Bill Text: CT SB00160 | 2012 | General Assembly | Introduced

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Bill Title: An Act Concerning The S.a.f.e. Mortgage Licensing Act.

Spectrum: Committee Bill

Status: (Introduced - Dead) 2012-03-01 - Public Hearing 03/06 [SB00160 Detail]

Download: Connecticut-2012-SB00160-Introduced.html

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General Assembly		Raised Bill No. 160
February Session, 2012		LCO No. 1007
		*01007_______BA_*
Referred to Committee on Banks
Introduced by:
(BA)

AN ACT CONCERNING THE S.A.F.E. MORTGAGE LICENSING ACT.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-3 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

Other definitions applying to this title or to specified parts thereof and the sections in which they appear are:

T1	"Account". Sections 36a-155 and 36a-365.
T2	"Additional proceeds". Section 36a-746e.
T3	"Administrative expense". Section 36a-237.
T4	"Advance fee". Sections 36a-485, as amended by this act, and 36a-615.
T5	"Advertise", [or] "advertisement" or "advertising". Section 36a-485, as
T6	amended by this act.
T7	"Agency bank". Section 36a-285.
T8	"Agent". Section 36a-494, as amended by this act.
T9	"Alternative mortgage loan". Section 36a-265.
T10	"Amount financed". Section 36a-690.
T11	"Annual percentage rate". Section 36a-690.
T12	"Annual percentage yield". Section 36a-316.
T13	"Annuities". Section 36a-455a.
T14	"Applicant". Section 36a-736.
T15	"APR". Section 36a-746a.
T16	"Assessment area". Section 36a-37.
T17	"Assets". Section 36a-70.
T18	"Associate". Section 36a-184.
T19	"Associated member". Section 36a-458a.
T20	"Bank". Section 36a-30.
T21	"Bankers' bank". Section 36a-70.
T22	"Banking business". Section 36a-425.
T23	"Basic services". Section 36a-437a.
T24	"Billing cycle". Section 36a-565.
T25	"Bona fide nonprofit organization". Section 36a-487, as amended by this
T26	act, and section 36a-655.
T27	"Branch". Sections 36a-145, 36a-410 and 36a-435b.
T28	"Branch office". Section 36a-485, as amended by this act.
T29	"Branch or agency net payment entitlement". Section 36a-428n.
T30	"Branch or agency net payment obligation". Section 36a-428n.
T31	"Broker". Section 36a-746a.
T32	"Business and industrial development corporation". Section 36a-626.
T33	"Business and property in this state". Section 36a-428n.
T34	"Capital". Section 36a-435b.
T35	"Cash advance". Section 36a-564.
T36	"Cash price". Section 36a-770.
T37	"Certificate of incorporation". Section 36a-435b.
T38	"CHFA loan". Section 36a-760.
T39	"Clerical or support duties". Section 36a-485, as amended by this act.
T40	"Closely related activities". Sections 36a-250 and 36a-455a.
T41	"Collective managing agency account". Section 36a-365.
T42	"Commercial vehicle". Section 36a-770.
T43	"Community bank". Section 36a-70.
T44	"Community credit union". Section 36a-37.
T45	"Community development bank". Section 36a-70.
T46	"Community reinvestment performance". Section 36a-37.
T47	"Connecticut holding company". Sections 36a-53 and 36a-410.
T48	"Consolidate". Section 36a-145.
T49	"Construction loan". Section 36a-458a.
T50	"Consumer". Sections 36a-155, 36a-676 and 36a-695.
T51	"Consumer Credit Protection Act". Section 36a-676.
T52	"Consumer debtor" and "debtor". Sections 36a-645 and 36a-800.
T53	"Consumer collection agency". Section 36a-800.
T54	"Consummation". Section 36a-746a.
T55	"Control person". Section 36a-485, as amended by this act.
T56	"Controlling interest". Section 36a-276.
T57	"Conventional mortgage rate". Section 36a-760.
T58	"Corporate". Section 36a-435b.
T59	"Credit". Sections 36a-645 and 36a-676.
T60	"Credit manager". Section 36a-435b.
T61	"Creditor". Sections 36a-676, 36a-695 and 36a-800.
T62	"Credit card", "cardholder" and "card issuer". Section 36a-676.
T63	"Credit clinic". Section 36a-700.
T64	"Credit rating agency". Section 36a-695.
T65	"Credit report". Section 36a-695.
T66	"Credit sale". Section 36a-676.
T67	"Credit union service organization". Section 36a-435b.
T68	"Credit union service organization services". Section 36a-435b.
T69	"De novo branch". Section 36a-410.
T70	"Debt". Section 36a-645.
T71	"Debt adjustment". Section 36a-655.
T72	"Debt mutual fund". Sections 36a-275 and 36a-459a.
T73	"Debt securities". Sections 36a-275 and 36a-459a.
T74	"Debtor". Section 36a-655.
T75	"Deliver". Section 36a-316.
T76	"Deposit". Section 36a-316.
T77	"Deposit account". Section 36a-316.
T78	"Deposit account charge". Section 36a-316.
T79	"Deposit account disclosures". Section 36a-316.
T80	"Deposit contract". Section 36a-316.
T81	"Deposit services". Section 36a-425.
T82	"Depositor". Section 36a-316.
T83	"Depository institution". Section 36a-485, as amended by this act.
T84	"Director". Section 36a-435b.
T85	"Dwelling". Section 36a-485, as amended by this act.
T86	"Earning period". Section 36a-316.
T87	"Electronic payment instrument". Section 36a-596.
T88	"Eligible collateral". Section 36a-330.
T89	"Eligible entity". Section 36a-34.
T90	"Employee". Section 36a-485, as amended by this act.
T91	"Equity mutual fund". Sections 36a-276 and 36a-459a.
T92	"Equity security". Sections 36a-276 and 36a-459a.
T93	"Executive officer". Sections 36a-263 and 36a-469c.
T94	"Expedited Connecticut bank". Section 36a-70.
T95	"Experience in the mortgage business". Section 36a-488, as amended by
T96	this act.
T97	"Federal banking agency". Section 36a-485, as amended by this act.
T98	"Federal Credit Union Act". Section 36a-435b.
T99	"Federal Home Mortgage Disclosure Act". Section 36a-736.
T100	"FHA loan". Section 36a-760.
T101	"Fiduciary". Section 36a-365.
T102	"Filing fee". Section 36a-770.
T103	"Finance charge". Sections 36a-690 and 36a-770.
T104	"Financial institution". Sections 36a-41, 36a-44a, 36a-155, 36a-316, 36a-330,
T105	36a-435b, 36a-736 and 36a-755.
T106	"Financial records". Section 36a-41.
T107	"First mortgage loan". Sections 36a-485, as amended by this act, 36a-705,
T108	36a-715 and 36a-725.
T109	"Foreign banking corporation". Section 36a-425.
T110	"Fully indexed rate". Section 36a-760b.
T111	"General facility". Section 36a-580.
T112	"Global net payment entitlement". Section 36a-428n.
T113	"Global net payment obligation". Section 36a-428n.
T114	"Goods". Sections 36a-535 and 36a-770.
T115	"Graduated payment mortgage loan". Section 36a-265.
T116	"Guardian". Section 36a-365.
T117	"High cost home loan". Section 36a-746a.
T118	"Holder". Section 36a-596.
T119	"Home banking services". Section 36a-170.
T120	"Home banking terminal". Section 36a-170.
T121	"Home improvement loan". Section 36a-736.
T122	"Home purchase loan". Section 36a-736.
T123	"Home state". Section 36a-410.
T124	"Housing finance agency". Section 36a-487, as amended by this act.
T125	"Immediate family member". Section 36a-435b and section 36a-485, as
T126	amended by this act.
T127	"Independent contractor". Section 36a-485, as amended by this act.
T128	"Individual". Section 36a-485, as amended by this act.
T129	"Insider". Section 36a-454b.
T130	"Installment loan contract". Sections 36a-535 and 36a-770.
T131	"Insurance". Section 36a-455a.
T132	"Insurance bank". Section 36a-285.
T133	"Insurance department". Section 36a-285.
T134	"Interest". Section 36a-316.
T135	"Interest rate". Section 36a-316.
T136	"Interim interest". Section 36a-746a.
T137	"Lender". Sections 36a-746a, 36a-760 and 36a-770.
T138	"Lessor". Section 36a-676.
T139	"License". Section 36a-626.
T140	"Licensee". Sections 36a-596 and 36a-626.
T141	"Limited branch". Section 36a-145.
T142	"Limited facility". Section 36a-580.
T143	"Loan broker". Section 36a-615.
T144	"Loan processor or underwriter". Section 36a-485, as amended by this act.
T145	"Loss". Section 36a-330.
T146	"Made in this state". Section 36a-770.
T147	"Main office". Section 36a-485, as amended by this act.
T148	"Managing agent". Section 36a-365.
T149	"Manufactured home". Section 36a-457b.
T150	"Material litigation". Section 36a-596.
T151	"Member". Section 36a-435b.
T152	"Member business loan". Section 36a-458a.
T153	"Member in good standing". Section 36a-435b.
T154	"Membership share". Section 36a-435b.
T155	"Mobile branch". Sections 36a-145 and 36a-435b.
T156	"Money order". Section 36a-596.
T157	"Money transmission". Section 36a-365.
T158	"Mortgage". Section 36a-760g.
T159	"Mortgage broker". Sections 36a-485, as amended by this act, 36a-705 and
T160	36a-760.
T161	"Mortgage correspondent lender". Section 36a-485, as amended by this act.
T162	"Mortgage insurance". Section 36a-725.
T163	"Mortgage lender". Sections 36a-485, as amended by this act, 36a-705 and
T164	36a-725.
T165	"Mortgage loan". Sections 36a-261, 36a-265, 36a-457b [, 36a-485] and 36a-
T166	736.
T167	"Mortgage loan originator". Section 36a-485, as amended by this act.
T168	"Mortgage rate lock-in". Section 36a-705.
T169	"Mortgage servicing company". Section 36a-715.
T170	"Mortgagor". Section 36a-715.
T171	"Motor vehicle". Section 36a-770.
T172	"Multiple common bond membership". Section 36a-435b.
T173	"Municipality". Section 36a-800.
T174	"Net outstanding member business loan balance". Section 36a-458a.
T175	"Net worth". Sections 36a-441a, 36a-458a and 36a-596.
T176	"Network". Section 36a-155.
T177	"Nonprime home loan". Section 36a-760.
T178	"Nonrefundable". Section 36a-498.
T179	"Nontraditional mortgage product". Section 36a-489a, as amended by this
T180	act.
T181	"Note account". Sections 36a-301 and 36a-456b.
T182	"Office". Sections 36a-23, 36a-316 and 36a-485, as amended by this act.
T183	"Officer". Section 36a-435b.
T184	"Open-end credit plan". Section 36a-676.
T185	"Open-end line of credit". Section 36a-760.
T186	"Open-end loan". Section 36a-565.
T187	"Organization". Section 36a-800.
T188	"Out-of-state holding company". Section 36a-410.
T189	"Outstanding". Section 36a-596.
T190	"Passbook savings account". Section 36a-316.
T191	"Payment instrument". Section 36a-596.
T192	"Periodic statement". Section 36a-316.
T193	"Permissible investment". Section 36a-596.
T194	"Person". Section 36a-184 and section 36a-485, as amended by this act.
T195	"Post". Section 36a-316.
T196	"Prepaid finance charge". Section 36a-746a.
T197	"Prime quality". Section 36a-596.
T198	"Principal amount of the loan". Section 36a-485, as amended by this act.
T199	"Processor". Section 36a-155.
T200	"Public deposit". Section 36a-330.
T201	"Purchaser". Section 36a-596.
T202	"Qualified financial contract". Section 36a-428n.
T203	"Qualified public depository" and "depository". Section 36a-330.
T204	"Real estate". Section 36a-457b.
T205	"Real estate brokerage activity". Section 36a-485, as amended by this act.
T206	"Records". Section 36a-17.
T207	"Registered mortgage loan originator". Section 36a-485, as amended by
T208	this act.
T209	"Related person". Section 36a-53.
T210	"Relocate". Sections 36a-145 and 36a-462a.
T211	"Residential mortgage loan". Section 36a-485, as amended by this act.
T212	["Residential property". Section 36a-485.]
T213	"Residential real estate". Section 36a-485, as amended by this act.
T214	"Resulting entity". Section 36a-34.
T215	"Retail buyer". Sections 36a-535 and 36a-770.
T216	"Retail credit transaction". Section 42-100b.
T217	"Retail installment contract". Sections 36a-535 and 36a-770.
T218	"Retail installment sale". Sections 36a-535 and 36a-770.
T219	"Retail seller". Sections 36a-535 and 36a-770.
T220	"Reverse annuity mortgage loan". Section 36a-265.
T221	"Sales finance company". Sections 36a-535 and 36a-770.
T222	"Savings department". Section 36a-285.
T223	"Savings deposit". Section 36a-316.
T224	"Secondary mortgage loan". Section 36a-485, as amended by this act.
T225	"Security convertible into a voting security". Section 36a-184.
T226	"Senior management". Section 36a-435b.
T227	"Settlement agent". Section 36a-494, as amended by this act.
T228	"Share". Section 36a-435b.
T229	"Simulated check". Section 36a-485, as amended by this act.
T230	"Single common bond membership". Section 36a-435b.
T231	"Special mortgage". Section 36a-760c.
T232	"Social purpose investment". Section 36a-277.
T233	"Sponsored". Section 36a-485, as amended by this act.
T234	"Standard mortgage loan". Section 36a-265.
T235	"System". Section 36a-485, as amended by this act.
T236	"Table funding agreement". Section 36a-485, as amended by this act.
T237	"Tax and loan account". Sections 36a-301 and 36a-456b.
T238	"The Savings Bank Life Insurance Company". Section 36a-285.
T239	"Time account". Section 36a-316.
T240	"Travelers check". Section 36a-596.
T241	"Troubled Connecticut credit union". Section 36a-448a.
T242	"Unique identifier". Section 36a-485, as amended by this act.
T243	"Unsecured loan". Section 36a-615.
T244	"Warehouse agreement". Section 36a-485, as amended by this act.

Sec. 2. Section 36a-485 of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

As used in this section and sections 36a-486 to 36a-498f, inclusive, 36a-534a [and 36a-534b] to 36a-534c, inclusive, as amended by this act, unless the context otherwise requires:

(1) "Advance fee" means any consideration paid or given, directly or indirectly, to a mortgage lender, mortgage correspondent lender or mortgage broker required to be licensed pursuant to sections 36a-485 to [36a-498a] 36a-498f, inclusive, and sections 36a-534a and 36a-534b, as amended by this act, prior to the closing of a residential mortgage loan to any person, including, but not limited to, loan fees, points, broker's fees or commissions, transaction fees or similar prepaid finance charges;

(2) "Advertise", "advertisement" or "advertising" means the use of any announcement, statement, assertion or representation that is placed before the public in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster or over any radio or television station, by means of the Internet, or by other electronic means of distributing information, by personal contact, or in any other way;

(3) "Branch office" means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a mortgage lender, mortgage correspondent lender or mortgage broker;

(4) "Control person" means an individual that directly or indirectly exercises control over another person. Any person that (A) is a director, general partner or executive officer; (B) directly or indirectly has the right to vote ten per cent or more of a class of any voting security or has the power to sell or direct the sale of ten per cent or more of any class of voting securities; (C) in the case of a limited liability company, is a managing member; or (D) in the case of a partnership, has the right to receive upon dissolution, or has contributed, ten per cent or more of the capital, is presumed to be a control person. For purposes of this subdivision, "control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract or otherwise;

(5) "Depository institution" has the same meaning as provided in Section 3 of the Federal Deposit Insurance Act, 12 USC 1813, and includes any Connecticut credit union, federal credit union or out-of-state credit union;

(6) "Dwelling" has the same meaning as provided in Section 103 of the Consumer Civil Protection Act, 15 USC 1602;

(7) "Employee" means an individual (A) whose manner and means of work performance are subject to the right of control of, or are controlled by, a person, and (B) whose compensation is reported or required to be reported on a W-2 form issued by the controlling person. For purposes of the definition of "registered mortgage loan originator", "employee" has the foregoing meaning or such other meaning as the federal banking agencies may issue in connection with such agencies' implementation of such agencies' responsibilities under the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC 5101 et seq.;

[(6)] (8) "Federal banking agency" means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration and the Federal Deposit Insurance Corporation;

[(7)] (9) "First mortgage loan" means a residential mortgage loan that is secured by a first mortgage;

[(8)] (10) "Immediate family member" means a spouse, child, sibling, parent, grandparent or grandchild and includes stepparents, stepchildren, stepsiblings and adoptive relationships;

(11) "Independent contractor" means an individual retained on a basis where the individual is not an employee of any person in connection with the services such individual provides and whose compensation is reported or required to be reported on an Internal Revenue Service Form 1099 issued by the retaining person;

[(9)] (12) "Individual" means a natural person;

[(10)] (13) "Loan processor or underwriter" means an individual who performs clerical or support duties. The term "clerical or support duties" includes, subsequent to the receipt of an application, (A) the receipt, collection, distribution and analysis of information common for the processing or underwriting of a residential mortgage loan, and (B) communication with a consumer to obtain the information necessary for the processing or underwriting of a loan to the extent that such communication does not include offering or negotiating loan rates or terms or counseling consumers about residential mortgage loan rates or terms;

[(11)] (14) "Main office" means the main address designated on the system;

[(12)] (15) "Mortgage broker" (A) means a person who [,] (i) for compensation or gain or [in] with the expectation of compensation or gain [(A)] (I) takes a residential mortgage loan application, or [(B)] (II) offers or negotiates terms of a residential mortgage loan, [excluding] and (ii) is not the prospective source of the funds for the residential mortgage loan, (B) but does not include (i) an individual who is [sponsored by another] licensed as a mortgage loan originator acting as a mortgage loan originator on behalf of such mortgage loan originator's sponsoring mortgage lender, mortgage correspondent lender, [or] mortgage broker or exempt registrant, or (ii) an individual exempt from mortgage loan originator licensure under subdivision (2) of subsection (b) of section 36a-486, as amended by this act, when acting within the scope of such exemption;

[(13)] (16) "Mortgage correspondent lender" means a person engaged in the business of making residential mortgage loans in such person's own name where the loans are not held by such person for more than ninety days and are funded by another person through a warehouse agreement, table funding agreement or similar agreement;

[(14)] (17) "Mortgage lender" means a person engaged in the business of making residential mortgage loans in such person's own name utilizing such person's own funds or by funding loans through a warehouse agreement, table funding agreement or similar agreement;

[(15)] (18) "Mortgage loan originator" means an individual who for compensation or gain or with the expectation of compensation or gain, either for such individual or for the person employing or retaining such individual, (A) takes a residential mortgage loan application, or (B) offers or negotiates terms of a residential mortgage loan. "Mortgage loan originator" does not include (i) an individual engaged solely as a loan processor or underwriter; (ii) a person who only performs real estate brokerage activities and is licensed in accordance with chapter 392, unless the person is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator or by any agent of such mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator; (iii) a person solely involved in extensions of credit relating to timeshare plans, as that term is defined in Paragraph 53D of 11 USC 101; or (iv) any individual who solely renegotiates terms for existing mortgage loans on behalf of a mortgagee and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction determines that the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., requires such individual to be licensed as a mortgage loan originator under state laws implementing said S.A.F.E. Mortgage Licensing Act;

[(16)] (19) "Office" means a branch office or a main office;

[(17)] (20) "Person" means a natural person, corporation, company, limited liability company, partnership or association;

[(18)] (21) "Principal amount of the loan" means the gross amount the borrower is obligated to repay including any prepaid finance charge that is financed, and any other charge that is financed;

[(19)] (22) "Real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including (A) acting as a real estate agent or real estate broker for a buyer, seller, lessor or lessee of real property; (B) bringing together parties interested in the sale, purchase, lease, rental or exchange of real property; (C) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental or exchange of real property, other than in connection with providing financing with respect to any such transaction; (D) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and (E) offering to engage in any activity, or act in any capacity, described in this subdivision;

[(20)] (23) "Registered mortgage loan originator" means any individual who (A) meets the definition of mortgage loan originator and is an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration; and (B) is registered with and maintains a unique identifier through the system;

[(21)] (24) "Residential mortgage loan" means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling [as defined in Section 103 of the Consumer Credit Protection Act, 15 USC 1602,] or residential real estate upon which is constructed or intended to be constructed a dwelling; [, as so defined;]

[(22)] (25) "Residential real estate" means any real property located in this state, upon which is constructed or intended to be constructed a dwelling; [as defined in Section 103 of the Consumer Credit Protection Act, 15 USC 1602]

[(23)] (26) "Secondary mortgage loan" means a residential mortgage loan that is secured, in whole or in part, by a mortgage, provided such property is subject to one or more prior mortgages;

[(24)] (27) "Simulated check" means a document that imitates or resembles a check but is not a negotiable instrument;

[(25)] (28) "Sponsored" means employed or retained as an independent contractor;

[(26)] (29) "System" means the Nationwide Mortgage Licensing System and Registry developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of mortgage lenders, mortgage correspondent lenders, mortgage brokers, mortgage loan originators and loan processors or underwriters;

[(27)] (30) "Table funding agreement" means an agreement wherein a person agrees to fund mortgage loans to be made in another person's name and to purchase such loans after they are made;

[(28)] (31) "Unique identifier" means a number or other identifier assigned by protocols established by the system; and

[(29)] (32) "Warehouse agreement" means an agreement to provide credit to a person to enable the person to have funds to make residential mortgage loans and hold such loans pending sale to other persons.

Sec. 3. Section 36a-486 of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(a) No person shall engage in the business of making residential mortgage loans or act as a mortgage broker in this state unless such person has first obtained the required license for its main office and each branch office where such business is conducted in accordance with the provisions of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, as amended by this act. Effective April 1, 2010, any such person who is an individual shall also obtain a mortgage loan originator license prior to conducting such business unless such individual does not engage directly in the activities of a mortgage loan originator. A person, other than a licensed mortgage loan originator acting on behalf of a mortgage lender or mortgage correspondent lender, shall be deemed to be engaged in the business of making residential mortgage loans if such person advertises, causes to be advertised, solicits or offers to make residential mortgage loans, either directly or indirectly. A person, other than a licensed mortgage loan originator acting on behalf of a mortgage broker, shall be deemed to be acting as a mortgage broker if such person advertises or causes to be advertised that such person will negotiate, solicit, place or find a residential mortgage loan, either directly or indirectly. A mortgage correspondent lender shall not be deemed to be acting as a mortgage lender if such mortgage correspondent lender makes a loan utilizing its own funds in a situation where another person does not honor such person's commitment to fund the loan.

(b) (1) No person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker shall engage the services of a mortgage loan originator or of a loan processor or underwriter required to be licensed under [subdivision (3) of this subsection] this section unless such mortgage loan originator or loan processor or underwriter is licensed under section 36a-489, as amended by this act. An individual, unless specifically exempted under subdivision (2) of this subsection, shall not engage in the business of a mortgage loan originator on behalf of a licensee or a person exempt under section 36a-487, as amended by this act, with respect to any residential mortgage loan without first obtaining and maintaining annually a license as a mortgage loan originator under section 36a-489, as amended by this act. An individual, unless specifically exempted under subdivision (2) of this subsection, shall be deemed to be engaged in the business of a mortgage loan originator if such individual: (A) Acts as a mortgage loan originator in connection with any residential mortgage loan on behalf of a licensee or person exempt under section 36a-487, as amended by this act; or (B) makes any representation to the public through advertising or other means of communication that such individual can or will act as a mortgage loan originator on behalf of a licensee or person exempt under section 36a-487, as amended by this act. Each licensed mortgage loan originator and each licensed loan processor or underwriter shall register with and maintain a valid unique identifier issued by the system. No individual may act as a mortgage loan originator or loan processor or underwriter for more than one person at the same time. The license of a mortgage loan originator or a loan processor or underwriter is not effective during any period when such mortgage loan originator or a loan processor or underwriter is not sponsored by a licensed mortgage lender, mortgage correspondent lender or mortgage broker, or by a person registered as an exempt registrant under subsection (c) of section 36a-487, or during any period in which the license of the mortgage lender, mortgage correspondent lender or mortgage broker with whom such originator or loan processor or underwriter is associated has been suspended. Either the mortgage loan originator, the loan processor or underwriter or the sponsor may file a notification of the termination of sponsorship with the system.

(2) The following are exempt from this section: (A) A registered mortgage loan originator or an employee of an institution or subsidiary described in subdivision [(20)] (23) of section 36a-485, as amended by this act, who is not required to be registered under Section 1507 of the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., when acting for such institution or subsidiary; [,] (B) an individual who offers or negotiates the terms of a residential mortgage loan with or on behalf of an immediate family member of such individual; [,] (C) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling [, as defined in Section 103 of the Consumer Credit Protection Act, 15 USC 1602,] that served as the individual's residence, [and] unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition; (D) a licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator or by any agent of such mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator; (E) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of a federal, state or local government agency or housing finance agency exempt from licensure pursuant to section 36a-487, as amended by this act, and who does so only pursuant to such individual's official duties as an employee of such agency; (F) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of an organization that has obtained bona fide nonprofit status from the commissioner and is exempt from licensure pursuant to section 36a-487, as amended by this act, and who does so only pursuant to such individual's official duties as an employee of such organization; and (G) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that is not the individual's residence but is owned by such individual, unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition.

[(3) A loan processor or underwriter who is: (A) An independent contractor, or (B) employed by any person other than: (i) A licensed mortgage lender, mortgage correspondent lender or mortgage broker; or (ii) any person exempt from such licensure under subdivision (1) of subsection (a) of section 36a-487 may not engage in the activities of a loan processor or underwriter unless such loan processor or underwriter obtains and maintains a license as a loan processor or underwriter under section 36a-489.]

(3) No loan processor or underwriter shall engage in the activities of a loan processor or underwriter unless such loan processor or underwriter obtains and maintains a license as a loan processor or underwriter under section 36a-489, as amended by this act, except an individual engaged in loan processor or underwriter activities:

(A) As an employee of a licensed mortgage lender, mortgage correspondent lender or mortgage broker and who engages in such activities at the direction and subject to the supervision of a licensed mortgage loan originator of such licensee;

(B) As an employee of a person exempt from licensure under subdivision (1) of subsection (a) of section 36a-487 and who engages in such activities at the direction of and subject to the supervision of either a licensed mortgage loan originator or a registered mortgage loan originator of such exempt entity; or

(C) In any capacity where the residential mortgage loans for which such individual provides services were originated by an individual not required to be licensed or registered as a mortgage loan originator under part I of chapter 668.

(4) An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.

(c) If the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction determines that the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., requires an individual described in subparagraph (B) (iv) of subdivision [(15)] (18) of section 36a-485, as amended by this act, to be licensed as a mortgage loan originator under state laws implementing said S.A.F.E. Mortgage Licensing Act, such individual may continue to act in such individual's current capacity, provided such individual files an application for a mortgage loan originator license not later than the date sixty days from the date of such determination by the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction.

(d) Each residential mortgage loan taken, offered, negotiated, solicited, arranged, placed, found, [or] made, processed or underwritten without a license shall constitute a separate violation for purposes of section 36a-50.

Sec. 4. Subsection (b) of section 36a-487 of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(b) The following are exempt from licensing as a mortgage lender or mortgage correspondent lender under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, as amended by this act:

(1) Persons making five or fewer residential mortgage loans within any period of twelve consecutive months, provided nothing herein shall relieve such persons from complying with all applicable laws;

(2) Bona fide nonprofit [corporations] organizations making residential mortgage loans [to] that promote home ownership for the economically disadvantaged. For purposes of this subdivision, a "bona fide nonprofit organization" means an organization that has filed a written certified submission to the commissioner in a form prescribed by the commissioner and with such documentation as may be required by the commissioner and that demonstrates to the satisfaction of the commissioner that the organization: (A) Has the status of a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended; (B) promotes affordable housing or provides home ownership education or similar services; (C) conducts its activities in a manner that serves public or charitable purposes rather than commercial purposes; (D) receives funding and revenue and charges fees in a manner that does not incentivize it or its employees to act other than in the best interests of its clients; (E) compensates its employees in a manner that does not incentivize employees to act other than in the best interests of its clients; (F) provides or identifies for the borrower residential mortgage loans (i) with terms favorable to the borrower, which means such terms must be consistent with loan origination in a public or charitable context, not a commercial context, and (ii) comparable to mortgage loans and housing assistance provided under government housing assistance programs; (G) is certified either by the United States Department of Housing and Urban Development or a state housing authority; and (H) meets such other standards as the commissioner may by regulation require. Any organization that demonstrates to the satisfaction of the commissioner its status as a bona fide nonprofit organization shall, not later than December thirty-first of each year, submit to the commissioner a renewed certification and documentation to update all information last filed in support of such status and timely report any change in any information previously submitted;

(3) Agencies of the federal government, or any state or municipal government, or any [quasi-governmental] housing finance agency making residential mortgage loans under the specific authority of the laws of any state or the United States. For purposes of this subdivision, a "housing finance agency" means any authority: (A) Chartered by a state to help meet the affordable housing needs of the residents of the state; (B) supervised directly or indirectly by the state government; (C) subject to audit and review by the state in which it operates; and (D) whose activities make it eligible to be a member of the National Council of State Housing Agencies;

(4) Persons licensed under sections 36a-555 to 36a-573, inclusive, when making residential mortgage loans authorized by said sections;

(5) Persons owning real property who take back from the buyer of such property a secondary mortgage loan in lieu of any portion of the purchase price of the property;

(6) Any corporation or its affiliate that makes residential mortgage loans exclusively for the benefit of its employees or agents;

(7) Any corporation, licensed in accordance with section 38a-41, or its affiliate or subsidiary, that makes residential mortgage loans to promote home ownership in urban areas;

(8) Persons acting as fiduciaries with respect to any employee pension benefit plan qualified under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, who make residential mortgage loans solely to plan participants from plan assets; and

(9) Persons making secondary mortgage loans to [individuals related to the maker by blood or marriage] immediate family members.

Sec. 5. Subdivision (1) of subsection (a) of section 36a-488 of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(a) (1) The commissioner shall not issue a mortgage lender license, a mortgage correspondent lender license or a mortgage broker license to any person unless such person meets the following tangible net worth and experience requirements, as applicable: (A) The minimum tangible net worth requirement for a mortgage lender shall be two hundred fifty thousand dollars and the minimum tangible net worth requirement for a mortgage correspondent lender and a mortgage broker shall be (i) prior to March 2, 2009, twenty-five thousand dollars, and (ii) on and after March 2, 2009, fifty thousand dollars, and (B) a mortgage lender, mortgage correspondent lender or mortgage broker shall have, at the main office for which the license is sought, a qualified individual and, at each branch office, a branch manager (i) who have supervisory authority over the lending or brokerage activities, (ii) who have at least three years' experience in the mortgage business within the five years immediately preceding the date of the application for the license, [and] (iii) who, effective April 1, 2010, have completed the prelicensing education requirement described in section 36a-489a, as amended by this act, and passed a written test that meets the test requirement described in section 36a-489a, as amended by this act, and (iv) who, effective November 1, 2012, are licensed as a mortgage loan originator under section 36a-489, as amended by this act. As used in this subdivision, "experience in the mortgage business" means paid experience in the origination, processing or underwriting of residential mortgage loans, the marketing of such loans in the secondary market or in the supervision of such activities, or any other relevant experience as determined by the commissioner.

Sec. 6. Subsection (a) of section 36a-489 of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(a) (1) The commissioner shall not issue an initial license for a mortgage lender, mortgage correspondent lender or mortgage broker unless the commissioner, at a minimum, finds that: (A) The applicant meets the requirements of subsection (a) of section 36a-488, as amended by this act; (B) notwithstanding the provisions of section 46a-80, the applicant, the control persons of the applicant and the qualified individual or branch manager with supervisory authority at the office for which the license is sought have not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign or military court during the seven-year period preceding the date of the application for licensing or at any time preceding the date of application if such felony involved an act of fraud, dishonesty, a breach of trust or money laundering, provided any pardon or expungement of a conviction shall not be a conviction for purposes of this subdivision; (C) the applicant demonstrates that the financial responsibility, character and general fitness of the applicant, the control persons of the applicant and the qualified individual or branch manager having supervisory authority over the office for which the license is sought are such as to command the confidence of the community and to warrant a determination that the applicant will operate honestly, fairly and efficiently within the purposes of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, as amended by this act; (D) the applicant has met the surety bond requirement under section 36a-492; and (E) the applicant has not made a material misstatement in the application. If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial. For purposes of this subsection, the level of offense of the crime and the status of any conviction, pardon or expungement shall be determined by reference to the law of the jurisdiction where the case was prosecuted. In the event that such jurisdiction does not use the term "felony", "pardon" or "expungement", such terms shall include legally equivalent events.

(2) (A) The minimum standards for license renewal for a mortgage lender, mortgage correspondent lender or mortgage broker shall include the following: (i) The applicant continues to meet the minimum standards under subdivision (1) of this subsection; (ii) effective April 1, 2010, each qualified [person] individual and branch manager has completed the prelicensing education requirement described in section 36a-489a, as amended by this act, and passed a written test that meets the test requirement described in section 36a-489a, as amended by this act, or has satisfied the annual continuing education requirements described in subsection (c) of section 36a-489a, as amended by this act, as applicable, and effective November 1, 2012, each qualified individual and branch manager is licensed as a mortgage loan originator and has completed any applicable continuing education requirements described in subsection (c) of section 36a-489a, as amended by this act; and (iii) the mortgage lender, mortgage correspondent lender or mortgage broker has paid all required fees for renewal of the license.

(B) The license of a mortgage lender, mortgage correspondent lender or mortgage broker failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a mortgage lender, mortgage correspondent lender or mortgage broker license if the licensee receives a deficiency on the system indicating that the payment required by subparagraph (A) of this subdivision was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-494, as amended by this act, and an opportunity for a hearing on such action in accordance with section 36a-51, and require such licensee to take or refrain from taking such action that, in the opinion of the commissioner, will effectuate the purposes of this section.

Sec. 7. Subdivision (1) of subsection (b) of section 36a-489 of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(b) (1) The commissioner shall not issue an initial license for a mortgage loan originator or a loan processor or underwriter unless the commissioner, at a minimum, finds that the applicant has: (A) Never had a mortgage loan originator or equivalent loan processor or underwriter license revoked in any governmental jurisdiction, except that a subsequent formal vacating of such revocation shall not be deemed a revocation; (B) notwithstanding the provisions of section 46a-80, not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign or military court during the seven-year period preceding the date of the application for licensing or at any time preceding such date of application if such felony involved an act of fraud, dishonesty, a breach of trust, or money laundering, provided any pardon or expungement of a conviction shall not be a conviction for purposes of this subdivision; (C) demonstrated financial responsibility, character and general fitness so as to command the confidence of the community and to warrant a determination that the mortgage loan originator or loan processor or underwriter will operate honestly, fairly and efficiently within the purposes of sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, as amended by this act; (D) for mortgage loan originator applicants, effective April 1, 2010, and for loan processor or underwriter applicants, effective October 1, 2011, completed the prelicensing education requirement described in section 36a-489a, as amended by this act, and passed a written test that meets the test requirement described in section 36a-489a, as amended by this act, and, effective November 1, 2012, for qualified individuals or branch managers seeking initial licensure as a mortgage loan originator, completed any continuing education required of them in their position as qualified individuals and branch managers pursuant to section 36a-489a, as amended by this act; (E) effective July 31, 2010, met the surety bond requirement under section 36a-492 and, effective October 1, 2011, in the case of a mortgage loan originator required to be licensed under section 36a-671e, met the surety bond requirements under sections 36a-492 and 36a-671d; and (F) not made a material misstatement in the application. If the commissioner denies an application for a mortgage loan originator or a loan processor or underwriter license, the commissioner shall notify the applicant and may notify the sponsor or any other person the commissioner deems appropriate of the denial and the reasons for such denial. For purposes of this subsection, the level of offense of the crime and the status of any conviction, pardon or expungement shall be determined by reference to the law of the jurisdiction where the case was prosecuted. In the event that such jurisdiction does not use the term "felony", "pardon" or "expungement", those terms shall include legally equivalent events.

Sec. 8. Section 36a-489a of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(a) (1) In order to meet the prelicensing education and testing requirements referred to in sections 36a-488 and 36a-489, as amended by this act, an individual shall complete at least twenty hours of education approved in accordance with subdivision (2) of this subsection, which shall include at least (A) three hours of instruction on relevant federal law and regulations; (B) three hours of ethics, including instruction on fraud, consumer protection and fair lending issues; and (C) two hours of training related to lending standards for the nontraditional mortgage product marketplace.

(2) For purposes of subdivision (1) of this subsection, prelicensing education courses shall be reviewed and approved by the system based upon reasonable standards. Review and approval of a prelicensing education course shall include review and approval of the course provider.

(3) Nothing in this subsection shall preclude any prelicensing education course, as approved by the system, that is provided by the sponsor or employer of the individual or an entity which is affiliated with the individual by an agency contract, or any subsidiary or affiliate of such sponsor, employer or entity.

(4) Prelicensing education may be offered either in a classroom, online or by any other means approved by the system.

(5) When prelicensing education requirements described in subdivision (1) of this subsection are completed in another state, such out-of-state prelicensing education requirements shall be accepted as credit towards completion of the prelicensing education requirements of this state, provided such out-of-state prelicensing education requirements are approved by the system.

(6) (A) An individual previously licensed under section 36a-489, as amended by this act, subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-489, as amended by this act, who is applying to be relicensed shall prove that such individual has completed all of the continuing education requirements for the year in which the license was last held.

(B) An individual who previously held a position as a qualified individual or branch manager subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-488, as amended by this act, at a time when such individual was not required to be licensed as a mortgage loan originator, may not hold such position again until such individual has completed all of the continuing education requirements for the year in which such individual last held such position and, effective November 1, 2012, has obtained the required mortgage loan originator license.

(b) (1) In order to meet the written test requirements referred to in sections 36a-488 and 36a-489, as amended by this act, an individual shall pass, in accordance with the standards established under this subsection, a qualified written test developed by the system and administered by a test provider approved by the system based upon reasonable standards.

(2) A written test shall not be treated as a qualified written test for purposes of subdivision (1) of this subsection unless the test adequately measures the individual's knowledge and comprehension in appropriate subject areas, including ethics, federal law and regulation pertaining to mortgage origination, state law and regulation pertaining to mortgage origination, and federal and state law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace and fair lending issues.

(3) Nothing in this subsection shall prohibit a test provider approved by the system from providing a test at the location of the sponsor or employer, any subsidiary or affiliate of the sponsor or employer or any entity with which the individual holds an exclusive arrangement to conduct the business of a mortgage loan originator. [or acts as a qualified individual or branch manager.]

(4) (A) An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than seventy-five per cent correct answers to questions.

(B) An individual may retake a test [four] three consecutive times with each consecutive taking occurring at least thirty days after the preceding test. After failing [four] three consecutive tests, an individual shall wait at least six months before taking the test again.

(C) (i) An individual who was licensed subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-489, as amended by this act, who has not been licensed as a mortgage loan originator within the five-year period preceding the date of the filing of such individual's application for a mortgage loan originator license, not taking into account any time during which such individual is a registered mortgage loan originator, shall retake such test; and (ii) [a qualified individual or branch manager who held such a position after the effective date of prelicensing education and testing referred to in section 36a-488 and who has not held such position within the five-year period preceding the date of the filing on the system designating such individual as a qualified individual or branch manager shall retake such test, unless such individual was licensed as a mortgage loan originator during the five-year period preceding the date of the filing on the system designating such individual as a qualified individual or branch manager, not taking into account any time during which such individual is a registered mortgage loan originator; and (iii)] effective October 1, 2011, an individual licensed as a loan processor or underwriter who applies to be licensed again shall retake the test if such individual has not been licensed as a loan processor or underwriter within the five-year period preceding the date of the filing of such application, not taking into account any time during which such individual is engaged in loan processing or underwriting but not required to be licensed under subdivision (3) of subsection (b) of section 36a-486, as amended by this act.

(c) (1) In order to meet the annual continuing education requirements referred to in subsections (a) and (b) of section 36a-489, as amended by this act, a licensed mortgage loan originator, a qualified individual or branch manager and, effective October 1, 2011, a licensed loan processor or underwriter, shall complete at least eight hours of education approved in accordance with subdivision (2) of this subsection. Such courses shall include at least (A) three hours of instruction on relevant federal law and regulation; (B) two hours of ethics, including instruction on fraud, consumer protection and fair lending issues; and (C) two hours of training related to lending standards for the nontraditional mortgage product marketplace.

(2) For purposes of subdivision (1) of this subsection, continuing education courses shall be reviewed and approved by the system based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.

(3) Nothing in this subsection shall preclude any education course approved by the system that is provided by the sponsor or employer or an entity that is affiliated with the mortgage loan originator, qualified individual or branch manager or, effective October 1, 2011, loan processor or underwriter by an agency contract, or by any subsidiary or affiliate of such sponsor, employer or entity.

(4) Continuing education may be offered either in a classroom, online or by any other means approved by the system.

(5) Except as provided in procedures adopted under subsections (a) and (b) of section 36a-489, as amended by this act, or in regulations adopted under subdivision (9) of this subsection, a licensed mortgage loan originator, qualified individual or branch manager or, effective October 1, 2011, a licensed loan processor or underwriter, may only receive credit for a continuing education course in the year [in] for which the course is taken, and may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.

(6) A licensed mortgage loan originator or a qualified individual or branch manager or, effective October 1, 2011, a licensed loan processor or underwriter who is an approved instructor of an approved continuing education course may receive credit for the licensee's own annual continuing education requirement at the rate of two hours credit for every one hour taught.

(7) When education requirements described in subdivision (1) of subsection (a) of this section are completed in another state, such out-of-state education requirements shall be accepted as credit towards completion of the education requirements of this state, provided such out-of-state education requirements are approved by the system.

(8) A licensed mortgage loan originator and, effective October 1, 2011, a licensed loan processor or underwriter who subsequently becomes unlicensed must complete the continuing education requirements for the last year in which the license was held prior to issuance of an initial or renewed license. A qualified individual or branch manager who ceases to hold such position shall complete the continuing education requirements for the last year in which such individual or branch manager held such position prior to [holding such position again] licensure as a mortgage loan originator.

(9) [A person] An individual who meets the requirements of subparagraphs (A)(i) and (A)(iii) of subdivision (2) of subsection (a) or (b) of section 36a-489, as amended by this act, may compensate for any deficiency in such individual's continuing education requirements pursuant to regulations adopted by the commissioner.

(d) For purposes of this section "nontraditional mortgage product" means any mortgage product other than a thirty-year fixed rate mortgage.

Sec. 9. Subdivision (1) of subsection (a) of section 36a-494 of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(a) (1) The commissioner may suspend, revoke or refuse to renew any mortgage lender, mortgage correspondent lender or mortgage broker license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b, as amended by this act, or if the commissioner finds that the licensee, any control person of the licensee, the qualified individual or branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following: (A) Made any material misstatement in the application; (B) committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any residential mortgage loan transaction, including disclosures required by subdivision (6) of subsection (a) of section 36a-493, or part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information; (C) violated any of the provisions of this title or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business; or (D) failed to perform any agreement with a licensee or a borrower. For purposes of this subdivision, "agent" includes any settlement agent used by the licensee and "settlement agent" means the person specified in any HUD-1 settlement statement or other settlement statement.

Sec. 10. Subsection (a) of section 36a-498a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(a) No mortgage lender licensee or mortgage correspondent lender licensee under section 36a-489, as amended by this act, and no person exempt from licensure under subdivision (1) of subsection (a) and subdivisions (1), (4) and (5) of subsection (b) of section 36a-487, as amended by this act, making a first mortgage loan may charge, impose or cause to be paid, directly or indirectly, prepaid finance charges that exceed in the aggregate, the greater of five per cent of the principal amount of the loan or two thousand dollars. If the proceeds of the loan are used to refinance an existing loan, the aggregate of the prepaid finance charges for the current refinancing and any previous financings by such licensee or exempt person or affiliate of such licensee or exempt person within two years of the current refinancing shall not exceed the greater of five per cent of the principal amount of the initial loan or two thousand dollars. The provisions of this section shall not prohibit such licensee or exempt person from charging, imposing or causing to be paid, directly or indirectly, prepaid finance charges in addition to those permitted by this section in connection with any additional proceeds received by the borrower in the refinancing, provided such prepaid finance charges on the additional proceeds shall not exceed five per cent of the additional proceeds.

Sec. 11. Subdivision (3) of subsection (c) of section 36a-534b of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

(3) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system. Each mortgage lender, mortgage correspondent lender, mortgage broker, mortgage loan originator and loan processor or underwriter licensee and each exempt registrant, to the extent required by the system, shall timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision. Failure of an exempt registrant to timely and accurately submit a report of condition shall form a basis to inactivate the licenses of all sponsored mortgage loan originators or loan processor or underwriters. To the extent that the system does not require submission of reports of condition by individual mortgage loan originator or loan processor or underwriter licensees, such individual licensees shall timely and accurately report all required information in their possession to their licensee's sponsor for purposes of their sponsor's reporting obligation. Failure of an individual licensee to timely and accurately report required information in their possession to their sponsor shall constitute a violation of this provision.

Sec. 12. Section 36a-534c of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2012):

The Banking Commissioner shall submit to the joint standing committee of the General Assembly having cognizance of matters relating to banks three annual reports that shall include financial statements of the State Regulatory Registry, LLC, concerning the [Nationwide Mortgage Licensing System described in section 36a-534b] system. Each such financial statement shall cover a twelve-month period. The commissioner shall submit such reports for three consecutive years not later than ten days after receipt of such financial statements by the commissioner.

This act shall take effect as follows and shall amend the following sections:
Section 1	October 1, 2012	36a-3
Sec. 2	October 1, 2012	36a-485
Sec. 3	October 1, 2012	36a-486
Sec. 4	October 1, 2012	36a-487(b)
Sec. 5	October 1, 2012	36a-488(a)(1)
Sec. 6	October 1, 2012	36a-489(a)
Sec. 7	October 1, 2012	36a-489(b)(1)
Sec. 8	October 1, 2012	36a-489a
Sec. 9	October 1, 2012	36a-494(a)(1)
Sec. 10	October 1, 2012	36a-498a(a)
Sec. 11	October 1, 2012	36a-534b(c)(3)
Sec. 12	October 1, 2012	36a-534c

Statement of Purpose:

To implement certain rule comments and clarifications emerging from the Department of Housing and Urban Development's final rule issued on June 30, 2011, entitled "SAFE Mortgage Licensing Act: Minimum Licensing Standards and Oversight Responsibilities", 76 Federal Register 38464, and to make various corresponding and technical changes.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]