HCS HB 382 -- MORTGAGE BROKERS

SPONSOR:  Cunningham (Cox)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Financial
Institutions by a vote of 11 to 0.

This substitute repeals the Residential Mortgage Brokers License
Act and establishes in its place the Missouri Secure and Fair
Enforcement for Mortgage Licensing and Residential Mortgage
Brokers Licensing Act.  It its main provisions, the substitute:

(1)  Requires an individual engaging in the business of a
mortgage loan originator to be licensed, employed, and acting
under the supervision of a single, Missouri-licensed residential
mortgage broker, except certain specified individuals.  Each
licensed mortgage loan originator must register with and maintain
a valid unique identifier issued by the Nationwide Mortgage
Licensing System and Registry (NMLSR).  The unique identifier
must be clearly shown on all residential mortgage loan
applications, forms, solicitations, or advertisements, including
business cards, web sites, and any other documents as required by
the Director of the Division of Finance within the Department of
Insurance, Financial Institutions and Professional Registration
(Section 443.706, RSMo);

(2)  Requires an independent contractor who is engaged in the
activities of a loan processor or underwriter for a Missouri
residential real estate loan to be licensed and maintain a valid
unique identifier issued by the NMLSR.  The independent
contractor must certify annually under oath to the division
director that he or she will not engage in the activities of a
mortgage loan originator absent full compliance with the
provisions regarding mortgage loan originators (Section 443.707);

(3)  Allows the division director to establish licensing rules or
regulations and interim procedures for the licensing and
acceptance of applications and to establish expedited review and
licensing procedures for individuals previously licensed as or
who were previously an ultimate equitable owner of a residential
mortgage loan broker (Section 443.709);

(4)  Authorizes the division director to establish relationships
or contracts with the NMLSR or other entities designated by the
NMLSR to collect and maintain records and process fees related to
licensees or other persons subject to the act.  An applicant for
licensing as a mortgage loan originator must provide, at a
minimum, the following information concerning his or her identity
to the NMLSR:

(a)  Fingerprints for submission to the Federal Bureau of
Investigation and any governmental agency for a state, national,
and international criminal history background check; and

(b)  Personal history and experience including an independent
credit report and information related to any administrative,
civil, or criminal findings by any governmental jurisdiction
provided; however, no applicant can be denied a license solely on
the basis of a credit score (Section 443.711);

(5)  Prohibits the division director from issuing or renewing a
mortgage loan originator license until he or she makes, at a
minimum, the following findings that the applicant:

(a)  Has never had a mortgage loan originator license revoked;

(b)  Has not been convicted of or pled guilty or nolo contendere
to a felony in a domestic, foreign, or military court in the
preceding seven-year period or at any time if the felony involved
fraud, dishonesty, a breach of trust, or money laundering;

(c)  Has demonstrated financial responsibility, character, and
general fitness to command confidence of the community;

(d)  Has completed the prelicensing education requirements;

(e)  Has passed a written test meeting the requirements of the
act; and

(f)  Has met the Missouri surety bond requirements of the act or
the requirements have been met by the applicant's employer
(Section 443.713);

(6)  Requires the division director to establish a process
whereby mortgage loan originators can challenge information
entered into the NMLSR by the division director (Section
443.727);

(7)  Allows the division director to deny, suspend, revoke,
condition, or decline to renew a licence for violations against
the act or for withholding information or making material
misstatements in a license or renewal application.  The division
director can order restitution and impose fines on any person
violating the provisions of the act (Section 443.729);

(8)  Authorizes the division director to conduct investigations
and examinations regarding compliance with the provisions of the
act (Section 443.735);

(9)  Prohibits any person or individual subject to the act from:

(a)  Directly or indirectly employing any scheme, device, or
artifice to defraud or mislead borrowers or lenders or to defraud
any person;

(b)  Engaging in any unfair or deceptive practice toward any
person;

(c)  Obtaining property by fraud or misrepresentation;

(d)  Soliciting or entering into a contract with a borrower that
allows the person or individual to earn a fee or commission when
no loan is actually obtained by the borrower;

(e)  Soliciting, advertising, or entering into a contract for
specific interest rates, points, or other financing terms unless
the terms are actually available at the time of soliciting,
advertising, or contracting;

(f)  Conducting business or assisting, aiding, or abetting any
person in conducting business without holding a valid license or
having the required employment;

(g)  Requiring a borrower to obtain property insurance coverage
that exceeds the replacement cost of improvements; and

(h)  Failing to truthfully account for moneys belonging to a
party to a residential mortgage loan transaction (Section
443.737); and

(10)  Requires mortgage loan brokers to disclose all fees and
compensation with the borrower (Section 443.867).

The provisions regarding an individual engaging in the business
of a mortgage loan originator without first obtaining and
maintaining a license under the provisions of the substitute and
obtaining employment and acting under the supervision of a single
licensed residential mortgage broker become effective July 31,
2010, or a later date approved by the Secretary of the United
States Department of Housing and Urban Development.

The substitute contains an emergency clause.

FISCAL NOTE:  No impact on General Revenue Fund in FY 2010,
FY 2011, and FY 2012.  Estimated Effect on Other State Funds of a
cost of $28,885 in FY 2010, an income of $37,197 in FY 2011, and
an income of $27,517 in FY 2012.

PROPONENTS:  Supporters say that the bill will allow easier
access to licensing across states for mortgage brokers.  If this
is not put into place, the federal government will begin
regulating this industry.  The state is better equipped to handle
regulation of this industry.

Testifying for the bill were Representative Cox; Division of
Finance, Department of Insurance, Financial Institutions and
Professional Regulation; Missouri Bankers Association; Mortgage
Bankers Association of Missouri; Missouri Financial Services
Association; State Farm Insurance Companies; Missouri Association
of Mortgage Brokers; St. Louis County Municipal League; Missouri
Credit Union Association; and Debbie Irwin, Beyond Housing and
Metro St. Louis Foreclosure Prevention Task Force.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
95th General Assembly, 1st Regular Session
Last Updated November 17, 2009 at 9:24 am