Senate Bill No. 5
(By Senator Minard, Oliverio, McCabe and D. Facemire)
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[Introduced January 13, 2010; referred to the Committee on
Banking and Insurance.]
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A BILL to amend and reenact §31-17-5, §31-17-8 and §31-17-14 of the
Code of West Virginia, 1931, as amended, all relating to
mortgage license provisional approval; disclosure of fees in
a mortgage loan; and administrative hearing, appeal and
scheduling procedures.
Be it enacted by the Legislature of West Virginia:
That §31-17-5, §31-17-8 and §31-17-14 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.
§31-17-5. Refusal or issuance of license.
(a) Upon an applicant's full compliance with the provisions of
section four of this article, the commissioner shall investigate
the relevant facts with regard to the applicant and his or her application for a lender's or broker's license, as the case may be.
Upon
the basis of the application and all other information before
him or her, the commissioner shall make and enter an order denying
the application and refusing the license sought if the commissioner
finds:
that
(1) The applicant does not have available the net worth
required by the provisions of section four of this article, if
applicable;
(2) The financial responsibility, character, reputation,
experience or general fitness of the applicant, including its
officers, directors, principals and employees, reasonably warrants
the belief
that the business will not be operated lawfully
and
properly in accordance with
the provisions of this article; and
(3) The applicant has
done any act or has failed or refused to
perform performed or failed or refused to perform any duty
or
obligation for which the license sought could be suspended or
revoked were it then issued and outstanding.
Otherwise, the commissioner shall issue to the applicant a
lender's or broker's license
which shall to entitle the applicant
to engage in the business of lender or broker, as the case may be,
during the period, unless sooner suspended or revoked, for which
the license is issued.
(b) Every application for a lender's or broker's license shall
be
passed upon reviewed and the license issued or refused within sixty days after the applicant therefor has fully complied with
the
provisions of this article.
The commissioner may grant a
provisional license to an applicant pending the outcome of a final
background investigation. If the results of the investigation
reveal information that would have been grounds for a license
denial or revocation, then the commissioner shall suspend or revoke
the provisional license. Under no circumstances whatever may a
person or licensee act as a broker and lender in the same
transaction. Whenever an application for a lender's or broker's
license is denied and the
license sought is refused, which refusal
denial has become final, the commissioner shall retain all fees to
cover administrative costs of processing the broker or lender
application.
§31-17-8. Maximum interest rate on subordinate loans; prepayment
rebate; maximum points, fees and charges; overriding
of federal limitations; limitations on lien
documents; prohibitions on primary and subordinate
mortgage loans; civil remedy.
(a) The maximum rate of finance charges on or in connection
with any subordinate mortgage loan may not exceed eighteen percent
per year on the unpaid balance of the amount financed.
(b) A borrower shall have the right to prepay his or her debt,
in whole or in part, at any time and shall receive a rebate for any
unearned finance charge, exclusive of any points, investigation fees and loan origination fees, which rebate shall be computed
under the actuarial method.
(c) Except as provided by section one hundred nine, article
three, chapter forty-six-a of this code and by subsection (g) of
this section, no additional charges may be made, nor may any charge
permitted by this section be assessed unless the loan is made.
(d) Where loan origination fees, investigation fees or points
have been charged by the licensee, the charges may not be imposed
again in any refinancing of that loan or any additional loan on
that property made within twenty-four months,
thereof unless the
new loan has a reasonable, tangible net benefit to the borrower
considering all of the circumstances, including the terms of both
the new and the refinanced loans, the cost of the new loan and the
borrower's circumstances. The licensee shall document this benefit
in writing on a form prescribed by the commissioner and maintain
such documentation in the loan file. To the extent this
subdivision overrides the preemption on limiting points and other
charges on first lien residential mortgage loans contained in the
United States Depository Institutions Deregulation and Monetary
Control Act of 1980, 12 U.S.C. §1735f-7a, the state law limitations
contained in this section shall apply.
(e) Notwithstanding other provisions of this section, a
delinquent charge or "late charge" may be charged on any
installment made ten or more days after the regularly scheduled due date in accordance with section one hundred twelve or one hundred
thirteen, article three, chapter forty-six-a of this code,
whichever is applicable. The charge may be made only once on any
one installment during the term of the primary or subordinate
mortgage loan.
(f) Hazard insurance may be required by the lender. The
charges for any insurance shall not exceed the standard rate
approved by the Insurance Commissioner for the insurance. Proof of
all insurance in connection with primary and subordinate mortgage
loans subject to this article shall be furnished to the borrower
within thirty days from and after the date of application
therefor
by the borrower.
(g) Except for fees for services provided by unrelated third
parties for appraisals, inspections, title searches and credit
reports, no application fee may be allowed whether or not the
mortgage loan is consummated. However, the borrower may be
required to reimburse the licensee for actual expenses incurred by
the licensee in a purchase money transaction after acceptance and
approval of a mortgage loan proposal made in accordance with
the
provisions of this article
which is not consummated because of:
(1) The borrower's willful failure to close the loan; or
(2) The borrower's false or fraudulent representation of a
material fact which prevents closing of the loan as proposed.
(h) No licensee shall make, offer to make, accept or offer to accept any primary or subordinate mortgage loan except on the terms
and conditions authorized in this article.
(i) No licensee shall induce or permit any borrower to become
obligated to the licensee under this article, directly or
contingently, or both, under more than one subordinate mortgage
loan at the same time for the purpose or with the result of
obtaining greater charges than would otherwise be permitted under
the provisions of this article.
(j) No instrument evidencing
or securing a primary or
subordinate mortgage loan shall contain:
(1) Any power of attorney to confess judgment;
(2) Any provision whereby the borrower waives any rights
accruing to him or her under
the provisions of this article;
(3) Any requirement that more than one installment be payable
in any one installment period, or
that the amount of any
installment be greater or less than that of any other installment,
except
for the final installment
which may be
in a lesser amount,
or unless the loan is structured as a revolving line of credit
having no set final payment date;
(4) Any assignment of or order for the payment of
any part of
any salary, wages, commissions or other compensation for services,
or any part thereof, earned or to be earned;
(5) A requirement for compulsory arbitration which does not
comply with federal law; or
(6) Blank or blanks to be filled in after
the consummation of
the loan. A borrower must be given a copy of every signed document
executed by the borrower at the time of closing.
(k) No licensee shall charge a borrower or receive from a
borrower money or other valuable consideration as compensation
before completing performance of all services the licensee has
agreed to perform for the borrower unless the licensee also
registers and complies with all requirements set forth for credit
service organizations in article six-c, chapter forty-six-a of this
code, including all additional bonding requirements as may be
established therein.
(l) No licensee shall make or broker revolving loans secured
by a primary or subordinate mortgage lien for the retail purchase
of consumer goods and services by use of a lender credit card.
(m) In making any primary or subordinate mortgage loan, no
licensee may, and no primary or subordinate mortgage lending
transaction may, contain terms which:
(1) Collect a fee not
contained in a good faith estimate
disclosed to the borrower
at least five business days prior to
closing; collect any attorney fee at closing in excess of the fee
that has been or will be remitted to the attorney; collect a fee
for a product or service where the product or service is not
actually provided; misrepresent the amount charged by or paid to a
third party for a product or service; or collect duplicate fee or points to act as both broker and lender for the same mortgage loan.
However, fees and points may be divided between the broker and the
lender as they agree, but may not exceed the total charges
otherwise permitted under this article
Provided, That the fact of
if any fee, point or compensation is disclosed to the borrower
consistent with the solicitation representation made to the
borrower;
(2) Compensate, whether directly or indirectly, coerce or
intimidate an appraiser for the purpose of influencing the
independent judgment of the appraiser with respect to the value of
real estate
that is to be covered by a deed of trust or
is being
offered as security according to an application for a primary or
subordinate mortgage loan;
(3) Make or assist in making any primary or subordinate
mortgage loan with the intent that the loan will not be repaid and
that the lender will obtain title to the property through
foreclosure.
Provided, That This subdivision shall not apply to
reverse mortgages obtained under the provisions of article
twenty-four, chapter forty-seven of this code;
(4) Require the borrower to pay, in addition to any periodic
interest, combined fees, compensation, or points of any kind to the
lender and broker to arrange, originate, evaluate, maintain or
service a loan secured by any encumbrance on residential property
that exceed, in the aggregate, six percent of the loan amount financed, including any yield spread premium paid by the lender to
the broker.
Provided, That Reasonable closing costs, as defined in
section one hundred two, article one, chapter forty-six-a of this
code, payable to unrelated third parties may not be included within
this limitation.
Provided, however, That However, no yield spread
premium is permitted for any loan for which the annual percentage
rate exceeds eighteen percent per year on the unpaid balance of the
amount financed.
Provided further, That if Also, if no yield
spread premium is charged, the aggregate of fees, compensation or
points can be no greater than five percent of the loan amount
financed. The financing of the fees and points are permissible
and, where included as part of the finance charge, does not
constitute charging interest on interest. To the extent
that this
section overrides the preemption on limiting points and other
charges on first lien residential mortgage loans contained in the
United States Depository Institutions Deregulation and Monetary
Control Act of 1980, 12 U.S.C. §1735f-7a, the state law limitations
contained in this section applies;
(5) Secure a primary or subordinate mortgage loan by any
security interest in personal property unless the personal property
is affixed to the residential dwelling or real estate;
(6) Allow or require a primary or subordinate mortgage loan to
be accelerated because of a decrease in the market value of the
residential dwelling
that is securing the loan;
(7) Require terms of repayment which do not result in
continuous monthly reduction of the original principal amount of
the loan.
Provided, That the provisions of This subdivision may
not apply to reverse mortgage loans obtained under article twenty-
four, chapter forty-seven of this code, home equity, open-end lines
of credit, bridge loans used in connection with the purchase or
construction of a new residential dwelling or commercial loans for
multiple residential purchases;
(8) Secure a primary or subordinate mortgage loan in a
principal amount that, when added to the aggregate total of the
outstanding principal balances of all other primary or subordinate
mortgage loans secured by the same property, exceeds the fair
market value of the property on the date
that the latest mortgage
loan is made. For purposes of this paragraph, a broker or lender
may rely upon a bona fide written appraisal of the property made by
an independent third-party appraiser, duly licensed or certified by
the West Virginia Real Estate Appraiser Licensing and Certification
Board and prepared in compliance with the uniform standards of
professional appraisal practice;
(9) Advise or recommend
that the consumer not make timely
payments on an existing loan preceding loan closure of a
refinancing transaction; or
(10) Knowingly violate any provision of any other applicable
state or federal law regulating primary or subordinate mortgage loans, including, without limitation, chapter forty-six-a of this
code.
§31-17-14. Hearing before commissioner; provisions pertaining to
hearing.
(a) Any applicant or licensee,
as the case may be, adversely
affected by an order made and entered by the commissioner in
accordance with
the provisions of section thirteen of this article,
if not previously provided the opportunity to a hearing on the
matter, may, in writing, demand a hearing before the commissioner.
The commissioner may appoint a hearing examiner to conduct the
hearing and prepare a recommended decision. The written demand for
a hearing must be filed with the commissioner within
thirty ten
days after the date upon which the applicant or licensee was served
with a copy of the order. The timely filing of a written demand
for hearing shall stay or suspend execution of the order in
question, pending a final determination, except for an order
suspending a license for failure of the licensee to maintain the
bond required by section four of this article in full force and
effect. If
a the written demand is timely filed
as aforesaid, the
aggrieved party is entitled to a hearing as a matter of right.
(b) All
of the pertinent provisions of article five, chapter
twenty-nine-a of this code shall
apply to and govern the hearing
and
the administrative procedures in connection with and following
such hearing, with like effect as if the provisions of the article were set forth in extenso in this subsection.
(c) For the purpose of conducting any such hearing hereunder,
the commissioner or appointed hearing examiner shall have the power
and authority to issue subpoenas and subpoenas duces tecum in
accordance with
the provisions of section one, article five,
chapter twenty-nine-a of this code. All subpoenas and subpoenas
duces tecum
are shall be issued and served in the manner, within
the time and for the fees and shall be enforced, as specified in
the section, and all of the section
provisions dealing with
subpoenas and subpoenas duces tecum shall apply to subpoenas and
subpoenas duces tecum issued for the purpose of a hearing
hereunder.
(d) Any hearing shall be held within
twenty thirty days after
the date upon which the commissioner received the timely written
demand
therefor unless there is a postponement or continuance. The
commissioner or hearing examiner may postpone or continue any
hearing on his or her own motion or for good cause shown
upon the
application of by the aggrieved party. At any hearing, the
aggrieved party may represent himself or herself or be represented
by any attorney-at-law admitted to practice before any circuit
court of this state.
(e) After the hearing and consideration of all of the
testimony, evidence and record in the case, the commissioner shall
make and enter an order affirming, modifying or vacating his or her earlier order, or shall make and enter an order as is considered
appropriate, meet and proper. If the commissioner appoints a
hearing examiner,
then the commissioner must issue his or her final
order within fifteen days of receiving the recommended decision of
the hearing examiner. The order shall be accompanied by findings
of fact and conclusions of law as specified in section three,
article five, chapter twenty-nine-a of this code and a copy of the
order and accompanying findings and conclusions shall be served
upon the aggrieved party and his or her attorney of record, if any,
in person or by certified mail, return receipt requested, or in any
other manner in which process in a civil action in this state may
be served. The order of the commissioner is final unless vacated
or modified on judicial review
thereof in accordance with
the
provisions of section fifteen of this article.
NOTE: The purpose of this bill is to make changes to the
disclosure requirements regarding fees in a mortgage loan, grant
the commissioner the authority to issue a provisional mortgage
license and to change time frame for hearings.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.