through the NMLSR in a form prescribed by the director.

9 Each form shall include such content as the director may reasonably require, shall be updated

10 as necessary to keep the information current and shall be accompanied by a nonrefundable

11 application fee of two hundred dollars ($200).

12 (2) In order to fulfill the purposes of this part, the director may establish relationships or

13 enter into contracts with the NMLSR or other entities designated by the NMLSR to collect and

14 maintain records and to process fees.

15 (3) Applicants for licensure under this part shall submit the following to the NMLSR:

16 (a) Fingerprints for submission to the federal bureau of investigation, and any

17 governmental agency or entity authorized to receive such information for a state, national

18 and international criminal history background check; and

19 (b) Personal history and experience in a form prescribed by the NMLSR, including the

20 authorization for the NMLSR and the director to obtain the following:

21 (i) An independent credit report obtained from a consumer reporting agency

22 described in section 603(p) of the fair credit reporting act; and

23 (ii) Information related to any administrative, civil or criminal findings by any

24 governmental jurisdiction.

25 (4) For the purposes of this section and in order to reduce the points of contact which

26 the federal bureau of investigation may have to maintain for purposes of subsection (3)(a) and

27 (b)(ii) of this section, the director may use the NMLSR as a channeling agent for requesting

28 information from and distributing information to the department of justice or any governmental

29 agency.

30 (5) For the purposes of this section and in order to reduce the points of contact which the

31 director may have to maintain for purposes of subsection (3)(b)(i) and (ii) of this section, the

32 director may use the NMLSR as a channeling agent for requesting and distributing information

33 to and from any source so directed by the director.

34 (6) Upon written request, an applicant for a license under this part is entitled to a hearing

35 on the question of his qualifications for a license if:

36 (a) The director has notified the applicant in writing that his application has been denied

37 and the request for a hearing is made not more than fifteen (15) days after the director

38 mailed the written notification of denial; or

39 (b) The director has not issued the applicant a license within sixty (60) days after the

40 application for the license was filed.

41 If a hearing is held, the applicant shall reimburse, pro rata, the director for his reasonable

42 and necessary expenses incurred as a result of the hearing. The director shall state, in

43 substance, his findings that support a denial of an application.

44 (7) The director may suspend action upon an application for a license pursuant to this

45 part pending the resolution of any criminal charge before a court of competent jurisdiction

20

1 against the applicant which could disqualify the applicant from licensure if the applicant is

2 found guilty of or pleads guilty to the pending charge.

3 (8) The director may suspend action upon an application for a license pursuant to this

4 part pending resolution of any civil action or administrative proceeding against an applicant that

5 involves any aspect of a financial service business, the outcome of which could disqualify the

6 applicant from licensure.

7 (9) A license applicant under this part shall make complete disclosure of all information

8 required in the license application. A license applicant or person acting on behalf of the

9 applicant is not liable in any civil action other than a civil action brought by a governmental

10 agency related to an alleged untrue statement made pursuant to this section, unless it is shown

11 that:

12 (a) The license applicant, or person acting on behalf of the license applicant, knew at the

13 time that the statement was made that it was materially false; or

14 (b) The license applicant or person acting on behalf of the license applicant acted in

15 reckless disregard as to the truth or falsity of the statement.

16 2631306.

ISSUANCE OF LICENSE. (1) The director shall not issue a mortgage loan

17 originator license under this part unless the director first makes the following findings:

18 (a) The applicant has never had a mortgage loan originator license, or other mortgage

19 related license, revoked in any governmental jurisdiction. If such revocation was

20 formally vacated, then it shall not be deemed a revocation for purposes of this section.

21 (b) The applicant has not been convicted of, found guilty of or pled guilty or nolo

22 contendere to, a felony in a domestic, foreign or military court:

23 (i) During the seven (7) year period immediately preceding the date of the

24 application for licensing or registration; or

25 (ii) At any time preceding such date of application, if such felony involved an act

26 of fraud, dishonesty, or a breach of trust, or money laundering;

27 Any pardon of a conviction shall not be deemed a conviction for purposes of this section.

28 (c) The applicant has demonstrated financial responsibility, character and general fitness

29 sufficient to command the confidence of the community and to warrant a determination

30 that the mortgage loan originator will operate honestly, fairly, and efficiently within the

31 purposes of this part. The director shall not base a license application denial under this

32 part solely on a license applicant’s credit score or credit report. For purposes of this

33 section, a license applicant is not financially responsible if he has shown a disregard for

34 the management of his personal financial affairs. A determination that an individual has

35 not shown financial responsibility may include, but is not limited to, consideration of the

36 following:

37 (i) A current outstanding judgment, except a judgment issued solely as a result of

38 medical expenses;

39 (ii) A current outstanding tax lien or other government lien or filing;

40 (iii) A foreclosure within the past three (3) years; or

41 (iv) A pattern of delinquent accounts within the past three (3) years.

42 (d) The applicant has successfully completed the prelicensing education requirement

43 pursuant to section 2631307,

Idaho Code.

44 (e) The applicant has passed a written test that meets the test requirement pursuant to

45 section 2631308,

Idaho Code.

21

1 (f) The applicant has met the mortgage recovery fund requirement pursuant to section

2 2631110,

Idaho Code.

3 (g) The applicant has provided information on the application as required in section

4 2631305,

Idaho Code.

5 (2) The director may conduct investigations as he deems necessary to determine the

6 existence of the requirements listed in this section.

7 2631307.

PRELICENSING AND RELICENSING EDUCATION OF MORTGAGE

8 LOAN ORIGINATORS. (1) All individuals seeking a mortgage loan originator license under

9 this part shall satisfy the prelicensing education requirement by completing at least twenty

10 (20) hours of course instruction that has been approved by the NMLSR and administered by a

11 provider approved by the NMLSR. Course instruction shall include:

12 (a) Three (3) hours minimum of instruction on federal law and regulation;

13 (b) Three (3) hours minimum of instruction on ethics, which shall include fraud,

14 consumer protection and fair lending issues;

15 (c) Two (2) hours minimum of instruction on lending standards for the nontraditional

16 mortgage product marketplace; and

17 (d) Two (2) hours minimum of instruction directly related to this chapter and rules

18 promulgated pursuant to this chapter.

19 (2) Nothing in this section shall preclude any prelicensing education course approved by

20 the NMLSR that is provided by the applicant’s employer, an entity affiliated with the applicant

21 by an agency contract or any subsidiary or affiliate of such employer or entity.

22 (3) The prelicensing education may be completed in a classroom, online or by any other

23 means approved by the NMLSR.

24 (4) The prelicensing education requirements approved by the NMLSR in subsection

25 (1)(a) through (c) of this section for any state shall be accepted as credit toward completion

26 of prelicensing education requirements in Idaho.

27 (5) An individual licensed prior to the effective date of this part who is applying to be

28 relicensed shall submit proof that he has completed all of the continuing education requirements

29 for the year in which the license was last held.

30 2631308.

TESTING OF MORTGAGE LOAN ORIGINATORS. (1) All individuals

31 seeking a mortgage loan originator license under this part shall satisfy the written test

32 requirement by passing a qualified written test developed by the NMLSR and administered by

33 a provider approved by the NMLSR based upon reasonable standards and subject to subsection

34 (2) of this section.

35 (2) A written test shall not be deemed a qualified written test for purposes of subsection

36 (1) of this section unless it tests the applicant’s knowledge and comprehension in the following

37 subject areas:

38 (a) Ethics;

39 (b) Federal and state law and regulation pertaining to mortgage loan origination;

40 (c) Federal and state law and regulation pertaining to fraud, consumer protection, the

41 nontraditional mortgage marketplace and fair lending issues.

42 (3) Nothing in this section shall prohibit a test provider approved by the NMLSR from

43 administering a written test at the applicant’s place of employment, at the location of any

22

1 subsidiary or affiliate of the applicant’s employer or at the location of any entity with which the

2 applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.

3 (4) In order to pass a qualified written test, an individual must achieve a test score of not

4 less than seventyfive

percent (75%) correct answers to questions.

5 (5) An individual may retake a qualified written test three (3) times with each test

6 occurring at least thirty (30) days after the preceding test. If an individual does not achieve

7 a passing score on a qualified written test upon retake number three (3), then the individual

8 shall wait at least six (6) months before retaking a written test.

9 (6) A mortgage loan originator who fails to maintain a valid license under this part for

10 a period of five (5) years or longer shall, as a condition of obtaining a new license under this

11 part, retake and pass a qualified written test, not taking into account any time during which

12 such individual is a registered mortgage loan originator.

13 2631309.

LICENSE RENEWAL REQUIREMENTS. (1) The minimum standards

14 for license renewal for mortgage loan originators licensed under this part shall include the

15 following:

16 (a) The mortgage loan originator continues to meet the minimum standards for license

17 issuance pursuant to section 2631306,

Idaho Code;

18 (b) The mortgage loan originator has satisfied the annual continuing education

19 requirements pursuant to section 2631310,

Idaho Code; and

20 (c) The mortgage loan originator has filed with the director through the NMLSR, on

21 or before December 31 of each year, a renewal form containing such information as the

22 director may require, accompanied by a nonrefundable annual license renewal fee of one

23 hundred dollars ($100).

24 (2) If a mortgage loan originator fails to timely satisfy the provisions of subsection (1) of

25 this section, then his license shall be deemed expired. The director may adopt procedures for

26 the reinstatement of expired licenses consistent with the standards established by the NMLSR.

27 2631310.

CONTINUING EDUCATION FOR MORTGAGE LOAN

28 ORIGINATORS. (1) In order to meet the annual continuing education requirements, a licensed

29 mortgage loan originator shall complete at least eight (8) hours of education each year, which

30 shall include:

31 (a) Three (3) hours minimum of instruction on federal law and regulation;

32 (b) Two (2) hours minimum of instruction on ethics, including instruction on fraud,

33 consumer protection and fair lending issues;

34 (c) Two (2) hours minimum of instruction on lending standards for the nontraditional

35 mortgage product marketplace; and

36 (d) One (1) hour minimum of instruction directly related to this chapter and rules

37 promulgated pursuant to this chapter.

38 (2) All continuing education courses and course providers shall be reviewed and

39 approved by the NMLSR based upon reasonable standards.

40 (3) Nothing in this section shall preclude any approved education course that is provided

41 by the mortgage loan originator’s employer or an entity which is affiliated with the mortgage

42 loan originator by an agency contract or any subsidiary or affiliate of such employer or entity.

43 (4) Continuing education courses may be completed either in a classroom, online or by

44 any other means approved by the NMLSR.

23

1 (5) A licensed mortgage loan originator may only receive credit for a continuing

2 education course in the year in which the course is taken, except as provided in section

3 2631309(

2), Idaho Code, and subsection (9) of this section, and may not take the same

4 approved course in the same or successive years in order to meet the annual continuing

5 education requirements.

6 (6) A licensed mortgage loan originator who is an approved instructor may receive credit

7 toward his required annual continuing education hours at the rate of two (2) hours of credit for

8 every one (1) hour of instruction of an approved continuing education course.

9 (7) An individual having successfully completed the continuing education requirements

10 described in subsection (1)(a) through (c) of this section for any state shall be awarded credit

11 toward completion of continuing education requirements in Idaho.

12 (8) A licensed mortgage loan originator who subsequently becomes unlicensed shall

13 complete the continuing education requirements for the last year in which the license was held

14 prior to issuance of a new or renewed license.

15 (9) An individual meeting the requirements of section 2631309(

1)(a) and (c), Idaho

16 Code, may make up any deficiency in continuing education requirements as established by rule

17 of the director.

18 2631311.

AUTHORITY TO REQUIRE LICENSE AND REGISTRATION. In

19 addition to any other duties imposed upon the director by law, the director shall require

20 mortgage loan originators to be licensed and registered through the NMLSR. In order to carry

21 out this requirement the director is authorized to participate in the NMLSR. For this purpose,

22 the director may establish by rule or order requirements for licensure as a mortgage loan

23 originator, as necessary including, but not limited to:

24 (1) Background checks, to include:

25 (a) Criminal history, through fingerprint or other databases;

26 (b) Civil or administrative records;

27 (c) Credit history; and

28 (d) Any other information as deemed necessary by the NMLSR.

29 (2) The setting or resetting as necessary of renewal or reporting dates; and

30 (3) Requirements for amending or surrendering a license or any other such activities as

31 the director deems necessary for participation in the NMLSR.

32 2631312.

NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY

33 INFORMATION CHALLENGE PROCESS. The director shall establish a process whereby

34 mortgage loan originators may challenge the information entered into the NMLSR by the

35 director.

36 2631313.

ENFORCEMENT AUTHORITY, VIOLATIONS AND PENALTIES. (1)

37 In order to ensure the effective supervision and enforcement of this part, the director may,

38 pursuant to chapter 52, title 67, Idaho Code:

39 (a) Deny, suspend, revoke, condition or decline to renew a license for a violation of this

40 chapter, or rule or order issued under this chapter;

41 (b) Deny, suspend, revoke, condition or decline to renew a license if an applicant or

42 licensee under this part fails at any time to meet the requirements of section 2631306,

43 Idaho Code, or section 2631309,

Idaho Code, or withholds information or makes a

44 material misstatement in an application for a license or renewal of a license;

24

1 (c) Deny, suspend, revoke, condition or decline to renew a license if the applicant has

2 violated any state or federal law, rule or regulation pertaining to mortgage brokering,

3 mortgage lending or loan origination activities;

4 (d) Order restitution against persons subject to this part for violations of this part;

5 (e) Impose penalties on persons subject to this part pursuant to subsections (2) through

6 (4) of this section; and

7 (f) Issue orders under this part as follows:

8 (i) Order persons subject to this part to cease and desist from conducting

9 business, including immediate temporary orders to cease and desist;

10 (ii) Order persons subject to this part to cease any harmful activities or violations

11 of this part, including immediate temporary orders to cease and desist;

12 (iii) Enter immediate temporary orders to cease business under a license or interim

13 license issued pursuant to this part, if the director determines that such license was

14 erroneously granted or the licensee is currently in violation of this part;

15 (iv) Order such other affirmative action as the director deems necessary.

16 (2) The director may impose a civil penalty upon a mortgage loan originator or other

17 person subject to this part if the director finds on the record, after notice and the opportunity for

18 a hearing, that such mortgage loan originator or other person subject to this part has violated or

19 failed to comply with any requirement of this part or any rule promulgated or order issued by

20 the director under this chapter and pertinent to this part.

21 (3) The maximum amount of penalty for each act or omission described in subsection (2)

22 of this section shall be twentyfive

thousand dollars ($25,000).

23 (4) Each violation of this part, or failure to comply with any rule promulgated or order

24 issued by the director under this chapter and pertinent to this part, is a separate and distinct

25 violation or failure.

26 2631314.

REMEDIES AVAILABLE TO THE DEPARTMENT. (1) If the director

27 determines that a person subject to this part has engaged in or is about to engage in any act

28 or practice constituting a violation of any provision of the truth in lending act, the real estate

29 settlement procedures act, regulation X, regulation Z or of this part or any rule promulgated or

30 order issued under this chapter and pertinent to this part, then the director may bring an action

31 in any court of competent jurisdiction, and upon a showing of any violation, there shall be

32 granted any or all of the following:

33 (a) A writ or order restraining or enjoining, temporarily or permanently, any act or

34 practice violating any provision of this part or any rule promulgated or order issued under

35 this chapter and pertinent to this part, and to enforce compliance with this part or any rule

36 promulgated or order issued under this chapter and pertinent to this part;

37 (b) An order that the person violating any provision of this part, or a rule promulgated

38 or order issued under this chapter and pertinent to this part pay a civil penalty to the

39 department in an amount not to exceed twentyfive

thousand dollars ($25,000) for each

40 violation;

41 (c) An order allowing the director to recover costs, which may include investigative

42 expenses and attorney’s fees;

43 (d) A declaratory judgment that a particular act, practice or method is a violation of the

44 provisions of this part;

45 (e) Other appropriate remedies including restitution to borrowers.

25

1 (2) If the director finds that a person subject to this part has violated, is violating, or

2 that there is reasonable cause to believe that a person is about to violate the provisions of this

3 part, or any rule promulgated or order issued under this chapter and pertinent to this part, the

4 director may, in his discretion, order the person to cease and desist from the violations.

5 2631315.

CONFIDENTIALITY. In order to promote effective regulation and reduce

6 regulatory burden through supervisory information sharing:

7 (1) Except as otherwise provided in section 1512, P.L. 110289,

the requirements under

8 any federal law or chapter 3, title 9, Idaho Code, regarding the privacy or confidentiality of

9 any information or material provided to the NMLSR, and any privilege arising under federal

10 or Idaho state law, including the rules of any federal or Idaho state court, with respect to

11 such information or material, shall continue to apply to such information or material after the

12 information or material has been disclosed to the NMLSR. Such information and material may

13 be shared with all state and federal regulatory officials having mortgage industry oversight

14 authority without the loss of privilege or the loss of confidentiality protections provided by

15 federal law or chapter 3, title 9, Idaho Code.

16 (2) For these purposes, the director is authorized to enter into agreements or sharing

17 arrangements with other governmental agencies, the conference of state bank supervisors,

18 the American association of residential mortgage regulators or other associations representing

19 governmental agencies as established by rule or order of the director.

20 (3) Information or material that is subject to a privilege or confidentiality under

21 subsection (1) of this section shall not be subject to:

22 (a) Disclosure under any federal or state law governing the disclosure to the public of

23 information held by an officer or an agency of the federal government or the respective

24 state; or

25 (b) Subpoena or discovery, or admission into evidence, in any private civil action or

26 administrative process, unless with respect to any privilege held by the NMLSR with

27 respect to such information or material, the person to whom such information or material

28 pertains waives, in whole or in part, in the discretion of such person, that privilege.

29 (4) Coordination with chapter 3, title 9, Idaho Code, relating to the disclosure of

30 confidential supervisory information or any information or material described in subsection (1)

31 of this section that is inconsistent with subsection (1) shall be superseded by the requirements

32 of this section.

33 (5) This section shall not apply with respect to the information or material relating to the

34 employment history of, and publicly adjudicated disciplinary and enforcement actions against,

35 mortgage loan originators that is included in the NMLSR for access by the public.

36 2631316.

INVESTIGATION AND EXAMINATION AUTHORITY. In addition to

37 any authority allowed under this chapter, the director shall have the authority to conduct

38 investigations and examinations as follows:

39 (1) For purposes of initial licensing, license renewal, license suspension, license

40 conditioning, license revocation or termination, or inquiry or investigation to determine

41 compliance with this part, the director shall have the authority to access, receive and use any

42 books, accounts, records, files, documents, information or evidence including, but not limited

43 to:

26

1 (a) Criminal, civil and administrative history information including nonconviction data;

2 and

3 (b) Personal history and experience information including independent credit reports

4 obtained from a consumer reporting agency described in section 603(p) of the federal

5 fair credit reporting act; and

6 (c) Any other documents, information or evidence the director deems relevant to the

7 inquiry or investigation, regardless of the location, possession, control or custody of such

8 documents, information or evidence.

9 (2) For the purposes of investigating violations or complaints arising under this part, or

10 for the purposes of examination, the director may review, investigate or examine any licensee,

11 individual or person subject to this part, as often as necessary in order to carry out the purposes

12 of this part. The director may subpoena or order the attendance of and examine under oath

13 all persons whose testimony may be required about the loans or the business or subject matter

14 of any such examination or investigation, and may subpoena or order such person to produce

15 books, accounts, records, files and any other documents the director deems relevant to the

16 inquiry.

17 (3) Each licensee, individual or other person subject to this part shall make available

18 to the director upon request the books and records relating to the operations of such licensee,

19 individual or other person subject to this part. The director may interview the licensee’s

20 employer, its employees and agents, its independent contractors, its officers and principals,

21 other mortgage loan originators, agents and customers of the licensee, individual or other

22 person subject to this part. For the purposes of this section, the director shall have free access

23 to the books and records of such persons.

24 (4) Each licensee, individual or other person subject to this part shall make or compile

25 reports or prepare other information as directed by the director in order to carry out the

26 purposes of this part including, but not limited to:

27 (a) Accounting compilations;

28 (b) Information lists and data concerning loan transactions in a format prescribed by the

29 director; and

30 (c) Such other information deemed necessary to carry out the purposes of this part.

31 (5) In making any examination or investigation authorized by this part, the director may

32 control access to any documents and records of the licensee or other person under examination

33 or investigation. The director may take possession of the documents and records or place a

34 person in exclusive charge of the documents and records in the place where they are usually

35 kept. During the period of control, no individual or person shall remove or attempt to remove

36 any of the documents and records except pursuant to a court order or with the consent of the

37 director. Unless the director has reasonable grounds to believe the documents or records of the

38 licensee or other person have been, or are at risk of being altered or destroyed for the purpose

39 of concealing a violation of this chapter, the licensee or owner of the documents and records

40 shall have access to the documents and records as necessary to conduct its ordinary business

41 affairs.

42 (6) In order to carry out the purposes of this section, the director may:

43 (a) Retain attorneys, accountants or other professionals and specialists as examiners,

44 auditors or investigators to conduct or assist in the conduct of examinations or

45 investigations;

27

1 (b) Enter into agreements or relationships with other government officials or regulatory

2 associations in order to improve efficiencies and reduce regulatory burden by sharing

3 resources, standardized or uniform methods or procedures, and documents, records,

4 information or evidence obtained under this section;

5 (c) Use, hire, contract or employ public or privately available analytical systems,

6 methods or software to examine or investigate the licensee, individual or other person

7 subject to this part;

8 (d) Accept and rely on examination or investigation reports made by other government

9 officials, including those inside and outside the state of Idaho; and

10 (e) Accept and rely upon audit reports made by an independent certified public

11 accountant for the licensee, individual or other person subject to this part. The director

12 may incorporate the audit report in the examination report, investigation report or other

13 writing of the director.

14 (7) The authority of this section shall remain in effect, whether such a licensee,

15 individual or other person subject to this part acts or claims to act under any licensing or

16 registration law of this state, or claims to act without such authority.

17 (8) No licensee, individual or other person subject to investigation or examination under

18 this section may knowingly withhold, abstract, remove, mutilate, destroy or secrete any books,

19 records, computer records or other information requested by the director.

20 2631317.

PROHIBITED ACTS AND PRACTICES. It is a violation of this part for a

21 person or individual subject to this part, in connection with mortgage loan origination activity

22 in this state, to:

23 (1) Directly or indirectly employ any scheme, device or artifice to defraud or mislead

24 borrowers or lenders or to defraud any person;

25 (2) Engage in any unfair or deceptive practice;

26 (3) Obtain property by fraud or misrepresentation;

27 (4) Solicit or enter into a contract with a borrower that provides that the person or

28 individual subject to this part may earn a fee or commission through “best efforts” to obtain a

29 loan, even though no loan is actually obtained for the borrower;

30 (5) Solicit, advertise or enter into a contract for specific interest rates, points or other

31 financing terms, unless the terms are actually available at the time of soliciting, advertising or

32 contracting;

33 (6) Conduct any business covered by this part without holding a valid license as required

34 under this part, or assist or aid and abet any person in the conduct of business under this part

35 who does not hold a valid license as required under this part;

36 (7) Fail to make disclosures as required by this part or any other applicable state or

37 federal law including rules or regulations promulgated thereunder;

38 (8) Fail to comply with provisions of this part or rules promulgated under this part,

39 or fail to comply with any other state or federal law, including the rules and regulations

40 promulgated thereunder, applicable to any business authorized or conducted under this part;

41 (9) Make any false or deceptive statement or representation, including a false or

42 deceptive statement or representation concerning rates, points or other financing terms or

43 conditions for a residential mortgage loan, or engage in bait and switch advertising;

44 (10) Negligently make any false statement or knowingly and willfully omit a material fact

45 in connection with any information or reports filed with a government agency or the NMLSR

28

1 or in connection with any investigation conducted by the director or another governmental

2 agency;

3 (11) Make any payment, threat or promise, directly or indirectly, to any person for the

4 purpose of influencing the independent judgment of the person in connection with a residential

5 mortgage loan, or make any payment, threat or promise, directly or indirectly, to any appraiser

6 of a property, for the purpose of influencing the independent judgment of the appraiser with

7 respect to the value of the property;

8 (12) Collect, charge, attempt to collect or charge, or use or propose any agreement

9 purporting to collect or charge any fee prohibited by this part;

10 (13) Cause or require a borrower to obtain property insurance coverage in an amount that

11 exceeds the replacement cost of the improvements as established by the property insurer;

12 (14) Fail to truthfully account for moneys belonging to a party to a residential mortgage

13 loan transaction;

14 (15) Be employed simultaneously by more than one (1) mortgage broker or mortgage

15 lender licensed or required to be licensed under part 2 of this chapter;

16 (16) Enter into concurrent contractual relationships for delivery of mortgage loan

17 origination services to more than one (1) mortgage broker or mortgage lender licensed or

18 required to be licensed under part 2 of this chapter;

19 (17) Obtain any exclusive dealing or exclusive agency agreement from any borrower;

20 (18) Delay closing of any residential mortgage loan for the purpose of increasing interest,

21 costs, fees or charges payable by the borrower;

22 (19) Accept any fees at closing which were not previously disclosed fully to the borrower;

23 (20) Obtain any agreement or instrument in which blanks are left to be filled in after

24 signing by a borrower; or

25 (21) Enter into any agreement, with or without the payment of a fee, to fix in advance a

26 particular interest rate or other term in a residential mortgage loan unless written confirmation

27 of the agreement is delivered to the borrower as required by rule pursuant to this chapter.

28 2631318.

UNLAWFUL ACTS. Any person, not exempt under the provisions of this

29 part, who engages in mortgage loan origination activities without first obtaining a mortgage

30 loan originator license or without first registering as a mortgage loan originator in accordance

31 with the requirements of this part, shall be guilty of a felony.

32 2631319.

NONFEDERALLY INSURED CREDIT UNIONS. Nonfederally insured

33 credit unions which employ loan originators, as defined in P.L. 110289,

shall register such loan

34 originators with the NMLSR by furnishing the information concerning the loan originators’

35 identities set forth in section 1507(a)(2), P.L. 110289.

36 2631320.

UNIQUE IDENTIFIER DISCLOSURE. The unique identifier of any person

37 engaged in the origination of a residential mortgage loan shall be clearly displayed on all

38 residential mortgage loan application forms, solicitations or advertisements, including business

39 cards and websites, and any other document required by rule promulgated under this chapter or

40 order issued by the director under this chapter and pertinent to this part.

41 2631321.

SEVERABILITY. The provisions of this act are hereby declared to be

42 severable and if any provision of this act or the application of such provision to any person or

29

1 circumstance is declared invalid for any reason, such declaration shall not affect the validity of

2 the remaining portions of this act.

3 SECTION 3. This act shall be in full force and effect on and after July 1, 2009.


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