INTRODUCTION: Regulation B-2014-02 supersedes and replaces
Mortgage Broker Regulation B-96-1.
Section
1 Authority and Purpose
This regulation is promulgated pursuant to Title
8 VSA Section
15 and Section 2214 Its purpose is to set
forth rules for the licensing and regulation of Mortgage
Brokers
Section 2
Individuals Authorized to Act as Mortgage Loan Originators under the Mortgage
Broker's License
(a) A Mortgage Broker license
may be issued to a partnership, corporation, or other legal entity, as well as
to an individual
(b) The licensee
must identify in the Nationwide Mortgage Licensing System and Registry
("NMLS"), and sponsor, all employees who are authorized to act as a mortgage
loan originator on behalf of the licensee. Such individuals must have a
mortgage loan originator license in an "approved" status and must have his/her
sponsorship accepted by the Commissioner prior to acting as a mortgage loan
originator under the Mortgage Broker's license. The Commissioner shall be
notified immediately of any changes to the individuals authorized to act as
mortgage loan originators on behalf of the Mortgage Broker.
(c) No individual may act as a mortgage loan
originator under the Mortgage Broker's license without the prior approval of
the Commissioner.
(d) All
individuals authorized to act as a mortgage loan originator under the Mortgage
Broker's license must be assigned to a licensed location of the Mortgage
Broker. All mortgage loan originators must live within a reasonable commuting
distance from the licensed location to which they are assigned. All
advertisements and solicitations must use a licensed location. (For example, an
authorized mortgage loan originator may not use a home address for
advertisements, solicitations, business cards, or correspondence unless such
home address is one of the Mortgage Broker's licensed locations.)
(e) All authorized individuals must be an
employee of the Mortgage Broker (i.e., a W-2 employee) and not an independent
contractor (i.e., a 1099 independent contractor).
(f) An independent contractor must obtain
his/her/its own Mortgage Broker license.
(g) No individual may be authorized to act as
a mortgage loan originator under more than one Mortgage Broker license at any
one time.
Section 3
Surrender of Mortgage Broker License
(a) A
licensee that does not intend to renew a Mortgage Broker license must surrender
the license by filing a request for surrender through the NMLS and by
delivering the original Mortgage Broker license to the Commissioner Failure to
renew the license (or surrender the license) in a timely manner may result in
the suspension, termination, or refusal to renew the license and may result in
the imposition of administrative fines and penalties
(b) A Mortgage Broker that surrenders its
license is still obligated to file:
(i) a
quarterly mortgage call report for the last quarter in which the licensee is
active; and
(ii) a final annual
report.
Failure to deliver the reports to the Commissioner in a
timely manner may result in the suspension, termination, or refusal to renew
the license and may result in the imposition of administrative fines and
penalties.
Section
4 Contract Requirements
(a)
Before a Mortgage Broker takes any fee or collects any charges, or at the time
the prospective borrower submits a signed application, whichever first occurs,
the Mortgage Broker and the prospective borrower must both sign a contract that
sets forth
(i) the particulars of the service
to be performed by the Mortgage Broker, including specifics as to what shall
constitute reasonable efforts on the part of the Mortgage Broker to perform the
agreed upon service;
(ii) that the
Mortgage Broker shall represent the interests of the prospective borrower
rather than those of any lender; and
(iii) all fees received by the Mortgage
Broker for services.
(b)
Any amount received by the Mortgage Broker in excess of the amount set forth in
the approved form of the Mortgage Broker contract shall be reimbursed to the
prospective borrower.
(c) The form
of the contract must be approved by the Commissioner prior to use by the
Mortgage Broker. The Appendix contains a sample form of Mortgage Broker
contract that is approved by the Commissioner.
(d) The Mortgage Broker shall not use any
form of Mortgage Broker contract that has not been approved by the Commissioner
for use by the Mortgage Broker.
Section 5 Segregated Accounts
(a) Any money collected from the prospective
borrower by the Mortgage Broker must be deposited in one or more accounts in a
federally insured bank The Mortgage Broker has a fiduciary duty with respect to
the funds in the account(s), and shall use the funds only for purposes
consistent with the contract required under
8 VSA §
2219, consistent with
8 VSA §
2218, and consistent with this regulation The
account(s) must be segregated from the personal accounts and operating or other
business accounts of the Mortgage Broker The funds of prospective borrowers are
not required to be segregated from the funds of other prospective
borrowers
(b) Repayment of charges
collected from the prospective borrower shall be governed by the application,
the contract, and applicable state and federal law.
Section 6 Quarterly Mortgage Call Reports
Each Mortgage Broker shall file a quarterly mortgage call
report through the NMLS The quarterly mortgage call report shall be in such
form, shall contain such information, and shall be filed with such frequency as
the NMLS may require. Currently, the NMLS requires that quarterly mortgage call
reports shall be filed within 45 days of the end of each calendar
quarter:
Quarter 1 data (January 1 - March 31) is due by May
15;
Quarter 2 data (April 1 - June 30) is due by August
14;
Quarter 3 data (July 1 - September 30) is due by November
14;
Quarter 4 data (October 1 - December 31) is due by February
14.
Failure to file accurate and timely reports may result in
the suspension, termination, or refusal to renew the license and may result in
the imposition of administrative fines and penalties.
Section 7 Prohibited Mortgage Broker
Activities
A Mortgage Broker may not act as the lender in connection
with any loan closing including, without limitation
(a) A Mortgage Broker may not, in its own
name, provide a prospective borrower with a rate lock, extend a rate lock, or
accept discount points or any other funds from a prospective borrower for the
purpose of buying down a rate of interest. A Mortgage Broker may, however,
forward a lender's rate lock to a prospective borrower provided the rate lock
is on behalf of the lender and is in the lender's name.
(b) A Mortgage Broker may not accept and keep
escrow waiver fees or other fees that are associated with the terms and
conditions of the loan.
(c) A
Mortgage Broker may not issue a commitment letter or be identified as the
lender in any commitment letter.
(d) A Mortgage Broker may not close a loan in
its own name.
Section 8
Other Vermont Law
In addition to the requirements of 8 VSA chapter 73,
Mortgage Brokers are subject to the requirements of 8 VSA §§
1020110205 (financial privacy) The loans placed by the Mortgage Broker may be
subject to all or part of the requirements of
8
VSA §§
10403 (prohibition against
discrimination), 10404 (mortgage loan escrow accounts), 9 VSA chapter 4
(permitted charges, actuarial method, prohibition against prepayment
penalties), Banking Bulletin 29 (nontraditional lending), and Banking Bulletin
32 (subprime lending) Pursuant to a Mortgage Broker's obligation to represent
the interests of the borrower, Mortgage Brokers shall not knowingly negotiate,
place, assist in placement, or find Vermont mortgage loans that violate Vermont
or federal laws or regulations This is not intended to be an exhaustive list;
other laws and regulations may also apply
Section 9 Effective Date
This Regulation shall become effective on October 1,
2014
Appendix Regulation B-96-1
This Regulation shall become effective on October 1,
2014
Appendix. Broker/Prospective Borrower Agreement.
This agreement is between [name of prospective borrower(s)]
(individually and jointly the "Borrower" or "you") and [name of mortgage
broker] ("Mortgage Broker") located at [address of mortgage broker] .
Property to be financed: ____________________
1. Mortgage Broker will assist Borrower in
securing financing for the above-referenced property. Mortgage Broker's
services include, but are not limited to, the following (check appropriate
boxes) :
[] Counseling on available mortgage products; Counseling on
general mortgage qualification procedures and requirements; Assistance in
obtaining information required to complete the mortgage application; Assistance
in processing the loan application and in meeting conditions of the loan
commitment; and Coordinating the closing.
[] Other (describe) _______________________
Mortgage Broker represents your interests while performing
the above services. The services are consultative only. You will rely on your
own judgment in deciding which available loan product best suits your needs and
financial means.
2. You
agree to provide true, complete, and accurate information to Mortgage
Broker.
3. Mortgage Broker is
compensated for arranging a mortgage loan. Mortgage Broker's compensation may
be paid either by you or by the lender, but not by both.
SELECT ONE:
[] The maximum fee you will pay Mortgage Broker will not be
more than (check appropriate box) :
[] $______
[] _______% of the loan amount.
OR
[] The maximum fee or other compensation Mortgage Broker
will receive from the lender will be not more than ____% of the loan
amount.
4. All fees and
charges payable to any third party will be disclosed on the federal Good Faith
Estimate and on the federal HUD-1 Settlement Statement. Effective August 1,
2015, all fees and charges payable to any third party will be disclosed on the
federally required Loan Estimate disclosure and the federally required Closing
Disclosure.
5. Mortgage Broker does
not distribute the products of all lenders and cannot guarantee the lowest
price or the best terms.
6.
Mortgage Broker will not be making the loan to you. The lender, not the
Mortgage Broker, underwrites your loan application, approves or denies your
loan application, and sets the terms and conditions of your loan. Mortgage
Broker acts only to facilitate your mortgage loan application.
7. Signing this contract does not obligate
you to obtain a mortgage loan through this Mortgage Broker nor does it
constitute a mortgage loan approval.
8. In the event you terminate your
relationship with Mortgage Broker prior to the closing of any loan, you are
relieved from all obligations under this Agreement, other than the payment of
any actual third party fees disclosed on the Good Faith Estimate or the
federally required Loan Estimate, as applicable, and actually incurred by the
Mortgage Broker.
9. There is no
other mortgage broker agreement between the Borrower and the Mortgage Broker.
Borrower and Mortgage Broker agree to the above terms and
conditions. Borrower authorizes the release of all information (including the
release of credit reports to the lender) required by the lender relating to the
disposition and status of the mortgage application.
NOTICE TO CONSUMER: Do not sign this agreement before you
read it. You are entitled to a copy of this agreement.
___________________________________
Borrower
___________________________________
Date
___________________________________
Borrower
___________________________________
Date
_________________________________
Mortgage Borrower
___________________________________
Date
Mortgage Broker NMLS number: ____________
Mortgage Loan Originator NMLS number: _____
