Utah Amends Provisions under Residential Mortgage Practices and Licensing Act
The state of Utah has recently revised its Residential Mortgage Practices and Licensing Act (House Bill 196), which specifies the reporting and licensing requirements under the jurisdiction of the Division of Real Estate. These changes are effective as of May 8, 2017.
The updated provisions clarify the licensing requirements for loan processors and underwriter in Utah. If a loan processor or underwriter is not a mortgage loan originator, he or she will not be required to be licensed as a mortgage loan originator if he or she is employed by, and acting on behalf of, a person or entity that is licensed. A loan processor or underwriter also will not be required to be licensed if he or she is under the direct supervision of a person who is licensed. If a loan processor or underwriter is acting as an independent contractor, he or she will still not be required to be licensed if either of the above applies.
The provisions state that in order to become licensed as a mortgage loan originator, an individual must pass the qualified written national test developed by the nationwide database. In addition, this test must include Utah-specific uniform test content that meets the minimum federal licensing requirements, and is administered by an approved examination provider. The provisions require the Residential Mortgage Regulatory Commission and the Division of Real Estate to make the state-specific education requirements available electronically through one or more education methods approved by the Commission and the Division.
The Act also sets out the prohibited conduct for persons transacting the business of residential mortgage loans in Utah. For example, an individual may not charge a fee in connection with a residential loan transaction that is excessive. Before charging any fee, he or she is required to provide the loan applicant with a written statement that includes whether or not the fee or deposit is refundable, and the conditions (if any) under which all or a portion of the fee or deposit will be refunded. The provisions also state that he or she may not make a false statement or representation, cause false documents to be generated, knowingly permit false information to be submitted by any party, and may not give or receive compensation or anything of value or withhold or threaten to withhold payment of an appraiser fee to influence the independent judgement of an appraiser.
The provisions also describe the requirements for becoming a lending manager. First, an individual must successfully complete mortgage loan originator pre-licensing education as required by federal licensing regulations, and complete 40 hours of Utah-specific pre-licensing education for a lending manager that is approved by the Division. He or she must also pass the mortgage loan originator licensing exam, including the national and uniform state portions. And finally, he or she must submit proof of three years of full-time active experience as a mortgage loan originator licensed in any state in the five years preceding the day on which the application is submitted, or equivalent experience as approved by the Commission.
Zachary Pearlstein, JD, is a Regulatory Compliance Director with CLA's Mortgage Advisory Division. He joined CLA on January 1, 2014, as part of its acquisition of Bankers Advisory, Inc. Zachary oversees Mortgage Advisory's regulatory compliance team, which focuses on federal and state compliance, fair lending, and the Home Mortgage Disclosure Act (HMDA). He is a graduate of Brandeis University and earned his juris doctor at Suffolk University Law School. He is admitted to the Massachusetts Bar.
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