Bill Analysis

Legislative Service Commission

LSC Analysis of House Bill

Sub. S.B. 124

128th General Assembly

(As Reported by H. Civil and Commercial Law)

 

Sens.     Faber and Schiavoni, Seitz, Fedor, Schuler, Kearney, D. Miller, Carey, Harris, Hughes, Patton, Strahorn, Wagoner, Gibbs, Stewart, R. Miller, Sawyer, Turner, Wilson

Reps.     Harwood, Mecklenborg, Stebelton

BILL SUMMARY

Real property--transfer on death designation

·         Changes the transfer on death designation instrument from a deed to an affidavit.

·         Allows an individual who owns real property or any interest in real property as a survivorship tenant to execute a transfer on death designation affidavit.

·         Allows an individual who together with the individual's spouse owns real property or an interest in real property as tenants by the entireties (pursuant to a deed recorded between February 9, 1972, and April 3, 1985) to execute a transfer on death designation affidavit.

·         Specifies the information that a transfer on death designation affidavit must include.

·         Provides that any person who knowingly makes any false statement in a transfer on death designation affidavit or an affidavit of confirmation is guilty of falsification.

·         Requires the county recorder to receive the transfer on death designation affidavit and cause it to be recorded in the same manner as deeds are recorded.

·         Requires that the transfer of a deceased owner's real property or interest in real property as designated in a transfer on death designation affidavit be recorded by presenting to the county auditor and filing with the county recorder an affidavit of confirmation executed by any transfer on death beneficiary to whom the transfer is made and specifies the information that must be contained in the affidavit of confirmation.

·         Modifies the characteristics and ramifications that the real property or an interest in real property that is the subject of a transfer on death designation affidavit must have.

·         Provides that the bill does not affect any deed that was executed and recorded prior to the effective date of the bill and does not affect any transfer on death beneficiary designation made pursuant to R.C. 5302.22 as it existed prior to the effective date of the bill.

·         Specifies that a nontestamentary instrument includes, but is not limited to, a transfer on death designation affidavit.

Regulation of mortgage lenders under the Mortgage Loan Law and regulation of mortgage brokers under the Mortgage Brokers Law

·         Makes changes generally to the provisions of the Mortgage Loan Law (R.C. 1321.51 to 1321.60) and the Mortgage Brokers Law (R.C. 1322.01 to 1322.12) that were enacted or amended by Am. Sub. H.B. 1 of the 128th General Assembly in the implementation of the S.A.F.E. Act, Title V of the federal Housing and Economic Recovery Act of 2008.

·         Removes the requirement for a registrant engaged in residential mortgage loan activity to maintain a net worth of at least $50,000 and, for each certificate of registration, assets of at least $50,000 either in use or readily available for use in the conduct of business, and retains existing law's requirement that the registrant maintain a corporate surety bond.

·         Permits the Superintendent of Financial Institutions to consider withdrawn an application or renewal application for registration under the Mortgage Loan Law or the Mortgage Brokers Law or for licensing as a loan originator under either Law if the information required under existing law is not submitted to the Nationwide Mortgage Licensing System and Registry within the required period of time after the information is requested.

·         Requires an individual applying for a mortgage loan originator license under the Mortgage Loan Law to additionally achieve a test score of at least 75% correct answers on all questions relating to Ohio mortgage lending laws and the Ohio Consumer Sales Practices Act as it applies to registrants and licensees.

·         Specifies that any of the following must not have been convicted of or pleaded guilty to (existing law) or pleaded nolo contendere (no contest) to any of the offenses specified in existing law in a domestic, foreign, or military court during the applicable period of time:  (1) an applicant for licensure as a loan originator under the Mortgage Loan Law or Mortgage Brokers Law, (2) an applicant or any person whose identity is required to be disclosed on an application for a mortgage broker certificate of registration.

·         Permits the Division or Superintendent of Financial Institutions to revoke, suspend, or refuse to issue or renew a certificate of registration or license under the Mortgage Loan Law or the Mortgage Brokers Law if it finds that the person has been convicted of or pleaded guilty to (existing law) or pleaded nolo contendere to any of the offenses specified in existing law in a domestic, foreign, or military court.

·         Prohibits any registrant, licensee, applicant, or other specified person under the Mortgage Loan Law or Mortgage Brokers Law from failing to notify the Division of Financial Institutions within 30 days after knowing that the registrant, licensee, applicant, or other person was convicted of or pleaded guilty to (existing law) or pleaded nolo contendere to any of the offenses specified in existing law in a domestic, foreign, or military court.

·         Requires an application by a credit union service organization for exemption from registration under the Mortgage Loan Law or the Mortgage Brokers Law, or an application by a mortgage banker from registration under the Mortgage Brokers Law, to include an attestation that the organization or mortgage banker, as applicable, and its owners, officers, or partners have not been convicted of or pleaded guilty to (existing law) or pleaded nolo contendere to any of the offenses specified in existing law in a domestic, foreign, or military court during the applicable period of time.

·         If a registrant under the Mortgage Brokers Law or any member of the immediate family of an owner of a registrant generally owns or controls a majority interest in an appraisal company, permits the Superintendent of Financial Institutions to order the registrant or family member to divest their interest in the company if the registrant is convicted of or pleads guilty to (existing law) or pleads nolo contendere to a criminal violation of the Mortgage Brokers Law or to a felony in a domestic, foreign, or military court.

·         Provides that the persons excluded from the existing definition of "mortgage broker" in the Mortgage Brokers Law are excluded only with respect to the business engaged in or authorized by the person's charter, license, authority, approval, or certificate.

·         Specifically prohibits any person acting as a mortgage broker or loan originator from failing to register with, and maintain a valid unique identifier issued by, the Nationwide Mortgage Licensing System and Registry.

·         Replaces the term "loan originator" in the Consumer Sales Practices Act with "loan officer" and defines the "loan officer" as an individual who for compensation or gain, or in anticipation of compensation or gain, takes or offers to take a residential mortgage loan application; assists or offers to assist a buyer in obtaining or applying to obtain a residential mortgage loan by, among other things, advising on loan terms, including rates, fees, and other costs; offers or negotiates terms of a residential mortgage loan; or issues or offers to issue a commitment for a residential mortgage loan.

·         Modifies the transition provisions of Am. Sub. H.B. 1 to specify dates when any credit union service organization or mortgage banker in operation as of January 1, 2010, may obtain a valid letter of exemption from the Superintendent of Financial Institutions to continue to operate as an exempt entity and when any person performing the duties of a mortgage loan originator and is employed by any of specified persons or entities as of January 1, 2010, may obtain a mortgage loan originator license to continue to perform those duties.

·         Enacts an emergency clause.

Board of Tax Appeals; Tax Appeals Administration Fund

·         Establishes the Small Claims Division of the Board of Tax Appeals that has jurisdiction over:  (1) any appeal to the Board from a decision of a county board of revision in which the property at issue qualifies for a partial tax exemption, or (2) any appeal from a decision of a municipal board of appeal or from a final determination by the Tax Commissioner regarding assessments, valuations, computations, or orders if the amount in controversy claimed by the taxpayer does not exceed $10,000 exclusive of interest and penalty.

·         Requires the Board of Tax Appeals to adopt rules to implement procedures to provide informal review of the taxpayers' appeals in the Small Claims Division.

·         Provides that a decision and order of the Small Claims Division is conclusive upon all of the parties and cannot be appealed or considered as precedent.

·         Declares the intent of the General Assembly in enacting the provisions establishing the Small Claims Division of the Board of Tax Appeals.

·         Creates the Tax Appeals Administration Fund; earmarks, for the Ohio Board of Tax Appeals, a portion (one-tenth of one per cent) of the state reimbursement to local taxing units for the 10% real property tax rollback; and credits the earmark to the newly created Tax Appeals Administration Fund to defray the expenses of the Board of Tax Appeals.

·         Enacts an emergency clause.

Delinquent Tax and Assessment Collection Fund

·         Authorizes, temporarily, a treasurer and a prosecuting attorney of a county with a population greater than 800,000 but less than 900,000 to designate that part of any surplus balance in the county's Delinquent Tax and Assessment Collection Fund be used to pay operating expenses in that office in lieu of county general fund money.

Requirements for instruments or documents recorded with county recorder

·         Requires a county recorder to accept for recording an instrument or document that does not conform to the format requirements without charging the additional fees under existing law for incidental information not essential to the recording process or the legal validity of the instrument or document.

TABLE OF CONTENTS

REAL PROPERTY--TRANSFER ON DEATH DESIGNATION.. 6

Definitions. 6

Transfer on death designation. 7

Existing law.. 7

Operation of the bill 7

Transfer of property that is the subject of a transfer on death designation affidavit 9

Recording of a transfer on death designation affidavit 10

Recording of affidavit of confirmation. 10

Designating transfer on death beneficiary. 11

Deeds executed and recorded prior to the effective date of the bill 14

Disclaiming testamentary and nontestamentary succession to real and personal property. 14

Statutory forms. 15

Rules and definitions. 16

Transfer on death designation affidavit Medicaid estate recovery form.. 16

 

REGULATION OF MORTGAGE LENDERS UNDER THE MORTGAGE LOAN LAW AND REGULATION OF MORTGAGE BROKERS UNDER THE MORTGAGE BROKERS LAW... 16

Background. 16

Overview of the bill 17

Residential mortgage loans--requirement for registrant to maintain net worth and assets. 17

Certain applications or renewal applications considered withdrawn. 18

Mortgage Loan Law.. 18

Mortgage Brokers Law.. 18

Call reports. 19

Test for mortgage loan originator license. 19

Definition of "mortgage broker" 19

No contest pleas to certain offenses. 19

Issuance of mortgage loan originator license, loan originator license, and mortgage
broker certificate of registration. 19

Revocation, suspension, or refusal to renew certificate of registration or license. 20

Failure to notify Division of Financial Institutions of certain offenses. 21

Exemptions from registration. 22

Interest in an appraisal company. 22

Miscellaneous changes. 23

Definition of "loan processor or underwriter" 23

Unique identifier 23

Good faith estimate statement 24

Renewal of loan originator license. 24

Consumer Sales Practices Act 25

Existing law.. 25

Operation of the bill 25

Credit unions' compliance with S.A.F.E. Act 26

Transition provisions of Am. Sub. H.B. 1 of the 128th General Assembly. 26

Emergency clause. 27

 

BOARD OF TAX APPEALS; TAX APPEALS ADMINISTRATION FUND.. 27

Small Claims Division. 27

Appeals from county board of revision. 29

Appeals from municipal board of appeal 29

Appeals from final determination of the Tax Commissioner or other officials. 29

Appeal from decision of Board of Tax Appeals to Supreme Court or Court of Appeals. 30

Declaration of intent 30

Tax Appeals Administration Fund. 31

Emergency clause. 32

 

DELINQUENT TAX AND ASSESSMENT COLLECTION FUND.. 32

Continuing law.. 32

Operation of the bill 33

 

REQUIREMENTS FOR INSTRUMENTS OR DOCUMENTS  RECORDED WITH COUNTY RECORDER   34

 

CONTENT AND OPERATION

REAL PROPERTY--TRANSFER ON DEATH DESIGNATION

Definitions

The bill provides the following definitions for the purposes of the law regarding transfer on death designations (R.C. 5302.22(A)):

(1)  "Affidavit of confirmation" means an affidavit executed under R.C. 5302.222(A) (see "Recording of affidavit of confirmation," below).

(2)  "Survivorship tenancy" means an ownership of real property or any interest in real property by two or more persons that is created by executing a deed pursuant to R.C. 5302.17 (not in the bill).

(3)  "Survivorship tenant" means one of the owners of real property or any interest in real property in a survivorship tenancy.

(4)  "Tenants by the entireties" mean only those persons who are vested as tenants in an estate by the entireties with survivorship pursuant to any deed recorded between February 9, 1972, and April 3, 1985, under R.C. 5302.17 as it existed during that period of time.  Nothing in R.C. 5302.22, 5302.222, 5302.23, and 5302.24 authorizes the creation of a tenancy by the entireties or recognizes a tenancy by the entireties created outside that period of time.

(5)  "Transfer on death designation affidavit" means an affidavit executed under R.C. 5302.22 (see "Transfer on death designation," below).

(6)  "Transfer on death beneficiary or beneficiaries" means the beneficiary or beneficiaries designated in a transfer on death designation affidavit.

Transfer on death designation

Existing law

Under existing law, any person who, under the Revised Code or the common law of Ohio, owns real property or any interest in real property as a sole owner or as a tenant in common may create an interest in the real property transferable on death by executing and recording a deed conveying the person's entire, separate interest in the real property to one or more individuals, including the grantor, and designating one or more other persons, identified in the deed by name, as transfer on death beneficiaries.  A deed conveying an interest in real property that includes a transfer on death designation need not be supported by consideration and need not be delivered to the transfer on death beneficiary to be effective.  (R.C. 5302.22(B).)

Operation of the bill

The bill replaces "person" in this provision with "individual" and provides that any individual who owns real property or any interest in real property as a sole owner, as a tenant in common, or as a survivorship tenant, or together with the individual's spouse owns an indivisible interest in real property as tenants by the entireties, may designate the entire interest, or any specified part that is less than the entire interest, in that real property as transferable on death to a designated beneficiary or beneficiaries by executing, together with the individual's spouse if any, a transfer on death designation affidavit.  The bill removes the provision that allows the person to execute and record a deed conveying the person's entire, separate interest in the real property to one or more individuals, including the grantor, and designating one or more other persons, identified in the deed by name, as transfer on death beneficiaries.  It also removes the provision specifying that a deed conveying an interest in real property that includes a transfer on death beneficiary designation does not have to be supported by consideration and does not have to be delivered to the transfer on death beneficiaries.  (R.C. 5302.22(B).)

The bill also provides that if the affidavit is executed by an individual together with the individual's spouse, if any, the dower rights of the spouse are subordinate to the vesting of title to the interest in the real property in the transfer on death beneficiary or beneficiaries designated under the bill's provisions.  The affidavit must be recorded in the county recorder's office in the county in which the real property is located, and, when so recorded, the affidavit or a certified copy of the affidavit is evidence of the transfer on death beneficiary or beneficiaries so designated in the affidavit insofar as the affidavit affects title to the real property.  (R.C. 5302.22(B).)

Under the bill, if an individual who owns real property or an interest in real property as a sole owner or as a tenant in common executes a transfer on death designation affidavit, upon the death of that individual, title to the real property or interest in the real property specified in the affidavit vests in the transfer on death beneficiary or beneficiaries designated in the affidavit.  If an individual who owns real property or an interest in real property as a survivorship tenant executes a transfer on death designation affidavit, upon the death of that individual or of one but not all of the surviving survivorship tenants, title to the real property or interest in the real property specified in the affidavit vests in the surviving survivorship tenant or tenants.  Upon the death of the last surviving survivorship tenant, title to the real property or interest in the real property vests in the transfer on death beneficiary or beneficiaries designated in the affidavit, subject to paragraph (7) under "Designating transfer on death beneficiary" below.  If an individual who together with the individual's spouse owns an indivisible interest in real property as tenants by the entireties executes a transfer on death designation affidavit, upon the death of that individual, title to the real property or interest in the real property vests in the remaining tenant by the entireties.  Upon the death of the remaining tenant by the entireties, title to the real property or interest in the real property vests in the transfer on death beneficiary or beneficiaries designated in the affidavit, subject to paragraph (7) under "Designating transfer on death beneficiary" below.  (R.C. 5302.22(C).)

The bill requires that a transfer on death designation affidavit be verified before any person authorized to administer oaths and must include all of the following (R.C. 5302.22(D)):

(1)  A description of the real property the title to which is affected by the affidavit and a reference to an instrument of record containing that description;

(2)  If less than the entire interest in the real property is to be transferred on death under the affidavit, a statement of the specific interest or part of the interest in the real property that is to be so transferred;

(3)  A statement by the individual executing the affidavit that the individual is the person appearing on the record of the real property as the owner of the real property or interest in the real property at the time of the recording of the affidavit and the marital status of that owner.  If the owner is married, the affidavit must include a statement by the owner's spouse stating that the spouse's dower rights are subordinate to the vesting of title to the real property or interest in the real property in the transfer on death beneficiary or beneficiaries designated in the affidavit.

(4)  A statement designating one or more persons, identified by name, as transfer on death beneficiary or beneficiaries.

Transfer of property that is the subject of a transfer on death designation affidavit

Under existing law, upon the death of any individual who owns real property or an interest in real property that is subject to a transfer on death beneficiary designation made under a transfer on death deed, the deceased owner's interest is transferred only to the transfer on death beneficiaries who are identified in the deed by name and who survive the deceased owner or that are in existence on the date of death of the deceased owner.  The bill modifies this provision by providing that it is subject to the bill's provisions regarding the vesting of title to the real property or interest in the real property under certain specified circumstances, removes the references to "deed" and replaces them with "affidavit," and specifies that the real property or interest in real property of the deceased owner is transferred only to the transfer on death beneficiary or beneficiaries who are identified in the affidavit by name and who survive the deceased owner or that are in existence on the date of death of the deceased owner.  (R.C. 5302.22(G).)  The bill also provides that if a natural or legal person designated by name in the affidavit as a transfer on death beneficiary or as a contingent transfer on death beneficiary as provided below under paragraph (2) in "Designating transfer on death beneficiary," solely in that person's capacity as a trustee of a trust has died, has resigned, or otherwise has been replaced by a successor trustee of the trust on the date of death of the deceased owner, the successor trustee of the trust is considered the transfer on death beneficiary or contingent transfer on death beneficiary in existence on the date of death of the deceased owner in full compliance with the provisions of this paragraph, notwithstanding that the successor trustee is not named as a transfer on death beneficiary or contingent transfer on death beneficiary in the affidavit.  (R.C. 5302.22(G).)  Any person who knowingly makes any false statement in a transfer on death designation affidavit is guilty of falsification under R.C. 2921.13(A)(6) (R.C. 5302.22(H)).

The bill relocates a provision that provides that upon the death of any individual holding real property or an interest in real property that is subject to a transfer on death beneficiary designation made under a transfer on death deed, if the title to the real property is registered pursuant to R.C. Ch. 5309. (Registration of Land Titles), the procedure for the transfer of the interest of the deceased owner is pursuant to R.C. 5309.081 (law regarding transfer of interest following the death of a survivorship tenant) (existing R.C. 5302.22(C)) to new section R.C. 5302.222(D) and specifies that the real property or interest in real property is the subject of a transfer on death designation affidavit and that the procedure for the transfer of the interest of the deceased owner to the transfer on death beneficiary or beneficiaries designated in the affidavit is pursuant to R.C. 5309.081. 

Recording of a transfer on death designation affidavit

The bill requires that the county recorder of the county in which a transfer on death designation affidavit is offered for recording receive the affidavit and cause it to be recorded in the same manner as deeds are recorded.  The county recorder must collect a fee for recording the affidavit in the same amount as the fee for recording deeds.  The county recorder also must index the affidavit in the name of the owner of record of the real property or interest in the real property who executed the affidavit.  (R.C. 5302.22(E).)  A transfer on death designation affidavit need not be supported by consideration and need not be delivered to the transfer on death beneficiary or beneficiaries designated in the affidavit to be effective.  However, in order to be effective, that affidavit must be recorded with the county recorder prior to the death of the individual who executed the affidavit.  (R.C. 5302.22(F).)

Recording of affidavit of confirmation

Existing law provides that the transfer of a deceased owner's interest must be recorded by presenting to the county auditor and filing with the county recorder an affidavit, accompanied by a certified copy of a death certificate for the deceased owner.  The affidavit must recite the name and address of each designated transfer on death beneficiary who survived the deceased owner or that is in existence on the date of the deceased owner's death, the date of the deceased owner's death, a description of the subject real property or interest in real property, and the names of each designated transfer on death beneficiary who has not survived the deceased owner or that is not in existence on the date of the deceased owner's death.  The affidavit must be accompanied by a certified copy of a death certificate for each designated transfer on death beneficiary who has not survived the deceased owner.  The county recorder must make an index reference to any affidavit so filed in the record of deeds.

The bill removes this provision from existing R.C. 5302.22(C) and enacts a very similar provision in new R.C. 5302.222.  The bill specifies that the transfer of a deceased owner's real property or interest in real property as designated in a transfer on death designation affidavit must be recorded by presenting to the county auditor of the county in which the real property is located and filing with the county recorder of that county an affidavit of confirmation executed by any transfer on death beneficiary to whom the transfer is made.  The affidavit of confirmation must be verified before a person authorized to administer oaths.  The bill provides that the affidavit of confirmation must contain the same information that the affidavit of the transfer of the deceased owner's interest was required to contain, but also provides that if a named beneficiary was designated as a transfer on death beneficiary solely in that person's capacity as a trustee of a trust and that trustee subsequently has been replaced by a successor trustee, the affidavit of confirmation must include the name and address of the successor trustee and must be accompanied by a copy of the recorded successor trustee affidavit.  As with the affidavit of the transfer of the deceased owner's interest, the affidavit of confirmation must be accompanied by a certified copy of the death certificate of the deceased owner and of the death certificate for each transfer on death beneficiary who has not survived the deceased owner, and the county recorder must make an index reference in the record of deeds to any affidavit of confirmation filed with the county recorder (R.C. 5302.222(A), (B), and (C)).

The bill also provides that any person who knowingly makes any false statement in an affidavit of confirmation is guilty of falsification under R.C. 2921.13(A)(6) (R.C. 5302.222(E)).

Designating transfer on death beneficiary

Existing law provides that any deed containing language that shows a clear intent to designate a transfer on death beneficiary must be liberally construed to do so.  The bill provides that the document containing this language is an affidavit rather than a deed.  (R.C. 5302.23(A).)  The bill also modifies the provision that real property or an interest in real property that is the subject of a transfer on death designation affidavit have certain characteristics and ramifications.  Those characteristics and ramifications are as follows (R.C. 5302.23(B)):

(1)  An interest of a deceased owner must be transferred to the transfer on death beneficiaries who are identified in the affidavit by name and who survive the deceased owner or that are in existence on the date of the deceased owner's death.  If there is a designation of more than one transfer on death beneficiary, the beneficiaries take title to the interest in equal shares as tenants in common, unless the deceased owner has specifically designated other than equal shares or has designated that the beneficiaries take title as survivorship tenants, subject to (3) below.  If a transfer on death beneficiary does not survive the deceased owner or is not in existence on the date of the deceased owner's death, and the deceased owner has designated one or more persons as contingent transfer on death beneficiaries as provided in (2) below, the designated contingent transfer on death beneficiaries take the same interest that would have passed to the transfer on death beneficiary had that transfer on death beneficiary survived the deceased owner or been in existence on the date of the deceased owner's death.  If none of the designated transfer on death beneficiaries survives the deceased owner or is in existence on the date of the deceased owner's death and no contingent transfer on death beneficiaries have been designated, have survived the deceased owner, or are in existence on the date of death of the deceased owner, the interest of the deceased owner must be distributed as part of the probate estate of the deceased owner of the interest.  If there are two or more transfer on death beneficiaries and the deceased owner has designated that title to the interest in the real property be taken by those beneficiaries as survivorship tenants, no designated contingent transfer on death beneficiaries can take title to the interest unless none of the transfer on death beneficiaries survives the deceased owner on the date of death of the deceased owner.

(2)  A transfer on death designation affidavit may contain a designation of one or more persons as contingent transfer on death beneficiaries, who take the interest of the deceased owner that would otherwise have passed to the transfer on death beneficiary if that named transfer on death beneficiary does not survive the deceased owner or is not in existence on the date of death of the deceased owner.  Persons designated as contingent transfer on death beneficiaries must be identified in the affidavit by name.

(3)  Any transfer on death beneficiary or contingent transfer on death beneficiary may be a natural or legal person, including, but not limited to, a bank as trustee of a trust, except that if two or more transfer on death beneficiaries are designated as survivorship tenants, all of those beneficiaries must be natural persons and if two or more contingent transfer on death beneficiaries are designated as survivorship tenants, all of those contingent beneficiaries must be natural persons.  A natural person who is designated a transfer on death beneficiary or contingent transfer on death beneficiary solely in that natural person's capacity as a trustee of a trust is not considered a natural person for purposes of designating the transfer on death beneficiaries or contingent transfer on death beneficiaries as survivorship tenants under this provision.

(4)  The designation of a transfer on death beneficiary has no effect on the present ownership of real property, and a person designated as a transfer on death beneficiary has no interest in the real property until the death of the owner of the interest.

(5)  The designation in a transfer on death designation affidavit of any transfer on death beneficiary may be revoked or changed at any time, without the consent of that transfer on death beneficiary, by the owner of the interest, by the surviving survivorship tenants of the interest, or by the remaining tenant by the entireties of the interest, by executing and recording, prior to the death of the owner of the interest, of the surviving survivorship tenants of the interest, or of the remaining tenant by the entireties of the interest, as the case may be, a new transfer on death designation affidavit pursuant to R.C. 5302.22 stating the revocation or change in that designation.  The new transfer on death designation affidavit automatically supersedes and revokes all prior recorded transfer on death designation affidavits with respect to the real property or the interest in real property identified in the new affidavit, provided that the prior recorded affidavit was executed before the later recorded affidavit.

(6)  A fee simple title or any fractional interest in a fee simple title may be subjected to a transfer on death beneficiary designation.

(7)(a)  A transfer on death beneficiary takes only the interest that the deceased owner or owners of the interest held on the date of death, subject to all encumbrances, reservations, and exceptions.

(b)  If the owners hold title to the interest in a survivorship tenancy, the death of all except the last survivorship tenant automatically terminates and nullifies any transfer on death beneficiary designations made solely by the deceased survivorship tenant or tenants without joinder by the last surviving survivorship tenant.  The termination or nullification of any transfer on death beneficiary designations under this provision is effective as of the date of death of a deceased survivorship tenant.  No affirmative act of revocation is required of the last surviving survivorship tenant for the termination or nullification of the transfer on death beneficiary designations to occur.  If the last surviving survivorship tenant dies with no transfer on death beneficiary designation, the entire interest of that last surviving survivorship tenant must be distributed as part of the tenant's probate estate.

(c)  If the owners hold title to the interest in a tenancy by the entireties, the death of the first tenant by the entireties automatically terminates and nullifies any transfer on death beneficiary designations made solely by that deceased first tenant without joinder by the remaining tenant by the entireties.  The termination or nullification of any transfer on death beneficiary designations under this provision is effective as of the date of death of the first tenant by the entireties.  No affirmative act of revocation is required of the remaining tenant by the entireties for the termination or nullification of the transfer on death beneficiary designations to occur.  If the remaining tenant by the entireties dies with no transfer on death beneficiary designation, the entire interest of that remaining tenant must be distributed as part of the tenant's probate estate.

(8)  No rights of any lienholder, including, but not limited to, any mortgagee, judgment creditor, or mechanic's lienholder, can be affected by the designation of a transfer on death beneficiary.  If any lienholder takes action to enforce the lien, by foreclosure or otherwise through a court proceeding, it is not necessary to join any transfer on death beneficiary as a party defendant in the action unless the transfer on death beneficiary has another interest in the real property. 

(9)  Any transfer on death of real property or of an interest in real property that results from a transfer on death designation affidavit designating a transfer on death beneficiary is not testamentary.  That transfer on death supersedes any attempted testate or intestate transfer of that real property or interest in real property.

(10)  The execution and recording of a transfer on death designation affidavit is effective to terminate the designation of a transfer on death beneficiary in a transfer on death deed involving the same real property or interest in real property and recorded prior to the effective date of R.C. 5302.23.

(11)  The execution and recording of a transfer on death designation affidavit is effective to bar the vesting of any rights of dower in a subsequent spouse of the owner of the real property who executed that affidavit unless the affidavit is revoked or changed.

Deeds executed and recorded prior to the effective date of the bill

The bill provides that the provisions of the bill do not affect any deed that was executed and recorded prior to the effective date of the bill, or any transfer on death beneficiary designation made pursuant to the law as it existed prior to the effective date of the bill.  If that deed or designation is valid on the day prior to the effective date of the bill, the deed or designation continues to be valid on and after the effective date of the bill.  A grantee of that deed need not execute a transfer on death designation affidavit that designates the same transfer on death beneficiary or beneficiaries as in the deed unless the grantee chooses to do so.  (R.C. 5302.24.)

Disclaiming testamentary and nontestamentary succession to real and personal property

Under existing law, a disclaimant, other than a fiduciary under an instrument who is not authorized by the instrument to disclaim the interest of a beneficiary, may disclaim, in whole or in part, the succession to any property by executing and by delivering, filing, or recording a written disclaimer instrument in a specified manner provided in existing law.  The written instrument of disclaimer must be signed and acknowledged by the disclaimant and must contain all of the following (R.C. 5815.36(B)):

(1)  A reference to the donative instrument;

(2)  A description of the property, part of property, or interest disclaimed, and of any fiduciary right, power, privilege, or immunity disclaimed;

(3)  A declaration of the disclaimer and its extent.

Generally, if the interest disclaimed is created by a nontestamentary instrument, the disclaimer instrument must be delivered personally or by certified mail to the trustee or other person who has legal title to, or possession of, the property disclaimed.   The bill specifies that a nontestamentary instrument includes, but is not limited to, a transfer on death designation affidavit.  The bill also provides that if the interest disclaimed is created by a transfer on death designation affidavit, the disclaimer instrument must be filed with the county recorder of the county in which the real property that is the subject of that affidavit is located.  (R.C. 5815.36(F)(1).)  Under existing law, if the interest disclaimed is created by a testamentary instrument, by intestate succession, by a transfer on death deed, or by a certificate of title to a motor vehicle, watercraft, or outboard motor that evidences ownership of the motor vehicle, watercraft, or outboard motor that is transferable on death, the disclaimer instrument must be filed in the probate division of the court of common pleas in the county in which proceedings for the administration of the decedent's estate have been commenced, and an executed copy of the disclaimer instrument must be delivered personally or by certified mail to the personal representative of the decedent's estate.  The bill removes the reference to a transfer on death deed.  (R.C. 5815.36(F)(2).)

Statutory forms

Existing law provides that a deed conveying any interest in real property, and in substance following the form set forth in the law, when duly executed in accordance with R.C. Ch. 5301. and recorded in the office of the county recorder, creates a present interest as sole owner or as a tenant in common in the grantee and creates a transfer on death interest in the beneficiary or beneficiaries.  The bill removes this provision.  Existing law also requires that the deed in substance conform to the form described in R.C. 5302.22 and provides that the form set forth in R.C. 5302.22 may be used and is sufficient for its purpose.  The bill removes these provisions.  (R.C. 5302.01 and 5302.22(A).)

Rules and definitions

Existing law states that the rules and definitions contained in R.C. 5302.22 (among other sections) apply to all deeds or other instruments relating to real estate, whether the statutory forms or other forms are used, where the instruments are executed on or after October 1, 1965, or in relation to the rules and definitions contained in R.C. 5302.22 on or after the effective date of that section.  The bill removes the first reference to R.C. 5302.22 and provides that the rules and definitions contained in R.C. 5302.22, as it existed prior to the effective date of the bill, apply to instruments executed on or after August 29, 2000, and prior to the effective date of the bill.  The bill also provides that the rules and definitions contained in R.C. 5302.22 apply to instruments executed on or after the effective date of the bill.  (R.C. 5302.02.)

Transfer on death designation affidavit Medicaid estate recovery form

Under existing law, the administrator of the Medicaid Estate Recovery Program must prescribe a form on which a beneficiary of a transfer on death deed, who survives the deceased owner of the real property or an interest in the real property or that is in existence on the date of death of the deceased owner, or such a beneficiary's representative is to indicate certain information.  The county recorder must obtain a properly completed form from the beneficiary of a transfer on death deed or the beneficiary's representative and send a copy of the form to the administrator of the Medicaid Estate Recovery Program before recording the transfer of the real property or interest in the real property under R.C. 5302.22(C).  The bill removes the reference to a transfer on death deed and replaces it with a transfer on death designation affidavit and removes the cross-reference to R.C. 5302.22(C) and replaces it with a cross-reference to R.C. 5302.222.  (R.C. 5302.221(B) and (C).)

REGULATION OF MORTGAGE LENDERS UNDER THE MORTGAGE LOAN LAW AND REGULATION OF MORTGAGE BROKERS UNDER THE MORTGAGE BROKERS LAW

Background

The Mortgage Loan Law (R.C. 1321.51 to 1351.60) prohibits any person from doing any of specified acts without having first obtained a certificate of registration from the Division of Financial Institutions.  Among these acts are:  (1) advertising, soliciting, or holding out that the person is engaged in the business of making residential mortgage loans secured by a mortgage on a borrower's real estate which is other than a first lien on the real estate, (2) engaging in the business of lending or collecting the person's own or another person's money, credit, or chooses in action for such non-first lien residential mortgage loans, or (3) employing or compensating mortgage loan originators licensed or who should be licensed under that Law to conduct the business of making residential mortgage loans.  (R.C. 1321.52(A)(1)(a), (b), and (c).)

The Mortgage Brokers Law (R.C. 1322.01 to 1322.12) prohibits any person from acting as a mortgage broker without first having obtained a certificate of registration from the Superintendent of Financial Institutions for every office to be maintained by the person for the transaction of business as a mortgage broker in Ohio, and prohibits any person acting or holding that person's self out as a mortgage broker under the authority or name of a registrant or person exempt from registration without first having obtained a certificate of registration from the Superintendent (R.C. 1322.02(A)).

Am. Sub. H.B. 1 of the 128th General Assembly provided for the implementation of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (ʺS.A.F.E. Actʺ) by requiring the licensing of ʺloan originatorsʺ (see COMMENT 1) who are employed by or associated with either a mortgage broker registered under the Mortgage Brokers Law or a mortgage lender registered under the Mortgage Loan Law, and made numerous revisions to the Mortgage Loan Law with respect to the regulation of mortgage lenders and to the Mortgage Brokers Law with respect to the regulation of mortgage brokers.

Overview of the bill

The bill makes changes to the provisions in the Mortgage Loan Law and the Mortgage Brokers Law that were enacted or amended by Am. Sub. H.B. 1 to implement the S.A.F.E. Act.

Residential mortgage loans--requirement for registrant to maintain net worth and assets

Under the existing Mortgage Loan Law, a registrant engaged in residential mortgage loan activity cannot conduct business in Ohio, unless the registrant:  (1) maintains a net worth of at least $50,000 and, for each certificate of registration, assets of at least $50,000 either in use or readily available for use in the conduct of business, and (2) maintains in effect at all times a corporate surety bond issued by a bonding company or insurance company authorized to do business in Ohio.  The bill removes the requirement for a registrant engaged in residential mortgage loan activity to maintain the net worth and assets described in (1), above, in order to conduct business in Ohio.  A registrant engaged in residential mortgage loan activity would still be required to be bonded, and a registrant that engages in lending under the Mortgage Loan Law other than residential mortgage loan activity would still be required to maintain a net worth and assets as described in (1), above.  (R.C. 1321.533(A)(1) and 1321.53(B).)

Certain applications or renewal applications considered withdrawn

Mortgage Loan Law

Under existing law, if any application for a "certificate of registration" under the Mortgage Loan Law or any renewal application does not contain all of the information required under the respective law governing the application or renewal application, and if such information is not submitted to the Division of Financial Institutions within 90 days after the Superintendent requests the information in writing, the Superintendent may consider the application or renewal application withdrawn (R.C. 1321.53(A)(6) and (7)(b)).  If an application for a mortgage loan originator license under the Mortgage Loan Law or a renewal application does not contain all of the information required under the law governing the application or renewal application, and if that information is not submitted to the Superintendent of Financial Institutions within 90 days after the Superintendent requests the information in writing, the Superintendent may consider the application or renewal application withdrawn (R.C. 1321.531(F) and 1321.532(E)).

The bill provides that if any of the applications or renewal applications described in the preceding paragraph does not contain all of the information required under the Mortgage Loan Law provisions governing the application or renewal application, and if that information is not submitted to the Superintendent or the Nationwide Mortgage Licensing System and Registry within 90 days after the Superintendent or the Nationwide Mortgage Licensing System and Registry requests the information in writing, including by electronic transmission or facsimile, the Superintendent may consider the application or renewal application withdrawn (italicized language is added by the bill) (R.C. 1321.53(A)(6) and (7)(b), 1321.531(F), and 1321.532(E)).

Mortgage Brokers Law

Under existing law, if an application for a "mortgage broker certificate of registration" or an application for a loan originator license does not contain all of the information required under the Mortgage Brokers Law governing the applicable application, and if that information is not submitted to the Superintendent within 90 days after the Superintendent requests the information in writing, the Superintendent may consider the application withdrawn.  The bill provides that if an application described in the preceding sentence does not contain all of the information required under the Mortgage Brokers Law provisions governing the application and if that information is not submitted to the Superintendent or the Nationwide Mortgage Licensing System and Registry within 90 days after the Superintendent or the Nationwide Mortgage Licensing System and Registry requests the information in writing, including by electronic transmission or facsimile, the Superintendent may consider the application withdrawn (italicized language is added by the bill) (R.C. 1322.03(D) and 1322.031(G)).

Call reports

The existing Mortgage Loan Law requires each licensee to submit to the Nationwide Mortgage Licensing System and Registry call reports or other reports of condition, which must be in such form and contain such information as the Nationwide Mortgage Licensing System and Registry may require.  The bill applies the above requirement to each mortgage licensee.  (R.C. 1321.55(B)(3).)

Test for mortgage loan originator license

The current Mortgage Loan Law provides that an individual applying for a mortgage loan originator license is not considered to have passed the required written test unless the individual achieves a test score of at least 75% correct answers on all questions.  The bill adds the requirement that the individual is not considered to have passed the test unless the individual also achieves a test score of at least 75% correct answers on all questions relating to Ohio mortgage lending laws and the Ohio Consumer Sales Practices Act, R.C. Chapter 1345., as it applies to registrants and licensees.  (R.C. 1321.535(A)(2).)

Definition of "mortgage broker"

The Mortgage Brokers Law defines "mortgage broker" (see COMMENT 2) as excluding specified persons or entities.  The bill provides that the persons or entities excluded from the definition of "mortgage broker" are excluded only with respect to the business engaged in or authorized by the person's charter, license, authority, approval, or certificate, or as otherwise authorized under a valid letter of exemption issued to a mortgage broker by the Superintendent of Financial Institutions.  (R.C. 1322.01(G)(2).)

No contest pleas to certain offenses

Issuance of mortgage loan originator license, loan originator license, and mortgage broker certificate of registration

The existing Mortgage Loan Law and Mortgage Brokers Law provide that upon the conclusion of the investigation required by the applicable Law, the Superintendent of Financial Institutions must issue a mortgage loan originator license or a loan originator license, whichever is applicable, to the applicant if the Superintendent finds that all of the required conditions are met.  One of these conditions is that the applicant has not been convicted of, or pleaded guilty to, any of the following in a domestic, foreign, or military court:  (1) during the seven-year period immediately preceding the date of application for licensure, any felony or a misdemeanor involving theft or (2) at any time prior to the date of application for licensure (for mortgage loan originator applicants) or at any time prior to the date the application for licensure is approved (for loan originator applicants), a felony involving an act of fraud, dishonesty, a breach of trust, theft, or money laundering.  The bill additionally provides that the applicant for licensure must not have pleaded nolo contendere to any of the offenses specified in (1) and (2) in this paragraph in a domestic, foreign, or military court during the applicable period of time.  (R.C. 1321.532(A)(4) and 1322.041(A)(3).)

The existing Mortgage Brokers Law provides that upon the conclusion of the investigation required by that Law, the Superintendent of Financial Institutions must issue a certificate of registration as a mortgage broker to the applicant if the Superintendent finds that all of the required conditions are met.  One of these conditions is that the applicant or any person whose identity is required to be disclosed on an application for a mortgage broker certificate of registration has not been convicted of, or pleaded guilty to, any of the following in a domestic, foreign, or military court:  (1) during the seven-year period immediately preceding the date of application for the certificate of registration, any felony or a misdemeanor involving theft or (2) at any time prior to the date of application for the certificate of registration, a felony involving an act of fraud, dishonesty, a breach of trust, theft, or money laundering.  The bill additionally provides that the applicant or any person whose identity is required to be disclosed on an application for a mortgage broker certificate of registration must not have pleaded nolo contendere to any of the offenses specified in (1) and (2) in this paragraph in a domestic, foreign, or military court during the applicable period of time.  (R.C. 1322.04(A)(7).)

Revocation, suspension, or refusal to renew certificate of registration or license

The existing Mortgage Loan Law permits the Division of Financial Institutions, upon written notice to a registrant or licensee stating the contemplated action, the grounds for the action, and the registrant's or licensee's reasonable opportunity to be heard on the action in accordance with the Administrative Procedure Act, to revoke, suspend, or refuse to renew any certificate or license issued under that Act, if it finds any of specified findings, including a finding that the person has been convicted of or pleaded guilty to any criminal felony offense in a domestic, foreign, or military court or that the person has been convicted of or pleaded guilty to any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, breach of trust, dishonesty, or drug trafficking, or any criminal offense involving money or securities, in a domestic, foreign, or military court.  The bill additionally provides that the Division may revoke, suspend, or refuse to renew any certificate or license if it finds that the person has pleaded nolo contendere to any of the offenses described in this paragraph.  (R.C. 1321.54(B)(1)(b) and (c).)

The existing Mortgage Brokers Law provides that after notice and opportunity for a hearing conducted in accordance with the Administrative Procedure Act, the Superintendent of Financial Institutions may suspend, revoke, or refuse to issue or renew a certificate of registration or license if the Superintendent finds any of specified findings, including (1) a conviction of or guilty plea to a felony in a domestic, foreign, or military court, or (2) a conviction of or guilty plea to any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, breach of trust, dishonesty, or drug trafficking, or any criminal offense involving money or securities, in a domestic, foreign, or military court.  The bill additionally provides that the Superintendent may revoke, suspend, or refuse to issue or renew a certificate of registration or license if it finds that the person has pleaded nolo contendere to any offense described in (1) or (2) in this paragraph.  (R.C. 1322.10(A)(1)(b) and (c).)

Failure to notify Division of Financial Institutions of certain offenses

The existing Mortgage Loan Law prohibits any registrant, licensee, or applicant while involved in the business of making or offering to make residential mortgage loans, from failing to notify the Division of Financial Institutions within 30 days after knowing any of specified information, including:  (1) that the registrant, licensee, or applicant has been convicted of or pleaded guilty to a felony offense in a domestic, foreign, or military court, or (2) that the registrant, licensee, or applicant has been convicted of or pleaded guilty to any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, breach of trust, dishonesty, or drug trafficking, or any criminal offense involving money or securities, in a domestic, foreign, or military court.  The bill prohibits any registrant, licensee, or applicant described above from also failing to notify the Division within 30 days after knowing that the registrant, licensee, or applicant pleaded nolo contendere to any of the offenses described in (1) or (2) in this paragraph.  (R.C. 1321.59(H)(1) and (2).)

The existing Mortgage Brokers Law prohibits any registrant, licensee, person required to be registered or licensed under that Law, or individual disclosed in an application as required under that Law from failing to notify the Division of Financial Institutions within 30 days after (1) being convicted of or pleading guilty to a felony in a domestic, foreign, or military court, or (2) being convicted of or pleading guilty to any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, breach of trust, dishonesty, or drug trafficking, or any criminal offense involving money or securities.  The bill prohibits any registrant, licensee, person, or individual described in this paragraph from also failing to notify the Division within 30 days after pleading nolo contendere to any of the offenses described in (1) or (2) in this paragraph and specifies that the conviction or plea of guilty or nolo contendere of an offense described in (2) is in a domestic, foreign, or military court.  (R.C. 1322.07(D)(1) and (2).)

Exemptions from registration

Under existing law, a credit union service organization seeking exemption from registration under the Mortgage Loan Law or the Mortgage Brokers Law must submit an application to the Superintendent of Financial Institutions that includes specified information, including an attestation that the organization and its owners, officers, or partners having control of the organization have not been convicted of, or pleaded guilty to, any of the following in a domestic, foreign, or military court:  (1) during the seven-year period immediately preceding the date of application for exemption, any felony or a misdemeanor involving theft or (2) at any time prior to the date of application for exemption, a felony involving an act of fraud, dishonesty, a breach of trust, theft, or money laundering.  The bill additionally requires the application for exemption to include an attestation that the organization and its owners, officers, or partners having control of the organization have not pleaded nolo contendere to any of the offenses described in (1) and (2) in this paragraph in a domestic, foreign, or military court during the applicable period of time.  (R.C. 1321.522(A)(3)(b) and 1322.023(A)(3)(b).)

Under the existing Mortgage Brokers Law, a mortgage banker seeking exemption from registration pursuant to that Law must submit an application to the Superintendent of Financial Institutions that includes specified information, including an attestation that the mortgage banker and its owners, officers, or partners having control of the business have not been convicted of, or pleaded guilty to, any of the following in a domestic, foreign, or military court:  (1) during the seven-year period immediately preceding the date of application for exemption, any felony or a misdemeanor involving theft or (2) at any time prior to the date of application for exemption, a felony involving an act of fraud, dishonesty, a breach of trust, theft, or money laundering.  The bill additionally requires the application for exemption to include an attestation is that the mortgage banker and its owners, officers, or partners having control of the business have not pleaded nolo contendere to any of the offenses specified in (1) and (2) in this paragraph in a domestic, foreign, or military court during the applicable period of time.  (R.C. 1322.022(A)(3)(b).)

Interest in an appraisal company

The existing Mortgage Brokers Law provides that, except as otherwise described in the following sentence, no registrant, or any member of the immediate family of an owner of a registrant, may own or control a majority interest in an appraisal company.  This prohibition does not apply to any registrant, or any member of the immediate family of an owner of a registrant, who, on October 16, 2009, directly or indirectly owns or controls a majority interest in an appraisal company.  However, such ownership or control is subject to specified conditions, one of which is that if the registrant is convicted of or pleads guilty to a criminal violation of the Mortgage Brokers Law or to a felony in a domestic, foreign, or military court, the Superintendent of Financial Institutions may, in addition to any of the disciplinary actions authorized under R.C. 1322.10, order the registrant or members of the immediate family of an owner of a registrant to divest their interest in the company.  The bill adds the condition that if the registrant pleads nolo contendere to a criminal violation of the Mortgage Brokers Law or to a felony in a domestic, foreign, or military court, the Superintendent of Financial Institutions may, in addition to any of the disciplinary actions authorized under R.C. 1322.10, order the registrant or members of the immediate family of an owner of a registrant to divest their interest in the company.  (R.C. 1322.074(A) and (B)(3).)

Miscellaneous changes

Definition of "loan processor or underwriter"

The current Mortgage Loan Law and Mortgage Brokers Law define "loan processor or underwriter" as an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of a licensed mortgage loan originator or registered mortgage loan originator (in the Mortgage Loan Law) or a licensed loan originator or registered loan originator (in the Mortgage Brokers Law).  For purposes of these provisions, "clerical or support duties" includes the following activities:  (1) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan, and (2) communicating with a borrower to obtain the information necessary for the processing or underwriting of a loan, to the extent the communication does not include offering or negotiating loan rates or terms or counseling borrowers about residential mortgage loan rates or terms.  The bill modifies current law by providing that for purposes of the above definitions of "loan processor or underwriter" in the Mortgage Loan Law and the Mortgage Brokers Law, "to perform clerical or support duties" means to do all of the following activities:  (1) Receiving, collecting, distributing, and analyzing information common for the processing or underwriting of a residential mortgage loan, and (2) communicating with a borrower as in (2) in the preceding sentence (modified language is in italics).  (R.C. 1321.51(V) and 1322.01(T).)

Unique identifier

The existing Mortgage Brokers Law requires each licensee to register with, and maintain a valid unique identifier issued by, the Nationwide Mortgage Licensing System and Registry.  It prohibits any person from using a licensee's unique identifier for any purpose other than as set forth in the "Secure and Fair Enforcement for Mortgage Licensing Act of 2008."  A violation of this prohibition is a misdemeanor of the first degree.

Instead of the above requirement for a licensee, the bill prohibits any person acting as a mortgage broker or loan originator from failing to register with, and maintain a valid unique identifier issued by, the Nationwide Mortgage Licensing System and Registry.  It prohibits any person from using a mortgage broker's or loan originator's (instead of licensee's) unique identifier for any purpose other than as set forth in the "Secure and Fair Enforcement for Mortgage Licensing Act of 2008."  A violation of either prohibition is a misdemeanor of the first degree.  (R.C. 1322.02(C) and 1322.99(C).)

Good faith estimate statement

The existing Mortgage Brokers Law requires a registrant or licensee to deliver to the buyer, at the same time that the registrant or licensee delivers the residential mortgage loan origination disclosure statement, a good faith estimate statement that discloses the amount of or range of charges for the specific settlement services the buyer is likely to incur in connection with the residential mortgage loan.  The good faith estimate statement must meet the requirements of the "Real Estate Settlement Procedures Act" and must include the underlined notice specified in that Law in at least ten-point type, new Roman style.

The bill requires a registrant or licensee to deliver to the buyer, at the same time that the registrant or licensee delivers the residential mortgage loan origination disclosure statement, both of the following documents:  (1) a good faith estimate statement as in existing law, and (2) an underlined notice in at least ten-point type, new Roman style, as follows (notice specified in the law is unchanged).  (Modified language and restructuring are in italics.)  (R.C. 1322.062(D).)

Renewal of loan originator license

The existing Mortgage Brokers Law provides that a loan originator license may be renewed annually on or before the 31st day of December if the Superintendent finds that all of specified conditions are met.  One of these conditions is that the applicant meets the conditions set forth in that Law for the initial issuance of a loan originator license.  The bill provides that an applicant who was issued a loan officer license prior to January 1, 2010, and has continuously maintained that license is not required to meet the condition described in R.C. 1322.031(B)(1)(b) (successful completion of four hours of instruction in a course or program of study reviewed and approved by the Superintendent concerning state lending laws and the Ohio Consumer Sales Practices Act, as it applies to registrants and licensees).  (R.C. 1322.041(B)(3).)

Consumer Sales Practices Act

Existing law

For purposes of the Consumer Sales Practices Act, (CSPA) "loan originator"[1] has the same meaning as in R.C. 1322.01, and includes a "mortgage loan originator" as defined in R.C. 1321.51 (see COMMENT 1), except that it does not include:  (1) an employee of a bank, savings bank, savings and loan association, credit union, or credit union service organization organized under the laws of Ohio, another state, or the United States, (2) an employee of a subsidiary of such a bank, savings bank, savings and loan association, or credit union, or (3) an employee of an affiliate that (a) controls, is controlled by, or is under common control with, such a bank, savings bank, savings and loan association, or credit union and (b) is subject to examination, supervision, and regulation, including with respect to the affiliate's compliance with applicable consumer protection requirements, by the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, or the National Credit Union Administration.  The CSPA defines "mortgage broker" as having the same meaning as in R.C. 1322.01 (see COMMENT 2), with substantially the same exceptions as in the definition of "loan originator" in this paragraph.  (R.C. 1345.01(H) and (J).)

Operation of the bill

The bill replaces the term "loan originator" in the CSPA with "loan officer" and defines the "loan officer" as an individual who for compensation or gain, or in anticipation of compensation or gain, takes or offers to take a residential mortgage loan application; assists or offers to assist a buyer in obtaining or applying to obtain a residential mortgage loan by, among other things, advising on loan terms, including rates, fees, and other costs; offers or negotiates terms of a residential mortgage loan; or issues or offers to issue a commitment for a residential mortgage loan.  "Loan officer" also includes a loan originator as defined in R.C. 1322.01(E)(1) (Mortgage Brokers Law) and excludes the same persons as in existing law above.  The bill defines "mortgage broker" for purposes of the CSPA as any of the following:  (1) a person that holds that person out as being able to assist a buyer in obtaining a mortgage and charges or receives from either the buyer or lender money or other valuable consideration readily convertible into money for providing this assistance, (2) a person that solicits financial and mortgage information from the public, provides that information to a mortgage broker or a person that makes residential mortgage loans, and charges or receives from either of them money or other valuable consideration readily convertible into money for providing the information, or (3) a person engaged in table-funding or warehouse-lending mortgage loans that are residential mortgage loans. It retains the same exceptions as in current law.  (R.C. 1345.01(H) and (J).)

The bill replaces "loan originator" with "loan officer" in other provisions of the CSPA (R.C. 1345.01(A) and (C), 1345.05(G), and 1345.09(C)(2)), in R.C. 1343.011(C) (interest in residential mortgage loans), and in R.C. 1349.31(B) and 1349.43(A) and (B) (consumer protection laws).

Credit unions' compliance with S.A.F.E. Act

Existing law provides that compliance by a credit union insured by a credit union share guaranty corporation established R.C. Chapter 1761., the subsidiaries of the credit union, and the loan originators employed by the credit union must be determined by rules adopted by the Superintendent of Financial Institutions in accordance with the Administrative Procedure Law.  The bill provides for such compliance to be determined by the rules adopted by the Superintendent, unless otherwise preempted by federal law (added by the bill).  (R.C. 1733.252(C).)

Transition provisions of Am. Sub. H.B. 1 of the 128th General Assembly

Under existing uncodified law, the provisions of Am. Sub. H.B. 1 amending or enacting various sections in the Mortgage Loan Law and Mortgage Brokers Law and related laws apply on and after January 1, 2010.  The Division of Financial Institutions is required to begin accepting applications for a mortgage loan originator license, and applications for an exemption from registration under the Mortgage Loan Law or the Mortgage Brokers Law on the effective date of Am. Sub. H.B. 1 (October 16, 2009).  Individuals holding a valid mortgage lender certificate of registration, mortgage broker certificate of registration, or loan officer license as of January 1, 2010, are not required to be in compliance with the requirements of Am. Sub. H.B. 1 until the first renewal of that certificate or license after that date.  (Section 745.60 of Am. Sub. H.B. 1.)

The bill modifies the above transition provisions by providing that the provisions of Am. Sub. H.B. 1 amending or enacting various sections in the Mortgage Loan Law and Mortgage Brokers Law and related laws apply on and after January 1, 2010 (existing law), unless otherwise provided as described in this paragraph.  The Division of Financial Institutions is required to begin accepting applications for a mortgage loan originator license, and applications for an exemption from registration under the Mortgage Loan Law or Mortgage Brokers Law on October 16, 2009 (existing law).  In order to continue to operate as an exempt entity, any credit union service organization in operation as of January 1, 2010, that seeks exemption from registration under the Mortgage Loan Law must obtain a valid letter of exemption issued by the Superintendent of Financial Institutions not later than July 1, 2010.  Any person performing the duties of a mortgage loan originator as of January 1, 2010, must obtain a mortgage loan originator license from the Division not later than January 1, 2011, in order to continue to perform those duties.  In order to continue to operate as an exempt entity, any mortgage banker or credit union service organization in operation as of January 1, 2010, that seeks exemption from registration under the Mortgage Brokers Law must obtain a valid letter of exemption issued by the Superintendent not later than May 1, 2010.  Any individual who, as of January 1, 2010, performs the duties of a loan originator and is employed by or associated with any person or entity listed in R.C. 1322.01(G)(2) must obtain a loan originator license from the Superintendent not later than May 1, 2010, in order to continue to perform those duties.  (Section 745.60(A) and (B) of Am. Sub. H.B. 1.)

Under existing section 745.60 of Am. Sub. H.B. 1, R.C. 1733.252 (compliance with the S.A.F.E. Act by credit unions, subsidiaries of credit unions, and loan originators employed by credit unions) and R.C. 1733.26 (loan officers of credit unions), as amended or enacted by Am. Sub. H.B. 1, apply on and after January 1, 2010.  Under the bill, those sections instead apply on and after January 1, 2011.  (Section 745.60(D).)

Emergency clause

The bill provides that the act is declared to be an emergency measure necessary for the immediate preservation of the public peace, health, and safety.  The reason for such necessity is that the act makes changes to the sections amended or enacted by Am. Sub. H.B. 1 of the 128th General Assembly in the implementation of the S.A.F.E. Act, and those sections apply on and after January 1, 2010.  (Section 8(B).)

BOARD OF TAX APPEALS; TAX APPEALS ADMINISTRATION FUND

Small Claims Division

The bill establishes a Small Claims Division of the Ohio Board of Tax Appeals. The Small Claims Division has jurisdiction over any proceeding that is commenced under any of the following (R.C. 5703.021(A) and (B)):

(1)  R.C. 5717.01 (see "Appeals from county board of revision," below) in which the property at issue qualifies for the partial tax exemption described in R.C. 319.302 (see COMMENT 3);

(2)  R.C. 5717.011 (see "Appeals from municipal board of appeal," below) or 5717.02 (see "Appeals from final determination of Tax Commissioner or other officials," below) if the amount in controversy claimed by the taxpayer does not exceed $10,000 exclusive of interest and penalty.  The Board by rule may modify that jurisdictional dollar threshold for cases qualifying for the Small Claims Division.

The bill provides that notwithstanding the above jurisdictional requirements, the Board must reassign to the regular docket an appeal that is initially assigned to the Small Claims Division if a party requests the reassignment or the appeal presents an issue of public or great general interest or presents a constitutional issue.  The Board may provide by rule for a reasonable time within which a party may request the reassignment of an appeal.  The Board must reassign to the regular docket an appeal that is initially assigned to the Small Claims Division if it determines that the appeal does not meet the jurisdictional requirements as described above.  (R.C. 5703.021(C).)

The bill permits the Board to reassign to the small claims docket an appeal that is originally assigned to the regular docket if the Small Claims Division has jurisdiction over the appeal.  The reassignment must be made with the consent of all of the parties.

The bill requires the Board of Tax Appeals to adopt rules to implement procedures to provide informal review of the taxpayers' appeals in the Small Claims Division.  The procedures may include telephonic hearings.  A decision and order of the Small Claims Division is conclusive upon all of the parties and cannot be appealed.

Notwithstanding R.C. 5703.02(C) that requires a record of the proceedings, the decision and order of the Small Claims Division cannot be considered as precedent in any other case, hearing, or proceeding.  (R.C. 5703.021(D), (E), and (F).)

The bill provides that the appearance of an attorney licensed to practice law in Ohio on behalf of any party in the Small Claims Division is permitted but not required.  A person other than a natural person that is a real party in interest as a taxpayer or claimant, or an entity or organization that may participate in the appeal pursuant to law, may commence an appeal in the Small Claims Division or appear in the appeal proceedings through an attorney licensed to practice law in Ohio.  That entity or organization, through any bona fide officer, partner, member, trustee, or salaried employee, may file and present its claim or defense in any appeal in the Small Claims Division, provided that the entity or organization, in the absence of representation by an attorney licensed to practice law in Ohio, does not engage in cross-examination, argument, or other acts of advocacy.  The Board by rule may provide additional guidelines applicable to the practice before the Board.  (R.C. 5703.021(G).)

Appeals from county board of revision

Existing law provides that an appeal from a decision of a county board of revision may be taken to the Board of Tax Appeals within 30 days after notice of the decision of the county board of revision is mailed as provided in R.C. 5715.20(A).  Such an appeal may be taken by the county auditor, the tax commissioner, or any board, legislative authority, public official, or taxpayer authorized by R.C. 5715.19 to file complaints against valuations or assessments with the auditor.  Existing law includes procedures for the filing of a notice of appeal, notification of the parties, certification of a transcript of the record, and hearing on the appeal.  (R.C. 5717.01.)  The bill provides that an appeal that qualifies under the jurisdictional requirements of the Small Claims Division of the Board of Tax Appeals may proceed in that Division pursuant to the bill's provisions.  (R.C. 5717.01(C).)

Appeals from municipal board of appeal

Existing law provides that appeals from a municipal board of appeal created under R.C. 718.11 may be taken by the taxpayer or the tax administrator to the Board of Tax Appeals or may be taken by the taxpayer or the tax administrator to a court of common pleas as otherwise provided by law.  If the taxpayer or the tax administrator elects to make an appeal to the Board of Tax Appeals or court of common pleas, the appeal must be taken by the filing of a notice of appeal with the Board or the court of common pleas, the municipal board of appeal, and the opposing party.  Existing law provides the procedures for the filing of the notice of appeal, the certification of the transcript of the record, and the hearing on the appeal.  (R.C. 5717.011.)  The bill provides that an appeal that qualifies under the jurisdictional requirements of the Small Claims Division of the Board of Tax Appeals may proceed in that Division pursuant to the bill's provisions.  (R.C. 5717.011(E).)

Appeals from final determination of the Tax Commissioner or other officials

Existing law generally provides that appeals from final determinations by the Tax Commissioner of any preliminary, amended, or final tax assessments, reassessments, valuations, determinations, findings, computations, or orders made by the Commissioner may be taken to the Board of Tax Appeals by the taxpayer, by the person to whom notice of the tax assessment, reassessment, valuation, determination, finding, computation, or order by the Commissioner is required by law to be given, by the Director of Budget and Management if the revenues affected by such decision would accrue primarily to the state treasury, or by the county auditors of the counties to the undivided general tax funds of which the revenues affected by such decision would primarily accrue.  Existing law provides the procedures for the filing of the notice of appeal, the certification of the transcript of the record, and the hearing on the appeal.  (R.C. 5717.02.)

The bill requires the Board of Tax Appeals to institute procedures, including the conduct of discovery, to control and manage appeals governed by R.C. 5717.02.  Those procedures must include a requirement that upon the filing of the transcript of the record in an appeal, the Board through its attorney examiners must establish a case management schedule in consultation with the parties or their counsel.  The bill provides that an appeal that qualifies under the jurisdictional requirements of the Small Claims Division of the Board of Tax Appeals may proceed in that Division pursuant to the bill's provisions.  (R.C. 5717.011(C) and E).)

Appeal from decision of Board of Tax Appeals to Supreme Court or Court of Appeals

Existing law provides that proceedings to obtain a reversal, vacation, or modification of a decision of the Board of Tax Appeals are by appeal to the Supreme Court or the court of appeals.  It specifies the parties who may appeal depending on the decisions of the Board determining appeals from the decisions of county board of revisions, appeals from final determinations by the Tax Commissioner, and other appeals or applications.  (R.C. 5717.04.)  The bill provides that notwithstanding those provisions of existing law, a decision or order of the Small Claims Division of the Board of Tax Appeals is conclusive upon all of the parties and cannot be appealed (R.C. 5717.04(A)(5)).

Declaration of intent

The bill provides that the General Assembly, in enacting R.C. 5703.021 and amending R.C. 5717.01, 5717.011, 5717.02, and 5717.04, declares the following (Section 11):

(1)  In light of the significant increase in the number of appeals that have been filed with the Board of Tax Appeals and in an effort to facilitate the resolution of pending appeals, it is the intent of the General Assembly that the Board of Tax Appeals continue to work with the Tax Commissioner, tax practitioners, and other interested parties to consider as soon as practicable the modification or adoption of rules and recommendations for legislation with respect to the conduct of appeals, including all of the following:

(a)  Pleading standards applicable to notices of appeal;

(b)  Appropriately defined circumstances under which an appeal may be remanded for further proceedings;

(c)  Implementation of small claims procedures;

(d)  Facilitation of settlement including the use of alternative dispute resolution;

(e)  Adoption of case management procedures, including appropriate changes in discovery rules;

(f)  Implementation of procedures for summary judgment;

(g)  Streamlining of the hearing process.

(2)  It is also the intent of the General Assembly that the funding mechanism for the Board of Tax Appeals be reexamined as part of the budget process for fiscal years 2012 and 2013. This reexamination will consider the feasibility and desirability of replacing some or all of the funding mechanism in R.C. 5703.81, as enacted by the bill, with additional funds from other sources, such as filing fees.

(3)  The enactment of R.C. 5703.021 and the amendment of R.C. 5717.01, 5717.011, 5717.02, and 5717.04 by the bill are considered to be purely remedial in operation and are to be applied in a remedial manner to cases pending at the time of the effective date of the bill to the extent practicable.

Tax Appeals Administration Fund

The bill creates in the State Treasury the Tax Appeals Administration Fund and requires all money to the credit of the Fund be used to defray the costs incurred by the Board of Tax Appeals in the performance of its duties.  The bill requires that the Tax Commissioner, each fiscal year between the 1st and 15th days of July, compute the following amounts for the property in each taxing district in each county and to certify to the Director of Budget and Management the sum of those amounts for all taxing district in all counties:  for FY 2010 and thereafter, one-tenth of one per cent of the total amount by which taxes charged against real property on the general tax list of real and public utility property were reduced under R.C. 319.302 (see COMMENT 3) for the preceding tax year.  After receiving the Tax Commissioner's certification, the Director of Budget and Management must transfer from the General Revenue Fund to the Tax Appeals Administration Fund one-fourth of the amount certified on or before each of the following days:  the first days of August, November, February, and May.  On or before the 30th day of June of the fiscal year, the Tax Commissioner must certify to the Director of Budget and Management the sum of the amounts by which the amounts computed for a taxing district under the above provision exceeded the distributions to the taxing district under R.C. 321.24(F) (see following paragraph), and the Director must transfer that sum from the Tax Appeals Administration Fund to the General Revenue Fund.  (R.C. 5703.81.)

The bill provides that upon receipt of the county treasurer's certification under continuing law of any adjustments made pursuant to R.C. 319.302 (see COMMENT 3), the Tax Commissioner must provide for payment to the county treasurer from the General Revenue Fund of an amount equal to one-half of the amount certified by the treasurer in the preceding tax year under R.C. 319.302, less one-half of the amount computed for all taxing districts in that county for the current fiscal year under R.C. 5703.81, above, for crediting to the Tax Appeals Administration Fund (R.C. 321.24(F)).

The bill provides in temporary law that for FY 2010, the Tax Commissioner must compute the amounts in R.C. 5703.81, above, between the 1st and 15th days of January, and must certify to the Director of Budget and Management the sum of those amounts for all taxing districts in all counties.  After receiving the Tax Commissioner's certification, the Director of Budget and Management must transfer from the General Revenue Fund to the Tax Appeals Administration Fund one-fourth of the amount certified on or before each of the first days of February and May.  (Section 7.)

Emergency clause

The bill provides that the act is an emergency measure necessary for the immediate preservation of the public peace, health, and safety.  The reason for such necessity is that the earmarks for the Board of Tax Appeals of a portion of the state reimbursement to local taxing units for the 10% real property tax rollback need to be implemented for the current fiscal year 2010.  (Section 8(A)(1).)  The bill also provides that if the emergency clause does not become part of the act, the provision in Section 7 described in the preceding paragraph does not apply and the provision in Section 10 described in the following paragraph applies.  If the emergency clause becomes a part of the act, the provision in Section 10 of this act does not apply.  (Section 9.)

Under Section 10, for fiscal year 2010, the Tax Commissioner must compute the amounts in R.C. 5703.81 (see "Tax Appeals Administration Fund," above) between the 1st and 15th days of April and must certify to the Director of Budget and Management the sum of those amounts for all taxing districts in all counties.  After receiving the Tax Commissioner's certification, the Director of Budget and Management must transfer from the General Revenue Fund to the Tax Appeals Administration Fund one-half of the amount certified on or before the first day of May.

DELINQUENT TAX AND ASSESSMENT COLLECTION FUND

Continuing law

Under continuing law, a Delinquent Tax and Assessment Collection (DTAC) Fund is established in each county treasury.  The Fund receives 5% of collections of delinquent property taxes, manufactured home taxes, and special assessments.  In most counties, the Fund can be used only to pay the expenses of the county prosecuting attorney and treasurer in collecting additional delinquent taxes and assessments including proceedings related to foreclosure of the state's lien for such taxes.  In any county with a 2006 population of more than 100,000, the treasurer and prosecuting attorney can spend any DTAC Fund money not needed for delinquent tax collection to assist townships and municipal corporations to abate foreclosed residential nuisances; the prosecuting attorney also can spend excess DTAC Fund money to prosecute violations of criminal and civil laws governing real estate and related transactions, including fraud and abuse.  The total amount spent for purposes other than delinquent tax collection cannot exceed $3 million per year.  In Cuyahoga County, which is the only county authorized to create a county land reutilization corporation (see R.C. Chapter 1724.), DTAC Fund money can be used to fund the corporation.  (R.C. 321.261(A) and (C)--not in the bill.)

Additionally, as amended by Am. Sub. H.B. 1 of the 128th General Assembly, existing law permits the treasurer or prosecuting attorney of any county to use certain excess money in the DTAC Fund to prevent residential mortgage foreclosures in the county and to address problems associated with other foreclosed real property.  Specifically, the DTAC money can be used to provide financial assistance in the form of loans to borrowers in default on their home mortgages, including for the payment of late fees, to clear arrearage balances, and to augment moneys used in the county's foreclosure prevention program.  The amount spent for those purposes in any year cannot exceed the amount that would result in the DTAC Fund reserve falling below 20% of the amount spent the preceding year on collecting delinquent taxes.  DTAC money also may be spent to assist cities, villages, and townships in nuisance abatement of ʺdeteriorated residential buildings in foreclosureʺ or "vacant, abandoned, tax‐delinquent, or blighted real property."  (R.C. 321.261(D)--not in the bill.)

Operation of the bill

The bill permits a prosecuting attorney or treasurer of a county with a population of greater than 800,000 but less than 900,000 to determine that the amount of money appropriated to the respective office from the DTAC Fund exceeds the amount required to be used by that office in collecting additional delinquent taxes and assessments including proceedings related to foreclosure of the state's lien for such taxes as prescribed under current law.  If a prosecuting attorney or treasurer of a county with that population makes such a determination, the prosecuting attorney or treasurer may expend up to 50% of the excess to pay the expenses of operating the respective office that otherwise would be payable from appropriations from the county general fund.  (Section 6.)  The bill provides that this section expires December 31, 2011.

REQUIREMENTS FOR INSTRUMENTS OR DOCUMENTS
RECORDED WITH COUNTY RECORDER

Under existing law, except for certain exceptions described below, an instrument or document that is presented for recording must comply with specified standard format requirements, among which are:  (1) print size not smaller than a computer font size of ten, and (2) a one and one-half inch margin across the top of each of the remaining pages of the instrument or document.  The bill modifies existing law by instead requiring:  (1) legible print size not smaller than a font (instead of computer font) size of ten, and (2) a one and one-half inch margin of blank space across the top of each of the remaining pages of the instrument or document to accommodate any certification or indorsement of the county engineer, county auditor, or county recorder, as may be required by law (modifications made by the bill are italicized.)  (R.C. 317.114(A)(1) and (9).)

Existing law requires the county recorder to accept for recording an instrument or document that does not conform to the format requirements and requires the county recorder to charge and collect the following additional fees for each such instrument or document:  an additional base fee for the recorder's services of $10 and a housing trust fund fee of $10 (R.C. 317.114(B)).  The bill provides that the county recorder must accept for recording an instrument or document that does not conform to the format requirements but prohibits the county recorder from charging and collecting the additional fees specified above in existing law for page numbers, hand-written, typed, or printed initials, bar codes, copyright information, trailing portions of signatures, plat description of any oil and gas well location or drilling unit or lease, or any other incidental information that is not essential to the recording process or to the legal validity of the instrument or document and that may appear in either of the side margins or in the bottom margin.  The bill additionally provides that notary stamps and seals and any signatures and initials that may appear within the instrument or document need not satisfy the font size requirement and that no additional fees may be charged or collected by the county recorder for such a nonconformance.  (R.C. 317.114(B)(2).)

COMMENT

1.  R.C. 1322.01(E)(1) (Mortgage Brokers Law) defines "loan originator" as an individual who for compensation or gain, or in anticipation of compensation or gain, does any of the following:

(a)  Takes or offers to take a residential mortgage loan application;

(b)  Assists or offers to assist a buyer in obtaining or applying to obtain a residential mortgage loan by, among other things, advising on loan terms, including rates, fees, and other costs;

(c)  Offers or negotiates terms of a residential mortgage loan;

(d)  Issues or offers to issue a commitment for a residential mortgage loan to a buyer.

"Loan originator" does not include any of the following (R.C. 1322.01(E)(2)):

(a)  An individual who performs purely administrative or clerical tasks on behalf of a loan originator;

(b)  A person licensed under R.C. Chapter 4735., or under the similar law of another state, who performs only real estate brokerage activities permitted by that license, provided the person is not compensated by a mortgage lender, mortgage broker, loan originator, or by any agent thereof;

(c)  A person solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. 101, in effect on January 1, 2009;

(d)  An employee of a registrant who acts solely as a loan processor or underwriter and who does not represent to the public, through advertising or other means of communicating, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the person can or will perform any of the activities of a loan originator;

(e)  A mortgage loan originator licensed under R.C. 1321.51 to 1321.60 (Mortgage Loan Law), when acting solely under that authority;

(f)  A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or another loan originator, or by any agent thereof;

(g)  Any person engaged in the retail sale of manufactured homes, mobile homes, or industrialized units if, in connection with financing those retail sales, the person only assists the borrower by providing or transmitting the loan application and does not do any of the following:  (i) offer or negotiate the residential mortgage loan rates or terms, (ii) provide any counseling with borrowers about residential mortgage loan rates or terms, (iii) receive any payment or fee from any company or individual for assisting the borrower to obtain or apply for financing to purchase the manufactured home, mobile home, or industrialized unit, or (iv) assist the borrower in completing a residential mortgage loan application.

(h)  An individual employed by a nonprofit organization that is recognized as tax exempt under 26 U.S.C. 501(c)(3) and whose primary activity is the construction, remodeling, or rehabilitation of homes for use by low-income families, provided that the nonprofit organization makes no-profit mortgage loans or mortgage loans at zero per cent interest to low-income families and no fees accrue directly to the nonprofit organization or individual employed by the nonprofit organization from those mortgage loans and that the United States Department of Housing and Urban Development does not deny this exemption.

R.C. 1321.51(P)(1) and (2) (Mortgage Loan Law) defines "mortgage loan originator" in substantially the same manner as in the Mortgage Brokers Law, above, excludes substantially the same individuals excluded from the definition of "loan originator" in the Mortgage Brokers Law, but does not exclude an individual described in (h) in the preceding paragraph.

R.C. 1321.51(P)(3) provides that an individual acting exclusively as a servicer engaging in loss mitigation efforts with respect to existing mortgage transactions is not considered a mortgage loan originator for purposes of the Mortgage Loan Law until July 1, 2011, unless such delay is denied by the United States Department of Housing and Urban Development.

2.  Subject to certain exceptions, R.C. 1322.01(G)(1) defines "mortgage broker" as any of the following:

(a)  A person that holds that person out as being able to assist a buyer in obtaining a mortgage and charges or receives from either the buyer or lender money or other valuable consideration readily convertible into money for providing this assistance;

(b)  A person that solicits financial and mortgage information from the public, provides that information to a mortgage broker or a person that makes residential mortgage loans, and charges or receives from either of them money or other valuable consideration readily convertible into money for providing the information;

(c)  A person engaged in table-funding or warehouse-lending mortgage loans that are first lien residential mortgage loans.

3.  R.C. 319.302, not in the bill, provides in relevant part that real property that is not intended primarily for use in a "business activity" qualifies for a partial exemption from real property taxation.  After complying with R.C. 319.301, the county auditor must reduce the remaining sums to be levied against each parcel of real property that is listed on the general tax list and duplicate of real and public utility property for the current tax year and that qualifies for partial exemption, by 10%, to provide a partial exemption for that parcel or home.

HISTORY

ACTION

DATE

 

 

Introduced

04-30-09

Reported, S. Judiciary - Civil Justice

10-06-09

Passed Senate (32-0)

10-28-09

Reported, H. Civil & Commercial Law

12-10-09

 

 

 

s0124-rh-128.docx/kl



[1]   Am. Sub. H.B. 1 if the 128th General Assembly eliminated the "loan officer" license and created the "mortgage loan originator" and "loan originator" license.  It made conforming changes in other areas of law, including the Consumer Sales Practices Act, by replacing references to "loan officer" to "loan originator."