Bill Text: GA HB946 | 2011-2012 | Regular Session | Introduced

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Bill Title: Mortgage lenders and brokers; certain mortgage activities without a license; prohibit

Spectrum: Moderate Partisan Bill (Republican 6-1)

Status: (Engrossed - Dead) 2012-03-21 - Senate Read Second Time [HB946 Detail]

Download: Georgia-2011-HB946-Introduced.html

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12 LC 39 0042

House Bill 946

By: Representatives Teasley of the 38th, Morris of the 155th, Williamson of the 111th, Dutton of the 166th, Dawkins-Haigler of the 93rd, and others

A BILL TO BE ENTITLED
AN ACT

To amend Article 13 of Chapter 1 of Title 7 of the Official Code of Georgia Annotated, relating to the licensing of mortgage lenders and brokers, so as to prohibit certain mortgage activities without a license; to provide for qualifications for the issuance of a mortgage loan originator license; to provide for the power of the department to revoke or decline to issue a license or registration in certain instances; to provide for the prohibition of certain conduct by persons engaged in mortgage activities; to provide for a grace period for serving residential mortgages with an inactive license or registration; to provide for certain criminal penalties; to provide for related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Article 13 of Chapter 1 of Title 7 of the Official Code of Georgia Annotated, relating to the licensing of mortgage lenders and brokers, is amended by revising subsection (a) of Code Section 7-1-1002, relating to conducting mortgage activities without a license or registration, as follows:

"(a) It shall be prohibited for any person to transact business in this state directly or indirectly engage in activities as a mortgage broker, a mortgage lender, or a mortgage loan originator in this state or to hold or represent oneself as being authorized to engage in such activities in this state unless such person:

(1) Is licensed or registered as such by the department utilizing the Nationwide Mortgage Licensing System and Registry;

(2) Is a person exempted from the licensing or registration requirements pursuant to Code Section 7-1-1001; or

(3) In the case of an employee of a mortgage broker or mortgage lender, such person has qualified to be relieved of the necessity for a license under the employee exemption in paragraph (14) of subsection (a) of Code Section 7-1-1001; or

(4) In the case of a mortgage loan originator, such person is supervised by a mortgage broker, mortgage lender, or exemptee on a daily basis while performing mortgage functions; is employed by and works exclusively for only one mortgage broker, mortgage lender, or exemptee; and is paid on a W-2 basis by the employing mortgage broker, mortgage lender, or exemptee, except those natural persons exempt from licensure as a mortgage broker or mortgage lender under paragraph (17) of subsection (a) of Code Section 7-1-1001. Each licensed mortgage loan originator shall register with and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry. For the purposes of implementing an orderly and efficient mortgage loan originator process, the department may establish licensing rules or regulations and interim procedures for licensing and acceptance of applications; or.

(5) A loan processor or underwriter who is an independent contractor shall not engage in the activities of a loan processor or underwriter unless such independent contractor loan processor or underwriter obtains and maintains a mortgage broker or mortgage lender license. Each independent contractor loan processor or underwriter licensed as a mortgage broker or mortgage lender shall have and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry."

SECTION 2.

Said article is further amended by revising subsection (d), paragraph (4) of subsection (f), and subsections (h) and (o) of Code Section 7-1-1004, relating to requirements for the issuance of a mortgage license or registration, as follows:

"(d) Upon receipt of an application for a mortgage loan originator license, the department shall conduct such investigation as it deems necessary to determine that the mortgage loan originator applicant:

(1) Has never had a mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation shall not be deemed a revocation;

(2) Has not been convicted of, or pleaded guilty or nolo contendere to, a felony in a domestic, foreign, or military court; provided, however, that any pardon of a conviction shall not be a conviction for purposes of this subsection;

(3) Has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purposes of this article;

(4) Has completed the prelicensing education requirement described in subsection (e) of this Code section; and

(5) Has passed a written test that meets the test requirement described in subsection (f) of this Code section; and

(6) Has not been the subject of a final determination by the Mortgage Testing and Education Board of the Nationwide Mortgage Licensing System and Registry for a violation of the rules of conduct for test takers sitting for any written national or state licensing test within the previous five years."

"(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 75 percent correct answers to questions.

(B) An individual may retake take a test three consecutive times with each consecutive taking occurring at least 30 days after the preceding test.

(C) After failing three consecutive tests, an individual shall wait at least six months before taking the test again.

(D) A licensed mortgage loan originator who fails to maintain a valid license for a period of five years or longer shall retake the test, not taking into account any time during which such individual is a registered mortgage loan originator."

"(h) The department shall not issue or may revoke a license or registration if it finds that the mortgage loan originator, mortgage broker, or mortgage lender applicant or licensee, or any person who is a director, officer, partner, agent, employee, or ultimate equitable owner of 10 percent or more of the mortgage broker or mortgage lender applicant, registrant, or licensee or any individual who directs the affairs or establishes policy for the mortgage broker or mortgage lender applicant, registrant, or licensee, has been convicted of a felony in any jurisdiction or of a crime which, if committed within this state, would constitute a felony under the laws of this state. Other than a mortgage loan originator, for the purposes of this article, a person shall be deemed to have been convicted of a crime if such person shall have pleaded guilty or nolo contendere to a charge thereof before a court or federal magistrate or shall have been found guilty thereof by the decision or judgment of a court or federal magistrate or by the verdict of a jury, irrespective of the pronouncement of sentence or the suspension thereof, and regardless of whether first offender treatment without adjudication of guilt pursuant to the charge was entered, or an adjudication or sentence was otherwise withheld or not entered on the charge, unless and until such plea of guilty, or such decision, judgment, or verdict, shall have been set aside, reversed, or otherwise abrogated by lawful judicial process or until probation, sentence, or both probation and sentence of a first offender have been successfully completed and documented, or unless the person convicted of the crime shall have received a pardon therefor from the President of the United States or the governor or other pardoning authority in the jurisdiction where the a conviction occurred or shall have received an official certification or pardon granted by the state's pardoning body in the jurisdiction where the conviction occurred that removes the legal disabilities resulting from such conviction and restores civil and political rights in this state. For purposes of this article, a mortgage loan originator shall be deemed to have been convicted of a crime if he or she has pleaded guilty to, been found guilty of, or entered a first offender or nolo contendere plea to a felony in a domestic, foreign, or military court; provided, however, that any pardon of a conviction shall not be a conviction."

"(o) The department shall may not issue a license or registration to and or may revoke a license or registration from a mortgage broker or mortgage lender applicant, licensee, or registrant if such person:

(1) Has been the recipient of a final cease and desist order issued within the preceding five years if such order was based on a violation of subsection (h) of this Code section or Code Section 7-1-1002 or 7-1-1013;

(2) Employs any other person against whom a final cease and desist order has been issued within the preceding five years if such order was based on a violation of subsection (h) of this Code section or Code Section 7-1-1002 or 7-1-1013; or

(3) Has had his or her license revoked within five years of the date such person was hired or employs any other person who has had his or her license revoked within five years of the date such person was hired."

SECTION 3.

Said article is further amended by revising Code Section 7-1-1013, relating to the prohibition of certain acts relating to mortgage activities, as follows:

"7-1-1013.

It shall be prohibited for any person transacting a engaging in mortgage business activities in or from this state, including any person required to be licensed or registered under this article and any person exempted from the licensing or registration requirements of this article under Code Section 7-1-1001, to:

(1) Misrepresent the material facts, make false statements or promises, or submit false statements or documents likely to influence, persuade, or induce an applicant for a mortgage loan, a mortgagee, or a mortgagor to take a mortgage loan, or, through agents or otherwise, pursue a course of misrepresentation by use of fraudulent or unauthorized documents or other means to the department or anyone;

(2) Misrepresent or conceal or cause another to misrepresent or conceal material factors, terms, or conditions of a transaction to which a mortgage lender or broker is a party, pertinent to an applicant or application for a mortgage loan or a mortgagor;

(3) Fail to disburse funds in accordance with a written commitment or agreement to make a mortgage loan;

(4) Improperly refuse to issue a satisfaction of a mortgage loan;

(5) Fail to account for or deliver to any person any personal property obtained in connection with a mortgage loan such as money, funds, deposit, check, draft, mortgage, or other document or thing of value which has come into the possession of a licensee or registrant and which is not the property of the licensee or registrant, or which the mortgage lender or broker is not in law or at equity entitled to retain;

(6) Engage in any transaction, practice, or course of business which is not in good faith or fair dealing, or which operates a fraud upon any person, in connection with the attempted or actual making of, purchase of, transfer of, or sale of any mortgage loan;

(7) Engage in any fraudulent home mortgage underwriting practices;

(8) Induce, require, or otherwise permit the applicant for a mortgage loan or mortgagor to sign a security deed, note, loan application, or other pertinent financial disclosure documents with any blank spaces to be filled in after it has been signed, except blank spaces relating to recording or other incidental information not available at the time of signing;

(9) Make, directly or indirectly, any residential mortgage loan with the intent to foreclose on the borrower's property. For purposes of this paragraph, there shall be a presumption that a person has made a residential mortgage loan with the intent to foreclose on the borrower's property if the following circumstances can be demonstrated:

(A) Lack of substantial benefit to the borrower;

(B) Lack of probability of full payment of the loan by the borrower; and

(C) A significant proportion of similarly foreclosed loans by such person;

(10) Provide an extension of credit or collect a mortgage debt by extortionate means; or

(11) Purposely withhold, delete, destroy, or alter information requested by an examiner of the department or make false statements or material misrepresentations to the department or the Nationwide Mortgage Licensing System and Registry or in connection with any investigation conducted by the department or another governmental agency."

SECTION 4.

Said article is further amended in subsection (f) of Code Section 7-1-1017, relating to the suspension and revocation of licenses and registrations of a mortgage loan originator, lender, or broker, as follows:

"(f) Nothing in this article shall preclude a mortgage broker or mortgage lender whose license or registration has been suspended or revoked from continuing to service mortgage loans pursuant to servicing contracts in existence at the time of the suspension or revocation for a period not to exceed six months after the date of the final order of the department suspending or revoking the license or registration has expired or been revoked, suspended, or surrendered from servicing residential mortgage loans for itself or other mortgage lenders for a period not to exceed six months from the date on which the license or registration ceased to be active; provided, however, that any servicing performed for other mortgage lenders during a time in which a license or registration ceased to be active shall be limited to written servicing contracts that were in existence on the last day the license or registration was active."

SECTION 5.

Said article is further amended in subsection (a) of Code Section 7-1-1018, relating to cease and desist orders issued by the department for prohibited mortgage activities, as follows:

"(a) Whenever it shall appear to the department that any person required to be licensed or registered under this article or employed by a licensee or who would be covered by the prohibitions in Code Section 7-1-1013 has violated any law of this state or any order or regulation of the department, the department may issue an initial written order requiring such person to cease and desist immediately from such unauthorized practices. Such cease and desist order shall be final 20 days after it is issued unless the person to whom it is issued makes a written request within such 20 day period for a hearing. The hearing shall be conducted in accordance with Chapter 13 of Title 50, the 'Georgia Administrative Procedure Act.' A cease and desist order to an unlicensed person that orders them that unlicensed person to cease doing a mortgage business engaging in mortgage activities without the appropriate license shall be final 30 days from the date of issuance, and there shall be no opportunity for an administrative hearing. If the proper license or evidence of exemption or valid employment status during the time of the alleged offense is delivered to the department within the 30 day period, the order shall be rescinded by the department. If a cease and desist order is issued to a person who has been sent a notice of bond cancellation and if the bond is reinstated or replaced and such documentation is delivered to the department within the 30 day period following the date of issuance of the order, the order shall be rescinded. If the notice of reinstatement of the bond is not received within the 30 days, the license shall expire at the end of the 30 day period, and the person shall be required to make a new application for license and pay the applicable fees. In the case of an unlawful purchase of mortgage loans, such initial cease and desist order to a purchaser shall constitute the knowledge required under subsection (b) of Code Section 7-1-1002 for any subsequent violations. Any cease and desist order sent to the person at both his or her personal and business addresses pursuant to this Code section that is returned to the department as 'refused' or 'unclaimed' shall be deemed as received and sufficiently served."

SECTION 6.

Said article is further amended in Code Section 7-1-1019, relating to criminal penalties for prohibited mortgage activities, as follows:

"7-1-1019.

Any person and the several members, officers, directors, agents, and employees thereof who:

(1) Shall violate the provisions of subsection (a) of Code Section 7-1-1002, by the willfull transaction of a willfully engaging in mortgage business activities without a license or exemption, shall be guilty of a felony punishable as provided in Code Section 7-1-845; or

(2) Shall violate any of the other provisions of this article shall be guilty of a misdemeanor and shall be punished by imprisonment for not more than one year or by a fine of not more than $1,000.00, or by both fine and imprisonment."

SECTION 7.

All laws and parts of laws in conflict with this Act are repealed.