2003 Legislation
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HOUSE BILL NO. 28 – Resident Mortgage Practices/license

HOUSE BILL NO. 28

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H0028...........................................................by MR. SPEAKER
                     Requested by: Department of Finance
RESIDENTIAL MORTGAGE PRACTICES - Amends existing law relating to the
Residential Mortgage Practices Act to revise definitions; to provide remedies
for violations of federal law and regulations; to revise licensure provisions
and license revocation and suspension provisions; to delete requirements for
trust accounts; to require the filing of renewal forms; to revise prohibited
practices; and to provide for the relationship of the Residential Mortgage
Practices Act to the laws of other political subdivisions.
                                                                        
01/06    House intro - 1st rdg - to printing
    Rpt prt - to Bus
02/06    Rpt out - rec d/p - to 2nd rdg
02/07    2nd rdg - to 3rd rdg
02/11    3rd rdg - PASSED - 67-0-3
      AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Bieter,
      Black, Block, Boe, Bolz, Campbell, Cannon, Clark, Collins, Crow, Cuddy,
      Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Field(18),
      Field(23), Gagner, Garrett, Harwood, Henbest, Jaquet, Jones, Kellogg,
      Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin, McKague, Meyer,
      Miller, Mitchell, Moyle, Naccarato, Nielsen, Raybould, Ridinger, Ring,
      Ringo, Roberts, Robison, Rydalch, Sali, Sayler, Schaefer(Schaefer),
      Shepherd, Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass,
      Stevenson, Trail, Wills, Wood, Mr. Speaker
      NAYS -- None
      Absent and excused -- Bradford, Eskridge, Tilman
    Floor Sponsor - Gagner
    Title apvd - to Senate
02/12    Senate intro - 1st rdg - to Com/HuRes
02/28    Rpt out - rec d/p - to 2nd rdg
03/03    2nd rdg - to 3rd rdg
03/10    3rd rdg - PASSED - 33-0-2
      AYES -- Andreason, Bailey, Brandt, Bunderson, Burtenshaw, Calabretta,
      Cameron, Compton, Darrington, Gannon, Geddes, Goedde, Hill, Ingram,
      Kennedy, Keough, Little, Lodge, Malepeai, Marley, McKenzie, McWilliams,
      Noble, Noh, Pearce, Richardson, Schroeder, Sorensen, Stegner, Stennett,
      Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Burkett, Davis
    Floor Sponsor - Goedde
    Title apvd - to House
03/11    To enrol
03/12    Rpt enrol - Sp signed
03/13    Pres signed
03/14    To Governor
03/17    Governor signed
         Session Law Chapter 73
         Effective: 07/01/03

Bill Text


                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 28
                                                                        
                                       BY MR. SPEAKER
                            Requested by: Department of Finance
                                                                        
  1                                        AN ACT
  2    RELATING TO RESIDENTIAL MORTGAGE PRACTICES; AMENDING  SECTION  26-3102,  IDAHO
  3        CODE,  TO  REVISE APPLICATION OF TERMINOLOGY, TO REVISE DEFINITIONS AND TO
  4        DEFINE TERMS; AMENDING SECTION 26-3106, IDAHO CODE,  TO  PROVIDE  REMEDIES
  5        FOR  VIOLATIONS  OF  FEDERAL LAW AND REGULATIONS AND TO PROVIDE CLARIFYING
  6        LANGUAGE; AMENDING SECTION 26-3108, IDAHO  CODE,  TO  REVISE  GROUNDS  FOR
  7        DENIAL  OF  LICENSES,  TO REQUIRE THE LICENSURE OF HOME OFFICES, TO REVISE
  8        PROVISIONS RELATING TO THE  LICENSURE  OF  HOME  AND  BRANCH  OFFICES,  TO
  9        REQUIRE  DISCLOSURE  OF  CERTAIN INFORMATION AND TO PROVIDE CIVIL IMMUNITY
 10        FOR APPLICANTS OR THEIR AGENTS IN CERTAIN CIRCUMSTANCES; AMENDING  SECTION
 11        26-3109,  IDAHO  CODE,  TO REVISE LICENSE REVOCATION AND SUSPENSION PROVI-
 12        SIONS; AMENDING SECTION 26-3110, IDAHO CODE,  TO  DELETE  A  REFERENCE  TO
 13        TRUST  ACCOUNTS,  TO  INCREASE  THE SURETY BOND AMOUNT REQUIRED FOR BRANCH
 14        OFFICES, AND TO DELETE LANGUAGE REQUIRING LICENSEES  TO  DEPOSIT  FEES  IN
 15        TRUST  ACCOUNTS  AND TO SUBMIT FORMS RELATING TO TRUST ACCOUNTS AND AUTHO-
 16        RIZING ACCESS TO SUCH TRUST  ACCOUNTS;  AMENDING  SECTION  26-3111,  IDAHO
 17        CODE,  TO  REQUIRE  LICENSEES  TO  FILE  A RENEWAL FORM WITH THE DIRECTOR;
 18        AMENDING SECTION 26-3114, IDAHO CODE, TO PROHIBIT PERSONS REQUIRED TO HAVE
 19        A LICENSE FROM ENGAGING IN CERTAIN  ACTIVITIES  AND  TO  PROHIBIT  CERTAIN
 20        AGREEMENTS  UNLESS  WRITTEN  CONFIRMATION  IS  DELIVERED  TO THE BORROWER;
 21        AMENDING SECTION 26-3116, IDAHO CODE, TO PROVIDE CORRECT CODE  REFERENCES;
 22        AND  AMENDING  CHAPTER  31, TITLE 26, IDAHO CODE, BY THE ADDITION OF A NEW
 23        SECTION 26-3117, IDAHO CODE, TO PROHIBIT STATE POLITICAL SUBDIVISIONS FROM
 24        REGULATING THE FINANCIAL OR LENDING ACTIVITIES OF CERTAIN PERSONS  AND  TO
 25        PROVIDE FOR APPLICATION OF THE PROHIBITION.
                                                                        
 26    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 27        SECTION  1.  That  Section 26-3102, Idaho Code, be, and the same is hereby
 28    amended to read as follows:
                                                                        
 29        26-3102.  DEFINITIONS. As used in this chapter and  in  rules  promulgated
 30    pursuant to this chapter:
 31        (1)  "Act" means this Idaho residential mortgage practices act.
 32        (2)  "Agent"  means  a person who acts with the consent and on behalf of a
 33    licensee, and is subject to the licensee's direct or indirect control, and may
 34    include an independent contractor.
 35        (3)  "Borrower" means the person who has applied to a lender for  a  resi-
 36    dential  mortgage  loan or on whose behalf the activities set forth in subsec-
 37    tions (127) and (138) of this section are conducted.
 38        (34)  "Department" means the department of finance of the state of Idaho.
 39        (45)  "Director" means the director of the department of finance.
 40        (56)  "Licensee" means a person  licensed  pursuant  to  this  chapter  to
 41    engage in the activities regulated by this act.
 42        (67)  "Mortgage banker" means any person, other than an exempt person, who
 43    makes  residential  mortgage  loans  to borrowers, and performs the activities
                                                                        
                                           2
                                                                        
  1    described in subsection (127) of this section.
  2        (78)  "Mortgage broker" means any person, other than an exempt person, who
  3    performs the activities described in subsection (138)  of  this  section  with
  4    respect to a residential mortgage loan.  For the purposes of this chapter, the
  5    term "mortgage broker" does not include persons who are mortgage bankers.
  6        (89)  "Mortgage  brokerage agreement" means a written agreement in which a
  7    mortgage broker agrees to obtain a residential mortgage loan for the  borrower
  8    or assist the borrower in obtaining a residential mortgage loan.
  9        (910) "Person" means an individual, sole proprietorship, partnership, cor-
 10    poration, or other association of individuals, however organized.
 11        (11) "Real estate settlement procedures act" means the act set forth in 12
 12    U.S.C. section 2601 et seq., as amended to and including January 1, 2003, or a
 13    subsequent date if so defined by administrative rule.
 14        (12) "Regulation  X" means regulation X as promulgated by the U.S. depart-
 15    ment of housing and urban development and codified in  24  CFR  part  3500  et
 16    seq.,  as amended to and including January 1, 2003, or a subsequent date if so
 17    defined by administrative rule.
 18        (13) "Regulation Z" means regulation Z as promulgated by the board of gov-
 19    ernors of the federal reserve system and codified in 12 CFR part 226 et  seq.,
 20    as  amended  to  and  including  January  1,  2003, or a subsequent date if so
 21    defined by administrative rule.
 22        (104) "Residential mortgage loan" means a loan  made  primarily  for  per-
 23    sonal,  family,  or household use and primarily secured by a security interest
 24    on residential real property located in this state.
 25        (115) "Residential real property" means  real  property  located  in  this
 26    state  improved  by a one (1) to four (4) family dwelling. used as the primary
 27    home or residence of one (1) or more persons or located in a platted  subdivi-
 28    sion.
 29        (16) "Truth  in  lending act" means the act set forth in 15 U.S.C. section
 30    1601 et seq., as amended to and including January 1,  2003,  or  a  subsequent
 31    date if so defined by administrative rule.
 32        (127) "Mortgage banking activities" means for compensation or gain, either
 33    directly or indirectly, accepting or offering to accept applications for resi-
 34    dential  mortgage loans, assisting or offering to assist in the preparation of
 35    an application for a residential mortgage loan.
 36        (138) "Mortgage brokering activities"  means  for  compensation  or  gain,
 37    either  directly or indirectly, accepting or offering to accept an application
 38    for a residential mortgage loan, assisting or offering to assist in the prepa-
 39    ration of an application for a residential mortgage loan on behalf of  a  bor-
 40    rower,  or  negotiating  or offering to negotiate the terms or conditions of a
 41    residential mortgage loan with any person making residential mortgage loans.
                                                                        
 42        SECTION 2.  That Section 26-3106, Idaho Code, be, and the same  is  hereby
 43    amended to read as follows:
                                                                        
 44        26-3106.  REMEDIES AVAILABLE TO THE DEPARTMENT. (1) Whenever it appears to
 45    the  director  that any person has engaged in or is about to engage in any act
 46    or practice constituting a violation of any provision of the truth in  lending
 47    act, the real estate settlement procedures act, regulation X, regulation Z, or
 48    of  this  chapter  or any rule or order thereunder this chapter, he may in his
 49    discretion bring an action in any court of competent jurisdiction, and upon  a
 50    showing of any violation there shall be granted any or all of the following:
 51        (a)  A  writ or order restraining or enjoining temporarily or permanently,
 52        any act or practice violating any provision of this chapter  or  any  rule
 53        promulgated pursuant thereto, and to enforce compliance under this chapter
                                                                        
                                           3
                                                                        
  1        or any rule or order hereunder;
  2        (b)  An  order that the person violating any provision of this chapter, or
  3        a rule or order hereunder pay a civil penalty  to  the  department  in  an
  4        amount not to exceed  five thousand dollars ($5,000) for each violation;
  5        (c)  An  order  allowing  the  director to recover costs which may include
  6        investigative expenses and attorney's fees;
  7        (d)  An order granting a declaratory judgment that a particular act, prac-
  8        tice or method is a violation of the provisions of this chapter;
  9        (e)  An order granting other appropriate remedies including restitution to
 10        borrowers for excess charges or actual damages.
 11        (2)  If the director finds that a person has violated or is violating,  or
 12    that  there  is  reasonable cause to believe that a person is about to violate
 13    the provisions of this chapter, the director may, in his discretion, order the
 14    person to cease and desist from the violations.
                                                                        
 15        SECTION 3.  That Section 26-3108, Idaho Code, be, and the same  is  hereby
 16    amended to read as follows:
                                                                        
 17        26-3108.  LICENSE  TO DO BUSINESS AS A MORTGAGE BANKER OR MORTGAGE BROKER.
 18    (1) The director shall receive and act on all applications for licenses to  do
 19    business  as a mortgage banker or mortgage broker. Applications shall be filed
 20    in the manner prescribed by the director, shall contain  such  information  as
 21    the director may reasonably require, shall be updated as necessary to keep the
 22    information  current,  and  shall  be accompanied by an application fee of two
 23    hundred dollars ($200). When an application for licensure is denied  or  with-
 24    drawn, the director shall retain all fees paid by the applicant.
 25        (2)  An application for license shall may be denied unless if the director
 26    finds that:
 27        (a)  The  financial  responsibility, character, and fitness of the license
 28        applicant, and of the officers and directors thereof, if the applicant  is
 29        a corporation, partners thereof if the applicant is a partnership, members
 30        or  managers  thereof if the applicant is a limited liability company, and
 31        individuals designated in charge of the applicant's  places  of  business,
 32        are  not such as to warrant belief that the business will be operated hon-
 33        estly and fairly within the purposes of this chapter;
 34        (b)  The individuals designated in charge of applicant's places  of  busi-
 35        ness does not have a minimum of three (3) years' experience in residential
 36        mortgage lending;
 37        (c)  The  applicant has does not have a net worth of at least ten thousand
 38        dollars ($10,000);
 39        (d)  The applicant has not been convicted of any felony or  a  misdemeanor
 40        involving  moral  turpitude any aspect of the financial services business,
 41        nor has or a court has accepted a finding of guilt  on  the  part  of  the
 42        applicant,  of  any  felony or a misdemeanor involving moral turpitude any
 43        aspect of the financial services business; and
 44        (e)  The applicant has not had a license, substantially  equivalent  to  a
 45        license  under  this  chapter  and  issued  by  another any state, denied,
 46        revoked or suspended under the law of such state;
 47        (f)  The applicant has filed an application for a license which  is  false
 48        or misleading with respect to any material fact;
 49        (g)  The applicant or any partner, officer, director, manager, employee or
 50        agent of the applicant has violated this chapter or any rule or order law-
 51        fully made pursuant to this chapter;
 52        (h)  The applicant or any partner, officer, director, manager, employee or
 53        agent  of  the applicant has violated any other law of this state, or fed-
                                                                        
                                           4
                                                                        
  1        eral laws or regulations pertaining to the mortgage  banking  or  mortgage
  2        brokering activities set forth in section 26-3102, Idaho Code; or
  3        (i)  The applicant has not provided information on the application as rea-
  4        sonably  required  by the director pursuant to subsection (1) of this sec-
  5        tion.
  6        (3)  The director is empowered to conduct investigations as  he  may  deem
  7    necessary,  to  enable  him to determine the existence of the requirements set
  8    out in subsection (2) of this section.
  9        (4)  Upon written request, an applicant is entitled to a  hearing  on  the
 10    question of his qualifications for a license if:
 11        (a)  The  director has notified the applicant in writing that his applica-
 12        tion has been denied, or objections filed;
 13        (b)  The director has not issued a license within sixty  (60)  days  after
 14        the  application  for  the  license  was  filed. If a hearing is held, the
 15        applicant and those filing  objections  shall  reimburse,  pro  rata,  the
 16        director for his reasonable and necessary expenses incurred as a result of
 17        the  hearing. A request for hearing may not be made more than fifteen (15)
 18        days after the director has mailed a writing to  the  applicant  notifying
 19        him  that  the  application  has  been denied and stating in substance the
 20        director's finding supporting denial of the application or that objections
 21        have been filed and the substance thereof.
 22        (5)  Every licensee shall have licensed and shall maintain a  home  office
 23    as a principal location for the transaction of mortgage business. The director
 24    may,  on  application,  issue  additional branch licenses to the same licensee
 25    upon compliance with all the provisions of this chapter governing the issuance
 26    of a single license. A separate license shall be required for  each  place  of
 27    business  from which mortgage brokering activities or mortgage banking activi-
 28    ties are directly or indirectly conducted. The individual in  charge  of  each
 29    place of business must satisfy the requirements of subsections (2)(b), (d) and
 30    (e) of this section. Each license shall remain in full force and effect unless
 31    annual  the  licensee  does not satisfy the renewal fees are not paid require-
 32    ments of section 26-3111(2), Idaho Code, or the license is relinquished,  sus-
 33    pended, or revoked; provided however, branch licenses shall be terminated upon
 34    the relinquishment or revocation of a home office license.
 35        (6)  No  licensee shall change the location of any place of business, con-
 36    solidate two (2) or more locations, or close any location, without giving  the
 37    director at least fifteen (15) days' prior written notice.
 38        (7)  A  licensee  shall  not engage in the business of making or brokering
 39    residential mortgage loans at any place of business for which he does not hold
 40    a license nor shall he engage in business under any other name  than  that  on
 41    the license.
 42        (8)  The  director  may  suspend action upon a license application pending
 43    resolution of any criminal charges before any court of competent  jurisdiction
 44    against an applicant which would disqualify that applicant if convicted.
 45        (9)  An  applicant  shall  make  complete  disclosure  of  all information
 46    required in the application, including information concerning officers, direc-
 47    tors, partners, members, managers, employees or agents. An  applicant,  or  an
 48    individual  acting  on  behalf  of  the  applicant, is not liable in any civil
 49    action other than a civil action brought by a governmental agency, related  to
 50    an  alleged  untrue statement made pursuant to this section unless it is shown
 51    by clear and convincing evidence that:
 52        (a)  The applicant, or an individual acting on behalf  of  the  applicant,
 53        knew  at  the  time  that  the statement was made that it was false in any
 54        material respect; or
 55        (b)  The applicant, or an individual acting on behalf  of  the  applicant,
                                                                        
                                           5
                                                                        
  1        acted in reckless disregard as to the statement's truth or falsity.
                                                                        
  2        SECTION  4.  That  Section 26-3109, Idaho Code, be, and the same is hereby
  3    amended to read as follows:
                                                                        
  4        26-3109.  REVOCATION OR SUSPENSION OF LICENSE. (1) If the  department  has
  5    reason  to  believe  that  grounds  exist  for  revocation  or suspension of a
  6    license, the department may initiate a contested case against the  license  of
  7    the  a mortgage banker or mortgage broker, and any partner, officer, director,
  8    manager, employee or agent whose activities constitute the basis  for  revoca-
  9    tion  or suspension, in accordance with chapter 52, title 67, Idaho Code.  The
 10    director may, after proceedings pursuant to chapter 52, title 67, Idaho  Code,
 11    suspend  the  license for a period not to exceed six (6) months, or revoke the
 12    license, if he finds that:
 13        (a)  The licensee or any partner, officer, director, manager, employee  or
 14        agent  of the licensee has violated this chapter or any rule or order law-
 15        fully made pursuant to this chapter; or
 16        (b)  The licensee or any partner, officer, director, manager, employee  or
 17        agent  of  the licensee has violated any other laws of this state, or fed-
 18        eral laws or regulations pertaining to the mortgage  banking  or  mortgage
 19        brokering activities set forth in section 26-3102, Idaho Code; or
 20        (c)  Facts  or  conditions  exist  which  would clearly have justified the
 21        director in refusing to grant a license had these facts or conditions been
 22        known to exist at the time the license was issued; or
 23        (d)  The licensee or any partner, officer, director, manager, employee  or
 24        agent  of  the  licensee has been convicted of any felony or a misdemeanor
 25        involving moral turpitude any aspect of the financial  services  business,
 26        or  a court has accepted a finding of guilt on the part of the licensee or
 27        partner, officer, director, manager, employee or agent of the licensee, of
 28        any felony or a misdemeanor involving moral turpitude any  aspect  of  the
 29        financial services business; or
 30        (e)  The  licensee or any partner, officer, director, manager, employee or
 31        agent of the licensee has had a  license  substantially  equivalent  to  a
 32        license  under  this chapter, and issued by another state, denied, revoked
 33        or suspended under the laws of such state; or
 34        (f)  The licensee has filed an application for a license which as  of  the
 35        date  the  license was issued, or as of the date of an order denying, sus-
 36        pending or revoking a license, was incomplete in any material  respect  or
 37        contained  any  statement  that  was,  in light of the circumstances under
 38        which it was made, false or misleading with respect to any material  fact;
 39        or
 40        (g)  The  licensee  fails  to maintain a net worth of ten thousand dollars
 41        ($10,000).
 42        (2)  If the director finds that probable cause for revocation of a license
 43    exists and that enforcement of this chapter and the  public  interest  require
 44    immediate  suspension  of  the  license pending investigation, he may, after a
 45    hearing upon five (5) days' written notice,  enter  an  order  suspending  the
 46    license for not more than thirty (30) days.
 47        (3)  Any  licensee  may relinquish the license by notifying the department
 48    in writing of its relinquishment, but this relinquishment shall not affect his
 49    liability for  acts previously committed, and may not occur after  the  filing
 50    of a complaint for revocation of the license.
 51        (4)  The director may, in his discretion, reinstate a license, terminate a
 52    suspension,  or grant a new license to a person whose license has been revoked
 53    or suspended if no fact or condition then exists which clearly  would  justify
                                                                        
                                           6
                                                                        
  1    the department in refusing to grant a license.
                                                                        
  2        SECTION  5.  That  Section 26-3110, Idaho Code, be, and the same is hereby
  3    amended to read as follows:
                                                                        
  4        26-3110.  SURETY BONDS. AND TRUST ACCOUNTS. (1)  All  licensees,  with  or
  5    without  an  office located in this state, shall maintain a surety bond to the
  6    state of Idaho in accordance with this section.  The  bond  to  be  maintained
  7    shall be in the amount of ten thousand dollars ($10,000). This amount shall be
  8    increased  by additional sums of five ten thousand dollars ($510,000) for each
  9    licensed branch office, in addition to an initial office,  that  the  licensee
 10    maintains within the state of Idaho. In the event that a licensee has violated
 11    any of the provisions of this chapter, any other governing state law, any gov-
 12    erning federal law, or in the event that a court of competent jurisdiction has
 13    found that a licensee has damaged any person, then the bond shall be forfeited
 14    and  paid  by  the  surety to the state of Idaho for the benefit of any person
 15    damaged by the licensee. The bond shall be  a  continuing  obligation  of  the
 16    issuing  surety.  The  surety's  liability  under the bond for any claims made
 17    thereunder either individually or in the aggregate shall in  no  event  exceed
 18    the  face  amount  of  the  bond  issued. The bond shall be issued by a surety
 19    authorized to do business in the state of Idaho. The bond, including  any  and
 20    all  riders  and endorsements executed subsequent to the effective date of the
 21    bond, shall be placed on file with the department.
 22        (2)  Each licensee shall deposit all  fees  allowed  by  section  26-3113,
 23    Idaho  Code,  paid to the licensee by borrowers in a trust account established
 24    at a bank, savings and loan association, or credit union located in the  state
 25    of  Idaho.  Funds  held in a trust account may only be withdrawn in accordance
 26    with a written agreement with the borrower In the event that a licensee or any
 27    employee or agent of a licensee has violated any of  the  provisions  of  this
 28    chapter  or of a rule or order lawfully made pursuant to this chapter, or fed-
 29    eral law  or  regulation  pertaining  to  the  mortgage  banking  or  mortgage
 30    brokering activities set forth in section 26-3102, Idaho Code, and has damaged
 31    any person by such violation, then the bond shall be forfeited and paid by the
 32    surety to the state of Idaho for the benefit of any person so damaged.
 33        (3)  Each licensee shall file with the director, on a form approved by the
 34    director,  a  statement  identifying  the  name  of the financial institution,
 35    account number, and name of account for the trust account maintained.
 36        (4)  Each licensee shall authorize the director or a duly authorized  rep-
 37    resentative  of  the  director, on a form approved by the director, to examine
 38    the licensee's trust account at such times as the director may direct.
                                                                        
 39        SECTION 6.  That Section 26-3111, Idaho Code, be, and the same  is  hereby
 40    amended to read as follows:
                                                                        
 41        26-3111.  RECORDS  --  ANNUAL  REPORTS  --  RENEWAL  OF LICENSE. (1) Every
 42    licensee shall maintain records in conformity with generally accepted account-
 43    ing principles in a manner that will enable the director to determine  whether
 44    the licensee is complying with the provisions of this chapter. The recordkeep-
 45    ing  system of a licensee shall be sufficient if he makes  the required infor-
 46    mation reasonably available. The records need not be  kept  in  the  place  of
 47    business  where  residential mortgage loans are made, if the director is given
 48    free access to the records wherever located.  The records  pertaining  to  any
 49    loan need not be preserved for more than five (5) years after making the final
 50    entry relating to the loan.
 51        (2)  On  or  before  August  31  of each year, every licensee shall pay an
                                                                        
                                           7
                                                                        
  1    annual license renewal fee of one hundred dollars ($100), and  file  with  the
  2    director  a  renewal  form  containing  such  information  as the director may
  3    require and a composite annual report for the residential mortgage loans  made
  4    or brokered by him.
                                                                        
  5        SECTION  7.  That  Section 26-3114, Idaho Code, be, and the same is hereby
  6    amended to read as follows:
                                                                        
  7        26-3114.  PROHIBITED PRACTICES. No licensee or person required to  have  a
  8    license shall:
  9        (1)  Obtain  any  exclusive dealing or exclusive agency agreement from any
 10    borrower;
 11        (2)  Delay closing of any residential mortgage loan  for  the  purpose  of
 12    increasing interest, costs, fees, or charges payable by the borrower;
 13        (3)  Accept  any fees at closing which were not previously disclosed fully
 14    to the borrower;
 15        (4)  Obtain any agreement or instrument in which blanks  are  left  to  be
 16    filled in after execution;
 17        (5)  Engage  in  any  misrepresentation  in  connection with a residential
 18    mortgage loan;
 19        (6)  Make payment, whether directly or indirectly, of any kind to any  in-
 20    house or fee appraiser for the purpose of influencing the independent judgment
 21    of  the  appraiser with respect to the value of any real estate which is to be
 22    covered by a residential mortgage loan;
 23        (7)  Make any false promises likely to influence or persuade, or pursue  a
 24    course  of  misrepresentations  and false promises through agents, solicitors,
 25    advertising or otherwise; nor
 26        (8)  Misrepresent, circumvent or conceal, through whatever  subterfuge  or
 27    device,  any  of  the  material particulars or the nature thereof, regarding a
 28    transaction to which it is a party.; nor
 29        (9)  Enter into any agreement, with or without the payment of  a  fee,  to
 30    fix in advance a particular interest rate or other term in a residential mort-
 31    gage  loan  unless  written confirmation of the agreement is in writing and is
 32    signed by the parties delivered to the borrower as required by  rule  pursuant
 33    to this chapter.
                                                                        
 34        SECTION  8.  That  Section 26-3116, Idaho Code, be, and the same is hereby
 35    amended to read as follows:
                                                                        
 36        26-3116.  INITIAL LICENSING AND COMPLIANCE. A person who conducts  any  of
 37    the  activities  set  forth in subsections (127) and (138) of section 26-3102,
 38    Idaho Code, on the effective date of this act shall, within  sixty  (60)  days
 39    following  the  effective  date  of  this  act,  apply to the department for a
 40    license.
                                                                        
 41        SECTION 9.  That Chapter 31, Title 26, Idaho Code, be,  and  the  same  is
 42    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 43    ignated as Section 26-3117, Idaho Code, and to read as follows:
                                                                        
 44        26-3117.  RELATIONSHIP TO OTHER LAWS. (1) All  political  subdivisions  of
 45    this state shall be prohibited from enacting and enforcing ordinances, resolu-
 46    tions, regulations and rules pertaining to the financial or lending activities
 47    of persons who:
 48        (a)  Are  subject  to  the jurisdiction of the department, including those
 49        whose activities are subject to this chapter;
                                                                        
                                           8
                                                                        
  1        (b)  Are subject to the jurisdiction  or  regulatory  supervision  of  the
  2        board  of governors of the federal reserve system, the office of the comp-
  3        troller of the currency, the office of thrift  supervision,  the  national
  4        credit  union  administration,  the federal deposit insurance corporation,
  5        the federal trade commission or the United States  department  of  housing
  6        and urban development; or
  7        (c)  Originate,  purchase,  sell,  assign,  securitize or service property
  8        interests or obligations created by financial transactions or loans  made,
  9        executed  or  originated by persons referred to in paragraph (a) or (b) of
 10        this subsection or who assist or facilitate such transactions.
 11        (2)  The requirements of this subsection shall apply  to  all  ordinances,
 12    resolutions and rules pertaining to financial or lending activities, including
 13    any ordinances, resolutions or rules disqualifying persons from doing business
 14    with  a  political  subdivision  based upon financial or lending activities or
 15    imposing reporting requirements or any other obligations upon persons  regard-
 16    ing financial or lending activities.

Statement of Purpose / Fiscal Impact


                     STATEMENT OF PURPOSE

                            RS 12389C1

The primary purposes of this legislation are to make denial of a
mortgage broker or mortgage banker license discretionary instead of
mandatory in certain instances, make consistent the reasons for
denying a license and revoking a license, clarify that branch
licenses are dependent upon an initial license, allow the
Department of Finance to name individuals in a revocation order,
eliminate the trust account requirement for licensees, provide
enforcement authority to the Department for violations of federal
mortgage laws, and preempt financial or lending laws passed by
cities or counties.






                         FISCAL IMPACT

No fiscal impact.





CONTACT
Name:        Mary Hughes
Agency:      Finance, Dept. of
Phone:       208-332-8060

Statement of Purpose/Fiscal Impact                   H 2