ENROLLED
COMMITTEE SUBSTITUTE
FOR
H. B. 2776
(
By Delegates Moore, Kominar, Perry, Barker,
Carmichael and Ashley
)
[Passed March 7, 2007; in effect ninety days from passage.]
AN ACT to amend and reenact §31-17-1, §31-17-2 and §31-17-11 of the
Code of West Virginia, 1931, as amended, all relating to
mortgage broker, lender and loan originator licenses;
requiring certain licensees to license all loan originators;
and permitting the Banking Commissioner to
enter into
information sharing agreements with other
mortgage regulators.
Be it enacted by the Legislature of West Virginia:
That §31-17-1, §31-17-2 and §31-17-11 of the Code of West
Virginia, 1931, as amended, be amended and reenacted, all to read
as follows:
ARTICLE 17. WEST VIRGINIA RESIDENTIAL MORTGAGE LENDER, BROKER AND
SERVICER ACT.
§31-17-1. Definitions and general provisions.
As used in this article:
(1) "Primary mortgage loan" means a consumer loan made to an individual which is secured, in whole or in part, by a primary
mortgage or deed of trust upon any interest in real property used
as an owner-occupied residential dwelling with accommodations for
not more than four families;
(2) "Subordinate mortgage loan" means a consumer loan made to
an individual which is secured, in whole or in part, by a mortgage
or deed of trust upon any interest in real property used as an
owner-occupied residential dwelling with accommodations for not
more than four families, which property is subject to the lien of
one or more prior recorded mortgages or deeds of trust;
(3) "Person" means an individual, partnership, association,
trust, corporation or any other legal entity, or any combination
thereof;
(4) "Lender" means any person who makes or offers to make or
accepts or offers to accept or purchases or services any primary or
subordinate mortgage loan in the regular course of business. A
person is considered to be acting in the regular course of business
if he or she makes or accepts, or offers to make or accept, more
than five primary or subordinate mortgage loans in any one calendar
year;
(5) "Broker" means any person acting in the regular course of
business who, for a fee or commission or other consideration,
negotiates or arranges, or who offers to negotiate or arrange, or
originates, processes or assigns a primary or subordinate mortgage loan between a lender and a borrower. A person is considered to be
acting in the regular course of business if he or she negotiates or
arranges, or offers to negotiate or arrange, or originates,
processes or assigns any primary or subordinate mortgage loans in
any one calendar year; or if he or she seeks to charge a borrower
or receive from a borrower money or other valuable consideration in
any primary or subordinate mortgage transaction before completing
performance of all broker services that he or she has agreed to
perform for the borrower;
(6) "Brokerage fee" means the fee or commission or other
consideration charged by a broker or loan originator for the
services described in subdivision (5) of this section;
(7) "Additional charges" means every type of charge arising
out of the making or acceptance of a primary or subordinate
mortgage loan, except finance charges, including, but not limited
to, official fees and taxes, reasonable closing costs and certain
documentary charges and insurance premiums and other charges which
definition is to be read in conjunction with and permitted by
section one hundred nine, article three, chapter forty-six-a of
this code;
(8) "Finance charge" means the sum of all interest and similar
charges payable directly or indirectly by the debtor imposed or
collected by the lender incident to the extension of credit as
coextensive with the definition of "loan finance charge" set forth in section one hundred two, article one, chapter forty-six-a of
this code;
(9) "Commissioner" means the Commissioner of Banking of this
state;
(10) "Applicant" means a person who has applied for a
lender's, broker's or loan originator's license;
(11) "Licensee" means any person duly licensed by the
commissioner under the provisions of this article as a lender,
broker or loan originator;
(12) "Amount financed" means the total of the following items
to the extent that payment is deferred:
(a) The cash price of the goods, services or interest in land,
less the amount of any down payment, whether made in cash or in
property traded in;
(b) The amount actually paid or to be paid by the seller
pursuant to an agreement with the buyer to discharge a security
interest in or a lien on property traded in; and
(c) If not included in the cash price:
(i) Any applicable sales, use, privilege, excise or
documentary stamp taxes;
(ii) Amounts actually paid or to be paid by the seller for
registration, certificate of title or license fees; and
(iii) Additional charges permitted by this article;
(13) "Affiliated" means persons under the same ownership or management control. As to corporations, limited liability
companies or partnerships, where common owners manage or control a
majority of the stock, membership interests or general partnership
interests of one or more such corporations, limited liability
companies or partnerships, those persons are considered affiliated.
In addition, persons under the ownership or management control of
the members of an immediate family shall be considered affiliated.
For purposes of this section, "immediate family" means mother,
stepmother, father, stepfather, sister, stepsister, brother,
stepbrother, spouse, child and grandchildren;
(14) "Servicing" or "servicing a residential mortgage loan"
means through any medium or mode of communication the collection or
remittance for, or the right or obligation to collect or remit for
another lender, note owner or noteholder, payments of principal,
interest, including sales finance charges in a consumer credit
sale, and escrow items as insurance and taxes for property subject
to a residential mortgage loan; and
(15) "Loan originator" means an individual who, on behalf of
a licensed mortgage broker, under the direct supervision and
control of a licensee who is engaged in brokering activity, and in
exchange for compensation by that broker, performs any of the
services described in subsection (5) of this section.
§31-17-2. License required for lender, broker or loan originator;
exemptions.
(a) No person may engage in this state in the business of
lender, broker or loan originator unless and until he or she first
obtains a license to do so from the commissioner, which license
remains unexpired, unsuspended and unrevoked, and no foreign
corporation may engage in business in this state unless it is
registered with the secretary of state to transact business in this
state.
(b) An entity applying for or holding both a lender and broker
license shall license all of its individual loan originators if
that entity brokers a majority of its residential mortgage loans.
The determination of whether an entity brokers the majority of its
residential mortgage loans is based upon the most recent annual
report filed with the division pursuant to section eleven of this
article. A new applicant applying for both a lender license and a
broker license shall license all of its loan originators unless the
applicant can demonstrate, through data compiled for other state
regulators, that it acts as a lender for a majority of its
residential mortgage loans made.
(c) Brokerage fees, additional charges and finance charges
imposed by licensed mortgage brokers, lenders and loan originators
are exempt from the tax imposed by article fifteen, chapter eleven
of this code beginning on the first day of January, two thousand
four.
(d)The provisions of this article do not apply to loans made by the following:
(1) Federally insured depository institutions;
(2) Regulated consumer lender licensees;
(3) Insurance companies;
(4) Any other lender licensed by and under the regular
supervision and examination for consumer compliance of any agency
of the federal government;
(5) Any agency or instrumentality of this state, federal,
county or municipal government or on behalf of the agency or
instrumentality;
(6) By a nonprofit community development organization making
mortgage loans to promote home ownership or improvements for the
disadvantaged which loans are subject to federal, state, county or
municipal government supervision and oversight; or
(7) Habitat for Humanity International, Inc., and its
affiliates providing low-income housing within this state.
Loans made subject to this exemption may be assigned,
transferred, sold or otherwise securitized to any person and shall
remain exempt from the provisions of this article, except as to
reporting requirements in the discretion of the commissioner where
the person is a licensee under this article. Nothing herein shall
prohibit a broker licensed under this article from acting as broker
of an exempt loan and receiving compensation as permitted under the
provisions of this article.
(e) A person or entity designated in subsection (c) of this
section may take assignments of a primary or subordinate mortgage
loan from a licensed lender and the assignments of said loans that
they themselves could have lawfully made as exempt from the
provisions of this article under this section do not make that
person or entity subject to the licensing, bonding, reporting or
other provisions of this article except as the defense or claim
would be preserved pursuant to section one hundred two, article
two, chapter forty-six-a of this code.
(f) The placement or sale for securitization of a primary or
subordinate mortgage loan into a secondary market by a licensee may
not subject the warehouser or final securitization holder or
trustee to the provisions of this article: Provided, That the
warehouser, final securitization holder or trustee under an
arrangement is either a licensee, or person or entity entitled to
make exempt loans of that type under this section, or the loan is
held with right of recourse to a licensee.
§31-17-11. Records and reports; examination of records; analysis.
(a) Every lender and broker licensee shall maintain at his or
her place of business in this state, if any, or if he or she has no
place of business in this state at his or her principal place of
business outside this state, such books, accounts and records
relating to all transactions within this article as are necessary
to enable the commissioner to enforce the provisions of this article. All the books, accounts and records shall be preserved,
exhibited to the commissioner and kept available as provided herein
for the reasonable period of time as the commissioner may by rules
require. The commissioner is hereby authorized to prescribe by
rules the minimum information to be shown in the books, accounts
and records.
(b) Each licensee shall file with the commissioner on or
before the fifteenth day of March of each year a report under oath
or affirmation concerning his or her business and operations in
this state for the preceding license year in the form prescribed by
the commissioner.
(c) The commissioner may, at his or her discretion, make or
cause to be made an examination of the books, accounts and records
of every lender or broker licensee pertaining to primary and
subordinate mortgage loans made in this state under the provisions
of this article, for the purpose of determining whether each lender
and broker licensee is complying with the provisions hereof and for
the purpose of verifying each lender or broker licensee's annual
report. If the examination is made outside this state, the
licensee shall pay the cost thereof in like manner as applicants
are required to pay the cost of investigations outside this state.
(d) The commissioner shall publish annually an aggregate
analysis of the information furnished in accordance with the
provisions of subsection (b) or (c) of this section, but the individual reports shall not be public records and shall not be
open to public inspection.
(e) The commissioner may enter into cooperative and
information sharing agreements with regulators in other states or
with federal authorities to discharge his or her responsibilities
under this article.