DAR File No. 27352

Commerce, Real Estate

R162-205

Residential Mortgage Unprofessional Conduct

NOTICE OF PROPOSED RULE

DAR File No.: 27352
Filed: 08/16/2004, 01:49
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The changes to this rule prohibit practices which could harm the public such as: 1) Division of Real Estate investigators have learned of instances in which mortgage brokers have acted as unlicensed real estate agents and filled out purchase agreements; and 2) the investigators have also learned of instances in which a property has not appraised high enough and the mortgage broker has falsified the figures on the appraisal. By defining these acts as "unprofessional conduct", the Division will give mortgage brokers express notice that these acts are not permitted.

Summary of the rule or change:

"Unprofessional Conduct" by mortgage brokers will include filling out or altering any purchase agreements or altering any appraisal.

State statutory or constitutional authorization for this rule:

Subsection 61-2c-103(3)(d)

Anticipated cost or savings to:

the state budget:

None--Defining "unprofessional conduct" by mortgage brokers to include additional acts has no impact on the State budget, except that it will make it easier for the Division of Real Estate to take disciplinary action against licensees who engage in these bad practices, and therefore, there may be a slight savings in enforcement costs.

local governments:

None--The standards of conduct for mortgage brokers do not impact local government.

other persons:

None--Mortgage brokers are already prohibited by the real estate licensing law from acting as real estate agents and filling out purchase agreements. They are already prohibited by criminal statutes from falsifying documents. Adding these acts to the list of what is "unprofessional conduct" for mortgage broker therefore does not result in either costs or savings to other persons.

Compliance costs for affected persons:

None--Mortgage brokers should not currently be engaging in these practices for other reasons.

Comments by the department head on the fiscal impact the rule may have on businesses:

There appears to be no fiscal impact to businesses as a result of this rule filing, which codifies existing practice into the definition of "unprofessional conduct."

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Shelley Wismer at the above address, by phone at 801-530-6761, by FAX at 801-530-6749, or by Internet E-mail at swismer@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/01/2004

This rule may become effective on:

10/02/2004

Authorized by:

Dexter Bell, Director

RULE TEXT

R162. Commerce, Real Estate.

R162-205. Residential Mortgage Unprofessional Conduct.

R162-205-1. Residential Mortgage Unprofessional Conduct.

Unprofessional conduct includes the following acts:

(a) conducting the business of residential mortgage lending under any name other than a name under which the entity or individual conducting such business is licensed with the Division;

(b) [F]failing to remit to the appropriate third parties appraisal fees, inspection fees, credit reporting fees, insurance premiums, or similar fees which have been collected from a borrower;

(c) [C]charging for services not actually performed; [and]

(d) [C]charging a borrower more for third party services than the actual cost of those services[.];

(e) filling out or altering any Real Estate Purchase Contract or other contract for the sale of real property, or any addenda thereto; and

(f) making any alteration to any appraisal of real property.

KEY: residential mortgage loan origination

[April 12, ]2004

61-2c-301(1)(i)

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Shelley Wismer at the above address, by phone at 801-530-6761, by FAX at 801-530-6749, or by Internet E-mail at swismer@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.