Minnesota Legislature
HF 2600
1st Committee Engrossment - 86th Legislature (2009 - 2010) Posted on 03/19/2013 07:29pm
KEY: stricken = removed, old language.
underscored = added, new language.
1.2relating to financial institutions; providing for the licensing and regulation
1.3of an individual engaged in the business of a mortgage loan origination or
1.4the mortgage loan business; providing certain conforming and transitional
1.5provisions; appropriating money;amending Minnesota Statutes 2008, sections
1.658.04, subdivision 1; 58.08, by adding a subdivision; 58.09; 58.10, subdivision
1.71; 58.11; Minnesota Statutes 2009 Supplement, section 58.06, subdivision 2;
1.8proposing coding for new law as Minnesota Statutes, chapter 58A; repealing
1.9Minnesota Statutes 2009 Supplement, section 58.126.
1.10BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.13 Section 1. [58A.01] TITLE.
1.14This chapter may be cited as the "Minnesota Secure and Fair Enforcement for
1.15Mortgage Licensing Act of 2010" or "Minnesota S.A.F.E. Mortgage Licensing Act of
1.162010."
1.17 Sec. 2. [58A.02] DEFINITIONS.
1.18 Subdivision 1. Application. For purposes of this chapter, the definitions in
1.19subdivisions 2 to 15 have the meanings given them.
1.20 Subd. 2. Depository institution. "Depository institution" has the meaning given in
1.21United States Code, title 12, section 1813, and includes a credit union.
1.22 Subd. 3. Federal banking agencies. "Federal banking agencies" means the Board
1.23of Governors of the Federal Reserve System, the comptroller of the currency, the director
1.24of the Office of Thrift Supervision, the National Credit Union Administration, and the
1.25Federal Deposit Insurance Corporation.
2.1 Subd. 4. Immediate family member. "Immediate family member" means a spouse,
2.2child, sibling, a parent, grandparent, or grandchild. This includes stepparents, stepchildren,
2.3stepsiblings, and adoptive relationships.
2.4 Subd. 5. Individual. "Individual" means a natural person.
2.5 Subd. 6. Loan processor or underwriter. "Loan processor or underwriter" means
2.6an individual who performs clerical or support duties as an employee at the direction
2.7of and subject to the supervision and instruction of a person licensed or exempt from
2.8licensing under chapter 58. For purposes of this subdivision, the term "clerical or support
2.9duties" may include after the receipt of an application:
2.10(1) the receipt, collection, distribution, and analysis of information common for the
2.11processing or underwriting of a residential mortgage loan; and
2.12(2) communicating with a consumer to obtain the information necessary for the
2.13processing or underwriting of a loan, to the extent that the communication does not include
2.14offering or negotiating loan rates or terms, or counseling consumers about residential
2.15mortgage loan rates or terms.
2.16 Subd. 7. Mortgage loan originator. "Mortgage loan originator":
2.17(1) means an individual who for compensation or gain or in the expectation of
2.18compensation or gain:
2.19(i) takes a residential mortgage loan application; or
2.20(ii) offers or negotiates terms of a residential mortgage loan;
2.21(2) does not include an individual engaged solely as a loan processor or underwriter
2.22except as otherwise provided in section 58A.03, subdivision 3;
2.23(3) does not include a person or entity that only performs real estate brokerage
2.24activities and is licensed or registered according to Minnesota law, unless the person or
2.25entity is compensated by a lender, a mortgage broker, or other mortgage loan originator or
2.26by an agent of the lender, mortgage broker, or other mortgage loan originator; and
2.27(4) does not include a person or entity solely involved in extensions of credit relating
2.28to timeshare plans, as that term is defined in United States Code, title 11, section 101(53D).
2.29 Subd. 8. Nationwide Mortgage Licensing System and Registry. "Nationwide
2.30Mortgage Licensing System and Registry" means a mortgage licensing system developed
2.31and maintained by the Conference of State Bank Supervisors and the American
2.32Association of Residential Mortgage Regulators for the licensing and registration of
2.33licensed mortgage loan originators.
2.34 Subd. 9. Nontraditional mortgage product. "Nontraditional mortgage product"
2.35means a mortgage product other than a 30-year fixed rate mortgage loan.
3.1 Subd. 10. Person. "Person" means a natural person, corporation, company, limited
3.2liability company, partnership, or association.
3.3 Subd. 11. Real estate brokerage activity. "Real estate brokerage activity" means
3.4an activity that involves offering or providing real estate brokerage services to the public,
3.5including:
3.6(1) acting as a real estate agent or real estate broker for a buyer, seller, lessor,
3.7or lessee of real property;
3.8(2) bringing together parties interested in the sale, purchase, lease, rental, or
3.9exchange of real property;
3.10(3) negotiating, on behalf of a party, a portion of a contract relating to the sale,
3.11purchase, lease, rental, or exchange of real property other than in connection with
3.12providing financing with respect to the transaction;
3.13(4) engaging in an activity for which a person engaged in the activity is required to
3.14be registered or licensed as a real estate agent or real estate broker under any applicable
3.15law; and
3.16(5) offering to engage in any activity, or act in any capacity, described in clause
3.17(1), (2), (3), or (4).
3.18 Subd. 12. Registered mortgage loan originator. "Registered mortgage loan
3.19originator" means an individual who:
3.20(1) meets the definition of mortgage loan originator and is an employee of:
3.21(i) a depository institution;
3.22(ii) a subsidiary that is owned and controlled by a depository institution and
3.23regulated by a federal banking agency; or
3.24(iii) an institution regulated by the Farm Credit Administration; and
3.25(2) is registered with, and maintains a unique identifier through, the Nationwide
3.26Mortgage Licensing System and Registry.
3.27 Subd. 13. Residential mortgage loan. "Residential mortgage loan" means a loan
3.28primarily for personal, family, or household use that is secured by a mortgage, deed of
3.29trust, or other equivalent consensual security interest on a dwelling, as defined in United
3.30States Code, title 15, section 1602(v), or residential real estate upon which a dwelling is
3.31constructed or intended to be constructed.
3.32 Subd. 14. Residential real estate. "Residential real estate" means real property
3.33located in Minnesota, upon which a dwelling is constructed or is intended to be
3.34constructed.
4.1 Subd. 15. Unique identifier. "Unique identifier" means a number or other identifier
4.2assigned by protocols established by the Nationwide Mortgage Licensing System and
4.3Registry.
4.4 Sec. 3. [58A.03] LICENSE AND REGISTRATION REQUIRED.
4.5 Subdivision 1. Generally. An individual, unless specifically exempted from this
4.6chapter under subdivision 2, shall not engage in the business of a mortgage loan originator
4.7with respect to a dwelling located in this state without first obtaining and maintaining a
4.8license under this chapter. An individual may not engage in the mortgage loan business
4.9unless the individual is employed and supervised by an entity which is either licensed
4.10or exempt from licensing under chapter 58. A licensed mortgage loan originator must
4.11register with and maintain a valid unique identifier issued by the Nationwide Mortgage
4.12Licensing System and Registry.
4.13 Subd. 2. Exemptions. The following are exempt from this chapter:
4.14(1) a registered mortgage loan originator, when acting for an entity described in
4.15section 58A.02, subdivision 12, clause (1);
4.16(2) an individual who offers or negotiates terms of a residential mortgage loan with
4.17or on behalf of an immediate family member of the individual;
4.18(3) an individual who offers or negotiates terms of a residential mortgage loan
4.19secured by a dwelling that served as the individual's residence; and
4.20(4) a licensed attorney who negotiates the terms of a residential mortgage loan
4.21on behalf of a client as an ancillary matter to the attorney's representation of the client,
4.22unless the attorney is compensated by a lender, a mortgage broker, or other mortgage
4.23loan originator or by any agent of the lender, mortgage broker, or other mortgage loan
4.24originator.
4.25 Subd. 3. Independent contractor loan processors or underwriters. A loan
4.26processor or underwriter who is an independent contractor may not engage in the activities
4.27of a loan processor or underwriter unless the independent contractor loan processor
4.28or underwriter obtains and maintains a license under subdivision 1. An independent
4.29contractor loan processor or underwriter licensed as a mortgage loan originator must have
4.30and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing
4.31System and Registry.
4.32EFFECTIVE DATE.In order to facilitate an orderly transition to licensing and
4.33minimize disruption in the mortgage marketplace, the effective date for subdivision 1
4.34is July 31, 2010, or a later date approved by the Secretary of the U.S. Department of
5.1Housing and Urban Development, under the authority granted in Public Law 110-289,
5.2section 1508(a).
5.3 Sec. 4. [58A.04] STATE LICENSE AND REGISTRATION APPLICATION AND
5.4ISSUANCE.
5.5 Subdivision 1. Application form. An applicant for a license shall apply in a form
5.6as prescribed by the commissioner. The form must contain content as set forth by rule,
5.7instruction, or procedure of the commissioner and may be changed or updated as necessary
5.8by the commissioner in order to carry out the purposes of this chapter.
5.9 Subd. 2. Commissioner may establish relationships or contracts. In order
5.10to fulfill the purposes of this chapter, the commissioner is authorized to establish
5.11relationships or contracts with the Nationwide Mortgage Licensing System and Registry
5.12or other entities designated by the Nationwide Mortgage Licensing System and Registry to
5.13collect and maintain records and process transaction fees or other fees related to licensees
5.14or other persons subject to this chapter.
5.15 Subd. 3. Waive or modify requirements. For the purpose of participating in the
5.16Nationwide Mortgage Licensing System and Registry, the commissioner is authorized to
5.17waive or modify, in whole or in part, by rule or order, any or all of the requirements of
5.18this chapter and to establish new requirements as reasonably necessary to participate in
5.19the Nationwide Mortgage Licensing System and Registry.
5.20 Subd. 4. Background checks. In connection with an application for licensing as a
5.21mortgage loan originator, the applicant shall, at a minimum, furnish to the Nationwide
5.22Mortgage Licensing System and Registry information concerning the applicant's identity,
5.23including:
5.24(1) fingerprints for submission to the Federal Bureau of Investigation, and a
5.25governmental agency or entity authorized to receive the information for a state, national,
5.26and international criminal history background check; and
5.27(2) personal history and experience in a form prescribed by the Nationwide
5.28Mortgage Licensing System and Registry, including the submission of authorization for
5.29the Nationwide Mortgage Licensing System and Registry and the commissioner to obtain:
5.30(i) an independent credit report obtained from a consumer reporting agency
5.31described in United States Code, title 15, section 1681a(p); and
5.32(ii) information related to administrative, civil, or criminal findings by a
5.33governmental jurisdiction.
5.34 Subd. 5. Agent for purposes of requesting and distributing criminal
5.35information. For the purposes of this section and in order to reduce the points of
6.1contact which the Federal Bureau of Investigation may have to maintain for purposes of
6.2subdivision 4, clauses (1) and (2), the commissioner may use the Nationwide Mortgage
6.3Licensing System and Registry as a channeling agent for requesting information from and
6.4distributing information to the Department of Justice or any governmental agency.
6.5 Subd. 6. Agent for purposes of requesting and distributing noncriminal
6.6information. For the purposes of this section and in order to reduce the points of contact
6.7which the commissioner may have to maintain for purposes of subdivision 4, clause (2)(i)
6.8and (ii), the commissioner may use the Nationwide Mortgage Licensing System and
6.9Registry as a channeling agent for requesting and distributing information to and from any
6.10source so directed by the commissioner.
6.11 Sec. 5. [58A.045] TERM OF LICENSE AND FEES.
6.12 Subdivision 1. Term. Licenses for mortgage loan originators issued under this
6.13chapter expire on December 31 and are renewable on January 1 of each year after that date.
6.14 Subd. 2. Fees. The following fees must be paid to the commissioner:
6.15 (1) for a mortgage loan originator license, $90; and
6.16 (2) for a renewal mortgage loan originator license, $50.
6.17 Sec. 6. [58A.05] ISSUANCE OF LICENSE.
6.18The commissioner shall not issue a mortgage loan originator license unless the
6.19commissioner finds at a minimum, that:
6.20(1) the applicant has never had a mortgage loan originator license revoked in a
6.21governmental jurisdiction, except that a subsequent formal vacation of a revocation shall
6.22not be deemed a revocation;
6.23(2) the applicant has not been convicted of, or pled guilty or nolo contendere to, a
6.24felony in a domestic, foreign, or military court:
6.25(i) during the seven-year period preceding the date of the application for licensing
6.26and registration;
6.27(ii) at any time preceding the date of application, if the felony involved an act of
6.28fraud, dishonesty, or a breach of trust, or money laundering; or
6.29(iii) provided that a pardon of a conviction is not a conviction for purposes of this
6.30clause;
6.31(3) the applicant has demonstrated financial responsibility, character, and general
6.32fitness such as to command the confidence of the community and to warrant a
6.33determination that the mortgage loan originator will operate honestly, fairly, and efficiently
6.34within the purposes of this chapter. For purposes of this chapter, a person has shown that
7.1the person is not financially responsible when the person has shown a disregard in the
7.2management of the person's own financial condition. A determination that an individual
7.3has not shown financial responsibility may include, but is not limited to:
7.4(i) current outstanding judgments, except judgments solely as a result of medical
7.5expenses;
7.6(ii) current outstanding tax liens or other government liens and filings;
7.7(iii) foreclosures within the past three years; and
7.8(iv) a pattern of seriously delinquent accounts within the past three years;
7.9(4) the applicant has completed the prelicensing education requirement described
7.10in section 58A.06;
7.11(5) the applicant has passed a written test that meets the test requirement described
7.12in section 58A.07; and
7.13(6) the applicant has met the surety bond requirement as required under section
7.1458A.13.
7.15 Sec. 7. [58A.06] PRELICENSING AND RELICENSING EDUCATION OF
7.16LOAN ORIGINATORS.
7.17 Subdivision 1. Minimum educational requirements. In order to meet the
7.18prelicensing education requirement referred to in section 58A.05, clause (4), a person
7.19shall complete at least 20 hours of education approved according to subdivision 2, that
7.20includes at least:
7.21(1) three hours of federal law and regulations;
7.22(2) three hours of ethics, which includes instruction on fraud, consumer protection,
7.23and fair lending issues; and
7.24(3) two hours of training related to lending standards for the nontraditional mortgage
7.25product marketplace.
7.26 Subd. 2. Approved educational courses. For purposes of subdivision 1,
7.27prelicensing education courses must be reviewed, and approved by the Nationwide
7.28Mortgage Licensing System and Registry based upon reasonable standards. Review
7.29and approval of a prelicensing education course must include review and approval of
7.30the course provider.
7.31 Subd. 3. Approval of employer and affiliate educational courses. Nothing in
7.32this section precludes a prelicensing education course, as approved by the Nationwide
7.33Mortgage Licensing System and Registry, that is provided by the employer of the applicant
7.34or an entity that is affiliated with the applicant by an agency contract, or any subsidiary or
7.35affiliate of the employer or entity.
8.1 Subd. 4. Venue of education. Prelicensing education may be offered in a classroom,
8.2online, or by any other means approved by the Nationwide Mortgage Licensing System
8.3and Registry.
8.4 Subd. 5. Reciprocity of education. The prelicensing education requirements
8.5approved by the Nationwide Mortgage Licensing System and Registry in subdivision
8.61 for a state must be accepted as credit toward completion of prelicensing education
8.7requirements in Minnesota.
8.8 Subd. 6. Relicensing education requirements. A person previously licensed under
8.9this chapter after the effective date of this chapter applying to be licensed again must
8.10prove that the person has completed all of the continuing education requirements for
8.11the year in which the license was last held.
8.12 Sec. 8. [58A.07] TESTING OF LOAN ORIGINATORS.
8.13 Subdivision 1. Generally. In order to meet the written test requirement referred to
8.14in section 58A.05, clause (5), an individual shall pass, in accordance with the standards
8.15established under this section, a qualified written test developed by the Nationwide
8.16Mortgage Licensing System and Registry and administered by a test provider approved
8.17by the Nationwide Mortgage Licensing System and Registry based upon reasonable
8.18standards.
8.19 Subd. 2. Qualified test. A written test must not be treated as a qualified written
8.20test for purposes of subdivision 1 unless the test adequately measures the applicant's
8.21knowledge and comprehension in appropriate subject areas, including:
8.22(1) ethics;
8.23(2) federal law and regulation pertaining to mortgage origination;
8.24(3) state law and rule pertaining to mortgage origination; and
8.25(4) federal and state law and rule, including instruction on fraud, consumer
8.26protection, the nontraditional mortgage marketplace, and fair lending issues.
8.27 Subd. 3. Testing location. Northing in this section prohibits a test provider approved
8.28by the Nationwide Mortgage Licensing System and Registry from providing a test at the
8.29location of the employer of the applicant or the location of a subsidiary or affiliate of the
8.30employer of the applicant, or the location of an entity with which the applicant holds an
8.31exclusive arrangement to conduct the business of a mortgage loan originator.
8.32 Subd. 4. Minimum competence. (a) An individual is not considered to have
8.33passed a qualified written test unless the individual achieves a test score of not less than
8.3475 percent correct answers to questions.
9.1(b) An individual may retake a test three consecutive times with each consecutive
9.2taking occurring at least 30 days after the preceding test.
9.3(c) After failing three consecutive tests, an individual shall wait at least six months
9.4before taking the test again.
9.5(d) A licensed mortgage loan originator who fails to maintain a valid license for a
9.6period of five years or longer shall retake the test, not taking into account any time during
9.7which the individual is a registered mortgage loan originator.
9.8 Sec. 9. [58A.08] STANDARDS FOR LICENSE RENEWAL.
9.9 Subdivision 1. Generally. The minimum standards for license renewal for a
9.10mortgage loan originator include that the mortgage loan originator:
9.11(1) continues to meet the minimum standards for license issuance under section
9.1258A.05;
9.13(2) has satisfied the annual continuing education requirements described in section
9.1458A.09; and
9.15(3) has paid all required fees for renewal of the license.
9.16 Subd. 2. Failure to satisfy minimum standards of license renewal. The license of
9.17a mortgage loan originator failing to satisfy the minimum standards for license renewal
9.18expires. The commissioner may adopt procedures for the reinstatement of expired licenses
9.19consistent with the standards established by the Nationwide Mortgage Licensing System
9.20and Registry.
9.21 Sec. 10. [58A.09] CONTINUING EDUCATION FOR MORTGAGE LOAN
9.22ORIGINATORS.
9.23 Subdivision 1. Generally. In order to meet the annual continuing education
9.24requirements referred to in section 58A.08, subdivision 1, clause (2), a licensed mortgage
9.25loan originator shall complete at least eight hours of education approved according to
9.26subdivision 2 that includes at least:
9.27(1) three hours of federal law and regulations;
9.28(2) two hours of ethics, which includes instruction on fraud, consumer protection,
9.29and fair lending issues; and
9.30(3) two hours of training related to lending standards for the nontraditional mortgage
9.31product marketplace.
9.32 Subd. 2. Approved educational courses. For purposes of subdivision 1, continuing
9.33education courses must be reviewed and approved by the Nationwide Mortgage Licensing
10.1System and Registry based upon reasonable standards. Review and approval of a
10.2continuing education course must include review and approval of the course provider.
10.3 Subd. 3. Approval of employer and affiliate educational courses. Nothing in
10.4this section precludes an education course, as approved by the Nationwide Mortgage
10.5Licensing System and Registry, that is provided by the employer of the mortgage loan
10.6originator or an entity that is affiliated with the mortgage loan originator by an agency
10.7contract, or a subsidiary or affiliate of the employer or entity.
10.8 Subd. 4. Venue of education. Continuing education may be offered either in a
10.9classroom, online, or by other means approved by the Nationwide Mortgage Licensing
10.10System and Registry.
10.11 Subd. 5. Calculation of continuing education credits. A licensed mortgage loan
10.12originator:
10.13(1) except for subdivision 9 and section 58A.08, subdivision 2, may only receive
10.14credit for a continuing education course in the year in which the course is taken; and
10.15(2) may not take the same approved course in the same or successive years to meet
10.16the annual requirements for continuing education.
10.17 Subd. 6. Instructor credit. A licensed mortgage loan originator who is an approved
10.18instructor of an approved continuing education course may receive credit for the licensed
10.19mortgage loan originator's own annual continuing education requirement at the rate of
10.20two hours credit for every one hour taught.
10.21 Subd. 7. Reciprocity of education. A person having successfully completed the
10.22education requirements approved by the Nationwide Mortgage Licensing System and
10.23Registry in subdivision 1 for a state must be accepted as credit toward completion of
10.24continuing education requirements in Minnesota.
10.25 Subd. 8. Lapse in license. A licensed mortgage loan originator who subsequently
10.26becomes unlicensed must complete the continuing education requirements for the last year
10.27in which the license was held before a new or renewed license is issued.
10.28 Subd. 9. Deficiency. A person meeting the requirements of section 58A.08,
10.29subdivision 1, clauses (1) and (3), may make up a deficiency in continuing education as
10.30established by rule of the commissioner.
10.31 Sec. 11. [58A.10] AUTHORITY TO REQUIRE LICENSE.
10.32In addition to any other duties imposed upon the commissioner by law, the
10.33commissioner shall require mortgage loan originators to be licensed and registered
10.34through the Nationwide Mortgage Licensing System and Registry. In order to carry out
10.35this requirement, the commissioner may participate in the Nationwide Mortgage Licensing
11.1System and Registry. For this purpose, the commissioner may establish by rule or order
11.2requirements as necessary, including but not limited to:
11.3(1) background checks for:
11.4(i) criminal history through fingerprint or other databases;
11.5(ii) civil or administrative records;
11.6(iii) credit history; or
11.7(iv) other information as determined necessary by the Nationwide Mortgage
11.8Licensing System and Registry;
11.9(2) the payment of fees to apply for or renew licenses through the Nationwide
11.10Mortgage Licensing System and Registry;
11.11(3) the setting or resetting as necessary of renewal or reporting dates; and
11.12(4) requirements for amending or surrendering a license or other activities the
11.13commissioner considers necessary for participation in the Nationwide Mortgage Licensing
11.14System and Registry.
11.15 Sec. 12. [58A.11] NATIONWIDE MORTGAGE LICENSING SYSTEM AND
11.16REGISTRY INFORMATION CHALLENGE PROCESS.
11.17The commissioner shall establish a process that allows mortgage loan originators
11.18to challenge information entered into the Nationwide Mortgage Licensing System and
11.19Registry by the commissioner.
11.20 Sec. 13. [58A.12] ENFORCEMENT AUTHORITIES, VIOLATIONS, AND
11.21PENALTIES.
11.22(a) In order to ensure the effective supervision and enforcement of this chapter, the
11.23commissioner may, pursuant to chapter 14:
11.24(1) deny, suspend, revoke, condition, or decline to renew a license for a violation of
11.25this chapter, rules issued under this chapter, or order or directive entered under this chapter;
11.26(2) deny, suspend, revoke, condition, or decline to renew a license if an applicant
11.27or licensee fails at anytime to meet the requirements of section 58A.05 or 58A.08, or
11.28withholds information or makes a material misstatement in an application for a license
11.29or renewal of a license;
11.30(3) order restitution against persons subject to this chapter for violations of this
11.31chapter;
11.32(4) impose fines on persons subject to this chapter pursuant to paragraphs (b)
11.33to (d); and
11.34(5) issue orders or directives under this chapter as follows:
12.1(i) order or direct persons subject to this chapter to cease and desist from conducting
12.2business, including immediate temporary orders to cease and desist;
12.3(ii) order or direct persons subject to this chapter to cease any harmful activities or
12.4violations of this chapter, including immediate temporary orders to cease and desist;
12.5(iii) enter immediate temporary orders to cease business under a license or interim
12.6license issued pursuant to the authority granted under section 58A.03, subdivision 4, if
12.7the commissioner determines that the license was erroneously granted or the licensee is
12.8currently in violation of this chapter; and
12.9(iv) order or direct other affirmative action the commissioner considers necessary.
12.10(b) The commissioner may impose a civil penalty on a mortgage loan originator or
12.11person subject to this chapter, if the commissioner finds, on the record after notice and
12.12opportunity for hearing, that the mortgage loan originator or person subject to this chapter
12.13has violated or failed to comply with any requirement of this chapter or any rule prescribed
12.14by the commissioner under this chapter or order issued under authority of this chapter.
12.15(c) The maximum amount of penalty for each act or omission described in paragraph
12.16(b) is $25,000.
12.17(d) Each violation or failure to comply with any directive or order of the
12.18commissioner is a separate and distinct violation or failure.
12.19 Sec. 14. [58A.13] SURETY BOND REQUIRED.
12.20 Subdivision 1. Coverage, form, and rules. (a) Each mortgage loan originator must
12.21be covered by a surety bond meeting the requirements of this section. In the event that
12.22the mortgage loan originator is an employee or exclusive agent of a person subject to this
12.23chapter, the surety bond of the person subject to this chapter can be used in lieu of the
12.24mortgage loan originator's surety bond requirement.
12.25(b) The surety bond shall provide coverage for each mortgage loan originator in
12.26an amount as prescribed in subdivision 2.
12.27(c) The surety bond must be in a form as prescribed by the commissioner.
12.28 Subd. 2. Penal sum of surety bond. The penal sum of the surety bond must be
12.29maintained in an amount that reflects the dollar amount of loans originated as determined
12.30by the commissioner.
12.31 Subd. 3. Action on bond. When an action is commenced on a licensee's bond the
12.32commissioner may require the filing of a new bond.
12.33 Subd. 4. New bond. Immediately upon recovery upon any action on the bond
12.34the licensee shall file a new bond.
13.1 Sec. 15. [58A.14] CONFIDENTIALITY.
13.2 Subdivision 1. Protections. Except as otherwise provided in Public Law 110-289,
13.3section 1512, the requirements under chapter 13 or any federal law regarding the privacy
13.4or confidentiality of any information or material provided to the Nationwide Mortgage
13.5Licensing System and Registry, and any privilege arising under federal or state law,
13.6including the rules of any federal or state court, with respect to the information or material,
13.7continue to apply to the information or material after the information or material has been
13.8disclosed to the Nationwide Mortgage Licensing System and Registry. The information
13.9and material may be shared with all state and federal regulatory officials with mortgage
13.10industry oversight authority without the loss of privilege or the loss of confidentiality
13.11protections provided by chapter 13 or federal law.
13.12 Subd. 2. Agreements and sharing arrangements. For purposes of this section,
13.13the commissioner is authorized to enter agreements or sharing arrangements with
13.14other governmental agencies, the Conference of State Bank Supervisors, the American
13.15Association of Residential Mortgage Regulators, or other associations representing
13.16governmental agencies as established by rule or order of the commissioner.
13.17 Subd. 3. Nonapplicability of certain requirements. Information or material that is
13.18subject to a privilege or confidentiality under subdivision 1 is not subject to:
13.19(1) disclosure under any federal or state law governing the disclosure to the public of
13.20information held by an officer or an agency of the federal government or the respective
13.21state; or
13.22(2) subpoena or discovery, or admission into evidence, in any private civil action
13.23or administrative process, unless with respect to any privilege held by the Nationwide
13.24Mortgage Licensing System and Registry with respect to the information or material,
13.25the person to whom the information or material pertains waives, in whole or in part, in
13.26the discretion of the person, that privilege.
13.27 Subd. 4. Coordination with Minnesota Government Data Practices Act. Chapter
13.2813 relating to the disclosure of confidential supervisory information or any information or
13.29material described in subdivision 1 that is inconsistent with subdivision 1 is superseded by
13.30the requirements of this section.
13.31 Subd. 5. Public access to information. This section does not apply with respect to
13.32the information or material relating to the employment history of, and publicly adjudicated
13.33disciplinary and enforcement actions against, mortgage loan originators that are included
13.34in the Nationwide Mortgage Licensing System and Registry for access by the public.
13.35 Sec. 16. [58A.15] INVESTIGATION AND EXAMINATION AUTHORITY.
14.1 Subdivision 1. Generally. In addition to any authority allowed under this chapter,
14.2the commissioner may conduct investigations and examinations according to subdivisions
14.32 to 9.
14.4 Subd. 2. Authority to access information. For purposes of initial licensing, license
14.5renewal, license suspension, license conditioning, license revocation or termination, or
14.6general or specific inquiry or investigation to determine compliance with this chapter, the
14.7commissioner may access, receive and use any books, accounts, records, files, documents,
14.8information or evidence including but not limited to:
14.9(1) criminal, civil, and administrative history information, including nonconviction
14.10data;
14.11(2) personal history and experience information including independent credit reports
14.12obtained from a consumer reporting agency described in United States Code, title 15,
14.13section 1681a(p); and
14.14(3) any other documents, information, or evidence the commissioner considers
14.15relevant to the inquiry or investigation regardless of the location, possession, control, or
14.16custody of the documents, information, or evidence.
14.17 Subd. 3. Investigation, examination, and subpoena authority. For the purposes
14.18of investigating violations or complaints arising under this chapter, or for the purposes of
14.19examination, the commissioner may review, investigate, or examine a licensee, individual,
14.20or person subject to this chapter, as often as necessary in order to carry out the purposes
14.21of this chapter. The commissioner may direct, subpoena, or order the attendance of and
14.22examine under oath all persons whose testimony may be required about the loans or the
14.23business or subject matter of any such examination or investigation, and may direct,
14.24subpoena, or order such person to produce books, accounts, records, files, and any other
14.25documents the commissioner considers relevant to the inquiry.
14.26 Subd. 4. Availability of books and records. A licensee, individual, or person
14.27subject to this chapter shall make available to the commissioner upon request the books
14.28and records relating to the operations of the licensee, individual, or person subject to this
14.29chapter. The commissioner shall have access to the books and records and interview
14.30the officers, principals, mortgage loan originators, employees, independent contractors,
14.31agents, and customers of the licensee, individual, or person subject to this chapter
14.32concerning the licensee's, individual's, or person's business.
14.33 Subd. 5. Reports and other information as directed. A licensee, individual, or
14.34person subject to this chapter shall make or compile reports or prepare other information
14.35as directed by the commissioner in order to carry out the purposes of this section including
14.36but not limited to:
15.1(1) accounting compilations;
15.2(2) information lists and data concerning loan transactions in a format prescribed
15.3by the commissioner; or
15.4(3) other information the commissioner considers necessary to carry out the
15.5purposes of this section.
15.6 Subd. 6. Control access to records. In making an examination or investigation
15.7authorized by this chapter, the commissioner may control access to documents and records
15.8of the licensee or person under examination or investigation. The commissioner may
15.9take possession of the documents and records or place a person in exclusive charge of
15.10the documents and records in the place where they are usually kept. During the period of
15.11control, no individual or person shall remove or attempt to remove any of the documents
15.12and records except pursuant to a court order or with the consent of the commissioner.
15.13Unless the commissioner has reasonable grounds to believe the documents or records
15.14of the licensee have been, or are at risk of being, altered or destroyed for purposes of
15.15concealing a violation of this chapter, the licensee or owner of the documents and records
15.16has access to the documents or records as necessary to conduct its ordinary business affairs.
15.17 Subd. 7. Additional authority. In order to carry out the purposes of this section,
15.18the commissioner may:
15.19(1) retain attorneys, accountants, or other professionals and specialists as examiners,
15.20auditors, or investigators to conduct or assist in the conduct of examinations or
15.21investigations;
15.22(2) enter into agreements or relationships with other government officials or
15.23regulatory associations in order to improve efficiencies and reduce regulatory burden
15.24by sharing resources, standardized or uniform methods or procedures, and documents,
15.25records, information, or evidence obtained under this section;
15.26(3) use, hire, contract, or employ public or privately available analytical systems,
15.27methods, or software to examine or investigate the licensee, individual, or person subject
15.28to this chapter;
15.29(4) accept and rely on examination or investigation reports made by other
15.30government officials, within or without this state; or
15.31(5) accept audit reports made by an independent certified public accountant for the
15.32licensee, individual, or person subject to this chapter in the course of that part of the
15.33examination covering the same general subject matter as the audit and incorporate the
15.34audit report in the report of the examination, report of investigation or other writing of
15.35the commissioner.
16.1 Subd. 8. Effect of authority. The authority of this section remains in effect,
16.2whether a licensee, individual, or person subject to this chapter acts or claims to act under
16.3any licensing or registration law of this state, or claims to act without such authority.
16.4 Subd. 9. Withhold records. A licensee, individual, or person subject to
16.5investigation or examination under this section shall not knowingly withhold, abstract,
16.6remove, mutilate, destroy, or secrete any books, records, computer records, or other
16.7information.
16.8 Sec. 17. [58A.16] PROHIBITED ACTS AND PRACTICES.
16.9 Subdivision 1. Generally. It is a violation of this chapter for a person or individual
16.10subject to this chapter to:
16.11(1) directly or indirectly employ any scheme, device, or artifice to defraud or mislead
16.12borrowers or lenders or to defraud any person;
16.13(2) engage in any unfair or deceptive practice toward any person;
16.14(3) obtain property by fraud or misrepresentation;
16.15(4) solicit or enter into a contract with a borrower that provides in substance that the
16.16person or individual subject to this chapter may earn a fee or commission through "best
16.17efforts" to obtain a loan even though no loan is actually obtained for the borrower;
16.18(5) solicit, advertise, or enter into a contract for specific interest rates, points, or
16.19other financing terms unless the terms are actually available at the time of soliciting,
16.20advertising, or contracting;
16.21(6) conduct any business covered by this chapter without holding a valid license as
16.22required under this chapter, or assist or aide and abet any person in the conduct of business
16.23under this chapter without a valid license as required under this chapter;
16.24(7) fail to make disclosures as required by this chapter and any other applicable
16.25state or federal law or regulations;
16.26(8) fail to comply with this chapter or rules adopted under this chapter or fail
16.27to comply with any other state or federal law or regulations applicable to any business
16.28authorized or conducted under this chapter;
16.29(9) make, in any manner, any false or deceptive statement or representation
16.30including, with regard to the rates, points, or other financing terms or conditions for a
16.31residential mortgage loan; or engage in bait-and-switch advertising;
16.32(10) negligently make a false statement or knowingly and willfully make an omission
16.33of material fact in connection with any information or reports filed with a governmental
16.34agency or the Nationwide Mortgage Licensing System and Registry or in connection with
16.35an investigation conducted by the commissioner or another governmental agency;
17.1(11) make a payment, threat, or promise, directly or indirectly, to a person for the
17.2purposes of influencing the independent judgment of the person in connection with a
17.3residential mortgage loan, or make a payment threat or promise, directly or indirectly, to
17.4an appraiser of a property, for the purposes of influencing the independent judgment of the
17.5appraiser with respect to the value of the property;
17.6(12) collect, charge, attempt to collect or charge, or use or propose an agreement
17.7purporting to collect or charge a fee prohibited by this chapter;
17.8(13) cause or require a borrower to obtain property insurance coverage in an amount
17.9that exceeds the replacement cost of the improvements as established by the property
17.10insurer; or
17.11(14) fail to truthfully account for money belonging to a party to a residential
17.12mortgage loan transaction.
17.13 Subd. 2. Loan processor or underwriter activities. An individual engaging solely
17.14in loan processor or underwriter activities shall not represent to the public, through
17.15advertising or other means of communicating or providing information, including the use
17.16of business cards, stationery, brochures, signs, rate lists, or other promotional items, that
17.17the individual can or will perform any of the activities of a mortgage loan originator.
17.18 Sec. 18. [58A.17] MORTGAGE CALL REPORTS.
17.19A mortgage licensee shall submit to the Nationwide Mortgage Licensing System and
17.20Registry reports of condition, which must be in the form and contain the information the
17.21Nationwide Mortgage Licensing System and Registry requires.
17.22 Sec. 19. [58A.18] REPORT TO NATIONWIDE MORTGAGE LICENSING
17.23SYSTEM AND REGISTRY.
17.24The commissioner shall regularly report violations of this chapter, as well as
17.25enforcement actions and other relevant information, to the Nationwide Mortgage
17.26Licensing System and Registry subject to the provisions contained in section 58A.14.
17.27 Sec. 20. [58A.20] UNIQUE IDENTIFIER SHOWN.
17.28The unique identifier of any person originating a residential mortgage loan shall
17.29be clearly shown on all residential mortgage loan application forms, solicitations, or
17.30advertisements, including business cards or Web sites, and any other documents as
17.31established by rule or order of the commissioner.
17.32 Sec. 21. EFFECTIVE DATE.
18.1This article is effective July 31, 2010.
18.5 Section 1. Minnesota Statutes 2008, section 58.04, subdivision 1, is amended to read:
18.6 Subdivision 1. Residential mortgage originator licensing requirements. (a)
18.7No person shall act as a residential mortgage originator, or make residential mortgage
18.8loans without first obtaining a license from the commissioner according to the licensing
18.9procedures provided in this chapter.
18.10 (b) A licensee must be either a partnership, limited liability partnership, association,
18.11limited liability company, corporation, or other form of business organization, and must
18.12have and maintainat all times one of the following: approval as a mortgagee by either the
18.13federal Department of Housing and Urban Development or the Federal National Mortgage
18.14Association; a minimum net worth, net of intangibles, of at least $250,000; or a surety
18.15bondor irrevocable letter of credit in the amount of $50,000 amounts prescribed under
18.16section 58.08.Net worth, net of intangibles, must be calculated in accordance with
18.17generally accepted accounting principles.
18.18 (c) The following persons are exempt from the residential mortgage originator
18.19licensing requirements:
18.20 (1) a person who is not in the business of making residential mortgage loans and who
18.21makes no more than three such loans, with its own funds, during any 12-month period;
18.22 (2) a financial institution as defined in section58.02, subdivision 10 ;
18.23 (3) an agency of the federal government, or of a state or municipal government;
18.24 (4) an employee or employer pension plan making loans only to its participants;
18.25 (5) a person acting in a fiduciary capacity, such as a trustee or receiver, as a result of
18.26a specific order issued by a court of competent jurisdiction; or
18.27 (6) a person exempted by order of the commissioner.
18.28 Sec. 2. Minnesota Statutes 2009 Supplement, section 58.06, subdivision 2, is amended
18.29to read:
18.30 Subd. 2. Application contents. (a) The application must contain the name and
18.31complete business address or addresses of the license applicant. The license applicant
18.32must be a partnership, limited liability partnership, association, limited liability company,
18.33corporation, or other form of business organization, and the application must contain the
18.34names and complete business addresses of each partner, member, director, and principal
19.1officer. The application must also include a description of the activities of the license
19.2applicant, in the detail and for the periods the commissioner may require.
19.3 (b) A residential mortgage originator applicant must submitone of the following:
19.4(1) evidence which shows, to the commissioner's satisfaction, that either the federal
19.5Department of Housing and Urban Development or the Federal National Mortgage
19.6Association has approved the residential mortgage originator applicant as a mortgagee;
19.7(2) a surety bond or irrevocable letter of credit in the amount of not less than
19.8$50,000 in a form approved by the commissioner, issued by an insurance company or bank
19.9authorized to do so in this state. The bond or irrevocable letter of credit must be available
19.10for the recovery of expenses, fines, and fees levied by the commissioner under this chapter
19.11and for losses incurred by borrowers. The bond or letter of credit must be submitted with
19.12the license application, and evidence of continued coverage must be submitted with each
19.13renewal. Any change in the bond or letter of credit must be submitted for approval by the
19.14commissioner within ten days of its execution; or
19.15(3) a copy of the residential mortgage originator applicant's most recent audited
19.16financial statement, including balance sheet, statement of income or loss, statements of
19.17changes in shareholder equity, and statement of changes in financial position. Financial
19.18statements must be as of a date within 12 months of the date of application. a surety bond
19.19that meets the requirements of section 58.08, subdivision 1a.
19.20 (c) The application must also include all of the following:
19.21 (1) an affirmation under oath that the applicant:
19.22 (i) is in compliance with the requirements of section58.125 ;
19.23(ii) will maintain a perpetual roster of individuals employed as residential mortgage
19.24originators, including employees and independent contractors, which includes the dates
19.25that mandatory testing, initial education, and continuing education were completed. In
19.26addition, the roster must be made available to the commissioner on demand, within three
19.27business days of the commissioner's request;
19.28(iii) (ii) will advise the commissioner of any material changes to the information
19.29submitted in the most recent application within ten days of the change;
19.30(iv) (iii) will advise the commissioner in writing immediately of any bankruptcy
19.31petitions filed against or by the applicant or licensee;
19.32(v) (iv) will maintain at all times either a net worth, net of intangibles, of at least
19.33$250,000 or a surety bond or irrevocable letter of credit in the amount of at least $50,000
19.34$100,000;
19.35(vi) (v) complies with federal and state tax laws; and
20.1(vii) (vi) complies with sections
345.31 to
345.60 , the Minnesota unclaimed
20.2property law;
20.3 (2) information as to the mortgage lending, servicing, or brokering experience of the
20.4applicant and persons in control of the applicant;
20.5 (3) information as to criminal convictions, excluding traffic violations, of persons in
20.6control of the license applicant;
20.7 (4) whether a court of competent jurisdiction has found that the applicant or persons
20.8in control of the applicant have engaged in conduct evidencing gross negligence, fraud,
20.9misrepresentation, or deceit in performing an act for which a license is required under
20.10this chapter;
20.11 (5) whether the applicant or persons in control of the applicant have been the subject
20.12of: an order of suspension or revocation, cease and desist order, or injunctive order, or
20.13order barring involvement in an industry or profession issued by this or another state or
20.14federal regulatory agency or by the Secretary of Housing and Urban Development within
20.15the ten-year period immediately preceding submission of the application; and
20.16 (6) other information required by the commissioner.
20.17 Sec. 3. Minnesota Statutes 2008, section 58.08, is amended by adding a subdivision to
20.18read:
20.19 Subd. 1a. Residential mortgage originators. (a) An applicant for a residential
20.20mortgage originator license must file with the department a surety bond in the amount of
20.21$100,000, issued by an insurance company authorized to do so in this state. The bond
20.22must cover all mortgage loan originators who are employees or independent agents of
20.23the applicant. The bond must be available for the recovery of expenses, fines, and fees
20.24levied by the commissioner under this chapter and for losses incurred by borrowers as
20.25a result of a licensee's noncompliance with the requirements of this chapter, sections
20.26325D.43 to 325D.48, and 325F.67 to 325F.69, or breach of contract relating to activities
20.27regulated by this chapter.
20.28 (b) The bond must be submitted with the originator's license application and
20.29evidence of continued coverage must be submitted with each renewal. Any change in the
20.30bond must be submitted for approval by the commissioner, within ten days of its execution.
20.31The bond or a substitute bond shall remain in effect during all periods of licensing.
20.32 (c) Upon filing of the mortgage call report as required by section 58A.17, a licensee
20.33shall maintain or increase its surety bond to reflect the total dollar amount of the closed
20.34residential mortgage loans originated in this state in the preceding year according to the
20.35table in this paragraph. A licensee may decrease its surety bond according to the table in
21.1this paragraph if the surety bond required is less than the amount of the surety bond on
21.2file with the department.
21.9 For purposes of this subdivision, "mortgage loan originator" has the meaning given
21.10the term in section 58A.02, subdivision 7.
21.11 Sec. 4. Minnesota Statutes 2008, section 58.09, is amended to read:
21.1258.09 TERM OF LICENSE.
21.13Initial Licenses for residential mortgage originators and residential mortgage
21.14servicers issued under this chapter expire onJuly 31, 2001, December 31 and are
21.15renewable onAugust 1, 2001, and on August 1 January 1 of each odd-numbered year
21.16after that date.A new licensee whose license expires less than 12 months from the date
21.17of issuance shall pay a fee equal to one-half the applicable initial license fee set forth in
21.18section
58.10, subdivision 1, clause (1) or (3).
21.19 Sec. 5. Minnesota Statutes 2008, section 58.10, subdivision 1, is amended to read:
21.20 Subdivision 1. Amounts. The following fees must be paid to the commissioner:
21.21 (1) foran initial a residential mortgage originator license, $2,125 $1,000, $50 of
21.22which is credited to the consumer education account in the special revenue fund;
21.23 (2) for a renewal license,$1,125 $500, $50 of which is credited to the consumer
21.24education account in the special revenue fund;
21.25 (3) foran initial a residential mortgage servicer's license, $1,000 $500;
21.26 (4) for a renewal license,$500 $250; and
21.27 (5) for a certificate of exemption, $100.
21.28 Sec. 6. Minnesota Statutes 2008, section 58.11, is amended to read:
21.2958.11 LICENSE RENEWAL.
21.30 Subdivision 1. Term. Licenses are renewable onAugust 1, 2001, and on August 1
21.31January 1 of eachodd-numbered year after that date.
21.32 Subd. 2. Timely renewal. (a) A person whose application is properly and timely
21.33filed who has not received notice of denial of renewal is considered approved for renewal
22.1and the person may continue to transact business as a residential mortgage originator or
22.2servicer whether or not the renewed license has been received on or beforeAugust January
22.31 of the renewal year. Application for renewal of a license is considered timely filed if
22.4received by the commissioner by, or mailed with proper postage and postmarked by,July
22.5December 15 of the renewal year. An application for renewal is considered properly filed
22.6if made upon forms duly executed and sworn to, accompanied by fees prescribed by this
22.7chapter, and containing any information that the commissioner requires.
22.8 (b) A person who fails to make a timely application for renewal of a license and
22.9who has not received the renewal license as ofAugust January 1 of the renewal year is
22.10unlicensed until the renewal license has been issued by the commissioner and is received
22.11by the person.
22.12 Subd. 3. Contents of renewal application. Application for the renewal of an
22.13existing license must contain the information specified in section58.06, subdivision 2 ;
22.14however, only the requested information having changed from the most recent prior
22.15application need be submitted.
22.16 Subd. 4. Cancellation. A licensee ceasing an activity or activities regulated by this
22.17chapter and desiring to no longer be licensed shall so inform the commissioner in writing
22.18and, at the same time, surrender the license and all other symbols or indicia of licensure.
22.19The licensee shall include a plan for the withdrawal from regulated business, including a
22.20timetable for the disposition of the business.
22.21 Sec. 7. ASSESSMENT.
22.22 The commissioner may levy a pro rata assessment on institutions licensed under
22.23Minnesota Statutes, chapter 58, to recover the costs to the Department of Commerce
22.24for administering the licensing and registration requirements of Minnesota Statutes,
22.25section 58A.10. The assessment amount must be determined by dividing those costs by
22.26the number of licensees.
22.27 The commissioner shall levy the assessments and notify each institution of the
22.28amount of the assessment being levied by September 30, 2010. The institution shall pay
22.29the assessment to the department no later than November 30, 2010. If an institution fails
22.30to pay its assessment by this date, its license may be suspended by the commissioner
22.31until it is paid in full.
22.32 This section expires December 1, 2010.
22.33 Sec. 8. RESIDENTIAL MORTGAGE ORIGINATORS AND SERVICERS;
22.34TRANSITIONAL LICENSE FEE AND TERMS.
23.1 A residential mortgage originator licensee and a residential mortgage service
23.2licensee operating under a valid license under Minnesota Statutes 2008, chapter 58,
23.3with an expiration date of July 31, 2011, shall pay a prorated renewal fee of $200 for a
23.4residential mortgage originator, and $100 for a residential mortgage servicer. The prorated
23.5license renewal fee must be paid by December 31, 2010, and such payment extends the
23.6license term until December 31, 2011.
23.7 Sec. 9. APPROPRIATION.
23.8$261,000 in fiscal year 2011 is appropriated from the general fund to the
23.9commissioner of commerce for implementing this act. The base appropriation for this
23.10program is $138,000 in fiscal year 2012 and $142,000 in fiscal year 2013.
23.11 Sec. 10. REPEALER.
23.12Minnesota Statutes 2009 Supplement, section 58.126, is repealed.
23.13 Sec. 11. EFFECTIVE DATE.
23.14 This article is effective July 31, 2010.
1.3of an individual engaged in the business of a mortgage loan origination or
1.4the mortgage loan business; providing certain conforming and transitional
1.5provisions; appropriating money;amending Minnesota Statutes 2008, sections
1.658.04, subdivision 1; 58.08, by adding a subdivision; 58.09; 58.10, subdivision
1.71; 58.11; Minnesota Statutes 2009 Supplement, section 58.06, subdivision 2;
1.8proposing coding for new law as Minnesota Statutes, chapter 58A; repealing
1.9Minnesota Statutes 2009 Supplement, section 58.126.
1.10BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.13 Section 1. [58A.01] TITLE.
1.14This chapter may be cited as the "Minnesota Secure and Fair Enforcement for
1.15Mortgage Licensing Act of 2010" or "Minnesota S.A.F.E. Mortgage Licensing Act of
1.162010."
1.17 Sec. 2. [58A.02] DEFINITIONS.
1.18 Subdivision 1. Application. For purposes of this chapter, the definitions in
1.19subdivisions 2 to 15 have the meanings given them.
1.20 Subd. 2. Depository institution. "Depository institution" has the meaning given in
1.21United States Code, title 12, section 1813, and includes a credit union.
1.22 Subd. 3. Federal banking agencies. "Federal banking agencies" means the Board
1.23of Governors of the Federal Reserve System, the comptroller of the currency, the director
1.24of the Office of Thrift Supervision, the National Credit Union Administration, and the
1.25Federal Deposit Insurance Corporation.
2.1 Subd. 4. Immediate family member. "Immediate family member" means a spouse,
2.2child, sibling, a parent, grandparent, or grandchild. This includes stepparents, stepchildren,
2.3stepsiblings, and adoptive relationships.
2.4 Subd. 5. Individual. "Individual" means a natural person.
2.5 Subd. 6. Loan processor or underwriter. "Loan processor or underwriter" means
2.6an individual who performs clerical or support duties as an employee at the direction
2.7of and subject to the supervision and instruction of a person licensed or exempt from
2.8licensing under chapter 58. For purposes of this subdivision, the term "clerical or support
2.9duties" may include after the receipt of an application:
2.10(1) the receipt, collection, distribution, and analysis of information common for the
2.11processing or underwriting of a residential mortgage loan; and
2.12(2) communicating with a consumer to obtain the information necessary for the
2.13processing or underwriting of a loan, to the extent that the communication does not include
2.14offering or negotiating loan rates or terms, or counseling consumers about residential
2.15mortgage loan rates or terms.
2.16 Subd. 7. Mortgage loan originator. "Mortgage loan originator":
2.17(1) means an individual who for compensation or gain or in the expectation of
2.18compensation or gain:
2.19(i) takes a residential mortgage loan application; or
2.20(ii) offers or negotiates terms of a residential mortgage loan;
2.21(2) does not include an individual engaged solely as a loan processor or underwriter
2.22except as otherwise provided in section 58A.03, subdivision 3;
2.23(3) does not include a person or entity that only performs real estate brokerage
2.24activities and is licensed or registered according to Minnesota law, unless the person or
2.25entity is compensated by a lender, a mortgage broker, or other mortgage loan originator or
2.26by an agent of the lender, mortgage broker, or other mortgage loan originator; and
2.27(4) does not include a person or entity solely involved in extensions of credit relating
2.28to timeshare plans, as that term is defined in United States Code, title 11, section 101(53D).
2.29 Subd. 8. Nationwide Mortgage Licensing System and Registry. "Nationwide
2.30Mortgage Licensing System and Registry" means a mortgage licensing system developed
2.31and maintained by the Conference of State Bank Supervisors and the American
2.32Association of Residential Mortgage Regulators for the licensing and registration of
2.33licensed mortgage loan originators.
2.34 Subd. 9. Nontraditional mortgage product. "Nontraditional mortgage product"
2.35means a mortgage product other than a 30-year fixed rate mortgage loan.
3.1 Subd. 10. Person. "Person" means a natural person, corporation, company, limited
3.2liability company, partnership, or association.
3.3 Subd. 11. Real estate brokerage activity. "Real estate brokerage activity" means
3.4an activity that involves offering or providing real estate brokerage services to the public,
3.5including:
3.6(1) acting as a real estate agent or real estate broker for a buyer, seller, lessor,
3.7or lessee of real property;
3.8(2) bringing together parties interested in the sale, purchase, lease, rental, or
3.9exchange of real property;
3.10(3) negotiating, on behalf of a party, a portion of a contract relating to the sale,
3.11purchase, lease, rental, or exchange of real property other than in connection with
3.12providing financing with respect to the transaction;
3.13(4) engaging in an activity for which a person engaged in the activity is required to
3.14be registered or licensed as a real estate agent or real estate broker under any applicable
3.15law; and
3.16(5) offering to engage in any activity, or act in any capacity, described in clause
3.17(1), (2), (3), or (4).
3.18 Subd. 12. Registered mortgage loan originator. "Registered mortgage loan
3.19originator" means an individual who:
3.20(1) meets the definition of mortgage loan originator and is an employee of:
3.21(i) a depository institution;
3.22(ii) a subsidiary that is owned and controlled by a depository institution and
3.23regulated by a federal banking agency; or
3.24(iii) an institution regulated by the Farm Credit Administration; and
3.25(2) is registered with, and maintains a unique identifier through, the Nationwide
3.26Mortgage Licensing System and Registry.
3.27 Subd. 13. Residential mortgage loan. "Residential mortgage loan" means a loan
3.28primarily for personal, family, or household use that is secured by a mortgage, deed of
3.29trust, or other equivalent consensual security interest on a dwelling, as defined in United
3.30States Code, title 15, section 1602(v), or residential real estate upon which a dwelling is
3.31constructed or intended to be constructed.
3.32 Subd. 14. Residential real estate. "Residential real estate" means real property
3.33located in Minnesota, upon which a dwelling is constructed or is intended to be
3.34constructed.
4.1 Subd. 15. Unique identifier. "Unique identifier" means a number or other identifier
4.2assigned by protocols established by the Nationwide Mortgage Licensing System and
4.3Registry.
4.4 Sec. 3. [58A.03] LICENSE AND REGISTRATION REQUIRED.
4.5 Subdivision 1. Generally. An individual, unless specifically exempted from this
4.6chapter under subdivision 2, shall not engage in the business of a mortgage loan originator
4.7with respect to a dwelling located in this state without first obtaining and maintaining a
4.8license under this chapter. An individual may not engage in the mortgage loan business
4.9unless the individual is employed and supervised by an entity which is either licensed
4.10or exempt from licensing under chapter 58. A licensed mortgage loan originator must
4.11register with and maintain a valid unique identifier issued by the Nationwide Mortgage
4.12Licensing System and Registry.
4.13 Subd. 2. Exemptions. The following are exempt from this chapter:
4.14(1) a registered mortgage loan originator, when acting for an entity described in
4.15section 58A.02, subdivision 12, clause (1);
4.16(2) an individual who offers or negotiates terms of a residential mortgage loan with
4.17or on behalf of an immediate family member of the individual;
4.18(3) an individual who offers or negotiates terms of a residential mortgage loan
4.19secured by a dwelling that served as the individual's residence; and
4.20(4) a licensed attorney who negotiates the terms of a residential mortgage loan
4.21on behalf of a client as an ancillary matter to the attorney's representation of the client,
4.22unless the attorney is compensated by a lender, a mortgage broker, or other mortgage
4.23loan originator or by any agent of the lender, mortgage broker, or other mortgage loan
4.24originator.
4.25 Subd. 3. Independent contractor loan processors or underwriters. A loan
4.26processor or underwriter who is an independent contractor may not engage in the activities
4.27of a loan processor or underwriter unless the independent contractor loan processor
4.28or underwriter obtains and maintains a license under subdivision 1. An independent
4.29contractor loan processor or underwriter licensed as a mortgage loan originator must have
4.30and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing
4.31System and Registry.
4.32EFFECTIVE DATE.In order to facilitate an orderly transition to licensing and
4.33minimize disruption in the mortgage marketplace, the effective date for subdivision 1
4.34is July 31, 2010, or a later date approved by the Secretary of the U.S. Department of
5.1Housing and Urban Development, under the authority granted in Public Law 110-289,
5.2section 1508(a).
5.3 Sec. 4. [58A.04] STATE LICENSE AND REGISTRATION APPLICATION AND
5.4ISSUANCE.
5.5 Subdivision 1. Application form. An applicant for a license shall apply in a form
5.6as prescribed by the commissioner. The form must contain content as set forth by rule,
5.7instruction, or procedure of the commissioner and may be changed or updated as necessary
5.8by the commissioner in order to carry out the purposes of this chapter.
5.9 Subd. 2. Commissioner may establish relationships or contracts. In order
5.10to fulfill the purposes of this chapter, the commissioner is authorized to establish
5.11relationships or contracts with the Nationwide Mortgage Licensing System and Registry
5.12or other entities designated by the Nationwide Mortgage Licensing System and Registry to
5.13collect and maintain records and process transaction fees or other fees related to licensees
5.14or other persons subject to this chapter.
5.15 Subd. 3. Waive or modify requirements. For the purpose of participating in the
5.16Nationwide Mortgage Licensing System and Registry, the commissioner is authorized to
5.17waive or modify, in whole or in part, by rule or order, any or all of the requirements of
5.18this chapter and to establish new requirements as reasonably necessary to participate in
5.19the Nationwide Mortgage Licensing System and Registry.
5.20 Subd. 4. Background checks. In connection with an application for licensing as a
5.21mortgage loan originator, the applicant shall, at a minimum, furnish to the Nationwide
5.22Mortgage Licensing System and Registry information concerning the applicant's identity,
5.23including:
5.24(1) fingerprints for submission to the Federal Bureau of Investigation, and a
5.25governmental agency or entity authorized to receive the information for a state, national,
5.26and international criminal history background check; and
5.27(2) personal history and experience in a form prescribed by the Nationwide
5.28Mortgage Licensing System and Registry, including the submission of authorization for
5.29the Nationwide Mortgage Licensing System and Registry and the commissioner to obtain:
5.30(i) an independent credit report obtained from a consumer reporting agency
5.31described in United States Code, title 15, section 1681a(p); and
5.32(ii) information related to administrative, civil, or criminal findings by a
5.33governmental jurisdiction.
5.34 Subd. 5. Agent for purposes of requesting and distributing criminal
5.35information. For the purposes of this section and in order to reduce the points of
6.1contact which the Federal Bureau of Investigation may have to maintain for purposes of
6.2subdivision 4, clauses (1) and (2), the commissioner may use the Nationwide Mortgage
6.3Licensing System and Registry as a channeling agent for requesting information from and
6.4distributing information to the Department of Justice or any governmental agency.
6.5 Subd. 6. Agent for purposes of requesting and distributing noncriminal
6.6information. For the purposes of this section and in order to reduce the points of contact
6.7which the commissioner may have to maintain for purposes of subdivision 4, clause (2)(i)
6.8and (ii), the commissioner may use the Nationwide Mortgage Licensing System and
6.9Registry as a channeling agent for requesting and distributing information to and from any
6.10source so directed by the commissioner.
6.11 Sec. 5. [58A.045] TERM OF LICENSE AND FEES.
6.12 Subdivision 1. Term. Licenses for mortgage loan originators issued under this
6.13chapter expire on December 31 and are renewable on January 1 of each year after that date.
6.14 Subd. 2. Fees. The following fees must be paid to the commissioner:
6.15 (1) for a mortgage loan originator license, $90; and
6.16 (2) for a renewal mortgage loan originator license, $50.
6.17 Sec. 6. [58A.05] ISSUANCE OF LICENSE.
6.18The commissioner shall not issue a mortgage loan originator license unless the
6.19commissioner finds at a minimum, that:
6.20(1) the applicant has never had a mortgage loan originator license revoked in a
6.21governmental jurisdiction, except that a subsequent formal vacation of a revocation shall
6.22not be deemed a revocation;
6.23(2) the applicant has not been convicted of, or pled guilty or nolo contendere to, a
6.24felony in a domestic, foreign, or military court:
6.25(i) during the seven-year period preceding the date of the application for licensing
6.26and registration;
6.27(ii) at any time preceding the date of application, if the felony involved an act of
6.28fraud, dishonesty, or a breach of trust, or money laundering; or
6.29(iii) provided that a pardon of a conviction is not a conviction for purposes of this
6.30clause;
6.31(3) the applicant has demonstrated financial responsibility, character, and general
6.32fitness such as to command the confidence of the community and to warrant a
6.33determination that the mortgage loan originator will operate honestly, fairly, and efficiently
6.34within the purposes of this chapter. For purposes of this chapter, a person has shown that
7.1the person is not financially responsible when the person has shown a disregard in the
7.2management of the person's own financial condition. A determination that an individual
7.3has not shown financial responsibility may include, but is not limited to:
7.4(i) current outstanding judgments, except judgments solely as a result of medical
7.5expenses;
7.6(ii) current outstanding tax liens or other government liens and filings;
7.7(iii) foreclosures within the past three years; and
7.8(iv) a pattern of seriously delinquent accounts within the past three years;
7.9(4) the applicant has completed the prelicensing education requirement described
7.10in section 58A.06;
7.11(5) the applicant has passed a written test that meets the test requirement described
7.12in section 58A.07; and
7.13(6) the applicant has met the surety bond requirement as required under section
7.1458A.13.
7.15 Sec. 7. [58A.06] PRELICENSING AND RELICENSING EDUCATION OF
7.16LOAN ORIGINATORS.
7.17 Subdivision 1. Minimum educational requirements. In order to meet the
7.18prelicensing education requirement referred to in section 58A.05, clause (4), a person
7.19shall complete at least 20 hours of education approved according to subdivision 2, that
7.20includes at least:
7.21(1) three hours of federal law and regulations;
7.22(2) three hours of ethics, which includes instruction on fraud, consumer protection,
7.23and fair lending issues; and
7.24(3) two hours of training related to lending standards for the nontraditional mortgage
7.25product marketplace.
7.26 Subd. 2. Approved educational courses. For purposes of subdivision 1,
7.27prelicensing education courses must be reviewed, and approved by the Nationwide
7.28Mortgage Licensing System and Registry based upon reasonable standards. Review
7.29and approval of a prelicensing education course must include review and approval of
7.30the course provider.
7.31 Subd. 3. Approval of employer and affiliate educational courses. Nothing in
7.32this section precludes a prelicensing education course, as approved by the Nationwide
7.33Mortgage Licensing System and Registry, that is provided by the employer of the applicant
7.34or an entity that is affiliated with the applicant by an agency contract, or any subsidiary or
7.35affiliate of the employer or entity.
8.1 Subd. 4. Venue of education. Prelicensing education may be offered in a classroom,
8.2online, or by any other means approved by the Nationwide Mortgage Licensing System
8.3and Registry.
8.4 Subd. 5. Reciprocity of education. The prelicensing education requirements
8.5approved by the Nationwide Mortgage Licensing System and Registry in subdivision
8.61 for a state must be accepted as credit toward completion of prelicensing education
8.7requirements in Minnesota.
8.8 Subd. 6. Relicensing education requirements. A person previously licensed under
8.9this chapter after the effective date of this chapter applying to be licensed again must
8.10prove that the person has completed all of the continuing education requirements for
8.11the year in which the license was last held.
8.12 Sec. 8. [58A.07] TESTING OF LOAN ORIGINATORS.
8.13 Subdivision 1. Generally. In order to meet the written test requirement referred to
8.14in section 58A.05, clause (5), an individual shall pass, in accordance with the standards
8.15established under this section, a qualified written test developed by the Nationwide
8.16Mortgage Licensing System and Registry and administered by a test provider approved
8.17by the Nationwide Mortgage Licensing System and Registry based upon reasonable
8.18standards.
8.19 Subd. 2. Qualified test. A written test must not be treated as a qualified written
8.20test for purposes of subdivision 1 unless the test adequately measures the applicant's
8.21knowledge and comprehension in appropriate subject areas, including:
8.22(1) ethics;
8.23(2) federal law and regulation pertaining to mortgage origination;
8.24(3) state law and rule pertaining to mortgage origination; and
8.25(4) federal and state law and rule, including instruction on fraud, consumer
8.26protection, the nontraditional mortgage marketplace, and fair lending issues.
8.27 Subd. 3. Testing location. Northing in this section prohibits a test provider approved
8.28by the Nationwide Mortgage Licensing System and Registry from providing a test at the
8.29location of the employer of the applicant or the location of a subsidiary or affiliate of the
8.30employer of the applicant, or the location of an entity with which the applicant holds an
8.31exclusive arrangement to conduct the business of a mortgage loan originator.
8.32 Subd. 4. Minimum competence. (a) An individual is not considered to have
8.33passed a qualified written test unless the individual achieves a test score of not less than
8.3475 percent correct answers to questions.
9.1(b) An individual may retake a test three consecutive times with each consecutive
9.2taking occurring at least 30 days after the preceding test.
9.3(c) After failing three consecutive tests, an individual shall wait at least six months
9.4before taking the test again.
9.5(d) A licensed mortgage loan originator who fails to maintain a valid license for a
9.6period of five years or longer shall retake the test, not taking into account any time during
9.7which the individual is a registered mortgage loan originator.
9.8 Sec. 9. [58A.08] STANDARDS FOR LICENSE RENEWAL.
9.9 Subdivision 1. Generally. The minimum standards for license renewal for a
9.10mortgage loan originator include that the mortgage loan originator:
9.11(1) continues to meet the minimum standards for license issuance under section
9.1258A.05;
9.13(2) has satisfied the annual continuing education requirements described in section
9.1458A.09; and
9.15(3) has paid all required fees for renewal of the license.
9.16 Subd. 2. Failure to satisfy minimum standards of license renewal. The license of
9.17a mortgage loan originator failing to satisfy the minimum standards for license renewal
9.18expires. The commissioner may adopt procedures for the reinstatement of expired licenses
9.19consistent with the standards established by the Nationwide Mortgage Licensing System
9.20and Registry.
9.21 Sec. 10. [58A.09] CONTINUING EDUCATION FOR MORTGAGE LOAN
9.22ORIGINATORS.
9.23 Subdivision 1. Generally. In order to meet the annual continuing education
9.24requirements referred to in section 58A.08, subdivision 1, clause (2), a licensed mortgage
9.25loan originator shall complete at least eight hours of education approved according to
9.26subdivision 2 that includes at least:
9.27(1) three hours of federal law and regulations;
9.28(2) two hours of ethics, which includes instruction on fraud, consumer protection,
9.29and fair lending issues; and
9.30(3) two hours of training related to lending standards for the nontraditional mortgage
9.31product marketplace.
9.32 Subd. 2. Approved educational courses. For purposes of subdivision 1, continuing
9.33education courses must be reviewed and approved by the Nationwide Mortgage Licensing
10.1System and Registry based upon reasonable standards. Review and approval of a
10.2continuing education course must include review and approval of the course provider.
10.3 Subd. 3. Approval of employer and affiliate educational courses. Nothing in
10.4this section precludes an education course, as approved by the Nationwide Mortgage
10.5Licensing System and Registry, that is provided by the employer of the mortgage loan
10.6originator or an entity that is affiliated with the mortgage loan originator by an agency
10.7contract, or a subsidiary or affiliate of the employer or entity.
10.8 Subd. 4. Venue of education. Continuing education may be offered either in a
10.9classroom, online, or by other means approved by the Nationwide Mortgage Licensing
10.10System and Registry.
10.11 Subd. 5. Calculation of continuing education credits. A licensed mortgage loan
10.12originator:
10.13(1) except for subdivision 9 and section 58A.08, subdivision 2, may only receive
10.14credit for a continuing education course in the year in which the course is taken; and
10.15(2) may not take the same approved course in the same or successive years to meet
10.16the annual requirements for continuing education.
10.17 Subd. 6. Instructor credit. A licensed mortgage loan originator who is an approved
10.18instructor of an approved continuing education course may receive credit for the licensed
10.19mortgage loan originator's own annual continuing education requirement at the rate of
10.20two hours credit for every one hour taught.
10.21 Subd. 7. Reciprocity of education. A person having successfully completed the
10.22education requirements approved by the Nationwide Mortgage Licensing System and
10.23Registry in subdivision 1 for a state must be accepted as credit toward completion of
10.24continuing education requirements in Minnesota.
10.25 Subd. 8. Lapse in license. A licensed mortgage loan originator who subsequently
10.26becomes unlicensed must complete the continuing education requirements for the last year
10.27in which the license was held before a new or renewed license is issued.
10.28 Subd. 9. Deficiency. A person meeting the requirements of section 58A.08,
10.29subdivision 1, clauses (1) and (3), may make up a deficiency in continuing education as
10.30established by rule of the commissioner.
10.31 Sec. 11. [58A.10] AUTHORITY TO REQUIRE LICENSE.
10.32In addition to any other duties imposed upon the commissioner by law, the
10.33commissioner shall require mortgage loan originators to be licensed and registered
10.34through the Nationwide Mortgage Licensing System and Registry. In order to carry out
10.35this requirement, the commissioner may participate in the Nationwide Mortgage Licensing
11.1System and Registry. For this purpose, the commissioner may establish by rule or order
11.2requirements as necessary, including but not limited to:
11.3(1) background checks for:
11.4(i) criminal history through fingerprint or other databases;
11.5(ii) civil or administrative records;
11.6(iii) credit history; or
11.7(iv) other information as determined necessary by the Nationwide Mortgage
11.8Licensing System and Registry;
11.9(2) the payment of fees to apply for or renew licenses through the Nationwide
11.10Mortgage Licensing System and Registry;
11.11(3) the setting or resetting as necessary of renewal or reporting dates; and
11.12(4) requirements for amending or surrendering a license or other activities the
11.13commissioner considers necessary for participation in the Nationwide Mortgage Licensing
11.14System and Registry.
11.15 Sec. 12. [58A.11] NATIONWIDE MORTGAGE LICENSING SYSTEM AND
11.16REGISTRY INFORMATION CHALLENGE PROCESS.
11.17The commissioner shall establish a process that allows mortgage loan originators
11.18to challenge information entered into the Nationwide Mortgage Licensing System and
11.19Registry by the commissioner.
11.20 Sec. 13. [58A.12] ENFORCEMENT AUTHORITIES, VIOLATIONS, AND
11.21PENALTIES.
11.22(a) In order to ensure the effective supervision and enforcement of this chapter, the
11.23commissioner may, pursuant to chapter 14:
11.24(1) deny, suspend, revoke, condition, or decline to renew a license for a violation of
11.25this chapter, rules issued under this chapter, or order or directive entered under this chapter;
11.26(2) deny, suspend, revoke, condition, or decline to renew a license if an applicant
11.27or licensee fails at anytime to meet the requirements of section 58A.05 or 58A.08, or
11.28withholds information or makes a material misstatement in an application for a license
11.29or renewal of a license;
11.30(3) order restitution against persons subject to this chapter for violations of this
11.31chapter;
11.32(4) impose fines on persons subject to this chapter pursuant to paragraphs (b)
11.33to (d); and
11.34(5) issue orders or directives under this chapter as follows:
12.1(i) order or direct persons subject to this chapter to cease and desist from conducting
12.2business, including immediate temporary orders to cease and desist;
12.3(ii) order or direct persons subject to this chapter to cease any harmful activities or
12.4violations of this chapter, including immediate temporary orders to cease and desist;
12.5(iii) enter immediate temporary orders to cease business under a license or interim
12.6license issued pursuant to the authority granted under section 58A.03, subdivision 4, if
12.7the commissioner determines that the license was erroneously granted or the licensee is
12.8currently in violation of this chapter; and
12.9(iv) order or direct other affirmative action the commissioner considers necessary.
12.10(b) The commissioner may impose a civil penalty on a mortgage loan originator or
12.11person subject to this chapter, if the commissioner finds, on the record after notice and
12.12opportunity for hearing, that the mortgage loan originator or person subject to this chapter
12.13has violated or failed to comply with any requirement of this chapter or any rule prescribed
12.14by the commissioner under this chapter or order issued under authority of this chapter.
12.15(c) The maximum amount of penalty for each act or omission described in paragraph
12.16(b) is $25,000.
12.17(d) Each violation or failure to comply with any directive or order of the
12.18commissioner is a separate and distinct violation or failure.
12.19 Sec. 14. [58A.13] SURETY BOND REQUIRED.
12.20 Subdivision 1. Coverage, form, and rules. (a) Each mortgage loan originator must
12.21be covered by a surety bond meeting the requirements of this section. In the event that
12.22the mortgage loan originator is an employee or exclusive agent of a person subject to this
12.23chapter, the surety bond of the person subject to this chapter can be used in lieu of the
12.24mortgage loan originator's surety bond requirement.
12.25(b) The surety bond shall provide coverage for each mortgage loan originator in
12.26an amount as prescribed in subdivision 2.
12.27(c) The surety bond must be in a form as prescribed by the commissioner.
12.28 Subd. 2. Penal sum of surety bond. The penal sum of the surety bond must be
12.29maintained in an amount that reflects the dollar amount of loans originated as determined
12.30by the commissioner.
12.31 Subd. 3. Action on bond. When an action is commenced on a licensee's bond the
12.32commissioner may require the filing of a new bond.
12.33 Subd. 4. New bond. Immediately upon recovery upon any action on the bond
12.34the licensee shall file a new bond.
13.1 Sec. 15. [58A.14] CONFIDENTIALITY.
13.2 Subdivision 1. Protections. Except as otherwise provided in Public Law 110-289,
13.3section 1512, the requirements under chapter 13 or any federal law regarding the privacy
13.4or confidentiality of any information or material provided to the Nationwide Mortgage
13.5Licensing System and Registry, and any privilege arising under federal or state law,
13.6including the rules of any federal or state court, with respect to the information or material,
13.7continue to apply to the information or material after the information or material has been
13.8disclosed to the Nationwide Mortgage Licensing System and Registry. The information
13.9and material may be shared with all state and federal regulatory officials with mortgage
13.10industry oversight authority without the loss of privilege or the loss of confidentiality
13.11protections provided by chapter 13 or federal law.
13.12 Subd. 2. Agreements and sharing arrangements. For purposes of this section,
13.13the commissioner is authorized to enter agreements or sharing arrangements with
13.14other governmental agencies, the Conference of State Bank Supervisors, the American
13.15Association of Residential Mortgage Regulators, or other associations representing
13.16governmental agencies as established by rule or order of the commissioner.
13.17 Subd. 3. Nonapplicability of certain requirements. Information or material that is
13.18subject to a privilege or confidentiality under subdivision 1 is not subject to:
13.19(1) disclosure under any federal or state law governing the disclosure to the public of
13.20information held by an officer or an agency of the federal government or the respective
13.21state; or
13.22(2) subpoena or discovery, or admission into evidence, in any private civil action
13.23or administrative process, unless with respect to any privilege held by the Nationwide
13.24Mortgage Licensing System and Registry with respect to the information or material,
13.25the person to whom the information or material pertains waives, in whole or in part, in
13.26the discretion of the person, that privilege.
13.27 Subd. 4. Coordination with Minnesota Government Data Practices Act. Chapter
13.2813 relating to the disclosure of confidential supervisory information or any information or
13.29material described in subdivision 1 that is inconsistent with subdivision 1 is superseded by
13.30the requirements of this section.
13.31 Subd. 5. Public access to information. This section does not apply with respect to
13.32the information or material relating to the employment history of, and publicly adjudicated
13.33disciplinary and enforcement actions against, mortgage loan originators that are included
13.34in the Nationwide Mortgage Licensing System and Registry for access by the public.
13.35 Sec. 16. [58A.15] INVESTIGATION AND EXAMINATION AUTHORITY.
14.1 Subdivision 1. Generally. In addition to any authority allowed under this chapter,
14.2the commissioner may conduct investigations and examinations according to subdivisions
14.32 to 9.
14.4 Subd. 2. Authority to access information. For purposes of initial licensing, license
14.5renewal, license suspension, license conditioning, license revocation or termination, or
14.6general or specific inquiry or investigation to determine compliance with this chapter, the
14.7commissioner may access, receive and use any books, accounts, records, files, documents,
14.8information or evidence including but not limited to:
14.9(1) criminal, civil, and administrative history information, including nonconviction
14.10data;
14.11(2) personal history and experience information including independent credit reports
14.12obtained from a consumer reporting agency described in United States Code, title 15,
14.13section 1681a(p); and
14.14(3) any other documents, information, or evidence the commissioner considers
14.15relevant to the inquiry or investigation regardless of the location, possession, control, or
14.16custody of the documents, information, or evidence.
14.17 Subd. 3. Investigation, examination, and subpoena authority. For the purposes
14.18of investigating violations or complaints arising under this chapter, or for the purposes of
14.19examination, the commissioner may review, investigate, or examine a licensee, individual,
14.20or person subject to this chapter, as often as necessary in order to carry out the purposes
14.21of this chapter. The commissioner may direct, subpoena, or order the attendance of and
14.22examine under oath all persons whose testimony may be required about the loans or the
14.23business or subject matter of any such examination or investigation, and may direct,
14.24subpoena, or order such person to produce books, accounts, records, files, and any other
14.25documents the commissioner considers relevant to the inquiry.
14.26 Subd. 4. Availability of books and records. A licensee, individual, or person
14.27subject to this chapter shall make available to the commissioner upon request the books
14.28and records relating to the operations of the licensee, individual, or person subject to this
14.29chapter. The commissioner shall have access to the books and records and interview
14.30the officers, principals, mortgage loan originators, employees, independent contractors,
14.31agents, and customers of the licensee, individual, or person subject to this chapter
14.32concerning the licensee's, individual's, or person's business.
14.33 Subd. 5. Reports and other information as directed. A licensee, individual, or
14.34person subject to this chapter shall make or compile reports or prepare other information
14.35as directed by the commissioner in order to carry out the purposes of this section including
14.36but not limited to:
15.1(1) accounting compilations;
15.2(2) information lists and data concerning loan transactions in a format prescribed
15.3by the commissioner; or
15.4(3) other information the commissioner considers necessary to carry out the
15.5purposes of this section.
15.6 Subd. 6. Control access to records. In making an examination or investigation
15.7authorized by this chapter, the commissioner may control access to documents and records
15.8of the licensee or person under examination or investigation. The commissioner may
15.9take possession of the documents and records or place a person in exclusive charge of
15.10the documents and records in the place where they are usually kept. During the period of
15.11control, no individual or person shall remove or attempt to remove any of the documents
15.12and records except pursuant to a court order or with the consent of the commissioner.
15.13Unless the commissioner has reasonable grounds to believe the documents or records
15.14of the licensee have been, or are at risk of being, altered or destroyed for purposes of
15.15concealing a violation of this chapter, the licensee or owner of the documents and records
15.16has access to the documents or records as necessary to conduct its ordinary business affairs.
15.17 Subd. 7. Additional authority. In order to carry out the purposes of this section,
15.18the commissioner may:
15.19(1) retain attorneys, accountants, or other professionals and specialists as examiners,
15.20auditors, or investigators to conduct or assist in the conduct of examinations or
15.21investigations;
15.22(2) enter into agreements or relationships with other government officials or
15.23regulatory associations in order to improve efficiencies and reduce regulatory burden
15.24by sharing resources, standardized or uniform methods or procedures, and documents,
15.25records, information, or evidence obtained under this section;
15.26(3) use, hire, contract, or employ public or privately available analytical systems,
15.27methods, or software to examine or investigate the licensee, individual, or person subject
15.28to this chapter;
15.29(4) accept and rely on examination or investigation reports made by other
15.30government officials, within or without this state; or
15.31(5) accept audit reports made by an independent certified public accountant for the
15.32licensee, individual, or person subject to this chapter in the course of that part of the
15.33examination covering the same general subject matter as the audit and incorporate the
15.34audit report in the report of the examination, report of investigation or other writing of
15.35the commissioner.
16.1 Subd. 8. Effect of authority. The authority of this section remains in effect,
16.2whether a licensee, individual, or person subject to this chapter acts or claims to act under
16.3any licensing or registration law of this state, or claims to act without such authority.
16.4 Subd. 9. Withhold records. A licensee, individual, or person subject to
16.5investigation or examination under this section shall not knowingly withhold, abstract,
16.6remove, mutilate, destroy, or secrete any books, records, computer records, or other
16.7information.
16.8 Sec. 17. [58A.16] PROHIBITED ACTS AND PRACTICES.
16.9 Subdivision 1. Generally. It is a violation of this chapter for a person or individual
16.10subject to this chapter to:
16.11(1) directly or indirectly employ any scheme, device, or artifice to defraud or mislead
16.12borrowers or lenders or to defraud any person;
16.13(2) engage in any unfair or deceptive practice toward any person;
16.14(3) obtain property by fraud or misrepresentation;
16.15(4) solicit or enter into a contract with a borrower that provides in substance that the
16.16person or individual subject to this chapter may earn a fee or commission through "best
16.17efforts" to obtain a loan even though no loan is actually obtained for the borrower;
16.18(5) solicit, advertise, or enter into a contract for specific interest rates, points, or
16.19other financing terms unless the terms are actually available at the time of soliciting,
16.20advertising, or contracting;
16.21(6) conduct any business covered by this chapter without holding a valid license as
16.22required under this chapter, or assist or aide and abet any person in the conduct of business
16.23under this chapter without a valid license as required under this chapter;
16.24(7) fail to make disclosures as required by this chapter and any other applicable
16.25state or federal law or regulations;
16.26(8) fail to comply with this chapter or rules adopted under this chapter or fail
16.27to comply with any other state or federal law or regulations applicable to any business
16.28authorized or conducted under this chapter;
16.29(9) make, in any manner, any false or deceptive statement or representation
16.30including, with regard to the rates, points, or other financing terms or conditions for a
16.31residential mortgage loan; or engage in bait-and-switch advertising;
16.32(10) negligently make a false statement or knowingly and willfully make an omission
16.33of material fact in connection with any information or reports filed with a governmental
16.34agency or the Nationwide Mortgage Licensing System and Registry or in connection with
16.35an investigation conducted by the commissioner or another governmental agency;
17.1(11) make a payment, threat, or promise, directly or indirectly, to a person for the
17.2purposes of influencing the independent judgment of the person in connection with a
17.3residential mortgage loan, or make a payment threat or promise, directly or indirectly, to
17.4an appraiser of a property, for the purposes of influencing the independent judgment of the
17.5appraiser with respect to the value of the property;
17.6(12) collect, charge, attempt to collect or charge, or use or propose an agreement
17.7purporting to collect or charge a fee prohibited by this chapter;
17.8(13) cause or require a borrower to obtain property insurance coverage in an amount
17.9that exceeds the replacement cost of the improvements as established by the property
17.10insurer; or
17.11(14) fail to truthfully account for money belonging to a party to a residential
17.12mortgage loan transaction.
17.13 Subd. 2. Loan processor or underwriter activities. An individual engaging solely
17.14in loan processor or underwriter activities shall not represent to the public, through
17.15advertising or other means of communicating or providing information, including the use
17.16of business cards, stationery, brochures, signs, rate lists, or other promotional items, that
17.17the individual can or will perform any of the activities of a mortgage loan originator.
17.18 Sec. 18. [58A.17] MORTGAGE CALL REPORTS.
17.19A mortgage licensee shall submit to the Nationwide Mortgage Licensing System and
17.20Registry reports of condition, which must be in the form and contain the information the
17.21Nationwide Mortgage Licensing System and Registry requires.
17.22 Sec. 19. [58A.18] REPORT TO NATIONWIDE MORTGAGE LICENSING
17.23SYSTEM AND REGISTRY.
17.24The commissioner shall regularly report violations of this chapter, as well as
17.25enforcement actions and other relevant information, to the Nationwide Mortgage
17.26Licensing System and Registry subject to the provisions contained in section 58A.14.
17.27 Sec. 20. [58A.20] UNIQUE IDENTIFIER SHOWN.
17.28The unique identifier of any person originating a residential mortgage loan shall
17.29be clearly shown on all residential mortgage loan application forms, solicitations, or
17.30advertisements, including business cards or Web sites, and any other documents as
17.31established by rule or order of the commissioner.
17.32 Sec. 21. EFFECTIVE DATE.
18.1This article is effective July 31, 2010.
18.5 Section 1. Minnesota Statutes 2008, section 58.04, subdivision 1, is amended to read:
18.6 Subdivision 1. Residential mortgage originator licensing requirements. (a)
18.7No person shall act as a residential mortgage originator, or make residential mortgage
18.8loans without first obtaining a license from the commissioner according to the licensing
18.9procedures provided in this chapter.
18.10 (b) A licensee must be either a partnership, limited liability partnership, association,
18.11limited liability company, corporation, or other form of business organization, and must
18.12have and maintain
18.13
18.14
18.15bond
18.16section 58.08.
18.17
18.18 (c) The following persons are exempt from the residential mortgage originator
18.19licensing requirements:
18.20 (1) a person who is not in the business of making residential mortgage loans and who
18.21makes no more than three such loans, with its own funds, during any 12-month period;
18.22 (2) a financial institution as defined in section
18.23 (3) an agency of the federal government, or of a state or municipal government;
18.24 (4) an employee or employer pension plan making loans only to its participants;
18.25 (5) a person acting in a fiduciary capacity, such as a trustee or receiver, as a result of
18.26a specific order issued by a court of competent jurisdiction; or
18.27 (6) a person exempted by order of the commissioner.
18.28 Sec. 2. Minnesota Statutes 2009 Supplement, section 58.06, subdivision 2, is amended
18.29to read:
18.30 Subd. 2. Application contents. (a) The application must contain the name and
18.31complete business address or addresses of the license applicant. The license applicant
18.32must be a partnership, limited liability partnership, association, limited liability company,
18.33corporation, or other form of business organization, and the application must contain the
18.34names and complete business addresses of each partner, member, director, and principal
19.1officer. The application must also include a description of the activities of the license
19.2applicant, in the detail and for the periods the commissioner may require.
19.3 (b) A residential mortgage originator applicant must submit
19.4
19.5
19.6
19.7
19.8
19.9
19.10
19.11
19.12
19.13
19.14
19.15
19.16
19.17
19.18
19.19that meets the requirements of section 58.08, subdivision 1a.
19.20 (c) The application must also include all of the following:
19.21 (1) an affirmation under oath that the applicant:
19.22 (i) is in compliance with the requirements of section
19.23
19.24
19.25
19.26
19.27
19.28
19.29submitted in the most recent application within ten days of the change;
19.30
19.31petitions filed against or by the applicant or licensee;
19.32
19.33
19.34$100,000;
19.35
20.1
20.2property law;
20.3 (2) information as to the mortgage lending, servicing, or brokering experience of the
20.4applicant and persons in control of the applicant;
20.5 (3) information as to criminal convictions, excluding traffic violations, of persons in
20.6control of the license applicant;
20.7 (4) whether a court of competent jurisdiction has found that the applicant or persons
20.8in control of the applicant have engaged in conduct evidencing gross negligence, fraud,
20.9misrepresentation, or deceit in performing an act for which a license is required under
20.10this chapter;
20.11 (5) whether the applicant or persons in control of the applicant have been the subject
20.12of: an order of suspension or revocation, cease and desist order, or injunctive order, or
20.13order barring involvement in an industry or profession issued by this or another state or
20.14federal regulatory agency or by the Secretary of Housing and Urban Development within
20.15the ten-year period immediately preceding submission of the application; and
20.16 (6) other information required by the commissioner.
20.17 Sec. 3. Minnesota Statutes 2008, section 58.08, is amended by adding a subdivision to
20.18read:
20.19 Subd. 1a. Residential mortgage originators. (a) An applicant for a residential
20.20mortgage originator license must file with the department a surety bond in the amount of
20.21$100,000, issued by an insurance company authorized to do so in this state. The bond
20.22must cover all mortgage loan originators who are employees or independent agents of
20.23the applicant. The bond must be available for the recovery of expenses, fines, and fees
20.24levied by the commissioner under this chapter and for losses incurred by borrowers as
20.25a result of a licensee's noncompliance with the requirements of this chapter, sections
20.26325D.43 to 325D.48, and 325F.67 to 325F.69, or breach of contract relating to activities
20.27regulated by this chapter.
20.28 (b) The bond must be submitted with the originator's license application and
20.29evidence of continued coverage must be submitted with each renewal. Any change in the
20.30bond must be submitted for approval by the commissioner, within ten days of its execution.
20.31The bond or a substitute bond shall remain in effect during all periods of licensing.
20.32 (c) Upon filing of the mortgage call report as required by section 58A.17, a licensee
20.33shall maintain or increase its surety bond to reflect the total dollar amount of the closed
20.34residential mortgage loans originated in this state in the preceding year according to the
20.35table in this paragraph. A licensee may decrease its surety bond according to the table in
21.1this paragraph if the surety bond required is less than the amount of the surety bond on
21.2file with the department.
21.9 For purposes of this subdivision, "mortgage loan originator" has the meaning given
21.10the term in section 58A.02, subdivision 7.
21.11 Sec. 4. Minnesota Statutes 2008, section 58.09, is amended to read:
21.1258.09 TERM OF LICENSE.
21.13
21.14servicers issued under this chapter expire on
21.15renewable on
21.16after that date.
21.17
21.18
21.19 Sec. 5. Minnesota Statutes 2008, section 58.10, subdivision 1, is amended to read:
21.20 Subdivision 1. Amounts. The following fees must be paid to the commissioner:
21.21 (1) for
21.22which is credited to the consumer education account in the special revenue fund;
21.23 (2) for a renewal license,
21.24education account in the special revenue fund;
21.25 (3) for
21.26 (4) for a renewal license,
21.27 (5) for a certificate of exemption, $100.
21.28 Sec. 6. Minnesota Statutes 2008, section 58.11, is amended to read:
21.2958.11 LICENSE RENEWAL.
21.30 Subdivision 1. Term. Licenses are renewable on
21.31January 1 of each
21.32 Subd. 2. Timely renewal. (a) A person whose application is properly and timely
21.33filed who has not received notice of denial of renewal is considered approved for renewal
22.1and the person may continue to transact business as a residential mortgage originator or
22.2servicer whether or not the renewed license has been received on or before
22.31 of the renewal year. Application for renewal of a license is considered timely filed if
22.4received by the commissioner by, or mailed with proper postage and postmarked by,
22.5December 15 of the renewal year. An application for renewal is considered properly filed
22.6if made upon forms duly executed and sworn to, accompanied by fees prescribed by this
22.7chapter, and containing any information that the commissioner requires.
22.8 (b) A person who fails to make a timely application for renewal of a license and
22.9who has not received the renewal license as of
22.10unlicensed until the renewal license has been issued by the commissioner and is received
22.11by the person.
22.12 Subd. 3. Contents of renewal application. Application for the renewal of an
22.13existing license must contain the information specified in section
22.14however, only the requested information having changed from the most recent prior
22.15application need be submitted.
22.16 Subd. 4. Cancellation. A licensee ceasing an activity or activities regulated by this
22.17chapter and desiring to no longer be licensed shall so inform the commissioner in writing
22.18and, at the same time, surrender the license and all other symbols or indicia of licensure.
22.19The licensee shall include a plan for the withdrawal from regulated business, including a
22.20timetable for the disposition of the business.
22.21 Sec. 7. ASSESSMENT.
22.22 The commissioner may levy a pro rata assessment on institutions licensed under
22.23Minnesota Statutes, chapter 58, to recover the costs to the Department of Commerce
22.24for administering the licensing and registration requirements of Minnesota Statutes,
22.25section 58A.10. The assessment amount must be determined by dividing those costs by
22.26the number of licensees.
22.27 The commissioner shall levy the assessments and notify each institution of the
22.28amount of the assessment being levied by September 30, 2010. The institution shall pay
22.29the assessment to the department no later than November 30, 2010. If an institution fails
22.30to pay its assessment by this date, its license may be suspended by the commissioner
22.31until it is paid in full.
22.32 This section expires December 1, 2010.
22.33 Sec. 8. RESIDENTIAL MORTGAGE ORIGINATORS AND SERVICERS;
22.34TRANSITIONAL LICENSE FEE AND TERMS.
23.1 A residential mortgage originator licensee and a residential mortgage service
23.2licensee operating under a valid license under Minnesota Statutes 2008, chapter 58,
23.3with an expiration date of July 31, 2011, shall pay a prorated renewal fee of $200 for a
23.4residential mortgage originator, and $100 for a residential mortgage servicer. The prorated
23.5license renewal fee must be paid by December 31, 2010, and such payment extends the
23.6license term until December 31, 2011.
23.7 Sec. 9. APPROPRIATION.
23.8$261,000 in fiscal year 2011 is appropriated from the general fund to the
23.9commissioner of commerce for implementing this act. The base appropriation for this
23.10program is $138,000 in fiscal year 2012 and $142,000 in fiscal year 2013.
23.11 Sec. 10. REPEALER.
23.12Minnesota Statutes 2009 Supplement, section 58.126, is repealed.
23.13 Sec. 11. EFFECTIVE DATE.
23.14 This article is effective July 31, 2010.