This filing was published in the 06/15/2007, issue, Vol. 2007, No. 12, of the Utah State Bulletin.
Commerce, Real Estate
Residential Mortgage Unprofessional Conduct
NOTICE OF PROPOSED RULE
DAR File No.: 29997
Filed: 05/31/2007, 10:18
Received by: NL
Purpose of the rule or reason for the change:
The purpose of this amendment is: 1) to add to the list of unprofessional conduct ordering services from third party service providers such as appraisers, insurance agents, etc. in connection with the origination of residential mortgage loans and then failing to pay for those services; 2) to add a new subsection to the rule setting forth standards of good conduct; and 3) to list in the new Section R162-205-2, the standard for disclosure of licensed status to borrowers and how to document compliance with that standard.
Summary of the rule or change:
Subsection R162-205-1(205-1-3) is added defining as unprofessional conduct the ordering of mortgage-related services and then failing to pay for those services. A new written disclosure of licensed status will be required, and a mortgage officer will be required to document compliance with this disclosure requirement by placing a copy of the mortgage officer's license and the written disclosure of licensed status in each loan file.
State statutory or constitutional authorization for this rule:
Anticipated cost or savings to:
the state budget:
None--Identifying another type of behavior as "unprofessional conduct" has no impact on the State budget, nor does specifying that a written disclosure of license status must be made to potential borrowers and that documentation related to this disclosure be placed in the loan file.
None--Local governments do not act as mortgage brokers or mortgage loan officers. Therefore, a rule requiring these persons to pay for services ordered has no impact on local governments, nor does a rule requiring written disclosure of licensed status and documentation that the written disclosure has been made.
The only persons who are affected by defining as unprofessional conduct the failure to pay for mortgage-related services that one has ordered are the mortgage loan officer who has ordered the service and the third-party service provider who has provided the service. The mortgage loan officer is already contractually obligated to pay for services ordered, so this rule change would not impose an additional financial obligation on the mortgage loan officer. The third party service providers may benefit from this rule change because the mortgage officers may be more likely to voluntarily pay them for services ordered. With respect to the change requiring a written disclosure of licensed status and keeping proof of the disclosure in each mortgage loan file, the only persons who would be affected by this requirement would be the mortgage entities and mortgage loan officers who would have to comply with this requirement. The requirement would cost them, at most, a few cents on each loan file for the cost of an additional form and a xerox copy of the mortgage officer's license.
Compliance costs for affected persons:
As stated above, the only persons who would incur costs to comply with these rule changes would be the mortgage entities or individual mortgage loan officers who would need to make one additional written disclosure to potential borrowers, and who would need to keep a copy of this disclosure and a license copy in each mortgage loan file. The paper costs of this should be minimal, amounting to no more than a few cents for each loan file.
Comments by the department head on the fiscal impact the rule may have on businesses:
This rule filing clarifies that failure to pay for mortgage-related services from third party providers constitutes unprofessional conduct. It also adds a requirement for mortgage officers to provide written disclosure of their licensed status to their clients and to maintain a copy of the written disclosure in each loan file. No fiscal impact to businesses is anticipated beyond those discussed in the rule summary. 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
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 email@example.com
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:
This rule may become effective on:
Derek Miller, Director
R162. Commerce, Real Estate.
R162-205. Residential Mortgage [
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 part[ ies] appraisal fees, inspection fees, credit reporting
fees, insurance premiums, or similar fees which have been collected from a
(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;
(f)] making any alteration to any
appraisal of real property;
(g)] in the case of a principal lending manager, failing to exercise
reasonable supervision over the activities of any unlicensed staff of the
(h)] unless acting as a real estate
licensee and not as a mortgage licensee:
(i)] providing a buyer or seller of
real estate with comparative market analysis or otherwise assisting a buyer or
seller to determine the offering price or sales price of real estate;
(ii)] representing or assisting a buyer
or seller of real estate in negotiations concerning a possible sale of real estate,
except that a mortgage licensee may advise a borrower about the consequences
that the terms of a purchase agreement may have on the terms and availability
of various mortgage products;
performing any other acts that require a real estate license under Title
61, Chapter 2;
(iv)] advertising the sale of real
estate by use of any advertising medium, except that a mortgage licensee may:
advertise real estate owned by the licensee as a "for sale by
(2)] provide advertising to a property
owner who has not signed an agency agreement with a real estate licensee and is
selling the real estate "for sale by owner", so long as the
advertising provides clear and distinguishable identification, contact
information, function and responsibility of both the property owner and the
mortgage licensee; or
advertise in conjunction with a real estate brokerage, so long as the
advertising provides clear and distinguishable identification, contact
information, function and responsibility of both the real estate licensee and
the mortgage licensee.
KEY: residential mortgage loan origination
Enactment or Last Substantive Amendment:
October 11, 2006]
Notice of Continuation: December 13, 2006
Authorizing, and Implemented or Interpreted Law: 61-2c-301(1)(k)
Text to be deleted is struck through and surrounded by brackets (e.g., [
example]). Text to be added is underlined (e.g., ). Older browsers may not depict some or any of these attributes on the screen or when the document is printed.
For questions regarding the content or application of this rule, please contact Shelley Wismer at the above address, by phone at 801-366-0145, by FAX at 801-366-0315, or by Internet E-mail at firstname.lastname@example.org
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.
Last modified: 06/13/2007 11:53 AM