Oregon Enacts Provisions Regarding Mortgage Loan Servicer Practices Act
The state of Oregon enacted provisions regarding its Mortgage Loan Servicer Practices Act that include, but is not limited to, licensing application and renewal requirements and required fees. These provisions become operative on January 1, 2018.
Section 2 defines “Service a residential mortgage loan” to mean: receiving a scheduled periodic payment from a borrower under the terms of a residential mortgage loan; paying to the lender or another person principal, interest and other amounts associated with a residential mortgage loan in accordance with the terms of any contract or agreement for servicing the residential mortgage loan; or paying an amount to a borrower, if the residential mortgage loan is a home equity conversion mortgage or a reverse mortgage
The amendment requires certain persons that service residential mortgage loans to obtain or renew a license but exempts state and federally chartered banks and credit unions. It also exempts anyone who is servicing loans they originated or purchased both the loan and the servicing rights. In addition, it exempts up to an additional servicing of 5000 loans that one did not originate or purchase.
Section 4 of the amendment specifies license application, renewal procedures and required fees. An application for a license shall be submitted to Director of the Department of Consumer and Business Services (“director”) or the director by rule may require an applicant to submit an application through the NMLS registry.
The applicant shall submit with the application fingerprints from all of the applicant’s controllers, registered agents and managers, unique identifier, the name and address of the applicant’s registered agent, address of the applicant’s principal place of business and the name of the manager of any branch office the applicant maintains. The amendment prescribes civil penalties against persons that engage in business as residential mortgage loan servicer without a license.
The amendment requires a licensee to maintain specified liquidity, operating reserves and net worth. Section 6 provides that a licensee shall maintain in accordance with generally accepted accounting principles sufficient liquidity, operating reserves and tangible net worth to permit the licensee to adequately meet all costs, expenses and other financial requirements related to servicing residential mortgage loans in this state
Section 7 requires disclosure by a mortgage loan servicer to the director of certain significant events such as relocating or closing the licensee’s principal place of business, opening a new branch office, filing for bankruptcy or reorganization and any change in the licensee’s operations or governance.
The amendment also prescribes duties of licensee and prohibits certain activities relating to negotiating or offering to negotiate modification of terms of residential mortgage loan.
Section 13 permits the director to suspend or remove any member of licensee’s governing body or licensee’s officer who violate any provisions under the Mortgage Loan Servicer Practices Act.
Rhona Kyeyune, LLM, is a regulatory compliance consultant with CLA. She is a graduate of Makerere University and earned her master of laws at Boston University School of Law.
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