As Introduced 1
122nd General Assembly 4
Regular Session H. B. No. 522 5
1997-1998 6
REPRESENTATIVES SCHULER-GARCIA-MOTTLEY 8
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A B I L L
To amend sections 1322.01, 1322.02, 1322.03, 12
1322.04, 1322.06, 1322.07, 1322.08, 1322.09, 13
1322.10, 1322.101, and 1322.99, to enact new 14
section 1322.05 and section 1322.031, and to 15
repeal section 1322.05 of the Revised Code to 16
require mortgage originators to register with the 17
Superintendent of Financial Institutions and to 18
specify other requirements relative to mortgage 19
originators; to modify the registration 20
requirements of mortgage brokers; to specify 21
requirements about the location of a mortgage 22
broker; to eliminate the net worth requirements 23
of mortgage brokers and to substitute certain 24
surety bond requirements; to modify the 25
examination authority of the Superintendent 26
relative to mortgage brokers; and to specify 27
fines to be charged for a violation of a law or 28
rule adopted under the Mortgage Broker Law. 29
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 31
Section 1. That sections 1322.01, 1322.02, 1322.03, 33
1322.04, 1322.06, 1322.07, 1322.08, 1322.09, 1322.10, 1322.101, 34
and 1322.99 be amended and new section 1322.05 and section 35
1322.031 of the Revised Code be enacted to read as follows: 37
Sec. 1322.01. As used in sections 1322.01 to 1322.12 of 46
the Revised Code:
(A) "Buyer" means an individual who is solicited to 48
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purchase or who purchases the services of a mortgage broker for 49
purposes other than obtaining a business loan as described in 50
division (B)(6) of section 1343.01 of the Revised Code. 51
(B) "Consumer reporting agency" has the same meaning as in 53
the "Fair Credit Reporting Act," 84 Stat. 1128, 15 U.S.C.A. 54
1681a, as amended. 55
(C) "Mortgage" means any indebtedness secured by a deed of 57
trust, security deed, or other lien on real property. 58
(D) "Mortgage banker" means any person that makes, 60
services, or buys and sells mortgage loans, and is approved as a 61
direct endorsement lender REQUIRED TO SUBMIT AUDITED FINANCIAL 64
STATEMENTS TO, AND IS SUBJECT TO A POSSIBLE AUDIT by, the United 67
States department of housing and urban development, the United 68
States department of veterans affairs, the federal national 69
mortgage association, the federal home loan mortgage corporation, 70
OR the government national mortgage association, or an approved 71
correspondent with the United States department of housing and 72
urban development.
(E) "Mortgage broker" means a person that, in the regular 74
course of business, holds himself, herself, or itself THAT PERSON 76
out as being able to assist a buyer in obtaining a mortgage and 77
charges or receives money or other valuable consideration readily 79
convertible into money for providing this assistance. "Mortgage 80
broker" does not include any of the following: 81
(1) A person that makes or collects loans, to the extent 83
these activities are subject to licensure or registration by this 84
state; 85
(2) A lender approved by the United States secretary of 87
housing and urban development for participation in a mortgage 88
insurance program under the "National Housing Act," 48 Stat. 1246 89
(1934), 12 U.S.C.A. 1701, as amended; 90
(3) A bank, savings bank, or savings and loan association, 92
or a subsidiary or an affiliate of a bank, savings bank, or 93
savings and loan association. For purposes of division (E)(3) of 95
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this section, "affiliate" has the same meaning as in division (A) 96
of section 1101.01 of the Revised Code, and "bank," as used in 97
division (A) of section 1101.01 of the Revised Code, is deemed to 98
include a savings bank or savings and loan association. 99
(4) A credit union organized and qualified under Chapter 101
1733. of the Revised Code or the "Federal Credit Union Act," 84 102
Stat. 994 (1970), 12 U.S.C.A. 1751, as amended; 103
(5) A budget and debt counseling service, as defined in 105
division (D) of section 2716.03 of the Revised Code, provided 106
that the service is a nonprofit organization exempt from taxation 107
under section 501(c)(3) of the "Internal Revenue Code of 1986," 108
100 Stat. 2085, 26 U.S.C.A. 501, as amended, and that the service 109
is in compliance with Chapter 4710. of the Revised Code; 110
(6) A consumer reporting agency that is in substantial 112
compliance with the "Fair Credit Reporting Act," 84 Stat. 1128, 113
15 U.S.C.A. 1681a, as amended; 114
(7) A mortgage banker; 116
(8) Any political subdivision, or any governmental or 118
other public entity, corporation, or agency, in or of the United 119
States or any state of the United States; 120
(9) A college or university, or controlled entity of a 122
college or university, as defined in section 1713.05 of the 123
Revised Code. 124
(F) "Registrant MORTGAGE ORIGINATOR" means any person that 126
has been issued a certificate of registration under sections 128
1322.01 to 1322.12 of the Revised Code EMPLOYED BY A MORTGAGE 129
BROKER TO ORIGINATE MORTGAGE LOANS IN THIS STATE. 130
(G) "ORIGINATE" MEANS ANY OF THE FOLLOWING: 132
(1) TO NEGOTIATE OR ARRANGE, OR TO OFFER TO NEGOTIATE OR 135
ARRANGE, A MORTGAGE LOAN BETWEEN A PERSON THAT MAKES OR FUNDS
MORTGAGE LOANS AND A BUYER; 136
(2) TO ISSUE A COMMITMENT FOR A MORTGAGE LOAN TO A BUYER; 139
(3) TO PLACE, ASSIST IN PLACEMENT, OR FIND A MORTGAGE LOAN 142
FOR A BUYER.
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(H) "Superintendent of financial institutions" includes 144
the deputy superintendent for consumer finance as provided in 145
section 1181.21 of the Revised Code. 146
Sec. 1322.02. (A) No person, on the person's own behalf 155
or on behalf of any other person, shall act as a mortgage broker 158
without first having obtained a certificate of registration AS A 159
MORTGAGE BROKER from the superintendent of financial institutions 160
for the person's main office and for every other office to be
maintained by the person for the transaction of business as a 161
mortgage broker in this state. A PERSON REGISTERED AS A MORTGAGE 163
BROKER PURSUANT TO SECTION 1322.04 OF THE REVISED CODE SHALL 164
MAINTAIN A MAIN OFFICE LOCATION IN THIS STATE FOR THE TRANSACTION
OF BUSINESS AS A MORTGAGE BROKER IN THIS STATE. 166
(B) NO PERSON SHALL ACT AS A MORTGAGE ORIGINATOR WITHOUT 169
FIRST HAVING OBTAINED A MORTGAGE ORIGINATOR CERTIFICATE OF 170
REGISTRATION FROM THE SUPERINTENDENT OF FINANCIAL INSTITUTIONS. 171
THE MORTGAGE ORIGINATOR CERTIFICATE OF REGISTRATION SHALL BE 172
MAINTAINED IN THIS STATE. 173
Sec. 1322.03. (A) An application for a certificate of 182
registration as a mortgage broker shall be in writing, under 183
oath, and in the form prescribed by the superintendent of 184
financial institutions. The application shall be accompanied by 186
an application fee of three hundred fifty dollars for each
location of an office to be maintained by the applicant IN 187
ACCORDANCE WITH DIVISION (A) OF SECTION 1322.02 OF THE REVISED 188
CODE and shall provide all of the following: 189
(1) The location or locations where the business is to be 191
transacted and whether any location is a residence. If any 192
location where the business is to be transacted is a residence, 193
the application shall be accompanied by a certified copy of a 194
zoning permit authorizing the use of the residence for commercial 195
purposes, or shall be accompanied by a written opinion or other 196
document issued by the county or political subdivision where the 197
residence is located certifying that the use of the residence to 198
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transact business as a mortgage broker is not prohibited by the 199
county or political subdivision, WHICH SHALL BE ZONED FOR 200
COMMERCIAL USE. THE APPLICATION SHALL BE ACCOMPANIED BY A 202
PHOTOGRAPH OF EACH LOCATION AT WHICH THE BUSINESS WILL BE 203
TRANSACTED.
(2)(a) In the case of a sole proprietor, the name and 205
address of the sole proprietor; 206
(b) In the case of a partnership, the name and address of 209
each partner;
(c) In the case of a corporation, the name and address of 212
each shareholder owning five per cent or more of the corporation. 213
(3)(a) If the applicant is a partnership, the applicant 215
shall designate one of the partners named in the application 218
pursuant to division (A)(2)(b) of this section as responsible for 219
managing the operations of the location or locations where THE 220
business is to be transacted.
(b) If the applicant is a corporation, the applicant shall 223
designate one of the shareholders named in the application 225
pursuant to division (A)(2)(c) of this section as responsible for 226
managing the operations of the location or locations where THE 227
business is to be transacted.
(4) Evidence that at least one of the following applies to 229
the sole proprietor, partner, or shareholder designated on the 231
application pursuant to division (A)(3) of this section as
responsible for managing the operations of the location or 233
locations where the business is to be transacted: 234
(a) The EXCEPT AS PROVIDED IN DIVISION (D)(2) OF THIS 236
SECTION, THE sole proprietor, partner, or shareholder has earned 237
at least an associate's ASSOCIATE degree in an area relating to 239
finance, banking, or business administration, and the degree was 240
earned at an accredited college or university, including an
accredited community or technical college. 241
(b) The sole proprietor, partner, or shareholder possesses 243
at least three years of experience in the mortgage and lending 245
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field, which experience may include employment with or as a
mortgage broker or with a financial institution, mortgage lending 247
institution, or other lending institution, or possesses at least 248
three years of other experience that the superintendent 249
determines meets the requirements of division (A)(4)(b) of this 250
section. Evidence of experience submitted with the application 252
may include letters of employment from present or prior 253
employers.
(5) Evidence of compliance with the financial SURETY BOND 255
requirements of section 1322.05 of the Revised Code and with 257
sections 1322.01 to 1322.12 of the Revised Code; 258
(6) In the case of a foreign corporation, evidence that it 260
maintains a license pursuant to Chapter 1703. of the Revised Code 261
to transact business in this state; 262
(7) A statement that the applicant has not been convicted 264
of or pleaded guilty to a criminal offense, the violation of 265
which is a felony, or any criminal offense involving fraud; 266
(8) Any further information that the superintendent 268
requires. 269
(B) Upon the filing of the application and payment of the 271
application fee, the superintendent shall investigate the 272
applicant. If, in order to issue a certificate of registration 273
AS A MORTGAGE BROKER to an applicant, investigation by the 274
superintendent outside this state is necessary, the 276
superintendent may require the applicant to advance sufficient 277
funds to pay the actual expenses of the investigation, if it 278
appears that these expenses will exceed three hundred fifty 279
dollars. The superintendent shall provide the applicant with an 280
itemized statement of the actual expenses that the applicant is 281
required to pay.
(C) All funds advanced and application and renewal fees 283
paid to the superintendent under this section and section 284
SECTIONS 1322.031 AND 1322.04 of the Revised Code shall be paid 286
by the superintendent to the treasurer of state to the credit of 287
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the consumer finance fund created in section 1321.21 of the 288
Revised Code.
(D)(1) Division (A)(4) of this section does not apply to 291
any registrant PERSON that, on the effective date of this 292
amendment MARCH 4, 1996, is registered AS A MORTGAGE BROKER under 294
sections 1322.01 to 1322.12 SECTION 1322.04 of the Revised Code 296
under a certificate of registration issued pursuant to those 297
sections THAT SECTION prior to the effective date of this 299
amendment MARCH 4, 1996, provided that the certificate of 301
registration is not surrendered by the registrant PERSON or
revoked or refused renewal by the superintendent of consumer 303
finance FINANCIAL INSTITUTIONS at any time after the effective 305
date of this amendment MARCH 4, 1996. 306
(2) AFTER THE EFFECTIVE DATE OF THIS AMENDMENT, EVIDENCE 309
OF EDUCATION AS PROVIDED FOR IN DIVISION (A)(4)(a) OF THIS 311
SECTION SHALL NOT BE ACCEPTED ON AN APPLICATION OF A PERSON 312
APPLYING AS AN APPLICANT FOR A CERTIFICATE OF REGISTRATION AS A 313
MORTGAGE BROKER. HOWEVER, AFTER THE EFFECTIVE DATE OF THIS 315
AMENDMENT, A PERSON WHO, PRIOR TO THAT DATE, SUBMITTED EVIDENCE 316
OF EDUCATION AS PROVIDED FOR IN DIVISION (A)(4)(a) OF THIS 319
SECTION MAY RENEW A CERTIFICATE OF REGISTRATION AS A MORTGAGE 320
BROKER, PROVIDED THAT THE PERSON IS REGISTERED ON THAT DATE AS A 321
MORTGAGE BROKER PURSUANT TO SECTION 1322.04 OF THE REVISED CODE, 323
AND A CERTIFICATE OF REGISTRATION AS A MORTGAGE BROKER IS NOT 324
SURRENDERED BY THE PERSON OR REVOKED OR REFUSED RENEWAL BY THE 325
SUPERINTENDENT AT ANY TIME AFTER THAT DATE. 326
Sec. 1322.031. (A) THE APPLICATION FOR A MORTGAGE 329
ORIGINATOR CERTIFICATE OF REGISTRATION SHALL BE IN WRITING, UNDER 330
OATH, AND IN A FORM PRESCRIBED BY THE SUPERINTENDENT OF FINANCIAL 331
INSTITUTIONS. THE APPLICATION SHALL INCLUDE THE NAME OF THE 332
MORTGAGE BROKER REGISTERED PURSUANT TO SECTION 1322.04 OF THE 334
REVISED CODE THAT IS THE EMPLOYER OF THE APPLICANT AND ALSO SHALL 336
INDICATE THE NAMES OF ALL PREVIOUS EMPLOYERS OF THE APPLICANT. 337
(B) THE APPLICATION FOR A MORTGAGE ORIGINATOR CERTIFICATE 340
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OF REGISTRATION SHALL BE ACCOMPANIED BY A NONREFUNDABLE 341
APPLICATION FEE OF FIFTY DOLLARS.
(C) THE SUPERINTENDENT SHALL ISSUE A CERTIFICATE UPON 344
RECEIPT OF AN APPLICATION COMPLETED IN ACCORDANCE WITH DIVISION 346
(A) OF THIS SECTION AND THE APPLICATION FEE IN ACCORDANCE WITH 347
DIVISION (B) OF THIS SECTION. 348
(D) A MORTGAGE ORIGINATOR SHALL BE AN EMPLOYEE, AS THAT 350
TERM IS DEFINED IN SECTION 4101.01 OF THE REVISED CODE, OF THE 353
MORTGAGE BROKER NAMED ON THE MORTGAGE ORIGINATOR'S CERTIFICATE OF 354
REGISTRATION APPLICATION. NO PERSON SHALL ORIGINATE MORTGAGE 355
LOANS FOR ANY MORTGAGE BROKER AS AN INDEPENDENT CONTRACTOR OR IN 356
THE COURSE OF A SIMILAR EMPLOYMENT RELATIONSHIP WITH THE MORTGAGE 357
BROKER.
(E) THE MORTGAGE BROKER EMPLOYING THE MORTGAGE ORIGINATOR 360
SHALL HOLD THE MORTGAGE ORIGINATOR CERTIFICATE OF REGISTRATION 361
AND SHALL MAKE THE CERTIFICATE AVAILABLE UPON REQUEST. 362
(F) A MORTGAGE ORIGINATOR MAY SURRENDER A MORTGAGE 365
ORIGINATOR CERTIFICATE OF REGISTRATION. 366
(G) UPON THE DEPARTURE OF A MORTGAGE ORIGINATOR FROM 369
EMPLOYMENT WITH THE MORTGAGE BROKER NAMED IN THE MORTGAGE 370
ORIGINATOR'S CERTIFICATE OF REGISTRATION APPLICATION, BOTH OF THE 371
FOLLOWING APPLY:
(1) THE MORTGAGE ORIGINATOR'S CERTIFICATE OF REGISTRATION 374
AS A MORTGAGE ORIGINATOR IS VOID;
(2) THE MORTGAGE BROKER SHALL SUBMIT NOTIFICATION IN 376
WRITING TO THE SUPERINTENDENT WITHIN TEN DAYS AFTER THE MORTGAGE 377
ORIGINATOR'S DEPARTURE FROM EMPLOYMENT. NO MORTGAGE BROKER SHALL 379
FAIL TO COMPLY WITH DIVISION (G)(2) OF THIS SECTION. 380
Sec. 1322.04. (A) Upon the conclusion of the 389
investigation required under division (B) of section 1322.03 of 390
the Revised Code, the superintendent of financial institutions 392
shall issue a certificate of registration AS A MORTGAGE BROKER to 393
the applicant if the superintendent finds that the following 395
conditions are met:
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(1) The application is accompanied by the application fee 397
of three hundred fifty dollars for each location of an office to 398
be maintained by the applicant IN ACCORDANCE WITH DIVISION (A) OF 399
SECTION 1322.02 OF THE REVISED CODE and complies with division 400
(A) of section 1322.03 of the Revised Code. 401
(2) If the application is for a location that is a 403
residence, that the applicant has obtained a valid zoning permit 404
authorizing the use of the residence for commercial purposes, or 405
has obtained a valid written opinion or other document issued by 407
the county or political subdivision where the residence is 408
located certifying that the use of the residence to transact 409
business as a mortgage broker is not prohibited by the county or 410
political subdivision THE APPLICATION IS ACCOMPANIED BY A 411
PHOTOGRAPH OF EACH LOCATION AT WHICH THE MORTGAGE BROKER'S 412
BUSINESS WILL BE TRANSACTED. 413
(3)(a) The sole proprietor, partner, or shareholder 415
designated on the application, pursuant to division (A)(3) of 417
section 1322.03 of the Revised Code, as responsible for managing 419
the operation of the location or locations where THE business is 420
to be transacted meets the educational or experience requirements 422
described in division (A)(4) of section 1322.03 of the Revised 423
Code.
(b) IF A PARTNER OR SHAREHOLDER DESIGNATED PURSUANT TO 426
DIVISION (A)(3) OF SECTION 1322.03 OF THE REVISED CODE CEASES TO 430
BE RESPONSIBLE FOR MANAGING THE OPERATION OF THE LOCATION OR 431
LOCATIONS WHERE THE BUSINESS IS TO BE TRANSACTED, THE APPLICANT 433
SHALL DESIGNATE ANOTHER PARTNER OR SHAREHOLDER AS RESPONSIBLE FOR 434
MANAGING THE OPERATION OF THE LOCATION OR LOCATIONS WHERE 435
BUSINESS IS TO BE TRANSACTED AND IMMEDIATELY SHALL NOTIFY THE 436
SUPERINTENDENT IN WRITING OF THE NEW DESIGNATION. THE NEWLY 438
DESIGNATED PARTNER OR SHAREHOLDER SHALL COMPLY WITH THE EDUCATION 439
OR EXPERIENCE REQUIREMENTS DESCRIBED IN DIVISION (A)(4) OF 441
SECTION 1322.03 OF THE REVISED CODE, AND THE APPLICANT SHALL 443
SUBMIT ANY ADDITIONAL INFORMATION THAT THE SUPERINTENDENT 444
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REQUIRES TO ESTABLISH THAT THE NEWLY DESIGNATED PARTNER OR 445
SHAREHOLDER COMPLIES WITH THE EDUCATION OR EXPERIENCE 446
REQUIREMENTS DESCRIBED IN THAT DIVISION. 447
(4) In the case of a foreign corporation, the applicant 449
maintains a license pursuant to Chapter 1703. of the Revised Code 450
to transact business in this state. 451
(5) The applicant complies with the financial SURETY BOND 453
requirements of section 1322.05 of the Revised Code. 455
(6) The applicant complies with sections 1322.01 to 457
1322.12 of the Revised Code. 458
(7) The applicant has not pleaded guilty to or been 460
convicted of a criminal offense, the violation of which is a 461
felony, or any criminal offense involving fraud. 462
(8) The applicant's financial responsibility, experience, 464
character, and general fitness command the confidence of the 465
public and warrant the belief that the business will be operated 466
honestly and fairly in compliance with the purposes of sections 467
1322.01 to 1322.12 of the Revised Code. 468
For purposes of determining whether an applicant that is a 470
partnership or corporation has met the conditions set forth in 471
division (A)(8) of this section, the superintendent shall 473
determine which partners or shareholders named in the application 474
pursuant to division (A)(2) of section 1322.03 of the Revised 476
Code must meet the conditions set forth in division (A)(8) of 477
this section. This determination shall be based on the extent 478
and nature of the partner's or shareholder's ownership interest 479
in the partnership or corporation that is the applicant. 480
(B) The certificate of registration issued pursuant to 482
division (A) of this section may be renewed annually on or before 483
the thirtieth day of April upon payment of a renewal fee of three 484
hundred fifty dollars for each location of an office to be 485
maintained by the applicant IN ACCORDANCE WITH DIVISION (A) OF 486
SECTION 1322.02 OF THE REVISED CODE and a finding by the 487
superintendent that the applicant meets the conditions set forth 488
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in divisions (A)(2) to (8) of this section and that the 489
applicant's certificate of registration is not subject to an 490
order of suspension or revocation by the superintendent. If a 491
renewal fee is submitted to RECEIVED BY the superintendent after 493
the thirtieth day of April but prior to the first day of June, 495
the fee shall be accompanied by a late renewal fee of one hundred 496
dollars for each location of an office maintained by the
applicant for which the renewal fee is late, THE CERTIFICATE OF 497
REGISTRATION SHALL NOT BE CONSIDERED RENEWED, AND THE APPLICANT 499
SHALL CEASE ACTIVITY AS A MORTGAGE BROKER AND APPLY FOR A 500
CERTIFICATE OF REGISTRATION AS A MORTGAGE BROKER. 501
(C) No application, OR renewal, or late renewal fee 503
required by division (A) or (B) of this section shall be returned 505
after a certificate of registration has been issued or renewed by 506
the superintendent.
(D) Division (A)(3) of this section does not apply to any 509
registrant PERSON that, on the effective date of this amendment 511
MARCH 4, 1996, is registered AS A MORTGAGE BROKER under sections 512
1322.01 to 1322.12 of the Revised Code THIS SECTION under a 513
certificate of registration issued pursuant to those sections 514
THIS SECTION prior to the effective date of this amendment MARCH 516
4, 1996, provided that the certificate of registration is not 518
surrendered by the registrant PERSON or revoked or refused 520
renewal by the superintendent of consumer finance FINANCIAL 521
INSTITUTIONS at any time after the effective date of this 522
amendment MARCH 4, 1996. 523
(E) IF A PARTNER OR SHAREHOLDER DESIGNATED PURSUANT TO 526
DIVISION (A)(3) OF SECTION 1322.03 OF THE REVISED CODE IS NO 528
LONGER RESPONSIBLE FOR MANAGING THE OPERATION OF THE LOCATION OR 529
LOCATIONS WHERE BUSINESS IS TO BE TRANSACTED, THE PERSON 530
REGISTERED AS A MORTGAGE BROKER PURSUANT TO SECTION 1322.04 OF 531
THE REVISED CODE SHALL DO ALL OF THE FOLLOWING: 534
(1) DESIGNATE ANOTHER PARTNER OR SHAREHOLDER AS 537
RESPONSIBLE FOR MANAGING THE OPERATION OF THE LOCATION OR 538
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LOCATIONS WHERE BUSINESS IS TO BE TRANSACTED;
(2) WITHIN TEN DAYS AFTER THE DESIGNATION DESCRIBED IN 541
DIVISION (B)(2)(a) OF THIS SECTION, NOTIFY THE SUPERINTENDENT IN 543
WRITING OF THE DESIGNATION; 544
(3) SUBMIT ANY ADDITIONAL INFORMATION THAT THE 547
SUPERINTENDENT REQUIRES TO ESTABLISH THAT THE NEWLY DESIGNATED 548
PARTNER OR SHAREHOLDER COMPLIES WITH THE EDUCATION OR EXPERIENCE 549
REQUIREMENTS SET FORTH IN DIVISION (A)(4) OF SECTION 1322.03 OF 550
THE REVISED CODE. 552
Sec. 1322.05. (A) NO PERSON REGISTERED AS A MORTGAGE 555
BROKER PURSUANT TO SECTION 1322.04 OF THE REVISED CODE SHALL 557
CONDUCT BUSINESS IN THIS STATE, UNLESS THE MORTGAGE BROKER HAS 558
OBTAINED A CORPORATE SURETY BOND ISSUED BY A BONDING COMPANY OR 559
INSURANCE COMPANY AUTHORIZED TO DO BUSINESS IN THIS STATE. THE 560
BOND SHALL BE IN FAVOR OF THE SUPERINTENDENT OF FINANCIAL 561
INSTITUTIONS AND IN THE PRINCIPAL SUM OF AT LEAST TWENTY-FIVE 562
THOUSAND DOLLARS AND AN ADDITIONAL PRINCIPAL SUM OF FIVE THOUSAND 563
DOLLARS FOR EACH LOCATION, IN EXCESS OF ONE, AT WHICH THE 564
MORTGAGE BROKER CONDUCTS BUSINESS. A COPY OF THE BOND SHALL BE 565
FILED WITH THE SUPERINTENDENT. THE PROCEEDS OF THE BOND SHALL 566
CONSTITUTE A TRUST FUND FOR THE EXCLUSIVE BENEFIT OF ANY PERSON 567
INJURED BY A VIOLATION OF ANY PROVISION OF SECTIONS 1322.01 TO 568
1322.12 OF THE REVISED CODE. 570
(B) THE MORTGAGE BROKER SHALL GIVE NOTICE TO THE 573
SUPERINTENDENT BY CERTIFIED MAIL OF ANY ACTION THAT IS BROUGHT 574
AGAINST THE MORTGAGE BROKER AND OF ANY JUDGMENT THAT IS ENTERED 575
AGAINST THE MORTGAGE BROKER BY A PERSON INJURED BY A VIOLATION OF 576
ANY PROVISION OF SECTIONS 1322.01 TO 1322.12 OF THE REVISED CODE. 579
THE NOTICE SHALL PROVIDE DETAILS SUFFICIENT TO IDENTIFY THE 580
ACTION OR JUDGMENT, AND SHALL BE FILED WITH THE SUPERINTENDENT 581
WITHIN TEN DAYS AFTER THE COMMENCEMENT OF THE ACTION OR NOTICE TO 582
THE MORTGAGE BROKER OF ENTRY OF A JUDGMENT. THE CORPORATE 583
SURETY, WITHIN TEN DAYS AFTER IT PAYS ANY CLAIM OR JUDGMENT, 584
SHALL GIVE NOTICE TO THE SUPERINTENDENT BY CERTIFIED MAIL OF THE 585
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PAYMENT, WITH DETAILS SUFFICIENT TO IDENTIFY THE PERSON AND THE 586
CLAIM OR JUDGMENT PAID. 587
(C) WHENEVER THE PRINCIPAL SUM OF THE CORPORATE SURETY 590
BOND IS REDUCED BY ONE OR MORE RECOVERIES OR PAYMENTS, THE 591
MORTGAGE BROKER SHALL FURNISH A NEW OR ADDITIONAL BOND UNDER THIS 592
SECTION, SO THAT THE TOTAL OR AGGREGATE PRINCIPAL SUM OF THE BOND 593
OR BONDS EQUALS THE SUM REQUIRED BY THIS SECTION, OR SHALL 594
FURNISH AN ENDORSEMENT EXECUTED BY THE CORPORATE SURETY 595
REINSTATING THE BOND TO THE REQUIRED PRINCIPAL SUM OF IT. 596
(D) THE LIABILITY OF THE CORPORATE SURETY ON THE BOND TO 599
THE SUPERINTENDENT AND TO ANY PERSON INJURED BY A VIOLATION OF 600
ANY PROVISION OF SECTIONS 1322.01 TO 1322.12 OF THE REVISED CODE 603
SHALL NOT BE AFFECTED IN ANY WAY BY ANY MISREPRESENTATION, BREACH 604
OF WARRANTY, OR FAILURE TO PAY THE PREMIUM, BY ANY ACT OR 605
OMISSION UPON THE PART OF THE MORTGAGE BROKER, BY THE INSOLVENCY 606
OR BANKRUPTCY OF THE MORTGAGE BROKER, OR BY THE INSOLVENCY OF THE 607
MORTGAGE BROKER'S ESTATE. THE LIABILITY FOR ANY ACT OR OMISSION 608
THAT OCCURS DURING THE TERM OF THE CORPORATE SURETY BOND SHALL BE 609
MAINTAINED AND IN EFFECT FOR AT LEAST TWO YEARS AFTER THE DATE ON 610
WHICH THE CORPORATE SURETY BOND IS TERMINATED OR CANCELED. 611
(E) THE CORPORATE SURETY BOND SHALL NOT BE CANCELED BY THE 614
MORTGAGE BROKER OR THE CORPORATE SURETY EXCEPT UPON NOTICE TO THE 615
SUPERINTENDENT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED. THE 616
CANCELLATION SHALL NOT BE EFFECTIVE PRIOR TO THIRTY DAYS AFTER 617
THE SUPERINTENDENT RECEIVES THE NOTICE. 618
(F) NO PERSON REGISTERED AS A MORTGAGE BROKER PURSUANT TO 621
SECTION 1322.04 OF THE REVISED CODE SHALL FAIL TO COMPLY WITH 623
THIS SECTION. 624
Sec. 1322.06. (A) As often as the superintendent of 634
financial institutions considers it necessary, the superintendent 636
may examine the registrant's records pertaining to business 638
transacted pursuant to sections 1322.01 to 1322.12 of the Revised 640
Code. EVERY PERSON REGISTERED AS A MORTGAGE BROKER PURSUANT TO 641
SECTION 1322.04 OF THE REVISED CODE SHALL BE UNDER THE 643
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SUPERVISION OF THE SUPERINTENDENT OF FINANCIAL INSTITUTIONS. THE 645
SUPERINTENDENT SHALL DEVELOP AND IMPLEMENT A SYSTEM FOR EXAMINING 646
MORTGAGE BROKERS. MORTGAGE BROKERS SHALL BE SUBJECT TO PERIODIC 647
EXAMINATIONS BY THE SUPERINTENDENT, AND THE BOOKS AND RECORDS OF 648
A MORTGAGE BROKER SHALL BE OPEN TO INSPECTION BY THE 649
SUPERINTENDENT AT ALL TIMES. IN CARRYING OUT THE DUTIES REQUIRED 650
BY THIS DIVISION, THE SUPERINTENDENT MAY SUBPOENA WITNESSES, 651
ADMINISTER OATHS, RECEIVE TESTIMONY, AND ORDER THE SUBMISSION OF 652
DOCUMENTS.
(B) A registrant PERSON REGISTERED AS A MORTGAGE BROKER 654
PURSUANT TO SECTION 1322.04 OF THE REVISED CODE shall maintain 655
records pertaining to business transacted pursuant to sections 657
1322.01 to 1322.12 of the Revised Code for two years or more 658
after the final entry on such THOSE records. No registrant 659
PERSON REGISTERED AS A MORTGAGE BROKER PURSUANT TO SECTION 660
1322.04 OF THE REVISED CODE shall fail to comply with this 661
division.
(C) All information obtained by the superintendent or the 663
superintendent's deputies, examiners, assistants, agents, or 664
clerks by reason of their official position, including 665
information obtained by such THOSE persons in the course of 666
examining a registrant PERSON REGISTERED AS A MORTGAGE BROKER 667
PURSUANT TO SECTION 1322.04 OF THE REVISED CODE or investigating 668
an applicant for a certificate of registration AS A MORTGAGE 669
BROKER, is privileged and confidential. All such information 671
shall remain privileged and confidential for all purposes except
when it is necessary for the superintendent and the 672
superintendent's deputies, examiners, assistants, agents, or 673
clerks to take official action regarding the affairs of the 674
registrant PERSON REGISTERED AS A MORTGAGE BROKER or in 675
connection with criminal proceedings.
Sec. 1322.07. No registrant PERSON REGISTERED AS A 685
MORTGAGE BROKER PURSUANT TO SECTION 1322.04 OF THE REVISED CODE 687
or applicant for a certificate of registration AS A MORTGAGE 688
15
BROKER under sections 1322.01 to 1322.12 SECTION 1322.04 of the 689
Revised Code shall do any of the following: 690
(A) Obtain a certificate of registration through any false 692
or fraudulent representation or make any substantial 693
misrepresentation in any registration application; 694
(B) Make false promises through advertising or other means 696
or engage in a continued course of misrepresentations; 697
(C) Engage in conduct that constitutes improper, 699
fraudulent, or dishonest dealings; 700
(D) Fail to notify the division of financial institutions 703
if the registrant PERSON or applicant, in a court of competent 704
jurisdiction of this state or any other state, is convicted of or 705
pleads guilty to a criminal offense, the violation of which is a 706
felony, or any criminal offense involving fraud; 707
(E) EMPLOY ANY PERSON TO ORIGINATE MORTGAGE LOANS THAT IS 709
NOT PROPERLY REGISTERED AS A MORTGAGE ORIGINATOR PURSUANT TO 710
SECTION 1322.031 OF THE REVISED CODE. 712
Sec. 1322.08. (A) Except as otherwise provided in this 721
division, no registrant PERSON REGISTERED AS A MORTGAGE BROKER 722
PURSUANT TO SECTION 1322.04 OF THE REVISED CODE shall charge or 724
receive, directly or indirectly, fees for assisting a buyer in 725
obtaining a mortgage, until all of the services that the 727
registrant MORTGAGE BROKER has agreed to perform for the buyer 729
are completed, and the proceeds of the mortgage loan have been 730
disbursed to or on behalf of the buyer. However, prior to 731
completion of such THOSE services, the following fees may be paid 733
for services performed by a bona fide third party in assisting 734
the buyer to obtain a mortgage if the fees are either paid 735
directly by the buyer to the bona fide third party or, except as 736
provided in division (A)(6) of this section, the fees are 737
deposited by the registrant MORTGAGE BROKER into the registrant's 739
MORTGAGE BROKER'S special account for services performed by the 740
bona fide third party:
(1) Fees to obtain a report from a credit reporting 742
16
agency;
(2) Fees for notary services; 744
(3) Fees authorized by law to record, file, or release a 746
security interest or mortgage; 747
(4) Fees for the performance of a title search, appraisal 749
of the real estate, or survey of the real estate; 750
(5) Fees charged by a lender for locking in an interest 752
rate in connection with obtaining or refinancing a mortgage, 753
provided that the fees do not exceed an amount equal to one and 754
one-half per cent of the mortgage loan amount; 755
(6) Fees not exceeding five hundred dollars paid directly 757
by the buyer to a state or federal government agency or 759
instrumentality for purposes of processing a mortgage application 760
relating to a government sponsored or guaranteed mortgage
program.
(B) If fees are paid by a buyer for the performance of any 762
of the services described in division (A)(4) of this section and 763
the registrant PERSON REGISTERED AS A MORTGAGE BROKER PURSUANT TO 764
SECTION 1322.04 OF THE REVISED CODE is unable to assist in 765
obtaining a mortgage for the buyer, the registrant MORTGAGE 766
BROKER shall return to the buyer the original documents prepared 768
by the bona fide third party at the time that the request for the 769
mortgage is refused or denied. No registrant MORTGAGE BROKER 770
shall fail to comply with this division.
(C) For purposes of this section: 772
(1) "Bona fide third party" means a person that is not an 774
employee of, related to, or affiliated with, the registrant 775
PERSON REGISTERED AS A MORTGAGE BROKER PURSUANT TO SECTION 777
1322.04 OF THE REVISED CODE, and that is not used for the purpose 778
of circumvention or evasion of this section. 779
(2) "Special account" means a depository account with a 781
financial institution, the deposits of which are insured by the 782
federal deposit insurance corporation, that is separate and 783
distinct from any personal or other account of the registrant 784
17
PERSON REGISTERED AS A MORTGAGE BROKER PURSUANT TO SECTION 785
1322.04 OF THE REVISED CODE, and that is maintained solely for 786
the holding and payment of fees described in division (A) of this 787
section for services performed by bona fide third parties and 788
received by the registrant MORTGAGE BROKER from buyers that the 789
registrant MORTGAGE BROKER assists in obtaining mortgages. 790
Sec. 1322.09. A mortgage broker shall disclose in any 799
printed or published advertisement relating to the mortgage 800
broker's services, the number designated on the certificate of 801
registration that is issued to the mortgage broker by the 802
superintendent of financial institutions under sections 1322.01 803
to 1322.12 SECTION 1322.04 of the Revised Code. No mortgage 805
broker shall fail to comply with this section.
Sec. 1322.10. (A) After notice and opportunity for a 814
hearing conducted in accordance with Chapter 119. of the Revised 815
Code, the superintendent of financial institutions may suspend DO 817
THE FOLLOWING:
(1) SUSPEND, revoke, or refuse to issue or renew a 819
certificate of registration PURSUANT TO SECTION 1322.04 OF THE 821
REVISED CODE if the superintendent finds a violation of division 822
(B) of section 1322.06, or section 1322.05, 1322.07, 1322.08, or 823
1322.09 of the Revised Code or the rules adopted thereunder; 824
(2) IMPOSE A FINE OF NOT LESS THAN ONE HUNDRED DOLLARS, 827
BUT NOT MORE THAN ONE THOUSAND DOLLARS, FOR EACH DAY A VIOLATION 828
OF A LAW OR RULE IS COMMITTED, REPEATED, OR CONTINUED. IF THE 829
MORTGAGE BROKER ENGAGES IN A PATTERN OF REPEATED VIOLATIONS OF A 830
LAW OR RULE, THE SUPERINTENDENT MAY IMPOSE A FINE OF NOT MORE 831
THAN TWO THOUSAND DOLLARS FOR EACH DAY THE VIOLATION IS 832
COMMITTED, REPEATED, OR CONTINUED. ALL FINES COLLECTED PURSUANT 835
TO THIS DIVISION SHALL BE PAID TO THE TREASURER OF STATE TO THE 836
CREDIT OF THE CONSUMER FINANCE FUND CREATED IN SECTION 1321.21 OF 837
THE REVISED CODE. 838
(B) The superintendent may investigate alleged violations 840
of section 1322.01 to 1322.12 of the Revised Code, or the rules 841
18
adopted thereunder, UNDER THOSE SECTIONS or complaints concerning 843
any such violation. The superintendent may make application to 844
the court of common pleas for an order enjoining any such 845
violation, and, upon a showing by the superintendent that a 846
person has committed, or is about to commit, such a violation, 847
the court shall grant an injunction, restraining order, or other 848
appropriate relief.
(C) In conducting any investigation pursuant to this 850
section, the superintendent may compel, by subpoena, witnesses, 851
to testify in relation to any matter over which the 852
superintendent has jurisdiction, and may require the production 853
of any book, record, or other document pertaining to such THAT 854
matter. If a person fails to file any statement or report, obey 855
any subpoena, give testimony, produce any book, record, or other 856
document as required by such a subpoena, or permit photocopying 857
of any book, record, or other document subpoenaed, the court of 858
common pleas of any county in this state, upon application made 859
to it by the superintendent, shall compel obedience by attachment 860
proceedings for contempt, as in the case of disobedience of the 861
requirements of a subpoena issued from the court or a refusal to 862
testify therein. 863
(D) If the superintendent determines that a person is 865
engaged in, or is believed to be engaged in, activities that may 866
constitute a violation of sections 1322.01 to 1322.12 of the 867
Revised Code, the superintendent may, after notice and a hearing 868
conducted in accordance with Chapter 119. of the Revised Code, 869
MAY issue a cease and desist order. Such an order shall be 870
enforceable in the court of common pleas. 871
Sec. 1322.101. On receipt of a notice pursuant to section 882
2301.373 of the Revised Code, the division of consumer finance
FINANCIAL INSTITUTIONS shall comply with that section with 884
respect to a certificate issued pursuant to this chapter.
Sec. 1322.99. (A) Whoever violates DIVISION (A) OR (B) OF 895
section 1322.02 or, SECTION 1322.07, or division (A) or (B) of 896
19
section 1322.08 of the Revised Code is guilty of a felony of the 897
fifth degree. 898
(B) A PERSON REGISTERED AS A MORTGAGE BROKER PURSUANT TO 901
SECTION 1322.04 OF THE REVISED CODE THAT FAILS TO COMPLY WITH 903
DIVISION (G)(2) OF SECTION 1322.031 OF THE REVISED CODE IS 906
SUBJECT TO A FORFEITURE OF FIFTY DOLLARS FOR EACH DAY A VIOLATION 907
IS COMMITTED, REPEATED, OR CONTINUED. 908
Section 2. That existing sections 1322.01, 1322.02, 910
1322.03, 1322.04, 1322.06, 1322.07, 1322.08, 1322.09, 1322.10, 911
1322.101, and 1322.99 and section 1322.05 of the Revised Code are 912
hereby repealed. 913