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Sub. S. B. No. 333 As Passed by the HouseAs Passed by the House
129th General Assembly | Regular Session | 2011-2012 |
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Cosponsors:
Senators Beagle, Coley, LaRose, Seitz, Bacon, Peterson, Brown, Balderson, Burke, Hughes, Jones, Lehner, Manning, Wagoner, Widener
Representatives Brenner, Adams, R., Antonio, Blessing, Garland, Grossman, Hackett, Ruhl Speaker Batchelder
A BILL
To amend sections 1109.22, 1304.55, 1321.52, and
1322.02 and to enact sections 1321.537, 1321.538,
1322.042, and 1322.043 of the Revised Code to
authorize the Superintendent of Financial
Institutions to issue a temporary mortgage loan
originator license or temporary loan originator
license to an out-of-state applicant who meets
certain criteria, to make changes regarding
derivative transactions by banks, and to make
changes to the Uniform Commercial Funds Transfers
law regarding remittance transfers.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1109.22, 1304.55, 1321.52, and
1322.02 be amended and sections 1321.537, 1321.538, 1322.042, and
1322.043 of the Revised Code be enacted to read as follows:
Sec. 1109.22. (A) As used in this section:
(1) "Derivative transaction" includes any transaction that is
a contract, agreement, swap, warrant, note, or option that is
based, in whole or in part, on the value of, any interest in, or
any quantitative measure or the occurrence of any event relating
to, one or more commodities, securities, currencies, interest or
other rates, indices, or other assets.
(2) "Loans and extensions of credit" shall include all of the
following:
(a) All direct or indirect advances of funds made on the
basis of any obligation of a person to repay the funds or
repayable from specific property pledged by or on behalf of the
person and, to;
(b) To the extent specified by the superintendent of
financial institutions, also include any liability of a bank to
advance funds to or on behalf of a person pursuant to a
contractual commitment;
(c) Any credit exposure to a person arising from a derivative
transaction between the person and a bank.
(2)(3) "Person" includes an individual; sole proprietorship;
partnership; joint venture; association; trust; estate; business
trust; corporation; government; agency, instrumentality, or
political subdivision of a government; limited liability company;
or any similar entity or organization.
(B) Except as provided in divisions (C), (D), (E), and (F) of
this section:
(1) The total loans and extensions of credit by a bank to a
person outstanding at any one time and not fully secured, as
determined in a manner consistent with division (B)(2) of this
section, by collateral having a market value at least equal to the
amount of the loans and extensions of credit to that person that
are outstanding shall not exceed fifteen per cent of the
unimpaired capital of the bank.
(2) The total loans and extensions of credit by a bank to a
person outstanding at one time and fully secured by readily
marketable collateral having a market value, as determined by
reliable and continuously available price quotations, at least
equal to the amount of the loans and extensions of credit to that
person outstanding shall not exceed ten per cent of the unimpaired
capital of the bank.
(3) The limitation set forth in division (B)(2) of this
section is separate from and in addition to the limitation set
forth in division (B)(1) of this section.
(C) No limitation based on capital applies to loans and
extensions of credit by a bank to a person that are any of the
following types:
(1) Loans or extensions of credit arising from the discount
of commercial or business paper evidencing an obligation to the
person negotiating it with recourse;
(2) The purchase of bankers' acceptances of the kinds
described in division (B) or (C) of section 1109.17 of the Revised
Code and issued by other banks;
(3) Loans or extensions of credit secured by bonds, notes,
certificates of indebtedness, treasury bills of the United States,
or other obligations fully guaranteed as to principal and interest
by the United States;
(4) Loans or extensions of credit to or secured by
unconditional takeout commitments or guarantees of any department,
agency, bureau, board, commission, or establishment of the United
States or any corporation wholly owned, directly or indirectly, by
the United States;
(5) Loans or extensions of credit secured by a segregated
deposit account in the lending bank;
(6) Loans or extensions of credit to any financial
institution or to any receiver, conservator, superintendent of
financial institutions, or other agent in charge of the business
and property of a financial institution, when the loans or
extensions of credit are approved by the superintendent of
financial institutions of this state;
(7) Loans or extensions of credit to the student loan
marketing association.
(D) A bank may make loans and extensions of credit secured by
bills of lading, warehouse receipts, or similar documents
transferring or securing title to readily marketable staples
subject to the general limitations of division (B) of this
section, and may make additional loans and extensions of credit
secured by bills of lading, warehouse receipts, or similar
documents transferring or securing title to readily marketable
staples, if all of the following apply:
(1) The market value of the staples securing each additional
loan or extension of credit at all times equals or exceeds one
hundred fifteen per cent of the outstanding amount of the loan or
extension of credit.
(2) The staples are fully covered by insurance whenever it is
customary to insure staples of that kind.
(3) The total amount of the bank's additional loans and
extensions of credit outstanding to one person at any time does
not exceed thirty-five per cent of the bank's capital.
(E) Subject to divisions (E)(1) and (2) of this section, a
bank may make loans and extensions of credit arising from the
discount of negotiable or nonnegotiable installment consumer
paper.
(1) If the paper carries a full recourse endorsement or
unconditional guarantee by the person transferring the paper, the
total amount of the installment consumer paper transferred by one
person a bank may hold at one time shall not exceed twenty-five
per cent of the bank's capital, and the collateral requirements of
division (B)(2) of this section do not apply.
(2) The limitations set forth in division (B) of this section
apply only to the loans and extensions of credit of each maker of
negotiable or nonnegotiable installment consumer paper, and not to
obligations arising from any full or partial recourse endorsement
or guarantee by the transferor discounting the consumer paper to
the bank, if both of the following apply:
(a) The bank's files are, or the knowledge of its officers of
the financial condition of each maker of the consumer paper is,
reasonably adequate.
(b) An officer of the bank designated for that purpose by the
bank's board of directors certifies in writing that the bank is
relying primarily upon the responsibility of each maker for
payment of the loans or extensions of credit and not upon any full
or partial recourse endorsement or guarantee by the transferor.
(F) Without regard to the collateral requirements of division
(B) of this section, a bank may have loans and extensions of
credit to one person outstanding at one time not exceeding
twenty-five per cent of the bank's capital of the following types:
(1) Loans and extensions of credit secured by shipping
documents or instruments transferring or securing title covering
livestock or giving a lien on livestock, when the market value of
the livestock securing the obligation is not at any time less than
one hundred fifteen per cent of the face amount of the note
covered;
(2) Loans and extensions of credit that arise from the
discount by dealers in dairy cattle of paper given in payment for
dairy cattle, if the paper carries a full recourse endorsement or
unconditional guarantee of the seller, and the loans and
extensions of credit are secured by the cattle being sold.
(G)(1) The superintendent may adopt rules to administer and
carry out the purposes of this section, including rules, but not
limited to, the following:
(a) Rules defining or further defining terms used in this
section, and rules including expanding or limiting the definition
of "person" defined in division (A) of this section;
(b) Rules establishing limits or requirements other than
those specified in this section for particular classes or
categories of loans or extensions of credit;
(c) Rules relating to credit exposure arising from derivative
transactions.
(2) The superintendent may determine when a loan putatively
made to a person is, for purposes of this section, to be
attributed to another person.
Sec. 1304.55. Sections (A) Except as otherwise provided in
division (B) of this section, sections 1304.51 to 1304.85 of the
Revised Code do not apply to a funds transfer any part of which is
governed by the "Electronic Fund Transfer Act," 92 Stat. 3728
(1978), 15 U.S.C.A. 1693, as amended.
(B) Sections 1304.51 to 1304.85 of the Revised Code apply to
a remittance transfer as defined in the "Electronic Fund Transfer
Act," 124 Stat. 2065 (2010), 15 U.S.C. 1693o-1, as amended, unless
the remittance transfer is an electronic fund transfer as defined
in the "Electronic Fund Transfer Act," 92 Stat. 3728 (1978), 15
U.S.C. 1693a, as amended.
(C) In a funds transfer to which sections 1304.51 to 1304.85
of the Revised Code apply, in the event of an inconsistency
between an applicable provision of sections 1304.51 to 1304.85 of
the Revised Code and an applicable provision of the "Electronic
Fund Transfer Act," 92 Stat. 3728 (1978), 15 U.S.C. 1693, as
amended, the provisions of the Electronic Fund Transfer Act govern
to the extent of the inconsistency.
Sec. 1321.52. (A)(1) No person, on that person's own behalf
or on behalf of any other person, shall do any of the following
without having first obtained a certificate of registration from
the division of financial institutions:
(a) Advertise, solicit, or hold 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;
(b) Engage in the business of lending or collecting the
person's own or another person's money, credit, or choses in
action for non-first lien residential mortgage loans;
(c) Employ or compensate mortgage loan originators licensed
or who should be licensed under sections 1321.51 to 1321.60 of the
Revised Code to conduct the business of making residential
mortgage loans;
(d) Make loans in this state of the type set forth in
division (C) of this section that are unsecured or are secured by
other than real property, which loans are for more than five
thousand dollars at a rate of interest greater than permitted by
section 1343.01 or other specific provisions of the Revised Code.
(2) Each person issued a certificate of registration or
license is subject to all the rules prescribed under sections
1321.51 to 1321.60 of the Revised Code.
(B)(1) All loans made to persons who at the time are
residents of this state are considered as made within this state
and subject to the laws of this state, regardless of any statement
in the contract or note to the contrary, except as follows:
(a) If the loan is primarily secured by a lien on real
property in another state and is arranged by a mortgage loan
originator licensed by that state, the borrower may by choice of
law designate that the transaction be governed by the law where
the real property is located if the other state has consumer
protection laws covering the borrower that are applicable to the
transaction.
(b) If the loan is for the purpose of purchasing goods
acquired by the borrower when the borrower is outside of this
state, the loan may be governed by the laws of the other state.
(2) Nothing in division (B)(1) of this section prevents a
choice of law or requires registration or licensure of persons
outside of this state in a transaction involving the solicitation
of residents of this state to obtain non-real estate secured loans
that require the borrowers to physically visit a lender's
out-of-state office to apply for and obtain the disbursement of
loan funds.
(C) A registrant may make unsecured loans, loans secured by a
mortgage on a borrower's real estate which is a first lien or
other than a first lien on the real estate, loans secured by other
than real estate, and loans secured by any combination of
mortgages and security interests, on terms and conditions provided
by sections 1321.51 to 1321.60 of the Revised Code.
(D)(1) If a lender that is subject to sections 1321.51 to
1321.60 of the Revised Code makes a loan in violation of division
(A)(1) of this section, the lender has no right to collect,
receive, or retain any interest or charges on that loan.
(2) If a registrant applies to the division for a renewal of
the registrant's certificate after the date required by division
(A)(7) of section 1321.53 of the Revised Code, but prior to the
first day of February of that year, and the division approves the
application, division (D)(1) of this section does not apply with
respect to any loan made by the registrant while the registrant's
certificate was expired.
(3) If a person's registration under sections 1321.51 to
1321.60 of the Revised Code terminates due to nonrenewal or
otherwise but the person continues to engage in the business of
collecting or servicing non-first lien residential mortgage loans
in violation of division (A)(1) of this section, the
superintendent of financial institutions may take administrative
action, including action on any subsequent application for a
certificate of registration. In addition, no late fee, bad check
charge except as incurred, charge related to default or cost to
realize on its security interest, or prepayment penalty on
non-first lien residential mortgage loans shall be collected or
retained by a person who is in violation of division (A)(1)(b) of
this section for the period of time in which the person was in
violation. Nothing in division (D)(3) of this section prevents or
otherwise precludes any other actions or penalties provided by law
or modifies a defense of holder in due course that a subsequent
purchaser servicing the residential mortgage loan may raise.
(E)(1) No individual shall engage in the business of a
mortgage loan originator without first obtaining and maintaining
annually a license pursuant to section 1321.532 of the Revised
Code from the division of financial institutions. A mortgage loan
originator shall be employed or associated with a registrant or
entity exempt from registration under sections 1321.51 to 1321.60
of the Revised Code, but shall not be employed by or associated
with more than one registrant or exempt entity at any one time.
(2) An individual acting under the individual's authority as
a registered mortgage loan originator shall not be required to be
licensed under division (E)(1) of this section.
(3) An individual who holds a valid temporary mortgage loan
originator license issued pursuant to section 1321.537 of the
Revised Code may engage in the business of a mortgage loan
originator in accordance with sections 1321.51 to 1321.60 of the
Revised Code during the term of the temporary license.
(F)(1) Each licensee shall register with, and maintain a
valid unique identifier issued by, the nationwide mortgage
licensing system and registry.
(2) No person shall use 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," 122 Stat. 2810,
12 U.S.C. 5101.
(G)(1) If a person that is subject to sections 1321.51 to
1321.60 of the Revised Code makes a loan in violation of division
(A)(1)(d) of this section and subsequently sells or assigns that
loan, the person is liable to the borrower for any interest paid
on that loan to the holder or assignee in excess of the rate that
would be applicable in the absence of sections 1321.51 to 1321.60
of the Revised Code, in addition to any interest or charges paid
on that loan to the unauthorized lender as provided by division
(D)(1) of this section.
(2) If a person that is subject to sections 1321.51 to
1321.60 of the Revised Code makes a residential mortgage loan in
violation of division (A)(1)(b) or (c) of this section and
subsequently sells or assigns that loan, the lender is liable to
the borrower for any interest paid on that loan to the holder or
assignee in excess of the rate set forth in division (B)(4) of
section 1343.01 of the Revised Code, in addition to any interest
or charges paid on that loan to the unauthorized lender as
provided by division (D)(1) of this section.
Sec. 1321.537. (A) As used in this section:
(1) "Out-of-state mortgage loan originator" means an
individual to whom both of the following apply:
(a) The individual holds a valid mortgage loan originator
license, or comparable authority, issued pursuant to the law of
any other state of the United States.
(b) The individual is registered, fingerprinted, and
maintains a unique identifier through the nationwide mortgage
licensing system and registry.
(2) "Sponsor" means a registrant or entity described in
division (D) of section 1321.53 of the Revised Code that employs
or is associated with an applicant for a temporary mortgage loan
originator license and, during the term of the applicant's
temporary license, covers the applicant under its corporate surety
bond or requires the applicant to obtain and maintain a corporate
surety bond.
(B) The superintendent of financial institutions may, in
accordance with this section, issue to an out-of-state mortgage
loan originator a temporary mortgage loan originator license that
enables the licensee to engage in the business of a mortgage loan
originator while the individual completes the requirements
necessary to meet the conditions set forth in section 1321.532 of
the Revised Code for a mortgage loan originator license. A
temporary mortgage loan originator license shall be valid for a
term of not more than one hundred twenty days from the date of
issuance. A temporary mortgage loan originator license may not be
renewed.
(C) An application for a temporary mortgage loan originator
license shall be in writing, under oath, and in a form that meets
the requirements of the nationwide mortgage licensing system and
registry. The application shall be accompanied by a nonrefundable
application fee, the amount of which shall be determined by the
superintendent in rule, and a certification that, as of the date
of application, the applicant meets the following conditions:
(1) The applicant has at least two years of experience in the
field of residential mortgage lending in the five years
immediately preceding the date of application for the temporary
mortgage loan originator license.
(2) The applicant has not previously applied for a temporary
mortgage loan originator license in this state.
(3) The applicant has not had a mortgage loan originator
license, or comparable authority, revoked in any governmental
jurisdiction. For purposes of division (C)(3) of this section, a
subsequent formal vacation of such a revocation shall not be
considered a revocation.
(4) The applicant has not been convicted of, or pleaded
guilty or nolo contendere to, any of the following in a domestic,
foreign, or military court:
(a) During the seven-year period immediately preceding the
date of application, a misdemeanor involving theft or any felony;
(b) At any time prior to the date of application, a felony
involving an act of fraud, dishonesty, a breach of trust, theft,
or money laundering.
For purposes of division (C)(4) of this section, any
conviction for which the applicant has received a pardon shall not
be considered a conviction.
(D) The superintendent shall issue a temporary mortgage loan
originator license to the applicant if the superintendent finds
that all of the following conditions are met:
(1) The application is accompanied by the application fee and
the certification described in division (C) of this section.
(2) The applicant is registered, fingerprinted, and has a
valid unique identifier through the nationwide mortgage licensing
system and registry as of the date of application.
(3) The applicant has authorized the nationwide mortgage
licensing system and registry to obtain a credit report for
submission to the superintendent.
(4) The applicant has a sponsor that certifies employment of,
or association with, the applicant and has signed the application.
(E) The sponsor of a temporary licensee shall have an
affirmative duty to supervise the conduct of each temporary
mortgage loan originator in the same manner as is required of its
other licensees. If the temporary licensee's employment or
association with the sponsor is terminated, the sponsor shall
notify the division of financial institutions of the termination
through the nationwide mortgage licensing system and registry.
Upon the division's receipt of the notice, the sponsor shall no
longer be held responsible for the conduct of the temporary
licensee.
(F) The superintendent may, in accordance with Chapter 119.
of the Revised Code, adopt rules necessary for the implementation
and operation of this section.
Sec. 1321.538. If the "Secure and Fair Enforcement for
Mortgage Licensing Act of 2008," 122 Stat. 2810, 12 U.S.C. 5101,
as amended, is modified after the effective date of this section,
or any regulation, statement, or position is adopted under that
act, to permit states to issue a temporary mortgage loan
originator license to a registered mortgage loan originator, the
superintendent shall, in accordance with section 111.15 of the
Revised Code, adopt rules the superintendent considers necessary
and appropriate to issue a temporary license to a registered
mortgage loan originator.
Sec. 1322.02. (A)(1) No person, on the person's own behalf
or on behalf of any other person, shall act 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 this state. A registrant shall maintain an
office location in this state for the transaction of business as a
mortgage broker in this state.
(2) No person shall act or hold that person's self out as a
mortgage broker under the authority or name of a registrant or
person exempt from sections 1322.01 to 1322.12 of the Revised Code
without first having obtained a certificate of registration from
the superintendent for every office to be maintained by the person
for the transaction of business as a mortgage broker in this
state.
(B)(1) No individual shall act as a loan originator without
first having obtained a license from the superintendent. A loan
originator shall be employed by or associated with a mortgage
broker or any person or entity listed in division (G)(2) of
section 1322.01 of the Revised Code, but shall not be employed by
or associated with more than one mortgage broker or person or
entity at any one time.
(2) An individual acting under the individual's authority as
a registered loan originator shall not be required to be licensed
under division (B)(1) of this section.
(3) An individual who holds a valid temporary loan originator
license issued pursuant to section 1322.042 of the Revised Code
may engage in the business of a loan originator in accordance with
sections 1322.01 to 1322.12 of the Revised Code during the term of
the temporary license.
(C)(1) No person acting as a mortgage broker or loan
originator shall fail to register with, and maintain a valid
unique identifier issued by, the nationwide mortgage licensing
system and registry.
(2) No person shall use a mortgage broker's or loan
originator's unique identifier for any purpose other than as set
forth in the "Secure and Fair Enforcement for Mortgage Licensing
Act of 2008," 122 Stat. 2810, 12 U.S.C. 5101.
Sec. 1322.042. (A) As used in this section:
(1) "Out-of-state loan originator" means an individual to
whom both of the following apply:
(a) The individual holds a valid loan originator license, or
comparable authority, issued pursuant to the law of any other
state of the United States.
(b) The individual is registered, fingerprinted, and
maintains a unique identifier through the nationwide mortgage
licensing system and registry.
(2) "Sponsor" means a registrant or entity described in
division (G)(2) of section 1322.01 of the Revised Code that
employs or is associated with an applicant for a temporary loan
originator license and, during the term of the applicant's
temporary license, covers the applicant under its corporate surety
bond or requires the applicant to obtain and maintain a corporate
surety bond.
(B) The superintendent of financial institutions may, in
accordance with this section, issue to an out-of-state loan
originator a temporary loan originator license that enables the
licensee to engage in the business of a loan originator while the
individual completes the requirements necessary to meet the
conditions set forth in section 1322.041 of the Revised Code for a
loan originator license. A temporary loan originator license shall
be valid for a term of not more than one hundred twenty days from
the date of issuance. A temporary loan originator license may not
be renewed.
(C) An application for a temporary loan originator license
shall be in writing, under oath, and in a form that meets the
requirements of the nationwide mortgage licensing system and
registry. The application shall be accompanied by a nonrefundable
application fee, the amount of which shall be determined by the
superintendent in rule, and a certification that, as of the date
of application, the applicant meets the following conditions:
(1) The applicant has at least two years of experience in the
field of residential mortgage lending in the five years
immediately preceding the date of application for the temporary
loan originator license.
(2) The applicant has not previously applied for a temporary
loan originator license in this state.
(3) The applicant has not had a loan originator license, or
comparable authority, revoked in any governmental jurisdiction.
For purposes of division (C)(3) of this section, a subsequent
formal vacation of such a revocation shall not be considered a
revocation.
(4) The applicant has not been convicted of, or pleaded
guilty or nolo contendere to, any of the following in a domestic,
foreign, or military court:
(a) During the seven-year period immediately preceding the
date of application, a misdemeanor involving theft or any felony;
(b) At any time prior to the date of application, a felony
involving an act of fraud, dishonesty, a breach of trust, theft,
or money laundering.
For purposes of division (C)(4) of this section, any
conviction for which the applicant has received a pardon shall not
be considered a conviction.
(D) The superintendent shall issue a temporary loan
originator license to the applicant if the superintendent finds
that all of the following conditions are met:
(1) The application is accompanied by the application fee and
the certification described in division (C) of this section.
(2) The applicant is registered, fingerprinted, and has a
valid unique identifier through the nationwide mortgage licensing
system and registry as of the date of application.
(3) The applicant has authorized the nationwide mortgage
licensing system and registry to obtain a credit report for
submission to the superintendent.
(4) The applicant has a sponsor that certifies employment of,
or association with, the applicant and has signed the application.
(E) The sponsor of a temporary licensee shall have an
affirmative duty to supervise the conduct of each temporary loan
originator in the same manner as is required of its other
licensees. If the temporary licensee's employment or association
with the sponsor is terminated, the sponsor shall notify the
division of financial institutions of the termination through the
nationwide mortgage licensing system and registry. Upon the
division's receipt of the notice, the sponsor shall no longer be
held responsible for the conduct of the temporary licensee.
(F) The superintendent may, in accordance with Chapter 119.
of the Revised Code, adopt rules necessary for the implementation
and operation of this section.
Sec. 1322.043. If the "Secure and Fair Enforcement for
Mortgage Licensing Act of 2008," 122 Stat. 2810, 12 U.S.C. 5101,
as amended, is modified after the effective date of this section,
or any regulation, statement, or position is adopted under that
act, to permit states to issue a temporary loan originator license
to a registered loan originator, the superintendent shall, in
accordance with section 111.15 of the Revised Code, adopt rules
the superintendent considers necessary and appropriate to issue a
temporary license to a registered loan originator.
Section 2. That existing sections 1109.22, 1304.55, 1321.52,
and 1322.02 of the Revised Code are hereby repealed.
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