Utah Adopts Provisions Regarding Residential Mortgage Practices and Licensing Rules

• October 8, 2015
• Anna DeSimone

By Laura McCarthy, J.D.
Effective immediately, the Utah Department of Commerce, Division of Real Estate has adopted provisions including, but not limited to, changes to existing sections regarding entity registration, instructor registration as well as licensee conduct. The changes to the Utah Residential Mortgage Practices and Licensing Rules are as follows:
Section R162-2c-201
Registering entities must list all business and trade names used.
Mortgage Entity

1. To obtain a Utah license to operate as a mortgage entity, a person shall register the entity in a nationwide database by submitting an MU1 form that includes (i) all required identifying information; (ii) the name of the principal lending manager  who, pursuant to Subsection R162-2c-301a(3)(a)(iv), will serve as the entity’s qualifying individual; (iii) the name of any lending manager who, pursuant to Subsection R162-2c-301a(3)(a)(iv), will serve as a branch lending manager; (iv) the name of any individuals who may serve as control persons; (v) the entity’s registered agent; and (vi) any other assumed business name or trade name under which the entity will operate.
2. A person shall also submit a license request for any assumed business name listed in the “Other Trade Name” section of the MU1 form.

Branch Office

1. To obtain a Utah license to operate as a branch office, a person shall ensure that any licensed trade names of the entity that are used from the branch office are listed in the “Other Name” section of the entity MU1 form.

Section R162-2c-203
Certification requirements for instructors in Division-approved courses.

1. To act as an instructor of Division-approved continuing education courses, an individual   shall complete the Division certification process at least 30 days prior to engaging in instruction.
2. To certify with the Division as an instructor, an applicant shall provide the following: (i) applicant’s name and contact information; (ii) evidence that the applicant meets the  competency requirements of Subsection R162-2c-202; (iii) evidence that the applicant has graduated from high school or successfully completed equivalent education; and (iv) evidence that the applicant understands the subject matter to be taught, as demonstrated through:

1. a minimum of two years full-time experience as a mortgage licensee;
2. college-level education related to the course subject; or
3. demonstrated expertise in the subject proposed to be taught.

An applicant shall also provide (i) evidence that the applicant has the ability to teach, as demonstrated  through: a minimum  of  12  months of  full-time  teaching experience; or part-time teaching experience equivalent to 12 months full-time teaching experience; a signed statement agreeing to allow the instructor’s courses to be  randomly audited on an unannounced basis by the Division or its representative; (ii) a signed statement agreeing not to market personal sales products; (iii) a signed statement certifying legal presence to work in the state; (iv) any other information the Division requires or requests; and (v) a nonrefundable application fee.

Section R162-2c-205
Licensees must update the nationwide database as to change in residential addresses.

1. An individual licensee who is registered with the national database shall enter into the national database any change in his or her residential address.

Section R162-2c-301a
Lender manager must take corrective action for problems identified through the underwriting process.

1. A lending manager who is designated in the nationwide database as the principal lending manager of an entity shall establish, maintain, and enforce written policies and procedures to ensure the independent judgment of any underwriter employed b the   sponsoring entity, whether  sponsored  from  the principal entity location or a branch office; and take corrective action for problems identified through the underwriting process.

Vicarious liability will apply to an entity whose sponsored licensees engage in unprofessional conduct.

1. If an entity originates Utah loans from a location where a principal lending manager is not present to oversee and supervise activities related to the business of residential mortgage loans, assign a separate lending manager to serve as the branch lending manager to ensure that each sponsored mortgage loan originator fulfills the affirmative duties.
2. A mortgage entity shall be subject to discipline under Sections 61-2c-401 through 405 if: any sponsored mortgage loan originator or lending manager engages in any prohibited conduct; or any unlicensed employee performs an activity for which licensure is required.

A mortgage entity must remit appraisal fees within 30 days of receipt.

1. A mortgage entity that fails to fulfill any affirmative duty shall be subject to discipline under Sections 61-2c-401 through 405. A mortgage entity shall remit to any third party service provider the fee(s) that have been collected from a borrower on behalf of the third party service provider, including appraisal fees, which shall be remitted no later than 30 days following the date on which the fees are received by the mortgage entity.

Section R162-2c-302
The record retention requirement applies to 1003 loan application forms.

1. An entity licensed under the Utah Residential Mortgage Practices Act shall maintain and safeguard for the period set forth in Section 61-2c-302 the following records: application forms, which include, but are not limited to the initial 1003 form, signed and dated by the loan originator; and the final 1003 form, signed and dated by the loan originator.

Section R162-2c-401
Adjudicative proceedings will be designated as informal or formal when filed and, thereafter, may be converted as provided by statute.

1. All adjudicative proceedings as to any matter not specifically designated as requiring a formal adjudicative proceeding shall be conducted as informal adjudicative proceedings designated as formal or informal in the Division’s notice of agency action or notice of proceeding.
2. A party to a proceeding may move the presiding officer to convert the proceeding to a formal or informal adjudication pursuant to Utah Code Section 63G-4-202(3).

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