COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 292
(By Senators Minard, Jenkins and Plymale)
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[Originating in the Committee on Banking and Insurance;
reported January 30, 2008.]
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A BILL to amend and reenact §31-17-4 of the Code of West Virginia,
1931, as amended, relating to permitting bond claims by the
Commissioner of Banking to collect unpaid civil administrative
penalties and unpaid examination invoices while allowing
priority for pending consumer claims.
Be it enacted by the Legislature of West Virginia:
That §31-17-4 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 17. WEST VIRGINIA RESIDENTIAL MORTGAGE LENDER, BROKER AND
SERVICER ACT.
§31-17-4. Applications for licenses; requirements; bonds; fees;
renewals; waivers and reductions; per loan fee.
(a) Application for a lender's or broker's license shall each
year be submitted in writing under oath, in the form prescribed by
the commissioner, and shall contain the full name and address of
the applicant and, if the applicant is a partnership, limited liability company or association, of every member thereof, and, if
a corporation, of each officer, director and owner of ten percent
or more of the capital stock thereof and further information as the
commissioner may reasonably require. Any application shall also
disclose the location at which the business of lender or broker is
to be conducted. Application for a loan originator's license shall
be initially submitted prior to the first day of September, two
thousand two, and thereafter in every fifth year beginning in two
thousand five. If the loan originator changes sponsoring mortgage
brokers, a new application must be submitted in accordance with
this article.
(b) At the time of making application for a lender's license,
the applicant therefor shall:
(1) If a foreign corporation, submit a certificate from the
Secretary of State certifying that the applicant is registered with
the Secretary of State to transact business in this state;
(2) Submit proof that he or she has available for the
operation of the business at the location specified in the
application net worth of at least two hundred fifty thousand
dollars;
(3) File with the commissioner a bond in favor of the state
for the benefit of consumers
or for a claim by the commissioner for
an unpaid civil administrative penalty or an unpaid examination
invoice in the amount of one hundred thousand dollars, in a form
and with conditions as the commissioner may prescribe, and executed
by a surety company authorized to do business in this state;
(4) Pay to the commissioner a license fee of one thousand two
hundred fifty dollars plus the actual cost of fingerprint
processing. If the commissioner shall determine that an
investigation outside this state is required to ascertain facts or
information relative to the applicant or information set forth in
the application, the applicant may be required to advance
sufficient funds to pay the estimated cost of the investigation.
An itemized statement of the actual cost of the investigation
outside this state shall be furnished to the applicant by the
commissioner and the applicant shall pay or shall have returned to
him or her, as the case may be, the difference between his or her
payment in advance of the estimated cost and the actual cost of the
investigation; and
(5) Submit proof that the applicant is a business in good
standing in its state of incorporation, or if not a corporation,
its state of business registration, and a full and complete
disclosure of any litigation or unresolved complaint filed by a
governmental authority or class action lawsuit on behalf of
consumers relating to the operation of the license applicant.
(c) At the time of making application for a broker's license,
the applicant therefor shall:
(1) If a foreign corporation, submit a certificate from the
Secretary of State certifying that the applicant is registered with
the Secretary of State to transact business in this state;
(2) Submit proof that he or she has available for the
operation of the business at the location specified in the application net worth of at least ten thousand dollars;
(3) File with the commissioner a bond in favor of the state
for the benefit of consumers
or for a claim by the commissioner for
an unpaid civil administrative penalty or an unpaid examination
invoice in the amount of fifty thousand dollars, in a form and with
conditions as the commissioner may prescribe, and executed by a
surety company authorized to do business in this state:
Provided,
That the bond must be in the amount of one hundred thousand dollars
before a broker may participate in a table-funded residential
mortgage loan;
(4) Pay to the commissioner a license fee of three hundred
fifty dollars plus the actual cost of fingerprint processing; and
(5) Submit proof that the applicant is a business in good
standing in its state of incorporation, or if not a corporation,
its state of business registration, and a full and complete
disclosure of any litigation or unresolved complaint filed by a
governmental authority or class action lawsuit on behalf of
consumers relating to the operation of the license applicant.
(d) Application for a loan originator license shall be
submitted by the sponsoring mortgage broker prior to the loan
originator engaging in mortgage activity, in writing under oath, on
a form prescribed by the commissioner. At the time of making
application for a loan originator license, the loan originator
therefor shall:
(1) Submit a statement under oath that he or she originates
loans exclusively for one broker, together with an acknowledgment of employment by the sponsoring mortgage broker;
(2) Pay to the commissioner a license fee of one hundred fifty
dollars plus the actual cost of fingerprint processing;
(3) Disclose the location at which the business of the
sponsoring mortgage broker is to be conducted by the licensed loan
originator; and
(4) If at any time a loan originator ceases working for the
sponsoring mortgage broker indicated on the license application,
such loan originator and sponsoring mortgage broker shall notify
the commissioner within fifteen business days and return the
original loan originator license to the Division of Banking. The
license of a loan originator is not effective during any period
when that person is not employed by a sponsoring mortgage broker
licensed under this article and a loan originator shall not be
employed simultaneously by more than one sponsoring mortgage
broker.
(e) The aggregate liability of the surety on any bond given
pursuant to the provisions of this section shall in no event exceed
the amount of the bond.
(f) Nonresident lenders and brokers licensed under this
article by their acceptance of the license acknowledge that they
are subject to the jurisdiction of the courts of West Virginia and
the service of process pursuant to section one hundred
thirty-seven, article two, chapter forty-six-a of this code and
section thirty-three, article three, chapter fifty-six of this
code.
(g) The commissioner may elect to reduce or waive the
application fees, bond amounts and net worth requirements imposed
by this section for nonprofit corporations whose residential
mortgage lending or brokering activities provide housing primarily
to households or persons below the HUD-established median income
for their area of residence.
(h) Every broker and lender licensee shall pay a fee of five
dollars for each residential mortgage loan originated, made or
brokered in a calendar year. This fee shall be paid semiannually
to the Division of Banking and remitted with the report required
pursuant to subsection (b), section eleven of this article for
loans made, brokered or originated during the last six months of
the previous calendar year and with the lender or broker license
renewal application required pursuant to subsection (b), section
seven of this article for the loans made, brokered or originated in
the first six months of that calendar year. In the event a
licensee ceases operation, it shall remit any fees due since the
last reporting period when it relinquishes its license.
(i) If a claim for a consumer restitution is pending on a bond
required pursuant to this section when the commissioner makes a
claim for a civil administrative penalty or an unpaid examination
invoice, the consumer claim shall be resolved before any payments
may be made for an unpaid penalty or examination invoice.
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(NOTE: The purpose of this bill is to permit bond claims by
the Commissioner of Banking to collect unpaid civil administrative
penalties and unpaid examination invoices while allowing priority for pending consumer claims.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.)