Compliance

Question 1

What is the Model State Law?

Answer 1

The Model State Law (MSL) was developed by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to assist states in designing and implementing their own laws that are in compliance with the S.A.F.E. Act.

Question 2

Who developed the MSL?

Answer 2

The Model State Law (MSL) was developed by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR).

Question 3

Who reviewed the MSL to make sure it met the purpose of the SAFE act?

Answer 3

the MSL was reviewed by HUD to ensure it met the purpose and intent of the S.A.F.E. Act.

Question 4

What actions are prohibited by a licensed MLO to do?

Answer 4

• Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers, lenders, or any person
• Engage in any unfair or deceptive practice toward any person
• Obtain property by fraud or misrepresentation
• Solicit or enter into a contract with a borrower that provides that the person or individual may earn a fee or commission through “best efforts” to obtain a loan even though no loan is actually obtained for the borrower
• Solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time
• Conduct loan origination business without holding a valid license or assist an unlicensed person in the conduct of such business
• Fail to:
  1. Make disclosures as required under applicable state or federal law and regulations
  2. Truthfully account for monies belonging to any party to a residential mortgage loan transaction
  3. Comply with the state’s S.A.F.E. Act and/or its corresponding rules or regulations, or
  4. Comply with any other state or federal law, rule(s), or regulation(s) applicable to the mortgage loan origination business
• Make any false or deceptive statement or representation, including any statement or representation related to the rates, points, or other financing terms or conditions for a residential mortgage loan
• Engage in bait-and-switch advertising
• Negligently make any false statement or knowingly and willfully omit a material fact in connection with any information or reports filed with a governmental agency or the NMLS or in connection with any investigation conducted by a state or any governmental agency
• Make any payment, threat, or promise, directly or indirectly, to influence the independent judgment of a real property appraiser in connection with the appraisal of a property that is the subject of a mortgage loan application
• Make any payment, threat, or promise, directly or indirectly, to influence the independent judgment of any person in connection with a residential mortgage loan
• Collect, charge, or attempt to collect or charge any fee prohibited by law
• Require a borrower to obtain property insurance coverage in an amount that exceeds the actual replacement cost of the improvements as established by the property insurer

Question 5

What disciplinary action can state agencies take when an MLO engages in prohibited activities?

Answer 5

• Deny, suspend, revoke, condition, or decline to renew a license
• Deny, suspend, or revoke a license if the violation involves:
  1. Making false statements or omitting information on a license application, or
  2. Failing to meet the standards for licensure
• Order restitution
• Impose fines and civil penalties
• Issue restraining orders, injunctions, and cease and desist orders, including temporary restraining orders
• Take any other action deemed necessary by the regulatory authority

Question 6

How much can a state agency charge an MLO for each violation?

Answer 6

A state regulator may, after notice to the licensee and the opportunity for hearing, impose a fine of up to $25,000 per violation.