CFPB Director Cordray Responds to Senator Corker Letter

The Consumer Financial Protection Bureau (CFPB) responded to a letter from Senator Bob Corker (R. Tenn.) requesting the Bureau to release official guidance on what constitutes a technical error under the TILA/RESPA Integrated Disclosure (TRID) rule and possible remediation methods for such errors. Senator Corker commented in his letter that &"there appears to be an overarching concern that the rule's lack of specificity and clarity has created challenges for a number of market participants;&" and observed that &"the lack of clarity around what constitutes a technical error and the curability of those errors by the CFPB has led to confusion throughout the market.&"

The Bureau's response, issued by Director Richard Cordray and dated April 7, 2016, responds item-by-item to the Senator's concerns, summarizing Bureau resources addressing the areas of concern raised by Senator Corker. Included within these resources are recent webinars covering construction loan disclosures and frequent post-implementation questions. However, except for summarizing the various methods by which the Bureau has issued unofficial guidance and the TRID rule cure provisions, Director Cordray was unwilling to commit to providing any official guidance on these or any other areas of industry concern.

- Matthew Smith


Ninth Circuit Rejects Director Cordray's Recess Appointment as Defense to CFPB Enforcement Action; Dissenting Judge Disagrees

Since it was filed in a California federal court in July 2012, we have been following Consumer Financial Protection Bureau (CFPB) v. Chance Edward Gordon, a case in which the CFPB alleged that an attorney duped consumers by falsely promising loan modifications in exchange for advance fees and, in reality, did little or nothing to help consumers. The CFPB charged the defendant with violations of the Consumer Financial Protection Act and Regulation O, the Mortgage Assistance Relief Services Rule.

As part of his affirmative defenses to the CFPB's complaint, the defendant included a challenge to President Obama's recess appointment of Director Richard Cordray. In his summary judgment motion, the defendant asserted that, based on the reasoning of the D.C. Circuit's decision in NLRB v. Noel Canning, Mr. Cordray was not validly appointed as CFPB Director. He argued that in the absence of a validly appointed Director, the CFPB had no authority over non-banks and the CFPB's action against him was therefore rendered invalid. The U.S. Supreme Court subsequently affirmed the D.C. Circuit's ruling that the NLRB appointments at issue in Canning were invalid but on different grounds.

Alternatively, the defendant argued that he was not a "covered person" within the meaning of the Dodd-Frank Act because he did not provide a "consumer financial product or service " but instead provided "custom legal products." The defendant also asserted that he did not provide &"mortgage assistance relief services&" within the meaning of Regulation O because the loan modification services he offered were provided for no compensation. According to the defendant, fees were only charged for pre-litigation, custom legal products.

The district court did not address the merits of the defendant's argument that the CFPB lacked authority to bring the action because of Director Cordray's unconstitutional appointment, concluding that the argument had been waived. It found that the defendant had violated the CFPA and Regulation O and ordered approximately $11.4 million in disgorgement and restitution.

In its opinion affirming the district court's finding of liability, the Ninth Circuit considered whether the district court had Article III jurisdiction to hear the CFPB's enforcement action (an issue which the defendant had not raised but was raised in an amicus brief). According to the Ninth Circuit, any defects in Director Cordray's appointment did not deprive the court of Article III jurisdiction because the CFPB retained its enforcement authority, and therefore its standing to sue, despite such defects.

In January 2013, following the oral argument in the D.C. Circuit in Canning but before the D.C. Circuit issued its decision, Director Cordray was renominated by President Obama. In July 2013, he was confirmed by the Senate as CFPB Director. Director Cordray thereafter issued a notice ratifying the actions he took as Director while he was serving as a recess appointee. The Ninth Circuit ruled that Director Cordray's invalid recess appointment did not render the enforcement action against the defendant invalid because Director Cordray's subsequent valid appointment coupled with his ratification notice cured any initial constitutional deficiencies.

In calculating the monetary judgment, the district court had included money earned by the defendant for a time period that began "prior to the enactment or effectiveness of Regulation O and the relevant portions of the CFPA." Although the Ninth Circuit agreed with the district court's liability finding, it vacated the judgment and remanded "for the district court to consider whether it is appropriate to include in its judgment" money earned by the defendant based on a retroactive application of Regulation O and the CFPA.

In a dissenting opinion, Judge Sandra Segal Ikuta disagreed with the majority's conclusion that Director Cordray's invalid appointment did not deprive the court of Article III jurisdiction. According to Judge Ikuta, because his appointment was invalid, Director Cordray did not have authority to enforce public rights in federal court on behalf of the Executive Branch. In Judge Ikuta's view, without an officer properly appointed by the President, the CFPB lacked any executive authority that would allow it to enforce public rights.

She concluded that, as a result, neither the CFPB nor Director Cordray had Article III standing to sue when the CFPB filed its enforcement action against the defendant and the action should have been dismissed by the district court for lack of jurisdiction. Judge Ikuta rejected the argument that Director Cordray's subsequent ratification of his actions while a recess appointee could retroactively cure the district court's lack of jurisdiction. As support, Judge Ikuta cited federal court cases that have also rejected the argument that a later act can cure a lack of standing at the time a lawsuit is filed.

Judge Ikuta observed that her conclusion that the district court lacked jurisdiction to hear the CFPB's enforcement action "undoubtedly applies to numerous other enforcement actions taken by the Bureau for the 18 months of its existence before" Cordray's Senate confirmation. She also commented that the court had a duty to dismiss the case for lack of Article III jurisdiction "practical effects notwithstanding."

The CFPB continues to face a constitutional challenge to its structure in two pending cases. One case was recently argued before the D.C. Circuit and the other case is before the D.C. federal district court. In both cases, the parties raising the constitutional challenge argue that the Dodd-Frank Act's placement of sweeping legislative, executive, and judicial power in the hands of a single Director who is not accountable to the President or Congress makes the CFPB's structure unconstitutional. In particular, they point to the President's ability to remove the CFPB Director only "for cause" and the funding of the CFPB through the Federal Reserve rather than the congressional appropriations process. (The case before the D.C. federal district court also includes a challenge to the CFPB's constitutionality based on Director Cordray's recess appointment.)

- Barbara S. Mishkin


CFPB's Office of Minority and Women Inclusion Issues Annual Report

The Consumer Financial Protection Bureau (CFPB)'s Office of Minority and Women Inclusion (OMWI) has issued its third annual report to Congress covering the OMWI's activities in 2015. The Dodd-Frank Act required the CFPB and various other federal agencies, including the Fed, OCC, FDIC, NCUA, and SEC, to establish an OMWI, and also required each OMWI to submit an annual report to Congress.

From industry's perspective, the most noteworthy task Dodd-Frank assigned to each OMWI was the development of standards to assess the diversity policies and practices relating to employment and third-party contracting of the institutions regulated by the OMWI's agency. As the report indicates, in June 2015, the CFPB and the agencies listed above jointly issued a final policy statement establishing such standards (Final Standards). The Final Standards became effective on June 10, 2015.

The Final Standards envision that an entity will conduct an annual "self-assessment" of its diversity policies and practices in four areas: (1) organizational commitment to diversity and inclusion, (2) workforce and employment practices, (3) procurement and business practices, and (4) practices to promote the transparency of organizational diversity and inclusion. The Final Standards provide for "assessment factors" for each of these areas, encouraging entities to allocate time and resources to monitor and evaluate their performance under their diversity policies and practices on an ongoing basis. In its report, the OMWI states that it "has begun work on plans related to the new standards including creating processes and procedures for entities to voluntarily assess and report on their internal diversity and inclusion. "

Another task of an OMWI is to develop standards for creating diversity in an agency's own workforce and increasing participation of minority-owned and women-owned businesses in the agency's programs and contracts. According to the report, as of year-end 2015, the CFPB had 1,507 employees, representing an increase of 283 employees from year-end 2014. Of the 1,507 employees, 48% were female and 52% were male. (The percentage of women represents a 2 percent increase from the 2014 percentage.) In addition, of those employees, 68% self-identified as White, 20% as Black/African-American, 9% as Asian American, and 3% as another racial group or belonging to two or more racial groups. The report notes that as of the end of 2015, minorities and women held, respectively, about 26% and 41% of the CFPB's executive leadership positions.

With regard to procurement, the report indicates that in FY 2015, the CFPB entered into 1,450 "contract actions, " totaling approximately $244 million. Of the total contract dollars awarded in FY 2015, the report states that 5% went to women-owned businesses and 9 percent went to minority-owned businesses (consisting of businesses owned by Hispanic Americans, African-Americans, Asian/Pacific Islander Americans and American Indians/Alaskan Natives, and Others).

As noted above, the Final Standards cover not only a regulated entity's diversity policies and practices relating to employment but also cover its procurement and business practices. Thus, banks and other regulated entities may want to take note of the section of the report describing the CFPB's efforts to increase vendor diversity.

Ballard Spahr's Diversity Team advises clients on the design and implementation of diversity and inclusion programs and counsels CFPB-supervised entities on developing and implementing diversity programs.

- Dee Spagnuolo


Massachusetts High Court Examines Disparate Impact Theory in Light of Recent Supreme Court Decision

A ruling last week by Massachusetts' highest state court demonstrates courts' vigorous examination of disparate impact housing claims in light of recent judicial guidance, as well as the type of proactive measures property owners can take to prevent disparate impact liability.

The Massachusetts Supreme Judicial Court based its ruling in Burbank Apartments Tenants Association v. Kargman on an analysis of the June 2015 U.S. Supreme Court decision in Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc. (ICP). Burbank ranks as one of the key early decisions to analyze Fair Housing Act disparate impact theory under the SCOTUS ICP guidance, which officially recognized FHA claims based on disparate impact theory. Disparate impact theory, unlike claims of intentional and/or overt discrimination, allows claims where seemingly race neutral policies or actions have a disproportionately adverse effect on certain protected classes of people—even if unintentional.

In the ICP opinion, the Supreme Court held that a prima facie case of disparate impact liability under the FHA requires plaintiffs to demonstrate, using statistics, that the defendant's policy or practice actually causes a discriminatory disparity. The Court asserted this "robust causality requirement" to protect "defendants from being held liable for racial disparities they did not create." Under this standard, a policy or practice must constitute "artificial, arbitrary, and unnecessary barriers" to give rise to a disparate impact liability.

Like many of the courts to analyze disparate impact claims under the FHA since ICP, the Massachusetts Supreme Judicial Court ruled that the plaintiffs failed to meet their burden of showing a prima facie case for liability. In Burbank, current and prospective tenants sued the Kargmans—owners of the Burbank Apartments—for not renewing a Section 8 housing assistance payment contract with HUD. The plaintiffs argued this would result in less affordable housing, which, because of the relationship between race and poverty, would have a negative and disproportionate impact on people of color and other protected classes. The Kargmans countered that both state and federal law permitted them to not renew the expiring contract, as did the contract, thus precluding liability. A Massachusetts housing court judge granted the Kargmans' motion to dismiss, and the Supreme Judicial Court affirmed last week.

The Burbank Court concluded that the plaintiffs did not demonstrate how the Kargmans' decision not to renew the HUD contract would cause a discriminatory effect. The Court began its opinion by declining to adopt a per se rule that would preclude a housing provider from disparate impact liability simply because it followed the terms of the contract and applicable federal and state laws. Instead, the Court analyzed whether the Kargmans' decision would, in fact, cause a discriminatory effect.

The Massachusetts Court carefully considered the SCOTUS guidance that disparate impact liability should only be imposed if a defendant's policy causes discriminatory effects or perpetuates segregation as shown though a statistical discrepancy. The plaintiffs failed to make that showing because they did not demonstrate any harm to indicate discriminatory treatment, the Court ruled. After ending the contract with HUD, the Burbank Apartments allowed all tenants that had been receiving Section 8 assistance to remain in their units using alternative "enhanced vouchers," which also allowed tenants to use the voucher at a different property.

The Court further criticized the plaintiffs over claims regarding prospective tenants, stating that there was no guarantee, even absent the Kargmans' decision, that prospective tenants would have received and moved into a Burbank apartment using a Section 8 project-based voucher. Therefore, the "robust causality requirement" was not met in showing that the Kargmans' policy resulted in a statistical disparity for protected classes. The Court distinguished the facts of this case from "heartland" disparate impact cases where a project-based housing provider paid off its mortgage early to entirely demolish the building, causing a disparate impact on protected classes. Nor did the Kargmans take action to raise the rent for the units so high that the public housing authority refused to pay them as unreasonable. Unlike those situations, the Kargmans' decision did not, on its own, create a discriminatory statistical disparity.

In a footnote, the Burbank Court aptly noted that the Supreme Court's recent decision on disparate impact liability "leaves a number of questions unanswered." The Court did, however, attempt to answer one of those remaining questions, concluding with an interesting observation that it read the Supreme Court's call for "adequate safeguards" and a "robust causality requirement" as indicating "a higher burden for disparate impact plaintiffs under the FHA than under Title VII" employment discrimination. The Court found support for this statement in both the "rigorous" pleading requirements imposed by other courts to analyze the ICP opinion as well as the Supreme Court's stressing the importance of "prompt resolution" for disparate impact cases.

The Burbank opinion shows that courts generally take the Supreme Court's ICP guidance seriously and will scrutinize disparate impact claims to determine if the defendant's practice or policy is actually the cause of the discriminatory effect, as proven through "robust causality" and statistical evidence. The Court found that the Burbank plaintiffs suffered no harm at all since the Kargmans allowed them to stay using enhanced vouchers, demonstrating how preemptive mitigation efforts can prevent a successful disparate impact claim. 

- Michael W. Skojec


One-Year Period of SCRA Foreclosure Protection Remains in Effect through 2017

On March 31, 2016, President Obama signed into law the Foreclosure Relief and Extension for Servicemembers Act of 2015, which continues through December 2017 a provision of the Servicemembers Civil Relief Act (SCRA) that prohibits foreclosing on a servicemember's house for one year following the servicemember's return from active duty.  

Under the original SCRA, enacted in 2003, servicemembers received only 90 days of foreclosure protection beyond their period of active duty service. In the interest of further assisting servicemembers as they transition to civilian life, Congress extended the 90-day period to nine months in 2008 and ultimately to one year in 2012, where it has remained as a result of a series of annual amendments to the sunset provision. 

The March 31 amendment continues the one-year period of protection against foreclosures, demonstrating a continued legislative and regulatory interest in protecting servicemembers and their families. The amendment's continuation of the one-year SCRA foreclosure protection period is effective retroactively to January 1, 2016, and will expire on December 31, 2017. Unless continued by further legislation, the protection period will revert back to 90 days on January 1, 2018.

- Alan S. Kaplinsky, Juliana D. Gerrick, and Anthony C. Kaye


Ninth Circuit Upholds Ruling in Favor of CFPB against Lawyer in Mortgage Relief Scam, Rejects Constitutional Challenge to Director Cordray's Recess Appointment

The Ninth Circuit recently considered arguments relating to an enforcement action brought by the Consumer Financial Protection Bureau (CFPB) against a California attorney who was offering loan modification services. The CFPB sought disgorgement and restitution against the defendant for approximately $11.4 million dollars that he and related parties collected from consumers between January 2010 and July 2012. 

In CFPB v. Gordon, the Ninth Circuit first addressed whether the court had jurisdiction to hear the case, noting that President Obama had appointed Richard Cordray as the CFPB's initial director on January 4, 2012, relying on his recess-appointment power. That same day, President Obama made three recess appointments to the National Labor Relations Board (NLRB).  The U.S. Supreme Court later held that the NLRB appointments did not satisfy the Appointments Clause set forth in Article II because they occurred when the Senate was in session.  The President renominated Mr. Cordray as Director on January 24, 2013.  On July 16, 2013, the Senate confirmed Mr. Cordray, and on August 30, 2013, Mr. Cordray claimed "the actions I took during the period I was serving as a recess appointee were legally authorized and entirely proper."

The CFPB filed its enforcement action against the defendant during the period that Mr. Cordray was serving as Director pursuant to his recess appointment.  In addressing the constitutionality of the CFPB's action, the Ninth Circuit held the recess appointment neither divested the federal courts of jurisdiction nor rendered the enforcement action invalid under Article II. 

We discussed the constitutional issues in greater detail last week in the CFPB Monitor, including Judge Ikuta's dissenting opinion. In short, the Ninth Circuit reasoned that Congress had authorized the CFPB to bring actions in federal court to enforce consumer protection statutes and regulations, and Mr. Cordray's recess appointment did not alter the Executive Branch's interest or power in having federal law enforced. The court concluded that Mr. Cordray's recess appointment did not negate Article III jurisdiction, and that his later, valid appointment, coupled with the August 30, 2013 ratification, cured any Article II deficiencies that may have existed.

With respect to the merits, the CFPB alleged that the defendant violated the Consumer Financial Protection Act's prohibition against unfair, deceptive, and abusive acts and practices (UDAAP) by claiming that consumers would likely receive mortgage relief and that his operation was affiliated with the government. The CFPB further alleged the defendant violated Regulation O by receiving up-front payments for mortgage relief services before consumers had entered into agreements with their lenders, failing to make proper disclosures, advising consumers not to communicate with their lenders, and misrepresenting his services. 

The Ninth Circuit affirmed the district court's finding that the defendant's mailers falsely claimed he was affiliated with the federal government. Each mailer bore the Equal Housing Opportunity logo and stated it was a "Notice of HUD Rights" sent from the "Qualifications Intake Department." The defendant argued he was not liable for the mailers because he had hired another company to create his marketing materials. The court rejected this argument because evidence showed the defendant had retained final decision-making authority over all advertisement and had reviewed the mailers in question. The defendant also argued that the contracts his clients eventually signed contained no misrepresentations as to his services and affiliations and therefore absolved him of any liability for the mailers. The Ninth Circuit rejected this argument, ruling that a &"later corrective written agreement does not eliminate a defendant's liability for making deceptive claims in the first instance.&"

As for the CFPB's other claims, the defendant argued that he was not a "mortgage assistance relief service provider" under Regulation O because he did not provide mortgage relief services in exchange for consideration. Instead, he claimed that he simply provided &"custom legal products,&" and that any mortgage relief services he provided were part of a pro bono program. The Ninth Circuit observed that consumers were not eligible for these "pro bono" services unless they signed up and paid fees for legal products, and consequently was not persuaded that a contract under which a consumer agrees to pay a fee can be used to escape Regulation O. Ultimately, the Ninth Circuit held that the district court properly granted summary judgment against the defendant, but remanded for further consideration relating to the monetary judgment.

While Gordon involves extreme conduct, it serves as a reminder that attempts to contract around consumer protection laws are risky, particularly when coupled with UDAAP conduct. In addition, the case highlights important constitutional issues surrounding the CFPB that remain unresolved.

- Steven D. Burt, Anthony C. Kaye, and Daniel L. Delnero


CFPB Staff Presents Second TRID Rule Webinar for 2016

The CFPB staff presented an informational webinar on Tuesday, April 12, 2016, to address several issues with the TILA/RESPA Integrated Disclosure (TRID) rule. The webinar, titled Know Before You Owe Mortgage Disclosure Rule: Post-Effective Date Questions & Guidance, focused on responding to specific industry raised questions. Specific topics of discussion included:

  • Determining what fees must be disclosed;
  • APR changes that require a new three-day waiting period;
  • Lender and seller credits as they relate to the APR and finance charge;
  • The calculation of the Total Interest Percentage (TIP);
  • Disclosure of the owner's title insurance policy premium when disclosures produce a negative premium amount;
  • Flood insurance premium disclosures;
  • Disclosure of escrow account balances credited from an existing loan;
  • Separate borrower and seller Closing Disclosures;
  • Disclosure of whether a loan is assumable;
  • How to address upfront fees collected from the consumer for items that cost less than the collected amount; and
  • Disclosure of a principal curtailment.

As we have previously written for the last TRID rule webinar, the fact that the entire presentation appeared to be scripted word-for-word was interesting considering the fact that the CFPB has refused industry requests to issue informal guidance in writing.

- Matthew Smith


NMLS Release 2016.1.2 Targeted for May 2, 2016

NMLS Release 2016.1.2 is targeted for delivery on May 2, 2016. The release contains general enhancements and system maintenance updates. For example, the MU2 section of the Individual Snapshot will be updated to display the corresponding industry and state(s) with their associated start and end dates for each Qualifying Individual and Branch Manager association.  The full summary of changes can be found here.

Colorado Modifies MLO Provisions

Colorado has modified provisions of the Mortgage Loan Originator Licensing and Mortgage Company Registration Act (Act) in an effort to conform more closely to applicable federal laws.  For instance, a new provision specifies that the board may adopt the uniform state test administered through the nationwide mortgage licensing system for the portion of the examination that represents the state-specific test required in the federal "Secure and Fair Enforcement for Mortgage Licensing Act of 2008." In addition, a parent who acts as a loan originator in providing loan financing to his or her child is exempt from licensing under the Act.  Also, the list of actions resulting in disciplinary actions has been expanded. 

These provisions become effective on August 10, 2016 (or 90 days following adjournment of the legislative session).

Kentucky Amends MLRA Provisions

Kentucky has amended certain provisions under the Mortgage Licensing and Regulation Act including, but not limited to, the following:

  • The definition of "clerical or support duties" has been clarified. Communication that involves assisting a borrower or prospective borrower with the preparation of documents necessary to obtain a mortgage loan does not fall under this definition.

  • The following new section will be added: A mortgage loan processor who is not registered or otherwise authorized to act as a mortgage loan originator shall not represent to the public or to individual consumers that he or she can, or is willing to, perform any of the activities of a mortgage loan originator.

  • The following requirement has been removed: The license certificate of a mortgage loan broker shall be at all times prominently displayed at the mortgage loan broker's physical location.

  • Provisions regarding mortgage loan processors have been added. A mortgage loan processor shall not be required to maintain a registration, but the processor's supervising mortgage loan company or mortgage loan broker shall be required to provide the mortgage loan processor with the continuing education as required, as well as perform an employee background check in accordance with uniform standards established by the commissioner prior to hiring an applicant as a processor, and provide proof of compliance with this section to the commissioner upon demand.

These provisions become effective on July 14, 2016 (or 90 days following adjournment of the legislative session).

Utah Amends RMPLA Provisions

Utah has modified the provisions in Residential Mortgage Practices and Licensing Act, including, but not limited to, the following:

  • Definitions added or amended:
    • "Mortgage loan originator" now includes an individual who, for compensation or in the expectation of compensation, directly or indirectly solicits a residential mortgage loan for another person and is licensed as a mortgage loan origination in accordance with this chapter.
    • "Referral fee" now includes "other compensation" tendered for a referral of business or a service incident to or part of a residential mortgage loan transaction.
  • Prohibited conduct added: A person transacting the business of residential mortgage loans in this state may not:
    • Act incompetently in the transaction of the business of residential mortgage loans such that the person fails to: (i) safeguard the interests of the public; or (ii) conform to acceptable standards of the residential mortgage loan industry, or
    • Sign or initial a document on behalf of another person, except for in a circumstance allowed by the Utah Division of Real Estate by rule, with the concurrence of the commission, made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
  • In conducting investigations, records inspections, and adjudicative proceedings, the division may now issue a subpoena that requires: (i) the attendance and testimony of a witness; or (ii) the production of evidence.

These provisions become effective on May 10, 2016.

- Wendy Tran


Did you know?

by Wendy Tran

NMLS Release 2016.1.2 Targeted for May 2, 2016

NMLS Release 2016.1.2 is targeted for delivery on May 2, 2016. The release contains general enhancements and system maintenance updates. For example, the MU2 section of the Individual Snapshot will be updated to display the corresponding industry and state(s) with their associated start and end dates for each Qualifying Individual and Branch Manager association. The full summary of changes can be found here.

Colorado Modifies MLO Provisions

Colorado has modified provisions of the Mortgage Loan Originator Licensing and Mortgage Company Registration Act (Act) in an effort to conform more closely to applicable federal laws. For instance, a new provision specifies that the board may adopt the uniform state test administered through the nationwide mortgage licensing system for the portion of the examination that represents the state-specific test required in the federal "Secure and Fair Enforcement for Mortgage Licensing Act of 2008." In addition, a parent who acts as a loan originator in providing loan financing to his or her child is exempt from licensing under the Act. Also, the list of actions resulting in disciplinary actions has been expanded.

These provisions become effective on August 10, 2016 (or 90 days following adjournment of the legislative session).

Kentucky Amends MLRA Provisions

Kentucky has amended certain provisions under the Mortgage Licensing and Regulation Act including, but not limited to, the following:

  •  The definition of "clerical or support duties" has been clarified. Communication that involves assisting a borrower or prospective borrower with the preparation of documents necessary to obtain a mortgage loan does not fall under this definition.
  • The following new section will be added: A mortgage loan processor who is not registered or otherwise authorized to act as a mortgage loan originator shall not represent to the public or to individual consumers that he or she can, or is willing to, perform any of the activities of a mortgage loan originator.
  • The following requirement has been removed: The license certificate of a mortgage loan broker shall be at all times prominently displayed at the mortgage loan broker's physical location.
  • Provisions regarding mortgage loan processors have been added. A mortgage loan processor shall not be required to maintain a registration, but the processor's supervising mortgage loan company or morgage loan broker shall be required to provide the mortgage loan processor with the continuing education as required, as well as perform an employee background check in accordance with uniform standards established by the commissioner prior to hiring an applicant as a processor, and provide proof of compliance with this section to the commissioner upon demand.

These provisions become effective on July 14, 2016 (or 90 days following adjournment of the legislative session).

Utah Amends RMPLA Provisions

Utah has modified  the provisions in Residential Mortgage Practices and Licensing Act, including, but not limited to, the following:

  • Definitions added or amended:
    • ''Mortgage loan originator'' now includes an individual who, for compensation or in the expectation of compensation, directly or indirectly solicits a residential mortgage loan for another person and is licensed as a mortgage loan origination in accordance with this chapter.
    •  ''Referral fee'' now includes ''other compensation'' tendered for a referral of business or a service incident to or part of a residential mortgage loan transaction.
  •  Prohibited conduct added: A person transacting the business of residential mortgage loans in this state may not:
    • Act incompetently in the transaction of the business of residential mortgage loans such that the person fails to: (i) safeguard the interests of the public; or (ii) conform to acceptable standards of the residential mortgage loan industry, or
    • Sign or initial a document on behalf of another person, except for in a circumstance allowed by the Utah Division of Real Estate by rule, with the concurrence of the commission, made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
  •  In conducting investigations, records inspections, and adjudicative proceedings, the division may now issue a subpoena that requires: (i) the attendance and testimony of a witness; or (ii) the production of evidence.
These provisions become effective on May 10, 2016.

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