DAR File No. 29516

Commerce, Real Estate

R162-203

Change to Residential Mortgage Licensure Statement

NOTICE OF PROPOSED RULE

DAR File No.: 29516
Filed: 02/14/2007, 05:01
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

It is necessary to update the rule to conform with statutory changes made by S.B. 178 (2004 General Session) and S.B. 172 (2005 General Session), which replaced the concept of an unlicensed "Control Person" for a licensed mortgage entity with a licensed "Principal Lending Manager" effective 05/01/2006. It is also necessary to close a loophole that would allow a mortgage officer whose license was inactivated because of failing to comply with the examination required by H.B. 277 (2003 General Session) to reactivate the license without passing the examination. (DAR NOTES: S.B. 178 (2004) is found at Chapter 297, Laws of Utah 2004, and was effective 05/03/2004. S.B. 172 (2005) is found at Chapter 199, Laws of Utah 2005, and was effective 05/02/2005. H.B. 277 (2003) is found at Chapter 243, Laws of Utah 2003, and was effective 01/01/2004.)

Summary of the rule or change:

The rule is changed to delete references to "Control Person" and to substitute "Principal Lending Manager" where applicable. A new Subsection R162-203-5(203.5.1) is also added to close a loophole that might allow a person whose license was inactivated for failure to take and pass the mortgage licensing examination to activate the license without taking the examination.

State statutory or constitutional authorization for this rule:

Subsection 61-2c-103(3)(a)(i)

Anticipated cost or savings to:

the state budget:

Any cost or savings to the State budget are attributable to H.B. 277 (2003), S.B. 178 (2004), and S.B. 172 (2005) and not to these changes updating the rule to conform to those statutory changes.

local governments:

Any cost or savings to local governments are attributable to H.B. 277 (2003), S.B. 178 (2004), and S.B. 172 (2005) and not to these changes updating the rule to conform to those statutory changes.

other persons:

Any cost or savings to other persons are attributable to H.B. 277 (2003), S.B. 178 (2004), and S.B. 172 (2005) and not to these changes updating the rule to conform to those statutory changes.

Compliance costs for affected persons:

The only persons who are affected by these rule changes are licensed mortgage entities, those persons who were formerly "control persons," those persons who are "principal lending managers," and mortgage loan officers who have failed to take and pass the mortgage licensing examination and had their licenses inactivated as a result. However, any costs incurred by these parties in complying with the rule changes are attributable to H.B. 277 (2003), S.B. 178 (2004), and S.B. 172 (2005) and not to these changes updating the rule to conform to those statutory changes.

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

This rule filing updates the rule with references to principal lending managers; it clarifies the examination requirement for those activating an inactive license; and makes other technical and clarifying amendments. No fiscal impact to businesses is anticipated. 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:

Commerce
Real Estate
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY UT 84111-2316

Direct questions regarding this rule to:

Shelley Wismer at the above address, by phone at 801-366-0145, by FAX at 801-366-0315, 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:

04/02/2007

This rule may become effective on:

04/10/2007

Authorized by:

Derek Miller, Director

R162. Commerce, Real Estate.

R162-203. Changes to Residential Mortgage Licensure Statement.

R162-203-1. Status Changes.

203.1. A licensee shall notify the Division within ten working days of any status change. Status changes are effective on the date the properly executed forms and non-refundable fees are received by the Division. Notice must be on the forms required by the Division.

203.1.1 Change in Entity. If a change in a licensed entity results in the creation of a new legal entity, the new entity may not operate under the license issued to the previous entity. If the change of partners in a partnership, either by the addition or withdrawal of partners, creates a new legal entity, the new entity may not operate under the license issued by the Division to the previous partnership. The dissolution of a corporation, partnership, limited liability company, association, or other entity that holds a license issued by the Division terminates that license.

203.1.1.1 Notification of Change in Entity. The [control person]principal lending manager of a licensed entity shall provide written notification to the Division of any change in the entity that will create a new legal entity or that will cause the dissolution of the entity prior to the effective date of the change.

203.1.2. Change of name requires submission of official documentations such as a marriage certificate, divorce decree, or driver's license.

203.1.3. Change of business, home address or mailing address requires written notification. A post office box without a street address is unacceptable as a business or home address. The licensee may designate any address to be used as a mailing address.

203.1.4. Change of name of a licensed entity shall be accompanied by evidence that the new name has been approved by the Division of Corporations and Commercial Code, Department of Commerce.

203.1.5. Change of [control person]principal lending manager of a licensed entity requires notice from the entity in the form required by the Division, signed by both the terminating [control person]principal lending manager and the new [control person]principal lending manager, and the applicable change fee.

 

R162-203-2. [Entity ]Affiliation with Principal Lending Manager.

203.2.1 A[n individual] mortgage officer licensed under the Utah Residential Mortgage Practices Act shall notify the Division, on the form required by the Division, of the [entity for which]principal lending manager on whose behalf that individual mortgage officer shall conduct residential mortgage lending before acting on behalf of that [entity]principal lending manager.

203.2.[1]2. Transfers. Prior to transferring from one [entity]principal lending manager to another, or from one branch office to another, the licensee must mail, deliver, or electronically transmit to the Division written notice of the transfer on the form required by the Division.

 

R162-203-3. Unavailability of Licensee.

203.3.1 Change in license affiliation of Mortgage Officers. If a mortgage officer is not available to properly execute the form required to terminate the license affiliation of the mortgage officer with a [licensed entity]principal lending manager, the [control person]principal lending manager [of the entity ]may still terminate the mortgage officer's license affiliation with the [entity]principal lending manager, provided a letter advising the mortgage officer of the termination is mailed by the [control person]principal lending manager [of the entity ]by certified mail to the last known address of the mortgage officer. A verified copy of the letter and proof of mailing by certified mail shall be attached to the form required to terminate the mortgage officer's license affiliation with the [entity]principal lending manager when the form is submitted to the Division.

203.3.1.1 If a mortgage officer's principal lending manager is not available to properly execute the form required to terminate the license affiliation of the mortgage officer with a principal lending manager, the mortgage officer may still terminate the mortgage officer's license affiliation with the principal lending manager, provided the mortgage officer sends to the principal lending manager by certified mail to the last known address of the principal lending manager a letter advising the principal lending manager of the mortgage officer's resignation. A verified copy of the letter and proof of mailing by certified mail shall be attached to the form required to terminate the mortgage officer's license affiliation with the principal lending manager when the form is submitted to the Division.

203.3.2 [Control Person]Change in Entity Affiliation of Principal Lending Manager. If [control person]a principal lending manager who will no longer be the [control person designated by the]principal lending manager of an entity is not available to properly execute the form that is required by the Division to substitute one [control person]principal lending manager for the other, the change in [control person]principal lending manager may still be made by the entity, provided a letter advising of the change is signed by a person who is legally authorized to make staffing decisions on behalf of the entity and mailed by certified mail to the last known address of the unavailable person. A verified copy of the letter and proof of mailing by certified mail shall be attached to the form required by the Division to substitute one [control person]principal lending manager for another when the form is submitted to the Division.

 

R162-203-4. Inactivation.

203.4 To voluntarily inactivate a license, the licensee shall deliver, mail, or electronically transmit to the Division a written request for license inactivation on the form required by the Division, which form shall have been signed by both the licensee and the licensee's [control person]principal lending manager.

203.4.1 The [control person]principal lending manager of the entity with which a mortgage officer is licensed may terminate the mortgage officer's license affiliation with the entity without the mortgage officer's consent, known as an "involuntarily inactivation" of the mortgage officer's license by complying with R162-203.3.1.

 

R162-203-5. Activation.

203.5 All licensees changing to active status must submit to the Division:

(a) the applicable non-refundable activation fee;

(b) a written request for activation on the form required by the Division; and

(c) if the licensee was on inactive status at the time of the most recent renewal, proof of successful completion of the number of hours of continuing education that would have been required to renew had the licensee been on active status at the time of the licensee's most recent renewal. To qualify as continuing education for activation, all continuing education hours submitted must have been completed within twenty-four months prior to applying to activate.

203.5.1 In addition to the requirements of Section 203.5, any licensee who was licensed prior to January 1, 2005, but whose license was inactivated by the Division for failure to submit proof by January 1, 2005 of having passed the examination required by Section 61-2c-202(4)(a)(i)(D), shall submit to the Division proof of having passed that examination before the Division will activate the individual's license.

 

KEY: residential mortgage loan origination

Date of Enactment or Last Substantive Amendment: [March 9, 2006]2007

Notice of Continuation: December 13, 2006

Authorizing, and Implemented or Interpreted Law: 61-2c-205(3)