FL Mortgage Laws

Secure and Fair Enforcement Act

• 20 hrs. pre-licensing education
• 8 hrs. annual continuing education
• Criminal background check
• Surety bond and net worth requirements
• Use of NMLS for applications and registrations
• Reporting of enforcement actions to NMLS

Florida Statutes Chapter 494

• 1. Current mortgage broker license will be reclassified as a loan originator license
• 2. Loan Originator License will emcompass individual brokers and loan originators
• 3. New mortgage broker license will replace old mortgage brokerage license

If issued before October 1, 2010 - will expire on December 31, 2010

Mortgage brokerage business license will not expire until the Office of Financial Regulation approves or denies the mortgage broker license application

December 31, 2011

December 31, 2010

Mortgage lender license does not expire until the Office of Financial Regulation approves or denies the mortgage broker license or mortgage lender license application.

• All correspondent mortgage lender licenses expire on December 31, 2010 and Florida will no longer recognize a correspondent mortgage lender as a licensee.
• Correspondent mortgage lenders will need to apply for a mortgage broker or mortgage lender license.

December 31, 2009 including the 20 hrs. of pre-licensing education

Need to become licensed to maintain ability to work after October 1, 2010

• -Enforcing Chapter 494
• -Issuing mortgage lending licenses
• -Approving licensing and continuing education courses for mortgage lenders
• -Monitoring licensee behavior
• -Conducting investigations into possible violations of law
• -Disciplining licensees

a licensed loan originator in charge of and responsible for the operation of the branch office of a mortgage broker or mortgage lender

Financial Services Commission

they possess the power to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise

• -a director, general partner, or officer exercising executive responsibility, or having similar status or functions
• -a person who directly or indirectly may vote 10% or more of a class of voting securities or sell or direct the sale of 10% or more of a class of voting securities
• -in the case of a partnership, may receive upon dissolution or has contributed 10% or more of the capital
• -the trustee of a trust
• -all elect managers if the company is a Limited Liability Corporation
• -Principal loan originators

a statement by the lender stating the terms and conditions upon which the lender is willing to make a particular mortgage loan to a particular borrower

• means a modification to an existing loan
• term does not include a refinancing transaction

• the total compensation from any source received by a mortgage broker acting as a loan originator
• any payment for processing mortgage loan applications must be included in the fee and must be paid to the mortgage broker

• directly or indirectly:
• -solicits a mortgage loan
• -accepts application for mortgage loan
• -negotiates the terms or conditions of new or existing mortgage loan on behalf of borrower or lender
• -processed mortgage loan application
• -negotiates the sale of existing mortgage loan to non-institutional investor for compensation or gain

the S.A.F.E. Mortgage Licensing Act of 2008

• does not include an employee of a mortgage broker or mortgage lender who performs only administrative or clerical tasks.
• these tasks include quoting available interest rates, physically handling a completed application form, or transmitting a completed form to a lender on behalf of prospective borrower

• an agreement where the lender guarantees the availability of an interest rate or specific interest rate formula for a set number of days
• the loan must be closed within that time period for the borrower to be guaranteed that rate

• means a change that would be important to a borrower in making a borrowing decision
• includes: change in the interest rate that was previously offered to borrower, change in type of loan offered to borrower, or change in fees to be charged to a borrower resulting in total fees greater than $100

a person making or servicing a mortgage loan for others, or, directly/indirectly selling or offering to sell a mortgage loan to a non-institutional investor for compensation/gain

• -Residential loan primarily for personal, family, or household use and is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined by the Federal Truth-In-Lending Act), or for purchase of residential real estate where dwelling will be constructed
• -Loan on commercial property if borrower is an individual or lender is non-institutional investor
• -Loan on improved property consisting of 5+ dwelling units if borrower is individual or lender is non-institutional investor

• Loan originator who is registered through the registry and employed by either:
• -depository institution
• -subsidiary owned and controlled by depository institution and regulated by federal banking agency
• -institution regulated by the Farm Credit Administration

the Nationwide Mortgage Licensing System and Registry

• -failure to provide required info or documents to the lender or broker in a timely manner
• -provided significantly inaccurate info in application or after causing the need for further investigation by broker/lender
• -failure to produce, no later than date specified, all documents specified in commitment or closing instructions as being required for closing
• -failure to be ready, willing, or able to close the loan no later than the date specified by the lender/broker

A depository institution and subsidiaries that are owned and controlled by a depository institution and regulated by the Board of Governors of the Federal Reserve System

• Comptroller of the Currency
• Director of the Office of Thrift Supervision
• National Credit Union Administration
• Federal Deposit Insurance Corporation
• Farm Credit Administration

• Federal National Mortgage Association
• The Federal Home Loan Mortgage Corporation
• Any agency of federal government; any state, county, or municipal government; or any quasi-governmental agency that acts in such capacity under specific authority of the laws of any state of United States

attorneys licensed in Florida who negotiate the terms of a mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client

if a person is involved solely in the extension of credit relating to the purchase of a timeshare plan, that person is exempt from regulation

• -person acting in fiduciary capacity conferred by the authority of a court
• -person who, as seller of their own real property, receives 1 or more mortgages in a purchase money transaction
• -person who acts soley under contract as agent for federal, state, or municipal agencies solely for purpose of servicing mortgage loans
• -person who makes only nonresidential mortgage loans and sells loans only to institutional investors
• -individual making, acquiring, or selling mortgage with own funds for own investment and not hold themself out to the public as being in mortgage lending business

to close a mortgage loan in a person's name, advance funds, offer to advance funds, or make a commitment to advance funds to an applicant for a mortgage loan

• -residential loan for personal, family, or household use, secured by a mortgage, deed of trust, or equivalent consensual serurity interest on a dwelling, or for the purchase of residential real estate where dwelling is to be constructed
• -loan on commercial real property if borrower is individual or lender is non-institutional investor
• -loan on improved real property consisting of 5+ dwelling units if borrower is individual or lender is non-institutional investor

Regulatory Enforcement and Licensing System

• electronic filing of all application forms and fees
• must also be used for mortgage licensing, updating licenses, license renewal and reactivation, and quarterly reports

http://www.flofr.com/REAL/index.htm

October 1, 2010

applicants and licensees, under Chapter 494, will be required to file through the NMLS

loan originators

• -at any time, been charged or convicted of a felony or pled guilty or no contest to a felony
• -within past 10 yrs. been charged, convicted, pled guilty or no contest to a misdemeanor, committed in any jurisdiction, that involves financial services, fraud, making of fraudulent/false statements, omissions, theft, forgery, bribery, perjury, counterfeiting, extortion or conspiracy

taking fingerprints and submitting them to the FBI and other agencies with authority to complete criminal background checks, and authorizing these agencies to release info to the Dept. of Financial Regulation and NMLS

• application form through NMLS
• $525 application fee ($415 for the application and $100 for the Trust Fund)
• designate a principal loan originator
• submit fingerprints
• authorize a credit report

90 days from date of application

• Fraud
• Dishonesty
• Breach of Trust
• Money Laundering
• Any other unmoral act

$75

$225

• Current outstanding judgements, except from medical bills
• Tax liens
• Foreclosures within last 3 yrs.
• Pattern of seriously delinquent accounts in last 7 yrs.

21 days

October 1, 2010

• designated qualified principal loan originator
• nonrefundable $500 application fee and nonrefundable $100 guaranty trust
• fingerprints for each of the applicant's control person
• financial audit report from most recent fiscal year
• authorize NMLS to obtain credit report on control person
• any other documents requested such as criminal histories or prior disciplinary actions

• $63,000 if applicant is not seeking a servicing endorsement
• $250,000 if applicant is seeking a servicing endorsement

• violation of any provision of the Chapter
• Criminal prosecutions involving fraud, dishonesty, breach of trust, money laundering, or any unmoral act
• Mortgage lender license revoked in another jurisdiction
• designation of a control person who has had loan originator license revoked in any jurisdiction
• Lack of financial responsibility

must have employment with a licensed mortgage lender, or with an exempt individual or entity

• securing employment as a loan originator
• notify Department of Financial Regulations, in writing, that they have secured employment with a licensed mortgage lender or an exempt employer
• Submit notarized statement from new employer to Department of Financial Regulations, stating that the loan originator is an employee

• provide the licensee with a dated written statement that describes the personal finance emergency
• waive the right to receive the notice
• bear the borrower's signature
• is not on a printed form prepared by licensee for the purpose of such a waiver

when the borrower determines that the extension of credit is needed to meet a bona fide financial emergency and the right to receive notice would delay the closing of the mortgage loan

before being delivered to the non-institutional investor

30 business days after the date of closing

None

all books, accounts, records, and documents necessary to determine the licensee's compliance with the Chapter

at the principal place of business designated on the license unless the Office has authorized the maintenance of the records at a different location

all records, including receipts for expenses paid by licensee on behalf of borrower and each closing statement signed by a borrower, must be kept for atleast 3 years after the date of original entry

the mortgage loan they have is not the loan that they thought they were getting

• prohibits advertising that is untruthful, deceptive, or unfair
• requires advertisers to have evidence to back up their claims

to clarify and regulate the standards for advertising credit and loan services

• percentage of down payment required
• that a higher rate or points could be required
• that restrictions as to the maximum principal amount of the loan offered could apply

a current, active license issued by the Office

• employ any device, scheme, or artifice to defraud
• engage in any fraud upon any person in connection with purchase or sale of any mortgage loan
• obtain property by fraud, willful misrepresentation of a future act, or false promise
• conceal, or cover up a material fact
• make any false/fraudulent statement representation
• make or use any false writing or document

the Mortgage Broker & Mortgage Lenders Chapter of the Financial Institutions law

• a mortgage broker
• a mortgage lender
• a person exempt from licensure under the Chapter

unless that document has been rendered by a court of competent jurisdiction

in a manner that would lead a reasonable person to believe that the material or solicitation originated from, was endorsed by, is related to or the responsibility of the financial institution or its affiliates or subsidiaries

• nature of the relationship, ownership, or financial interest between the provider of products, services or businessm and the licensee making the referral
• estimated charge or range of charge generally made by such a provider
• financial benefit to the licensee as a result of the conflict
• that alternative sources may be chosen by the borrower

• licensee/licensee's relative provides borrower with additional products/services
• licensee/relative owns/controls/holds with power to vote/holds proxies representing, 10% or more of equity securities or other beneficial interest in the person providing the additional products or services or in the licensee
• holding company holds/controls.....10% or more equity securities or beneficial interest in both licensee and person providing additional products or services
• 1+ persons or a relative, sits as an officer or director for both the licensee and the person providing the additional products or services, or just for the person providing additional products or services

• the person's spouse, father, mother, children, brothers, and sisters
• the father, mother, brothers, and sisters of the person's spouse
• the spouses of children, brothers, or sisters of the person

whenever the Office has reason to believe that a violation of the Chapter has been committed or is about to be committed

file a written complaint with the Office setting forth details of the alleged violation

at a convenient location in Florida, unless the Office determines that it is more effective or cost-efficient to perform an examination at a licensee's out-of-state location

• travel expenses
• per diem at the rate provided by law for up to 30 eight-hour days, per year, for each Office examiner who participates in an examination

until the investigation or examination is concluded or inactive unless it is submitted to any law enforcement or administrative agency for further investigation where it will remain confidential and exempt until that agency's investigation is cocluded or inactive

• it would jeopardize the integrity of another active investigation or examination
• it would reveal the name, address, telephone number, social security number, or any other identifying number or information of any complainant, customer, or account holder
• it would disclose the identity of a confidential source
• it would disclose investigative techniques or procedures
• it would reveal a trade secret as defined in the Uniform Trade Secrets Acts of the Florida Statutes

a person who furnishes information or evidence to the Office unless that person acts in bad faith or with malice in providing the information or evidence

the attendance of any witness and the production of any books, accounts, records, or other documents and materials that appear necessary to the resolution of the application for injunction

an order to cease and desist and to take corrective action

• pleading no contest to a crime involving fraud, dishonest dealing, or any unmoral act
• having been convicted or found guilty of a crime involving fraud, dishonest dealing, or unmoral act
• fraud, misrepresentation, deceit, negligence, or incompetence in any mortgage financing transaction
• material misstatement of fact on an initial or renewal application
• failure to place immediately upon receipt and maintain any money entrusted to them by a person dealing with them as their mortgage broker in a segregated account of a federally insured financial institution in this state

• failure to account for or deliver any property in the licensee's possession which they are not entitled to retain
• failure to disburse funds in accordance with agreements
• any misuse, misapplication, or misappropriation of personal property entrusted to their care to which they had no current property right at the time of entrustment
• having license or equivalent, to practice any profession or occupation revoked, suspended, or otherwise acted against.
• failure to comply with any order or rule made or issued under the Chapter

• Acting as a mortgage broker business without current, active license issued under the guidelines of the Chapter
• Failure to pay, in timely fashion, any fee, charge, or fine under the Chapter
• Failure to keep available for examination all books, accounts, or other documents required by the Chapter and the rules of the Commissioner
• Refusal to permit an investigation or examination of books and records, or refusal to comply with an Office subpoena
• Consisting and materially underestimating maximum closing costs

• Failure to comply with, or violation of, any other provision of the Chapter
• Commission of fraud, misrepresentation, concealment, dishonest dealing by trick, scheme, or device, or breach of trust in any business transaction in any state, nation or territory
• Aiding, assisting, or conspiring with any other person engaged in any such misconduct
• Payment for a license or permit with a check or electronic transmission of funds that is dishonored by the applicant's or licensee's financial institution

• Having a final judgment entered against the applicant or licensee in a civil action upon grounds of fraud, embezzlement, misrepresentation or deceit
• Having been the subject of any decision, finding, injunction, suspension, prohibition, revocation, denial, judgment, or administrative order involving a violation of any federal or state securities or commodities law or rule or regulation adopted under such law or involving a violation of any rule or regulation of any national securities, commodities, or options exchange or association

• Having been the subject of any injunction or adverse administrative order by a state or federal agency regulating any of the following: Banking, Insurance, Finance or small loan companies, real estate, mortgage brokers or lenders, money transmitter, other related or similar industries
• In any mortgage transaction, violating any provision of the federal Real Estate Settlement Procedure Act, the Truth-in-Lending Act, or any regulations adopted under such acts

• Revocation of a license or registration
• Suspension of license/registration subject to reinstatement upon satisfying all reasonable conditions that Office specifies
• Placement of licensee/registrant/applicant on probation for period of time and subject to reasonable conditions specified
• Issuance of a reprimand
• Imposition of a fine in an amount not exceeding $5,000 for each count or separate offense
• Denial of license or registration
• Administrative fine $1,000 per day for unlicensed person acting as licensee or licensed person conducts business at unlicensed branch office

• total value of money and property unlawfully obtained exceeded $50,000
• and
• there were five or more victims

the person making the transaction and every licensee, director, or officer who participated in making the transaction are jointly and severely liable to every party to the transaction in an action for damages incurred by the party or parties

• if they can show they acted in good faith and without knowledge of the violation
• or if the person could not have known that the transaction was committed in violation of the Chapter

• loan originator's unique NMLS Registry number must be printed on agreement
• must describe the services to be provided by the loan originator
• must specify the amount and terms of the loan origination fee that the mortgage broker is to receive
• all fees on mortgage broker agreement must be disclosed in dollar amounts
• all loan origination fees must be paid to mortgage broker

• within 3 business days after a mortgage loan application is accepted if the borrower is present when application is accepted
• if borrower is not present, licensee must forward agreement to the borrower within 3 business days after the licensee's acceptance of the application and licensee bears the burden of proving that the borrower received and approved the agreement

• arranging for a conditional mortgage loan commitment between a borrower and a lender
• taking application, assembling info and preparing paperwork and documentation necessary for conditional mortgage loan commitment
• reviewing, analyzing, and evaluating borrower's financial statements, income, and credit history
• incidental services utilized in arranging for and procuring conditional loan commitment, such as, courier services, express mailings, and long distance telephone charges
• premiums and other charges for insurance written in connection with a loan

• at the time a written mortgage agreement is executed by the borrower or forwarded to the borrower for execution
• at the time the mortgage broker accepts an application fee, credit report fee, property appraisal fee, or any other third-party fee
• not less than 3 business days before execution of the closing or settlement statement

$250 plus 10% of the entire mortgage loan

• identification of the margin-interest rate differential
• identification of a nationally recognized index which must be free from control of the mortgage broker or mortgage lender
• the estimated net proceeds to be paid directly to the borrower (the cash to be received by the borrower after payment of any fees, charges, debts, liens or encumbrances to perfect the lien of the new mortgage and establish the agreed-upon priority of the new mortgage

You are entering into a contract with a mortgage broker to obtain a bona fide mortgage loan commitment under the same terms and conditions as stated hereinabove or in a separate executed good faith estimate form. If the mortgage broker obtains a bona fide commitment under the same terms and conditions, you will be obligated to pay the mortgage broker fees, including, but not limited to, a mortgage broker fee, even if you choose not to complete the loan transaction. If the provisions of s.494.00421, Florida Statutes, are not met, the mortgage broker fee can only be earned upon the funding of the mortgage loan. The borrower may contact the Department of Financial Services, Tallahassee,Florida, regarding any complaints that the borrower may have against the mortgage broker or the mortgage brokerage business. The telephone number of the department is:

abusive lending practices

• a mortgage will be placed on the borrower's home, and they could lose the home in the event of foreclosure
• interest rates and terms can vary, depending on the lender or broker
• borrowers should consider consulting a HUD approved credit counseling agency or a financial advisor regarding financing of their home
• debt consolidation can be a useful tool if the borrower does not take on additional short-term debts
• loan applicants do not have to accept the loan, even though they have filled out an application

the Guidance on Nontraditional Mortgage Product Risks

any company that controls, is controlled by, or is in common control with another company

the annual percentage rate for a loan calculated by the Federal Reserve Board

any natural person obligated to repay a loan. includes, but is not limited to, a co-borrower, co-signor, or guarantor

a loan with a maturity of less than 18 months that only requires the payment of interest until the entire unpaid balance is due and payable

a consumer credit transaction that is secured by the consumer's principal dwelling, other than a residential mortgage transaction, a reverse mortgage transaction, or a transaction under an open ended credit plan if: APR at consummation of transaction will exceed by more than 10 percentage points the yield on Treasury securities having comparable periods of maturity on the 15th day of the month immediately preceeding the month in which the application for the extension of credit is received by the creditor or, the total points and fees payable by the consumer at or before closing will exceed the greater of either 8% of the total loan amount or $400

• the borrower has also been offered a choice of another product without a prepayment penalty
• the borrower has been given, at least 3 business days prior to the loan consummation, a written disclosure of the terms of the prepayment fee or penalty by the lender, including the benefit the borrower will receive for accepting the prepayment fee or penalty through either a reduced interest rate on the loan or reduced points or fees

high-cost home loan may not contain terms that require a borrower to pay a prepayment penalty for paying all or part of the loan principal before the date on which the payment is due

does not apply to interest rate changes in a variable rate loan if they are otherwise consistent with the provisions of the loan documents

the payment schedule is adjusted to account for the seasonal or irregular income of the borrower or if the loan is a bridge loan

loan may not include terms under which more than two periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower

the borrowers collateral without regard to the borrowers ability to repay the loan. ability to repay includes the borrowers current and expected income, current obligations, and employment

• in a payment made directly to the borrower or jointly to the borrower and the contractor
• to a third party escrow agent per a written agreement signed by the borrower, the lender, and the contractor prior to the date of payment