Florida License Law and Regulation (20%) Flashcards
An individual who, directly or indirectly, solicits or offers to solicit a mortgage loan, accepts or offers to accept an application for a mortgage loan, negotiates or offers to negotiate the terms or conditions of a new or existing mortgage loan on behalf of a borrower or lender, processes a mortgage loan application, or negotiates or offers to negotiate the sale of an existing mortgage loan to a non-institutional investor for compensation or gain. An individual cannot act as a loan originator unless he/she is employed by a broker or lender or acting as an independent contractor for a broker or lender. Additionally, loan originators may only work for one mortgage broker at a time.
Loan originator
A person conducting loan originator activities through one or more licensed loan originators employed by the mortgage broker or as independent contractors to the mortgage broker.(494.001(21)) Mortgage brokers are required to designate a qualified principal loan originator on their application.
Mortgage broker
A person making a mortgage loan or servicing a mortgage loan for others, or, for compensation or gain, directly or indirectly, selling or offering to sell a mortgage loan to a non-institutional investor.
Mortgage lender
What is defined as an individual who strictly engages in loan processing tasks which include:
Receipt, collection, distribution and analysis of information common for the processing or underwriting of a residential mortgage loan
Communication with the consumer to obtain information necessary for processing or underwriting a loan, to the extent that the communication does not include offering or negotiating loan rates or terms or counseling consumers about loan rates or terms?
Loan Processor
A loan processors must file what with the Office?
a “declaration of intent to engage solely in loan processing”
Are loan processors required to be licensed like a loan originator?
Yes. Under Florida law, loan processors are required to maintain a loan originator license, although they are not restricted to working for a single broker or lender.
A depository institution and subsidiaries that are owned and controlled by a depository institution and regulated by the Board of Governors of the Federal Reserve System are exempt from the licensing provisions.
Federally Controlled Entities
Also exempt are depository institutions and subsidiaries regulated by the:(5)
Comptroller of the Currency Director of the Office of Thrift Supervision National Credit Union Administration Federal Deposit Insurance Corporation Farm Credit Administration
Additionally, the following agencies and associations are exempt from the statutes:
- Freddie
- Fannie
- Any agency of the federal government; any state, county, or municipal government; or any quasi-governmental agency that acts in such capacity under the specific authority of the laws of any state or the United States.
The law exempts attorneys licensed in Florida who negotiate the terms of a mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client.
Licensed Attorneys
If a person is involved solely in the extension of credit relating to the purchase of a timeshare plan…
that person is exempt from regulation.
The licensing law that applies to loan originators includes a number of exemptions. The following persons are exempt from regulation under 693 part III of the law:
- Person acting on the behalf of the court
- Seller of property (seller financed)
- LO making non-residential loans (commercial) and selling them to institutional investors
- An individual buying a loan as an investment
- An individual selling an existing loan that they made with their own funds
The MU1 form requires the business entity that is seeking a license to disclose whether it has:
Within the past ten years, operated as a mortgage lender or broker that was the subject of a bankruptcy petition
Ever had a bonding company deny, pay out, or revoke a bond
Any unsatisfied judgments or liens pending
The MU2 form requires control persons, which include principals and executive officers, to disclose whether they have:
Within the past ten years, filed a bankruptcy petition or been the subject of an involuntary bankruptcy action
Within the past ten years, exercised control over an organization that has filed a bankruptcy petition or been the subject of an involuntary bankruptcy action
Ever had a bonding company deny, pay out, or revoke a bond
Any unsatisfied judgments or liens pending
Loan originator applicants are required to submit the MU4 form through the NMLS which requires the applicant to disclose whether he/she has:
Within the past ten years, filed a bankruptcy petition or been the subject of an involuntary bankruptcy petition
Within the past ten years, exercised control over an organization that has filed a bankruptcy petition or been the subject of an involuntary bankruptcy action
Ever had a bonding company deny, pay out, or revoke a bond
Any unsatisfied judgments or liens pending
What disclosure require the applicant to disclose under oath whether it or its control affiliate has:
At any time, been charged or convicted for a felony or pled guilty or nolo contendere (no contest) to a felony
Within the past ten years, been charged, convicted, pled guilty, or pled nolo contendere to a misdemeanor, committed in any jurisdiction, that involves financial services or financial services related business, or an offense involving breach of trust or fraudulent or dishonest dealing, or money laundering?
Criminal Disclosures
What disclosures require the applicant and its control affiliate to disclose under oath whether a regulatory agency has taken any of the following actions against it within the past ten years:
Found the applicant involved in the making of false statements or omissions
Found the applicant involved in the violation of financial-services regulations
Denied, revoked, or suspended a license?
Regulatory Action Disclosures
What disclosures require the applicant to disclose under oath whether it has, within the past ten years, been:
Subject to an injunction in connection with an activity related to providing financial services
Found to have violated any laws of regulations that relate to financial services
A party to a settlement agreement, which it entered to resolve an action brought against it for alleged violation of laws and regulations that relate to financial services?
Civil Judicial Disclosures
The nonrefundable NMLS processing fees are the same for every state, and they are:
$100 for mortgage company applications
$30 for mortgage loan originator applications
$20 for branch office applications
to pay (someone) for something he has done.
Remunerate
What is The licensing fees for:
1. residential mortgage lender license
- residential mortgage broker license
- mortgage loan originator license
- $758.25 for a residential mortgage lender license (includes $500 application fee, $100 guaranty fee, $43.25 FBI and state background check fee, $15 credit report fee, and $100 NMLS processing fee)
- $683.25 for a residential mortgage broker license (includes $425 application fee, $100 guaranty fee, $43.25 FBI and state background check fee, $15 credit report fee, and $100 NMLS processing fee)
- $332 for a mortgage loan originator license (includes $195 application fee, $20 guaranty fee, $39 federal background check fee, $33 state background check fee, $15 credit report fee and $30 NMLS processing fee)
When making the decision to approve or deny an application based on these factors, the Office considers the following information:
The applicant’s credit history as reflected by a credit report
Information provided by the applicant
Responses in the license application
Any previous licensing history of the applicant with the Office
Any other information that reflects on character, general fitness or financial responsibility
Time and context of information and any patterns of behavior
The Office may determine that an applicant is not financially responsible if “adverse credit history” appears on his/her financial records. Adverse credit history may include:
Personal bankruptcy within the previous year
Bankruptcy within the previous year of any organization where the individual was a control person
Outstanding tax or other government liens
Outstanding judgments based on fraud, embezzlement, misrepresentation or deceit
Open collection accounts or charged off accounts that remain unpaid (with the exception of medical expenses)
Foreclosures within the previous five years
What is the net worth requirement If applicant is not seeking a servicing endorsement?
$63,000
What is the net worth requirement If applicant is seeking a servicing endorsement?
$250,000
Mortgage lenders are required to continually maintain the net worth requirements to keep their licenses valid. If a mortgage lender fails to satisfy the net worth requirements, the mortgage lender must…
immediately cease taking any new mortgage loan applications
How long do mortgage lenders have to satisfy the net worth requirements?
Within 60 days
If the licensee makes the Office aware, prior to an examination, that the licensee no longer meets the net worth requirements, the mortgage lender has ___ days within which to satisfy the net worth requirements.
120
In making this determination to approve or deny a license, the Office will consider the following information:
The relevant person’s entire credit history as reflected in the credit report
Application responses
Previous licensing history
Previous regulatory actions
Other information that reflects upon an applicant’s character, general fitness, or financial responsibility
The Commissioner will deny a license if the applicant is in violation of the law or is the subject of a pending felony criminal prosecution that involves:
Fraud Dishonesty Breach of trust Money laundering Any other act of moral turpitude
When reviewing the financial responsibility of a loan originator applicant, the Commissioner will look at the applicant’s own financial affairs. The Commissioner may conclude that an applicant has shown disregard for his/her financial affairs if any of the following are found:
Current outstanding judgments, except relating from medical expenses
Current tax or other governmental liens
Foreclosures within the past three years
Seriously delinquent accounts in the last seven years
How longer are licenses valid and when do they expire?
Licenses are valid for one year and expire on December 31st of the year they were issued.
Continuing education is ___ hours and include what?
- 8 hours
- 3 hrs Fed Law
- 2 hrs Ethics
- 2 hrs Nontraditional mortgage products
30-day Reporting Requirements:
Any conviction of, or plea of nolo contendere (no contest)
o A crime or administrative violation that involves fraud, dishonest dealing, or any other act of moral turpitude
o Any felony committed by the licensee
o A report must be made to the Office no later than 30 days after the date of conviction, entry of a plea, or final administrative action (494.004(1)(a))
Any change to the information contained in any initial application form or any amendment to the application (494.004(1)(d))
Any action in bankruptcy, voluntary or involuntary
o Report must be made no later than 30 days after the action is instituted (494.004(1)(c))
Each person licensed as a loan originator, mortgage broker, or mortgage lender which proposes to change its name, form of business organization, or any other information contained in any initial application form or any amendment thereto, must file an amendment through the NMLS no later than ___ days after the effective date of the change.
30 days
In order to renew a mortgage broker license, a licensee must submit the following:
A completed license renewal form
A renewal fee of $375, plus the $100 for the Trust Fund and $25.25 for further background checks
Fingerprints for any new control persons who have not previously been screened by the Office
Authorization for the Office to obtain credit reports on all control persons
Any additional information requested by the Commissioner such as criminal histories, disciplinary events, and plea agreements
How much is the nonrefundable renewal fee for each branch office license through the NMLS at the time of renewing the mortgage broker license?
$225 for each branch
All mortgage lender licenses must be renewed annually by _______ ___ of each year. If a license is not renewed, it will expire.
December 31st
In order to renew a mortgage lender license, a mortgage lender must submit a completed license renewal application. Additionally, the following must be submitted:
A nonrefundable renewal fee of $475, and a nonrefundable fee of $100 for the Trust Fund
Fingerprints for any new control persons who have not been screened
Proof that the mortgage lender continues to meet the applicable net worth requirement
Authorization to the registry to obtain an independent credit report on the mortgage lender from a consumer reporting agency, and transmit or provide access to the report to the Office
Submit any additional information or documentation requested by the Office such as prior disciplinary and criminal history events, or other comparable documents that may provide the Office with the information they need to determine if the lender’s license should be renewed
In order to renew a loan originator license, the licensee must:
Submit a renewal form
Submit a renewal fee of $195.25, which includes $150 renewal fee, $20 for the mortgage recovery fund and fingerprint processing fees, and $25.25 to cover further costs of criminal background check.
Complete eight hours of continuing education
Authorize the registry to obtain a credit report
Submit any other documentation required by the Office
Violations of the rules 494.00313 Loan originator license renewal result in what?
license suspension and a fine of $500
Records of loan transactions, discolsures, etc must be maintained for at least how many years after the date of the original entry?
3 years after the date of original entry.
The penalty for maintaining books, accounts, and records at a location other than the principal place of business, without written notification to the Office of Financial Regulation, must be the issuance of a “notice of noncompliance” for a first offense How much is the fine?
Will be deemed “noncompliant” and may result in a fine of $500.
If books and records are requested by the OFR, and those items are kept at a location other than their principle place of buisiness, how many days must they be provided after written request.
3 business days of written request
As with general books and records, mortgage broker files must be maintained for a period of?
three years from the date of original entry
The following documents must be retained by a mortgage broker
Mortgage Brokerage Agreement
GFE
Copy of written commitment supplied by the lender
Copy of written lock in agreement supplied by the lender
HUD settlement statement
Notice of Adverse Action of denial document
Other required disclosures
Name of borrower and date of application
What is The fund that ensures payment to consumers who suffer a financial loss due to fraud or deception on behalf of a mortgage originator?
Mortgage Guaranty Trust Fund
How much is the fee that is required to pay into the Mortgage Guaranty Trust Fund?
- Individual licensee
- Mortgage Broker & Lender
- $20
2. $100
When can the Mortgage Guaranty Trust Fund be discontinued?
Collection continues annually until the fund reaches $5 million at which time the collection fee will be discontinued. Following discontinuation, the fee is not re-imposed until the fund’s value drops below $1 million
Persons applying for compensation from the trust fund will receive payment equal to the unsatisfied portion of that person’s judgment, or ________, whichever is less.
$50,000
Payments for claims are limited in the aggregate to ___________ against any one licensee under the law.
$250,000
