ENROLLED
       2011 Legislature            CS for CS for SB 1316, 1st Engrossed
       
       
       
       
       
       
                                                             20111316er
    1  
    2         An act relating to loan processing; amending s.
    3         494.001, F.S.; creating and revising definitions;
    4         deleting a redundant definition; amending s. 494.0011,
    5         F.S.; specifying rulemaking powers of the Financial
    6         Services Commission; amending s. 494.00115, F.S.;
    7         providing an exemption from regulation under ch. 494,
    8         F.S., for certain persons regulated under ch. 475,
    9         F.S.; amending s. 494.00255, F.S.; including in-house
   10         loan processors in disciplinary provisions; amending
   11         s. 494.00331, F.S.; providing that specified
   12         provisions do not apply to a licensed contract loan
   13         processor who has on file with the office a
   14         declaration of intent to act solely as a contract loan
   15         processor; deleting a definition; providing
   16         restrictions on employment of persons licensed as in
   17         house loan processors; amending s. 494.0035, F.S.;
   18         clarifying provisions concerning the operation of
   19         mortgage brokers; amending s. 494.0038, F.S.; revising
   20         provisions relating to disclosure of settlement
   21         charges and loan terms; amending s. 494.00421, F.S.;
   22         revising an agency reference in the mortgage broker
   23         agreement; providing that a borrower may contact the
   24         Office of Financial Regulation rather than the
   25         Department of Financial Services regarding any
   26         complaints against a loan originator; amending s.
   27         494.00612, F.S.; requiring that in order to renew a
   28         mortgage lender license a mortgage lender must
   29         authorize the Nationwide Mortgage Licensing System and
   30         Registry to obtain an independent credit report on
   31         each of the mortgage lender’s control persons;
   32         amending s. 494.0067, F.S.; requiring each mortgage
   33         lender to submit certain reports to the registry as
   34         may be required; providing an effective date.
   35  
   36  Be It Enacted by the Legislature of the State of Florida:
   37  
   38         Section 1. Subsections (1), (14), (25), and (26) of section
   39  494.001, Florida Statutes, are amended, new subsections (5),
   40  (11), and (17) are added to that section, present subsections
   41  (5) through (9) are renumbered as subsections (6) through (10),
   42  respectively, present subsections (10) through (14) are
   43  renumbered as subsections (12) through (16), respectively,
   44  present subsections (15) through (24) are renumbered as
   45  subsections (18) through (27), respectively, and present
   46  subsections (26) through (34) are renumbered as subsections (28)
   47  through (36), respectively, to read:
   48         494.001 Definitions.—As used in ss. 494.001-494.0077, the
   49  term:
   50         (1) “Borrower” means a person obligated to repay a mortgage
   51  loan and includes, but is not limited to, a coborrower or,
   52  cosignor, or guarantor.
   53         (5) “Contract loan processor” means an individual who is
   54  licensed under part II of this chapter as a loan originator, who
   55  is an independent contractor for a mortgage broker or mortgage
   56  lender, and who engages only in loan processing.
   57         (11) “In-house loan processor” means an individual who is
   58  an employee of a mortgage broker or a mortgage lender who
   59  engages only in loan processing.
   60         (16)(14) “Loan originator” means an individual who,
   61  directly or indirectly, solicits or offers to solicit a mortgage
   62  loan, accepts or offers to accept an application for a mortgage
   63  loan, negotiates or offers to negotiate the terms or conditions
   64  of a new or existing mortgage loan on behalf of a borrower or
   65  lender, processes a mortgage loan application, or negotiates or
   66  offers to negotiate the sale of an existing mortgage loan to a
   67  noninstitutional investor for compensation or gain. The term
   68  includes an individual who is required to be licensed as a loan
   69  originator under the activities of a loan originator as that
   70  term is defined in the S.A.F.E. Mortgage Licensing Act of 2008,
   71  and an individual acting as a loan originator pursuant to that
   72  definition is acting as a loan originator for purposes of this
   73  definition. The term does not include an employee of a mortgage
   74  broker or mortgage lender whose duties are limited to who
   75  performs only administrative or clerical tasks, including
   76  quoting available interest rates, physically handling a
   77  completed application form, or transmitting a completed
   78  application form to a lender on behalf of a prospective
   79  borrower.
   80         (17) “Loan processing” means:
   81         (a) Receiving, collecting, distributing, and analyzing
   82  information common for the processing of a mortgage loan; or
   83         (b) Communicating with a consumer to obtain information
   84  necessary for the processing of a mortgage loan if such
   85  communication does not include offering or negotiating loan
   86  rates or terms, or counseling consumers about residential
   87  mortgage loan rates or terms.
   88         (25) “Person” has the same meaning as in s. 1.01.
   89         (28)(26) “Principal loan originator” means the licensed
   90  loan originator in charge of, and responsible for, the operation
   91  of a mortgage lender or mortgage broker, including all of the
   92  activities of the mortgage lender’s or mortgage broker’s loan
   93  originators, in-house loan processors, and branch managers,
   94  whether employees or independent contractors.
   95         Section 2. Subsection (2) of section 494.0011, Florida
   96  Statutes, is amended to read:
   97         494.0011 Powers and duties of the commission and office.—
   98         (2) To administer ss. 494.001-494.0077, The commission may
   99  adopt rules to administer parts I, II, and III of this chapter,
  100  including rules:
  101         (a) Requiring electronic submission of any forms,
  102  documents, or fees required by this act.
  103         (b) Relating to compliance with the S.A.F.E. Mortgage
  104  Licensing Act of 2008, including rules to:
  105         1. Require loan originators, mortgage brokers, mortgage
  106  lenders, and branch offices to register through the registry.
  107         2. Require the use of uniform forms that have been approved
  108  by the registry, and any subsequent amendments to such forms if
  109  the forms are substantially in compliance with the provisions of
  110  this chapter. Uniform forms that the commission may adopt
  111  include, but are not limited to:
  112         a. Uniform Mortgage Lender/Mortgage Broker Form, MU1.
  113         b. Uniform Mortgage Biographical Statement & Consent Form,
  114  MU2.
  115         c. Uniform Mortgage Branch Office Form, MU3.
  116         d. Uniform Individual Mortgage License/Registration &
  117  Consent Form, MU4.
  118         3. Require the filing of forms, documents, and fees in
  119  accordance with the requirements of the registry.
  120         4. Prescribe requirements for amending or surrendering a
  121  license or other activities as the commission deems necessary
  122  for the office’s participation in the registry.
  123         5. Prescribe procedures that allow a licensee to challenge
  124  information contained in the registry.
  125         6. Prescribe procedures for reporting violations of this
  126  chapter and disciplinary actions on licensees to the registry.
  127         (c) Establishing time periods during which a loan
  128  originator, mortgage broker, or mortgage lender license
  129  applicant under part II or part III is barred from licensure due
  130  to prior criminal convictions of, or guilty or nolo contendere
  131  pleas by, any of the applicant’s control persons, regardless of
  132  adjudication.
  133         1. The rules must provide:
  134         a. Permanent bars for felonies involving fraud, dishonesty,
  135  breach of trust, or money laundering;
  136         b. A 15-year disqualifying period for felonies involving
  137  moral turpitude;
  138         c. A 7-year disqualifying period for all other felonies;
  139  and
  140         d. A 5-year disqualifying period for misdemeanors involving
  141  fraud, dishonesty, or any other act of moral turpitude.
  142         2. The rules may provide for an additional waiting period
  143  due to dates of imprisonment or community supervision, the
  144  commitment of multiple crimes, and other factors reasonably
  145  related to the applicant’s criminal history.
  146         3. The rules may provide for mitigating factors for crimes
  147  identified in sub-subparagraph 1.b. However, the mitigation may
  148  not result in a period of disqualification less than 7 years.
  149  The rule may not mitigate the disqualifying periods in sub
  150  subparagraphs 1.a., 1.c., and 1.d.
  151         4. An applicant is not eligible for licensure until the
  152  expiration of the disqualifying period set by rule.
  153         5. Section 112.011 is not applicable to eligibility for
  154  licensure under this part.
  155         Section 3. Paragraph (f) is added to subsection (1) of
  156  section 494.00115, Florida Statutes, to read:
  157         494.00115 Exemptions.—
  158         (1) The following are exempt from regulation under this
  159  part and parts II and III of this chapter.
  160         (f) A person who performs only real estate brokerage
  161  activities and is licensed or registered in this state under
  162  part I of chapter 475, unless the person is compensated by a
  163  lender, a mortgage broker, or other loan originator or by an
  164  agent of such lender, mortgage broker, or other loan originator.
  165  The term “real estate brokerage activity” has the same meaning
  166  as in the federal Secure and Fair Enforcement for Mortgage
  167  Licensing Act of 2008.
  168         Section 4. Subsections (3), (4), (5), and (6) of section
  169  494.00255, Florida Statutes, are amended, and paragraph (m) of
  170  subsection (1) of that section is reenacted, to read:
  171         494.00255 Administrative penalties and fines; license
  172  violations.—
  173         (1) Each of the following acts constitutes a ground for
  174  which the disciplinary actions specified in subsection (2) may
  175  be taken against a person licensed or required to be licensed
  176  under part II or part III of this chapter:
  177         (m) In any mortgage transaction, violating any provision of
  178  the federal Real Estate Settlement Procedures Act, as amended,
  179  12 U.S.C. ss. 2601 et seq.; the federal Truth in Lending Act, as
  180  amended, 15 U.S.C. ss. 1601 et seq.; or any regulations adopted
  181  under such acts.
  182         (3) A mortgage broker or mortgage lender, as applicable, is
  183  subject to the disciplinary actions specified in subsection (2)
  184  for a violation of subsection (1) by:
  185         (a) A control person of the mortgage broker or mortgage
  186  lender; or
  187         (b) A loan originator employed by or contracting with the
  188  mortgage broker or mortgage lender; or
  189         (c) An in-house loan processor who is an employee of the
  190  mortgage broker or mortgage lender.
  191         (4) A principal loan originator of a mortgage broker is
  192  subject to the disciplinary actions specified in subsection (2)
  193  for violations of subsection (1) by a loan originator or an in
  194  house loan processor in the course of an association with the
  195  mortgage broker if there is a pattern of repeated violations by
  196  the loan originator or in-house loan processor or if the
  197  principal loan originator has knowledge of the violations.
  198         (5) A principal loan originator of a mortgage lender is
  199  subject to the disciplinary actions specified in subsection (2)
  200  for violations of subsection (1) by a loan originator or an in
  201  house loan processor in the course of an association with a
  202  mortgage lender if there is a pattern of repeated violations by
  203  the loan originator or in-house loan processor or if the
  204  principal loan originator has knowledge of the violations.
  205         (6) A branch manager is subject to the disciplinary actions
  206  specified in subsection (2) for violations of subsection (1) by
  207  a loan originator or an in-house loan processor in the course of
  208  an association with the mortgage broker or mortgage lender if
  209  there is a pattern of repeated violations by the loan originator
  210  or in-house loan processor or if the branch manager has
  211  knowledge of the violations.
  212         Section 5. Section 494.00331, Florida Statutes, is amended
  213  to read:
  214         494.00331 Loan originator and loan processor employment.—
  215         (1) LOAN ORIGINATORS.—An individual may not act as a loan
  216  originator unless he or she is an employee of, or an independent
  217  contractor for, a mortgage broker or a mortgage lender, and may
  218  not be employed by or contract with more than one mortgage
  219  broker or mortgage lender, or either simultaneously.
  220         (2) CONTRACT LOAN PROCESSORS.—Subsection (1) However, this
  221  provision does not apply to a contract loan processor who has a
  222  declaration of intent to act solely as a contract loan processor
  223  on file with the office. The declaration of intent must be on a
  224  form as prescribed by commission rule any licensed loan
  225  originator who acts solely as a loan processor and contracts
  226  with more than one mortgage broker or mortgage lender, or either
  227  simultaneously.
  228         (2) For purposes of this section, the term “loan processor”
  229  means an individual who is licensed as a loan originator who
  230  engages only in:
  231         (a) The receipt, collection, distribution, and analysis of
  232  information common for the processing or underwriting of a
  233  residential mortgage loan; or
  234         (b) Communication with consumers to obtain the information
  235  necessary for the processing or underwriting of a loan, to the
  236  extent that such communication does not include offering or
  237  negotiating loan rates or terms or does not include counseling
  238  consumers about residential mortgage loan rates or terms.
  239         (3) A person may not act as a loan processor unless the
  240  person is licensed as a loan originator under this chapter and
  241  has on file with the office a declaration of intent to engage
  242  solely in loan processing. The declaration of intent must be on
  243  such form as prescribed by the commission by rule.
  244         (a)(4) A loan originator that currently has a declaration
  245  of intent to engage solely in loan processing on file with the
  246  office may withdraw his or her declaration of intent to engage
  247  solely in loan processing. The withdrawal of declaration of
  248  intent must be on such form as prescribed by commission rule.
  249         (b)(5) A declaration of intent or a withdrawal of
  250  declaration of intent is effective upon receipt by the office.
  251         (c)(6) The fee earned by a contract loan processor may be
  252  paid to the company that employs the loan processor without
  253  violating the restriction in s. 494.0025(7) requiring fees or
  254  commissions to be paid to a licensed mortgage broker or mortgage
  255  lender or a person exempt from licensure under this chapter.
  256         (3) IN-HOUSE LOAN PROCESSORS.—An individual may not act as
  257  an in-house loan processor unless he or she is an employee of a
  258  mortgage broker or a mortgage lender and may not be employed by
  259  more than one mortgage broker or mortgage lender, or either,
  260  simultaneously. An in-house loan processor must work at the
  261  direction of and be subject to the supervision and instruction
  262  of a loan originator licensed under this part.
  263         Section 6. Subsection (1) of section 494.0035, Florida
  264  Statutes, is amended to read:
  265         494.0035 Principal loan originator and branch manager for
  266  mortgage broker.—
  267         (1) Each mortgage broker must be operated by a principal
  268  loan originator who shall have full charge, control, and
  269  supervision of the mortgage broker business. The principal loan
  270  originator must have been licensed as a loan originator for at
  271  least 1 year before being designated as the principal loan
  272  originator, or must demonstrate to the satisfaction of the
  273  office that he or she has been actively engaged in a mortgage
  274  related mortgage broker-related business for at least 1 year
  275  before being designated as a principal loan originator. Each
  276  mortgage broker must keep the office informed of the person
  277  designated as the principal loan originator as prescribed by
  278  commission rule. If the designation is inaccurate, the mortgage
  279  broker business shall be deemed to be operated under the full
  280  charge, control, and supervision of each officer, director, or
  281  ultimate equitable owner of a 10-percent or greater interest in
  282  the mortgage broker, or any other person in a similar capacity.
  283  A loan originator may not be a principal loan originator for
  284  more than one mortgage broker at any given time.
  285         Section 7. Paragraph (c) of subsection (3) of section
  286  494.0038, Florida Statutes, is amended to read:
  287         494.0038 Loan origination and mortgage broker fees and
  288  disclosures.—
  289         (3) At the time a written mortgage broker agreement is
  290  signed by the borrower or forwarded to the borrower for
  291  signature, or at the time the mortgage broker business accepts
  292  an application fee, credit report fee, property appraisal fee,
  293  or any other third-party fee, but at least 3 business days
  294  before execution of the closing or settlement statement, the
  295  mortgage broker shall disclose in writing to any applicant for a
  296  mortgage loan the following information:
  297         (c) A good faith estimate that discloses settlement charges
  298  and loan terms, signed and dated by the borrower, which
  299  discloses the total amount of each of the fees the borrower may
  300  reasonably expect to pay if the loan is closed, including, but
  301  not limited to, fees earned by the mortgage broker, lender fees,
  302  third-party fees, and official fees, together with the terms and
  303  conditions for obtaining a refund of such fees, if any.
  304         1. Any amount collected in excess of the actual cost shall
  305  be returned within 60 days after rejection, withdrawal, or
  306  closing.
  307         2. At the time a good faith estimate is provided to the
  308  borrower, the loan originator must identify in writing an
  309  itemized list that provides the recipient of all payments
  310  charged the borrower, which, except for all fees to be received
  311  by the mortgage broker, may be disclosed in generic terms, such
  312  as, but not limited to, paid to lender, appraiser, officials,
  313  title company, or any other third-party service provider. This
  314  requirement does not supplant or is not a substitute for the
  315  written mortgage broker agreement described in subsection (1).
  316  The disclosure required under this subparagraph must be signed
  317  and dated by the borrower.
  318         Section 8. Paragraph (a) of subsection (7) of section
  319  494.00421, Florida Statutes, is amended to read:
  320         494.00421 Fees earned upon obtaining a bona fide
  321  commitment.—Notwithstanding the provisions of ss. 494.001
  322  494.0077, any mortgage broker which contracts to receive a loan
  323  origination fee from a borrower upon obtaining a bona fide
  324  commitment shall accurately disclose in the mortgage broker
  325  agreement:
  326         (7)(a) The following statement, in at least 12-point
  327  boldface type immediately above the signature lines for the
  328  borrowers:
  329         “You are entering into a contract with a mortgage broker to
  330  obtain a bona fide mortgage loan commitment under the same terms
  331  and conditions as stated hereinabove or in a separate executed
  332  good faith estimate form. If the mortgage broker obtains a bona
  333  fide commitment under the same terms and conditions, you will be
  334  obligated to pay the loan origination fees even if you choose
  335  not to complete the loan transaction. If the provisions of s.
  336  494.00421, Florida Statutes, are not met, the loan origination
  337  fee can only be earned upon the funding of the mortgage loan.
  338  The borrower may contact the Office of Financial Regulation
  339  Department of Financial Services, Tallahassee, Florida,
  340  regarding any complaints that the borrower may have against the
  341  loan originator. The telephone number of the office department
  342  is: ...(insert telephone number)....”
  343         Section 9. Paragraph (e) of subsection (1) of section
  344  494.00612, Florida Statutes, is amended to read:
  345         494.00612 Mortgage lender license renewal.—
  346         (1) In order to renew a mortgage lender license, a mortgage
  347  lender must:
  348         (e) Authorize the registry to obtain an independent credit
  349  report on each of the mortgage lender’s control persons lender
  350  from a consumer reporting agency, and transmit or provide access
  351  to the report to the office. The cost of the credit report shall
  352  be borne by the licensee.
  353         Section 10. Subsection (13) is added to section 494.0067,
  354  Florida Statutes, to read:
  355         494.0067 Requirements of mortgage lenders.—
  356         (13) Each mortgage lender shall submit to the registry
  357  reports of condition which are in a form and which contain such
  358  information as the registry may require.
  359         Section 11. This act shall take effect July 1, 2011.