Minnesota Residential Mortgage Originator or Servicer Licensing Act
Beginning August 1, 1999, no person shall act as a residential mortgage originator, or make residential mortgage loans without first obtaining a license from the commissioner according to the licensing procedures provided in this chapter.
58.01 Citation.
This chapter shall be cited as the "Minnesota Residential
Mortgage Originator and Servicer Licensing Act."
58.02 Definitions.
Subdivision 1. Scope. For purposes of this chapter, the terms
defined in this section have the meanings given to them.
Subd. 2. Act. "Act" means the Minnesota Residential
Mortgage Originator and Servicer Licensing Act.
Subd. 3. Advance fee. "Advance fee" means a commission,
fee, charge, or compensation of any kind paid to a residential
mortgage originator before the closing of a loan, that is intended
in whole or in part as payment for the originator's services
in finding or attempting to find a loan for a borrower. Advance
fee does not include pass-through fees or commitment or extended
lock fees or other fees as determined by the commissioner.
Subd. 4. Borrower. "Borrower" means a person or persons
applying for a residential mortgage loan, a mortgagor, or the
person or persons on whose behalf the activities in subdivisions
12, 14, 22, and 23 are conducted.
Subd. 5. Closing. "Closing" means either or both of
the following: (1) the process whereby the real estate contract
between a buyer and a seller is consummated; or (2) the process
whereby the documents creating a security interest in real property
become effective between the borrower and the lender.
Subd. 6. Commissioner. "Commissioner" means the commissioner
of commerce.
Subd. 7. Employee. "Employee" means an individual who
is treated as an employee by the residential mortgage originator
or servicer for purposes of compliance with federal income tax
laws.
Subd. 8. Escrow account. "Escrow account" means a trust
account that is established and maintained to hold funds received
from a borrower, such as real estate taxes and insurance premiums,
incurred in connection with the servicing of the mortgage.
Subd. 9. Exempt person. "Exempt person" means a person
exempt from residential mortgage originator licensing requirements,
and a person exempt from residential mortgage service licensing
requirements.
Subd. 10. Financial institution. "Financial institution"
means a bank, bank and trust, trust company with banking powers,
savings bank, savings association, or credit union, organized
under the laws of this state or the United States; a Minnesota
host state branch of an out-of-state state-chartered bank as
provided for in section 49.411; an industrial loan and thrift
under chapter 53; or a regulated lender under chapter 56. The
term "financial institution" also includes a subsidiary
or operating subsidiary of a financial institution or of a bank
holding company as defined in the federal Bank Holding Company
Act, United States Code, title 12, section 1841 et seq., if the
subsidiary or operating subsidiary can demonstrate to the satisfaction
of the commissioner that it is regulated and subject to active
and ongoing oversight and supervision by a federal banking agency,
as defined in the Federal Deposit Insurance Act, United States
Code, title 12, section 1811 et seq., or the commissioner.
Subd. 11. Lender. "Lender" means a person who makes
residential mortgage loans including a person who provides table
funding.
Subd. 12. Making a residential mortgage loan. "Making a
residential mortgage loan" means for compensation or gain,
or the expectation of compensation or gain, to advance funds
or make a commitment to advance funds in connection with a residential
mortgage.
Subd. 13. Mortgage broker; broker. "Mortgage broker"
or "broker" means a person who performs the activities
described in subdivisions 14 and 23.
Subd. 14. Mortgage brokering; brokering. "Mortgage brokering"
or "brokering" means helping to obtain from another
person, for a borrower, a residential mortgage loan or assisting
a borrower in obtaining a residential mortgage loan in return
for consideration to be paid by the borrower or lender or both.
Mortgage brokering or brokering includes, but is not limited
to, soliciting, placing, or negotiating a residential mortgage
loan.
Subd. 15. Net worth. "Net worth" has the meaning given
it in section 58.07.
Subd. 16. Person. "Person" means a natural person,
firm, partnership, limited liability partnership, corporation,
association, limited liability company, or other form of business
organization and the officers, directors, employees, or agents
of that person.
Subd. 17. Person in control. "Person in control" means
any member of senior management and other persons who possess,
directly or indirectly, the power to direct or cause the direction
of the management policies of an applicant or licensee under
this chapter, regardless of whether the person has any ownership
interest in the applicant or licensee. Control is presumed to
exist if a person, directly or indirectly, owns, controls, or
holds with power to vote ten percent or more of the voting stock
of an applicant or licensee or of a person who owns, controls,
or holds with power to vote ten percent or more of the voting
stock of an applicant or licensee.
Subd. 18. Residential mortgage loan. "Residential mortgage
loan" means a loan made primarily for personal, family,
or household use and secured primarily by either: (1) a mortgage
on residential real property; or (2) certificates of stock or
other evidence of ownership interest in and proprietary lease
from corporations, partnerships, or other forms of business organizations
formed for the purpose of cooperative ownership of residential
real property.
Subd. 19. Residential mortgage originator. "Residential
mortgage originator" means a person who, directly or indirectly,
for compensation or gain or in expectation of compensation or
gain, solicits or offers to solicit, or accepts or offers to
accept an application for a residential mortgage loan through
any medium or mode of communication from a borrower, or makes
a residential mortgage loan. "Residential mortgage originator"
includes a lender as defined in subdivision 11 and a broker as
defined in subdivision 13.
Subd. 20. Residential mortgage servicer; servicer. "Residential
mortgage servicer" or "servicer" means a person
who engages in the activity of servicing a residential mortgage
as defined in subdivision 22.
Subd. 21. Residential real property; residential real estate.
"Residential real property" or "residential real
estate" means real property improved or intended to be improved
by a structure designed principally for the occupancy of from
one to four families.
Subd. 22. Servicing; servicing a residential mortgage. "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 a lender,
mortgagee, note owner, noteholder, or for a person's own account,
of payments, interest, principal, and escrow items such as insurance
and taxes for property subject to a residential mortgage loan.
Subd. 23. Soliciting, placing, or negotiating a residential mortgage
loan. "Soliciting, placing, or negotiating a residential
mortgage loan" means for compensation or gain or expectation
of compensation or gain, whether directly or indirectly, accepting
or offering to accept an application for a residential mortgage
loan, assisting, or offering to assist a borrower in applying
for a residential mortgage loan, or negotiating or offering to
negotiate the terms or conditions of a residential mortgage loan
with a lender on behalf of a borrower.
Subd. 24. Table funding. "Table funding" means a closing
or settlement at which a residential mortgage loan is funded
by a lender by way of a contemporaneous advance of residential
mortgage loan funds and an assignment of the residential mortgage
loan to the lender advancing the funds.
Subd. 25. Trust account. "Trust account" means a negotiable
order of withdrawal account, demand deposit, or checking account
maintained for the purpose of segregating trust funds from other
funds. A "trust account" must not allow the financial
institution a right of set-off against the money owed it by the
account holder.
Subd. 26. Trust funds. "Trust funds" means funds received
by a residential mortgage originator or servicer in a fiduciary
capacity for later distribution, such as appraisal or credit
report fees, taxes, or insurance premiums. Trust funds includes
commitment, lock, extended lock, and advance fees.
58.03 Classes of license.
The commissioner may issue the following classes of license under
this chapter:
(1) a residential mortgage originator license; and
(2) a residential mortgage servicer license.
58.04 Licensing requirement.
Subdivision 1. Residential mortgage originator licensing
requirements. (a) Beginning August 1, 1999, no person shall
act as a residential mortgage originator, or make residential
mortgage loans without first obtaining a license from the commissioner
according to the licensing procedures provided in this chapter.
(b) The following persons are exempt from the residential
mortgage originator licensing requirements:
(1) an employee of one mortgage originator licensee or one
person holding a certificate of exemption;
(2) a person engaged solely in commercial mortgage activities;
(3) a person licensed as a real estate broker under chapter
82, and an individual licensee who is licensed to the broker
if:
(i) the individual licensee acts only under the name, authority,
and supervision of the broker to whom the licensee is licensed;
(ii) the broker obtains a certificate of exemption according
to section 58.05, subdivision 2;
(iii) the broker does not collect an advance fee for its
residential mortgage-related activities; and
(iv) the residential mortgage origination activities are
incidental to the real estate licensee's primary activities as
a
real estate broker or salesperson;
(4) a person making no more than five residential mortgage
loans with its own funds, during any 12-month period;
(5) a financial institution as defined in section 58.02,
subdivision 10;
(6) an agency of the federal government, or of a state or
municipal government;
(7) an employee or employer pension plan making loans only
to its participants;
(8) a person acting in a fiduciary capacity, such as a trustee
or receiver, as a result of a specific order issued by a
court of competent jurisdiction; or
(9) a person exempted by order of the commissioner.
Subd. 2. Residential mortgage servicer licensing requirements.
(a) Beginning August 1, 1999, no person shall
engage in activities or practices that fall within the definition
of "servicing a residential mortgage loan" under
section 58.02, subdivision 22, without first obtaining a license
from the commissioner according to the licensing procedures provided
in this chapter.
(b) The following persons are exempt from the residential
mortgage servicer licensing requirements:
(1) a person licensed as a residential mortgage originator;
(2) an employee of one licensee or one person holding a certificate
of exemption based on an exemption under this subdivision;
(3) a person engaged solely in commercial mortgage activities;
(4) a person servicing loans made with its own funds, if
no more than five such loans are made in any 12-month period;
(5) a financial institution as defined in section 58.02,
subdivision 10;
(6) an agency of the federal government, or of a state or
municipal government;
(7) an employee or employer pension plan making loans only
to its participants;
(8) a person acting in a fiduciary capacity, such as a trustee
or receiver, as a result of a specific order issued by a
court of competent jurisdiction; or
(9) a person exempted by order of the commissioner.
Subd. 3. Conducting business under license. No person
required to be licensed under this chapter may, without a license,
do business under a name or title or circulate or use advertising
or make representations or give information to a person, that
indicates or reasonably implies activity within the scope of
this chapter.
Subd. 4. Applicability to banks and credit unions.
Except for section 58.13, this chapter does not apply to a bank,
savings bank, savings association, or credit union subject to
supervision by either a federal regulatory agency or the commissioner.
58.06 Application requirements for residential mortgage originators
and servicers.
Subdivision 1. License application form. Application for a residential
mortgage originator or a residential mortgage servicer license
must be in writing, under oath, and on a form obtained from and
prescribed by the commissioner.
Subd. 2. Application contents. The application must contain the
name and complete business address or addresses of the license
applicant. If the license applicant is a partnership, limited
liability partnership, association, limited liability company,
corporation, or other form of business organization, the application
must contain the names and complete business addresses of each
partner, member, director, and principal officer. The application
must also include a description of the activities of the license
applicant, in the detail and for the periods the commissioner
may require. The application must also include all of the following:
(a) an affirmation under oath that the applicant:
(1) will maintain competent staff and adequate staffing levels,
through direct employees or otherwise, to meet the requirements
of this chapter;
(2) will advise the commissioner of any material changes to the
information submitted in the most recent application within ten
days of the change;
(3) will advise the commissioner in writing immediately of any
bankruptcy petitions filed against or by the applicant or licensee;
(4) is financially solvent and in compliance with net worth requirements;
(5) complies with federal and state tax laws;
(6) complies with sections 345.31 to 345.60, the Minnesota unclaimed
property law; and
(7) is, or that a person in control of the license applicant
is, at least 18 years of age;
(b) information as to the mortgage lending, servicing, or brokering
experience of the applicant and persons in control of the applicant;
(c) information as to criminal convictions, excluding traffic
violations, of persons in control of the license applicant;
(d) whether a court of competent jurisdiction has found that
the applicant or persons in control of the applicant have engaged
in conduct evidencing gross negligence, fraud, misrepresentation,
or deceit in performing an act for which a license is required
under this chapter;
(e) whether the applicant or persons in control of the applicant
have been the subject of: an order of suspension or revocation,
cease and desist order, or injunctive order, or order barring
involvement in an industry or profession issued by this or another
state or federal regulatory agency or by the Secretary of Housing
and Urban Development within the ten-year period immediately
preceding submission of the application; and
(f) other information required by the commissioner.
58.07 Net worth for originators and servicers.
Subdivision 1. Requirement. A licensee who is issued a residential
mortgage originator license shall maintain a minimum net worth
of $25,000. A licensee who is issued a residential mortgage servicer's
license shall maintain a minimum net worth of $250,000.
Subd. 2. Computation. Net worth must be computed according to
generally accepted accounting principles and must reflect any
adjustment to net worth required by the Government National Mortgage
Association.
Subd. 3. Certified financials. The commissioner may require the
submission of financial data audited by an independent certified
public accountant when it is considered necessary for an investigation
or examination.
58.08 Bonds; letters of credit.
Subdivision 1. Requirement of residential mortgage originators.
A residential mortgage originator licensee shall continuously
maintain a surety bond or irrevocable letter of credit in an
amount not less than $50,000 in a form approved by the commissioner,
issued by an insurance company or bank authorized to do so in
this state. The bond must be available for the recovery of expenses,
fines, and fees levied by the commissioner under this chapter,
and for losses or damages incurred by borrowers as the result
of a licensee's noncompliance with the requirements of this chapter,
sections 325D.43 to 325D.48, and 325F.67 to 325F.69, or breach
of contract.
The bond or irrevocable letter of credit must be submitted with
the originator's license application, and evidence of continued
coverage must be submitted with each renewal. Any change in the
bond or letter of credit must be submitted for approval by the
commissioner, within ten days of its execution.
Subd. 2. Requirement of residential mortgage servicers. A residential
mortgage servicer licensee shall continuously maintain a surety
bond or irrevocable letter of credit in an amount not less than
$100,000 in a form approved by the commissioner, issued by an
insurance company or bank authorized to do so in this state.
The bond must be available for the recovery of expenses, fines,
and fees levied by the commissioner under this chapter, and for
losses or damages incurred by borrowers or other aggrieved parties
as the result of a licensee's noncompliance with the requirements
of this chapter, sections 325D.43 to 325D.48, and 325F.67 to
325F.69, or breach of contract relating to activities regulated
by this chapter.
The bond or irrevocable letter of credit must be submitted with
the servicer's license application and evidence of continued
coverage must be submitted with each renewal. Any change in the
bond or letter of credit must be submitted for approval by the
commissioner, within ten days of its execution.
Subd. 3. Exemption. Subdivisions 1 and 2 do not apply to mortgage
originators or mortgage servicers who are approved as seller/servicers
by the Federal National Mortgage Association or the Federal Home
Loan Mortgage Corporation.
58.09 Term of license.
Initial licenses for residential mortgage originators and residential
mortgage servicers issued under this chapter expire on July 31,
2001, and are renewable on August 1, 2001, and on August 1 of
each odd-numbered year after that date. A new licensee whose
license expires less than 12 months from the date of issuance
shall pay a fee equal to one-half the applicable initial license
fee set forth in section 58.10, subdivision 1, clause (1) or
(3).
58.10 Fees.
Subdivision 1. Amounts. The following fees must be paid to the
commissioner:
(1) for an initial residential mortgage originator license, $800;
(2) for a renewal license, $400;
(3) for an initial residential mortgage servicer's license, $1,000;
(4) for a renewal license, $500;
(5) license service fees as set forth in chapter 45; and
(6) for a certificate of exemption, $100.
Subd. 2. Forfeiture. All fees are nonrefundable except that an
overpayment of a fee must be refunded upon proper application.
58.15 Disclosure requirements for residential mortgage originators.
Subdivision 1. Nonagency disclosure. If a residential mortgage
originator or exempt person does not contract or offer to contract
to act as an agent of a borrower, or accept an advance fee, it
must, within 72 hours of accepting an application for a residential
mortgage loan, provide the borrower with a written disclosure
as provided in subdivision 2.
Subd. 2. Form and content requirements. The disclosure must be
a separate document, 8-1/2 inches by 11 inches, must be signed
by the borrower and must contain the following statement in 14-point
boldface print:
Originator IS NOT ACTING AS YOUR AGENT IN CONNECTION WITH OBTAINING
A RESIDENTIAL MORTGAGE LOAN. WHILE WE SEEK TO ASSIST YOU IN MEETING
YOUR FINANCIAL NEEDS, WE CANNOT GUARANTEE THE LOWEST OR BEST
TERMS AVAILABLE IN THE MARKET.
Subd. 3. Electronic application disclosure requirement. In case
of an electronic residential mortgage application, the disclosure
requirements of this section may be satisfied by providing the
disclosure statement as a separate screen if the disclosure must
be acknowledged by the borrower before an application is accepted.
Subd. 4. Exemption from disclosure requirement. If the Department
of Housing and Urban Development adopts and implements a disclosure
requirement for persons offering mortgage origination services
that the commissioner determines to be substantially similar
to the disclosure required in subdivision 2, licensees and exempt
persons complying with the HUD disclosure shall be considered
to have complied with the requirements of subdivisions 1 and
2.
58.16 Residential mortgage originators; standards of conduct
for agency or advance fee transactions.
Subdivision 1. Compliance. Residential mortgage originators who
solicit or receive an advance fee in exchange for assisting a
borrower located in this state in obtaining a loan secured by
a lien on residential real estate, or who offer to act as an
agent of the borrower located in this state in obtaining a loan
secured by a lien on residential real estate shall be considered
to have created a fiduciary relationship with the borrower and
shall comply with the requirements of subdivisions 2 to 7.
Subd. 2. Contract provisions. (a) A residential mortgage originator
who engages in the activities described in subdivision 1 shall
enter into a written contract with each borrower and shall provide
a copy of the written contract to each borrower at or before
the time of receipt of any fee or valuable consideration paid
for mortgage origination services. The written contract must:
(1) specifically describe the services to be provided by the
residential mortgage originator and if the originator collects
an advance fee, the dates by which the services will be performed;
(2) specifically identify whether the residential mortgage originator
may receive compensation from sources other than the borrower
in connection with the loan transaction;
(3) state the total amount of commission or compensation that
the borrower agrees to pay for the residential mortgage originator's
services, or the basis on which the compensation will be computed;
(4) state the maximum rate of interest to be charged on any residential
mortgage loan obtained;
(5) contain a statement that notifies the borrower of the right
to cancel the contract according to subdivision 3; and
(6) disclose, with respect to the 12-month period ending ten
business days before the date of the contract in question, the
percentage of the mortgage originator's customers for whom loans
have actually been funded as a result of the residential mortgage
originator's services.
(b) If an advance fee is solicited or received the contract must
also:
(1) identify the trust account into which the fees or consideration
will be deposited;
(2) set forth the circumstances under which the residential mortgage
originator will be entitled to disbursement from the trust account;
and
(3) set forth the circumstances under which the borrower will
be entitled to a refund of all or part of the fee.
Subd. 3. Cancellation. A borrower who pays an advance fee, or
who enters into a contract for residential mortgage services
as set forth in subdivisions 1 and 2, has an unconditional right
to rescind the contract for residential mortgage origination
services at any time until midnight of the third business day
after the day on which the contract is signed. Cancellation is
evidenced by the borrower giving written notice of cancellation
to the residential mortgage originator at the address stated
in the contract. Notice of cancellation, if given by mail, is
effective upon deposit in a mailbox properly addressed to the
originator with postage prepaid. Notice of cancellation need
not take a particular form and is sufficient if it indicates
by any form of written expression the intention of the borrower
not be bound by the contract. No act of a borrower or a residential
mortgage originator is effective to waive the right to rescind
as provided in this subdivision.
Subd. 4. Trust account. The residential mortgage originator shall
deposit in a trust account within three business days all fees
received before the time a loan is actually funded. The trust
account must be in a financial institution located within the
state of Minnesota.
Subd. 5. Records. The residential mortgage originator shall maintain
a separate record of all fees received for services performed
or to be performed as a residential mortgage originator. Each
record must set forth the date the funds are received; the person
from whom the funds are received; the amount received; the date
of deposit in the escrow account, the account number, the date
the funds are disbursed and the check number of the disbursement,
and a description of each disbursement and the justification
for the disbursement.
Subd. 6. Monthly statement. The residential mortgage originator
shall provide to each borrower at least monthly a detailed written
accounting of all disbursements of the borrower's funds from
the trust account.
Subd. 7. Disclosure of lenders. The residential mortgage originator
shall provide to each borrower at the expiration of the contract
a list of the lenders or loan sources to whom loan applications
were submitted on behalf of the borrower.
HIST: 1998 c 343 art 1 s 16
* NOTE: This section, as added by Laws 1998, chapter 343, *article
1, section 16, is effective July 1, 1999. Laws 1998, *chapter
343, article 1, section 19.
Copyright 1998 by the Office of Revisor of Statutes, State of
Minnesota.
AMENDMENTS Journal of the House - 57th Day - Tuesday,
May 4, 1999 - Top of Page 3711
Sec. 34. Minnesota Statutes 1998, section 58.04, subdivision
1, is amended to read:
Subdivision 1. [RESIDENTIAL MORTGAGE ORIGINATOR LICENSING REQUIREMENTS.]
(a) Beginning August 1, 1999, no person shall act as a residential
mortgage originator, or make residential mortgage loans without
first obtaining a license from the commissioner according to
the licensing procedures provided in this chapter.
(b) The following persons are exempt from the residential mortgage
originator licensing requirements:
(1) an employee of one mortgage originator licensee or one person
holding a certificate of exemption;
(2) a person engaged solely in commercial mortgage activities;
(3) a person licensed as a real estate broker under chapter 82,
and an individual licensee who is licensed to the broker if:
(i) the individual licensee acts only under the name, authority,
and supervision of the broker to whom the licensee is licensed;
(ii) the broker obtains a certificate of exemption according
to section 58.05, subdivision 2;
(iii) the broker does not collect an advance fee for its residential
mortgage-related activities; and
(iv) the residential mortgage origination activities are incidental
to the real estate licensee's primary activities as a real estate
broker or salesperson;
(4) an individual licensed as a property/casualty or life/health
insurance agent under chapter 60K if:
(i) the insurance agent acts on behalf of only one residential
mortgage originator, which is in compliance with chapter 58;
(ii) the insurance agent has entered into a written contract
with the mortgage originator under the terms of which the mortgage
originator agrees to accept responsibility for the insurance
agent's residential mortgage-related activities;
(iii) the insurance agent obtains a certificate of exemption
under section 58.05, subdivision 2; and
(iv) the insurance agent does not collect an advance fee for
the insurance agent's residential mortgage-related activities;
(5) a person making no more than five residential mortgage loans
with its own funds, during any 12-month period;
(5) (6) a financial institution as defined in section 58.02,
subdivision 10;
(6) (7) an agency of the federal government, or of a state or
municipal government;
(7) (8) an employee or employer pension plan making loans only
to its participants;
(8) (9) a person acting in a fiduciary capacity, such as a trustee
or receiver, as a result of a specific order issued by a court
of competent jurisdiction; or
(9) (10) a person exempted by order of the commissioner.
Sec. 35. Minnesota Statutes 1998, section 58.06, subdivision
2, is amended to read:
Subd. 2. [APPLICATION CONTENTS.] The application must contain
the name and complete business address or addresses of the license
applicant. If the license applicant is a partnership, limited
liability partnership, association, limited liability company,
corporation, or other form of business organization, the application
must contain the names and complete business addresses of each
partner, member, director, and principal officer. The application
must also include a description of the activities of the license
applicant, in the detail and for the periods the commissioner
may require. The application must also include all of the following:
(a) an affirmation under oath that the applicant:
(1) will maintain competent staff and adequate staffing levels,
through direct employees or otherwise, to meet the requirements
of this chapter;
(2) will advise the commissioner of any material changes to the
information submitted in the most recent application within ten
days of the change;
(3) will advise the commissioner in writing immediately of any
bankruptcy petitions filed against or by the applicant or licensee;
(4) is financially solvent and in compliance with net worth requirements;
(5) complies with federal and state tax laws;
(6) complies with sections 345.31 to 345.60, the Minnesota unclaimed
property law; and
(7) is, or that a person in control of the license applicant
is, at least 18 years of age;
(b) information as to the mortgage lending, servicing, or brokering
experience of the applicant and persons in control of the applicant;
(c) information as to criminal convictions, excluding traffic
violations, of persons in control of the license applicant;
(d) whether a court of competent jurisdiction has found that
the applicant or persons in control of the applicant have engaged
in conduct evidencing gross negligence, fraud, misrepresentation,
or deceit in performing an act for which a license is required
under this chapter;
(e) whether the applicant or persons in control of the applicant
have been the subject of: an order of suspension or revocation,
cease and desist order, or injunctive order, or order barring
involvement in an industry or profession issued by this or another
state or federal regulatory agency or by the Secretary of Housing
and Urban Development within the ten-year period immediately
preceding submission of the application; and
(f) other information required by the commissioner.
Sec. 36. Minnesota Statutes 1998, section 58.08, subdivision
1, is amended to read:
Subdivision 1. [REQUIREMENT OF RESIDENTIAL MORTGAGE ORIGINATORS.]
A residential mortgage originator licensee engaging in servicing
a residential mortgage loan shall continuously maintain a surety
bond or irrevocable letter of credit in an amount not less than
$50,000 in a form approved by the commissioner, issued by an
insurance company or bank authorized to do so in this state.
The bond must be available for the recovery of expenses, fines,
and fees levied by the commissioner under this chapter relating
to servicing, and for losses or damages incurred by borrowers
as the result of a licensee's servicing-related noncompliance
with the requirements of this chapter, sections 325D.43 to 325D.48,
and 325F.67 to 325F.69, or breach of contract.
The bond or irrevocable letter of credit must be submitted with
the originator's license application, and evidence of continued
coverage must be submitted with each renewal. Any change in the
bond or letter of credit must be submitted for approval by the
commissioner, within ten days of its execution.
Sec. 37. Minnesota Statutes 1998, section 59A.03, subdivision
2, is amended to read:
Subd. 2. The applicant at the time of making application, shall
pay to the commissioner the sum of $250 as a fee for investigating
the application, and the additional sum of $100 $200 as an annual
licensee fee for a period terminating on May 31 of each year.
In addition to the annual license fee, every licensee shall pay
to the commissioner the actual costs of each examination as may
be required to be conducted under the terms of sections 59A.01
to 59A.15.
Sec. 38. Minnesota Statutes 1998, section 60K.11, subdivision
1, is amended to read:
Subdivision 1. [GROUNDS.] The commissioner may by order take
any or all of the following actions:
(1) deny, suspend, or revoke an insurance agent or agency license;
(2) censure the licensee; or
3) impose a civil penalty as provided for in section 45.027,
subdivision 6.
In order to take this action the commissioner must find that
the order is in the public interest and that the applicant,;
licensee,; or in the case of an insurance agency, partner, director,
shareholder, officer, or agent of that insurance agency:
(i) does not intend to or is not in good faith carrying on the
business of an insurance agent;
(ii) has filed an application for a license which is incomplete
in any material respect or contains any statement which, in light
of the circumstances under which it is made, contains any misrepresentation,
or is false, misleading, or fraudulent;
(iii) has engaged in an act or practice, whether or not such
act or practice involves the business of insurance, which demonstrates
that the applicant or licensee is untrustworthy, financially
irresponsible, or otherwise incompetent or unqualified to act
as an insurance agent or agency;
(iv) has pled guilty, with or without explicitly admitting guilt,
pled nolo contendere, or been convicted of a felony, gross misdemeanor,
or misdemeanor involving moral turpitude, including, but not
limited to, assault or similar conduct;
(v) has violated or failed to comply with any of the provisions
of the insurance laws including chapter 45 or chapters 60A to
72A or any rule or order under those chapters;
(vi) is permanently or temporarily enjoined by any court of competent
jurisdiction from engaging in or continuing any conduct or practice
involving any aspect of the insurance business;
(vii) has violated or failed to comply with any order of the
insurance regulator of any other state or jurisdiction;
(viii) has had an insurance agent or agency license denied, suspended,
or revoked, has been censured or reprimanded, has been the subject
of any other discipline imposed by, or has paid or has been required
to pay a monetary penalty or fine to, another state or jurisdiction;
(ix) has misrepresented the terms of any actual or proposed insurance
contract;
(x) has engaged in any fraudulent, coercive, deceptive, or dishonest
act or practice whether or not such act or practice involves
the business of insurance;
(xi) has improperly withheld, misappropriated, or converted to
the licensee's or applicant's own use any money belonging to
a policyholder, insurer, beneficiary, or other person; or
(xii) has forged another's name to any document whether or not
the document relates to an application for insurance or a policy
of insurance; or
(xiii) has, while performing residential mortgage activity regulated
under chapter 58, violated any notification, disclosure, or recordkeeping
requirement, or any standard of conduct, imposed by chapter 58.