126th General Assembly
The Conference Committee recommends the bill
as passed by the Senate with the following changes:
|
Senate |
House |
Conference Committee |
Offenses that may disqualify a mortgage broker, loan officer, or real
estate appraiser license, permit, or certification applicant |
In addition to the
criminal offenses that under existing law may exclude an applicant from
receiving a mortgage broker certificate or loan officer license, adds that
the Superintendent must also find that the applicant has not pled guilty to
or been convicted of a violation of existing or former law of this state, any
other state, or the United States that is substantially equivalent to any of
the criminal offenses listed (R.C.
1322.04 and 1322.041). Also, prohibits the
Superintendent from issuing or renewing a real estate appraiser certificate,
license, or registration to any person who has been convicted or pled guilty
to certain criminal offenses (R.C.
4763.05(H)(2) and 4763.06(A)). |
Maintains these provisions
from the Senate version, and adds a specific clause prohibiting the
Superintendent from granting a certificate of registration as a mortgage
broker to any applicant who has received a felony or misdemeanor conviction
of theft and stipulates that no person acting as a mortgage broker is exempt
from the registration requirements of the Mortgage Broker Law on the basis of
prior work as a mortgage broker (R.C.
1322.03). |
House version, but removes
a clause from the House bill that prohibited the Superintendent from granting
a certificate of registration as a mortgage broker to any applicant who has
received a felony or misdemeanor conviction of theft (R.C. 1322.03). |
Prepayment penalties for refinancing penalties, generally |
No provision. |
Prohibits penalties for
the prepayment or refinancing of any mortgage obligation of less than $50,000
issued by a mortgage broker, loan officer, or nonbank mortgage lender (R.C. 1343.011). |
House version, but
increases from $50,000 to $75,000 the minimum size of a residential mortgage
for which prepayment or refinancing penalties may be charged, and provides
for the minimum loan amount to be adjusted by the annual percentage change in
the consumer price index. The
Department of Commerce must publish the adjusted amounts on its web
site. (R.C. 1343.011.) |
Entities exempt from Mortgage Broker Law |
No provision. |
In addition to the
financial institutions and their affiliates that current law exempts from the
requirements of the Mortgage Broker Law, exempts credit union service
organizations. Specifically, defines
an "affiliate" as an entity that controls, is controlled by, or is
under common control with the exempted financial institution (would also
include credit union service organizations), and is subject to oversight from
various federal regulators (R.C.
1322.02). |
House with technical
revision (R.C. 1322.02(C)(1)(a)). |
Mortgage broker and loan officer education requirements |
No provision. |
Requires any person who
applies for a mortgage broker certificate or loan officer license on or after
January 1, 2007 to meet certain qualifying education requirements, which
include 24 hours of classroom instruction within the preceding ten years
(broken down: 8-real estate
finance/lending; 8-Ohio real estate, federal civil rights law; 4‑real
estate appraisal; and 4‑ethics).
Furthermore, requires that applicants, in lieu of actual submission of
transcripts, maintain, for five years, transcript records substantiating
successful completion of the pre-license education requirements for
inspection by the Superintendent.
Also, the Superintendent may require an applicant to submit a
"statement" affirming the existence of such transcripts and makes
same available for inspection if required (R.C. 1322.03 and 1322.031). |
Keeps House requirement
for 24‑hour pre-license education requirements, but modifies course
content requirements (R.C. 1322.03
and 1322.031). |
Mortgage loan origination disclosure statement |
Mortgage brokers currently
are required to deliver a mortgage loan origination disclosure statement
(MLODS) to a buyer within three business days after taking an application for
a loan. Among other things, the MLODS
must include a description of the method by which the fee to be paid by the
buyer to the mortgage broker will be calculated. Adds that, the MLODS also must provide a "good faith
estimate" of the total amount of that fee. |
In addition to the new
requirements contained in the Senate bill, requires a mortgage broker to
provide a copy of any credit score and report obtained regarding the buyer
for the purpose of the mortgage loan application. Requires a mortgage broker to deliver a good faith estimate
that discloses the amount or range of charges for the specific settlement
services the buyer is likely to incur.
The good faith estimate must meet the requirements of the federal Real
Estate Settlement Procedures Act and include a specifically defined
notice that advises the nature of the relationship between the buyer and the
mortgage broker, specific warnings, and the conditions for termination of the
agreement (R.C. 1322.062 and
1322.063). |
House version with an
additional specification that the registrant shall deliver to the buyer, a
copy of any "non-proprietary or publicly available" credit report
(R.C. 1322.062 and 1322.063). |
Prohibited acts, mortgage brokers |
Prohibits mortgage brokers
and loan officers from failing to "timely" (defined as within 24
hours of the change or before the loan closes, whichever is the earlier)
inform the buyer (1) of any "material change" (defined in bill) in
the terms of the loan and (2) if the estimated cash out available to the
buyer changes by more than 10% (R.C.
1322.064);
and from promising to refinance a loan in the future at a lower interest rate
or with more favorable terms unless the promise is set forth in writing and
is initialed by the buyer (R.C.
1322.07). |
Rather than require
mortgage brokers and loan officers to timely inform the buyer if the
estimated cash out ((2) in the Senate bill) available to the buyer changes by
more than 10%, requires buyers to be informed if any fees payable to the
broker or lender increase by more than 10% or $100, whichever is greater (R.C. 1322.064). |
House version. |
Influencing an appraiser's judgment |
Prohibits a broker or loan
officer, registrant, or applicant or any other person from knowingly
compensating, instructing, inducing, coercing, or intimidating, or attempting
to compensate, instruct, induce, coerce, or intimidate, a person licensed or
certified under the Real Estate Appraisers Law for the purpose of corrupting
or improperly influencing their judgment.
A violation of this prohibition is made a fifth degree felony, and a
buyer injured by a violation may bring an action for the recovery of damages (R.C. 1322.07, 1322.99, 4763.12, and 4763.99). |
Modifies the Senate
prohibition related to improperly influencing a real estate appraisal to
prohibit any mortgage broker or real estate appraiser from knowingly
instructing, influencing, bribing, coercing, or extorting a person certified,
licensed, or registered as a real estate appraiser. |
Senate version. |
Mortgage broker ownership interest in a title insurance or appraisal
company |
Prohibits a mortgage
broker, and any member of the mortgage broker's immediate family, from owning
or controlling a majority interest in a title insurance company or appraisal
company. This prohibition does not
apply to any mortgage broker, or any member of the mortgage broker's
immediate family, who--on the bill's effective date--owns or controls a
majority interest in a title insurance company or appraisal company as long
as the broker or family member must not increase the ownership interest. The Superintendent, as an alternative to
suspending the broker's registration or imposing a fine for commission of any
of the various criminal offenses listed may require divestiture of the
ownership interest (R.C. 1322.074). |
Removes the prohibitions
against ownership interest in a title insurance company but maintains the
prohibition against ownership interest in an appraisal company (R.C. 1322.074). |
House version. |
Title agents prohibited practices |
No provision. |
No provision. |
Prohibits a title
insurance agent from engaging in the following acts, which are declared to be
unfair and deceptive acts or practices in violation of the Consumer Sales
Practices Act: (1) knowingly
coerce or wrongfully instruct a consumer to enter into a mortgage loan, (2)
knowingly fail to disclose to the consumer that the consumer does not have to
close on a mortgage loan, (3) knowingly make a material misrepresentation to
the consumer regarding the terms of a mortgage loan, (4) knowingly make a
material misrepresentation to the consumer regarding the terms of a mortgage
loan (R.C. 3953.35). |
Mortgage broker referrals to title insurance or
appraisal companies |
Prohibits mortgage brokers
or loan officers from referring a buyer to a title insurance company or to an
appraisal company, if the mortgage broker or loan officer, or a member of the
immediate families, has an ownership or investment interest in the company or
any compensation arrangement with the company. Also, prohibits knowingly entering into an arrangement or
scheme, including a cross-referral arrangement with such companies (R.C. 1322.075). |
Removes the prohibition
against referring a buyer to a specific title insurance company and maintains
the prohibition against a mortgage broker referring a buyer to an appraisal
company. A mortgage broker, however,
is permitted to refer a buyer to any settlement service provider, including
any title insurance company if the buyer is provided with a written notice
disclosing any business relationship, or ownership interest (R.C. 1322.075). |
House version. |
Fiduciary duty and lender responsibility |
Stipulates that, with
respect to a mortgage loan transaction, a mortgage broker, loan officer, as
well as a nonbank mortgage lender when the consumer has less than $25,000 net
worth, are fiduciaries of the buyer and must use their best efforts to
further the interest of the buyer, including complying with the buyer's
reasonable and lawful instructions and acting with reasonable care, skill,
and diligence on behalf of the buyer.
Additionally, the duty cannot be waived or modified, however, in the
case of a nonbank lender, this duty cannot be construed to obligate the
lender to seek more favorable loan terms or make referrals to a
non-affiliated lending institution (R.C. 1322.081 and 1349.41). |
Removes the fiduciary
requirements in favor of a requirement that, a mortgage broker or loan
officer has a fiduciary duty with respect
to any funds received from or on behalf of the buyer and must follow
reasonable and lawful instructions from the buyer, act with reasonable skill,
care, and diligence, and make reasonable efforts with lenders with whom the
registrant or licensee regularly does business to secure a loan that is
reasonably advantageous to the borrower.
Also adds that, if a buyer is approved for more than one loan product
by more than one lender, the registrant or licensee must present each option
to the buyer (R.C.
1322.081). |
Stipulates that a mortgage
broker or loan officer, in addition to duties imposed by other statutes or
common law, shall do all of the following:
(1) safeguard and account for any money handled for the borrower, (2)
follow reasonable and lawful instructions from the borrower, (3) act with
reasonable skill, care, and diligence, (4) act in good faith and with fair
dealing in any transaction, practice or course of business in connection with
the brokering or originating of any mortgage loan, and (5) make reasonable
efforts to secure a mortgage loan, from lenders with whom the registrant or
licensee regularly does business, with rates, charges, and repayment terms that
are advantageous to the borrower.
Wholesale lenders (companies that enter into transactions with
borrowers exclusively through unaffiliated third party mortgage brokers), are
exempted from the above responsibilities (R.C. 1322.081). |
Prehearing suspensions |
Authorizes the
Superintendent of Financial Institutions to suspend, without a prior hearing,
the certificate of registration of a mortgage broker, or the license of a
loan officer, who is convicted of or pleads guilty to certain criminal
violations, or the certificate of registration of a mortgage broker who
violates the existing surety bond requirement. Subsequently, pursuant to the Administrative Procedure Act, the
Superintendent may revoke a registration.
(R.C.
1322.10.) |
Adds authorization to the
Superintendent to, without a hearing, require a registrant or licensee, or an
applicant, in lieu of school transcripts, to provide a written statement that
they have met the pre-license education requirements, and conduct an
investigation of qualifying education transcripts, unannounced, at any
registrant's or licensee's place of business. Also, requires the Superintendent to suspend the certificate of
registration or license of a registrant or licensee who has failed to meet
the continuing education requirements of the Mortgage Broker/Loan Officer Law
(R.C. 1322.10). |
House version. |
Enforcement actions, damages (mortgage brokers and
loan officers) |
Alters the enforcement
authority for the Mortgage Brokers/Loan Officers Law by, under specific
circumstances, permitting the county prosecuting attorney to bring an
action. Also permits the county
prosecuting attorney to initiate criminal proceedings, and permits the
Attorney General to initiate criminal proceedings when the prosecuting
attorney agrees not to. |
Maintains the provisions
of the Senate bill. |
House version. |
Enforcement actions, damages (covered loans) |
Modifies the enforcement
authority for sections 1349.26 and 1349.27 of the Revised Code, which govern
creditor disclosures and practices regarding covered loans. Under certain circumstances, the county
prosecuting attorney, the attorney general, or the superintendent of
financial institutions may bring an action.
The attorney general may specifically bring an action with the same rights,
privileges, and powers that the attorney general has under the Consumer Sales
Practices Act (R.C. 1349.31). |
Same as Senate version. |
Maintains this provision,
but specifies that the county prosecuting attorney or the superintendent of
financial institutions may only bring an action, under this section, against
mortgage brokers, loan officers, or nonbank mortgage lenders (R.C. 1349.31). |
Definition of "covered loan" under the Consumer Credit
Mortgage Loan Law |
No provision. |
Existing Ohio law includes
the definition of a "covered loan" under the federal Home Owner
Equity Protection Act by reference.
This definition is modified to mean a loan related to a consumer
credit transaction that is secured by the consumer's principal dwelling and
either of one of two arrangements for financing exist: (1) a first-lien loan with an annual
percentage rate of more than 8%, or a subordinate-lien loan with a rate of
more than 10% above the yield on treasury securities having comparable
periods of maturity, or (2) a loan where the total points and fees exceed 5%
of the total loan amount, or 6% of the total loan amount including all fees
paid if the transaction contains a yield spread premium, are considered
covered loans (R.C. 1349.25). |
Expands the House version
definition of "covered loan" to also include "an open end
credit plan." Specifies that
"points and fees" do not include fees paid to a federal or state
government agency that insures payment of some portion of a home loan, such
as the federal housing administration and the United States department of veterans
affairs. Also, revises the points and
fees criteria for covered loans. (R.C. 1349.25.) |
Covered loans, prohibited acts |
No provision. |
No provision. |
Regarding covered loans,
prohibits a creditor (in addition to the prohibitions under current law) from
making a covered loan that increases the consumer's debt to a specified
level, without providing the appropriate disclosure and without verifying
that the consumer has received pre-purchase counseling from an approved
counseling service (R.C. 1349.27). |
CSPA, definition of
"consumer transaction" and application to loan officer, mortgage
broker, and nonbank mortgage lender |
Under the existing CSPA,
transactions excluded from
the definition of "consumer transaction" include, among other
things, transactions involving dealers in intangibles. Changes the definition of "consumer
transaction" so as to expressly include
transactions between certain loan officers, mortgage brokers, and
nonbank mortgage lenders and their customers thereby subjecting such
transactions to enforcement procedures by the Attorney General pursuant to
the CSPA. Transactions involving loan
officers, mortgage brokers, and nonbank lenders who work for a bank, savings
bank, savings and loan association, and a credit union, or a subsidiary or
affiliate of any of these, remain not covered under the CSPA (R.C. 1345.01). |
Restores the CSPA back to
current law, and establishes new consumer protections relative to certain
mortgage loans. Adds a separate
definition of "consumer transaction" to specifically apply to a
loan transaction between a loan officer, mortgage broker, or nonbank mortgage
lender and their customers. Without
limiting the scope of what the Superintendent of Financial Institutions may
by rule determine to be an unfair or deceptive act, adds a twenty-point
definition for an unfair or deceptive act or practice which applies only to
loan officers, mortgage brokers, and nonbank mortgage lenders (R.C. 1349.38). |
Alters the definition of
several terms from the Senate version for application within the Consumer
Sales Practices Act (R.C.
1345.01). |
CSPA, damages |
Consumers are currently
provided with a private right of action for violations of CSPA. In an individual action, a consumer may
rescind the transaction or recover the consumer's "damages." In certain circumstances, the consumer may
recover three times the amount of "actual damages" or $200,
whichever is greater, or recover "damages" in a class action. Specifies that, to be recoverable under
the CSPA, the consumer's damages must be "actual damages."
Additionally, changes from permissive to mandatory the awarding of
reasonable attorney's fees to the prevailing party if the consumer brought or
maintained an action that is groundless and filed or maintained the action in
bad faith (R.C.
1345.09). |
The bill returns CSPA to
existing law. |
Returns CSPA to existing
law, except that a provision from the Senate version, which provides that
revocation of the consumer transaction, in any action for rescission, is only
available to a consumer in an individual action and must occur not later than
the time limit permitted by the Truth in Lending Act, has been retained (R.C. 1345.09). |
Assignee liability |
Generally provides that no
claim or defense under the CSPA, except a claim or defense of rescission by a
consumer may be asserted by the Attorney General or any consumer
against an assignee or purchaser of a mortgage loan for value if any one of the following applies: (1) the violation was not committed by the assignee or purchaser after the assignment or
purchase, (2) the assignee or purchaser is not affiliated by common control with the seller of the loan at
the time of such assignment or purchase and the loan was not in default at the time of such assignment or purchase,
(3) the assignee or purchaser is a bank, savings bank, savings and loan
association, credit union, or credit union service organization organized
under the laws of this state, another state, or the United States; a
subsidiary of such a bank, savings bank, savings and loan association, or
credit union; or certain affiliates (R.C. 1345.091). |
Revises the provision
(which is transferred in the bill to the Consumer Credit Mortgage Loan
sections in the Revised Code--in Chapter 1349.), to provide that no claim or
defense by a consumer may be
asserted by the Attorney General or any consumer against an assignee or
purchaser of a mortgage loan for value unless any one of
the following applies: (1) the
violation was committed by the
assignee or purchaser before
the assignment or purchase, (2) the assignee or
purchaser is affiliated by
common control with the seller of the loan at the time of such assignment or
purchase and the loan was in
default at the time of such assignment or purchase. Does not exempt a claim or defense of rescission from the
options available to a consumer as is done with respect to the CSPA in Senate
version. (R.C. 1349.40.) |
Revises the House version
of this provision (which is transferred in the bill back to the Consumer
Sales Practices Act), to provide that no claim or defense may be asserted by
the Attorney General or any consumer against an assignee or purchaser of a
mortgage loan for value unless any one of the following applies: (1) the
violation was committed by the assignee or purchaser, (2) the assignee or
purchaser is affiliated by common control with the seller of the loan at the
time of such assignment or purchase (R.C.
1345.091). |
Financing of insurance |
No provision. |
Prohibits the financing of
insurance, although premiums calculated and paid on a monthly basis may not
be considered as financed by the lender (R.C. 1349.41). |
This provision from the
House bill has been included in the list of unconscionable acts under the
Consumer Sales Practices Act (R.C.
1345.031(B)(11)). |
Flipping |
No provision. |
Prohibits
"flipping." Defined as
making a consumer home loan that refinances an existing consumer home loan
when the new loan does not have a reasonable, tangible net benefit to the
borrower (R.C. 1349.41). |
This provision from the
House bill has been included in the list of unconscionable acts under the
Consumer Sales Practices Act (R.C.
1345.031(B)(12)). |
Electronic database of
enforcement actions |
Requires the Department of
Commerce to establish and maintain an electronic database accessible through
the internet that contains information on certain enforcement actions taken
by the Superintendent of Financial Institutions and the Attorney General
regarding noncompliance with the Mortgage Brokers/Loan Officers Law and the
Consumer Sales Practices Act (CSPA).
The Attorney General is required to submit the information related to
the CSPA to the Department on the first day of each January, April, July, and
October (R.C.
1349.43). |
Adds additional language that prohibits
confidential information from being included in the electronic database and
only administrative and judicial actions that are public records. |
House version. |
Consumer Finance Education
Board |
No provision. |
Creates the Consumer
Finance Education Board in the Department of Commerce. Among other things, the Board will create
a pilot program in financial literacy to be operated in the five Ohio
counties having the highest foreclosure rates and to mandate the development
of an education curriculum in financial literacy for elementary and secondary
school students. Also, creates a
financial literacy and counseling program that will be mandatory for any
consumer seeking a mortgage loan with origination fees greater than 5%, and
is funded through the Department of Commerce Consumer Finance Fund created
under R.C. 3121.21. (R.C. 1349.71 and 1349.72.) |
Maintains the House
provision for the Consumer Finance Education Board and the pilot program in
financial literacy. Modifies the
number of members, and the organizations represented, on both the Board and
the Advisory Committee. Removes the
requirement that the Board design a pilot program to develop an educational
curriculum for public schools (R.C.
1349.71 and 1349.72). |
Title insurance |
No provision. |
Requires title insurance
agents to notify purchasers of the availability of owner's title insurance
when issuing lender's title insurance in conjunction with a residential
mortgage loan (R.C.
3953.30). |
House version. |
Title agents prohibited practices |
No provision. |
Requires a title insurance
company to offer closing or settlement protection to the lender, borrower,
and seller of the property, and to any applicant for title insurance, which
shall indemnify those parties against the loss of settlement funds resulting
from certain specific acts (R.C.
3953.32). |
House version, also
prohibits a title insurance agent from engaging in the following acts, which
are declared to be unfair and deceptive acts or practices in violation of the
Consumer Sales Practices Act:
(1) knowingly coerce or wrongfully instruct a consumer to enter into a
mortgage loan, (2) knowingly fail to disclose to the consumer that the
consumer does not have to close on a mortgage loan, (3) knowingly make a
material misrepresentation to the consumer regarding the terms of a mortgage
loan, (4) knowingly make a material misrepresentation to the consumer
regarding the terms of a mortgage loan (R.C.
3953.35).
|
Real estate appraiser
experience |
No provision. |
Under current law, an
applicant for a residential real estate appraiser certificate or residential
real estate appraiser license must possess at least two years of experience
in real estate appraisal, or any equivalent experience the board
prescribes. Establishes that a
minimum of two years of classroom instruction and an associate's degree in the
field of real estate and real estate appraisal at an institution of higher
education will meet the necessary requirements (R.C. 4763.05). |
Senate version. |
Real estate appraiser
report to mortgage borrower |
No provision. |
Requires a copy of a real
estate appraisal done in connection with a mortgage loan be given to the
borrower and accompanied by a copy of the county auditor's current appraisal
of the property (R.C.
4763.12). |
Senate version. |
Effective date clause |
Stipulates that R.C.
sections 4763.13 and 4763.19, which require a license or certification to
perform a real estate appraisal for a mortgage loan, take effect six months
after the effective date (Section 3). |
Stipulates that the entire
act is to take effect on January 1, 2007 (Section 3). |
House version (January 1,
2007). |
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