MTG Licensing

With in the Department of Commerce, oversees and regulates mortgage lenders, mortgage brokers and loan originators in the state.

is the Division Chief, is appointed by the Governor, must file with the Secretary of State a 1 million dollar surety bond, appoints for deputy superintendents

issues orders and creats rules to enforce OMBA, requires background investigations on all brokers and originator, issues certificates of registration, reports violations to the NMLS, conducts examinations, denies, suspends or revokes licenses, imposes pentalities,

a residential mortgage loan is a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent security interest on a dwelling or on residential real estate upon which is constructed or intended to be constructed a dwelling.

A mortgage broker is a person that:• in exchange for money or other valuable consideration from either the buyer or lender, holds that person out as being able to assist a buyer in obtaining a mortgage loan. A buyer is an individual who is solicited to purchase or who purchases the services of a mortgage broker for purposes of obtaining a residential mortgage loan.• for money or other valuable consideration, solicits financial and mortgage information from the public and provides that information to a mortgage broker or person that makes residential mortgage loans.• engages in table-funding or warehouse-lending mortgage loans that are first lien residential mortgage loans.

the mortgage broker does not use its own funds to fund the transaction; the mortgage is initially payable to the mortgage broker; and the mortgage is simultaneously assigned to another person under the terms of the mortgage or other agreement

the mortgage broker uses its own funds to fund the transaction; the mortgage is initially payable to the mortgage broker; and the mortgage is sold or assigned before the mortgage broker receives a scheduled payment on the mortgage.

takes or offers to take a residential mortgage loan application. assists or offers to assist a borrower in obtaining or apply for a residential mortgage loan by, among other things, advising on loan terms, including rates,fees, and other costs. offers or negotiates terms of a residential mortgage loan; issues or offers to issue a commitment for a residential mortgage loan to a buyer

is registered with, and maintains a unique identifier through, the NMLS. A unique identifier is a number that permanently identifies a loan originator. It is assigned by protocols established by the NMLS or federal banking agencies to facilitate electronic tracking of loan originators and uniformly identify and give public access to loan originators’ employment histories and disciplinary and enforcement actions.• is an employee of:o a depository institution (i.e., any bank or savings institution) or a subsidiary owned and controlled by a depository institution, regulated by a federal banking agency (i.e., the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration, or the Federal Deposit Insurance Corporation); or an institution regulated by the Farm Credit Administration

for whom a mortgage broker:o pays a wage or salary, Social Security contributions, unemployment taxes and workers’ compensation coverage; and withholds local, state, and federal income taxes.• who acts as a loan originator or operations manager but for whom a registrant is prevented by law from making tax withholdings.

A person that makes residential mortgage loans and receives scheduled payments on each of those mortgage loans• A state or federally chartered bank, savings bank, trust company, savings and loan association, or credit union, or a subsidiary of one of these entities, regulated by a federal banking agency• A consumer reporting agency (CRA) or credit bureau (i.e., an agency that collects and distributes information about consumers’ credit histories)• A state or federal political subdivision or governmental or other public entity• A college or university, or a controlled entity of a college or university.• An entity created solely to securitize loans (i.e., package and sell mortgage loans as a unit for sale as investment securities), provided the entity does not service the loans• A person engaged in the retail sale of manufactured homes, mobile homes, or industrialized units, if the person only assists the borrower with obtaining financing for those sales. (The person cannot offer or negotiate loan rates orterms, provide counseling, or receive payment for assisting the borrower in obtaining or applying for financing or completing the residential mortgage loan application.)• A tax-exempt nonprofit organization, whose primary activity is the construction,remodeling, or rehabilitation of homes for use by low-income families, that makes no-profit mortgage loans or mortgage loans at zero per cent interest to low income families with no fees accruing directly to it• A credit union service organization that utilizes services provided by registered loan originators or holds a valid letter of exemption• An exempt mortgage banker (i.e., any person that makes, services, buys, or sells residential mortgage loans secured by a first lien; that underwrites the loans and has been approved by the Department of Veterans Affairs as a non-supervised automatic lender, by HUD as a non-supervised mortgagee with participation in the direct endorsement program, or by FNMA or the FHMLC as a seller/servicer)

a nonrefundable fee of $500 for each office location, plus an NMLS fee. A residence can act as a business location, provided the application includes:o a copy of a zoning permit authorizing commercial use of the residence; or o a written opinion issued by local government certifying that commercial use of the residence is not prohibited.• the name and address of the sole proprietor or each partner, corporate share holder or person owning five percent or more of the corporation or mortgage broker entity.• for a partnership, corporation, limited liability company, or any other business entity or association, the name of an employee or owner designated as the operations manager.• proof of compliance with the surety bond requirements.• for a foreign business entity (i.e., one based in a state other than Ohio), evidence that it maintains a license or registration with the Secretary of State, authorizing it to do business in Ohio.

A mortgage broker applicant or registrant must designate one individual as the company’s operations manager. An operations manager is an employee or owner responsible for the everyday operations, compliance requirements, and management of a mortgage broker business.

A mortgage broker registrant must obtain and maintain a corporate surety bond, issued by a bonding company or insurance company authorized to do business in Ohio. A bond must equal one-half percent of the total amount of residential mortgage loans originated in the immediately preceding calendar year but cannot exceed $150,000 (the licensee may, however,choose to carry a larger bond). If, based upon the originated loans calculation, the bond amount is less than $50,000, an additional $10,000 for each branch location of the licensee must be added to the bond’s value

Testing and Retesting (ORC 1322.051)A loan originator applicant must pass a written test developed and administered by the NMLS with a score of at least 75% for the overall test and 75% on the state specific portion.An operations manager designee must pass, with a score of at least 75%, a written test approved by the Superintendent of Financial Institutions.An individual may take the test three times at intervals of at least 30 days. After failing the test three consecutive times, the individual must wait at least six months before taking the test again.A loan originator whose license has been lapsed for five years or longer must also take and pass the test in order to have a new license issued to him. However, any time during which the individual was a registered loan originator will not be used in calculating the five-year time frame.

had a comparable registration or license revoked in any jurisdiction.• been convicted of or pled guilty or nolo contendere to:o any misdemeanor involving theft or any felony during the seven-year period immediately preceding the date of application.o a felony at any time involving fraud, dishonesty, a breach of trust, theft, or money laundering.• failed to:o pay the application fee. If a fee is submitted with insufficient funds, the Superintendent will notify the applicant that the application will be withdrawn unless the fee plus a $100 penalty is paid within 30 days.o show that the intended business use for a residence is not prohibited bylocal law or zoning regulations.o appoint an operations manager who meets the experience, education, and testing requirements of the OMBA.o maintain all necessary filings and approval required by the Secretary of State.o comply with the surety bond requirements.o comply with a child support order.o prove the applicant is of good business repute, has the qualifications to act as a mortgage broker, and is in compliance with the OMBA and its rules.o establish financial responsibility, experience, character, and general fitness to command the confidence of the public and warrant the belief the business will be operated honestly and fairly. However, the Superintendent cannot use a credit score as the sole basis to deny a registration.

fails to pay the application fee. If a fee is submitted with insufficient funds, the Superintendent will notify the applicant that the application will be withdrawn unless the fee plus a $100 penalty is paid within 30 days.• fails to complete the prelicensing education requirements and pass the required written test.• had a loan originator or comparable authority revoked in any governmental jurisdiction.• been convicted of or pled guilty or nolo contendere to:o any misdemeanor involving theft or felony during the seven-year period immediately preceding the date of application.o a felony at any time involving fraud, dishonesty, a breach of trust, theft, or money laundering.For Example: Ward Smith is applying for a loan originator license. He has taken the required education and passed the written examination. Ward was convicted of auto theft eight years ago;money laundering, ten years ago; and burglary, nine years ago.The Superintendent must deny Ward’s license application because of the money laundering conviction. An applicant cannot at any time have been convicted of a felony involvingfraud, dishonesty, breach of trust or money laundering. Felonies involving any other crimes result in automatic denial if committed within seven years prior to the application date.• fails to prove that he is of good business repute, qualified as a loan originator,complied with state law, or meet all the condition for issuing a loan originator license.• fails to be in compliance with surety bond requirements• establish financial responsibility, experience, character, and general fitness to command the confidence of the public and warrant the belief the business will be operated honestly and fairly. However, the Superintendent cannot use a credit score as the sole basis to deny a registration.

three hours on federal law and regulations.• two hours of ethics, including fraud, consumer protection, and fair lending issues.• two hours on lending standards for the nontraditional mortgage products marketplace (i.e., any mortgage product other than a 30-year fixed-rate mortgage).

within 90 days, designate another operations manager.• notify the Superintendent in writing within 10 day of the designation.• submit any information required by the Superintendent to show the newly designated operations manager’s compliance with application requirements.A registrant must cease operation if it is without an operations manager approved by the Superintendent for more than 180 days, unless authorized by the Superintendent due to circumstances.

continue to meet the standards required for initial registration/license issuance.• not have a suspended license or outstanding fine.• provide proof that the loan originator or the broker’s designated operations manager has completed at least eight hours of continuing education.• pay a nonrefundable renewal fee, plus an NMLS fee. If payment is late or a timely check is returned for insufficient funds, the license or registration will be canceled unless the person pays the renewal fee plus a $100 penalty by January 31. The renewal fee is:o $500 plus NMLS processing fees for each location of a mortgage broker.o $150 plus NMLS processing fees for loan originators.

obtain a license or registration through any false or fraudulent representation of or the omission of a material fact on a licenseor registration application.• through advertising or other means, make false or misleading statements of a material fact, omissions of statements required by state or federal law, or false promises regarding a material fact, or engage in a continued course of misrepresentations.• engage in improper, fraudulent or dishonest dealings.• knowingly make, propose or solicit fraudulent, false, or misleading statements on any document related to a mortgage, including a mortgage application, real estate appraisal, or real estate settlement or closing document.• fail to notify the Division within 30 days after:o being convicted of or pleading guilty or nolo contendere to a felony in a domestic, foreign, or military court.o being convicted of or pleading guilty or nolo contendere to any criminal offense involving:? theft.? receipt of stolen property.? embezzlement.? forgery.? fraud.? passing bad checks.? money laundering.? breach of trust.? dishonesty.? drug trafficking.? money or securities.o having a certificate of registration or loan originator license, or comparable authority revoked in any jurisdiction.• knowingly instruct, solicit, propose, or otherwise cause a buyer to sign a mortgage related document containing blanks.• knowingly compensate, instruct, induce, coerce, or intimidate or attempt to compensate, instruct, induce, coerce, or intimidate a real estate appraiser for the purpose of corrupting or improperly influencing the independent judgment of the appraiser with respect to the value of the dwelling offered as security for a mortgage loan.• engage in any unfair, deceptive, or unconscionable act or practice prohibited under the Ohio Uniform Commercial Code.• promise to refinance a loan in the future at a lower interest rate or with more favorable terms, unless the promise is set forth in writing and initialed by the buyer.• fail to return upon the request of the borrower all original documents received in connection with a loan application.• accept a premium on the fees charged for third-party services.• pay or receive a referral fee or kickback to or from any third party or other party with an interest in a residential real estate transaction, for the referral of business(e.g., a home improvement contractor, real estate developer, real estate agent).For Example Mortgage loan originator Raine E. Day has asked appraiser Sonny Skye for an appraisal,informing him that the sale price for the property is $250,000. Raine knows the property will not appraise for that much, but promises Sonny more business if he “can make the deal work.” The loan is closed based upon the appraisal report showing the value of the property as $250,000. Raine’s offer of more business to Sonny is prohibited conduct.• circumvent, interfere with, obstruct, or fail to cooperate with an examination or investigation conducted by the Superintendent by:o making a false or misleading statement.o failing to produce records.o intimidating or encouraging perjury by any witness.o tampering with, altering, or manufacturing evidence.o withholding, abstracting, removing, mutilating, destroying, or secreting any books, records, computer records, or other information

Reasonably supervise a loan originator or other persons associated with the registrant• Establish reasonable procedures designed to avoid violation of the OMBA or its rules, or violation of applicable state and federal consumer and lending laws or rules, by loan originators or other associate persons

safeguard and account for any money handled on behalf of the borrower.• follow the borrower’s reasonable and lawful instructions.• act with reasonable skill, care, and diligence.• act in good faith and with fair dealing in any transaction, practice, or course of business in connection with the brokering or originating of any residential mortgage loan.• make reasonable efforts to secure a mortgage loan from lenders with whom the licensee or registrant regularly does business with rates, charges, and repayment terms that are advantageous to the borrower.

maintained at a federally insured financial institution (e.g., a bank).• separate from any other account of the registrant.• solely for the receipt and payment of fees from a buyer to bona fide third parties.

the annual percentage rate is greater than an amount determined by the federal Home Ownership and Equity Protection Act of 1994; or• the total points and fees payable exceed:o five percent of the total loan amount if the loan amount is $25,000 or more; or eight percent of the total loan amount if the loan amount is less than $25,000.