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To amend sections 1321.52 and 1322.02 and to enact | 1 |
sections 1321.537 and 1322.042 of the Revised Code | 2 |
to authorize the Superintendent of Financial | 3 |
Institutions to issue a temporary mortgage loan | 4 |
originator license under certain circumstances. | 5 |
Section 1. That sections 1321.52 and 1322.02 be amended and | 6 |
sections 1321.537 and 1322.042 of the Revised Code be enacted to | 7 |
read as follows: | 8 |
Sec. 1321.52. (A)(1) No person, on that person's own behalf | 9 |
or on behalf of any other person, shall do any of the following | 10 |
without having first obtained a certificate of registration from | 11 |
the division of financial institutions: | 12 |
(a) Advertise, solicit, or hold out that the person is | 13 |
engaged in the business of making residential mortgage loans | 14 |
secured by a mortgage on a borrower's real estate which is other | 15 |
than a first lien on the real estate; | 16 |
(b) Engage in the business of lending or collecting the | 17 |
person's own or another person's money, credit, or choses in | 18 |
action for non-first lien residential mortgage loans; | 19 |
(c) Employ or compensate mortgage loan originators licensed | 20 |
or who should be licensed under sections 1321.51 to 1321.60 of the | 21 |
Revised Code to conduct the business of making residential | 22 |
mortgage loans; | 23 |
(d) Make loans in this state of the type set forth in | 24 |
division (C) of this section that are unsecured or are secured by | 25 |
other than real property, which loans are for more than five | 26 |
thousand dollars at a rate of interest greater than permitted by | 27 |
section 1343.01 or other specific provisions of the Revised Code. | 28 |
(2) Each person issued a certificate of registration or | 29 |
license is subject to all the rules prescribed under sections | 30 |
1321.51 to 1321.60 of the Revised Code. | 31 |
(B)(1) All loans made to persons who at the time are | 32 |
residents of this state are considered as made within this state | 33 |
and subject to the laws of this state, regardless of any statement | 34 |
in the contract or note to the contrary, except as follows: | 35 |
(a) If the loan is primarily secured by a lien on real | 36 |
property in another state and is arranged by a mortgage loan | 37 |
originator licensed by that state, the borrower may by choice of | 38 |
law designate that the transaction be governed by the law where | 39 |
the real property is located if the other state has consumer | 40 |
protection laws covering the borrower that are applicable to the | 41 |
transaction. | 42 |
(b) If the loan is for the purpose of purchasing goods | 43 |
acquired by the borrower when the borrower is outside of this | 44 |
state, the loan may be governed by the laws of the other state. | 45 |
(2) Nothing in division (B)(1) of this section prevents a | 46 |
choice of law or requires registration or licensure of persons | 47 |
outside of this state in a transaction involving the solicitation | 48 |
of residents of this state to obtain non-real estate secured loans | 49 |
that require the borrowers to physically visit a lender's | 50 |
out-of-state office to apply for and obtain the disbursement of | 51 |
loan funds. | 52 |
(C) A registrant may make unsecured loans, loans secured by a | 53 |
mortgage on a borrower's real estate which is a first lien or | 54 |
other than a first lien on the real estate, loans secured by other | 55 |
than real estate, and loans secured by any combination of | 56 |
mortgages and security interests, on terms and conditions provided | 57 |
by sections 1321.51 to 1321.60 of the Revised Code. | 58 |
(D)(1) If a lender that is subject to sections 1321.51 to | 59 |
1321.60 of the Revised Code makes a loan in violation of division | 60 |
(A)(1) of this section, the lender has no right to collect, | 61 |
receive, or retain any interest or charges on that loan. | 62 |
(2) If a registrant applies to the division for a renewal of | 63 |
the registrant's certificate after the date required by division | 64 |
(A)(7) of section 1321.53 of the Revised Code, but prior to the | 65 |
first day of February of that year, and the division approves the | 66 |
application, division (D)(1) of this section does not apply with | 67 |
respect to any loan made by the registrant while the registrant's | 68 |
certificate was expired. | 69 |
(3) If a person's registration under sections 1321.51 to | 70 |
1321.60 of the Revised Code terminates due to nonrenewal or | 71 |
otherwise but the person continues to engage in the business of | 72 |
collecting or servicing non-first lien residential mortgage loans | 73 |
in violation of division (A)(1) of this section, the | 74 |
superintendent of financial institutions may take administrative | 75 |
action, including action on any subsequent application for a | 76 |
certificate of registration. In addition, no late fee, bad check | 77 |
charge except as incurred, charge related to default or cost to | 78 |
realize on its security interest, or prepayment penalty on | 79 |
non-first lien residential mortgage loans shall be collected or | 80 |
retained by a person who is in violation of division (A)(1)(b) of | 81 |
this section for the period of time in which the person was in | 82 |
violation. Nothing in division (D)(3) of this section prevents or | 83 |
otherwise precludes any other actions or penalties provided by law | 84 |
or modifies a defense of holder in due course that a subsequent | 85 |
purchaser servicing the residential mortgage loan may raise. | 86 |
(E)(1) No individual shall engage in the business of a | 87 |
mortgage loan originator without first obtaining and maintaining | 88 |
annually a license pursuant to section 1321.532 of the Revised | 89 |
Code from the division of financial institutions. A mortgage loan | 90 |
originator shall be employed or associated with a registrant or | 91 |
entity exempt from registration under sections 1321.51 to 1321.60 | 92 |
of the Revised Code, but shall not be employed by or associated | 93 |
with more than one registrant or exempt entity at any one time. | 94 |
(2) An individual acting under the individual's authority as | 95 |
a registered mortgage loan originator shall not be required to be | 96 |
licensed under division (E)(1) of this section. | 97 |
(3) An individual who holds a valid temporary mortgage loan | 98 |
originator license issued pursuant to section 1321.537 of the | 99 |
Revised Code may engage in the business of a mortgage loan | 100 |
originator in accordance with sections 1321.51 to 1321.60 of the | 101 |
Revised Code during the term of the temporary license. | 102 |
(F)(1) Each licensee shall register with, and maintain a | 103 |
valid unique identifier issued by, the nationwide mortgage | 104 |
licensing system and registry. | 105 |
(2) No person shall use a licensee's unique identifier for | 106 |
any purpose other than as set forth in the "Secure and Fair | 107 |
Enforcement for Mortgage Licensing Act of 2008," 122 Stat. 2810, | 108 |
12 U.S.C. 5101. | 109 |
(G)(1) If a person that is subject to sections 1321.51 to | 110 |
1321.60 of the Revised Code makes a loan in violation of division | 111 |
(A)(1)(d) of this section and subsequently sells or assigns that | 112 |
loan, the person is liable to the borrower for any interest paid | 113 |
on that loan to the holder or assignee in excess of the rate that | 114 |
would be applicable in the absence of sections 1321.51 to 1321.60 | 115 |
of the Revised Code, in addition to any interest or charges paid | 116 |
on that loan to the unauthorized lender as provided by division | 117 |
(D)(1) of this section. | 118 |
(2) If a person that is subject to sections 1321.51 to | 119 |
1321.60 of the Revised Code makes a residential mortgage loan in | 120 |
violation of division (A)(1)(b) or (c) of this section and | 121 |
subsequently sells or assigns that loan, the lender is liable to | 122 |
the borrower for any interest paid on that loan to the holder or | 123 |
assignee in excess of the rate set forth in division (B)(4) of | 124 |
section 1343.01 of the Revised Code, in addition to any interest | 125 |
or charges paid on that loan to the unauthorized lender as | 126 |
provided by division (D)(1) of this section. | 127 |
Sec. 1321.537. (A) As used in this section: | 128 |
(1) "Out-of-state mortgage loan originator" means an | 129 |
individual to whom both of the following apply: | 130 |
(a) The individual holds a valid mortgage loan originator | 131 |
license, or comparable authority, issued pursuant to the law of | 132 |
any other state of the United States. | 133 |
(b) The individual is registered, fingerprinted, and | 134 |
maintains a unique identifier through the nationwide mortgage | 135 |
licensing system and registry. | 136 |
(2) "Sponsor" means a registrant that employs an applicant | 137 |
for a temporary mortgage loan originator license and, during the | 138 |
term of the applicant's temporary license, covers the applicant | 139 |
under its corporate surety bond. | 140 |
(B) The superintendent of financial institutions may, in | 141 |
accordance with this section, issue to a registered mortgage loan | 142 |
originator or an out-of-state mortgage loan originator a temporary | 143 |
mortgage loan originator license that enables the licensee to | 144 |
engage in the business of a mortgage loan originator while the | 145 |
individual completes the requirements necessary to meet the | 146 |
conditions set forth in section 1321.532 of the Revised Code for a | 147 |
mortgage loan originator license. A temporary mortgage loan | 148 |
originator license shall be valid for a term of at least one | 149 |
hundred twenty days. | 150 |
(C) An application for a temporary mortgage loan originator | 151 |
license shall be in writing, under oath, and in a form that meets | 152 |
the requirements of the national mortgage licensing system and | 153 |
registry. The application shall be accompanied by a nonrefundable | 154 |
application fee of one hundred dollars and a certification that, | 155 |
as of the date of application, the applicant meets both of the | 156 |
following conditions: | 157 |
(1) The applicant has not had a mortgage loan originator | 158 |
license, or comparable authority, revoked in any governmental | 159 |
jurisdiction. For purposes of division (C)(1) of this section, a | 160 |
subsequent formal vacation of such a revocation shall not be | 161 |
considered a revocation. | 162 |
(2) The applicant has not been convicted of, or pleaded | 163 |
guilty or nolo contendere to, any of the following in a domestic, | 164 |
foreign, or military court: | 165 |
(a) During the seven-year period immediately preceding the | 166 |
date of application, a felony; | 167 |
(b) At any time prior to the date of application, a felony | 168 |
involving an act of fraud, dishonesty, a breach of trust, theft, | 169 |
or money laundering. | 170 |
For purposes of division (C)(2) of this section, any | 171 |
conviction for which the applicant has received a pardon, or that | 172 |
has been expunged, shall not be considered a conviction. | 173 |
(D) The superintendent shall issue a temporary mortgage loan | 174 |
originator license to the applicant if the superintendent finds | 175 |
that all of the following conditions are met: | 176 |
(1) The application is accompanied by the application fee and | 177 |
the certification described in division (C) of this section. | 178 |
(2) The applicant has been employed for at least two of the | 179 |
immediately preceding ten years as a mortgage loan originator in | 180 |
this or any other state. | 181 |
(3) The applicant is registered, fingerprinted, and has a | 182 |
valid unique identifier through the nationwide mortgage licensing | 183 |
system and registry as of the date of application. | 184 |
(4) The applicant has authorized the nationwide mortgage | 185 |
licensing system and registry to obtain a credit report for | 186 |
submission to the superintendent. | 187 |
(5) The applicant has a sponsor that certifies employment of | 188 |
the applicant and has signed the application. | 189 |
(E) The sponsor of a temporary licensee shall be responsible | 190 |
for the activities of the licensee within the scope of the | 191 |
licensee's employment during the term of the temporary license. If | 192 |
the temporary licensee's employment with the sponsor is | 193 |
terminated, the sponsor shall notify the division of financial | 194 |
institutions, by registered mail return receipt requested, of the | 195 |
termination. Upon the division's receipt of the notice, the | 196 |
sponsor shall no longer be held responsible for the activities of | 197 |
the temporary licensee. | 198 |
(F) In accordance with Chapter 119. of the Revised Code, the | 199 |
superintendent may revoke a licensee's temporary mortgage loan | 200 |
originator license if the superintendent finds either of the | 201 |
following: | 202 |
(1) The licensee no longer meets the conditions set forth in | 203 |
division (C) of this section. | 204 |
(2) The licensee made a substantial misrepresentation in the | 205 |
license application. | 206 |
(G) The superintendent may, in accordance with Chapter 119. | 207 |
of the Revised Code, adopt rules necessary for the implementation | 208 |
and operation of this section. | 209 |
Sec. 1322.02. (A)(1) No person, on the person's own behalf | 210 |
or on behalf of any other person, shall act as a mortgage broker | 211 |
without first having obtained a certificate of registration from | 212 |
the superintendent of financial institutions for every office to | 213 |
be maintained by the person for the transaction of business as a | 214 |
mortgage broker in this state. A registrant shall maintain an | 215 |
office location in this state for the transaction of business as a | 216 |
mortgage broker in this state. | 217 |
(2) No person shall act or hold that person's self out as a | 218 |
mortgage broker under the authority or name of a registrant or | 219 |
person exempt from sections 1322.01 to 1322.12 of the Revised Code | 220 |
without first having obtained a certificate of registration from | 221 |
the superintendent for every office to be maintained by the person | 222 |
for the transaction of business as a mortgage broker in this | 223 |
state. | 224 |
(B)(1) No individual shall act as a loan originator without | 225 |
first having obtained a license from the superintendent. A loan | 226 |
originator shall be employed by or associated with a mortgage | 227 |
broker or any person or entity listed in division (G)(2) of | 228 |
section 1322.01 of the Revised Code, but shall not be employed by | 229 |
or associated with more than one mortgage broker or person or | 230 |
entity at any one time. | 231 |
(2) An individual acting under the individual's authority as | 232 |
a registered loan originator shall not be required to be licensed | 233 |
under division (B)(1) of this section. | 234 |
(3) An individual who holds a valid temporary loan originator | 235 |
license issued pursuant to section 1322.042 of the Revised Code | 236 |
may engage in the business of a loan originator in accordance with | 237 |
sections 1322.01 to 1322.12 of the Revised Code during the term of | 238 |
the temporary license. | 239 |
(C)(1) No person acting as a mortgage broker or loan | 240 |
originator shall fail to register with, and maintain a valid | 241 |
unique identifier issued by, the nationwide mortgage licensing | 242 |
system and registry. | 243 |
(2) No person shall use a mortgage broker's or loan | 244 |
originator's unique identifier for any purpose other than as set | 245 |
forth in the "Secure and Fair Enforcement for Mortgage Licensing | 246 |
Act of 2008," 122 Stat. 2810, 12 U.S.C. 5101. | 247 |
Sec. 1322.042. (A) As used in this section: | 248 |
(1) "Out-of-state loan originator" means an individual to | 249 |
whom both of the following apply: | 250 |
(a) The individual holds a valid loan originator license, or | 251 |
comparable authority, issued pursuant to the law of any other | 252 |
state of the United States. | 253 |
(b) The individual is registered, fingerprinted, and | 254 |
maintains a unique identifier through the nationwide mortgage | 255 |
licensing system and registry. | 256 |
(2) "Sponsor" means a registrant that employs an applicant | 257 |
for a temporary loan originator license and, during the term of | 258 |
the applicant's temporary license, covers the applicant under its | 259 |
corporate surety bond. | 260 |
(B) The superintendent of financial institutions may, in | 261 |
accordance with this section, issue to a registered loan | 262 |
originator or an out-of-state loan originator a temporary loan | 263 |
originator license that enables the licensee to engage in the | 264 |
business of a loan originator while the individual completes the | 265 |
requirements necessary to meet the conditions set forth in section | 266 |
1322.041 of the Revised Code for a loan originator license. A | 267 |
temporary loan originator license shall be valid for a term of at | 268 |
least one hundred twenty days. | 269 |
(C) An application for a temporary loan originator license | 270 |
shall be in writing, under oath, and in a form that meets the | 271 |
requirements of the national mortgage licensing system and | 272 |
registry. The application shall be accompanied by a nonrefundable | 273 |
application fee of one hundred dollars and a certification that, | 274 |
as of the date of application, the applicant meets both of the | 275 |
following conditions: | 276 |
(1) The applicant has not had a loan originator license, or | 277 |
comparable authority, revoked in any governmental jurisdiction. | 278 |
For purposes of division (C)(1) of this section, a subsequent | 279 |
formal vacation of such a revocation shall not be considered a | 280 |
revocation. | 281 |
(2) The applicant has not been convicted of, or pleaded | 282 |
guilty or nolo contendere to, any of the following in a domestic, | 283 |
foreign, or military court: | 284 |
(a) During the seven-year period immediately preceding the | 285 |
date of application, a felony; | 286 |
(b) At any time prior to the date of application, a felony | 287 |
involving an act of fraud, dishonesty, a breach of trust, theft, | 288 |
or money laundering. | 289 |
For purposes of division (C)(2) of this section, any | 290 |
conviction for which the applicant has received a pardon, or that | 291 |
has been expunged, shall not be considered a conviction. | 292 |
(D) The superintendent shall issue a temporary loan | 293 |
originator license to the applicant if the superintendent finds | 294 |
that all of the following conditions are met: | 295 |
(1) The application is accompanied by the application fee and | 296 |
the certification described in division (C) of this section. | 297 |
(2) The applicant has been employed for at least two of the | 298 |
immediately preceding ten years as a loan originator in this or | 299 |
any other state. | 300 |
(3) The applicant is registered, fingerprinted, and has a | 301 |
valid unique identifier through the nationwide mortgage licensing | 302 |
system and registry as of the date of application. | 303 |
(4) The applicant has authorized the nationwide mortgage | 304 |
licensing system and registry to obtain a credit report for | 305 |
submission to the superintendent. | 306 |
(5) The applicant has a sponsor that certifies employment of | 307 |
the applicant and has signed the application. | 308 |
(E) The sponsor of a temporary licensee shall be responsible | 309 |
for the activities of the licensee within the scope of the | 310 |
licensee's employment during the term of the temporary license. If | 311 |
the temporary licensee's employment with the sponsor is | 312 |
terminated, the sponsor shall notify the division of financial | 313 |
institutions, by registered mail return receipt requested, of the | 314 |
termination. Upon the division's receipt of the notice, the | 315 |
sponsor shall no longer be held responsible for the activities of | 316 |
the temporary licensee. | 317 |
(F) In accordance with Chapter 119. of the Revised Code, the | 318 |
superintendent may revoke a licensee's temporary loan originator | 319 |
license if the superintendent finds either of the following: | 320 |
(1) The licensee no longer meets the conditions set forth in | 321 |
division (C) of this section. | 322 |
(2) The licensee made a substantial misrepresentation in the | 323 |
license application. | 324 |
(G) The superintendent may, in accordance with Chapter 119. | 325 |
of the Revised Code, adopt rules necessary for the implementation | 326 |
and operation of this section. | 327 |
Section 2. That existing sections 1321.52 and 1322.02 of the | 328 |
Revised Code are hereby repealed. | 329 |