H. B. 4415
(By Delegate Moore)
[Introduced February 5, 2008; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §31-17-2 and §31-17-4 of the Code of
West Virginia, 1931, as amended, all relating to the West
Virginia Residential Mortgage Lender, Broker and Servicer Act;
making a technical correction of an erroneous reference to a
subsection in §31-17-2 relating to certain exemptions;
providing that bonds filed with the commissioner of banking by
licensed mortgage lenders and brokers are available to satisfy
unpaid civil administrative penalties and unpaid examination
invoices owed by the licensee to the commissioner;
establishing priority of consumer claims.
Be it enacted by the Legislature of West Virginia:
That §31-17-2 and §31-17-4 of the Code of West Virginia, 1931,
as amended, be amended and reenacted, all to read as follows:
ARTICLE 17. WEST VIRGINIA RESIDENTIAL MORTGAGE LENDER, BROKER AND
SERVICER ACT.
§31-17-2. License required for lender, broker or loan originator;
exemptions.
(a) No person may engage in this state in the business of
lender, broker or loan originator unless and until he or she first
obtains a license to do so from the commissioner, which license
remains unexpired, unsuspended and unrevoked, and no foreign
corporation may engage in business in this state unless it is
registered with the Secretary of State to transact business in this
state.
(b) An entity applying for or holding both a lender and broker
license shall license all of its individual loan originators if
that entity brokers a majority of its residential mortgage loans.
The determination of whether an entity brokers the majority of its
residential mortgage loans is based upon the most recent annual
report filed with the division pursuant to section eleven of this
article. A new applicant applying for both a lender license and
a broker license shall license all of its loan originators unless
the applicant can demonstrate, through data compiled for other
state regulators, that it acts as a lender for a majority of its
residential mortgage loans made.
(c) Brokerage fees, additional charges and finance charges
imposed by licensed mortgage brokers, lenders and loan originators
are exempt from the tax imposed by article fifteen, chapter eleven
of this code beginning on the first day of January, two thousand four.
(d)The provisions of this article do not apply to loans made
by the following:
(1) Federally insured depository institutions;
(2) Regulated consumer lender licensees;
(3) Insurance companies;
(4) Any other lender licensed by and under the regular
supervision and examination for consumer compliance of any agency
of the federal government;
(5) Any agency or instrumentality of this state, federal,
county or municipal government or on behalf of the agency or
instrumentality;
(6) By a nonprofit community development organization making
mortgage loans to promote home ownership or improvements for the
disadvantaged which loans are subject to federal, state, county or
municipal government supervision and oversight; or
(7) Habitat for Humanity International, Inc., and its
affiliates providing low-income housing within this state.
Loans made subject to this exemption may be assigned,
transferred, sold or otherwise securitized to any person and shall
remain exempt from the provisions of this article, except as to
reporting requirements in the discretion of the commissioner where
the person is a licensee under this article. Nothing herein shall
prohibit a broker licensed under this article from acting as broker of an exempt loan and receiving compensation as permitted under the
provisions of this article.
(e) A person or entity designated in subsection
(c) (d) of
this section may take assignments of a primary or subordinate
mortgage loan from a licensed lender and the assignments of said
loans that they themselves could have lawfully made as exempt from
the provisions of this article under this section do not make that
person or entity subject to the licensing, bonding, reporting or
other provisions of this article except as the defense or claim
would be preserved pursuant to section one hundred two, article
two, chapter forty-six-a of this code.
(f) The placement or sale for securitization of a primary or
subordinate mortgage loan into a secondary market by a licensee may
not subject the warehouser or final securitization holder or
trustee to the provisions of this article:
Provided, That the
warehouser, final securitization holder or trustee under an
arrangement is either a licensee, or person or entity entitled to
make exempt loans of that type under this section, or the loan is
held with right of recourse to a licensee.
§31-17-4. Applications for licenses; requirements; bonds; fees;
renewals; waivers and reductions; per loan fee.
(a) Application for a lender's or broker's license shall each
year be submitted in writing under oath, in the form prescribed by
the commissioner, and shall contain the full name and address of the applicant and, if the applicant is a partnership, limited
liability company or association, of every member thereof, and, if
a corporation, of each officer, director and owner of ten percent
or more of the capital stock thereof and further information as the
commissioner may reasonably require. Any application shall also
disclose the location at which the business of lender or broker is
to be conducted. Application for a loan originator's license shall
be initially submitted prior to the first day of September, two
thousand two, and thereafter in every fifth year beginning in two
thousand five. If the loan originator changes sponsoring mortgage
brokers, a new application must be submitted in accordance with
this article.
(b) At the time of making application for a lender's license,
the applicant therefor shall:
(1) If a foreign corporation, submit a certificate from the
Secretary of State certifying that the applicant is registered with
the Secretary of State to transact business in this state;
(2) Submit proof that he or she has available for the
operation of the business at the location specified in the
application net worth of at least two hundred fifty thousand
dollars;
(3) File with the commissioner a bond in favor of the state
for the benefit of consumers
or for a claim by the commissioner for
an unpaid civil administrative penalty or an unpaid examination invoice in the amount of one hundred thousand dollars, in a form
and with conditions as the commissioner may prescribe, and executed
by a surety company authorized to do business in this state;
(4) Pay to the commissioner a license fee of one thousand two
hundred fifty dollars plus the actual cost of fingerprint
processing. If the commissioner shall determine that an
investigation outside this state is required to ascertain facts or
information relative to the applicant or information set forth in
the application, the applicant may be required to advance
sufficient funds to pay the estimated cost of the investigation.
An itemized statement of the actual cost of the investigation
outside this state shall be furnished to the applicant by the
commissioner and the applicant shall pay or shall have returned to
him or her, as the case may be, the difference between his or her
payment in advance of the estimated cost and the actual cost of the
investigation; and
(5) Submit proof that the applicant is a business in good
standing in its state of incorporation, or if not a corporation,
its state of business registration, and a full and complete
disclosure of any litigation or unresolved complaint filed by a
governmental authority or class action lawsuit on behalf of
consumers relating to the operation of the license applicant.
(c) At the time of making application for a broker's license,
the applicant therefor shall:
(1) If a foreign corporation, submit a certificate from the
Secretary of State certifying that the applicant is registered with
the Secretary of State to transact business in this state;
(2) Submit proof that he or she has available for the
operation of the business at the location specified in the
application net worth of at least ten thousand dollars;
(3) File with the commissioner a bond in favor of the state
for the benefit of consumers
or for a claim by the commissioner for
an unpaid civil administrative penalty or an unpaid examination
invoice in the amount of fifty thousand dollars, in a form and with
conditions as the commissioner may prescribe, and executed by a
surety company authorized to do business in this state:
Provided,
That the bond must be in the amount of one hundred thousand dollars
before a broker may participate in a table-funded residential
mortgage loan;
(4) Pay to the commissioner a license fee of three hundred
fifty dollars plus the actual cost of fingerprint processing; and
(5) Submit proof that the applicant is a business in good
standing in its state of incorporation, or if not a corporation,
its state of business registration, and a full and complete
disclosure of any litigation or unresolved complaint filed by a
governmental authority or class action lawsuit on behalf of
consumers relating to the operation of the license applicant.
(d) Application for a loan originator license shall be submitted by the sponsoring mortgage broker prior to the loan
originator engaging in mortgage activity, in writing under oath, on
a form prescribed by the commissioner. At the time of making
application for a loan originator license, the loan originator
therefor shall:
(1) Submit a statement under oath that he or she originates
loans exclusively for one broker, together with an acknowledgment
of employment by the sponsoring mortgage broker;
(2) Pay to the commissioner a license fee of one hundred fifty
dollars plus the actual cost of fingerprint processing;
(3) Disclose the location at which the business of the
sponsoring mortgage broker is to be conducted by the licensed loan
originator; and
(4) If at any time a loan originator ceases working for the
sponsoring mortgage broker indicated on the license application,
such the loan originator and sponsoring mortgage broker shall
notify the commissioner within fifteen business days and return the
original loan originator license to the Division of Banking. The
license of a loan originator is not effective during any period
when that person is not employed by a sponsoring mortgage broker
licensed under this article, and a loan originator shall not be
employed simultaneously by more than one sponsoring mortgage
broker.
(e) The aggregate liability of the surety on any bond given pursuant to the provisions of this section shall in no event exceed
the amount of the bond.
(f) Nonresident lenders and brokers licensed under this
article by their acceptance of the license acknowledge that they
are subject to the jurisdiction of the courts of West Virginia and
the service of process pursuant to section one hundred thirty-
seven, article two, chapter forty-six-a of this code and section
thirty-three, article three, chapter fifty-six of this code.
(g) The commissioner may elect to reduce or waive the
application fees, bond amounts and net worth requirements imposed
by this section for nonprofit corporations whose residential
mortgage lending or brokering activities provide housing primarily
to households or persons below the HUD-established median income
for their area of residence.
(h) Every broker and lender licensee shall pay a fee of five
dollars for each residential mortgage loan originated, made or
brokered in a calendar year. This fee shall be paid semiannually
to the Division of Banking and remitted with the report required
pursuant to subsection (b), section eleven of this article for
loans made, brokered or originated during the last six months of
the previous calendar year and with the lender or broker license
renewal application required pursuant to subsection (b), section
seven of this article for the loans made, brokered or originated in
the first six months of that calendar year. In the event a licensee ceases operation, it shall remit any fees due since the
last reporting period when it relinquishes its license.
(i) If a claim for consumer restitution is pending on a bond
required pursuant to this section when the commissioner makes a
claim for a civil administrative penalty or an unpaid examination
invoice, the consumer claim shall be resolved before any payments
from the bond may be made to the commissioner for an unpaid penalty
or examination invoice.
NOTE:
The purpose of this bill is to
correct a typographical
error, and permit the division to make a claim on a licensee's bond
for unpaid penalties and invoices while giving consumer claims
priority.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.