DAR File No. 28498

Commerce, Real Estate

R162-205

Residential Mortgage Unprofessional Conduct

NOTICE OF PROPOSED RULE

DAR File No.: 28498
Filed: 02/08/2006, 12:42
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose for the rule change is to provide that principal lending managers of a licensed entity are responsible to supervise not only the licensees of that entity but also any unlicensed support staff.

Summary of the rule or change:

Failing to exercise reasonable supervision over the activities of any unlicensed staff is added as an act that constitutes unprofessional conduct.

State statutory or constitutional authorization for this rule:

Subsections 61-2c-103(3)(d) and 61-2c-301(1)(k)

Anticipated cost or savings to:

the state budget:

None--The state budget is not impacted by a requirement that the principal lending manager of a licensed mortgage entity must supervise not only the licensees of that entity but also the unlicensed staff of the entity.

local governments:

None--Local governments are not entities that engage in the residential mortgage business that is regulated by the Division of Real Estate. Therefore, a requirement that affects the principal lending manager of a licensed mortgage entity does not affect local governments.

other persons:

The only other persons who are affected by this rule are licensed mortgage entities and their managers. The current manager of an entity is a "control person." The control person currently is responsible for supervising the licensee of the entity and the entity's unlicensed staff. Effective May 1, 2006, the "control person" of an entity will be replaced by a new licensed category, the "principal lending manager." It will neither save nor cost licensed entities any money for their new manager, the principal lending manager, to have the same supervisory responsibility as their old manager, the control person.

Compliance costs for affected persons:

The only persons who will be affected by this rule will be licensed mortgage entities and their managers. Their new manager, the "principal lending manager," will have the same supervisory responsibility as their old manager, the "control person." This will not result in any increased compliance costs for the entity.

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

This rule filing clarifies the provisions regarding unprofessional conduct to include the principal lending manager's duty to supervise unlicensed staff members. Because it is a clarification of existing standards, no fiscal impact to businesses is anticipated as a result of this filing. Francine A. Giani, Executive Director

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:

03/31/2006

This rule may become effective on:

04/01/2006

Authorized by:

Derek Miller, 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) 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) charging for services not actually performed;

(d) 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[.]; and

(g) in the case of a principal lending manager, failing to exercise reasonable supervision over the activities of any unlicensed staff of the entity.

KEY: residential mortgage loan origination

Date of Enactment or Last Substantive Amendment: [October 7, 2004]2006

Authorizing, and Implemented or Interpreted Law: 61-2c-301(1)[(i)](k)

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.