SENATE, No. 597

SECTION 1. CHAPTER 255F

Section 1.  Definitions

As used in this chapter the following words shall have the following meanings:

“Division”, The Commonwealth of Massachusetts Division of Banks.

“Commissioner”, The Commissioner of the Commonwealth of Massachusetts Division of Banks.

“Entity”, a person or entity that is a “licensee” as defined under M.G.L. Chapter 255E, Section 1, regulated by the Commonwealth of Massachusetts Division of Banks.

“Mortgage loan originator”, a natural person:  (a) who is employed by or associated with one (1) and not more than one (1) entity as defined above; and (b) who negotiates, solicits, arranges, provides or accepts residential mortgage loan applications, or assists consumers in completing such applications; and (c) whose compensation for such activity is in any way based on a number or dollar volume of mortgage loan applications, mortgage loan closings or other residential mortgage loan activity.

Employees whose responsibilities are limited to clerical and administrative tasks and who does not solicit borrowers, accept applications, or negotiate the terms of residential mortgage loans on behalf of the employer are not considered loan originators and do not require licenses.

“Mortgage loan”, a loan or an extension of credit, including, but not limited to, an extension of credit pursuant to a contract or an assigned contract for the sale of goods or services, made to a natural person, the proceeds of which are to be used primarily for personal, family or household purposes, and which is secured wholly or partially by a mortgage on residential property.

“Residential property”, real property located in the Commonwealth of Massachusetts having thereon a dwelling house with accommodations for four or less separate households intended to be used or occupied for residential purposes.

Section 2.  Mortgage loan originator license requirement

No natural person shall act as a mortgage loan originator unless such person has first obtained a mortgage loan originator license from the Commissioner.  A natural person who meets the definition of  a mortgage loan originator, prior to enactment of this Chapter 255F, shall file and application and obtain a license from the Commissioner within one hundred eighty (180) days of the enactment of Chapter 255F without being required to comply with Section 4(b) hereof.  An entity shall not knowingly employ or retain a mortgage loan originator unless the mortgage loan originator is licensed hereunder.

Section 3.  Rules and regulations

The Commissioner may adopt, amend or repeal rules and regulations to aid in the administration and enforcement of this chapter.

Section 4.  License application; residential mortgage lending course requirements

(a)  The application for a license shall be in writing and in the form prescribed by the Commissioner, signed under the pains and penalties of perjury, and shall contain the name, address and license number of the entity with whom a mortgage loan originator is employed or associated and other information as the Commissioner may require, including evidence of compliance of subsection (b).  Such application shall also include a description of the activities of the application, in such detail and for such periods as the Commissioner may require, as well as such further information as the Commissioner may require.  The Division shall investigate each applicant and such investigation shall include a criminal records check based on the fingerprints of the applicant and a civil records check.  The Division shall require each applicant to file a set of the applicant’s fingerprints, taken by a law enforcement agency, and any other information necessary to complete a statewide and nationwide criminal check with the Criminal Investigation Bureau of the Department of Justice for state processing and the Federal Bureau of Investigation for federal processing.  All costs associated with the criminal history check shall be determined annually by the Commissioner of administration under the provisions of Section three B (3B) of Chapter Seven (7).  All costs associated with the criminal history check are the responsibility of the applicant.  Criminal history records provided to the Division under this section are confidential and the Division may use the records only to determine if the applicant is eligible for licensure. 

(b)  An applicant shall (i) have completed a residential mortgage lending course, accredited by the Commonwealth of Massachusetts’ Division of Professional Licensure, and managed by the Independent Board of Mortgage Lending, not later than the two-year period immediately preceding the date of the application and (ii) provide evidence that the applicant has received a passing grade on the residential mortgage lending course examination administered by the Board of Residential Mortgage Lending within such two-year period.

Section 5.  Issuance of license by Commissioner; notice of license denial; appeal

If the Commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant is such as to warrant belief that the applicant will act honestly, fairly, soundly and efficiently in the public interest, consistent with the purposes of this chapter, the Commissioner shall thereupon issue the applicant a license to engage in the business of a mortgage loan originator upon payment of the required fees.  If the Commissioner shall not so find, or if the applicant’s criminal history demonstrates any felony criminal convictions or other convictions involving fraud or if the applicant has had any adverse civil judgments involving fraudulent dealings, the Commissioner shall not issue a license and he or she shall notify the applicant of the denial.  Within twenty (20) days thereafter, the Commissioner shall enter upon the Division’s records a written decision and findings containing the reasons supporting the denial and shall forthwith give written notice thereof by registered mail to the applicant.  Within thirty (30) days after the date of such notice, such appeal should be processed as a de novo appeal pursuant to MGL c. 30(a).  The Commissioner shall approve or deny every application for a license within sixty (60) days after the filing thereof, but any failure of the Commissioner to act within such period shall not be deemed to be an approval of any such application.

Section 6.  Employment of loan originator; information on license; notice requirements

A loan originator may transact business only for an employing entity.  Each original license issued to a loan originator must be provided to and maintained by the employing entity at the entity’s main office.  If the employment of a loan originator is terminated, the entity shall return the loan originator’s license to the Division within five (5) business days after termination.  For a period of one (1) year after the termination of employment, the loan originator may request the transfer of the license to another entity by submitting a relocation application to the Division, along with a fee established by the Division by rule.  The return of the license of any loan originator to the Division that is not transferred to another entity terminates the right of the loan originator to engage in any residential mortgage loan origination activity until Division procedures have been followed to reinstate the license.  The license of any loan originator that has been returned to the Division and not transferred to another entity within one (1) year of termination of employment must be cancelled.

Each license shall state the name and address of the mortgage loan originator licensee.  A copy of the license must be prominently posted at the place of business of the entity with whom the mortgage loan originator is employed or associated.

Section 7.  Fees; license renewal; disposition of fees

A loan originator seeking licensure shall pay an initial non-refundable license application fee of $500.  The license of a mortgage loan originator shall expire bi-annually.  Each licensee, shall bi-annually, on or before a date to be determined by the Commissioner, submit a license renewal application with the Commissioner.  Said license renewal application shall be on a form prescribed by the Commissioner, signed under the pains and penalties of perjury, containing such information as the Commissioner may require, including evidence satisfactory to the Commissioner that the licensee has completed at least sixteen (16) hours of  residential mortgage lending continuing education courses accredited by the Division of Professional Licensure and the Independent Board of Mortgage Lending during the two-year period immediately preceding license renewal.  Failure of the licensee to satisfy the continuing education requirement will render the mortgage loan originator ineligible for renewal and deemed to be inactive.   A mortgage loan originator neglecting to file such application or failing to amend the same within fifteen (15) days of notice from the Commissioner directing the same shall be deemed inactive.  Inactive mortgage loan originators are prohibited from engaging in business as a mortgage loan originator.

All fees collected under this section must be deposited in the Division’s state special revenue fund to be used by the Division in administering the provisions of this Chapter.

Section 8.  License suspension or revocation; notice and hearing

The Commissioner may suspend, revoke or refuse to renew any license issued pursuant to this chapter if the Commissioner finds that:  (a) the licensee has violated any provision of this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; (b) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the Commissioner in refusing to issue such license; or (c) the licensee has committed any fraud, misappropriated funds or misrepresented any of the material particulars of a mortgage loan transaction.

Except as provided in section seven (7), no license shall be revoked or suspended except after notice and a hearing thereon pursuant to MGL Chapter 30(a).  Any order issued pursuant to this section shall be subject to de novo review as provided in MGL Chapter 30(a).

A licensee may surrender a license by delivering to the Commissioner written notice that it hereby surrenders such license, but such surrender shall not affect the civil or criminal liability of the licensee for acts committed before such surrender.

Section 9.  Commissioner’s order to cease and desist from unlawful act or practice; prior notice and opportunity for hearing; temporary order

(a)  If the Commissioner determines, after giving notice of and opportunity for a hearing, that a licensee has engaged in or is about to engage in an act or practice constituting a violation of a provision of this chapter or a rule, regulation or order hereunder, he or she may order such licensee to cease and desist from such unlawful act or practice and take such affirmative action as in his judgment will effect the purposes of this chapter. 

(b)  If the Commissioner makes written findings of fact that the public interest will be irreparably harmed by delay in issuing an order under subsection (a) her or she may issue a temporary cease and desist order.  Upon the entry of a temporary cease and desist order, the Commissioner shall promptly notify, in writing, the licensee and the employing entity affected thereby that such order has been so entered, the reasons therefore, and that within twenty (20) days after the receipt of a written request from such licensee, the matter will be scheduled for hearing to determine whether or not such temporary order shall become permanent and final.  If no such hearing is requested and none is ordered by the Commissioner, the order shall remain in effect until it is modified or vacated by the Commissioner.  If a hearing is requested or ordered, the Commissioner, after giving notice of and opportunity for a hearing to the licensee subject to said order and the employing entity, shall, by written findings of facts and conclusions of law, vacate, modify or make permanent the order.

(c)  No order under this section, except an order issued pursuant to subsection (b), may be entered without prior notice of and opportunity for a hearing.  The Commissioner may vacate or modify an order under this section upon finding that the conditions which required such an order have changed and that it is in the public interest to so vacate or modify.

Any order issued pursuant to this section shall be subject to de novo review as provided in MGL Chapter 30(a).

Section 10.  Civil actions filed by Commissioner

The Commissioner may enforce the provisions of this chapter, or restrain any violations thereof, by filing a civil action in any court of competent jurisdiction.  Nothing herein shall be construed so as to create a private cause of action.

Section 11.  Penalties

Whoever violates any provision of section two or any rule or regulation made thereunder by the Commissioner shall be punished by a fine of not more than Five Hundred ($500.00) Dollars.  Each day such violation occurs or continues shall be deemed a separate offense.

Amendment to CHAPTER 13 – New Sections 98, 99, 100

Section 98.  Independent Board of Mortgage Lending

There is hereby created an Independent Board of Mortgage Lending whose exclusive purpose shall be to (i) review residential mortgage lending course curricula for mortgage loan originators as defined in Section 1 of Chapter 255F to be offered or sponsored by any enterprise (including for profit or not for profit entities), recommend accreditation thereof by the Division of Professional Licensure, and issue certificates of completion thereof, and (ii) develop and administer a residential mortgage lending course examination.  The Independent Board of Mortgage Lending shall consist of five (5) persons who are residents of the Commonwealth of Massachusetts, of who four (4) shall be employed by an entity as defined in Section 1 of Chapter 255F and have at least five (5) years’ experience in the residential mortgage loan industry, and one (1) of whom shall be a representative of the public, subject to the provision of Section nine B (9B).  The members of said board shall be appointed in January of each year by the Governor, for a term of three (3) years from the first day of the following February.  Any member of the board may be reappointed by the Governor to serve successive terms.

Section 99.  Independent Board of Mortgage Lending; Organization; Meetings

The members of the board shall meet in February of each year at such time or place as they shall determine, and shall organize by electing from its own members a Chairman and a Secretary, who shall hold their respective office for one year.  The board shall hold regular meetings in February, May, August and November, and such additional meetings as it may determine, at such times and places as may be agreed upon by the members.

Section 100.  Independent Board of Mortgage Lending; Compensation and Expenses

Each member of the board shall serve without compensation, but shall be paid by the Commonwealth the expenses necessarily incurred by him or her in the discharge of his or her official duties.  The Commonwealth shall provide the board with adequate office space and shall pay the expenses of the board incurred in the performance of its duties.