Bill Text: MI HB4688 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: Trade; securities; adoption of new uniform securities act (2002); update uniform securities act references in mortgage brokers, lenders, and servicers licensing act. Amends secs. 1a & 29 of 1987 PA 173 (MCL 445.1651a & 445.1679).
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2009-04-29 - Referred To Committee On Banking And Financial Institutions [HB4688 Detail]
Download: Michigan-2009-HB4688-Engrossed.html
HB-4688, As Passed House, April 28, 2009
SUBSTITUTE FOR
HOUSE BILL NO. 4688
A bill to amend 1987 PA 173, entitled
"Mortgage brokers, lenders, and servicers licensing act,"
by amending section 29 (MCL 445.1679), as amended by 2008 PA 529.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 29. (1) An owner, partner, member, officer, director,
trustee, employee, agent, broker, or other person, or a
representative acting on the authority of that person that
willfully or intentionally does any of the following is guilty of a
misdemeanor punishable by a fine of not more than $15,000.00 or
imprisonment for not more than 1 year, or both:
(a) Engages in this state in the business of a mortgage
broker, mortgage lender, or mortgage servicer without a license or
registration required under this act or acts as a loan officer in
this state without a loan officer registration required under this
act.
(b) Transfers or assigns a mortgage loan or a security
directly representing an interest in 1 or more mortgage loans
before the disbursement of 75% or more of the proceeds of the
mortgage loan to, or for the benefit of, the borrower. This
subdivision does not apply to any of the following:
(i) A land contract not considered to be an equitable mortgage.
(ii) A loan made under a state or federal government program
that allows the lender to escrow more than 25% of the loan proceeds
for a limited period of time.
(iii) A construction loan.
(iv) A loan that provides in writing that the loan proceeds
shall be disbursed to or for the benefit of the borrower in
installments or upon the request of the borrower or upon the
completion of renovations or repairs to the dwelling situated on
the real property subject to the mortgage loan.
(c) Transfers or assigns a mortgage loan or a security
representing an interest in 1 or more mortgage loans to an
individual investor unless 1 or more of the following apply:
(i) The transfer or assignment is made through a broker-dealer
which is a member of the New York stock exchange.
(ii) The transfer or assignment is made through a broker-dealer
who meets all of the following criteria:
(A) The broker-dealer is registered under the uniform
securities act, 1964 PA 265, MCL 451.501 to 451.818, or the uniform
securities act (2002), 2008 PA 551, MCL 451.2101 to 451.2703.
(B) The broker-dealer is not an affiliate of the mortgage
lender unless the person acquired the broker-dealer registration,
directly or indirectly, before September 1, 1987 under the uniform
securities act, 1964 PA 265, MCL 451.501 to 451.818, was affiliated
with a mortgage lender before September 1, 1987, and has
continuously maintained that registration subsequent to September
1, 1987. For purposes of this subparagraph, if an aggregate of more
than 10% of the outstanding voting stock or interest in a
corporation, unincorporated organization, partnership, or other
legal entity that is a broker-dealer or mortgage lender is sold,
transferred, assigned, or otherwise conveyed subsequent to
September 1, 1987, the registration is not considered to have been
continuously maintained.
(C) The broker-dealer acquired the mortgage loan or security
on a firm commitment.
(iii) The transfer or assignment is made to a person who the
transferor or assignor believes, or has reasonable grounds to
believe, is 1 of the following:
(A) A business entity having either net income from operations
after taxes in excess of $100,000.00 in its last fiscal year or its
latest 12-month period, or a net worth in excess of $1,000,000.00
at the time of purchase.
(B) An individual who, after the purchase, has an investment
of more than $50,000.00 in mortgage loans or securities
representing an interest in 1 or more mortgage loans, including
installment payments to be made within 1 year after purchase by the
individual, has either personal income before taxes in excess of
$100,000.00 for his or her last fiscal year or latest 12-month
period and is capable of bearing the economic risk, or net worth in
excess of $1,000,000.00, and has the knowledge and experience in
financial and business matters that he or she is capable of
evaluating the merits and risks of the prospective investment, or
has obtained the advice of an attorney, certified public
accountant, or investment adviser registered under the investment
advisers act of 1940, or an investment adviser registered under the
uniform securities act, 1964 PA 265, MCL 451.501 to 451.818, or the
uniform securities act (2002), 2008 PA 551, MCL 451.2101 to
451.2703, with respect to the merits and risks of the prospective
investment.
(iv) A transferor or assignor does not maintain its principal
place of business in this state and the transferee or assignee is
not a resident of this state and does not maintain its principal
place of business in this state.
(d) Coerces or induces a real estate appraiser to inflate the
value of real property used as collateral for a mortgage loan,
including, but not limited to, by doing any of the following:
(i) Representing or implying that a real estate appraiser will
not be selected to conduct an appraisal of the real property or
selected for future appraisal work unless the appraiser agrees in
advance to a value, range of values, or minimum value for the real
property.
(ii) Representing or implying that a real estate appraiser will
not be paid for an appraisal unless the appraiser agrees in advance
to a value, range of values, or minimum value for the real
property.
(2) Subject to subsections (4) and (5), if the commissioner
finds that a licensee, registrant, or loan officer registrant has
violated, or directly or indirectly counseled, aided, or abetted in
a violation, of this act or the rules promulgated under this act,
the commissioner may do 1 or more of the following:
(a) Assess a civil fine against the licensee, registrant, or
loan officer registrant or a person who controls the licensee,
registrant, or loan officer registrant of not more than $3,000.00
for each violation, except that the licensee, registrant, or loan
officer registrant or the person shall not be fined more than
$30,000.00 for a transaction resulting in more than 1 violation,
plus the costs of investigation.
(b) Suspend or revoke a license, registration, or loan officer
registration or refuse to issue a license or renew a license,
registration, or loan officer registration.
(c) Require the licensee, registrant, or loan officer
registrant or a person who controls the licensee, registrant, or
loan officer registrant to make restitution to each injured
individual, if the commissioner finds that the violation of this
act or a rule promulgated under this act resulted in an injury to 1
or more individuals.
(3) A civil fine assessed under subsection (2) may be sued for
and recovered by and in the name of the commissioner and may be
collected and enforced by summary proceedings by the attorney
general. Each individual injured by a violation of this act or a
rule is a separate violation. In determining under subsection (2)
the amount of a fine, whether to suspend or revoke a license,
registration, or loan officer registration, whether to refuse to
issue or renew a license or loan officer registration, or the
amount of restitution, the commissioner shall consider the extent
to which the violation was a knowing and willful violation, the
extent of the injury suffered because of the violation, the
corrective action taken by the licensee, registrant, or loan
officer registrant to ensure that the violation will not be
repeated, and the record of the licensee, registrant, or loan
officer registrant in complying with this act. Any proceedings
under this subsection are subject to the procedures of the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328.
(4) Subsection (2) does not apply to a violation of this act
that results from a bona fide error that occurs notwithstanding the
adoption and observance of reasonable procedures intended to
prevent the occurrence of the error.
(5) If a loan officer registrant violates section 22b(e)(ii),
the commissioner shall revoke his or her loan officer registration.
Revocation of a loan officer registration under this subsection
does not affect the commissioner's authority to pursue any other
remedy available under subsection (2) for that violation.
