Bill Text: AZ SB1006 | 2016 | Fifty-second Legislature 2nd Regular | Engrossed
Bill Title: Institutional investor; definition
Spectrum: Strong Partisan Bill (Republican 10-1)
Status: (Engrossed - Dead) 2016-02-22 - Referred to House BFS Committee [SB1006 Detail]
Download: Arizona-2016-SB1006-Engrossed.html
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Senate Engrossed |
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State of Arizona Senate Fifty-second Legislature Second Regular Session 2016
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SENATE BILL 1006 |
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AN ACT
amending sections 6-902, 6-942, 6-971 and 6-1302, Arizona Revised Statutes; relating to mortgage bankers, mortgage brokers and loan originators.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 6-902, Arizona Revised Statutes, is amended to read:
6-902. Exemptions
A. This article does not apply to:
1. A person who does business under any other law of this state, or law of any other state while regulated by a state agency of such other state or the United States, relating to banks, savings banks, trust companies, savings and loan associations, profit sharing and pension trusts, credit unions, insurance companies or consumer lenders, or receivership, including directly or indirectly making, negotiating or offering to make or negotiate a mortgage loan if the mortgage transactions are regulated by the other law or are under the jurisdiction of a court. Subsidiaries and service corporations of these institutions shall not be exempt and shall be subject to the provisions of this article unless preempted by federal law.
2. A person who makes a mortgage loan:
(a) With his own monies.
(b) For his own investment.
(c) Without intent to resell.
(d) And is not engaged in the business of making mortgage loans.
3. A person who funds a mortgage loan which has been originated and processed by a licensee, by a mortgage banker licensed in this state or by a person exempt under paragraph 1 of this subsection and who meets all of the following:
(a) Does not maintain a place of business in this state in connection with funding mortgage loans.
(b) Does not directly or indirectly solicit borrowers in this state for the purpose of making mortgage loans.
(c) Does not participate in the negotiation of mortgage loans.
4. A person who, as seller of real property, receives one or more mortgages or deeds of trust as security for a purchase money obligation.
5. A person who is licensed to practice law in this state, but is not actively and principally engaged in the business of negotiating mortgage loans, if this person renders services in the course of his practice as an attorney at law.
6. A person who receives a mortgage or deed of trust on real property as security for an obligation payable on an installment or deferred payment basis and arising out of materials furnished or services rendered in the improvement of that real property or any lien created without the consent of the owner of the real property.
7. A person who is licensed pursuant to article 2 or 3 of this chapter.
8. An agency of any state or of the United States.
9. A nonprofit federally tax exempt corporation certified by the United States small business administration and organized to promote economic development within this state whose primary activity consists of providing financing for business expansion.
10. An institutional investor as defined in section 6‑971 unless the institutional investor makes a mortgage loan other than a commercial mortgage loan or a commercial business purpose loan as defined in section 6‑971.
B. For the purposes of:
1. Subsection A, paragraph 3 of this section, "originate" includes loans closed in a name other than that of the licensee, a mortgage banker licensed in this state or an exempt person only if the person in whose name the loan is closed meets the other requirements of subsection A, paragraph 3 of this section.
2. Subsection A, paragraph 3, subdivision (c) of this section, "negotiation of mortgage loans" does not include setting the terms under which a person may buy a mortgage loan originated by a licensee or a person exempt under subsection A, paragraph 1 of this section.
Sec. 2. Section 6-942, Arizona Revised Statutes, is amended to read:
6-942. Exemptions
A. This article does not apply to:
1. A person who does business under any other law of this state, or any other state while regulated by a state agency of such other state, or of the United States, relating to banks, savings banks, trust companies, savings and loan associations, profit sharing and pension trusts, credit unions, insurance companies or consumer lenders, or receiverships, including directly or indirectly making, negotiating or offering to make or negotiate a mortgage banking loan or a mortgage loan if the mortgage transactions are regulated by the other law or are under the jurisdiction of a court.
2. A person who makes a mortgage banking loan or a mortgage loan:
(a) With his own monies.
(b) For his own investment.
(c) Without intent to resell.
(d) And is not engaged in the business of making mortgage loans or mortgage banking loans.
3. A person who funds a mortgage loan or mortgage banking loan which has been originated and processed by a licensee, by a mortgage broker licensed in this state or by a person exempt under paragraph 1 of this subsection and who meets all of the following:
(a) Does not maintain a place of business in this state in connection with funding mortgage loans or mortgage banking loans.
(b) Does not directly or indirectly solicit borrowers in this state for the purpose of making mortgage loans.
(c) Does not participate in the negotiation of mortgage loans.
4. A person who, as seller of real property, receives one or more mortgages or deeds of trust as security for a purchase money obligation.
5. A person who is licensed to practice law in this state, but is not actively and principally engaged in the business of negotiating mortgage banking loans or mortgage loans, if this person renders services in the course of his practice as an attorney at law.
6. A person who receives a mortgage or deed of trust on real property as security for an obligation payable on an installment or deferred payment basis and arising out of materials furnished or services rendered in the improvement of that real property or any lien created without the consent of the owner of such real property.
7. A person who is licensed pursuant to article 1 or 3 of this chapter.
8. An agency of any state or of the United States.
9. A nonprofit federally tax exempt corporation certified by the United States small business administration and organized to promote economic development within this state whose primary activity consists of providing financing for business expansion.
10. An institutional investor as defined in section 6‑971 unless the institutional investor makes either:
(a) A mortgage loan other than a commercial mortgage loan or a commercial business purpose loan as defined in section 6‑971.
(b) A mortgage banking loan other than a commercial mortgage loan or a commercial business purpose loan as defined in section 6‑971.
B. Subsidiaries and service corporations of institutions exempt under subsection A, paragraph 1 of this section shall not be exempt and shall be subject to the provisions of this article unless preempted by federal law.
C. For the purposes of:
1. Subsection A, paragraph 3 of this section, "originate" includes loans closed in a name other than that of the licensee, a mortgage broker licensed in this state or an exempt person only if the person in whose name the loan is closed meets the other requirements of subsection A, paragraph 3 of this section.
2. Subsection A, paragraph 3, subdivision (c) of this section, negotiation of mortgage loans does not include setting the terms under which a person may buy a mortgage loan originated by a licensee or a person exempt under subsection A, paragraph 1 of this section.
Sec. 3. Section 6-971, Arizona Revised Statutes, is amended to read:
6-971. Definitions
In this article, unless the context otherwise requires:
1. "Affiliate" means an entity that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the specified entity.
2. "Commercial business purpose loan" means a loan that has a commercial business purpose and that may be directly or indirectly secured by a mortgage, deed of trust or any lien interest on any real property that is established with the real property owner's consent.
2. 3. "Commercial mortgage banker" means a person who engages in the following:
(a) Originating commercial mortgage loans.
(b) Servicing commercial mortgage loans.
(c) Either directly or indirectly making, negotiating or offering to make or negotiate commercial mortgage loans.
3. 4. "Commercial mortgage loan" means a loan that is directly or indirectly secured by a mortgage or deed of trust or any lien interest on commercial property and created with the consent of the owner of the commercial property.
4. 5. "Commercial mortgage loan closing" means the day by which all documents relating to the commercial mortgage loan have been executed and recorded and all monies have been accounted for under the terms of the escrow instructions.
5. 6. "Commercial property" means real estate that is located in this state and that is not used for a one to four family residence.
6. 7. "Compensation" means anything of value or any benefit including points, commissions, bonuses, referral fees, loan origination fees and other similar fees but excluding periodic interest resulting from the application of the note rate of interest to the outstanding principal balance remaining unpaid from time to time.
7. 8. "Institutional investor" means a person who in the regular course of business makes commercial mortgage loans of more than two hundred fifty thousand dollars or commercial business purpose loans that are funded exclusively from the institutional investor's own resources.
8. 9. "Investor" means a person who directly or indirectly provides monies to a commercial mortgage banker that are, or are intended to be, used to make a loan, and any person who purchases a loan, or any interest in a loan, from a commercial mortgage banker or in a transaction that has been directly or indirectly arranged or negotiated by a commercial mortgage banker.
9. 10. "License" means a license issued under this article.
10. 11. "Licensee" means a person who is licensed under this article.
11. 12. "Own resources" means any of the following:
(a) Cash, corporate capital, warehouse credit lines at commercial banks, savings banks or savings and loan associations or other sources that are liability items on the person's financial statements.
(b) Correspondent contracts between the commercial mortgage banker and an institutional investor, bank, savings bank, trust company, savings and loan association, credit union, profit sharing or pension trust, consumer lender or insurance company.
(c) The person's affiliates' cash, corporate capital, warehouse credit lines at commercial banks or other sources that are liability items on the affiliates' financial statements for which the affiliates' assets are pledged.
12. 13. "Servicing commercial mortgage loans" means collecting payments at a location in this state on commercial mortgage loans, including:
(a) Principal.
(b) Interest.
(c) Trust items such as hazard insurance premiums, taxes and various reserves on an obligation under the terms of the obligation.
(d) Operational procedures covering accounting, bookkeeping, insurance, tax records, loan payment follow‑up, delinquency loan follow‑up, loan analysis and property valuation.
Sec. 4. Section 6-1302, Arizona Revised Statutes, is amended to read:
6-1302. Scope of chapter; exemptions
A. Any person who acts as an advance fee loan broker shall register with the superintendent as provided in this chapter. A person who is not exempt under subsection B of this section and who advertises for, solicits or purports to be willing to make or procure a loan or extension of credit for an advance fee is presumed to be engaged in the business of an advance fee loan broker.
B. This chapter does not apply to:
1. Individuals not regularly engaged in the business of making or procuring loans or extensions of credit for an advance fee.
2. A person doing business as permitted by any law of any state or of the United States relating to banks, savings banks, trust companies, savings and loan associations, credit unions, insurance companies, consumer lenders or profit sharing and pension trusts.
3. A person licensed as a mortgage broker, a mortgage banker or a commercial mortgage banker pursuant to chapter 9 of this title.
4. A person who makes a loan with the person's own money or for the person's own investment.
5. A person licensed as a real estate broker or salesperson pursuant to title 32, chapter 20, article 2.
6. A person who is licensed to practice law in this state but who is not actively and principally engaged in the business of making or procuring loans or extensions of credit, if this person renders services in the course of the person's practice as an attorney.
7. An institutional investor as defined in section 6‑971 unless the institutional investor advertises for, solicits or holds himself out as willing to make or procure for an advance fee a loan or extension of credit other than a commercial mortgage loan or a commercial business purpose loan as defined in section 6‑971.
8. This state including any political subdivision of this state.
9. The United States or any department or agency of the United States.
