130th Ohio General Assembly
The online versions of legislation provided on this website are not official. Enrolled bills are the final version passed by the Ohio General Assembly and presented to the Governor for signature. The official version of acts signed by the Governor are available from the Secretary of State's Office in the Continental Plaza, 180 East Broad St., Columbus.

Sub. S. B. No. 76  As Reported by the House Financial Institutions Committee
As Reported by the House Financial Institutions Committee

124th General Assembly
Regular Session
2001-2002
Sub. S. B. No. 76


SENATORS Harris, White, Prentiss, Spada, Carnes, Robert Gardner, Hottinger, Fingerhut, Hagan, Johnson, Jacobson

REPRESENTATIVES Salerno, Blasdel, Beatty, Coates, Collier, Evans, Hoops, Husted, Kilbane, R. Miller, Ogg, Otterman, Reidelbach, Reinhard, Schmidt, Setzer, G. Smith, Sulzer, Webster, Wilson



A BILL
To amend sections 1322.01, 1322.02, 1322.03, 1322.04,1
1322.05, 1322.06, 1322.07, 1322.08, 1322.09,2
1322.10, 1322.101, 1322.11, 1322.99, and 4712.013
and to enact sections 1322.021, 1322.031,4
1322.041, 1322.051, 1322.052, 1322.061, 1322.062,5
1322.071, 1322.072, and 1322.073 of the Revised6
Code to revise the laws governing mortgage brokers7
and loan officers.8


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1. That sections 1322.01, 1322.02, 1322.03, 1322.04,9
1322.05, 1322.06, 1322.07, 1322.08, 1322.09, 1322.10, 1322.101,10
1322.11, 1322.99, and 4712.01 be amended and sections 1322.021,11
1322.031, 1322.041, 1322.051, 1322.052, 1322.061, 1322.062,12
1322.071, 1322.072, and 1322.073 of the Revised Code be enacted to13
read as follows:14

       Sec. 1322.01.  As used in sections 1322.01 to 1322.12 of the15
Revised Code:16

       (A) "Buyer" means an individual who is solicited to purchase17
or who purchases the services of a mortgage broker for purposes18
other than obtaining a business loan as described in division19
(B)(6) of section 1343.01 of the Revised Code.20

       (B) "Consumer reporting agency" has the same meaning as in21
the "Fair Credit Reporting Act," 84 Stat. 1128, 15 U.S.C.A. 1681a,22
as amended.23

       (C) "Employee" means an individual for whom a mortgage24
broker, in addition to providing a wage or salary, pays social25
security and unemployment taxes, provides workers' compensation26
coverage, and withholds local, state, and federal income taxes.27
"Employee" also includes any shareholder, member, or partner of a28
registrant who acts as a loan officer or operations manager of the29
registrant, but for whom the registrant is prevented by law from30
making income tax withholdings.31

       (D) "Licensee" means any person that has been issued a loan32
officer license under sections 1322.01 to 1322.12 of the Revised33
Code.34

        (E) "Loan officer" means an employee who originates35
mortgage loans in consideration of direct or indirect gain,36
profit, fees, or charges. "Loan officer" also includes an37
employee who solicits financial and mortgage information from the38
public for sale to another mortgage broker.39

       (F) "Mortgage" means any indebtedness secured by a deed of40
trust, security deed, or other lien on real property.41

       (D) "Mortgage banker" means any person that makes, services,42
or buys and sells mortgage loans, and is required to submit43
audited financial statements to, and is subject to a possible44
audit by, the United States department of housing and urban45
development, the United States department of veterans affairs, the46
federal national mortgage association, the federal home loan47
mortgage corporation, or the government national mortgage48
association.49

       (E)(G) "Mortgage broker" means aany of the following:50

       (1) A person that, in the regular course of business, holds51
that person out as being able to assist a buyer in obtaining a52
mortgage and charges or receives from either the buyer or lender53
money or other valuable consideration readily convertible into54
money for providing this assistance. "Mortgage broker" does not55
include any of the following:56

       (1) A person that makes or collects loans, to the extent57
these activities are subject to licensure or registration by this58
state;59

       (2) A lender approved by the United States secretary of60
housing and urban development for participation in a mortgage61
insurance program under the "National Housing Act," 48 Stat. 124662
(1934), 12 U.S.C.A. 1701, as amendedperson that solicits63
financial and mortgage information from the public, provides that64
information to a mortgage broker, and charges or receives from the65
mortgage broker money or other valuable consideration readily66
convertible into money for providing the information;67

       (3) A bank, savings bank, savings and loan association, or68
subsidiary or affiliate of a bank, savings bank, or savings and69
loan association. For purposes of division (E)(3) of this70
section, "affiliate" has the same meaning as in division (A) of71
section 1101.01 of the Revised Code, and "bank," as used in72
division (A) of section 1101.01 of the Revised Code, is deemed to73
include a savings bank or savings and loan association.74

       (4) A credit union organized and qualified under Chapter75
1733. of the Revised Code or the "Federal Credit Union Act," 8476
Stat. 994 (1970), 12 U.S.C.A. 1751, as amended;77

       (5) A budget and debt counseling service, as defined in78
division (D) of section 2716.03 of the Revised Code, provided that79
the service is a nonprofit organization exempt from taxation under80
section 501(c)(3) of the "Internal Revenue Code of 1986," 10081
Stat. 2085, 26 U.S.C.A. 501, as amended, and that the service is82
in compliance with Chapter 4710. of the Revised Code;83

       (6) A consumer reporting agency that is in substantial84
compliance with the "Fair Credit Reporting Act," 84 Stat. 1128, 1585
U.S.C.A. 1681a, as amended;86

       (7) A mortgage banker;87

       (8) Any political subdivision, or any governmental or other88
public entity, corporation, or agency, in or of the United States89
or any state of the United States;90

       (9) A college or university, or controlled entity of a91
college or university, as defined in section 1713.05 of the92
Revised Code.93

       (F)person engaged in table-funding or warehouse-lending94
mortgage loans that are first lien mortgage loans.95

       (H) "Operations manager" means the individual responsible96
for the everyday operations, compliance requirements, and97
management of a mortgage broker business.98

       (I) "Originate" means to do any of the following:99

       (1) Negotiate or arrange, or offer to negotiate or arrange,100
a mortgage loan between a person that makes or funds mortgage101
loans and a buyer;102

       (2) Issue a commitment for a mortgage loan to a buyer;103

       (3) Place, assist in placement, or find a mortgage loan for104
a buyer.105

       (J) "Registrant" means any person that has been issued a106
mortgage broker certificate of registration under sections 1322.01107
to 1322.12 of the Revised Code.108

       (G)(K) "Superintendent of financial institutions" includes109
the deputy superintendent for consumer finance as provided in110
section 1181.21 of the Revised Code.111

       (L) "Table-funding mortgage loan" means a mortgage loan112
transaction in which the mortgage is initially payable to the113
mortgage broker, the mortgage broker does not use the mortgage114
broker's own funds to fund the transaction, and, by the terms of115
the mortgage or other agreement, the mortgage is simultaneously116
assigned to another person. 117

       (M) "Warehouse-lending mortgage loan" means a mortgage loan118
transaction in which the mortgage is initially payable to the119
mortgage broker, the mortgage broker uses the mortgage broker's120
own funds to fund the transaction, and the mortgage is sold or121
assigned before the mortgage broker receives a scheduled payment122
on the mortgage.123

       Sec. 1322.02.  (A)(1) No person, on the person's own behalf124
or on behalf of any other person, shall act as a mortgage broker125
without first having obtained a certificate of registration from126
the superintendent of financial institutions for every office to127
be maintained by the person for the transaction of business as a128
mortgage broker in this state. A registrant shall maintain an129
office location in this state for the transaction of business as a130
mortgage broker in this state.131

        (2) No person shall act or hold that person's self out as a132
mortgage broker under the authority or name of a registrant or133
person exempt from sections 1322.01 to 1322.12 of the Revised Code134
without first having obtained a certificate of registration from135
the superintendent for every office to be maintained by the person136
for the transaction of business as a mortgage broker in this137
state.138

       (B) No person, on the person's own behalf or on behalf of139
any other person, shall originate mortgage loans for a registrant,140
unless that person is an employee of the registrantact as a loan141
officer without first having obtained a license from the142
superintendent. A loan officer shall not be employed by more than143
one mortgage broker at any one time.144

       (C) As used in this section:145

       (1) Employee means a person who may be required or directed146
by a registrant to originate mortgage loans in consideration of147
direct or indirect gain or profit. Employee does not include an148
independent contractor or any person who has a similar employment149
relationship with a mortgage brokerThe following persons are150
exempt from sections 1322.01 to 1322.12 of the Revised Code only151
with respect to business engaged in or authorized by their152
charter, license, authority, approval, or certificate, or as153
otherwise authorized by division (C)(1)(g) of this section:154

       (a) A bank, savings bank, savings and loan association, or155
credit union organized under the laws of this state, another156
state, or the United States, or a subsidiary or affiliate of a157
bank, savings bank, savings and loan association, or credit union;158

       (b) A budget and debt counseling service, as defined in159
division (D) of section 2716.03 of the Revised Code, provided that160
the service is a nonprofit organization exempt from taxation under161
section 501(c)(3) of the "Internal Revenue Code of 1986," 100162
Stat. 2085, 26 U.S.C.A. 501, as amended, and that the service is163
in compliance with Chapter 4710. of the Revised Code;164

       (c) A consumer reporting agency that is in substantial165
compliance with the "Fair Credit Reporting Act," 84 Stat. 1128, 15166
U.S.C.A. 1681a, as amended;167

       (d) Any political subdivision, or any governmental or other168
public entity, corporation, or agency, in or of the United States169
or any state of the United States;170

       (e) A college or university, or controlled entity of a171
college or university, as defined in section 1713.05 of the172
Revised Code;173

       (f) A person registered under sections 1321.51 to 1321.60 of174
the Revised Code, provided that not more than five per cent of the175
person's mortgage loans constitute table-funding mortgage loans or176
warehouse-lending mortgage loans. Division (C)(1)(f) of this177
section does not include any person that is also registered or178
licensed under sections 1322.01 to 1322.12 of the Revised Code.179

       (g) A mortgage banker. For purposes of division (C)(1)(g)180
of this section, "mortgage banker" means any person that makes,181
services, buys, or sells mortgage loans, that underwrites the182
loans, and that meets at least one of the following criteria:183

       (i) The person has been directly approved by the United184
States department of housing and urban development as a185
nonsupervised mortgagee with participation in the direct186
endorsement program, or, provided that the loans in all respects,187
except loan amounts, comply with the underwriting and188
documentation requirements of the United States department of189
housing and urban development, the person makes loans in excess of190
the applicable loan limit set by the federal national mortgage191
association. Division (C)(1)(g)(i) of this section does not192
include a mortgagee approved as a loan correspondent.193

       (ii) The person has been directly approved by the federal194
national mortgage association as a seller/servicer, or, provided195
that the loans in all respects, except loan amounts, comply with196
the underwriting and documentation requirements of the federal197
national mortgage association, the person makes loans in excess of198
the applicable loan limit set by the federal national mortgage199
association.200

       (iii) The person has been directly approved by the federal201
home loan mortgage corporation as a seller/servicer, or, provided202
that the loans in all respects, except loan amounts, comply with203
the underwriting and documentation requirements of the federal204
home loan mortgage corporation, the person makes loans in excess205
of the applicable loan limit set by the federal home loan mortgage206
corporation.207

       (iv) The person has been directly approved by the United208
States department of veterans affairs as a nonsupervised automatic209
lender. Division (C)(1)(g)(iv) of this section does not include a210
person directly approved by the United States department of211
veterans affairs as a nonsupervised lender, an agent of a212
nonsupervised automatic lender, or an agent of a nonsupervised213
lender.214

       (h) A person created solely for the purpose of securitizing215
loans secured by an interest in real estate, provided the person216
does not service the loans. For purposes of division (C)(1)(h) of217
this section, "securitizing" means the packaging and sale of218
mortgage loans as a unit for sale as investment securities, but219
only to the extent of those activities.220

       (2) Originate means any of the following:221

       (a) To negotiate or arrange, or to offer to negotiate or222
arrange, a mortgage loan between a person that makes or funds223
mortgage loans and a buyer;224

       (b) To issue a commitment for a mortgage loan to a buyer;225

       (c) To place, assist in placement, or find a mortgage loan226
for a buyerAny individual who is employed by a person exempt from227
sections 1322.01 to 1322.12 of the Revised Code is also exempt228
from those sections to the extent the individual is acting within229
the scope of the individual's employment and within the scope of230
the exempt person's charter, license, authority, approval, or231
certificate.232

       Sec. 1322.021. (A) A registrant that is a corporation,233
limited liability company, partnership, trust, or other business234
entity or association shall notify the division of financial235
institutions of every sale, transfer, or hypothecation of any236
stock, security, membership, partnership, or other equitable,237
beneficial, or ownership interest in the entity or association, if238
the interest represents at least a five per cent membership,239
partnership, or other equitable, beneficial, or ownership interest240
in the entity or association.241

       (B) Every person that acquires or otherwise receives an242
interest described in division (A) of this section is subject to243
sections 1322.01 to 1322.12 of the Revised Code. The division may244
make any investigation necessary to determine whether any fact or245
condition exists that, if it had existed at the time of the246
original application for a certificate of registration, the fact247
or condition would have warranted the division to deny the248
application under section 1322.04 of the Revised Code. If such a249
fact or condition is found, the division may, in accordance with250
Chapter 119. of the Revised Code, revoke the registrant's251
certificate.252

       Sec. 1322.03.  (A) An application for a certificate of253
registration as a mortgage broker shall be in writing, under oath,254
and in the form prescribed by the superintendent of financial255
institutions. The application shall be accompanied by ana256
nonrefundable application fee of three hundred fifty dollars for257
each location of an office to be maintained by the applicant in258
accordance with division (A) of section 1322.02 of the Revised259
Code and; however, an applicant that is registered under sections260
1321.51 to 1321.60 of the Revised Code shall not be required to261
pay an application fee. The application shall provide all of the262
following:263

       (1) The location or locations where the business is to be264
transacted and whether any location is a residence. If any265
location where the business is to be transacted is a residence,266
the application shall be accompanied by a certified copy of a267
zoning permit authorizing the use of the residence for commercial268
purposes, or shall be accompanied by a written opinion or other269
document issued by the county or political subdivision where the270
residence is located certifying that the use of the residence to271
transact business as a mortgage broker is not prohibited by the272
county or political subdivision. The application also shall be273
accompanied by a photograph of each location at which the business274
will be transacted.275

       (2)(a) In the case of a sole proprietor, the name and276
address of the sole proprietor;277

       (b) In the case of a partnership, the name and address of278
each partner;279

       (c) In the case of a corporation, the name and address of280
each shareholder owning five per cent or more of the corporation;281

       (d) In the case of any other entity, the name and address of282
any person that owns five per cent or more of the entity that will283
transact business as a mortgage broker.284

       (3)(a) If the applicant is a partnership, the applicant285
shall designate one of the partners named in the application286
pursuant to division (A)(2)(b) of this section as responsible for287
managing the operations of the location or locations where the288
business is to be transacted.289

       (b) If the applicant is a corporation, the applicant shall290
designate one of the shareholders named in the application291
pursuant to division (A)(2)(c) of this section as responsible for292
managing the operations of the location or locations where the293
business is to be transacted.294

       (c) If the applicant iscorporation, limited liability295
company, or any other business entity or association, the296
applicant shall designate a natural person that owns five per cent297
or more of the entity that will transact business as a mortgage298
broker as responsible for managing thean employee or owner of the299
applicant as the applicant's operations of the location or300
locations where the business is to be transactedmanager. While301
acting as the operations manager, the employee or owner shall not302
be employed by any other mortgage broker.303

       (4) Evidence that at least one of the following applies to304
the sole proprietor, partner, shareholder, or naturalthe person305
designated on the application pursuant to division (A)(3) of this306
section, as responsible for managing the operations of the307
location or locations where the business is to be transacted:308

       (a) Except as provided in division (D)(2) of this section,309
the sole proprietor, partner, shareholder, or natural person has310
earned at least an associate degree in an area relating to311
finance, banking, or business administration, and the degree was312
earned at an accredited college or university, including an313
accredited community or technical college.314

       (b) The sole proprietor, partner, shareholder, or natural315
personapplicable, possesses at least three years of experience in316
the mortgage and lending field, which experience may include317
employment with or as a mortgage broker or with a financial318
institution, mortgage lending institution, or other lending319
institution, or possesses at least three years of other experience320
related specifically to the business of mortgage loans that the321
superintendent determines meets the requirements of division322
(A)(4)(b) of this section.;323

       (5) Evidence of compliance with the surety bond requirements324
of section 1322.05 of the Revised Code and with sections 1322.01325
to 1322.12 of the Revised Code;326

       (6) In the case of a foreign corporationbusiness entity,327
evidence that it maintains a license or registration pursuant to328
Chapter 1703., 1705., 1775., 1777., 1782., or 1783. of the Revised329
Code to transact business in this state;330

       (7) A statement thatas to whether the applicant or, to the331
best of the applicant's knowledge, any shareholder, member,332
partner, operations manager, or employee of the applicant has not333
been convicted of or pleaded guilty to aany criminal offense, the334
violation of which is a felonyinvolving theft, receiving stolen335
property, embezzlement, forgery, fraud, passing bad checks, money336
laundering, or drug trafficking, or any criminal offense involving337
fraudmoney or securities;338

       (8) A statement as to whether the applicant or, to the best339
of the applicant's knowledge, any shareholder, member, partner,340
operations manager, or employee of the applicant has been subject341
to any adverse judgment for conversion, embezzlement,342
misappropriation of funds, fraud, misfeasance or malfeasance, or343
breach of fiduciary duty;344

       (9) Evidence that the applicant's operations manager has345
successfully completed the examination required under division (A)346
of section 1322.051 of the Revised Code;347

       (10) Any further information that the superintendent348
requires.349

       (B) Upon the filing of the application and payment of the350
application fee, the superintendent shall investigate the351
applicant. The investigation shall include a criminal records352
check based on the fingerprints of the applicant and a civil353
records check. If, in order to issue a certificate of354
registration to an applicant, investigation by the superintendent355
outside this state is necessary, the superintendent may require356
the applicant to advance sufficient funds to pay the actual357
expenses of the investigation, if it appears that these expenses358
will exceed three hundred fifty dollars. The superintendent shall359
provide the applicant with an itemized statement of the actual360
expenses that the applicant is required to pay.361

       (C) All funds advanced and application and renewal fees and362
penalties paid to the superintendent under this section and363
section 1322.04 of the Revised Code shall be paid by the364
superintendent to the treasurer of state to the credit of the365
consumer finance fund created in section 1321.21 of the Revised366
Code.367

       (D)(1) Division (A)(4) of this section does not apply to any368
registrant that, on March 4, 1996, is registered as a mortgage369
broker under sections 1322.01 to 1322.12 of the Revised Code under370
a certificate of registration issued pursuant to those sections371
prior to March 4, 1996, provided that the certificate of372
registration is not surrendered by the registrant or revoked or373
refused renewal by the superintendent of financial institutions at374
any time after March 4, 1996.375

       (2) Except as provided in division (D)(3) of this section,376
on and after the effective date of this amendment, evidence of377
education provided in division (A)(4)(a) of this section shall not378
be accepted on an application of a person applying as a new379
applicant for a certificate of registration as a mortgage broker.380
However, on and after the effective date of this amendment, a381
person who, prior to that date, submitted evidence of education as382
provided for in division (A)(4)(a) of this section may renew a383
certificate of registration as a mortgage broker, provided that384
the person is registered on that date as a mortgage broker385
pursuant to section 1322.04 of the Revised Code, and a certificate386
of registration as a mortgage broker is not surrendered by the387
person or revoked or refused renewal by the superintendent at any388
time after that date.389

       (3) For a period ending three years after the effective date390
of this amendment, evidence that the person designated as391
responsible for managing the operation of a location or locations392
where business is or will be transacted meets the educational393
requirements specified in division (A)(4)(a) of this section shall394
be acceptable on an application for a certificate of registration395
as a mortgage broker, if the superintendent determines that both396
of the following apply:397

       (a) Prior to the effective date of this amendment, the398
person was designated pursuant to division (A)(3) of this section399
as responsible for managing the operations of a location or400
locations where a registrant's business was transacted, having met401
the educational requirements provided in division (A)(4)(a) of402
this section;403

       (b) The person is designated as responsible for managing the404
operations of an entity described in division (A)(2) of this405
section where the mortgage broker business is or will be406
transactedIf an application for a certificate of registration407
does not contain all of the information required under division408
(A) of this section, and if that information is not submitted to409
the superintendent within ninety days after the superintendent410
requests the information in writing, the superintendent may411
consider the application withdrawn. 412

       (E) A certificate of registration, or the authority granted413
under such a certificate, is not transferable or assignable and414
cannot be franchised by contract or any other means.415

       Sec. 1322.031. (A) An application for a license as a loan416
officer shall be in writing, under oath, and in the form417
prescribed by the superintendent of financial institutions. The418
application shall be accompanied by a nonrefundable application419
fee of one hundred dollars and shall provide all of the following:420

       (1) The name and address of the applicant;421

       (2) A statement as to whether the applicant has been422
convicted of or pleaded guilty to any criminal offense involving423
theft, receiving stolen property, embezzlement, forgery, fraud,424
passing bad checks, money laundering, or drug trafficking, or any425
criminal offense involving money or securities;426

       (3) A statement as to whether the applicant has been subject427
to an adverse judgment for conversion, embezzlement,428
misappropriation of funds, fraud, misfeasance or malfeasance, or429
breach of fiduciary duty;430

       (4) Any further information that the superintendent431
requires.432

        (B) Upon the filing of the application and payment of the433
application fee, the superintendent shall investigate the434
applicant. The investigation shall include a criminal records435
check based on the fingerprints of the applicant and a civil436
records check. If, in order to issue a license to an applicant,437
investigation by the superintendent outside this state is438
necessary, the superintendent may require the applicant to advance439
sufficient funds to pay the actual expenses of the investigation,440
if it appears that these expenses will exceed one hundred dollars.441
The superintendent shall provide the applicant with an itemized442
statement of the actual expenses that the applicant is required to443
pay.444

       (C) All funds advanced and application and renewal fees and445
penalties paid to the superintendent under this section and446
section 1322.041 of the Revised Code shall be paid by the447
superintendent to the treasurer of state to the credit of the448
consumer finance fund created in section 1321.21 of the Revised449
Code.450

       (D) If an application for a license does not contain all of451
the information required under division (A) of this section, and452
if that information is not submitted to the superintendent within453
ninety days after the superintendent requests the information in454
writing, the superintendent may consider the application455
withdrawn.456

       (E)(1) The business of a loan officer shall principally be457
transacted at an office of the employing mortgage broker, which458
office is registered in accordance with division (A) of section459
1322.02 of the Revised Code. Each original license shall be460
deposited with and maintained by the employing mortgage broker at461
the mortgage broker's main office. A copy of the license shall be462
maintained and displayed at the office where the loan officer463
principally transacts business.464

       (2) If a loan officer's employment is terminated, the465
mortgage broker shall return the original license to the466
superintendent within five business days after the termination.467
The licensee may request the transfer of the license to another468
mortgage broker by submitting a relocation application, along with469
a fifteen dollar fee, to the superintendent or may request the470
superintendent in writing to hold the license in escrow for a471
period not to exceed one year. Any licensee whose license is held472
in escrow shall cease activity as a loan officer.473

       A mortgage broker may employ a loan officer on a temporary474
basis pending the transfer of the loan officer's license to the475
mortgage broker, if the mortgage broker receives written476
confirmation from the superintendent that the loan officer is477
licensed under sections 1322.01 to 1322.12 of the Revised Code.478

       (F) A license, or the authority granted under such a license,479
is not assignable and cannot be franchised by contract or any480
other means.481

       Sec. 1322.04.  (A) Upon the conclusion of the investigation482
required under division (B) of section 1322.03 of the Revised483
Code, the superintendent of financial institutions shall issue a484
certificate of registration to the applicant if the superintendent485
finds that the following conditions are met:486

       (1) TheExcept as otherwise provided in division (A) of487
section 1322.03 of the Revise Code, the application is accompanied488
by the application fee of three hundred fifty dollars for each489
location of an office to be maintained by the applicant in490
accordance with division (A) of section 1322.02 of the Revised491
Code and complies with division (A) of section 1322.03 of the492
Revised Code. If a check or other draft instrument is returned to493
the superintendent for insufficient funds, the superintendent494
shall notify the registrant by certified mail, return receipt495
requested, that the certificate of registration issued in reliance496
on the check or other draft instrument will be canceled unless the497
registrant, within thirty days after receipt of the notice,498
submits the application fee and a one-hundred-dollar penalty to499
the superintendent. If the registrant does not submit the500
application fee and penalty within that time period, or if any501
check or other draft instrument used to pay the fee or penalty is502
returned to the superintendent for insufficient funds, the503
certificate of registration shall be canceled immediately without504
a hearing and the registrant shall cease activity as a mortgage505
broker.506

       (2) If the application is for a location that is a507
residence, that the applicant has obtained a valid zoning permit508
authorizing the use of the residence for commercial purposes, or509
has obtained a valid written opinion or other document issued by510
the county or political subdivision where the residence is located511
certifying that the use of the residence to transact business as a512
mortgage broker is not prohibited by the county or political513
subdivision. The application also is accompanied by a photograph514
of each location at which the mortgage broker's business will be515
transacted.516

       (3)(a) The sole proprietor, partner, shareholder, or natural517
the person designated on the application, pursuant to division518
(A)(3) of section 1322.03 of the Revised Code, as responsible for519
managing the operation of the location or locations where the520
business is to be transactedapplicable, meets the educational or521
experience requirements provided in division (A)(4) of section522
1322.03 of the Revised Code.523

       (b) If a partner, shareholder, or natural person designated524
pursuant to division (A)(3) of section 1322.03 of the Revised Code525
ceases to be responsible for managing the operation of the526
location or locations where the business is to be transacted, the527
applicant shall comply with the requirements that apply to a528
registrant under division (E) of this section.529

       (4) In the case of a foreign corporation, theThe applicant530
maintains a license pursuant to Chapter 1703. of the Revised Code531
to transact business in thisall licenses and registrations532
required by the secretary of state.533

       (5) The applicant complies with the surety bond requirements534
of section 1322.05 of the Revised Code.535

       (6) The applicant complies with sections 1322.01 to 1322.12536
of the Revised Code.537

       (7) TheNeither the applicant nor any shareholder, member,538
partner, operations manager, or employee of the applicant has not539
pleaded guilty to or been convicted of aany criminal offense, the540
violation of which is a felony, or any criminal offense involving541
frauddescribed in division (A)(7) of section 1322.03 of the542
Revised Code, or, if the applicant or any of those other persons543
has pleaded guilty to or been convicted of such an offense, the544
applicant has proven to the superintendent, by a preponderance of545
the evidence, that the applicant's or other person's activities546
and employment record since the conviction show that the applicant547
or other person is honest, truthful, and of good reputation, and548
there is no basis in fact for believing that the applicant or549
other person will commit such an offense again.550

       (8) Neither the applicant nor any shareholder, member,551
partner, operations manager, or employee of the applicant has been552
subject to any adverse judgment for conversion, embezzlement,553
misappropriation of funds, fraud, misfeasance or malfeasance, or554
breach of fiduciary duty, or, if the applicant or any of those555
other persons has been subject to such a judgment, the applicant556
has proven to the superintendent, by a preponderance of the557
evidence, that the applicant's or other person's activities and558
employment record since the judgment show that the applicant or559
other person is honest, truthful, and of good reputation, and560
there is no basis in fact for believing that the applicant or561
other person will be subject to such a judgment again.562

       (9) The applicant's operations manager successfully completed563
the examination required under division (A) of section 1322.051 of564
the Revised Code.565

       (10) The applicant's financial responsibility, experience,566
character, and general fitness command the confidence of the567
public and warrant the belief that the business will be operated568
honestly and fairly in compliance with the purposes of sections569
1322.01 to 1322.12 of the Revised Code.570

       For purposes of determining whether an applicant that is a571
partnership, corporation, or other business entity or association572
has met the conditions set forth in divisiondivisions (A)(7),573
(A)(8), and (A)(10) of this section, the superintendent shall574
determine which partners, shareholders, or persons named in the575
application pursuant to division (A)(2) of section 1322.03 of the576
Revised Code must meet the conditions set forth in division577
divisions (A)(7), (A)(8), and (A)(10) of this section. This578
determination shall be based on the extent and nature of the579
partner's, shareholder's, or person's ownership interest in the580
partnership, corporation, or other business entity or association581
that is the applicant.582

       (B) The certificate of registration issued pursuant to583
division (A) of this section may be renewed annually on or before584
the thirtieth day of April upon payment of aif the superintendent585
finds that all of the following conditions are met: 586

       (1) The renewal application is accompanied by a587
nonrefundable renewal fee of three hundred fifty dollars for588
each location of an office to be maintained by the applicant in589
accordance with division (A) of section 1322.02 of the Revised590
Code and a finding by the superintendent that the; however, an591
applicant that is registered under sections 1321.51 to 1321.60 of592
the Revised Code shall not be required to pay a renewal fee. If a593
check or other draft instrument is returned to the superintendent594
for insufficient funds, the superintendent shall notify the595
registrant by certified mail, return receipt requested, that the596
certificate of registration renewed in reliance on the check or597
other draft instrument will be canceled unless the registrant,598
within thirty days after receipt of the notice, submits the599
renewal fee and a one-hundred-dollar penalty to the600
superintendent. If the registrant does not submit the renewal fee601
and penalty within that time period, or if any check or other602
draft instrument used to pay the fee or penalty is returned to the603
superintendent for insufficient funds, the certificate of604
registration shall be canceled immediately without a hearing and605
the registrant shall cease activity as a mortgage broker.606

       (2) On and after January 1, 2003, the operations manager607
designated under division (A)(3) of section 1322.03 of the Revised608
Code has completed, during the immediately preceding calendar609
year, at least six hours of continuing education as required under610
section 1322.052 of the Revised Code.611

       (3) The applicant meets the conditions set forth in612
divisions (A)(2) to (8)(10) of this section and that the.613

       (4) The applicant's certificate of registration is not614
subject to an order of suspension or revocation by the615
superintendent. If616

       (C)(1) Subject to division (C)(2) of this section, if a617
renewal fee is received by the superintendent after the thirtieth618
day of April, the certificate of registration shall not be619
considered renewed, and the applicant shall cease activity as a620
mortgage broker and apply for a certificate of registration as a621
mortgage broker.622

       (C) No application or renewal fee required by division (A)623
or (B) of this section shall be returned after a certificate of624
registration has been issued or renewed by the superintendent.625

       (D) Division (A)(3) of this section does not apply to any626
registrant that, on March 4, 1996, is registered as a mortgage627
broker under sections 1322.01 to 1322.12 of the Revised Code under628
a certificate of registration issued pursuant to those sections629
prior to March 4, 1996, provided that the certificate of630
registration is not surrendered by the registrant or revoked or631
refused renewal by the superintendent of financial institutions at632
any time after March 4, 1996.633

       (E)(2) Division (C)(1) of this section shall not apply if634
the applicant, no later than the thirty-first day of May, submits635
the renewal fee and a one-hundred-dollar penalty to the636
superintendent.637

       (D) If a partner, shareholder, or naturalthe person638
designated as the operations manager pursuant to division (A)(3)639
of section 1322.03 of the Revised Code is no longer responsible640
for managing the operation of the location or locations where641
business is to be transactedthe operations manager, the642
registrant shall do all of the following:643

       (1) Designate another partner, shareholder, or natural644
person as responsible for managing the operation of the location645
or locations where business is to be transactedthe operations646
manager;647

       (2) Within ten days after the designation described in648
division (E)(D)(1) of this section, notify the superintendent in649
writing of the designation;650

       (3) Submit any additional information that the651
superintendent requires to establish that the newly designated652
partner, shareholder, or natural personoperations manager653
complies with the experience requirements set forth in division654
(A)(4)(b) of section 1322.03 of the Revised Code.655

       Sec. 1322.041. (A) Upon the conclusion of the investigation656
required under division (B) of section 1322.031 of the Revised657
Code, the superintendent of financial institutions shall issue a658
loan officer license to the applicant if the superintendent finds659
that the following conditions are met:660

       (1) The application is accompanied by the application fee.661
If a check or other draft instrument is returned to the662
superintendent for insufficient funds, the superintendent shall663
notify the licensee by certified mail, return receipt requested,664
that the license issued in reliance on the check or other draft665
instrument will be canceled unless the licensee, within thirty666
days after receipt of the notice, submits the application fee and667
a one-hundred-dollar penalty to the superintendent. If the668
licensee does not submit the application fee and penalty within669
that time period, or if any check or other draft instrument used670
to pay the fee or penalty is returned to the superintendent for671
insufficient funds, the license shall be canceled immediately672
without a hearing and the licensee shall cease activity as a loan673
officer.674

       (2) The applicant complies with sections 1322.01 to 1322.12675
of the Revised Code.676

       (3) The applicant has not been convicted of or pleaded677
guilty to any criminal offense described in division (A)(2) of678
section 1322.031 of the Revised Code, or, if the applicant has679
been convicted of or pleaded guilty to such an offense, the680
applicant has proven to the superintendent, by a preponderance of681
the evidence, that the applicant's activities and employment682
record since the conviction show that the applicant is honest,683
truthful, and of good reputation, and there is no basis in fact684
for believing that the applicant will commit such an offense685
again.686

       (4) The applicant has not been subject to an adverse judgment687
for conversion, embezzlement, misappropriation of funds, fraud,688
misfeasance or malfeasance, or breach of fiduciary duty, or, if689
the applicant has been subject to such a judgment, the applicant690
has proven to the superintendent, by a preponderance of the691
evidence, that the applicant's activities and employment record692
since the judgment show that the applicant is honest, truthful,693
and of good reputation, and there is no basis in fact for694
believing that the applicant will be subject to such a judgment695
again.696

       (5) The applicant's character and general fitness command the697
confidence of the public and warrant the belief that the business698
will be operated honestly and fairly in compliance with the699
purposes of sections 1322.01 to 1322.12 of the Revised Code.700

       (B) The license issued under division (A) of this section701
may be renewed annually on or before the thirtieth day of April if702
the superintendent finds that all of the following conditions are703
met:704

       (1) The renewal application is accompanied by a705
nonrefundable renewal fee of one hundred dollars. If a check or706
other draft instrument is returned to the superintendent for707
insufficient funds, the superintendent shall notify the licensee708
by certified mail, return receipt requested, that the license709
renewed in reliance on the check or other draft instrument will be710
canceled unless the licensee, within thirty days after receipt of711
the notice, submits the renewal fee and a one-hundred-dollar712
penalty to the superintendent. If the licensee does not submit713
the renewal fee and penalty within that time period, or if any714
check or other draft instrument used to pay the fee or penalty is715
returned to the superintendent for insufficient funds, the license716
shall be canceled immediately without a hearing and the licensee717
shall cease activity as a loan officer.718

       (2) On and after January 1, 2003, the loan officer has719
completed, during the immediately preceding calendar year, at720
least six hours of continuing education as required under section721
1322.052 of the Revised Code.722

       (3) The applicant meets the conditions set forth in723
divisions (A)(2) to (5) of this section.724

       (4) The applicant's license is not subject to an order of725
suspension or revocation by the superintendent.726

       (C)(1) Subject to division (C)(2) of this section, if a727
license renewal application or renewal fee is received by the728
superintendent after the thirtieth day of April, the license shall729
not be considered renewed, and the applicant shall cease activity730
as a loan officer.731

       (2) Division (C)(1) of this section shall not apply if the732
applicant, no later than the thirty-first day of May, submits the733
renewal application and fee and a one-hundred-dollar penalty to734
the superintendent.735

       Sec. 1322.05.  (A) No registrant shall conduct business in736
this state, unless the registrant has obtained and maintains in737
effect at all times a corporate surety bond issued by a bonding738
company or insurance company authorized to do business in this739
state. The bond shall be in favor of the superintendent of740
financial institutions and in the penal sum of at least741
twenty-fivefifty thousand dollars and an additional penal sum of742
fiveten thousand dollars for each location, in excess of one, at743
which the registrant conducts business. The term of the bond shall744
coincide with the term of registration. A copy of the bond shall745
be filed with the superintendent. The bond shall be for the746
exclusive benefit of any personbuyer injured by a violation by an747
employee, licensee, or registrant of any provision of sections748
1322.01 to 1322.12 of the Revised Code. The aggregate liability749
of the corporate surety for any and all breaches of the conditions750
of the bond shall not exceed the penal sum of the bond.751

       (B)(1) The registrant shall give notice to the752
superintendent by certified mail of any action that is brought by753
a buyer against the registrant or loan officer of the registrant754
alleging injury by a violation of any provision of sections755
1322.01 to 1322.12 of the Revised Code, and of any judgment that756
is entered against the registrant or loan officer of the757
registrant by a personbuyer injured by a violation of any758
provision of sections 1322.01 to 1322.12 of the Revised Code. The759
notice shall provide details sufficient to identify the action or760
judgment, and shall be filed with the superintendent within ten761
days after the commencement of the action or notice to the762
registrant of entry of a judgment. The763

       (2) A corporate surety, within ten days after it pays any764
claim or judgment, shall give notice to the superintendent by765
certified mail of the payment, with details sufficient to identify766
the person and the claim or judgment paid.767

       (C) Whenever the penal sum of the corporate surety bond is768
reduced by one or more recoveries or payments, the registrant769
shall furnish a new or additional bond under this section, so that770
the total or aggregate penal sum of the bond or bonds equals the771
sum required by this section, or shall furnish an endorsement772
executed by the corporate surety reinstating the bond to the773
required penal sum of it.774

       (D) The liability of the corporate surety on the bond to the775
superintendent and to any personbuyer injured by a violation of776
any provision of sections 1322.01 to 1322.12 of the Revised Code777
shall not be affected in any way by any misrepresentation, breach778
of warranty, or failure to pay the premium, by any act or omission779
upon the part of the registrant, by the insolvency or bankruptcy780
of the registrant, or by the insolvency of the registrant's781
estate. The liability for any act or omission that occurs during782
the term of the corporate surety bond shall be maintained and in783
effect for at least two years after the date on which the784
corporate surety bond is terminated or canceled.785

       (E) The corporate surety bond shall not be canceled by the786
registrant or the corporate surety except upon notice to the787
superintendent by certified mail, return receipt requested. The788
cancellation shall not be effective prior to thirty days after the789
superintendent receives the notice.790

       (F) No registrant shall fail to comply with this section.791
Any registrant that fails to comply with this section shall cease792
all mortgage broker activity in this state until the registrant793
complies with this section.794

       Sec. 1322.051. (A) Each person designated under division795
(A)(3) of section 1322.03 of the Revised Code to act as operations796
manager for a mortgage broker business shall submit to an797
examination approved by the superintendent of financial798
institutions.799

       (B) Each licensee, within ninety days after the original800
issuance of the loan officer license, shall successfully complete801
an examination approved by the superintendent. Failure to comply802
with this division results in the termination of the license by803
operation of law.804

       Sec. 1322.052. On and after January 1, 2002, each licensee805
and each person designated under division (A)(3) of section806
1322.03 of the Revised Code to act as operations manager for a807
mortgage broker business shall complete at least six hours of808
continuing education every calendar year. To fulfill this809
requirement, the six hours of continuing education must be offered810
in a course or program of study approved by the superintendent of811
financial institutions.812

       Sec. 1322.06.  (A) As often as the superintendent of813
financial institutions considers it necessary, the superintendent814
may examine the registrant's records pertaining to business815
transacted pursuant to sections 1322.01 to 1322.12 of the Revised816
Code.817

       (B) A registrant shall maintain records pertaining to818
business transacted pursuant to sections 1322.01 to 1322.12 of the819
Revised Code for twofour years or more after the final entry on820
such records. No registrant shall fail to comply with this821
division.822

       (C) All information obtained by the superintendent or the823
superintendent's deputies, examiners, assistants, agents, or824
clerks by reason of their official position, including information825
obtained by such persons in the course of examining a registrant826
or investigating an applicant for a certificate of registration,827
is privileged and confidential. All such information shall remain828
privileged and confidential for all purposes except when it is829
necessary for the superintendent and the superintendent's830
deputies, examiners, assistants, agents, or clerks to take831
official action regarding the affairs of the registrant or in832
connection with criminal proceedings.833

       Sec. 1322.061. (A)(1) The following information is834
privileged and confidential:835

       (a) Examination information, and any information leading to836
or arising from an examination;837

       (b) Investigation information, and any information arising838
from or leading to an investigation.839

       (2) The information described in division (A)(1) of this840
section shall remain privileged and confidential for all purposes841
except when it is necessary for the superintendent of financial842
institutions to take official action regarding the affairs of a843
registrant, or in connection with civil or criminal investigations844
or proceedings conducted by the attorney general or a county845
prosecutor. The superintendent may share examination and846
investigation information with any law enforcement agency or any847
other state or federal regulatory agency. Any information shared848
with the attorney general, a county prosecutor, or a law849
enforcement agency or other state or federal regulatory agency850
shall remain privileged and confidential and shall only be used in851
connection with an official investigation, proceeding, or action.852

       (B) All application information, except social security853
numbers, employer identification numbers, financial account854
numbers, the identity of the institution where financial accounts855
are maintained, personal financial information, fingerprint cards856
and the information contained on such cards, and criminal857
background information, is a public record as defined in section858
149.43 of the Revised Code.859

       Sec. 1322.062. (A) Within three business days after taking860
an application for a loan from a buyer, a registrant shall deliver861
to the buyer a mortgage loan origination disclosure statement that862
contains all of the following:863

        (1) The name, address, and telephone number of the buyer;864

       (2) The typewritten name of the loan officer and the number865
designated on the loan officer's license;866

       (3) The street address, telephone number, and facsimile867
number of the registrant and the number designated on the868
registrant's certificate of registration; 869

       (4) The signature of the loan officer or registrant; 870

       (5) A statement indicating whether the buyer is to pay for871
the services of a bona fide third party if the registrant is872
unable to assist the buyer in obtaining a mortgage; 873

       (6) A statement that describes the method by which the fee874
to be paid by the buyer to the registrant will be calculated;875

        (7) A statement that the lender may pay compensation to the876
registrant;877

       (8) A description of all the services the registrant has878
agreed to perform for the buyer;879

       (9) A statement that the buyer has not entered into an880
exclusive agreement for brokerage services.881

       (B) If there is any change in the information provided under882
division (A)(6) or (8) of this section, the registrant shall883
provide the buyer with the revised mortgage loan origination884
disclosure statement no later than three days after the change885
occurs, or the date the loan is closed, whichever is earlier.886

       (C) No registrant shall fail to comply with this section.887

       Sec. 1322.07.  No mortgage broker, registrant, licensee, or888
applicant for a certificate of registration or license under889
sections 1322.01 to 1322.12 of the Revised Code shall do any of890
the following:891

       (A) Obtain a certificate of registration or license through892
any false or fraudulent representation of a material fact or any893
omission of a material fact required by state law, or make any894
substantial misrepresentation in any registration or license895
application;896

       (B) Make false or misleading statements of a material fact,897
omissions of statements required by state law, or false promises898
regarding a material fact, through advertising or other means, or899
engage in a continued course of misrepresentations;900

       (C) Engage in conduct that constitutes improper, fraudulent,901
or dishonest dealings;902

       (D) Fail to notify the division of financial institutions if903
within thirty days after the registrant, licensee, or applicant,904
in a court of competent jurisdiction of this state or any other905
state, is convicted of or pleads guilty to aany criminal offense,906
the violation of which is a felonyinvolving theft, receiving907
stolen property, embezzlement, forgery, fraud, passing bad checks,908
money laundering, or drug trafficking, or any criminal offense909
involving fraudmoney or securities;910

        (E) Knowingly make, propose, or solicit fraudulent, false,911
or misleading statements on any mortgage document or on any912
document related to a mortgage, including a mortgage application,913
real estate appraisal, or real estate settlement or closing914
document. For purposes of this division, "fraudulent, false, or915
misleading statements" does not include mathematical errors,916
inadvertent transposition of numbers, typographical errors, or any917
other bona fide error.918

       (F) Knowingly instruct, solicit, propose, or otherwise cause919
a buyer to sign in blank a mortgage related document.920

       Sec. 1322.071. (A) As used in this section, "bona fide third921
party" has the same meaning as in section 1322.08 of the Revised922
Code.923

       (B) No mortgage broker, registrant, or licensee shall do any924
of the following:925

        (1) Retain original documents provided to the mortgage926
broker, registrant, or licensee by the buyer in connection with927
the loan application, including income tax returns, account928
statements, or other financial related documents; 929

       (2) Receive, directly or indirectly, a premium on the fees930
charged for services performed by a bona fide third party; 931

       (3) Pay or receive, directly or indirectly, a referral fee932
or kickback of any kind to or from a bona fide third party or933
other party with a related interest in the transaction, such as a934
home improvement builder, real estate developer, or real estate935
broker or agent, for the referral of business.936

       Sec. 1322.072. No person, in connection with any examination937
or investigation conducted by the superintendent of financial938
institutions under sections 1322.01 to 1322.12 of the Revised939
Code, shall knowingly do either of the following:940

       (A) Circumvent, interfere with, obstruct, or fail to941
cooperate, including making a false or misleading statement,942
failing to produce records, or intimidating or suborning any943
witness;944

       (B) Tamper with, alter, or manufacture any evidence.945

       Sec. 1322.073. No person shall acquire, sell, transfer, or946
hypothecate any interest in a registrant or an applicant for a947
certificate of registration in order to obfuscate or conceal the948
true ownership or control of the registrant or applicant. 949

       Sec. 1322.08.  (A)No registrant shall fail to do any of the950
following:951

       (1) Maintain a special account;952

       (2) Deposit into the registrant's special account any bona953
fide third-party fee the registrant receives;954

       (3) Pay bona fide third-party fees to a bona fide third955
party from the registrant's special account.956

       (B) Except as otherwise provided in this division, no957
registrant shall charge or receive, directly or indirectly, fees958
for assisting a buyer in obtaining a mortgage, until all of the959
services that the registrant has agreed to perform for the buyer960
are completed, and the proceeds of the mortgage loan have been961
disbursed to or on behalf of the buyer. However, prior to962
completion of such services the following fees may be paid for963
services performed by a bona fide third party in assisting the964
buyer to obtain a mortgage if the fees are either paid directly by965
the buyer to the bona fide third party or, except as provided in966
division (A)(6)(B)(5) of this section, the fees are deposited by967
the registrant into the registrant's special account for services968
performed by the bona fide third party:969

       (1) Fees to obtain a report from a credit reporting agency;970

       (2) Fees for notary services;971

       (3) Fees authorized by law to record, file, or release a972
security interest or mortgage;973

       (4) Fees for the performance of a title search, appraisal of974
the real estate, or survey of the real estate;975

       (5)(4) Fees charged by a lender for locking in an interest976
rate in connection with obtaining or refinancing a mortgage,977
provided that the fees do not exceed an amount equal to one and978
one-half per cent of the mortgage loan amount;979

       (6)(5) Fees not exceeding five hundred dollars paid directly980
by the buyer to a state or federal government agency or981
instrumentality for purposes of processing a mortgage application982
relating to a government sponsored or guaranteed mortgage program.983

       (B)(C) If fees are paid by a buyer for the performance of984
any of the services described in division (A)(4)(B)(3) of this985
section and the registrant is unable to assist in obtaining a986
mortgage for the buyer, the registrant shall return to the buyer987
the original documents prepared by the bona fide third party at988
the time that the request for the mortgage is refused or denied.989
With respect to any appraisal, however, the registrant may return990
either the original or a copy. No registrant shall fail to comply991
with this division.992

       (C)(D) For purposes of this section:993

       (1) "Bona fide third party" means a person that is not an994
employee of, related to, or affiliated with, the registrant, and995
that is not used for the purpose of circumvention or evasion of996
this section.997

       (2) "Special account" means a depository account with a998
financial institution, the deposits of which are insured by the999
federal deposit insurance corporation, that is separate and1000
distinct from any personal or other account of the registrant, and1001
that is maintained solely for the holding and payment of fees1002
described in division (A) of this section for services performed1003
by bona fide third parties and received by the registrant from1004
buyers that the registrant assists in obtaining mortgages.1005

       Sec. 1322.09.  A mortgage broker shall disclose in any1006
printed, televised, broadcast, electronically transmitted, or1007
published advertisement relating to the mortgage broker's1008
services, including on any electronic site accessible through the1009
internet, the name and street address of the mortgage broker and1010
the number designated on the certificate of registration that is1011
issued to the mortgage broker by the superintendent of financial1012
institutions under sections 1322.01 to 1322.12 of the Revised1013
Code. No1014

       No mortgage broker shall fail to comply with this section.1015

       Sec. 1322.10.  (A) After notice and opportunity for a1016
hearing conducted in accordance with Chapter 119. of the Revised1017
Code, the superintendent of financial institutions may do the1018
following:1019

       (1) Suspend, revoke, or refuse to issue or renew a1020
certificate of registration or license if the superintendent finds1021
aeither of the following:1022

       (a) A violation of division (B) of section 1322.06 or1023
section 1322.05, 1322.07, 1322.08, or 1322.09or failure to comply1024
with any provision of sections 1322.01 to 1322.12 of the Revised1025
Code or the rules adopted under those sections or any other law1026
applicable to the business conducted under a certificate of1027
registration;1028

       (b) A conviction of or guilty plea to any criminal offense1029
involving theft, receiving stolen property, embezzlement, forgery,1030
fraud, passing bad checks, money laundering, or drug trafficking,1031
or any criminal offense involving money or securities. 1032

       (2) Impose a fine of not more than one thousand dollars, for1033
each day a violation of a law or rule is committed, repeated, or1034
continued. If the registrant or licensee engages in a pattern of1035
repeated violations of a law or rule, the superintendent may1036
impose a fine of not more than two thousand dollars for each day1037
the violation is committed, repeated, or continued. All fines1038
collected pursuant to this division shall be paid to the treasurer1039
of state to the credit of the consumer finance fund created in1040
section 1321.21 of the Revised Code. In determining the amount of1041
a fine to be imposed pursuant to this division, the superintendent1042
shall consider all of the following:1043

       (a) The seriousness of the violation;1044

       (b) The registrant's or licensee's good faith efforts to1045
prevent the violation;1046

       (c) The registrant's or licensee's history regarding1047
violations and compliance with division orders;1048

       (d) The registrant's or licensee's financial resources;1049

       (e) Any other matters the superintendent considers1050
appropriate in enforcing sections 1322.01 to 1322.12 of the1051
Revised Code.1052

       (B) The superintendent may investigate alleged violations of1053
sectionsections 1322.01 to 1322.12 of the Revised Code or the1054
rules adopted under those sections or complaints concerning any1055
such violation. The superintendent may make application to the1056
court of common pleas for an order enjoining any such violation,1057
and, upon a showing by the superintendent that a person has1058
committed or is about to commit such a violation, the court shall1059
grant an injunction, restraining order, or other appropriate1060
relief.1061

       (C) In conducting any investigation pursuant to this1062
section, the superintendent may compel, by subpoena, witnesses to1063
testify in relation to any matter over which the superintendent1064
has jurisdiction and may require the production of any book,1065
record, or other document pertaining to that matter. If a person1066
fails to file any statement or report, obey any subpoena, give1067
testimony, produce any book, record, or other document as required1068
by a subpoena, or permit photocopying of any book, record, or1069
other document subpoenaed, the court of common pleas of any county1070
in this state, upon application made to it by the superintendent,1071
shall compel obedience by attachment proceedings for contempt, as1072
in the case of disobedience of the requirements of a subpoena1073
issued from the court or a refusal to testify therein.1074

       (D) If the superintendent determines that a person is1075
engaged in or is believed to be engaged in activities that may1076
constitute a violation of sections 1322.01 to 1322.12 of the1077
Revised Code, the superintendent, after notice and a hearing1078
conducted in accordance with Chapter 119. of the Revised Code, may1079
issue a cease and desist order. Such an order shall be1080
enforceable in the court of common pleas.1081

       (E) If the superintendent revokes the certificate of1082
registration or license of a registrant or licensee who is1083
convicted of or pleads guilty to a criminal violation of any1084
provision of sections 1322.01 to 1322.12 of the Revised Code or1085
any criminal offense described in division (A)(1)(b) of this1086
section, the revocation shall be permanent.1087

       Sec. 1322.101.  On receipt of a notice pursuant to section1088
3123.43 of the Revised Code, the division of financial1089
institutions shall comply with sections 3123.41 to 3123.50 of the1090
Revised Code and any applicable rules adopted under section1091
3123.63 of the Revised Code with respect to a certificate or1092
license issued pursuant to this chapter.1093

       Sec. 1322.11.  (A)(1) A buyer injured by a violation of1094
section 1322.02 or, 1322.062, 1322.07, division (B) of section1095
1322.06, or division (A) or (B) of section1322.071, 1322.08, or1096
1322.09 of the Revised Code may bring an action for recovery of1097
damages.1098

       (2) Damages awarded under division (A)(1) of this section1099
shall not be less than the amount paid by the buyer to the1100
mortgage broker, plus reasonable attorney's fees and court costs.1101

       (3) The buyer may be awarded punitive damages.1102

       (B)(1) The superintendent of financial institutions, the1103
attorney general, or a buyer may bring an action to enjoin a1104
violation of sections 1322.01 to 1322.12 of the Revised Code.1105

       (2) The superintendent may initiate criminatecriminal1106
proceedings under sections 1322.01 to 1322.12 of the Revised Code1107
by presenting any evidence of criminal violation to the1108
prosecuting attorney of the county in which the offense may be1109
prosecuted. If the prosecuting attorney does not prosecute the1110
violations, or at the request of the prosecuting attorney, the1111
superintendent shall present any evidence of criminal violations1112
to the attorney general, who may proceed in the prosecution with1113
all the rights, privileges, and powers conferred by law on1114
prosecuting attorneys, including the power to appear before grand1115
juries and to interrogate witnesses before such grand juries.1116
These powers of the attorney general shall be in addition to any1117
other applicable powers of the attorney general.1118

       (C) The remedies provided by this section are in addition to1119
any other remedy provided by law.1120

       (D) In any proceeding or action brought under sections1121
1322.01 to 1322.12 of the Revised Code, the burden of proving an1122
exemption under those sections is on the person claiming the1123
benefit of the exemption.1124

       (E) No person shall be deemed to violate sections 1322.01 to1125
1322.12 of the Revised Code with respect to any act taken or1126
omission made in reliance on a written notice, written1127
interpretation, or written report from the superintendent, unless1128
there is a subsequent amendment to those sections, or rules1129
promulgated thereunder, that affects the superintendent's notice,1130
interpretation, or report.1131

       (F) Upon disbursement of mortgage loan proceeds to or on1132
behalf of the buyer, the registrant that assisted the buyer to1133
obtain the mortgage loan is deemed to have completed the1134
performance of the registrant's services for the buyer and owes no1135
additional duties or obligations to the buyer with respect to the1136
mortgage loan. However, nothing in this division shall be1137
construed to limit or preclude the civil or criminal liability of1138
a registrant for failing to comply with sections 1322.01 to1139
1322.12 of the Revised Code or any rule adopted under those1140
sections, for failing to comply with any provision of or duty1141
arising under an agreement with a buyer or lender under sections1142
1322.01 to 1322.12 of the Revised Code, or for violating any other1143
provision of state or federal law.1144

       Sec. 1322.99. (A) Whoever violates division (A)(1) or (2) of1145
section 1322.02, division (E) or (F) of section 1322.07 or,1146
division (A)(B)(1) or (B)(2) of section 1322.071, or section1147
1322.08 of the Revised Code is guilty of a felony of the fifth1148
degree.1149

       (B) Whoever violates division (B)(3) of section 1322.071 of1150
the Revised Code is guilty of a felony of the fourth degree.1151

       (C) Whoever violates division (B) of section 1322.02 of the1152
Revised Code is guilty of a misdemeanor of the first degree.1153

       Sec. 4712.01.  As used in sections 4712.01 to 4712.14 of the1154
Revised Code:1155

       (A) "Buyer" means an individual who is solicited to purchase1156
or who purchases the services of a credit services organization1157
for purposes other than obtaining a business loan as described in1158
division (B)(6) of section 1343.01 of the Revised Code.1159

       (B) "Consumer reporting agency" has the same meaning as in1160
the "Fair Credit Reporting Act," 84 Stat. 1128, 15 U.S.C.A. 1681a,1161
as amended.1162

       (C)(1) "Credit services organization" means any person that,1163
in return for the payment of money or other valuable consideration1164
readily convertible into money for the following services, sells,1165
provides, or performs, or represents that the person can or will1166
sell, provide, or perform, one or more of the following services:1167

       (a) Improving a buyer's credit record, history, or rating;1168

       (b) Obtaining an extension of credit by others for a buyer;1169

       (c) Providing advice or assistance to a buyer in connection1170
with division (C)(1)(a) or (b) of this section;1171

       (d) Removing adverse credit information that is accurate and1172
not obsolete from the buyer's credit record, history, or rating;1173

       (e) Altering the buyer's identification to prevent the1174
display of the buyer's credit record, history, or rating.1175

       (2) "Credit services organization" does not include any of1176
the following:1177

       (a) A person that makes or collects loans, to the extent1178
these activities are subject to licensure or registration by this1179
state;1180

       (b) A mortgage broker, as defined in division (E) of section1181
1322.01 of the Revised Code, that holds a valid certificate of1182
registration under sections 1322.01 to 1322.12 of the Revised1183
Code;1184

       (c) A lender approved by the United States secretary of1185
housing and urban development for participation in a mortgage1186
insurance program under the "National Housing Act," 48 Stat. 12461187
(1934), 12 U.S.C.A. 1701, as amended;1188

       (d) A bank, savings bank, or savings and loan association,1189
or a subsidiary or an affiliate of a bank, savings bank, or1190
savings and loan association. For purposes of division (C)(2)(d)1191
of this section, "affiliate" has the same meaning as in division1192
(A) of section 1101.01 of the Revised Code and "bank," as used in1193
division (A) of section 1101.01 of the Revised Code, is deemed to1194
include a savings bank or savings and loan association.1195

       (e) A credit union organized and qualified under Chapter1196
1733. of the Revised Code or the "Federal Credit Union Act," 841197
Stat. 994 (1970), 12 U.S.C.A. 1751, as amended;1198

       (f) A budget and debt counseling service, as defined in1199
division (D) of section 2716.03 of the Revised Code, provided that1200
the service is a nonprofit organization exempt from taxation under1201
section 501(c)(3) of the "Internal Revenue Code of 1986," 1001202
Stat. 2085, 26 U.S.C.A. 501, as amended, and that the service is1203
in compliance with Chapter 4710. of the Revised Code;1204

       (g) A consumer reporting agency that is in substantial1205
compliance with the "Fair Credit Reporting Act," 84 Stat. 1128, 151206
U.S.C.A. 1681a, as amended.1207

       (h) A mortgage banker;1208

       (i) Any political subdivision, or any governmental or other1209
public entity, corporation, or agency, in or of the United States1210
or any state of the United States;1211

       (j) A college or university, or controlled entity of a1212
college or university, as defined in section 1713.05 of the1213
Revised Code;1214

       (k) A motor vehicle dealer licensed pursuant to Chapter1215
4517. of the Revised Code acting within the scope and authority of1216
that license or a motor vehicle auction owner licensed pursuant to1217
Chapters 4517. and 4707. of the Revised Code acting within the1218
scope and authority of that license.1219

       (D) "Extension of credit" means the right to defer payment of1220
debt, or to incur debt and defer its payment, offered or granted1221
primarily for personal, family, or household purposes. "Extension1222
of credit" does not include a mortgage.1223

       (E) "Mortgage" means any indebtedness secured by a deed of1224
trust, security deed, or other lien on real property.1225

       (F) "Mortgage banker" means any person that makes, services,1226
or buys and sells mortgage loans and is approved by the United1227
States department of housing and urban development, the United1228
States department of veterans affairs, the federal national1229
mortgage association, or the federal home loan mortgage1230
corporation.1231

       (G) "Superintendent of financial institutions" includes the1232
deputy superintendent for consumer finance as provided in section1233
1181.21 of the Revised Code.1234

       Section 2. That existing sections 1322.01, 1322.02, 1322.03,1235
1322.04, 1322.05, 1322.06, 1322.07, 1322.08, 1322.09, 1322.10,1236
1322.101, 1322.11, 1322.99, and 4712.01 of the Revised Code are1237
hereby repealed.1238

       Section 3. Sections 1 and 2 of this act shall take effect six1239
months after the effective date of this act.1240

       Section 4. It is the intent of the General Assembly that the1241
Superintendent of Financial Institutions take any action necessary1242
to provide for an orderly transition for those persons who, on the1243
effective date of this act, perform the functions, duties, or1244
powers prescribed for registrants and licensees under this act.1245
Consequently, the Division of Financial Institutions shall accept1246
registration and license applications submitted by such persons1247
beginning on the effective date of this act and shall make every1248
effort possible to act upon such applications within the six-month1249
period immediately following that date.1250

       Section 5. The prior operation of section 1322.03 of the1251
Revised Code, which permitted evidence on an application for a1252
certificate of registration as a mortgage broker that the person1253
designated as responsible for managing the operations of a1254
mortgage broker business meets the educational requirements then1255
in effect if, prior to March 18, 1999, that person was designated1256
as being responsible for managing the operations of the1257
registrant's business, shall continue and not be affected by the1258
enactment of this act until March 18, 2002; except that, all1259
requirements, except the experience requirements, applicable to1260
operations managers under this act apply to that person on the1261
date this act takes effect. On and after March 18, 2002, a person1262
not meeting the experience requirements provided in division1263
(A)(4) of section 1322.03 of the Revised Code, as amended by this1264
act, or any other requirement applicable to an operations manager1265
under this act shall not be designated as an operations manager on1266
an application for a certificate of registration as a mortgage1267
broker.1268

Please send questions and comments to the Webmaster.
© 2024 Legislative Information Systems | Disclaimer