How To Get A Mortgage In Arizona

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1 4 HOUR SAFE FLORIDA: LICENSING EDUCATION & EXAM PREP COURSE FLORIDA STATE COMPONENT (F.S. 494) FLORIDA MORTGAGE BROKER SCHOOL D/B/A JIM MONTRYM S NATIONAL MORTGAGE LOAN ORIGINATOR SCHOOL TAMPA, FL NMLS PROVIDER ID:

2 Florida Mortgage Broker School D/B/A Jim Montrym s National Mortgage Loan Originator School P.O. Box Tampa, FL Toll Free 800/ Fax 813/ Web Site: [email protected] Owner/Instructor: Jim Montrym Cell Number: 813/ TABLE OF CONTENTS Florida Specific Calculations... 1 Commissions... 1 State Transfer Taxes... 2 Florida License Categories... 3 Practice Grids (blank) for License Categories... 4 Florida Statute 494 Key Changes in Florida Statute 494 Mortgage Lending Act... 9 Chapter 69V-40 Mortgage Brokerage Rules Florida OFR Mission Statement Florida Specific Origination Information ***Information within this course manual is direct from 2010 Florida Statute 494, 69V-40, and other various Florida laws 2010 Florida Mortgage Broker School d/b/a Jim Montrym s National Mortgage Loan Originator School

3 MAXIMUM MORTGAGE BROKERAGE COMMISSIONS (FEES) A NET LOAN IS THE AMOUNT OF THE LOAN AFTER THE COSTS HAVE BEEN DEDUCTED A GROSS LOAN IS THE AMOUNT OF THE LOAN BEFORE THE COSTS HAVE BEEN DEDUCTED UP TO $1, UP TO $1, $ $ $1, TO $2,000.00* $1, TO $5, $ ON THE FIRST $1, ADD $1, TO THE AMOUNT PLUS $10.00 FOR EACH LOAN AND DIVIDE BY 11 ADDITIONAL WHOLE $ OF THE LOAN AMOUNT $2, TO $5, $5, TO $5, $ ON THE FIRST $2, THE MAXIMUM COMMISSION IS PLUS $10.00 FOR EACH THE AMOUNT OVER $5, ADDITIONAL WHOLE $ Sample Problem: OF THE LOAN AMOUNT $5,725 - $5,000 = $725 max commission OVER $5, OVER $5, $ PLUS 10% OF THE DIVIDE THE AMOUNT OF THE LOAN AMOUNT OF THE LOAN BY 11 AND ADD $ Q: On a $100,000 loan amount what is the formula used to calculate maximum mortgage brokerage commission? a. $ on the first $1, plus $10.00 for each additional whole $ of the loan amount b. $2, to $5, $ on the first $2, plus $10.00 for each additional whole $ of the loan amount c. $ plus 10% of the amount of the loan d. Add $1, to the amount loan and divide by 11 Rev 2/24/ All Rights Reserved by FMBS

4 STATE TRANSFER TAXES TAX BASED ON TAX RATE EXAMPLES DOC STAMPS ON SALES PRICE SALES PRICE X.007 SALES PRICE = THE DEED (JAMES BOND) $80, (NORMALLY PAID BY SELLER) DOC STAMPS ON MORTGAGE (AKA NOTE OR SECURITY INSTRUMENT) (NORMALLY PAID BY BUYER) INTANGIBLE TAX (NORMALLY PAID BY BUYER) NEW MORTGAGE AMOUNT NEW MORTGAGES AMOUNT THE NEW MORTGAGE AMOUNT X.0035 (1/2 OF.007) THE NEW MORTGAGE AMOUNT X.002 $80, X.007 = $ NEW MORTGAGE = $50, $50, X.0035 = $ NEW MORTGAGE = $50, ASSUMED MORTGAGE = $10, $50, X.002 = $ INTANGIBLE (USE NEW MORTGAGE AMOUNT ONLY) Documentary stamps must be paid before the instrument is recorded. The intangible tax is based on the face value of the note. Correct chronology: Closing, Doc Stamps, Recording (at the closing the money is distributed to the appropriate parties. Some of the money is used to purchase doc stamps and then the documents are recorded). HINT: It s alphabetical: CDR Rev 2/24/ All Rights Reserved by FMBS

5 FLORIDA MORTGAGE BROKER SCHOOL FOUR LICENSE CATEGORIES UNDER THE MORTGAGE BROKERAGE AND MORTGAGE LENDING ACT MORTGAGE LOAN ORIGINATOR (MLO) (EFFECTIVE OCTOBER 1, 2010) MORTGAGE BROKER MORTGAGE LENDER (Not Servicing) MORTGAGE LENDER (Servicing) LICENSE FEE $ $ $ $ NET WORTH REQUIREMENT NONE NONE $63,000 ends 9/30/11 $250,000 $125,000 begins 10/1/11 $250,000 after 10/1/12 GUARANTY FUND $20 $100 $100 $100 PERMITTED TO Originate/ Broker Mortgages Make Loans BUT Make loans & Arrange Mortgage Service Loans Loans Thru Mortgage Broker or Lender May NOT Service beyond 4 months Must File Servicing RENEWAL PERIOD RENEWAL FEES December 31 Annually December 31 Annually December 31 Annually Endorsement December 31 Annually $ $ $ $ RENEWAL FEES (BRANCH) MISC. N/A Must Provide ~Electronic Fingerprints ~Credit Report ~Background Check Must Designate Branch Manager $225 Must Have a Principal Mortgage Loan Originator Must Designate Branch Manager $225 Must Have a Principal Mortgage Loan Originator Must Designate Branch Manager $225 Must Have a Principal Mortgage Loan Originator OTHER ~20 Hours Pre- Licensing Education ~8 Hours Continuing Education Annually Must Hold MLO Must Provide License For 1 Year Or Electronic Fingerprints Show 1 Year Prior -Credit Reports Experience Must Provide Electronic Fingerprints -Credit Reports OTHER Contract Processors May Process For Multiple Broker/Lender. Must Designate As A Processor. May Not Originate N/A ~Control Person (10% Ownership) Must File Fingerprints ~Must File Servicing Endorsement ~Control Person (10% Ownership) Must File Fingerprints 1. Establishing Guarantee Fund: Max $5 million/minimum $1 million 2. Contract Processors may be affiliated with multiple mortgage companies BUT must file Declaration of Intent to Solely Engage in Loan Processing Q: What is the net worth requirement for a non-servicing lender? A: $ Q: What is the required renewal fee for a MLO license? A: $150 Rev 2/24/ All Rights Reserved by FMBS

6 FLORIDA MORTGAGE BROKER SCHOOL FOUR LICENSE CATEGORIES UNDER THE MORTGAGE BROKERAGE AND MORTGAGE LENDING ACT MORTGAGE LOAN ORIGINATOR (MLO) (EFFECTIVE OCTOBER 1, 2010) MORTGAGE BROKER MORTGAGE LENDER (Not Servicing) MORTGAGE LENDER (Servicing) LICENSE FEE NET WORTH REQUIREMENT GUARANTY FUND PERMITTED TO RENEWAL PERIOD RENEWAL FEES RENEWAL FEES (BRANCH) MISC. OTHER OTHER 1. Establishing Guarantee Fund: Max $5 million/minimum $1 million 2. Contract Processors may be affiliated with multiple mortgage companies BUT must file Declaration of Intent to Solely Engage in Loan Processing Rev 2/24/ All Rights Reserved by FMBS

7 FLORIDA MORTGAGE BROKER SCHOOL FOUR LICENSE CATEGORIES UNDER THE MORTGAGE BROKERAGE AND MORTGAGE LENDING ACT MORTGAGE LOAN ORIGINATOR (MLO) (EFFECTIVE OCTOBER 1, 2010) MORTGAGE BROKER MORTGAGE LENDER (Not Servicing) MORTGAGE LENDER (Servicing) LICENSE FEE NET WORTH REQUIREMENT GUARANTY FUND PERMITTED TO RENEWAL PERIOD RENEWAL FEES RENEWAL FEES (BRANCH) MISC. OTHER OTHER 1. Establishing Guarantee Fund: Max $5 million/minimum $1 million 2. Contract Processors may be affiliated with multiple mortgage companies BUT must file Declaration of Intent to Solely Engage in Loan Processing Rev 2/24/ All Rights Reserved by FMBS

8 KEY CHANGES TO F.S Branch Manager: Run branch offices Mortgage Broker or Mortgage Lender branch offices. 2. Principal Loan Originator: Run main office of Mortgage Broker or Mortgage Lender. 3. Material Change: Fees change by $ Revised GFE, TIL, Broker Agreement 3 days prior to closing. 4. CSBS: Conference of State Bank Supervisors 5. AARMR: American Association of Residential Mortgage Regulators 6. NMLS: National Mortgage Licensing System 7. Guarantee Fund: a. $20 annually for Mortgage Loan Originators b. $100 annually for Mortgage Broker and/or Mortgage Lender 8. Maximum Fund $5 million and Minimum Fund $1 million 9. Maximum Pay Out: a. $50,000 per claimant b. $250,000 total claims 10. Conflicting Interest: 1% or more ownership of 3 rd party Service Provider. 11. Bankruptcy Notification: 30 Days. 12. Loan Modification: a. Disclose total fees to be charged must be given to client 1 business day before they sign. b. May not collect any fee until services have been provided. c. Must provide modification agreement within 3 hours of client signing the agreement. d. Client may cancel with no penalty for 3 business days after signing the agreement. e. Client must be fully refunded within 10 business days after cancellation. 13. Credit Score cannot disqualify a mortgage loan originator. 14. Mortgage Loan Originator Employment: MLO may only work for 1 Mortgage Broker or Mortgage Lender. Rev 2/24/ All Rights Reserved by FMBS

9 15. Loan Processors: a. Must be licensed as a MLO b. May process for multiple Mortgage Broker and/or Mortgage Lenders, but must sign Declaration of Intent to Process ONLY. 16. Mortgage Broker Agreement: a. Signed by Principal MLO or Branch Manager and the borrower. b. Must have MLO Unique Identifier Number on the agreement. c. Must be provided within 3 business days of application. d. Must re-disclose if any material changes occur (i.e. $ or greater) within 3 business days of knowledge of the change BUT no less than 3 business days prior to closing. e. Re-disclosure NOT required if no changes from the original mortgage broker agreement. f. Re-disclosure of changes may be waived if imminent foreclosure. 17. Correspondent Lender License Eliminated (NOW Non-Serving Lender) a. Net worth requirement $63,000 until September 30, b. Net worth requirement $125,000 from October 1, 2011 to September 30, c. Net worth requirement $250,000 from October 1, 2012 forward. 18. Servicing endorsement required for lenders who intend to service loans more than 4 months Uniform forms: Uniform Mortgage Lender/Mortgage Broker Form, MU Uniform Mortgage Biographical Statement & Consent Form, MU2 (Partners, stockholders, ultimate equitable owners, control persons) Uniform Mortgage Branch Office Form, MU Uniform Individual Mortgage License/Registration & Consent Form, MU4 Rev 2/24/ All Rights Reserved by FMBS

10 PART 1 GENERAL PROVISIONS: FLORIDA STATUTE CHAPTER Definitions Powers and duties of the commission and office Investigations; complaints; examinations Confidentiality of information relating to investigations and examinations Injunction to restrain violations Cease and desist orders; administrative fines; refund orders Evidence; examiner's worksheets, investigative reports, other related documents Books, accounts, and records; maintenance; examinations by the office Prohibited advertising; record requirements Regulatory Trust Fund Penalties Liability in case of unlawful transaction Statutory or common-law remedies Pubic records Applicability of act Conflicting interest Waiver Prohibited practices Disposition of insurance proceeds Arbitration Mortgage business schools Professional continuing education. Rev 2/24/ All Rights Reserved by FMBS

11 Definitions As used in ss , the term: (1) [Effective 10/1/10] "Borrower" means a person obligated to repay a mortgage loan and includes. But is not limited to a co-borrower, cosigner, or guarantor. (2) [Effective 10/1/10, see (6) & (31) for old def.] "Branch manager" means the licensed loan originator in charge of, and responsible for, the operation of the branch office of a mortgage broker or mortgage lender. **Requires License, does NOT require 1 year experience** (3) [Effective 1/1/10] "Act as a mortgage broker" means, for compensation or gain, or in the expectation of compensation or gain, directly or indirectly, accepting or offering to accept an application for a mortgage loan, soliciting or offering to solicit a mortgage loan on behalf of a borrower, negotiating or offering to negotiate the terms or conditions of a new or existing mortgage loan on behalf of a borrower or lender, or negotiating or offering to negotiate the Sale of an existing mortgage loan to a noninstitutional investor. An employee whose activities are ministerial and clerical, which may include quoting available interest rates or loan terms and conditions, is not acting as a mortgage broker. Q: What is not considered compensation per FS 494? a. Origination Fee c. Bonus b. Referral Fees and Application Fees d. Salary & Commission (3) [Effective 10/1/10, see (71for old def.] "Branch office" means a location, other than a mortgage brokers or mortgage lender s principal place of business: (a) The address of which appears on business cards, stationery, or advertising used by the licensee in connection with business conducted under this chapter; (b) At which the licensee's name, advertising or promotional materials, or signage suggests that mortgage loans are originated, negotiated, funded, or serviced; or (c) At which mortgage loans are originated, negotiated, funded, or serviced by a licensee. Q: If a MLO has his home address on his business card how must he be licensed? A: Branch Office (4) [Effective 10/1/10, see (8) for old def.] "Commission" means the Financial Services Commission. Rev 2/24/ All Rights Reserved by FMBS

12 (5) [Effective 10/1/10, see (9) for old def.] "Control person" means an individual, partnership, corporation, trust, or other organization that possesses the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. The term includes, but is not limited to: (a) A company's executive officers, including the president, chief executive officer, chief financial officer, chief operations officer, chief legal officer, chief compliance officer, director, and other individuals having similar status or functions. (b) For a corporation, each shareholder that, directly or indirectly, owns 10 percent or more or that has the power to vote 10 percent or more, of a class of voting securities unless the applicant is a publicly traded company. (c) For a partnership, all general partners and limited or special partners that have contributed 10 percent or more or that have the right to receive, upon dissolution, 10 percent or more of the partnership's capital. (d) For a trust, each trustee. (e) For a limited liability company, all elected managers and those members that have contributed 10 percent or more or that have the right to receive, upon dissolution, 10 percent or more of the partnership's capital. (f) Principal loan originators. (6) [Effective 10/1/10] "Credit report" means any written, oral, or other information obtained from a consumer reporting agency as described in the federal Fair Credit Reporting Act, which bears on an individual's credit worthiness, credit standing, or credit capacity. A credit score alone, as calculated by the reporting agency, is not considered a credit report. (7) [Effective 10/1/10] "credit score" means a score, grade, or value that is derived by using data from a credit report in any type of model, method, or program, whether electronically, in an algorithm, in a computer software or program, or by any other process for the purpose of grading or ranking credit report data. (8) [Effective 10/1/10] "Depository institution" has the same meaning as in s. (3) (c) of the Federal Deposit Insurance Act, and includes any credit union. (9) [Effective 10/1/10] "Financial audit report" means a report prepared in connection with a financial audit that is conducted in accordance with generally accepted auditing standards prescribed by the American Institute of Certified Pubic Accountants by a certified public accountant licensed to do business in the United States, and which must include: (a) Financial statements, including notes related to the financial statements and required supplementary information, prepared in conformity with United States generally accepted accounting principles. (b) An expression of opinion regarding whether the financial statements are presented in conformity with United States generally accepted accounting principles, or an assertion to the effect that such an opinion cannot be expressed and the reasons. Rev 2/24/ All Rights Reserved by FMBS

13 (10) [Effective 10/1/10, see (14) for old def.] "Institutional investor" means a depository institution, real estate investment trust, insurance company, real estate company, accredited investor as defined in 17 C.F.R. ss et seq., mortgage broker or mortgage lender licensed under this chapter, or other business entity that invests in mortgage loans, including a secondary mortgage market institution including, without limitation, the Federal National Mortgage Association, the Federal Home Loan mortgage corporation, and the Government National Mortgage Association, conduits, investment bankers, and any subsidiary of such entities. (11) [Effective 10/1/10, see (15) for old def.] "Loan commitment or "commitment" means a statement by the lender setting forth the terms and conditions upon which the lender is witting to make a particular mortgage loan to a particular borrower. (12) [Effective 10/1/10] "Loan modification" means a modification to an existing loan. The term does not include a refinancing transaction. (13) [Effective 10/1/10, see (18) (33) for old def.] "Loan origination fee" means the total compensation from any source received by a mortgage broker acting as a loan originator. Any payment for processing mortgage loan applications must be included in the fee and must be paid to the mortgage broker. ***Processing fees cannot be separate*** (14) [Effective 10/1/10, see (2) for old def.] "Loan originator" means an individual who, directly or indirectly, solicits or offers to solicit a mortgage loan, accepts or offers to accept an application for a mortgage loan, negotiates or offers to negotiate the terms or conditions of a new or existing mortgage loan on behalf of a borrower or lender, processes a mortgage loan application, or negotiates or offers to negotiate the sale of an existing mortgage loan to a noninstitutional investor for compensation or gain. The term includes the activities of a loan originator as that term is defined in the S.A.F.E. Mortgage Licensing Act of 2008, and an individual acting as a loan originator pursuant to that definition is acting as a loan originator for purposes of this definition. The term does not include an employee of a mortgage broker or mortgage lender who performs only administrative or clerical tasks, including quoting available interest rates, physically handling a completed application form, or transmitting a completed form to a lender on behalf of a prospective borrower. Q: The MLO who originates the loan a. May attend closing c. Never attends closing b. Must attend unless borrower s attorney is present d. Must attend closing (15) [Effective 10/1/10, see (16) for old def.] "Lock-in agreement" means an agreement whereby the lender guarantees for a specified number of days or until a specified date the availability of a specified rate of interest or specified formula by which the rate of interest with be determined or specific number of discount points with be given, if the loan is approved and closed within the stated period of time. Rev 2/24/ All Rights Reserved by FMBS

14 (16) [Effective 10/1/10, see (17) for old def.] "Making a mortgage loan means closing a mortgage loan in a person's name, advancing funds, offering to advance funds, or making a commitment to advance funds to an applicant for a mortgage loan. (17) [Effective 10/1/10] "Material change" means a change that would be important to a reasonable borrower in making a borrowing decision, and includes a change in the interest rate previously offered a borrower, a change in the type of loan offered to a borrower, or a change in fees to be charged to a borrower resulting in total fees greater than $100. (18) [Effective 10/1/10, see (19) for old def.] "Mortgage broker" means a person conducting loan originator activities through one or more licensed loan originators employed by the mortgage broker or as independent contractors to the mortgage broker. (19) [Effective 10/1/10] "Mortgage lender" means a person making a mortgage loan or servicing a mortgage loan for others, or, for compensation or gain, directly or indirectly, selling or offering to sell a mortgage loan to a noninstitutional investor. Q: Which of the following can make a loan and sell it to a non-institutional investor per FS 494? a. Mortgage Broker c. Non-servicing Lender b. Credit Union d. Full Lender (20) [Effective 10/1/10] "Mortgage loan" means any: (a) Residential loan primarily for personal, family, or household use which is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling, as defined in s. 103(v) of the federal Truth in Lending Act, or for the purchase of residential real estate upon which a dwelling is to be constructed; (b) Loan on commercial real property if the borrower is an individual or the lender is a noninstitutional investor; or (c) Loan on improved real property consisting of five or more dwelling units if the borrower is an individual or the lender is a noninstitutional investor. Q: Which of the following is not a residential mortgage loan? a. A commercial loan made by a depository institution c. 1-4 unit property b. Purchase of a single family investment property d. Reverse Mortgage Rev 2/24/ All Rights Reserved by FMBS

15 (21) [Effective 10/1/10, see (32) for old def.] "Mortgage loan application" means the submission of a borrower's financial information in anticipation of a credit decision, which includes the borrower's name, the borrower's monthly income, the borrower's social security number to obtain a credit report, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any other information deemed necessary by the loan originator. An application may be in writing or electronically submitted, including a written record of an oral application. (22) [Effective 10/1/10, see (21) for old def.] "Net worth" means total assets minus total liabilities pursuant to United States generally accepted accounting principles. (23) [Effective 10/1/10, see (22) for old def.] "Noninstitutional investor" means an investor other than an institutional investor. (24) [Effective 10/1/10, see (10) for old def.] "Office" means the Office of Financial Regulation. (25) [Effective 10/1/10, see (24) for old def.] "Person" has the same meaning as in s (26) [Effective 10/1/10, see (25) for old def.] "Principal loan originator" means the licensed loan originator in charge of, and responsible for, the operation of a mortgage lender or mortgage broker, including all of the activities of the mortgage lender's or mortgage broker's loan originators and branch managers, whether employees or independent contractors. (27) [Effective 10/1/10, see (26) for old def.] "Principal place of business" means a mortgage broker's or mortgage lender's primary business office, the street address, or physical location that is designated on the application for licensure or any amendment to such application. (28) [Effective 10/1/10] "Registered loan originator" means a loan originator who is employed by a depository institution, by a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or by an institution regulated by the Farm Credit Administration, and who is registered with and maintains a unique identifier through the registry. (MLO s who work for FDIC insured banks) (29) [Effective 10/1/10] "Registry" means the Nationwide Mortgage Licensing System and Registry (NMLS), which is the mortgage licensing system developed and maintained by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) for the licensing and registration of loan originators. Rev 2/24/ All Rights Reserved by FMBS

16 (30) [Effective 10/1/10] "Relative" means any of the following, whether by the full or half blood or by adoption: (a) A person's spouse, father, mother, children, brothers, and sisters. (b) The father, mother, brothers, and sisters of the person's spouse. (c) The spouses of the person's children, brothers, or sisters. (According to the above, a cousin is not considered a relative.) (31) [Effective 10/1/10] "Servicing Endorsement" means authorizing a mortgage lender to service a loan for more than 4 months. Q: A lender who files a servicing endorsement must have NET worth of how much? A: $250,000 (32) [Effective 10/1/10, see (28) for old def.] "Servicing a Mortgage Loan" means to receive, cause to be received, or transferred for another, installment payments of principal, interest, or other payments pursuant to a mortgage loan.. NOTE: 1. Service a Loan = Principal, Interest, Taxes, & Insurance 2. Debt Service = Principal & Interest ONLY Rev 2/24/ All Rights Reserved by FMBS

17 (33) [Effective 10/1/10, see (29) for old def.] "Substantial Fault of the Borrower" means that the borrower: (a) Failed to provide information or documentation required by the lender or broker in a timely manner; (b) Provided information, in the application or subsequently, which upon verification proved to be significantly inaccurate, causing the need for review or further investigation by the lender or broker; (c) Failed to produce by the date specified by the lender all documentation specified in the commitment or closing instructions as being required for closing; or (d) Failed to be ready, willing, or able to close the loan by the date specified by the lender or broker. For purposes of this definition, a borrower is considered to have provided information or documentation in a timely manner if such information and documentation was received by the lender within 7 days after the borrower received a request for same, and information is considered significantly inaccurate if the correct information materially affects the eligibility of the borrower for the loan for which application is made. Q: What is a reasonable amount of time for a borrower to respond? A: 7 Days (34) [Effective 10/1/10, see (30) for old def.] "Ultimate equitable owner" means an individual who, directly or indirectly, owns or controls an ownership interest in a corporation, a foreign corporation, an alien business organization, or any other form of business organization, regardless of whether the individual owns or controls such interest through one or more individuals or one or more proxies, powers of attorney, nominees, corporations, associations, partnerships, trusts, joint stock companies, or other entities or devices, or any combination thereof. NOTE: Ultimate Equitable Owner = 10% or greater ownership Business Day Monday through Saturday NOT a Business Day Sunday and Federal Holidays Rev 4/20/ All Rights Reserved by FMBS

18 [Effective 10/1/10] Powers and duties of the commission and office Government Constitution Statutes Rules The People Legislature Office of Financial Regulation (1) The office shall be responsible for the administration and enforcement of ss Q: Who writes the Rules for FS 494? A: Commissioner of the Office of Financial Regulation (2) To administer ss , the commission may adopt rules: (a) Requiring electronic submission of any forms, documents, or fees required by this act. (b) Relating to compliance with the S.A.F.E. Mortgage Licensing Act of 2008, including rules to: 1. Require loan originators, mortgage brokers, mortgage lenders, and branch offices to register through the registry (NMLS). 2. Require the use of uniform forms that have been approved by the registry and any subsequent amendments to such forms if the forms are substantially in compliance with the provisions of this chapter. Uniform forms that the commission may adopt include, but are not limited to: a. Uniform Mortgage Lender/Mortgage Broker Form, MU1. (BUSINESS) b. Uniform Mortgage Biographical Statement & Consent Form, MU2. (Partners, stockholders, ultimate equitable owners, control persons) (OWNERS OF THE BUSINESS) c. Uniform Mortgage Branch Office Form, MU3. (BRANCH) d. Uniform Individual Mortgage License/Registration & Consent Form, MU4. (MLO - YOU) 3. Require the filing of forms, documents, and fees in accordance with the requirements of the registry. 4. Prescribe requirements for amending or surrendering a license or other activities as the commission deems necessary for the office's participation in the registry. 5. Prescribe procedures that allow a licensee to challenge information contained in the registry. 6. Prescribe procedures for reporting violations of this chapter and disciplinary actions on licensees to the registry. Rev 2/24/ All Rights Reserved by FMBS

19 (c) Establishing time periods during which a loan originator, mortgage broker, or mortgage lender license applicant under part ll or part lll is barred from licensure due to prior criminal convictions of, or guilty or nolo contendre pleas by, any of the applicant s control persons, regardless of adjudication. 1. The rules must provide: a. Permanent bars for felonies involving fraud, dishonesty, breach of trust, or money laundering; b. A 15-year disqualifying period for felonies involving moral turpitude; c. A 7-year disqualifying period for all other felonies; and d. A 5-year disqualifying period for misdemeanors involving fraud, dishonesty, or any other act of moral turpitude. 2. The rules may provide for an additional waiting period due to dates of imprisonment or community supervision, the commitment of multiple crimes, and other factors reasonably related to the applicant s criminal history. 3. The rules may provide for mitigating factors for crimes identified in sub subparagraph 1.b. However, the mitigation may not result in a period of disqualification less than 7 years. The rule may not mitigate the disqualifying periods in sub subparagraphs 1.b., 1.c., and 1.d. 4. An applicant is not eligible for licensure until the expiration of the disqualifying period set by rule. 5. Section is not applicable to eligibility for licensure under this part. (3) Except as provided in s , all fees, charges, and fines collected pursuant to ss shall be deposited in the Regulatory Trust Fund of the office. (4) The office shall participate in the registry and shall regularly report to the registry violations of this chapter, disciplinary actions, and other information deemed relevant by the office under this chapter. Rev 2/24/ All Rights Reserved by FMBS

20 [Effective 1/1/10] Exemptions (1) The following are exempt from regulation under parts l, ll, and lll of this chapter. (a) Any person operating exclusively as a registered loan originator in accordance with the S.A.F.E. Mortgage Licensing Act of (Employees of FDIC Insured Banks) (b) A depository institution; subsidiaries that are owned and controlled by a depository institution and regulated by the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration, or the Federal Deposit lnsurance Corporation; or institutions regulated by the Farm Credit Administration. (c) The Federal National Mortgage Association; the Federal Home Loan Mortgage Corporation; any agency of the Federal Government; any state, county, or municipal government; or any quasi-governmental agency that acts in such capacity under the specific authority of the laws of any state or the United States. (d) An attorney licensed in this state who negotiates the terms of a mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client. (Only in the scope of his/her practice at law) (e) A person involved solely in the extension of credit relating to the purchase of a timeshare plan, as that term is defined in 11 U.S.C. s. 101(53D) *(1)(a)(b)(c)(d)(e) Are ALL EXEMPT from both Law & Licensure (2) The following persons are exempt from regulation under part lll (LENDER Part of the LAW) of this chapter: (a) A person acting in a fiduciary capacity conferred by the authority of a court. (b) A person who, as a seller of his or her own real property, receives one or more mortgages in a purchase money transaction. (c) A person who acts solely under contract and as an agent for federal, state, or municipal agencies for the purpose of servicing mortgage loans. (d) A person who makes only nonresidential mortgage loans and sells loans only to institutional investors. Rev 2/24/ All Rights Reserved by FMBS

21 (e) An individual making or acquiring a mortgage loan using his or her own funds for his or her own investment, and who does not hold himself or herself out to the public as being in the mortgage lending business. (I.e. Seller HOLDING the mortgage on the property he selling PRIVATE MORTGAGE) (f) An individual selling a mortgage that was made or purchased with that individual s funds for his or her own investment, and who does not hold himself or herself out to the public as being in the mortgage lending business. *(2)(a)(b)(c)(d)(e)(f) Are ALL EXEMPT from the Lender part of the Law (3) It is not necessary to negate any of the exemptions provided in this section in any complaint, information, indictment, or other writ or proceeding brought under ss ' The burden of establishing the right to an exemption is on the party claiming the benefit of the exemption. Q: Which of the following is exempt from licensure? a. Loan officers of Credit Unions b. Attorney in scope of practice c. Court Appointed Persons d. All of the above A: D all of the above Investigations; complaints; examinations (1) The office may conduct an investigation of any person whenever the office has reason to believe, either upon complaint or otherwise, that any violation of ss has been committed or is about to be committed. (2) Any person having reason to believe that a provision of this act has been violated may file a written complaint with the office setting forth details of the alleged violation. Rev 2/24/ All Rights Reserved by FMBS

22 (3) (a) The office may, at intermittent periods, conduct examinations of any licensee or other person under the provisions of ss TT. (b) The office shall conduct all examinations at a convenient location in this state unless the office determines that it is more effective or cost-efficient to perform an examination at the licensee's out-of-state location. For an examination performed at the licensee's out-of-state location, the licensee shall pay the travel expense and per diem subsistence at the rate provided by law for up to thirty 8-hour days per year for each office examiner who participates in such an examination. However, if the examination involves or reveals fraudulent conduct by the licensee, the licensee shall pay the travel expense and per diem subsistence provided by law, without limitation, for each participating examiner. ~Audit IN STATE no charge. ~Audit OUT OF STATE Mortgage Broker/Lender PAYS Confidentiality of information relating to investigations and examinations (1) (a) Except as otherwise provided by this section, information relative to an investigation or examination by the office pursuant to this chapter, including any consumer complaint received by the office or the Department of Financial Services, is confidential and exempt from s (1) until the investigation or examination is completed or ceases to be active. The information compiled by the office in such an investigation or examination shall remain confidential and exempt from s (1) after the office's investigation or examination is completed or ceases to be active if the office submits the information to any law enforcement or administrative agency for further investigation. Such information shall remain confidential and exempt from s (1) until that agency's investigation is completed or ceases to be active. For purposes of this section, an investigation or examination shall be considered "active" so long as the office or any law enforcement or administrative agency is proceeding with reasonable dispatch and has a reasonable good faith belief that the investigation or examination may lead to the filing of an administrative, civil, or criminal proceeding or to the denial or conditional grant of a license. This section shall not be construed to prohibit disclosure of information which is required by law to be filed with the office and which, but for the investigation or examination, would be subject to s (1). Rev 2/24/ All Rights Reserved by FMBS

23 (b) Except as necessary for the office to enforce the provisions of this chapter, a consumer complaint and other information relative to an investigation or examination shall remain confidential and exempt from s (1) after the investigation or examination is completed or ceases to be active to the extent disclosure would: 1. Jeopardize the integrity of another active investigation or examination. 2. Reveal the name, address, telephone number, social security number, or any other identifying number or information of any complainant, customer, or account holder. 3. Disclose the identity of a confidential source. 4. Disclose investigative techniques or procedures. 5. Reveal a trade secret as defined in s (c) In the event that office personnel are or have been involved in an investigation or examination of such nature as to endanger their lives or physical safety or that of their families, then the home addresses, telephone numbers, places of employment, and photographs of such personnel, together with the home addresses, telephone numbers, photographs, and places of employment of spouses and children of such personnel and the names and locations of schools and day care facilities attended by the children of such personnel are confidential and exempt from s (1). (d) Nothing in this section shall be construed to prohibit the office from providing information to any law enforcement or administrative agency. Any law enforcement or administrative agency receiving confidential information in connection with its official duties shall maintain the confidentiality of the information so long as it would otherwise be confidential. (e) All information obtained by the office from any person which is only made available to the office on a confidential or similarly restricted basis shall be confidential and exempt from s (1). This exemption shall not be construed to prohibit disclosure of information which is required by law to be filed with the office or which is otherwise subject to s (1). (2) lf information subject to subsection (1) is offered in evidence in any administrative, civil, or criminal proceeding, the presiding officer may, in her or his discretion, prevent the disclosure of information which would be confidential pursuant to paragraph (1)(b). (3) A privilege against civil liability is granted to a person who furnishes information or evidence to the office, unless such person acts in bad faith or with malice in providing such information or evidence Injunction to restrain violations (1) The office may bring action through its own counsel in the name and on behalf of the state against any person who has violated or is about to violate any provision of ss or any rule of the commission or order of the office issued under ss to enjoin the person from continuing in or engaging in any act in furtherance of the violation. Rev 2/24/ All Rights Reserved by FMBS

24 (2) In any injunctive proceeding, the court may, on due showing by the office, issue a subpoena or subpoena duces tecum requiring the attendance of any witness and requiring the production of any books, accounts, records, or other documents and materials that appear necessary to the expeditious resolution of the application for injunction. (3) ln addition to all other means provided by law for the enforcement of any temporary restraining order, temporary injunction, or permanent injunction issued in any such court proceeding, the court has the power and jurisdiction, upon application of the office, to impound, and to appoint a receiver or administrator for, the property, assets, and business of the defendant, including, but not limited to, the books, records, documents, and papers appertaining thereto. Such receiver or administrator, when appointed and qualified, has all powers and duties as to custody, collection, administration, winding up, and liquidation of the property and business as are from time to time conferred upon him or her by the court. In any such action, the court may issue an order staying all pending suits and enjoining any further suits affecting the receiver's or administrator's custody or possession of the property, assets, and business, or the court, in its discretion and with the consent of the chief judge of the circuit, may require that all such suits be assigned to the circuit court judge who appoints the receiver or administrator [Effective 10/1/10] Subpoenas The Office MAY Subpoena BOTH licensed and Unlicensed individuals (1) The office may: (a) lssue and serve subpoenas and subpoenas duces tecum to compel the attendance of witnesses and the production of all books, accounts, records, and other documents and materials relevant to an examination or investigation conducted by the office. The office, or its authorized representative, may administer oaths and affirmations to any person. Subpoena = Show up Subpoena duces tecum = Bring in requested books and records (b) Seek subpoenas or subpoenas duces tecum from any court to command the appearance of witnesses and the production of books, accounts, records, and other documents or materials at a time and place named in the subpoenas, and an authorized representative of the office may serve such subpoena. Rev 2/24/ All Rights Reserved by FMBS

25 (2) lf there is substantial noncompliance with a subpoena or subpoena duces tecum issued by the office, the office may petition the court in the county where the person subpoenaed resides or has his or her principal place of business for an order requiring the person to appear, testify, or produce such books, accounts, records, and other documents as are specified in the subpoena or subpoena duces tecum. (a) The court may grant injunctive relief restraining the person from advertising, promoting, soliciting, entering into, offering to enter into, continuing, or completing a mortgage loan or servicing a mortgage loan. (b) The court may grant such other relief, including, but not limited to, the restraint, by injunction or appointment of a receiver, of any transfer, pledge, assignment, or other disposition of the person's assets or any concealment, alteration, destruction, or other disposition of books, accounts, records, or other documents and materials as the court deems appropriate, until the person has fully complied with the subpoena duces tecum and the office has completed its investigation or examination. (c) The court may order the refund of any fees collected in a mortgage loan transaction if books and documents substantiating the transaction are not produced or cannot be produced. (d) lf it appears to the office that compliance with a subpoena or subpoena duces tecum issued is essential and otherwise unavailable to an investigation or examination, the office may apply to the court for a writ of ne exeat pursuant to s (e) The office may seek a writ of attachment to obtain all books, accounts, records, and other documents and materials relevant to an examination or investigation. (3) The office is entitled to the summary procedure provided in s. $1.011, and the court shall advance such cause on its calendar. Attorney's fees and any other costs incurred by the office to obtain an order granting, in whole or in part, a petition for enforcement of a subpoena or subpoena duces tecum shall be taxed against the subpoenaed person, and failure to comply with such order is a contempt of court [Effective 10/1/10] Cease and desist orders; refund orders (1) The office may issue and serve upon any person an order to cease and desist and to take corrective action if it has reason to believe the person is violating, has violated, or is about to violate any provision of ss , any rule or order issued under ss , or any written agreement between the person and the office. All procedural matters relating to issuance and enforcement of such order are governed by the Administrative Procedure Act. Q: The office discovers substantial violations of FS 494 what can they do? a. Injunction with writ of attachment c. Suspend license without prejudice b. Issue a Cease and Desist order d. Summary recall of license Rev 2/24/ All Rights Reserved by FMBS

26 (2) The office may order the refund of any fee directly or indirectly assessed and charged on a mortgage loan transaction which is unauthorized or exceeds the maximum fee specifically authorized in ss , or any amount collected for the payment of third-party fees which exceeds the cost of the service provided. Lender will be required to REFUND commissions/income from all loans closed during the period in which his NET WORTH was BELOW minimum requirement!!! Evidence; examiner's worksheets, investigative reports, other related documents In any hearing in which the financial examiner acting under authority of ss is available for cross-examination, any official written report, worksheet, or other related paper, or a duly certified copy thereof, compiled, prepared, drafted, or otherwise made by the financial examiner, after being duly authenticated by the examiner, may be admitted as competent evidence upon the oath of the examiner that the report, worksheet, or related paper was prepared as a result of an examination of the books and records of a licensee or other person conducted pursuant to the authority of ss Books, accounts, and records; maintenance; examinations by the Office (1) Each licensee shall maintain, at the principal place of business designated on the license, all books, accounts, records, and documents necessary to determine the licensee's compliance with ss (2) The office may authorize maintenance of records at a location other than a principal place of business. The office may require books, accounts, and records to be produced and available at a reasonable and convenient location in this state. (3) All books, accounts, records, documents, and receipts for expenses paid by the licensee on behalf of the borrower, including each closing statement signed by a borrower, shall be preserved and kept available for examination by the office for at least 3 years after the date of original entry. (4) The commission may prescribe by rule the minimum information to be shown in the books, accounts, records, and documents of licensees so that such records will enable the office to determine the licensee's compliance with ss ln addition, the commission may prescribe by rule requirements for the destruction of books, accounts, records, and documents retained by the licensee after completion of the time period specified in subsection (3). Rev 2/24/ All Rights Reserved by FMBS

27 Prohibited advertising; record requirements (1) It is a violation of this chapter for any person to: (a) Advertise that an applicant shall have unqualified access to credit without disclosing the material limitations on the availability of such credit. Material limitations include, but are not limited to, the percentage of down payment required, that a higher rate or points could be required, or that restrictions on the maximum principal amount of the loan offered could apply. (b) Advertise a mortgage loan at an expressed interest rate unless the advertisement specifically states that the expressed rate could change or not be available at commitment or closing. (c) Advertise mortgage loans, including rates, margins, discounts, points, fees, commissions, or other material information, including material limitations on such loans, unless the person is able to make such mortgage loans available to a reasonable number of qualified applicants. (d) Falsely advertise or misuse names indicating a federal agency pursuant to 18 U.S.C. s (e) Engage in unfair, deceptive, or misleading advertising regarding mortgage loans, brokering services, or lending services.*per TILA if an ad has percentage (%) rate it must also include the APR* (2) Each person required to be licensed under this chapter must maintain a record of samples of each of its advertisements, including commercial scripts of each radio or television broadcast, for examination by the office for 2 years after the date of publication or broadcast [Effective 10/1/10] Mortgage Guaranty Trust Fund; payment of fees and claims Q: The maximum total payment from the Guaranty Trust Fund for any one licensee would be which of the following? a. $25,000 b. $50,000 c. $100,000 d. $250,000 A: d. $250,000 A nonrefundable fee is imposed on each application for a mortgage broker, mortgage lender, or loan originator license and on each annual application for a renewal of such license. For a loan originator, the initial and renewal fee is $20. For mortgage brokers and lenders, the initial and renewal fee is $100. This fee is in addition to the regular application or renewal fee assessed and shall be deposited into the Mortgage Guaranty Trust Fund of the office for the payment of claims in accordance with this section. Rev 2/24/ All Rights Reserved by FMBS

28 (1) If the amount in the trust fund exceeds $5 million, the additional fee shall be discontinued and may not be reimposed until the fund is reduced to below $1 million pursuant to disbursements made in accordance with this section. (2) A borrower in a mortgage loan transaction is eligible to seek recovery from the trust fund if all of the following conditions are met: (a) The borrower has recorded a final judgment issued by a state court wherein the cause of action against a licensee under this chapter was based on a violation of this chapter and the damages were the result of that violation. (b) The borrower has caused a writ of execution to be issued upon such judgment, and the officer executing the judgment has made a return showing that no personal or real property of the judgment debtor liable to be levied upon in satisfaction of the judgment can be found or that the amount realized on the sale of the judgment debtor's property pursuant to such execution is insufficient to satisfy the judgment. I.e. Borrower must show that the Broker is Broke (c) The borrower has made all reasonable searches and inquiries to ascertain whether the judgment debtor possesses real or personal property or other assets subject to being sold or applied in satisfaction of the judgment, and has discovered no such property or assets; or he or she has discovered property and assets and has taken all necessary action and proceedings for the application thereof to the judgment, but the amount realized is insufficient to satisfy the judgment. (d) The borrower has applied any amounts recovered from the judgment debtor, or from any other source, to the damages awarded by the court. (e) The borrower, at the time the action was instituted, gave notice and provided a copy of the complaint to the office by certified mail. The requirement of a timely giving of notice may be waived by the office upon a showing of good cause. (f) The act for which recovery is sought occurred on or after January 1, (3) The requirements of subsection (2) are not applicable if the licensee upon which the claim is sought has filed for bankruptcy or has been adjudicated bankrupt. However, the claimant must file a proof of claim in the bankruptcy proceedings and must notify the office by certified mail of the claim by enclosing a copy of the proof of claim and all supporting documents. NOTE: If the borrower can verify that the broker filed bankruptcy then they can go after funds from the Guaranty Fund. Rev 2/24/ All Rights Reserved by FMBS

29 (4) Any person who meets all of the conditions in subsection (2) may apply to the office for payment from the trust fund equal to the unsatisfied portion of that person's judgment or $50,000, whichever is less, but only to the extent that the amount reflected in the judgment is for actual or compensatory damages, plus any attorney's fees and costs awarded by the trial court which have been determined-by the court, and the documented costs associated with attempting to collect the judgment. Actual or compensatory damages may not include post judgment interest. Attorney's fees may not exceed $5,000 or 20 percent of the actual or compensatory damages, whichever is less. lf actual or compensatory damages, plus attorney's fees and costs, exceed $50,000, actual or compensatory damages must be paid first. The cumulative payment for actual or compensatory damages, plus attorney's fees and costs, may not exceed $50,000 as described in this section. (a) A borrower may not collect more than $50,000 from the trust fund for any claim regardless of the number of licensees liable for the borrower's damages. (b) Payments for claims are limited in the aggregate to $250,000 against any one licensee under this chapter. lf the total claims exceed the aggregate limit of $250,000, the office shall prorate payments based on the ratio that a claim bears to the total claims filed. (c) Payments shall be made to all persons meeting the requirements of subsection (2) 2 years after the date the first complete and valid notice is received by the office. Persons who give notice after 2 years and who otherwise comply with the conditions precedent to recovery may recover from any remaining portion of the $250,000 aggregate as provided in this subsection, with claims being paid in the order notice was received until the $250,000 aggregate has been disbursed. (d) The claimant shall assign his or her right, title, and interest in the judgment, to the extent of his or her recovery from the fund, to the office and shall record, at his or her own expense, the assignment of judgment in every county where the judgment is recorded. (e) lf the money in the fund is insufficient to satisfy any valid claim or portion thereof, the office shall satisfy such unpaid claim or portion as soon as a sufficient amount of money has been deposited in the trust fund. lf there is more than one unsatisfied claim outstanding, such claims shall be paid in the order in which the claims were filed with the office. (f) The payment of any amount from the fund in settlement of a claim or in satisfaction of a judgment against a licensee constitutes prima facie grounds for the revocation of the license. NOTE: Any payment from Guaranty Fund is grounds for license revocation Max payout per claim = $50,000 Max payout per Licensee = $250,000 Rev 2/24/ All Rights Reserved by FMBS

30 [Effective 10/1/10] Penalties (1) Whoever knowingly violates any provision of s (1)(a), (b), or (c) or s (1), (2), (3), (4), or (5), except as provided in subsection (2) of this section, commits a felony of the third degree, punishable as provided in s , s , or s Each such violation constitutes a separate offense. (ADMINISTRATIVE) (2) Any person who violates any provision of ss , in which the total value of money and property unlawfully obtained exceeds $50,000 and there are five or more victims, commits a felony of the first degree, punishable as provided in s , s , or s (MAJOR FRAUD) Q: What is the penalty for violating FS 494? a. 3 rd Degree Felony c. 2 nd Degree Misdemeanor b. Class D Crime d. 1 st Degree Felony Q: What is the crime classified as for committing fraud against someone over 60 years old? a. 1 st Degree Felony c. 3 rd Degree Felony b. Enhanced Penalty d. 2 nd Degree Felony Liability in case of unlawful transaction (1) lf a mortgage loan transaction is made in violation of any provision of ss , the person making the transaction and every licensee, director, or officer who participated in making the transaction are jointly and severally liable to every party to the transaction in an action for damages incurred by the party or parties. (2) A person is not liable under this section upon a showing that such person's licensees, officers, and directors who participated in making the mortgage loan transaction, if any, acted in good faith and without knowledge and, with the exercise of due diligence, could not have known of the act committed in violation of ss Statutory or common-law remedies Sections do not limit any statutory or common-law right of any person to bring any action in any court for any act involved in the mortgage loan business or the right of the state to punish any person for any violation of any law. Rev 2/24/ All Rights Reserved by FMBS

31 Public records All audited financial statements submitted pursuant to ss are confidential and exempt from the requirements of s (1), except that office employees may have access to such information in the administration and enforcement of ss and such information may be used by office personnel in the prosecution of violations under ss Applicability of act Failure to comply with the provisions of ss does not affect the validity or enforceability of any mortgage loan; and no person acquiring a mortgage loan, as mortgagee or assignee, is required to ascertain whether or not the provisions of ss have been complied with. Q: If a mortgage broker or his representative fail to appear for a hearing involving possible fraud, what option do they have? a. Request a new hearing within 7 days b. Request a new hearing within 14 days c. Request a new hearing within 21 days d. Surrender their license A: d. Surrender their license [Effective 10/1/10] Conflicting interest (1) lf, in a mortgage transaction, a licensee has a conflicting interest as specified in subsection (2), the licensee shall, at a minimum, provide the following disclosures to the borrower in writing: (a) The nature of the relationship, ownership, or financial interest between the provider of products or services, or business incident thereto, and the licensee making the referral; (b) An estimated charge or range of charges generally made by such a provider; (c) That a financial benefit may be received by the licensee as a result of the conflicting interest; and (d) That alternative sources may be chosen by the borrower to provide the required products or services. Rev 2/24/ All Rights Reserved by FMBS

32 (2) A licensee has a conflicting interest if: (a) The licensee or the licensee's relative provides the borrower with additional products or services; (b) The licensee or licensee's relative, directly or indirectly, owns, controls, or holds with power to vote, or holds proxies representing, 1 percent or more of any class of equity securities or other beneficial interest in the person providing the additional products or services; (c) The person providing the additional products or services, directly or indirectly, owns, controls, or holds the power to vote, or holds proxies representing, 1 percent or more of any class of equity securities or other beneficial interest in the licensee; (d) A holding company, directly or indirectly, owns, controls, or holds with power to vote, or holds proxies representing, 1 percent or more of any class of equity securities or other beneficial interest in both the licensee and the person providing the additional products or services; (e) One or more persons, or such person's relative, sits as an officer or director, or performs similar functions as an officer or director, for both the licensee and the person providing the additional products or services; or (f) The licensee or the licensee's relative sits as an officer or director, or performs similar functions as an officer or director, of the person providing the additional products or services. (3) The commission may adopt rules to administer the disclosure requirements of this section. The rules must consider the disclosure requirements of the federal Real Estate Settlement Procedures Act, 12 U.S.C. ss.2601 et seq.; the federal Truth in Lending Act, 15 U.S.C. et seq.; and related federal regulations. Q: If you have a conflicting interest who must you notify? a. Borrower c. Lender b. Seller d. Title Company Waiver Unless otherwise indicated, any waiver of ss is unenforceable and void [Effective 10/1/10] Prohibited practices It is unlawful for any person: (1) To act as a loan originator in this state without a current, active license issued by the office pursuant to part ll of this chapter. (2) To act as a mortgage broker in this state without a current, active license issued by the office pursuant to part ll of this chapter. Rev 2/24/ All Rights Reserved by FMBS

33 (3) To act as a mortgage lender in this state without a current, active license issued by the office pursuant to part lll of this chapter. (4) In any practice or transaction or course of business relating to the sale, purchase, negotiation, promotion, advertisement, or hypothecation of mortgage loan transactions, directly or indirectly: (a) To knowingly or wittingly employ any device, scheme, or artifice to defraud; (b) To engage in any transaction, practice, or course of business which operates as a fraud upon any person in connection with the purchase or sale of any mortgage loan; or (c) To obtain property by fraud, willful misrepresentation of a future act, or false promise. (5) In any matter within the jurisdiction of the office, to knowingly and willfully falsify, conceal, or cover up by a trick, scheme, or device a material fact, make any false or fraudulent statement or representation, or make or use any false writing or document, knowing the same to contain any false or fraudulent statement or entry. (6) To violate s (2), subject to ss (7) To pay a fee or commission in any mortgage loan transaction to any person or entity other than a licensed mortgage broker or mortgage lender, or a person exempt from licensure under this chapter. (8) To record a mortgage broker agreement or any other document, not rendered by a court of competent jurisdiction, which purports to enforce the terms of the agreement. (9) To use the name or logo of a financial institution, as defined in s (1), or its affiliates or subsidiaries when marketing or soliciting existing or prospective customers if such marketing materials are used without the written consent of the financial institution and in a manner that would lead a reasonable person to believe that the material or solicitation originated from, was endorsed by, or is related to or the responsibility of the financial institution or its affiliates or subsidiaries. (10) Subject to investigation or examination under this chapter, to knowingly alter, withhold, conceal, or destroy any books, records, computer records, or other information relating to a person's activities which subject the person to the jurisdiction of this chapter.. Rev 2/24/ All Rights Reserved by FMBS

34 [Effective 10/1/10] Administrative penalties and fines; license violations (1) Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection (2) may be taken against a person licensed or required to be licensed under part ll or part lll of this chapter: (a) Failure to immediately place upon receipt, and maintain until authorized to disburse, any money entrusted to the licensee as a licensee in a segregated account of a federally insured financial institution in this state. (ESCROW account MUST be in Florida bank branch) (b) Failure to account or deliver to any person any property that is not the licensee's, or that the licensee is not entitled to retain, under the circumstances and at the time that has been agreed upon or as required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery. (c) Failure to disburse funds in accordance with agreements. (d) Any misuse, misapplication, or misappropriation of personal property entrusted to the licensee's care to which the licensee had no current property right at the time of entrustment. (e) Fraud, misrepresentation, deceit, negligence, or incompetence in any mortgage financing transaction. (f) Requesting a specific valuation, orally or in writing, from an appraiser for a particular property, implying to an appraiser that a specific valuation is needed for a particular property, or in any manner conditioning the order for an appraisal on the appraisal meeting a specific valuation. The numeric value of the specific valuation sought need not be stated, but rather the mere statement that a specific valuation is sought, violates this section. (Coercion of appraisers) (g) Consistently and materially underestimating maximum closing costs. (h) Disbursement, or an act which has caused or will cause disbursement, to any person in any amount from the Mortgage Guaranty Trust Fund, the Securities Guaranty Fund, or the Florida Real Estate Recovery Fund, regardless of any repayment or restitution to the disbursed fund by the licensee or any person acting on behalf of the licensee. (i) Commission of fraud, misrepresentation, concealment, or dishonest dealing by trick, scheme, or device; culpable negligence; breach of trust in any business transaction in any state, nation, or territory; or aiding, assisting, or conspiring with any other person engaged in any such misconduct and in furtherance thereof. (j) Being convicted of, or entering a plea of guilty or nolo contendere to, regardless of adjudication, any felony or any crime involving fraud, dishonesty, breach of trust, money laundering, or act of moral turpitude. (k) Having a final judgment entered against the licensee in a civil action upon grounds of fraud, embezzlement, misrepresentation, or deceit. Rev 2/24/ All Rights Reserved by FMBS

35 (l) Having been the subject of any: 1. Decision, finding, injunction, suspension, prohibition, revocation, denial, judgment, or administrative order by any court, administrative law judge, state or federal agency, national securities exchange, national commodities exchange, national option exchange, national securities association, national commodities association, or national option association involving a violation of any federal or state securities or commodities law or rule or regulation adopted under such law or involving a violation of any rule or regulation of any national securities, commodities, or options exchange or association. 2. Injunction or adverse administrative order by a state or federal agency regulating banking, insurance, finance or small loan companies, real estate, mortgage brokers or lenders, money transmitters, or other related or similar industries (m) In any mortgage transaction, violating any provision of the federal Real Estate Settlement Procedure Act, as amended, 12 U.S.C. ss et seq.; the Federal Truth in Lending Act, as amended, 15 U.S.C. ss et seq.; or any regulations adopted under such acts. 1) Q: Mortgage lender provides all of the following except: a. GFE c. Servicing disclosure b. TIL d. Employee contract & Home Inspection 2) Q: Where do you find details about a prepayment penalty? a. GFE c. Deed b. Mortgage d. Servicing Disclosure 3) Q: Which of the following requires disclosure of a GFE? a. ECOA c. TILA b. RESPA d. GLBA 4) Q: Which of the following is a credit given to a buyer or seller on purchase funds collected at closing on a purchase? a. Special assessment c. Aggregate adjustment b. Tax proration d. Prorated tax adjustment 5) Q: A borrower s right to opt out of additional solicitations from a company and their affiliates is included in which of the following? a. Anti-coercion c. Privacy Policy b. HMDA d. TIL 6) Q: Which of the following is a violation of FS 494? a. Not giving a GFE at application c. Collecting Fee from lender at closing b. Processing Fees d. Re-disclosing GFE 5 days before closing 7) Q: How many days PRIOR to closing may a borrower review the HUD-1? A: 1 Day Rev 4/20/ All Rights Reserved by FMBS

36 (n) Having a loan originator, mortgage broker, or mortgage lender license, or the equivalent of such license, revoked in any jurisdiction. (o) Having a license, or the equivalent of such license, to practice any profession or occupation revoked, suspended, or otherwise acted against, including the denial of licensure by a licensing authority of this state or another state, territory, or country. (p) Acting as a loan originator, mortgage broker, or mortgage lender without a current license issued under part ll or part lll of this chapter. (q) Operating a mortgage broker or mortgage lender branch office without a current license issued under part ll or part lll of this chapter. (r) Conducting any mortgage brokering or mortgage lending activities in the absence of a properly designated principal loan originator or mortgage brokering or mortgage lending activities at any particular branch office without a property designated branch manager. (s) A material misstatement or omission of fact on an initial or renewal license application. (t) Payment to the office for a license or permit with a check or electronic transmission of funds which is dishonored by the applicant s or licensee s financial institution. (u) Failure to comply with, or violations of, any provision of ss , or any rule or order made or issued under ss (v) Failure to maintain, preserve, and keep available for examination all books, accounts, or other documents required by ss and the rules of the commission. (w) Refusal to permit an investigation or examination of books and records, or refusal to comply with an office subpoena or subpoena duces tecum. (x) Failure to timely pay any fee, charge, or fine imposed or assessed pursuant to ss or related rules. (2) If the office finds a person in violation of any act specified in this section, it may enter an order imposing one or more of the following penalties: (a) Issuance of a reprimand. (b) Suspension of a license, subject to reinstatement upon satisfying all reasonable conditions imposed by the office. (c) of a license. (d) Denial of a license. (e) lmposition of a fine in an amount up to $25,000 for each count or separate offense. (f) An administrative fine of up to $1,000 per day, but not to exceed $25,000 cumulatively, for each day that 1. A mortgage broker or mortgage lender conducts business at an unlicensed branch office. 2. An unlicensed person acts as a loan originator, a mortgage broker, or a mortgage lender. Rev 2/24/ All Rights Reserved by FMBS

37 1) Q: A mortgage loan officer s license is revoked, when may it be re-issued? a. After 5 years c. Pardon from Director of OFR b. Appeal to the state Supreme Court d. Never 2) Q: What is the maximum penalty imposed for ANY violation of FS 494 a. $7,500 c. $25,000 b. $10,000 d. $1,000 per day up to $25,000 3) Q: Which of the following are not possible administrative penalties under FS 494? a. Fine c. b. Denial of license d. Jail or Contempt of Court 4) Q: A MLO who originates loans without a license could face which of the following penalties? a. 6 months in county jail c. 1 to 10 years in State Prison b. It is a finable offense d. Drivers License Suspension 5) Q: A MLO originates a loan without a license what is the penalty? a. Fine of $1,000 per day Max $25,000 c. 6 months in county jail b. Drivers License Suspension d. Class B penalties (3) A mortgage broker or mortgage lender, as applicable, is subject to the disciplinary actions specified in subsection (2) for a violation of subsection (1) by: (a) A control person of the mortgage broker or mortgage lender; or (b) A loan originator employed by or contracting with the mortgage broker or mortgage lender. (4) A principal loan originator of a mortgage broker is subject to the disciplinary actions specified in subsection (2) for violations of subsection (1) by a loan originator in the course of an association with the mortgage broker if there is a pattern of repeated violations by the loan originator or if the principal loan originator has knowledge of the violations. (5) A principal loan originator of a mortgage lender is subject to the disciplinary actions specified in subsection (2) for violations of subsection (1) by a loan originator of a mortgage lender if there is a pattern of repeated violations by the loan originator or if the principal loan originator has knowledge of the violations. (6) A branch manager is subject to the disciplinary actions specified in subsection (2) for violations of subsection (1) by a loan originator in the course of an association with the mortgage broker or mortgage lender if there is a pattern of repeated violations by the loan originator or if the branch manager has knowledge of the violations. (7) An individual who is associated with a mortgage broker is subject to the disciplinary actions specified in subsection (2) for a violation of subsection (1) with respect to an action in which such person was involved. Rev 4/20/ All Rights Reserved by FMBS

38 (8) Pursuant to s (6), the office may summarily suspend the license of a loan originator, mortgage broker, or mortgage lender if the office has reason to believe that a licensee poses an immediate, serious danger to the public s health, safety, or welfare. The arrest of the licensee, or the mortgage broker or the mortgage lender's control person, for any felony or any crime involving fraud, dishonesty, breach of trust, money laundering, or any other act of moral turpitude is deemed sufficient to constitute an immediate danger to the public's health, safety, or welfare. Any proceeding for the summary suspension of a license must be conducted by the commissioner of the office, or designee, who shall issue the final summary order. (9) The office may deny any request to terminate or withdraw any license application or license if the office believes that an act that would be a ground for license denial, suspension, restriction, or revocation under this chapter has been committed Disposition of insurance proceeds The following provisions apply to mortgage loans held by a mortgagee or assignee that is subject to part ll or part lll of this chapter. (1) The mortgagee or assignee must promptly endorse a check, draft, or other negotiable instrument payable jointly to the mortgagee or assignee and the insured by the insurance company. However, the mortgagee or assignee is not required to endorse such instrument if the insured or a payee who is not subject to part ll or part lll of this chapter refuses to endorse the instrument. (2) Insurance proceeds received by a mortgagee or assignee that relate to compensation for damage to property or contents insurance coverage in which the mortgagee or assignee has a security interest must be promptly deposited into a segregated account of a federally insured financial institution. (3) Insurance proceeds received by a mortgagee or assignee that relate to contents insurance coverage in which the mortgagee or assignee does not have a security interest in the contents must be promptly distributed to the insured. (4) Insurance proceeds received by a mortgagee or assignee that relate to additional living expenses must be promptly distributed to the insured. Q: What insurance money must immediately be given to the borrower? A: Living expense and content insurance Rev 2/24/ All Rights Reserved by FMBS

39 (5) The mortgagee or assignee is not required to remit the portion of the proceeds relating to additional living expenses and contents insurance if the mortgagee or assignee is not able to determine which part of the proceeds relates to additional living expenses and contents insurance. This section may not be construed to prevent an insurance company from paying the insured directly for additional living expenses or paying the insured directly for contents insurance coverage if the mortgagee or assignee does not have a security interest in the contents [Effective 10/1/10] Arbitration (1) This section applies to any mortgage broker agreement, servicing agreement, loan application, or purchase agreement that provides for arbitration between: (a) A noninstitutional investor and a mortgage lender servicing a mortgage loan. (b) A borrower and a mortgage broker or mortgage lender to obtain a mortgage loan. (c) A noninstitutional investor and a mortgage broker or mortgage lender to fund or purchase a mortgage loan. (2) All agreements subject to this section must provide that, at the voluntary election of the noninstitutional investor or borrower, disputes shall be handled by a court or by binding arbitration. (3) All agreements subject to this section must provide the noninstitutional investor or borrower with the option to elect arbitration before the American Arbitration Association or other independent nonindustry arbitration forum. Any other nonindustry arbitration forum may apply to the office to allow such forum to provide arbitration services. The office shall grant the application if the applicant's fees, practices, and procedures do not materially differ from those of the American Arbitration Association. (4) At the election of the noninstitutional investor or borrower, venue shall be in the county in which the noninstitutional investor or borrower entered into the agreement or at a business location of the mortgage broker or mortgage lender. (5) Any fees or charges must be in accordance with the rules of the American Arbitration Association or other approved nonindustry arbitration forum and may not be set in the agreement. (6) Any election made under this section is irrevocable. (7) This section does not require an agreement that is subject to this section to contain an arbitration clause. Q: Who can select arbitration? A: Noninstitutional Investor & Borrower Rev 2/24/ All Rights Reserved by FMBS

40 [Effective 10/1/10] Loan modification (1) PROHIBITED ACTS - When offering or providing loan modification services, a loan originator, mortgage broker, or mortgage lender may not: (a) Engage in or initiate loan modification services without first executing a written agreement for loan modification services with the borrower; (b) Execute a loan modification without the consent of the borrower after the borrower is made aware of each modified term; or (c) Solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for loan modification services before completing or performing all services included in the agreement for loan modification services. A fee may be charged only if the loan modification results in a material benefit to the borrower. The commission may adopt rules to provide guidance on what constitutes a material benefit to the borrower (2) LOAN MODIFICATION AGREEMENT - (a) The written agreement for loan modification services must be printed in at least 12-point uppercase type and signed by both parties. The agreement must include the name and address of the person providing loan modification services, the exact nature and specific detail of each service to be provided, the total amount and terms of charges to be paid by the borrower for the services, and the date of the agreement. The date of the agreement may not be earlier than the date the borrower signed the agreement. The mortgage broker or mortgage lender must give the borrower a copy of the agreement to review at least 1 business day before the borrower is to sign the agreement. (b) The borrower has the right to cancel the written agreement without any penalty or obligation if the borrower cancels the agreement within 3 business days after signing the agreement. The right to cancel may not be waived by the borrower or limited in any manner by the loan originator, mortgage broker, or mortgage lender. If the borrower cancels the agreement, any payments made must be returned to the borrower within 10 business days after receipt of the notice of cancelation. (c) An agreement for loan modification services must contain, immediately above the signature line, a statement in at least 12-point uppercase type which substantially complies with the following: Rev 2/24/ All Rights Reserved by FMBS

41 BORROWER'S RIGHT OF CANCELLATION YOU MAY CANCEL THIS AGREEMENT FOR LOAN MODIFICATION SERVICES WITHOUT ANY PENALTY OR OBLIGATION WITHIN 3 BUSINESS DAYS AFTER THE DATE THIS AGREEMENT IS SIGNED BY YOU. THE LOAN ORIGINATOR, MORTGAGE BROKER, OR MORTGAGE LENDER IS PROHIBITED BY LAW FROM ACCEPTING ANY MONEY, PROPERTY, OR OTHER FORM OF PAYMENT FROM YOU UNTIL ALL PROMISED SERVICES HAVE BEEN COMPLETED. IF FOR ANY REASON YOU HAVE PAID THE CONSULTANT BEFORE CANCELLATION, YOUR PAYMENT MUST BE RETURNED TO YOU WITHIN 1O BUSINESS DAYS AFTER THE CONSULTANT RECEIVES YOUR CANCELLATION NOTICE. TO CANCEL THIS AGREEMENT, A SIGNED AND DATED COPY OF A STATEMENT THAT YOU ARE CANCELING THE AGREEMENT SHOULD BE MAILED (POSTMARKED) OR DELIVERED TO... (NAME)... AT... (ADDRESS)... NO LATER THAN MIDNIGHT OF... (DATE).... IMPORTANT: IT IS RECOMMENDED THAT YOU CONTACT YOUR MORTGAGE LENDER OR MORTGAGE SERVICER BEFORE SIGNING THIS AGREEMENT. YOUR LENDER OR SERVICER MAY BE WILLING TO NEGOTIATE A PAYMENT PLAN OR A RESTRUCTURING WITH YOU FREE OF CHARGE. (d) The inclusion of the statement does not prohibit a loan originator, mortgage broker, or mortgage lender from giving the homeowner more time to cancel the agreement than is set forth in the statement if all other requirements of this subsection are met. (e) The person offering or providing the loan modification services must give the borrower a copy of the signed agreement within 3 hours after the borrower signs the agreement. Review of Modification Agreement A. Disclose all fees upfront B. Borrower may review modification agreement 1 business day prior to signing C. Borrow has right to rescind for 3 business days after signing D. Broker must refund all money within 10 business days after borrower cancels E. Borrower must be given a copy of the modification agreement with 3 hours after signing Rev 2/24/ All Rights Reserved by FMBS

42 PART II - MORTGAGE BROKERS FLORIDA STATUTE CHAPTER Loan originator license Mortgage broker's license Mortgage broker association Renewal of mortgage broker's license Principal loan originator and branch broker requirements Mortgage broker branch offices Loan origination and mortgage broker fee disclosures Principal place of business requirements Requirements of licensees Administrative penalties and fines; license violations Brokerage fees Fees earned upon obtaining a bona fide commitment Requirements for brokering loans to noninstitutional investors. Rev 2/24/ All Rights Reserved by FMBS

43 [Effective 10/1/10] Loan originator license (1) An individual who acts as a loan originator must be licensed under this section. (2) In order to apply for loan originator license, an applicant must: (a) Be at least 18 years of age and have a high school diploma or its equivalent. (b) Complete a 20-hour prelicensing class approved by the registry. (c) Pass a written test developed by the registry and administered by a provider approved by the registry. (d) Submit a completed license application form as prescribed by commission rule. (e) Submit a nonrefundable application fee of $195, and the $20 nonrefundable fee if required by s Application fees may not be prorated for partial years of Iicensure. (f) Submit fingerprints in accordance with rules adopted by the commission: 1. The fingerprints may be submitted to the registry, the office, or a vendor acting on behalf of the registry or the office. 2. The office may contract with a third-party vendor to provide live-scan fingerprinting in lieu of a paper fingerprint card. 3. A state criminal history background check must be conducted through the Department of Law Enforcement and a federal criminal history background check must be conducted through the Federal Bureau of Investigation. 4. All fingerprints submitted to the Department of Law Enforcement must be submitted electronically and entered into the statewide automated fingerprint identification system established in s (2)(b) and available for use in accordance with s (2)(9) and (h). The office shall pay an annual fee to the department to participate in the system and inform the department of any person whose fingerprints are no longer required to be retained. 5. The costs of fingerprint processing, including the cost of retaining the fingerprints, shall be borne by the person subject to the background check. 6. The office is responsible for reviewing the results of the state and federal criminal history checks and determining whether the applicant meets licensure requirements. Rev 2/24/ All Rights Reserved by FMBS

44 (g) Authorize the registry to obtain an independent credit report on the applicant from a consumer reporting agency, and transmit or provide access to the report to the office. The cost of the credit report shall be borne by the applicant. (h) Submit additional information or documentation requested by the office and required by rule concerning the applicant. Additional information may include documentation of pending and prior disciplinary and criminal history events, including arrest reports and certified copies of charging documents, plea agreements, judgments and sentencing documents, documents relating to pretrial intervention, orders terminating probation or supervised release, final administrative agency orders, or other comparable documents that may provide the office with the appropriate information to determine eligibility for licensure. (i) Submit any other information required by the registry for the processing of the application. (3) An application is considered received for the purposes of s upon the office's receipt of all documentation from the registry, including the completed application form, documentation of completion of the prelicensure class, test results, criminal history information, and independent credit report, as we[[ as the license application fee, the fee required by s , and all applicable fingerprinting processing fees. (4) The office shall issue a loan originator license to each person who is not otherwise ineligible and who meets the requirements of this section. However, it is a ground for denial of licensure if the applicant: (a) Has committed any violation specified in ss , or is the subject of a pending felony criminal prosecution or a prosecution or an administrative enforcement action, in any jurisdiction, which involves fraud, dishonesty, breach of trust, money laundering, or any other act of moral turpitude. (b) Has failed to demonstrate the character, general fitness, and financial responsibility necessary to command the confidence of the community and warrant a determination that the applicant will operate honestly, fairly, and efficiently. 1. lf the office has information that could form the basis for license denial under this paragraph, before denying the license, the office must notify the applicant in writing of the specific items of concern and provide the applicant with an opportunity to explain the circumstances surrounding the specific items and provide any information that the applicant believes is relevant to the office's determination. 2. For purposes of evaluating adverse information found in an applicant s credit report, the information must be considered within the totality of the circumstances. Information provided by the applicant under subparagraph (1), or information obtained by the office by other means, may be used to provide a context for the adverse items. For example, the adverse items may have resulted from factors that do not necessarily reflect negatively upon the applicant s character, general fitness, or financial responsibility. Rev 2/24/ All Rights Reserved by FMBS

45 3. The office may not use a credit score or the absence or insufficiency of credit history information to determine character, general fitness, or financial responsibility. 4. lf information contained in a credit report is used as the basis for denying a license, the office shall, in accordance with s (3), provide with particularity the grounds or basis for denial. The use of the terms "poor credit history," "poor credit rating," or similar language do not meet the requirements of this paragraph. (5) The office may not issue a license to an applicant who has had a loan originator license or its equivalent revoked in any jurisdiction. (6) A loan originator license shall be annulled pursuant to s if it was issued by the office by mistake. A license must be reinstated if the applicant demonstrates that the requirements for obtaining the license under this chapter have been satisfied. (7) All loan originator licenses must be renewed annually by December 31 pursuant to s lf a person holding an active loan originator license has not applied to renew the license on or before December 31, the loan originator license expires on December 31. lf a person holding an active loan originator license has applied to renew the license on or before December 31, the loan originator license remains active until the renewal application is approved or denied. A loan originator is not precluded from reapplying for licensure upon expiration of a previous license. Q: If a MLO does not renew their license by December 31 what is required? A: Reapply and meet all requirements of new applicants [Effective 10/1/10] Loan originator license renewal (1) ln order to renew a loan originator license, a loan originator must: (a) Submit a completed license renewal form as prescribed by commission rule. (b) Submit a nonrefundable renewal fee of $150, the $20 nonrefundable fee if required by s , and nonrefundable fees to cover the cost of further fingerprint processing and retention as set forth in commission rule. (c) Provide documentation of completion of at least 8 hours of continuing education in courses reviewed and approved by the registry. (d) Authorize the registry to obtain an independent credit report on the licensee from a consumer reporting agency, and transmit or provide access to the report to the office. The cost of the credit report shall be borne by the licensee. Rev 2/24/ All Rights Reserved by FMBS

46 (e) Submit any additional information or documentation requested by the office and required by rule concerning the licensee. Additional information may include documentation of pending and prior disciplinary and criminal history events, including arrest reports and certified copies of charging documents, plea agreements, judgments and sentencing documents, documents relating to pretrial intervention, orders terminating probation or supervised release, final administrative agency orders, or other comparable documents that may provide the office with the appropriate information to determine eligibility for renewal of licensure. (2) The office may not renew a loan originator license unless the loan originator continues to meet the minimum requirements for initial licensure pursuant to s and adopted rule [Effective 10/1/10] Mortgage broker license (BUSINESS LICENSE) (1) Each person who acts as a mortgage broker must be licensed in accordance with this section. (2) In order to apply for a mortgage broker license an applicant must: (a) Submit a completed license application form as prescribed by commission rule. (b) Designate a qualified principal loan originator (RUNS the HOME OFFICE) on the application form who meets the requirements of s (c) Submit a nonrefundable application fee of $425, and the $100 nonrefundable fee if required by s Application fees may not be prorated for partial years of licensure. (d) Submit fingerprints for each of the applicant s control persons in accordance with rules adopted by the commission: 1. The fingerprints may be submitted to the registry, the office, or a vendor acting on behalf of the registry or the office. 2. The office may contract with a third-party vendor to provide live-scan fingerprinting in lieu of a paper fingerprint card. 3. A state criminal history background check must be conducted through the Department of Law Enforcement and a federal criminal history background check must be conducted through the Federal Bureau of Investigation. 4. All fingerprints submitted to the Department of Law Enforcement must be submitted electronically and entered into the statewide automated fingerprint identification system established in s (2)(b) and available for use in accordance with s (2)(9) and (h). The office shall pay an annual fee to the department to participate in the system and inform the department of any person whose fingerprints are no longer required to be retained. Rev 2/24/ All Rights Reserved by FMBS

47 5. The costs of fingerprint processing, including the cost of retaining the fingerprints, shall be borne by the person subject to the background check. 6. The office is responsible for reviewing the results of the state and federal criminal history checks and determining whether the applicant meets licensure requirements. (e) Authorize the registry to obtain an independent credit report on each of the applicant's control persons from a consumer reporting agency, and transmit or provide access to the report to the office. The cost of the credit report shall be borne by the applicant. (f) Submit additional information or documentation requested by the office and required by rule concerning the applicant or a control person of the applicant. Additional information may include documentation of pending and prior disciplinary and criminal history events, including arrest reports and certified copies of charging documents, plea agreements, judgments and sentencing documents, documents relating to pretrial intervention, orders terminating probation or supervised release, final administrative agency orders, or other comparable documents that may provide the office with the appropriate information to determine eligibility for licensure. (g) Submit any other information required by the registry for the processing of the application. (3) An application is considered received for the purposes of s upon the office's receipt of all documentation from the registry, including the completed application form, criminal history information, and independent credit report, as well as the license application fee, the fee required by s , and all applicable fingerprinting processing fees. (4) The office shall issue a mortgage broker license to each person who is not otherwise ineligible and who meets the requirements of this section. However, it is a ground for denial of licensure if the applicant or one of the applicant's control persons: (a) Has committed any violation specified in ss , or is the subject of a pending felony criminal prosecution or a prosecution or an administrative enforcement action, in any jurisdiction, which involves fraud, dishonesty, breach of trust, money laundering, or any other act of moral turpitude. (b) Has failed to demonstrate the character, general fitness, and financial responsibility necessary to command the confidence of the community and warrant a determination that the applicant wit[ operate honestly, fairly, and efficiently. 1. lf the office has information that could form the basis for license denial under this paragraph, before denying the license, the office must notify the applicant in writing of the specific items of concern and provide the applicant with an opportunity to explain the circumstances surrounding the specific items and provide any information that the applicant believes is relevant to the office's determination. Rev 2/24/ All Rights Reserved by FMBS

48 2. For purposes of evaluating adverse information found in an applicant s credit report, the information must be considered within the totality of the circumstances. Information provided by the applicant under subparagraph (1), or information obtained by the office by other means, may be used to provide a context for the adverse items. For example, the adverse items may have resulted from factors that do not necessarily reflect negativity upon the applicant s character, general fitness, or financial responsibility. 3. The office may not use a credit score or the absence or insufficiency of credit history information to determine character, general fitness, or financial responsibility. 4. lf information contained in a credit report is used as the basis for denying a license, the office shall, in accordance with s (3), provide with particularity the grounds or basis for denial. The use of the terms "poor credit history," "poor credit rating," or similar language do not meet the requirements of this paragraph. (5) The office shall deny a license if the applicant has had a mortgage broker license, or its equivalent, revoked in any jurisdiction, or if any of the applicant s control persons has had a loan originator license, or its equivalent, revoked in any jurisdiction. *If licensed REVOKED in ANY other state NO license in Florida* (6) A mortgage broker license shall be annulled pursuant to s if it was issued by the office by mistake. A license must be reinstated if the applicant demonstrates that the requirements for obtaining the license under this chapter have been satisfied. (7) All mortgage broker licenses must be renewed annually by December 31 pursuant to s lf a person holding an active mortgage broker license has not applied to renew the license on or before December 31, the mortgage broker license expires on December 31. lf a person holding an active mortgage broker license has applied to renew the license on or before December 31, the mortgage broker license remains active until the renewal application is approved or denied. A mortgage broker is not precluded from reapplying for licensure upon expiration of a previous Iicense [Effective 10/1/10] Mortgage broker license renewal (1) ln order to renew a mortgage broker license, a mortgage broker must: (a) Submit a completed license renewal form as prescribed by commission rule. (b) Submit a nonrefundable renewal fee of $375, the $100 nonrefundable fee if required by s , and nonrefundable fees to cover the cost of further fingerprint processing and retention as set forth in commission rule. (c) Submit fingerprints in accordance with s (2)(d) for any new control persons who have not been screened. (d) Authorize the registry to obtain an independent credit report on each of the licensee's control persons from a consumer reporting agency, and transmit or provide access to the report to the office. The cost of the credit report shall be borne by the licensee. Rev 2/24/ All Rights Reserved by FMBS

49 (e) Submit any additional information or documentation requested by the office and required by rule concerning the licensee or a control person of the licensee. Additional information may include documentation of pending and prior disciplinary and criminal history events, including arrest reports and certified copies of charging documents, plea agreements, judgments and sentencing documents, documents relating to pretrial intervention, orders terminating probation or supervised release, final administrative agency orders, or other comparable documents that may provide the office with the appropriate information to determine eligibility for renewal of Iicensure. (2) The office may not renew a mortgage broker license unless the licensee continues to meet the minimum requirements for initial licensure pursuant to s and adopted rule [Effective 10/1/10] Loan originator employment (1) An individual may not act as a loan originator unless he or she is an employee of, or an independent contractor for, a mortgage broker or a mortgage lender, and may not be employed by or contract with more than one mortgage broker or mortgage lender, or either simultaneously. However, this provision does not apply to any licensed loan originator who acts solely as a loan processor and contracts with more than one mortgage broker or mortgage lender, or either simultaneously. (Processors required to have a license) (2) For purposes of this section, the term "loan processor" means an individual who is licensed as a loan originator who engages ONLY in: (a) The receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; or (b) Communication with consumers to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms or does not include counseling consumers about residential mortgage loan rates or terms. *Processors do NOT Negotiate OR Counsel* Q: A mortgage broker can do all of the following except: a. Negotiate terms of a new mortgage loan b. Gather documentation for a new mortgage loan c. Assist a borrower in completing the loan application d. Receive funds from the borrower for an appraisal and pass it on to the appraiser Rev 2/24/ All Rights Reserved by FMBS

50 (3) A person may NOT act as a loan processor unless the person is licensed as a loan originator under this chapter and has on file with the office a declaration of intent to engage solely in loan processing. The declaration of intent must be on such form as prescribed by the commission by rule. (MAY process for multiple Mortgage Brokers but may NOT originate loans) (4) A loan originator that currently has a declaration of intent to engage solely in loan processing on file with the office may withdraw his or her declaration of intent to engage solely in loan processing. The withdrawal of declaration of intent must on such form as prescribed by commission rule. (5) A declaration of intent or a withdrawal of declaration of intent is effective upon receipt by the office. (6) The fee earned by a loan processor may be paid to the company that employs the loan processor without violating the restriction in s (71requiring fees or commissions to be paid to a licensed mortgage broker or mortgage lender or a person exempt from licensure under this chapter [Effective 10/1/10] Principal loan originator and branch manager for mortgage broker (1) Each mortgage broker must be operated by a principal loan originator who shall have full charge, control, and supervision of the mortgage broker business. The principal loan originator must have been licensed as a loan originator for at least 1 year before being designated as the principal loan originator, or must demonstrate to the satisfaction of the office that he or she has been actively engaged in a mortgage broker-related business for at least 1 year before being designated as a principal loan originator. Each mortgage broker must keep the office informed of the person designated as the principal loan originator as prescribed by commission rule. lf the designation is inaccurate, the business shall be deemed to be operated under the full charge, control, and supervision of each officer, director, or ultimate equitable owner of a 10-percent or greater interest in the mortgage broker, or any other person in a similar capacity. A loan originator may not be a principal loan originator for more than one mortgage broker at any given time. (2) Each branch office of a mortgage broker must be operated by a branch manager who shall have full charge, control, and supervision of the branch office. The designated branch manager must be a licensed loan originator pursuant to s Each branch office must keep the office informed of the person designated as the branch manager as prescribed by commission rule, which includes documentation of the individual s acceptance of such responsibility. lf the designation is inaccurate, the branch office shall be deemed to be operated under the full charge, control, and supervision of each officer, director, or ultimate equitable owner of a 10- percent or greater interest in the mortgage broker, or any other person in a similar capacity. Rev 2/24/ All Rights Reserved by FMBS

51 [Effective 10/1/10] Mortgage broker branch office license (1) Each branch office of a mortgage broker must be licensed under this section. (2) The office shall issue a mortgage broker branch office license to a mortgage broker licensee after the office determines that the licensee has submitted a completed application for a branch office in a form as prescribed by commission rule and payment of an initial nonrefundable branch office license fee of $225 per branch office. Application fees may not be prorated for partial years of licensure. The branch office license shall be issued in the name of the mortgage broker that maintains the branch office. An application is considered received for purposes of s upon receipt of a completed application form as prescribed by commission rule, and the required fees. (3) A branch office license must be renewed annually at the time of renewing the mortgage broker license under s A nonrefundable branch renewal fee of $225 per branch office must be submitted at the time of renewal [Effective 10/1/10] Loan origination and mortgage broker fees and disclosures (1) A loan origination fee may not be paid except pursuant to a written mortgage broker agreement between the mortgage broker and the borrower which is signed and dated by the principal loan originator or branch manager, and the borrower. The unique registry identifier of each loan originator responsible for providing loan originator services must be printed on the mortgage broker agreement. FACT: Mortgage Broker Agreement must be in writing and signed by the principal loan originator or the branch manager and the borrower. FACT: MLO unique identifier number MUST be on the application (1003) and the mortgage broker agreement. (a) The written mortgage broker agreement must describe the services to be provided by the mortgage broker and specify the amount and terms of the loan origination fee that the mortgage broker is to receive. 1. Except for application and third-party fees, all fees received by a mortgage broker from a borrower must be identified as a loan origination fee. 2. All fees on the mortgage broker agreement must be disclosed in dollar amounts. (NO separate fees for processing, administrative, & service fees, etc.) 3. All loan origination fees must be paid to a mortgage broker. Rev 2/24/ All Rights Reserved by FMBS

52 (b) The agreement must be executed within 3 business days after a mortgage loan application is accepted if the borrower is present when the mortgage loan application is accepted. lf the borrower is not present, the licensee shall forward the agreement to the borrower within 3 business days after the licensee s acceptance of the application and the licensee bears the burden of proving that the borrower received and approved the agreement. FACT: Mortgage broker agreement must be provided to borrower within 3 business days of application (2) lf the mortgage broker is to receive any payment of any kind from the mortgage lender, the maximum total dollar amount of the payment must be disclosed to the borrower in the written mortgage broker agreement as described in paragraph (1)(a). The commission may prescribe by rule an acceptable form for disclosure of brokerage fees received from the lender. The agreement must state the nature of the relationship with the lender, describe how compensation is paid by the lender, and describe how the mortgage interest rate affects the compensation paid to the mortgage broker. (a) The exact amount of any payment of any kind by the lender to the mortgage broker must be disclosed in writing to the borrower within 3 business days after the mortgage broker is made aware of the exact amount of the payment from the lender but not less than 3 business days before the execution of the closing or settlement statement. The licensee bears the burden of proving such notification was provided to the borrower. Notification is waived if the exact amount of the payment is accurately disclosed in the written mortgage broker agreement. (MLO does NOT have to redisclose if accurate on 1 st mortgage broker agreement.) (b) The commission may prescribe by rule the form of disclosure of brokerage fees. Q: What s not required on a broker contract? a. Origination Fee b. Unique Identifier Number c. Statement saying broker is in good standing with the state d. Address of Mortgage Broker company (3) At the time a written mortgage broker agreement is signed by the borrower or forwarded to the borrower for signature, or at the time the mortgage broker business accepts an application fee, credit report fee, property appraisal fee, or any other thirdparty fee, but at least 3 business days before execution of the closing or settlement statement, the mortgage broker shall disclose in writing to any applicant for a mortgage loan the following information: Rev 2/24/ All Rights Reserved by FMBS

53 (a) That the mortgage broker may NOT make mortgage loans or commitments. The mortgage broker may make a commitment and may furnish a lock in of the rate and program on behalf of the lender if the mortgage broker has obtained a written commitment or lock-in for the loan from the lender on behalf of the borrower for the loan. The commitment must be in the same form and substance as issued by the lender. ***BROKERS DO NOT ISSUE LOAN COMMITMENTS*** (b) That the mortgage broker cannot guarantee acceptance into any particular loan program or promise any specific loan terms or conditions. (c) A good faith estimate, signed and dated by the borrower, which discloses the total amount of each of the fees the borrower may reasonably expect to pay if the loan is closed, including, but not limited to, fees earned by the mortgage broker, lender fees, third-party fees, and official fees, together with the terms and conditions for obtaining a refund of such fees, if any. 1. Any amount collected in excess of the actual cost shall be returned within 60 days after rejection, withdrawal, or closing. 2. At the time a the good faith estimate is provided to the borrower, the loan originator must identify in writing the recipient of all payments charged the borrower, which and, except for all fees to be received by the mortgage broker, may be disclosed in generic terms, such as, but not limited to, paid to lender, appraiser, officials, title company, or any other third-party service provider. This requirement does not supplant or is not a substitute for the written mortgage broker agreement described in subsection (1). The disclosure required under this subparagraph must be signed and dated by the borrower. Q: What money must be paid back to a borrower? A: Any 3 rd party fees not distributed to providers (4) The disclosures required by this subsection must be furnished in writing at the time an adjustable rate mortgage loan is offered to the borrower and whenever the terms of the adjustable rate mortgage loan offered materially change prior to closing. The mortgage broker shall furnish the disclosures relating to adjustable rate mortgages in a format prescribed by ss and of Regulation Z of the Board of Governors of the Federal Reserve System, as amended; its commentary, as amended; and the federal Truth in Lending Act, 15 U.S.C. ss et seq., as amended; together with the Consumer Handbook on Adjustable Rate Mortgages, as amended; published by the Federal Reserve Board and the Federal Home Loan Bank Board. The licensee bears the burden of proving such disclosures were provided to the borrower. (5) If the mortgage broker agreement includes a nonrefundable application fee, the following requirements are applicable: (a) The amount of the application fee, which must be clearly denominated as such, must be clearly disclosed. (b) The specific services that will be performed in consideration for the application fee must be disclosed. Rev 2/24/ All Rights Reserved by FMBS

54 (c) The application fee must be reasonably related to the services to be performed and may not be based upon a percentage of the principal amount of the loan or the amount financed. (6) A mortgage broker may not accept any fee in connection with a mortgage loan other than an application fee, credit report fee, property appraisal fee, or other third-party fee before obtaining a written commitment from a qualified lender. (7) Any third-party fee entrusted to a mortgage broker must immediately, upon receipt, be placed into a segregated account with a financial institution located in the state the accounts of which are insured by the Federal Government. Such funds shall be held in trust for the payor and shall be kept in the account until disbursement. Such funds may be placed in one account if adequate accounting measures are taken to identify the source of the funds. (8) A mortgage broker may not pay a commission to any person not licensed pursuant to this chapter. (9) This section does not prohibit a mortgage broker from offering products and services, in addition to those offered in conjunction with the loan origination process, for a fee or commission Principal place of business requirements Each mortgage broker licensee shall maintain and transact business from a principal place of business. Q: Where can a Florida mortgage broker business be located? a. Florida c. United States of America b. Northern Hemisphere d. Anywhere in the WORLD! Q: Which of the following is NOT required in Florida? I. Office in Florida III. Sign II. Occupational License IV. Your License on wall a. I & II b. II & IV c. I, II, III, & IV d. I & III Requirements of licensees (1) Each licensee under this part shall report to the office (a) In writing, any conviction of, or plea of nolo contendere to, regardless of adjudication, any felony or any crime or administrative violation that involves fraud, dishonesty, breach of trust, money laundering, or any other act of moral turpitude, in any jurisdiction, by the licensee or any control person within 30 days after the date of conviction, entry of a plea of nolo contendere, or final administrative action. Rev 2/24/ All Rights Reserved by FMBS

55 (b) In a form prescribed by rule of the commission, any conviction of, or plea of nolo contendere to, regardless of adjudication, any felony committed by the licensee or any control person within 30 days after the date of conviction or the date the plea of nolo contendere is entered. (c) Any action in bankruptcy, voluntary or involuntary, within 30 days after the action is instituted. (d) On a form prescribed by rule of the commission any change to the information contained in any initial application form or any amendment to the application within 30 days after the change is effective. (e) Any change in the principal loan originator, any addition or subtraction of a control person or any change in the form of business organization, by written amendment in the form and at the time the commission specifies by rule. (f) Any addition of a control person who has not previously filed a Uniform Mortgage Biographical Statement & Control Form, MU2, or has not previously complied with the fingerprinting and credit report requirements of ss and is subject to the provisions of these sections. lf, after the addition of a control person, the office finds that the licensee does not continue to meet licensure requirements, the office may bring an administrative action in accordance with s to enforce the provisions of this chapter. (2) In every mortgage loan transaction, each licensee under this part shall notify a borrower of any material changes (I.e. more than $100) in the terms of a mortgage loan previously offered to the borrower within 3 business days after being made aware of such changes by the mortgage lender but at least 3 business days before the signing of the settlement or closing statement. The licensee bears the burden of proving such notification was provided and accepted by the borrower. A borrower may waive the right to receive notice of a material change that is granted under paragraph (a) if the borrower determines that the extension of credit is needed to meet a bona fide personal financial emergency and the right to receive notice would delay the closing of the mortgage loan. The imminent Sale of the borrower's home at foreclosure during the 3-day period before the signing of the settlement or closing statement constitutes an example of a bona fide personal financial emergency. In order to waive the borrower's right to receive notice not less than 3 business days before the signing of the settlement or closing statement of any such material change, the borrower must provide the licensee with a dated written statement that describes the personal financial emergency, waives the right to receive the notice, bears the borrower's signature, and is not on a printed form prepared by the licensee for the purpose of such a waiver. (3) Each mortgage broker shall submit to the registry reports of condition, which must be in such form and shall contain such information as the registry may require. (4) A licensee issued under this part is not transferable or assignable. Rev 2/24/ All Rights Reserved by FMBS

56 Loan origination (1) A loan origination fee earned by a licensee, pursuant to this part, is not considered interest or a finance charge under chapter 687. (2) A person may not charge or exact, directly or indirectly, from the borrower a fee or commission in excess of the maximum fee or commission specified in this section. The maximum fees or commissions that may be charged for mortgage loans are as follows: (a) On a mortgage loan of $1,000 or less: $250. (b) On a mortgage loan exceeding $1,000 and not exceeding $2,000: $250 for the first $1,000 of the mortgage loan, plus $10 for each additional $100 of the mortgage loan. (c) On a mortgage loan exceeding $2,000 and not exceeding $5,000: $350 for the first $2,000 of the mortgage loan, plus $10 for each additional $100 of the mortgage loan. (d) On a mortgage loan exceeding $5,000: $250 plus 10 percent of the entire mortgage loan. For the purpose of determining the maximum fee, the amount of the mortgage loan is based on the amount of mortgage loan actually funded exclusive of the authorized maximum fees or commissions. (3) At the time of accepting a mortgage loan application, a mortgage broker may receive from the borrower a nonrefundable application fee. If the mortgage loan is funded, the nonrefundable application fee shall be credited against the amount owed as a result of the loan being funded. A person may not receive any form of compensation for acting as a loan originator other than a nonrefundable application fee, a fee based on the mortgage amount being funded, or a fee which complies with s Fees earned upon obtaining a bona fide commitment Notwithstanding the provisions of ss , any mortgage broker which contracts to receive from a borrower a loan origination fee upon obtaining a bona fide commitment shall accurately disclose in the mortgage broker agreement: (1) The gross loan amount. (2) In the case of a fixed-rate mortgage, the note rate. (3) In the case of an adjustable rate mortgage: (a) The initial note rate. (b) The length of time for which the initial note rate is effective. (c) The frequency of changes. (d) The limitation upon such changes including adjustment to adjustment cap and life cap. (e) Whether the loan has any potential for negative amortization. Rev 2/24/ All Rights Reserved by FMBS

57 (f) ldentification of the margin-interest rate differential. (g) ldentification of a nationally recognized index which index must be free from control of the mortgage broker or mortgage lender. (4) The estimated net proceeds to be paid directly to the borrower. "Estimated net proceeds" means the cash to be received by the borrower after payment of any fees, charges, debts, liens, or encumbrances to perfect the lien of the new mortgage and establish the agreed-upon priority of the new mortgage. (5) The lien priority of the new proposed mortgage. (6) The number of calendar days, which are mutually agreed upon, within which the mortgage broker shall obtain a bona fide mortgage commitment. (7) (a) The following statement, in at least 12-point boldface type immediately above the signature lines for the borrowers: "You are entering into a contract with a mortgage broker to obtain a bona fide mortgage loan commitment under the same terms and conditions as stated hereinabove or in a separate executed good faith estimate form. lf the mortgage broker obtains a bona fide commitment under the same terms and conditions, you will be obligated to pay the loan origination fees, even if you choose not to complete the loan transaction. lf the provisions of s , Florida Statutes, are not met, the loan origination fee can only be earned upon the funding of the mortgage loan. The borrower may contact the Department of Financial Services, Tallahassee, Florida, regarding any complaints that the borrower may have against the loan originator. The telephone number of the department is: [insert telephone number]. (b) Paragraph (a) does not apply to nonresidential mortgage loan commitments in excess of $1 million. (8) Any other disclosure required pursuant to s Requirements for brokering loans to noninstitutional investors (1) A loan originator, when arranging a mortgage loan for a noninstitutional investor, shall: (a) Before any payment of money by a noninstitutional investor, provide an opinion of value from an appraiser stating the value of the security property unless the opinion is waived in writing. The opinion must state the value of the property as it exists on the date of the opinion. lf any relationship exists between the loan originator or mortgage broker and the appraiser, that relationship shall be disclosed to the investor. (b) Provide to the noninstitutional investor a mortgagee's title insurance policy or an opinion of title by an attorney licensed to practice law in the state, or a copy thereof. Rev 2/24/ All Rights Reserved by FMBS

58 1. If a title insurance policy is issued, it must insure the noninstitutional investor against the unmarketability of the mortgagee's interest in such title. It must also specify any superior liens that exist against the property. lf an opinion of title is issued by an attorney, the opinion must include a statement as to the marketability of the title to the property described in the mortgage and specify the priority of the mortgage being closed. 2. If the title insurance policy or opinion of title is not available at the time of purchase, the licensee shall provide a binder of the title insurance or conditional opinion of title. This binder or opinion must include any conditions or requirements that need to be corrected before the issuance of the final title policy or opinion of title. The binder or opinion must also include information concerning the requirements specified in subparagraph 1. Any conditions must be eliminated or waived in writing by the investor before delivery to the noninstitutional investor. The policy or opinion, or a copy thereof, shall be delivered to the investor within a reasonable period of time, not exceeding 6 months, after closing. 3. The requirements of this paragraph may be waived in writing. lf the requirements are waived by the noninstitutional investor, the waiver must include the following statement: "The noninstitutional investor acknowledges that the mortgage broker or mortgage lender brokering this mortgage loan is not providing a title insurance policy or opinion of title issued by an attorney who is licensed to practice law in the State of Florida. Any requirement for title insurance or for a legal opinion of title is the sole responsibility of the noninstitutional mortgage investor." (c) Provide, if the loan is other than a first mortgage, a statement showing the balance owed by the mortgagor on any existing mortgages prior to this investment and the status of such existing mortgages. (d) Provide a disclosure if the licensee is directly or indirectly acting as a borrower or principal in the transaction. (2) Each original or certified copy of the mortgage, or other instrument securing a note or assignment thereof, must be recorded before being delivered to the noninstitutional investor. A mortgage broker shall cause the property endorsed original note to be delivered to the noninstitutional investor. (3) Each mortgage and assignment must be recorded as soon as practical, but no later than 30 business days after the date of closing. (4) Any money from a noninstitutional investor for disbursement at a mortgage loan closing must be deposited with and disbursed by an attorney duty licensed in this state or by a title company duly licensed in this state. A person acting as a loan originator may not have control of any money from a noninstitutional investor. This subsection does not prohibit a licensee under this part from receiving a loan origination fee upon the closing of the mortgage loan funded by the noninstitutional investor. ***Don t touch the Money*** Rev 2/24/ All Rights Reserved by FMBS

59 PART III - MORTGAGE LENDERS FLORIDA STATUTE CHAPTER Exemptions Mortgage lender's license requirements Correspondent mortgage lender's license requirements Audited financial statements Renewal of mortgage lender s license; branch office license renewal Saving clause Branch offices Requirements of licensees under ss Loan application process Lock-in agreement Commitment process Expiration of lock-in agreement or commitment Administrative penalties and fines; license violations Net worth Mortgage lender or correspondent mortgage lender when acting as a mortgage broker Lender fees and charges Requirements for selling loans to noninstitutional investors Servicing audits Other products and services. Rev 2/24/ All Rights Reserved by FMBS

60 [Effective 10/1/10] Mortgage lender license (1) Each person who acts as a mortgage lender must be licensed under this section. (2) In order to apply for a mortgage lender license an applicant must: (a) Submit a completed application form as prescribed by the commission by rule. (b) Designate a qualified principal loan originator who meets the requirements of s on the application form. (c) Submit a nonrefundable application fee of $500, and the $100 nonrefundable fee if required by s Application fees may not be prorated for partial years of licensure. (d) Submit fingerprints for each of the applicant s control persons in accordance with rules adopted by the commission: 1. The fingerprints may be submitted to the registry, the office, or a vendor acting on behalf of the registry or the office. 2. The office may contract with a third-party vendor to provide live-scan fingerprinting in lieu of a paper fingerprint card. 3. A state criminal history background check must be conducted through the Department of Law Enforcement and a federal criminal history background check must be conducted through the Federal Bureau of Investigation. 4. All fingerprints submitted to the Department of Law Enforcement must be submitted electronically and entered into the statewide automated fingerprint identification system established in s (2)(b) and available for use in accordance with s (2)(g) and (h). The office shall pay an annual fee to the department to participate in the system and inform the department of any person whose fingerprints are no longer required to be retained. 5. The costs of fingerprint processing, including the cost of retaining the fingerprints, shall be borne by the person subject to the background check. 6. The office is responsible for reviewing the results of the state and federal criminal history checks and determining whether the applicant meets licensure requirements. (e) Indicate whether the applicant will be seeking a servicing endorsement on the application form. Rev 2/24/ All Rights Reserved by FMBS

61 (f) Submit a copy of the applicant s financial audit report for the most recent fiscal year which, pursuant to United States generally accepted accounting principles. lf the applicant is a wholly owned subsidiary of another corporation, the financial audit report for the parent corporation satisfies this requirement. The commission may establish by rule the form and procedures for filing the financial audit report, including the requirement to file the report with the registry when technology is available. The financial audit report must document that the applicant has a bona fide and verifiable net worth, of at least $63,000 if the applicant is not seeking a servicing endorsement, or at least $250,000 if the applicant is seeking a servicing endorsement, which must be continuously maintained as a condition of licensure. However, if the applicant held an active license issued before October 1, 2010, pursuant to former s , and the applicant is seeking a servicing endorsement, the minimum net worth requirement: 1. Until September 30, 2011, is $63, Between October 1, 2011, and September 30, 2012, is $125, On or after October 1, 2012, is $250,000. (g) Authorize the registry to obtain an independent credit report on each of the applicant's control persons from a consumer reporting agency, and transmit or provide access to the report to the office. The cost of the credit report shall be borne by the applicant. (h) Submit additional information or documentation requested by the office and required by rule concerning the applicant or a control person of the applicant. Additional information may include documentation of pending and prior disciplinary and criminal history events, including arrest reports and certified copies of charging documents, plea agreements, judgments and sentencing documents, documents relating to pretrial intervention, orders terminating probation or supervised release, final administrative agency orders, or other comparable documents that may provide the office with the appropriate information to determine eligibility for licensure. (i) Submit any other information required by the registry for the processing of the application. (3) An application is considered received for the purposes of s upon the office's receipt of all documentation from the registry, including the completed application form, criminal history information, and independent credit report, as well as the license application fee, the fee required under s , and all applicable fingerprinting processing fees. Rev 2/24/ All Rights Reserved by FMBS

62 (4) The office shall issue a mortgage lender license to each person who is not otherwise ineligible and who meets the requirements of this section. However, it is a ground for denial of licensure if the applicant or one of the applicant's control persons: (a) Has committed any violation specified in ss , or is the subject of a pending felony criminal prosecution or a prosecution or an administrative enforcement action, in any jurisdiction, which involves fraud, dishonesty, breach of trust, money laundering, or any other act of moral turpitude. (b) Has failed to demonstrate the character, general fitness, and financial responsibility necessary to command the confidence of the community and warrant a determination that the applicant wit[ operate honestly, fairly, and efficiently. 1. lf the office has information that could form the basis for license denial under this paragraph, before denying the license, the office must notify the applicant in writing of the specific items of concern and provide the applicant with an opportunity to explain the circumstances surrounding the specific items and provide any information that the applicant believes is relevant to the office's determination. 2. For purposes of evaluating adverse information found in an applicant s credit report, the information must be considered within the totality of the circumstances. lnformation provided by the applicant under subparagraph 1., or information obtained by the office by other means, may be used to provide a context for the adverse items. For example, the adverse items may have resulted from factors that do not necessarily reflect negatively upon the applicant s character, general fitness, or financial responsibility. 3. The office may not use a credit score or the absence or insufficiency of credit history information to determine character, general fitness, or financial responsibility. 4. lf information contained in a credit report is used as the basis for denying a license, the office shall, in accordance with s (3), provide with particularity the grounds or basis for denial. The use of the terms "poor credit history," "poor credit rating," or similar language do not meet the requirements of this paragraph. (5) The office may not issue a license if the applicant has had a mortgage lender license or its equivalent revoked in any jurisdiction, or any of the applicant's control persons has ever had a loan originator license or its equivalent revoked in any jurisdiction. (6) A person required to be licensed under this part, or an agent or employee thereof, is deemed to have consented to the venue of courts in this state regarding any matter within the authority of ss regardless of where an act or violation was committed. (7) A license issued in accordance with this part is not transferable or assignable. Rev 2/24/ All Rights Reserved by FMBS

63 (8) A mortgage lender or branch office license may be annulled pursuant to s if it was issued by the office by mistake. A license must be reinstated if the applicant demonstrates that the requirements for obtaining the license under this chapter have been satisfied. (9) Each lender, regardless of the number of branches it operates, shall designate a principal loan originator representative who exercises control of the licensee's business, and a branch manager for each branch office. Each mortgage lender must keep the office informed of the persons designated as prescribed by commission rule, which includes documentation of the individual s acceptance of such responsibility. If the designation is inaccurate, the branch shall be deemed to be operated under the full charge, control, and supervision by each officer, director, or ultimate equitable owner of a 10 percent or greater interest in the mortgage lender business, or any other person in a similar capacity during that time. (10) All mortgage lender licenses must be renewed annually by December 31 pursuant to s lf a person holding an active mortgage lender license has not applied to renew the license on or before December 31, the mortgage lender license expires on December 31. lf a person holding an active mortgage lender license has applied to renew the license on or before December 31, the mortgage lender license remains active until the renewal application is approved or denied. A mortgage lender is not precluded from reapplying for licensure upon expiration of a previous license [Effective 10/1/10] Mortgage lender license renewal (1) In order to renew a mortgage lender license, a mortgage lender must: (a) Submit a completed license renewal form as prescribed by commission rule. (b) Submit a nonrefundable renewal fee of $475, the $100 nonrefundable fee if required by s , and nonrefundable fees to cover the cost of further fingerprint processing and retention as set forth in commission rule. (c) Submit fingerprints in accordance with s (2)(d) for any new control persons who have not been screened. (d) Provide proof that the mortgage lender continues to meet the applicable net worth requirement in a form prescribed by commission rule. (e) Authorize the registry to obtain an independent credit report on the mortgage lender from a consumer reporting agency, and transmit or provide access to the report to the office. The cost of the credit report shall be borne by the licensee. (f) Submit any additional information or documentation requested by the office and required by rule concerning the licensee. Additional information may include documentation of pending and prior disciplinary and criminal history events, including arrest reports and certified copies of charging documents, plea agreements, judgments and sentencing documents, documents relating to pretrial intervention, orders terminating probation or supervised release, final administrative agency orders, or other comparable documents that may provide the office with the appropriate information to determine eligibility for renewal of licensure. Rev 2/24/ All Rights Reserved by FMBS

64 (2) The office may not renew a mortgage lender license unless the mortgage lender continues to meet the minimum requirements for initial licensure pursuant to s and adopted rule Audited financial statements - All Audited financial statements required by ss must be prepared by an independent licensed certified public accountant. A mortgage lender must obtain an annual financial audit report as of the date on the licensee's fiscal year end, as disclosed to the office on the application. The mortgage lender shall submit a copy of the report to the office within 120 days after the end of the licensee s fiscal year. lf the licensee is a wholly owned subsidiary of another corporation, the financial audit report of the parent corporation's satisfies this requirement. lf the licensee changes its fiscal year, the licensee must file a report within 18 months after the previously submitted report. The commission may establish by rule the procedures and form for filing a financial audit report including the requirement to file the report with the registry when technology is available Branch offices (1) A branch office license of a mortgage lender must be licensed under this section. (2) The office shall issue a branch office license to a mortgage lender after the office determines that the mortgage lender has submitted a completed branch office application form as prescribed by rule by the commission and an initial nonrefundable branch office license fee of $225. Application fees may not be prorated for partial years of licensure. The branch office application must include the name and license number of the mortgage lender this part, the name of the branch manager in charge of the branch office, and the address of the branch office. The branch office license shall be issued in the name of the mortgage lender and must be renewed in conjunction with the license renewal. An application is considered received for purposes of s upon receipt of a completed branch office renewal form, as prescribed by commission rule, and the required fees. (3) A branch office license must be renewed at the time of renewing the mortgage lender license. A nonrefundable fee of $225 per branch office must be submitted at the time of renewal. Rev 2/24/ All Rights Reserved by FMBS

65 [Effective 10/1/10] Principal loan originator and branch manager for mortgage lender (1) Each mortgage lender business must be operated by a principal loan originator who shall have full charge, control, and supervision of the mortgage lender business. The principal loan originator must be licensed as a loan originator pursuant to s Each mortgage lender must keep the office informed of the person designated as the principal loan originator as prescribed by commission rule. lf the designation is inaccurate, the business shall be deemed to be operated under the full charge, control, and supervision of each officer, director, or ultimate equitable owner of a 10 percent or greater interest in the mortgage lender business, or any other person in a similar capacity during that time. (2) Each branch office of a mortgage lender must be operated by a branch manager who shall have full charge, control, and supervision of the branch office. The designated branch manager must be a licensed loan originator pursuant to s Each mortgage lender must keep the office informed of the person designated as the branch manager as prescribed by commission rule, which includes documentation of the individual s acceptance of such responsibility. lf the designation is inaccurate, the branch office shall be deemed to be operated under the full charge, control, and supervision of each officer, director, or ultimate equitable owner of a 10 percent or greater interest in the mortgage lender business, or any other person in a similar capacity during that time Requirements of mortgage lenders (1) A mortgage lender that makes mortgage loans on real estate in this state shall transact business from a principal place of business. Each principal place of business and each branch office shall be operated under the full charge, control, and supervision of the licensee under ss (2) A license issued under this part is not transferable or assignable. (3) A mortgage lender shall report, on a form prescribed by rule of the commission, any change in the information contained in any initial application form, or any amendment thereto, within 30 days after the change is effective. (4) A mortgage lender shall report any changes in the principal loan originator, and addition or subtraction of a control person, or any change in the form of business organization by written amendment in such form and at such time that the commission specifies by rule. (a) In any case in which a person or a group of persons, directly or indirectly or acting through one or more persons, proposes to purchase or acquire a controlling interest in a licensee, such person or group must submit an initial application for licensure as a mortgage lender before such purchase or acquisition and at the time and in form prescribed by the commission by rule. Rev 2/24/ All Rights Reserved by FMBS

66 (b) Any addition of a control person who has not previously filed a Uniform Mortgage Biographical Statement & Consent Form, MU2, or has not previously complied with the fingerprinting and credit report requirements of s is subject to the provisions of this section. lf, after the addition of a control person, the office determines that the licensee does not continue to meet licensure requirements, the office may bring administrative action in accordance with s to enforce this section. (5) Each mortgage lender shall report in a form prescribed by rule of the commission any indictment, information, charge, conviction, or plea of guilty or nolo contendre regardless of adjudication to any felony or any crime or administrative violation that involves fraud, dishonesty, breach of trust, money laundering or any other act of moral turpitude, in any jurisdiction, by the licensee or any principal officer, director, or ultimate equitable owner of 10 percent or more of the licensed corporation, within 30 business days after the indictment, information, charge, conviction, or final administrative action. (6) Each mortgage lender shall report any action in bankruptcy, voluntary or involuntary, to the office, within 30 business days after the action is instituted. (7) Each mortgage lender shall designate a registered agent in this state for service of process. (8) Each licensee under ss shall provide an applicant for a mortgage loan a good faith estimate of the costs the applicant can reasonably expect to pay in obtaining a mortgage loan. The good faith estimate of costs shall be mailed or delivered to the applicant within 3 business days after the licensee receives a written loan application from the applicant. The estimate of costs may be provided to the applicant by a person other than the licensee making the loan. The good faith estimate must identify the recipient of all payments charged to the borrower and, except for all fees to be received by the mortgage broker and the mortgage lender, may be disclosed in generic terms, such as, but not limited to, paid to appraiser, officials, title company, or any other third-party service provider. The licensee bears the burden of proving such disclosures were provided to the borrower. The commission may adopt rules that set forth the disclosure requirements of this section (9) The disclosures in this subsection must be furnished in writing at the time an adjustable rate mortgage loan is offered to the borrower and whenever the terms of the adjustable rate mortgage loan offered have a material change prior to closing. The lender shall furnish the disclosures relating to adjustable rate mortgages in a format prescribed by ss and of Regulation Z of the Board of Governors of the Federal Reserve System, as amended; its commentary, as amended; and the federal Truth in Lending Act, 15 U.S.C. ss et seq., as amended; together with the Consumer Handbook on Adjustable Rate Mortgages, as amended; published by the Federal Reserve Board and the Federal Home Loan Bank Board. The licensee bears the burden of proving such disclosures were provided to the borrower. Rev 2/24/ All Rights Reserved by FMBS

67 (10) In every mortgage loan transaction, each mortgage lender shall notify a borrower of any material changes in the terms of a mortgage loan previously offered to the borrower within 3 business days after being made aware of such changes by the lender but at least 3 business days before signing the settlement or closing statement. The licensee bears the burden of proving such notification was provided and accepted by the borrower. A borrower may waive the right to receive notice of a material change if the borrower determines that the extension of credit is needed to meet a bona fide personal financial emergency and the right to receive notice would delay the closing of the mortgage loan. The imminent sale of the borrower's home at foreclosure during the 3-day period before the signing of the settlement or closing statement constitutes an example of a bona fide personal financial emergency. In order to waive the borrower's right to receive notice the borrower must provide the licensee with a dated written statement that describes the personal financial emergency, waives the right to receive the notice, bears the borrower's signature, and is not on a printed form prepared by the licensee for the purpose of such a waiver. (11) A mortgage lender may close loans in its own name but may not service the loan for more than 4 months unless the lender has a servicing endorsement. Only a mortgage lender who continuously maintains a net worth of at least $250,000 may obtain a servicing endorsement. (12) A mortgage lender must report to the office the failure to meet the applicable net worth requirements of s within 2 days (48 hours) after the mortgage lender's knowledge of such failure or after the mortgage lender should have known of such failure Loan application process (1) ln addition to the requirements set forth in s (8), before accepting an application fee in whole or in part, a credit report fee, an appraisal fee, or a fee charged as reimbursement for third-party charges, a mortgage lender shall make a written disclosure to the borrower, which disclosure may be contained in the application, setting forth: (a) Whether all or any part of such fees or charges is refundable. (b) The terms and conditions for the refund, if all or any part of the fees or charges is refundable. (c) A realistic estimate of the number of days required to issue a commitment following receipt of the application by the lender. (d) The name or title of a person within the lender's organization to whom the borrower may address written questions, comments, or complaints and who is required to promptly respond to such inquiries. Rev 2/24/ All Rights Reserved by FMBS

68 (2) The disclosures required in subsection (1) must be acknowledged in writing by the borrower and maintained by the mortgage lender, and a copy of such acknowledgment shall be given to the borrower. (3) The borrower may, without penalty or responsibility for paying additional fees and charges, withdraw an application at any time prior to acceptance of commitment. Upon such withdrawal, the lender is responsible for refunding to the borrower only those fees and charges to which the borrower may be entitled pursuant to the terms set forth in the written disclosure required by subsection (1), except that: (a) lf the lender failed to provide the borrower with the written disclosure required by subsection (1), the lender shall promptly refund to the borrower all funds paid to the lender; or (b) lf the lender failed to make a good faith effort to approve the loan, the lender shall promptly refund to the borrower all funds paid to the lender. (4) The application fee must be reasonably related to the services to be performed and may not be based upon a percentage of the principal amount of the loan or the amount financed. (5) For the purposes of this section, the term "application fee" means any moneys advanced by the borrower upon filing an application with a mortgage lender to offset the lender's expenses for determining whether the borrower is qualified for the mortgage loan or whether the mortgage loan should be funded Lock-in agreement (1) Each lock-in agreement must be in writing and must contain: (a) The expiration date of the lock-in, if any; (b) The interest rate locked in, if any; (c) The discount points locked in, if any; (d) The commitment fee locked in, if any; (e) The lock-in fee, if any; and (f) A statement advising of the provisions of this part regarding lock-in agreements. (2) The mortgage lender shall make a good faith effort to process the mortgage loan application and stand ready to fulfill the terms of its commitment before the expiration date of the lock-in agreement or any extension thereof. (3) Any lock-in agreement received by a mortgage lender by mail or through a mortgage broker must be signed by the mortgage lender in order to become effective. The borrower may rescind any lock-in agreement until a written confirmation of the agreement has been signed by the lender and mailed to the borrower or to the mortgage broker pursuant to its contractual relationship with the borrower. If a borrower elects to so rescind, the mortgage lender shall promptly refund any lock-in fee paid. Rev 2/24/ All Rights Reserved by FMBS

69 Q: For a lock-in to be valid it must A: Be signed by the lender Q: Borrower may rescind lock-in and receive a refund of any lock-in fee A: Until lock-in signed by lender (4) Before issuing a mortgage loan rate lock-in agreement, a mortgage lender must have the ability to timely advance funds on all mortgage loans for which rate lock-in agreements have been issued. As used in this section, "ability to timely advance funds" means having sufficient liquid assets or a line of credit necessary to cover all rate lock-in agreements issued with respect to which a lock-in fee is collected. (a) A mortgage lender that does not comply with this subsection may issue mortgage rate lock-in agreements only if, prior to the issuance, the mortgage lender: 1. Has received a written rate lock-in agreement from the mortgage lender that complies with this subsection; or 2. Has received a written rate lock-in agreement from an institutional investor or an agency of the Federal Government or the state or local government that will be funding, making, or purchasing the mortgage loan. (b) All rate lock-in fees collected by a mortgage lender who is not in compliance must be deposited into an escrow account in a federally insured financial institution, and such fees may not be removed from such escrow account until: 1. The mortgage loan closes and is funded; 2. The applicant cancels the loan application or the loan application is rejected; or 3. The mortgage lender is required to forward a portion of the lock-in fee to mortgage lender, institutional investor, or agency that will be funding, making, or purchasing the loan. The mortgage lender may remove only the amount of the lock-in fee actually paid to another mortgage lender, institutional investor, or agency. Q: Funds may be removed from escrow account by a mortgage lender who is not in compliance with "ability to timely advance funds"? a. Closed & Funded b. Cancelled or rejected c. Once Placed with someone that has the ability to fund the loan d. All of the above Rev 2/24/ All Rights Reserved by FMBS

70 (5) For purposes of this section, the term "lock-in fee" means any moneys advanced by the borrower to lock in for a specified period of time a specified interest rate or discount points. (6) The commission may adopt by rule a form for required lock-in agreement disclosures Commitment process (1) If a commitment is issued, the mortgage lender shall disclose in writing: (a) The expiration date of the commitment; (b) The mortgage amount, meaning the face amount of credit provided to the borrower or in the borrower's behalf; (c) lf the interest rate or other terms are subject to change before expiration of the commitment: 1. The basis, index, or method, if any, which will be used to determine the rate at closing. Such basis, index, or method shall be established and disclosed with direct reference to the movement of an interest rate index or of a national or regional index that is available to and verifiable by the borrower and beyond the control of the lender; or 2. The following statement, in at least 10-point bold type: "The interest rate will be the rate established by the lender in its discretion as its prevailing rate... days before closing."; (d) The amount of the commitment fee, if any, and whether and under what circumstances the commitment fee is refundable; and (e) The time, if any, within which the commitment must be accepted by the borrower. (2) The provisions of a commitment cannot be changed prior to expiration of the specified period within which the borrower must accept it. lf any information necessary for an accurate disclosure required by subsection (1) is unknown to the mortgage lender at the time disclosure is required, the mortgage lender shall make the disclosure based upon the best information reasonably available to it and shall state that the disclosure is an estimate. (3) A commitment fee is refundable if: (a) The commitment is contingent upon approval by parties to whom the mortgage lender seeks to sell the loan. (b) The loan purchaser's requirements are not met due to circumstances beyond the borrower's control. (c) The borrower is witting but unable to comply with the loan purchaser's requirements. Rev 2/24/ All Rights Reserved by FMBS

71 Expiration of lock-in agreement or commitment If a lock-in agreement has been executed and the loan does not close before the expiration date of the lock-in agreement or any commitment issued consistent therewith through no substantial fault of the borrower, the borrower may withdraw the application or reject or terminate any commitment, whereupon the mortgage lender shall promptly refund to the borrower any lock-in fee and any commitment fee paid by the borrower Net Worth (1) The net worth requirements in s shall be continually maintained as a condition of licensure. (2) If a mortgage lender fails to satisfy the net worth requirements, the mortgage lender shall immediately cease taking any new mortgage loan applications. Thereafter, the mortgage lender shall have up to 60 days within which to satisfy the net worth requirements. lf the licensee makes the office aware, prior to an examination, that the licensee no longer meets the net worth requirements, the mortgage lender shall have 120 days within which to satisfy the net worth requirements. A mortgage lender may not resume acting as a mortgage lender without written authorization from the office, which authorization shall be granted if the mortgage lender or correspondent mortgage lender provides the office with documentation which satisfies the requirements of s whichever is applicable. (120 days if lender voluntarily tells the state and 60 days if they don t but state finds out) (3) lf the mortgage lender does not satisfy the net worth requirements within 120- days, the license of the mortgage lender shall be deemed to be relinquished and canceled and all servicing contracts shall be disposed of in a timely manner by the mortgage lender Mortgage lender when acting as a mortgage broker The provisions of this part do not prohibit a mortgage lender from acting as a mortgage broker. However, in mortgage transactions in which a mortgage lender acts as a mortgage broker, the provisions of ss , (2), , and (1), (2), and (3) apply. Rev 2/24/ All Rights Reserved by FMBS

72 Lender fees and charges (1) In a mortgage financing transaction, fees designated as loan origination fees, up to 4 percent of the face amount of the loan or line of credit, are not considered interest or finance charge under chapter 687. (2) In a mortgage finance transaction, fees designated as loan origination fees, up to 10 percent of the face amount of the loan or line of credit, are not considered interest or finance charges under chapter 687 if such licensee sells or assigns the loan to another person within 90 days after the date the loan was funded. Florida Statute (F.S. 687) USURY = Excessive amount of interest (%) Loans are FORGIVEN!!!! Maximum interest rate on loan amounts up to $500,000 = 18% Maximum interest rate on loan amounts over $500,000 = 25% Hold mortgage (indefinitely) 4 points (4%) Sell mortgage within 90 days 10 points (10%) Q: Ch 687 = usury = covers land & building ONLY Q: How much of a usury loan must be repaid? A: NONE Q: Lender charges 18% & 6 points, how long do they have to get it out of their portfolio to avoid usury? A: 90 Days Requirements for selling loans to noninstitutional investors (1) A mortgage lender, when selling a mortgage loan to a noninstitutional investor, shall: (a) Before any payment of money by a noninstitutional investor, provide an opinion of value from an appraiser stating the value of the security property unless the opinion is waived in writing. The opinion must state the value of the property as it exists on the date of the opinion. lf any relationship exists between the lender and the appraiser, that relationship shall be disclosed. (b) Provide to the noninstitutional investor a mortgagee's title insurance policy or an opinion of title by an attorney licensed to practice law in this state, or a copy thereof: Rev 2/24/ All Rights Reserved by FMBS

73 1. lf a title insurance policy is issued, it must insure the noninstitutional investor against the unmarketability of the mortgagee's interest in such title. lt must also specify any superior liens that exist against the property. lf an opinion of title is issued by an attorney, the opinion must include a statement as to the marketability of the title to the property described in the mortgage and specify the priority of the mortgage being purchased. 2. If the title insurance policy or opinion of title is not available at the time of purchase, the licensee shall provide a binder of the title insurance or conditional opinion of title. This binder or opinion must include any conditions or requirements needed to be corrected before the issuance of the final title policy or opinion of title. The binder or opinion must also include information concerning the requirements specified in subparagraph 1. Any conditions must be eliminated or waived in writing by the investor before delivery to the noninstitutional investor. The policy or opinion, or a copy thereof, shall be delivered to the investor within a reasonable period of time, not exceeding 6 months, after purchase. 3. The requirements of this paragraph may be waived in writing. If the requirements are waived by the noninstitutional investor, the waiver must include the following wording: "The noninstitutional investor acknowledges that the mortgage lender selling this mortgage loan is not providing a title insurance policy or opinion of title issued by an attorney who is licensed to practice law in the State of Florida. Any requirement for title insurance or for a legal opinion of title is the sole responsibility of the noninstitutional mortgage purchaser." (c) Provide, if the loan is other than a first mortgage, a statement showing the balance owed by the mortgagor on any existing mortgages prior to this investment and the status of such existing mortgages. (d) Provide a disclosure if the licensee is directly or indirectly acting as a borrower or principal in the transaction. (2) Each mortgage, or other instrument securing a note or assignment thereof, must be recorded before being delivered to the noninstitutional investor. (3) Each mortgage and assignment shall be recorded as soon as practical, but within 30 business days after the date of purchase. (4) lf the loan is to be serviced by a licensee under this part for a noninstitutional investor, there shall be a written servicing agreement. (5) The mortgage lender shall cause the original note to be property endorsed showing the assignment of the note to the noninstitutional investor. Rev 2/24/ All Rights Reserved by FMBS

74 Servicing audits (1) (a) Each licensee under part lll of chapter who services mortgage loans shall: 1. Maintain a segregated set of records for accounts that are serviced by the Iicensee. 2. Have a separate, segregated depository account for all receipts relating to servicing. (b) For fiscal years ending after January 1, 1992, such records and receipts shall be audited annually pursuant to the Uniform Single Audit Program for Mortgage Bankers as approved by the Mortgage Bankers Association of America with the cooperation of the American Institute of Certified Public Accountants. (c) The audited statement shall be maintained at the licensee's place of business. (2) (a) ln lieu of the audit referred to in subsection (1), a person who services an aggregate value of less than $7.5 million in outstanding mortgage loans, excluding mortgage loans serviced under contract as an agent for federal, state, or municipal agencies, may obtain a fidelity bond, financial guaranty bond, fidelity insurance, or other financial guaranty providing protection against theft, loss, or other illegal diversion of funds for any amounts normally held by such person. (b) The commission may adopt rules to ensure that investors are adequately protected under this subsection Other products and services This part does not prohibit a mortgage lender from offering, for a fee or commission, products and services in addition to those offered in conjunction with making a mortgage loan. Rev 2/24/ All Rights Reserved by FMBS

75 FLORIDA STATUTE CHAPTER 494 PART IV - FLORIDA FAIR LENDING ACT Short title; purposes Definitions Prohibited acts Required disclosures for high-cost home loans Liability of purchasers and assignees Right to cure high-cost home loans Powers and duties of the commission and office; investigations; examinations; injunctions; orders Enforcement General rule. Rev 2/24/ All Rights Reserved by FMBS

76 Short title; purposes (1) This act shall be known as the "Florida Fair Lending Act." (2)(a) The Legislature finds that abusive mortgage lending has become a problem in this state even though most high-cost home loans do not involve abusive mortgage practices. One of the most common forms of abusive lending is the making of loans that are equity-based rather than income-based. The financing of points and fees in these loans provides immediate income to the originator and encourages creditors to repeatedly refinance home loans. As long as there is sufficient equity in the home, an abusive creditor benefits even if the borrower is unable to make the payments and is forced to refinance. The financing of high points and fees causes the loss of equity in each refinancing and often leads to foreclosure. (b) Abusive lending has threatened the viability of many communities and caused decreases in home ownership. White the marketplace appears to operate effectively for conventional mortgages, too many homeowners find themselves victims of overreaching creditors who provide loans with unnecessarily high costs and terms that are unnecessary to secure repayment of the loan. The Legislature finds that as competition and self-regulation have not eliminated the abusive terms from home secured loans, the consumer protection provisions of this act are necessary to encourage fair lending. Q: Florida specific law that deals with predatory lending? a. FFLA (Florida Fair Lending Act) c. UCC b. Statue of Frauds d. FS Definitions As used in this act: (1) "Affiliate" means any company that controls, is controlled by, or is in common control with another company, as set forth in 12 U.S.C. ss et seq. and the regulations adopted there under. (2) "Annual percentage rate" means the annual percentage rate for the loan calculated according to the provisions of 15 U.S.C. s and the refutations adopted there under by the Federal Reserve Board. (3) "Borrower" means any natural person obligated to repay a loan, including, but not limited to, a co borrower, cosigner, or guarantor. (4) "Bridge loan" means a loan with a maturity of less than 18 months that only requires the payment of interest until such time as the entire unpaid balance is due and payable. (5) "Commission" means the Financial Services Commission. (6) "Office" means the Office of Financial Regulation of the commission. Rev 2/24/ All Rights Reserved by FMBS

77 (7) "High-cost home loan" means a home loan as defined in 15 U.S.C. s. 1602(aa) and refutations adopted there under. (8) "Lender" means any person who makes a high-cost home loan or acts as a mortgage broker or lender, finance company, or retail installment seller with respect to a high-cost home loan, but shall not include any entity chartered by the United States Congress when engaging in secondary market mortgage transactions as an assignee or otherwise Prohibited acts (1) PREPAYMENT PENALTIES - (a) A high-cost home loan may not contain terms that require a borrower to pay a prepayment penalty for paying all or part of the loan principal before the date on which the payment is due. (b) Notwithstanding paragraph (a), a lender making a high-cost home loan may include in the loan contract a prepayment fee or penalty, for up to the first 36 months after the date of consummation of the loan, if: 1. The borrower has also been offered a choice of another product without a prepayment penalty. 2. The borrower has been given, at least 3 business days prior to the loan consummation, a written disclosure of the terms of the prepayment fee or penalty by the lender, including the benefit the borrower will receive for accepting the prepayment fee or penalty through either a reduced interest rate on the loan or reduced points or fees. (2) DEFAULT INTEREST RATE - A high-cost home loan may not provide for a higher interest rate after default on the loan. However, this prohibition does not apply to interest rate changes in a variable rate loan otherwise consistent with the provisions of the loan documents, provided the change in interest rate is not triggered by a default or the acceleration of the interest rate. (3) BALLOON PAYMENTS - A high-cost home loan having a term of less than 10 years may not contain terms under which the aggregate amount of the regular periodic payments would not fully amortize the outstanding principal balance. However, this prohibition does not apply when the payment schedule is adjusted to account for the seasonal or irregular income of the borrower or if the loan is a bridge loan. (4) NEGATIVE AMORTIZATION - A high-cost home loan may not contain terms under which the outstanding principal balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of the interest due. Rev 2/24/ All Rights Reserved by FMBS

78 (5) PREPAID PAYMENTS - A high-cost home loan may not include terms under which more than two periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower. (6) EXTENDING CREDIT WITHOUT REGARD TO THE PAYMENT ABILITY OF THE BORROWER - A lender making a high-cost home loan shall not engage in any pattern or practice of extending high-cost home loans to borrowers based upon the borrowers' collateral without regard to the borrowers' abitity to repay the loan, including the borrowers' current and expected income, current obligations, and employment. Q: Which of the following is prohibited with section 32 High Cost loans? a. Door-to-door b. Negative Amortization c. Extending credit without the ability to repay (based on equity only) d. All of the above (7) PAYMENTS TO A HOME CONTRACTOR - A lender shall not make any payments to a contractor under a home improvement contract from amounts of a high-cost home loan other than: (a) In the form of an instrument that is payable to the borrower or jointly to the borrower and the contractor; or (b) At the election of the borrower by a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the lender, and the contractor prior to the date of payment. (8) DUE-ON-DEMAND CLAUSE - A high-cost home loan may not contain a provision that permits the lender, in its sole discretion, to call or accelerate the indebtedness. This provision does not prohibit acceleration of the loan due to the borrower's failure to abide by the terms of the loan, or due to fraud or material misrepresentation by the consumer in connection with the loan. (9) REFINANCING WITHIN AN 18-MONTH-PERlOD (High Cost TO High Cost loan) (a) A lender, its affiliate, or an assignee shall not refinance any high-cost home loan to the same borrower within the first 18 months of the loan when the refinancing does not have a reasonable benefit to the borrower considering all of the circumstances, including, but not limited to, the terms of both the new and refinanced loans, the cost of the new loan, and the borrower's circumstances. (b) A lender or assignee shall not engage in acts or practices to evade this requirement, including a pattern or practice of arranging for the refinancing of the lender's or assignee's own loans by affiliated or unaffiliated lenders or modifying a loan agreement, whether or not the existing loan is satisfied and replaced by the new loan, and charging a fee. Rev 2/24/ All Rights Reserved by FMBS

79 (10) OPEN-ENDED LOANS - A lender shall not make any loan as an open-ended loan in order to evade the provisions of this act unless such open-ended loans meet the definition in 12 C.F.R. s (a)(20). (11) RECOMMENDATION OF DEFAULT - A lender shall not recommend or encourage default on an existing loan or other debt prior to and in connection with the closing or planned closing of a high-cost home loan that refinances all or any portion of such existing loan or debt. (12) PROHIBITED DOOR-TO-DOOR LOANS - A high-cost home loan may not be made as a direct result of a potential or future lender or its representative offering or selling a high-cost home loan at the residence of a potential borrower without a prearranged appointment with the potential borrower or the expressed invitation of the potential borrower. This subsection does not apply to mail solicitations that may be received by the potential borrower. (13) LATE PAYMENT FEES - A lender may not charge a late payment fee for a high cost home loan except as provided in this subsection: (a) A late payment fee may not be in excess of 5 percent of the amount of the payment past due. Q: What is the maximum late fee on a FNMA/FHLMC mortgage? a. 3% c. 5% b. 4% d. 10% (b) A late payment fee may only be assessed for a payment past due for 15 days or more. (c) A late payment fee may not be charged more than once with respect to a single late payment. If a late payment fee is deducted from a payment made on the loan and such deduction causes a subsequent default on a subsequent payment, no late payment fee may be imposed for such default. lf a late payment fee has been imposed once with respect to a particular late payment, no such fee shall be imposed with respect to any future payment which would have been timely and sufficient, but for the previous default. (14) MODIFICATION OR DEFERRAL FEES - A lender may not charge a borrower any fees or other charges to modify, renew, extend, or amend a high-cost home loan or to defer any payment due under the terms of a high-cost home loan on a minimum of one modification, renewal, extension, or deferral per each 12 months of the length of the loan. Rev 2/24/ All Rights Reserved by FMBS

80 Required disclosures for high-cost home loans (1) In addition to other disclosures required by law and in conspicuous type: (a) Notice to borrower - A lender making a high-cost home loan shall provide a notice to a borrower in substantially the following form: If you obtain this high-cost home loan, the lender will have a mortgage on your home. You could lose your home and any money you have put into it if you do not meet your obligations under the loan. Mortgage loan rates and closing costs and fees vary based on many factors, including your particular credit and financial circumstances, your employment history, the loan to- value requested, and the type of property that will secure your loan. The loan rate and fees could also vary based upon which lender or broker you select. As a borrower, you should shop around and compare loan rates and fees. You should also consider consulting a qualified independent credit counselor or other experienced financial adviser regarding the rates, fees, and provisions of this mortgage loan before you proceed. You should contact the United States Department of Housing and Urban Development for a list of credit counselors available in your area. You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application. Borrowing for the purpose of debt consolidation can be an appropriate financial management tool. However, if you continue to incur significant new credit card charges or other debts after this high-cost home loan is closed and then experience financial difficulties, you could lose your home and any equity you have in it if you do not meet your mortgage loan obligations. Remember that property taxes and homeowners' insurance are your responsibility. Not all lenders provide escrow services for these payments. You should ask your lender about these services. Also, your payments on existing debts contribute to your credit rating. You should not accept any advice to ignore your regular payments to your existing creditors. (b) Annual percentage rate.-a lender making a high-cost home loan shall disclose: 1. In the case of a fixed mortgage, the annual percentage rate and the amount of the regular monthly payment. 2. In the case of any other credit transaction, the annual percentage rate, the amount of the regular monthly payment and the amount of any balloon payment permitted under this section, a statement that the interest rate and monthly payment may increase, and the amount of the maximum Rev 2/24/ All Rights Reserved by FMBS

81 monthly payment based upon the maximum interest rate allowed pursuant to law. (c) Notice to purchasers and assignees. All high-cost home loans shall contain the following notice: Notice: This is a mortgage subject to the provisions of the Florida Fair Lending Act. Purchasers and assignees of this mortgage could be liable for alt claims and defenses with respect to the mortgage which the borrower could assert against the creditor. (2) TIMING OF DISCLOSURE - (a) The disclosure required by this subsection shall be given not less than 3 business days prior to the consummation of the high-cost home loan. (b) New disclosures are required when, after disclosure is made, the lender making the high-cost home loan changes the terms of the extension of credit, including if such changes make the original disclosures inaccurate, unless new disclosures are provided that meet the requirements of this section. (c) A lender may provide new disclosures pursuant to paragraph (b) by telephone, if: 1. The change is initiated by the borrower. 2. At the consummation of the high-cost home loan: a. The lender provides the disclosures in writing to the borrower. b. The lender and the borrower certify in writing that the new disclosures were provided by telephone no later than 3 days prior to the consummation of the high-cost home loan. (d) A creditor must disclose to any high-cost home loan borrower the rights of the borrower to rescind the high-cost home loan within 3 business days pursuant to 15 U.S.C. s.1635(a) and shall provide appropriate forms for the borrower to exercise his or her right to rescission. The notice, forms, and provisions thereof must be in accordance with the requirements of 15 U.S.C. s. 1635(a). Q: Which of the following are you required to disclose on high cost loans? a. You could lose your home and any money you have put into it if you do not meet your obligations under the loan. b. As a borrower, you should shop around and compare loan rates and fees. c. You should also consider consulting a qualified independent credit counselor or other experienced financial adviser regarding the rates, fees, and provisions of this mortgage loan before you proceed. d. All of the above Q: Which of the following is true with Florida High Cost Loans? a. Max 5% late fee b. Only 1 late fee per period c. Late fee can only be charged after 15 days late d. All of the above Rev 2/24/ All Rights Reserved by FMBS

82 Liability of purchasers and assignees Any person who purchases or is otherwise assigned a high-cost home loan shall be subject to all claims and defenses with respect to that mortgage that the borrower could assert against the creditor of the mortgage, to the same extent and subject to the same limitations that a borrower of a high-cost home loan may assert against an assignee or purchaser pursuant to 15 U.S.C. s Right to cure high-cost home loans (1) RIGHT TO REINSTATE - For a high-cost home loan, if a lender asserts that grounds for acceleration exist and requires the payment in full of all sums secured by the security instrument, the borrower, or anyone authorized to act on the borrower's behalf, shall have the right, during the 45-day period set forth in subsection (2), to cure the default and reinstate the home loan by tendering the amount or performance as specified in this section. However, once a lender has provided two such notices as required by this section, for two separate incidents, a lender is not thereafter required to provide the notice required by this section, and the borrower is not entitled by this section to cure the default, for a third or subsequent incident for which the lender asserts that grounds exist for acceleration of the loan and repayment in full. Cure of default as provided in this section shall reinstate the borrower to the same position as if the default had not occurred and shall nullify, as of the date of the cure, any acceleration of any obligation under the security instrument or note arising from the default. Q: How many days does a borrower have to cure a default with a high interest rate loan? a. 7 days b. 15 days c. 30 days d. 45 days (2) GROUNDS FOR REINSTATEMENT - Before any action filed to foreclose upon the home or other action is taken to seize or transfer ownership of the home, a notice of the right to cure the default must be delivered to the borrower at the address of the property upon which any security exists for the home loan by postage prepaid certified United States mail, return receipt requested, which notice is effective upon deposit in the United States mail, and shall inform the borrower: (a) Of the nature of default claimed on the home loan and of the borrower's right to cure the default by paying the sum of money required to cure the default. lf the amount necessary to cure the default will change during the 45-day period after the effective date of the notice due to the application of a daily interest rate or the addition of late payment fees, as allowed by this act, the notice shall give sufficient information to enable the borrower to calculate the amount at any point during the 45-day period. Rev 2/24/ All Rights Reserved by FMBS

83 (b) Of the date by which the borrower shall cure the default to avoid acceleration and initiation of foreclosure or other action to seize the home, which date shall not be less than 45 days after the date the notice is effective, and the name and address and telephone number of a person to whom the payment or lender shall be made. (c) That if the borrower does not cure the default by the date specified, the creditor may take steps to terminate the borrower's ownership of the property by requiring payment in full of the home loan and commencing a foreclosure proceeding or other action to seize the home. (d) Of the name and address of the creditor and the telephone number of a representative of the creditor whom the borrower may contact if the borrower disagrees with the creditor's assertion that a default has occurred or the correctness of the creditor's calculation of the amount required to cure the default. (3) FEES.-To cure a default under this section, a borrower shall not be required to pay any charge, fee, or penalty attributable to the exercise of the right to cure a default as provided for in this section, other than the fees specifically allowed by this act. The borrower shall not be liable for any attorney's fees or costs relating to the borrower's default that are incurred by the creditor prior to or during the 45-day period set forth in paragraph (2)(b) Powers and duties of the commission and office; investigations; examinations; injunctions; orders.- (1) (a) The commission and office are responsible for the administration and enforcement of this act. (b) The commission may adopt rules pursuant to ss (1) and to implement this act. The commission may adopt rules to allow electronic submission of any forms, documents, or fees required by this act. (2) (a) The office may conduct an investigation of any person whenever the office has reason to believe, upon complaint or otherwise, that any violation of the act has occurred. (b) Any person having reason to believe that a provision of this act has been violated may file a written complaint with the office selling forth the details of the alleged violation. (c) The office may conduct examinations of any person to determine compliance with this act. (3) (a) The office may bring action, through its own counsel in the name and on behalf of the state, against any person who has violated or is about to violate any provision of this act, or any rule or order issued under the act, to enjoin the person from continuing in or engaging in any act in furtherance of the violation. Rev 2/24/ All Rights Reserved by FMBS

84 (b) In any injunctive proceeding, the court may, on due showing by the office, issue a subpoena or subpoena duces tecum requiring the attendance of any witness and requiring the production of any books, accounts, records, or other documents and materials that appear necessary to the expeditious resolution of the application for injunction. (4) The office may issue and serve upon any person an order to cease and desist and to take corrective action whenever the office has reason to believe the person is violating, has violated, or is about to violate any provision of this act, any rule or order issued under this act, or any written agreement between the person and the office. All procedural matters relating to issuance and enforcement of cease and desist orders are governed by the Administrative Procedure Act. (5) Whenever the office finds a person in violation of this act, it may enter an order imposing a fine in an amount not exceeding $5,000 for each count or separate offense, provided that the aggregate fine for all violations of this act that could have been asserted at the time of the order imposing the fine shall not exceed $500,000. (6) Any violation of this act shall also be deemed to be a violation of chapter 494, chapter $16, chapter $20, chapter 655, chapter 657, chapter 658, chapter 660, chapter 663, chapter 665, or chapter 667. The commission may adopt rules to enforce this subsection Enforcement (1) Any person or the agent, officer, or other representative of any person committing a material violation of the provisions of this act shall forfeit the entire interest charged in the high-cost home loan or contracted to be charged or received, and only the principal sum of such high-cost home loan can be enforced in any court in this state, either at law or in equity. (2) A creditor in a home loan who, when acting in good faith, fails to comply with the provisions of this act shall not be deemed to have violated this act if the creditor establishes that within 60 days after receiving any notice from the borrower of the compliance failure, which compliance failure was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such errors, the borrower has been notified of the compliance failure, appropriate restitution has been made to the borrower, and appropriate adjustments are made to the loan. Bona fide errors shall include, but not be limited to, clerical, calculation, computer malfunction and programming, and printing errors. An error of legal judgment with respect to a person's obligations under this section is not a bona fide error. (3) The remedies provided in this section are cumulative. Rev 2/24/ All Rights Reserved by FMBS

85 General rule All counties and municipalities of this state are prohibited from enacting and enforcing ordinances, resolutions, and rules regulating financial or lending activities, including ordinances, resolutions, and rules disqualifying persons from doing business with a city, county, or municipality based upon lending interest rates or imposing reporting requirements or any other obligations upon persons regarding financial services or lending practices of persons or entities, and any subsidiaries or affiliates thereof, who: (1) Are subject to the jurisdiction of the office, including for activities subject to this chapter, except entities licensed under s ; (2) Are subject to the jurisdiction of the Office of Thrift Supervision, the Office of the Comptroller of the Currency, the National Credit Union Administration, the Federal Deposit lnsurance Corporation, the Federal Trade Commission, or the United States Department of Housing and Urban Development; (3) Originate, purchase, sell, assign, secure, or service property interests or obligations created by financial transactions or loans made, executed, or originated by persons referred to in subsection (1) or subsection (2) to assist or facilitate such transactions; (4) Are chartered by the United States Congress to engage in secondary market mortgage transactions; or (5) Are created by the Florida Housing Finance Corporation. Proof of noncompliance with this act can be used by a city, county, or municipality of this state to disqualify a vendor or contractor from doing business with a city, county, or municipality of this state.. Rev 2/24/ All Rights Reserved by FMBS

86 PART V LOANS UNDER FLORIDA UNIFORM LAND SALES PRACTICES LAW Mortgages offered by land developers licensed pursuant to the Florida Uniform Land Sales Practices Law; requirements; prohibitions No mortgage loan which has a face amount of $35,000 or less and is secured by vacant land registered under the Florida Uniform Land Sales Practices Law, chapter 498, shall be sold to a mortgagee, except a financial institution, by any person unless all of the following requirements are met: (1) Each mortgage securing a note or other obligation sold or offered for Sale shall be eligible for a recordation as a first mortgage. (2) Each mortgage negotiated pursuant to this section must include a mortgagee's title insurance policy or an opinion of title, from an attorney who is licensed to practice law in this state, on each parcel of land which is described in the mortgage. The policy or opinion shall reflect that there are no other mortgages on the property. A notice stating the priority of the mortgage shall be placed on the face of each mortgage in an amount over $35,000 issued pursuant to this section. (3) Contracts to purchase a mortgage loan shall contain, immediately above the purchaser's signature tine, the statement in 1O-point boldfaced type: "This mortgage is secured by vacant land subject to development at a future time." This statement shall also be typed or printed in 10-point type on the face of the note and mortgage sold. (4) The most recent assessment for tax purposes made by the county property appraiser of each parcel of land described in the mortgage shall be furnished to each mortgagee. (5) The mortgage broker shall record or cause to be recorded All mortgages or other similar documents prior to delivery of the note and mortgage to the mortgagee. (6) All funds received by the mortgage broker pursuant to this section shall promptly be deposited in the broker's trust account where they shall remain until the note and mortgage are fully executed and recorded. (7) Willful failure to comply with any of the above provisions shall subject the person to the penalties of 's Rev 2/24/ All Rights Reserved by FMBS

87 CHAPTER 69V-40 MORTGAGE BROKERAGE RULES Q: Who writes the Rules for FS 494? A: Commissioner of the Office of Financial Regulation 69V Definitions Rulemaking Authority (2) FS. Law Implemented (2)(e), (f), FS. History Revised , Renumbered from to 3D on , Formerly 3D-40.01, Amended , , , , , , , , , , , Formerly 3D , Amended , Repealed V Effect of Law Enforcement Records on Applications for Loan Originator, Mortgage Broker, and Mortgage Lender Licensure (1) General Procedure Regarding Law Enforcement Records. For the purposes of this rule each loan originator applicant and each control person of a mortgage broker and mortgage lender license applicant shall be referred to collectively as relevant persons. If the mortgage broker or mortgage lender license applicant is a natural person, he or she is a relevant person under this rule. As part of the application review process, the Office is required to consider a relevant person s law enforcement record when deciding whether to approve an application for licensure as a loan originator, mortgage broker, or mortgage lender. When conducting this review, the Office reviews the relevant person s Form MU1, MU2 or MU4 responses and criminal history information derived from the fingerprint check. In the event of a question regarding the relevant person s criminal history, the Office will request additional information from the relevant person to determine the status of a criminal event, the specific facts and circumstances surrounding a criminal event, or to address other issues determined to be relevant to the review of the law enforcement record. The Office will notify the applicant of any specific documents that it requires in order to complete its review. The requested documents must be legible. Documentation that is typically requested includes: (a) A copy of the police arrest affidavit, arrest report or similar document. (b) A certified copy of the charges. (c) A certified copy of the plea, judgment, and sentence where applicable. (d) A certified copy of an order of entry into pre-trial intervention, and the order of termination of pre-trial intervention showing dismissal of charges where applicable. (e) A certified copy of an order of termination of probation or supervised release, if applicable. If the requested documentation cannot be obtained, the relevant person shall submit evidence of that fact in order for the application to be deemed complete. Evidence that documentation cannot be obtained shall consist of a written statement on the letterhead of the agency that would be the custodian of the documents, signed by a representative of that agency, stating that they have no record of such matter, or that the record is lost or was damaged or destroyed, or otherwise stating why the document cannot be produced. Rev 2/24/ All Rights Reserved by FMBS

88 (2) Classification of Crimes. (a) The Office makes a general classification of crimes into four classes: A, B, C and D as listed in subsections (13), (14), (15) and (16) of this rule. (b) These classifications reflect the Office s evaluation of various crimes in terms of moral turpitude and the seriousness of the crime as such factors relate to the prospective threat to public welfare typically posed by a person who would commit such a crime. (c) The names and descriptions of crimes, as set out in the classification of crimes, are intended to serve only as generic names or descriptions of crimes and shall not be read as legal titles of crimes, or as limiting the included crimes bearing the exact name or description stated. (d) For purposes of this rule, trigger date means the date on which an applicant was found guilty, or pled guilty, or pled nolo contendere to a crime. (e) A charge in the nature of attempt or intent to commit a crime, or conspiracy to commit a crime, is classified the same as the crime itself. (3) Effect on Licensure of Commitment of Single Crime. The Office finds it necessary to implement the following standards for applications with a relevant person whose law enforcement record includes a single crime, subject to the mitigating factors set forth in this rule before licensure. All periods referenced in this rule run from the trigger date. (a) Class A Crime. The applicant is not eligible for licensure. (b) Class B Crime. The applicant will not be granted a license until 15 years have passed since the trigger date. (c) Class C Crime. The applicant will not be granted a license until 7 years have passed since the trigger date. (d) Class D Crime. The applicant will not be granted a license until 5 years have passed since the trigger date. (4) Applicants With Multiple Crimes. (a) The Office requires that applications with a relevant person whose law enforcement record includes multiple class B, C, or D crimes, or any combination thereof, wait longer than those whose law enforcement record includes only a single crime before becoming eligible for licensure in order to assure that such applicant s greater inability or unwillingness to abide by the law has been overcome. Therefore, the Office finds it necessary that a longer disqualifying period be utilized in such instances, before licensure can safely be granted. Accordingly, where the relevant person has been found guilty or pled guilty or pled nolo contendere to more than one crime, the Office shall add 5 years to the disqualifying period for each additional crime. (b) The additional periods are added to the disqualifying period for the most serious class B, C, or D crime, and the combined total disqualifying period then runs from the trigger date of the most recent class B, C, or D crime. (c) Classification as Single Crime versus Multiple Crimes. For the purposes of this rule, two (2) or more offenses are considered a single crime if they are based on the same act or transaction or on two (2) or more connected acts or transactions. Rev 2/24/ All Rights Reserved by FMBS

89 (5) Mitigating Factors. (a) The disqualifying period for a Class B crime shall be shortened upon proof of one or more of the following factors. When more than one factor is present the applicant is entitled to add together all of the applicable mitigation amounts and deduct that total from the usual disqualifying period, provided that an applicant shall not be permitted an aggregate mitigation of more than three (3) years for the following factors: 1. One year is deducted if the probation officer or prosecuting attorney in the most recent crime states in a signed writing that the probation officer or prosecuting attorney believes the relevant person would pose no significant threat to public welfare if the applicant is licensed as a loan originator, mortgage broker, or mortgage lender. 2. One year is deducted if restitution or settlement has been made for all crimes in which restitution or settlement was ordered by the court, and proof of such restitution or settlement is shown in official court documents or as verified in a signed writing by the prosecuting attorney or probation officer. 3. One year will be deducted if the relevant person was under age 21 when the crime was committed and there is only one crime in the relevant person s law enforcement record. 4. One year is deducted if the applicant furnishes proof that the relevant person was at the time of the crime addicted to drugs or suffering active alcoholism. The proof must be accompanied by a written letter from a properly licensed doctor, psychologist, or therapist licensed by a duly constituted state licensing body stating that the licensed person has examined or treated the applicant and that in his or her professional opinion the addiction or alcoholism is currently in remission and has been in remission for the previous 12 months. The professional opinion shall be dated within 45 days of the time of application. 5. Other Mitigating Factors. An applicant is permitted to submit any other evidence of facts that the applicant believes should decrease the disqualifying period before licensure is allowed and one additional year shall be deducted if the Office agrees the facts have a mitigating effect on the licensure decision. (b) The burden is upon the applicant to establish these mitigating factors. Where the mitigating factor relates to or requires evidence of government agency or court action, it must be proved by a certified true copy of the agency or court document. (6) Circumstances Not Constituting Mitigation. The Office finds that no mitigating weight exists, and none will be given, for the following factors: (a) Type of Plea. The Office draws no distinction among types of plea, e.g., found guilty; pled guilty; pled nolo contendere. Rev 2/24/ All Rights Reserved by FMBS

90 (b) Collateral Attack on Criminal Proceedings. The Office will not allow or give any weight to an attempt to re-litigate, impeach, or collaterally attack judicial criminal proceedings or their results wherein the relevant person was found guilty or pled guilty or nolo contendere. Thus the Office will not hear or consider arguments such as: the criminal proceedings were unfair; the judge was biased; the witness or prosecutor lied or acted improperly; the defendant only pled guilty due to financial or mental stress; the defendant was temporarily insane at the time of the crime; or the defendant had ineffective counsel. (c) Subjective Factors. The Office finds that subjective factors involving state of mind have no mitigating weight. (7) Effect of Pending Appeal in Criminal Proceedings; Reversal on Appeal. (a) The Office interprets the statutory grounds for denial of licensure as arising immediately upon a finding of guilt, or a plea of guilty or nolo contendere, regardless of whether an appeal is or is not allowed to be taken. The Office will not wait for the outcome of an appeal to deny licensure, unless a Florida court specifically stays the Office s adverse action. (b) If on appeal the conviction is reversed, the Office shall immediately drop the said crime as grounds for denial of licensure. (8) Pre-Trial Intervention. If at the time of application a relevant person is participating in a pre-trial intervention program based upon a charge of criminal conduct that would authorize denial of a license under Chapter 494, F.S., the Office will deny the application for license. The Office considers participation in a pre-trial intervention program to be a pending criminal prosecution under Chapter 494, F.S., and finds it necessary to the public welfare to wait until final disposition of all charges of criminal conduct that would authorize denial of a license under Chapter 494, F.S., before an application for licensure may be considered. (9) Effect of Sealing or Expunging of Criminal Record. (a) A relevant person is not required to disclose or acknowledge, and is permitted in fact to affirmatively deny, any arrest or criminal proceeding, the record or which has been legally and properly expunged or sealed by order of a court of competent jurisdiction prior to the time of application, and such denial or failure to disclose is not grounds for adverse action by the Office. (b) Matters Sealed or Expunged Subsequent to Application. Occasionally a relevant person will have a matter sealed or expunged after an application has been filed, but before a licensing decision is made by the Office. In such situation the Office policy is as follows: 1. If the relevant person properly disclosed the matter on the application, and thereafter has the record sealed or expunged, the Office will not consider the matter in the application decision. Rev 2/24/ All Rights Reserved by FMBS

91 2. However, if the relevant person did not reveal the matter on the application and the matter had not been sealed or expunged at the time of making the application, the Office will construe the failure to disclose the matter on the application as a material misrepresentation or material misstatement, and the application shall be denied pursuant to Chapter 494, F.S. (10) Effect of Varying Terminology. (a) With regard to the following six subparagraphs, the Office treats each phrase in a particular subparagraph as having the same effect as the other phrases in that same subparagraph: 1. Adjudicated guilty; convicted. 2. Found guilty; entered a finding of guilt. 3. Pled guilty; entered a plea of guilty; admitted guilt; admitted the charges. 4. Nolo contendere; no contest; did not contest; did not deny; no denial. 5. Adjudication of guilt withheld; adjudication withheld; no adjudication entered; entry of findings withheld; no official record to be entered; judgment withheld; judgment not entered. 6. Nolle prosse; nolle prosequi; charges withdrawn; charges dismissed; charges dropped. (b) In all other instances the Office will look to the substantive meaning of the terminology used in the context in which it was used under the law of the jurisdiction where it was used. (11) Imprisoned Persons and Community Supervision. (a) Imprisonment. Notwithstanding any provision to the contrary in this rule, the Office shall not license any applicant under Chapter 494, F.S., while a relevant person is imprisoned, under arrest, or serving a sentence for any crime. Further, the Office shall not license any applicant when a relevant person has been released from imprisonment, based upon a charge of criminal conduct that would authorize denial of licensure under Chapter 494, F.S., until the later of the period otherwise set out in the rules or five (5) years after the date of release. The Office finds it necessary that the person be released from imprisonment and thereafter demonstrate an ability to abide by the law by passage of at least five (5) years on good behavior, before licensure can be granted without undue risk to the public welfare. For the purposes of this section, the term imprisonment shall include confinement in a state or federal prison or county jail for a period of more than one year. Q: FS 494 considers the term imprisoned in a federal or state prison or a county jail for how long? a. 6 months b. 1 year c. 3 years d. 5 years Rev 4/20/ All Rights Reserved by FMBS

92 (b) Community Supervision. The Office shall not grant licensure when a relevant person who at the time of application or at any time during the pendency of the application is under supervision as the result of the commission or a criminal offense and released to the community under the jurisdiction of the courts, paroling authorities, correctional agencies, or other criminal justice agencies based upon a charge of criminal conduct that would authorize denial of a license under Chapter 494, F.S. (12) Effect of Disqualifying Periods. The disqualifying periods established in this rule do not give an applicant a right to licensure after any set period of time. Regardless of the expiration of any disqualifying period imposed by these rules, the burden to prove entitlement to licensure remains on the applicant. (13) Class A Crimes include all felonies involving an act of fraud, dishonesty, or a breach of trust, or money laundering, and the Office finds that such crimes constitute crimes of moral turpitude. The Office finds the following list of crimes are Class A crimes. This list is representative only and shall not be construed to constitute a complete or exclusive list of all crimes that are Class A crimes. No inference should be drawn from the absence of any crime from this list. (a) Any type of fraud, including but not limited to Fraud, Postal Fraud, Wire Fraud, Securities Fraud, Welfare Fraud, Defrauding the Government, Credit Card Fraud, Defrauding an Innkeeper, Passing worthless check(s) with intent to defraud. (b) Perjury. (c) Armed robbery. (d) Robbery. (e) Extortion. (f) Bribery. (g) Embezzlement. (h) Grand Theft. (i) Larceny. (j) Burglary. (k) Breaking and entering. (l) Identity theft. (m) Any type of forgery or uttering a forged instrument. (n) Misuse of public office. (o) Racketeering. (p) Buying, receiving, concealing, possessing or otherwise dealing in stolen property. (q) Treason against the United States, or a state, district, or territory thereof. (r) Altering public documents. (s) Witness tampering. (t) Tax evasion. (u) Impersonating or attempting to impersonate a law enforcement officer. (v) Money Laundering. Rev 2/24/ All Rights Reserved by FMBS

93 (14) Class B Crimes include the following list of felonies, or similar felonies, and the Office finds that such crimes constitute crimes of moral turpitude. (a) Murder in all degrees. (b) Arson. (c) Sale, importation, or distribution of controlled substances (drugs); or possession for sale, importation or distribution. (d) Aggravated Assault (e.g., as with a deadly weapon). (e) Aggravated Battery (e.g., as with a deadly weapon). (f) Rape. (g) Sexually molesting any minor. (h) Sexual battery. (i) Battery of or threatening a law enforcement office or public official in the perormance of his/her duties. (j) Kidnapping. (k) Video Voyeurism. (15) Class C Crimes include all felonies not Class A or Class B Crimes. (16) Class D Crimes includes any misdemeanor that involves fraud, dishonesty, or any other act of moral turpitude. (17) Foreign Law Enforcement Records. If a law enforcement record includes convictions, charges, or arrests outside the United States, the Office shall consider the following factors to reduce, eliminate, or apply a disqualifying period: (a) Whether the crime in the criminal record would be a crime under the laws of the United States or any state within the United States; (b) The degree of penalty associated with the same or similar crimes in the United States; and (c) The extent to which the foreign justice system provided safeguards similar to those provided criminal defendants under the Constitution of the United States; for example, the right of a defendant to a public trial, the right against self-incrimination, the right of notice of the charges, the right to confront witnesses, the right to call witnesses, and the right to counsel. (18) For purposes of this rule, certified means that there must be a certification or attestation by the issuer of the record that the document is a true copy of a record contained in the issuer s office and the issuer s seal, if any. (19) Uniform Mortgage Lender/Mortgage Broker Form, MU1; Uniform Mortgage Biographical Statement & Consent Form, MU2; and Uniform Individual Mortgage License/Registration & Consent Form, MU4, are incorporated by reference in Rule 69V , F.A.C. Rev 2/24/ All Rights Reserved by FMBS

94 69V Adoption of Forms (1) The forms referred to in this section below are incorporated by reference and readopted by this rule for the purposes of Rules 69V , F.A.C.: (a) Registry Forms: NMLS (Federal) Forms 1. Uniform Mortgage Lender/Mortgage Broker Form, MU1, dated January 25, Uniform Mortgage Biographical Statement & Consent Form, MU2, dated January 25, Uniform Mortgage Branch Office Form, MU3, dated January 2, Uniform Individual Mortgage License/Registration & Consent Form, MU4, dated January 25, (b) Florida Forms: FL State Specific Forms 1. Mortgage Brokerage Deposit Account Form, Form OFR , effective March 23, 2008; 2. Mortgage Brokerage Transaction and Lending Journal, Form OFR , effective March 23, 2008; 3. Calculation of Aggregate Value of Mortgage Loans Serviced, Form OFR , effective March 23, 2008; 4. Non-Institutional Investor s Funds Account Form, Form OFR , effective March 23, Declaration of Intent to Engage Solely in Loan Processing, Form OFR , effective October 1, (3) All forms adopted by this rule are available on the Office s website at and by mail from the Office of Financial Regulation, 200 East Gaines Street, Tallahassee, Florida V Electronic Filing of Forms and Fees (1) All forms adopted under paragraph 69V (1)(a), F.A.C., must be electronically filed through the Registry. (2) Unless otherwise specifically instructed in this Rule Chapter all fees required in conjunction with an initial application, amendment, and license renewal must be filed electronically through the Registry. (3) Annual Financial Audit Reports required in Section , F.S., must be filed electronically through the Registry. Rev 2/24/ All Rights Reserved by FMBS

95 69V Fees and Commissions (1) A mortgage broker shall state in each contract for services the total fee to be received. The total fee shall not exceed the maximum as prescribed in Section (2), F.S. (2) (a) In determining the total loan origination fee, all compensation for the following services, by whatever name called, shall be included: 1. Arranging for a conditional mortgage loan commitment between a borrower and a lender; (COMMITMENT) 2. Taking an application, assembling information and preparing all paperwork and documentation necessary for a conditional mortgage loan commitment; (PROCESSING) 3. Reviewing, analyzing, and evaluating a borrower s financial statements, income, and credit history; and (UNDERWRITING) 4. Incidental services utilized in arranging for and procuring a conditional loan commitment, such as, courier services, express mailings, and long distance telephone charges, except as provided in subparagraph (3)(a)12., below. (COURIER, TELEPHONE EXPENSES, ETC.) 5. Premiums and other charges for insurance written in connection with a loan, except as provided in subparagraph (3)(a)5. below. Origination Fee Includes: Processing Underwriting Service Administration (b) The total loan origination fee shall include all compensation for the services described in paragraph (2)(a), whether or not the compensation is to be received by the licensee, a co-broker, an affiliate, or an independent third party. (c) A good faith estimate does not supplant or substitute for the agreement required by Section (1), F.S. Rev 2/24/ All Rights Reserved by FMBS

96 (3) (a) In addition to stating the total loan origination fee, the licensee shall provide a good faith estimate of costs for services or products that may be incurred or expended on behalf of the borrower in arranging for the loan. Services or products for which costs shall be estimated, but which are not required to be included in the loan origination fee include the following: 1. Appraisal fee charged to obtain a statement of property value for the lender prior to closing. This subparagraph shall not be construed to prevent a licensee or lender from setting reasonable criteria for the selection of an appraiser; 2. Inspection fees required by the lender, its agents, or a governmental body or agency or quasi-governmental body or agency for the security property; 3. Loan assumption fee and a transfer fee charged to enable the buyer to assume existing loans; 4. Pest inspection fee charged to cover inspections for termites or other pest infestations; 5. Charges for title insurance as defined in Section , F.S., abstract of title, title search fee, and fees for an attorney s title opinion. A licensee may not receive or accept any monetary consideration or inducement in connection with the issuance of a title insurance policy in a transaction in which he was involved; 6. Survey or topography fees charged to determine the exact location of any structures and the lot line, as well as easements and rights of way; 7. Mortgage guaranty insurance as defined in Section , F.S.; 8. Credit report fee; 9. Photograph fees for photographs of the property offered as security, if required by the lender in writing and acceptable photographs of the property have not been otherwise provided to the lender; 10. Flood hazard determination fee charged by an entity to assist lenders in determining whether the security property is in a flood hazard area; 11. Real estate tax service fee charged by an entity engaged in the business of assisting lenders or their agents in assuring that real property taxes are paid on the security property; 12. Incidental fees, such as, courier services and express mailings if preauthorized in writing by the borrower; 13. Settlement or closing fee charged by a settlement agent for distributing the proceeds of the mortgage loan; 14. Attorney s fees; 15. Charges imposed by federal, state, county or municipal governments or government agencies or quasi-governmental agencies including, but not necessarily limited to, the cost of recording the mortgage, cost of documentary stamps, and intangible taxes for the mortgage; 16. Environmental audit costs required by the lender, or by local ordinances or state or federal law; and 17. Costs incurred in curing title defects affecting the security property. Rev 2/24/ All Rights Reserved by FMBS

97 (b) The costs enumerated in paragraph (3)(a) may be charged and collected provided they are itemized and supported by an actual expenditure. (4) (a) Premiums or other charges for life, credit life, accident, health, or loss-of-income insurance written in connection with a loan are not included in determining the loan origination fee if: 1. The licensee or registrant discloses to the borrower in writing that such insurance is not required to be purchased through the licensee; and 2. The licensee discloses to the borrower in writing the premiums for the initial term. (b) Premiums or other charges for insurance that is written in connection with a mortgage loan and protects against loss or damage to property or liability arising out of the ownership or use of property are not included in determining the loan origination fee if the borrower may choose the insurance agent and the insurance provider. (5) The loan origination fee does not include prepaid finance charges of the lender under the Federal Truth in Lending Act, as amended, and Federal Reserve Board Regulation Z that are disclosed on a Truth in Lending Disclosure form provided to the borrower. (6) The maximum fees or commissions as provided in Section (2), F.S., must be based on the net proceeds of the loan. (7) In determining the maximum fees or commissions on the gross proceeds of a loan, the following method may be used: On loans in excess of $1,000 and not over $5,650, add $1,500 to the gross proceeds of the loan and divide that sum by 11; and, on loans of $5,760 and over, divide the gross proceeds by 11 and add $ On loans that are over $5,650 but less than $5,750, the maximum fee is the amount in excess of $5,000. (8) No person shall charge or exact, directly or indirectly, from the mortgagor or lender a fee or commission in excess of the maximum fees or commissions as set forth herein. All fees paid to or on behalf of the licensee including, but not limited to, bonus plans, advertisement allowances, incentive plans, kick-backs, premiums or discounts whether paid directly or indirectly or to an affiliate firm in which the licensee has an ownership interest, must be included in determining the maximum loan origination fees. (9) All loan origination fees to other mortgage brokers disbursed from the loan proceeds shown on the closing statement shall reflect the name of each mortgage broker or co-brokering mortgage broker paid. Rev 2/24/ All Rights Reserved by FMBS

98 69V Misleading Practice; Penalty. The taking and recording of a mortgage is tantamount to a commitment, and when funds are not available for immediate disbursement to the mortgagor, such procedure will be considered a misleading and deceptive practice, and to warrant suspension or revocation of the license of the licensee or registrant who does so, unless, prior to such recording, the licensee or registrant informs the mortgagor in writing of a definite date by which payment will be made, and secures the mortgagor s written permission for the delay thus entailed. 69V Demonstrating Character, General Fitness, and Financial Responsibility. (1) Definitions. As used in this rule, the term: (a) Adverse credit history information means the following: 1. Personal bankruptcy within the previous year. 2. Bankruptcy within the previous year of any organization based on events that occurred while the relevant person was a control person. 3. Outstanding tax lien or other governmental lien. 4. Outstanding judgment based upon grounds of fraud, embezzlement, misrepresentation, or deceit. 5. Open collection account or charged-off account that remains unpaid, except accounts related solely to unpaid medical expenses. 6. Foreclosure on personally owned property within the last 5 years. (b) Charged-off means an account that has been identified by the creditor as an uncollectable debt. (c) Relevant person means each loan originator applicant and each control person of a mortgage broker and mortgage lender license applicant. If the mortgage broker or mortgage lender license applicant is a natural person, he or she is a relevant person under this rule. (2) Adverse Credit History Information. If a relevant person s credit report or responses to the license application contains adverse credit history information, the Office will notify the applicant in writing of the specific items constituting adverse credit history information. The notification will also inform the applicant of the: (a) Opportunity to explain the circumstances surrounding the specific items and provide any other relevant information that the applicant wishes the Office to consider surrounding the specific items; (b) Documents that the Office requires in order to complete its review of the specific items. The requested documents provided by the applicant must be legible. Documents that are typically requested by the Office include, but are not limited to: 1. Copies of satisfaction of judgment. 2. Copies of satisfaction of outstanding tax liens or other governmental liens. 3. Copies of court documents that reflect the substance of the matter and how the matter was resolved or adjudicated. Rev 2/24/ All Rights Reserved by FMBS

99 4. Copies of account statements or letters from the creditors explaining the current status of accounts. For security purposes, the relevant person may redact all but the last four (4) digits of the account number prior to submitting the document to the Office. 5. Copies of tax returns, pay stubs, or other documentation of income. If the documents requested above cannot be obtained, the relevant person shall submit evidence of that fact in order for the license application to be deemed complete. Evidence that documents cannot be obtained shall consist of a written statement from the agency s or creditor s records custodian that is written on the agency s or creditor s letterhead; indicates that the agency or the creditor does not have any record of such matter or that the record was lost, damaged, or destroyed, or cannot otherwise be produced and provide a statement as to why the record cannot be produced; and is signed by the agency s or creditor s records custodian. (3) Procedure for Reviewing Adverse Credit History Information. (a) When deciding whether to approve an application for licensure as a loan originator, mortgage broker, or mortgage lender, the Office must make a determination regarding whether the relevant person has demonstrated that he or she possesses the character, general fitness, and financial responsibility to warrant the Office s determination that the relevant person will operate honestly, fairly, and efficiently. In making this determination, the Office will consider the following information: 1. The relevant person s entire credit history as reflected in the credit report. 2. The information provided by the relevant person under subsection (2). 3. The responses contained in the license application. 4. The previous licensing history with the Office including whether the relevant person was named in any regulatory action by the Office. 5. Other information that reflects upon an applicant s character, general fitness, or financial responsibility. 6. The time and context of the information available and any pattern of behavior the information may demonstrate. (b) Based on the totality of the circumstances as developed under paragraph (a), the Office will make a determination as to whether the relevant person has demonstrated that he or she possesses the character, general fitness, and financial responsibility to warrant the Office s determination that the relevant person will operate honestly, fairly, and efficiently. In considering the totality of the circumstances, the fact that an applicant has been a debtor in a bankruptcy or been the control person of a bankrupt organization shall not be the sole basis of the Office s determination to deny the issuance of a license. Rev 2/24/ All Rights Reserved by FMBS

100 69V Application Procedure for Loan Originator license. (1) Each individual desiring to obtain licensure as a loan originator shall apply to the Office of Financial Regulation by submitting the following: (a) A completed Uniform Individual Mortgage License/Registration & Consent Form, MU4, filed through the Registry; (b) The statutory nonrefundable application fee of $195 filed through the Registry; (c) The statutory nonrefundable mortgage guaranty fund assessment fee of $20, if required by Section , F.S., filed through the Registry; (d) Evidence that the applicant has been awarded a high school diploma or the equivalent; (e) Confirmation from the Registry that the applicant has satisfied the requirement to complete a 20-hour pre-license class approved by the Registry. (f) Confirmation from the Registry that the applicant has satisfed the requirement to pass a test developed by the Registry and administered by a provider approved by the Registry. For the purposes of this rule, a test developed by the Registry and administered by a provider approved by the Registry includes both a national component and a state component. (g) Submit fingerprints to the Registry for submission to the Federal Bureau of Investigation for a federal criminal background check; (h) Submit fingerprints to a live scan vendor approved by the Florida Department of Law Enforcement and published on the Florida Department of Law Enforcement s website( e0da50/livescan.aspx) for submission to the Florida Department of Law Enforcement for a state criminal background check. The cost of fingerprint processing shall be borne by the applicant and paid directly to the live scan vendor; (i) Authorize the Registry to obtain and make available to the Office an independent credit report on the applicant. (2) Request for Additional Information. Within 30 days of receipt the Office shall review each loan originator application and inform the applicant of any request for additional information required to complete its review. The additional information must be received by the Office within 120 days from the date of the request. Failure by the applicant to respond within 120 days from the date of the request shall be construed by the Office of Financial Regulation as grounds for denial for failure to provde the requested information. (3) Amendments to Pending Applications. If the information contained in Form MU4 or any amendment thereto becomes inaccurate for any reason the applicant shall file an amendment through the Registry correcting such information within 15 days of the change. An amendment changing answers to question 9 on Form MU4 shall be considered a material change to the application and grounds for denial of the application. Rev 2/24/ All Rights Reserved by FMBS

101 (4) Withdrawal of Application. An applicant may request withdrawal of an application prior to a determination of the application being made by the Office by filing such request through the Registry. (5) Upon approval of an application, a loan originator license will be issued with an expiration date of December 31 for the year in which the license was issued. Any license granted from October 1, 2010 to December 31, 2010 expires on December 31, (6) Uniform Individual Mortgage License/Registration & Consent Form, MU4, is incorporated by reference in Rule 69V , F.A.C. 69V Loan Originator License Renewal. (1) In order to renew an active loan originator license a licensee must submit the following to the Office no later than December 31 of each calendar year in which the licensee wishes to renew the license: (a) A completed renewal submission as required by the Registry submitted through the Registry. (b) Submit a total payment of $ paid through the Registry which includes the following: 1. $150 nonrefundable renewal fee; 2. $20 nonrefundable mortgage broker guaranty fund fee, if required by Section , F.S., and 3. $25.25 to cover further costs of criminal background check. (c) Authorize the Registry to obtain and make available to the Office an independent credit report on the licensee. (2) Request for Additional Information. The Office shall review each loan originator renewal request and inform the licensee of any request for additional information required to complete its review. The additional information must be received by the Office within 30 days from the date of the request. Failure by the licensee to respond within 30 days from the date of the request shall be construed by the Office of Financial Regulation as grounds for denial of the renewal request for failure to provde the requested information. (3) Upon the Office determining that a renewal request has been completed the Office shall determine if the licensee continues to meet the minimum standards for licensure as set forth in Section , F.S., and Rules 69V and 69V , F.A.C. If a licensee continues to meet the minimum standards for licensure the Office shall renew the loan originator license which shall be valid until December 31 of the year following the expiration date of the loan originator license. If a licensee does not continue to meet the minimum standards for licensure the Office shall deny the renew request pursuant to Section (2), F.S. Rev 2/24/ All Rights Reserved by FMBS

102 69V Application Procedure for a Mortgage Broker license. (1) Each person desiring to obtain licensure as a mortgage broker shall apply to the Office of Financial Regulation by submitting the following: (a) A completed Uniform Mortgage Lender/Mortgage Broker Form, MU1, filed through the Registry; (b) The statutory nonrefundable application fee of $425 filed through the Registry; (c) The statutory nonrefundable mortgage guaranty fund assessment fee of $100, if required by Section , F.S., filed through the Registry; (d) Designate a qualified principal loan originator who meets the requirements of Section , F.S.; (e) For each of the applicant s control persons, submit fingerprints to a live scan vendor approved by the Florida Department of Law Enforcement and published on the Florida Department of Law Enforcement s website ( e0da50/livescan.aspx) for submission to the Florida Department of Law Enforcement and the Federal Bureau of Investigation for a state criminal background check and a Federal criminal background check. The cost of fingerprint processing shall be borne by the applicant and paid directly to the live scan vendor; (f) For each of the applicant s control persons, authorize the Registry to obtain and make available to the Office an independent credit report; (2) For the purposes of this rule, the requirements in paragraphs (1)(e) and (f) above are not required if the control person is currently licensed as a loan originator. (3) Request for Additional Information. Within 30 days of receipt the Office shall review each mortgage broker application and inform the application of any request for additional information required to complete its review. The additional information must be received by the Office within 45 days from the date of the request. Failure by the applicant to respond within 45 days from the date of the request shall be construed by the Office of Financial Regulation as grounds for denial for failure to provde the requested information. (4) Amendments to Pending Applications. If the information contained in the Form MU1 or any amendment thereto becomes inaccurate for any reason, the applicant shall file an amendment through the Registry correcting such information within 15 days of the change. An amendment changing answers to question 9 on the Form MU1 or question 8 on the Uniform Mortgage Biographical Statement & Consent Form, MU2, shall be considered a material change to the application and grounds for denial of the application. (5) Withdrawal of Application. An applicant may request withdrawal of an application prior to a determination of the application being made by the Office by filing such request through the Registry. Rev 2/24/ All Rights Reserved by FMBS

103 (6) Upon approval of an application, a mortgage broker license will be issued with an expiration date of December 31 for the year in which the license was issued. Any license granted from October 1, 2010 to December 31, 2010 expires on December 31, (7) Uniform Mortgage Lender/Mortgage Broker Form, MU1, and Uniform Mortgage Biographical Statement & Consent Form, MU2, are incorporated by reference in Rule 69V , F.A.C. 69V Mortgage Broker License Renewal. (1) In order to renew an active loan originator license a mortgage broker licensee must submit the following to the Office no later than December 31 of each calendar year in which the licensee wishes to renew the license: (a) A completed renewal submission as required by the Registry submitted through the Registry. (b) Submit a payment of $475 through the Registry for the following: 1. $375 nonrefundable renewal fee; and 2. $100 nonrefundable mortgage broker guaranty fund fee, (c) Submit $25.25 to the Office for each control person listed on the licensee s Form MU1 to cover the further costs of criminal background check. (d) Authorize the Registry to obtain and make available to the Office an independent credit report on each control person listed on the licensee s Form MU1. (e) Submt a nonrefundable renewal fee of $225 for each branch office license through the Registry at the time of renewing the mortgage broker license. (2) For the purposes of this rule, the requirements in paragraphs (1)(c) and (d) above are not required if the control person is currently licensed as a loan originator and has filed through the Registry a renewal submission of the loan originator license. (3) Request for additional information. The Office shall review each mortgage broker renewal request and inform the licensee of any request for additional information required to complete its review. The additional information must be received by the Office within 30 days from the date of the request. Failure by the licensee to respond within 30 days from the date of the request shall be contrued by the Office as grounds for denial of the renewal request. (4) Upon the Office determining that a renewal request has been completed the Office shall determine if the licensee continues to meet the minimum standards for licensure as set forth in Section , F.S., and Rules 69V and 69V , F.A.C. If a licensee continues to meet the minimum standards for licensure the Office shall renew the mortgage broker license which shall be valid until December 31 of the year following the expiration date of the mortgage broker license. If a licensee does not continue to meet the minimum standards for licensure the Office shall deny the renewal request pursuant to Section (2), F.S. Rev 2/24/ All Rights Reserved by FMBS

104 (5) Uniform Mortgage Lender/Mortgage Broker Form, MU1, is incorporated by reference in Rule 69V , F.A.C. 69V Declaration of Intent to Engage Solely in Loan Processing. (1) A person who seeks to act solely as a loan processor shall: (a) Be licensed as a loan originator under Chapter 494, F.S., and must at all times thereafter remain licensed; and (b) Submit a completed Form OFR (Declaration of Intent to Engage Solely in Loan Processing) to the Office. (2) Form OFR (Declaration of Intent to Engage Solely in Loan Processing) is incorporated by reference in Rule 69V , F.A.C. (3) A person who currently has on file with the Office a Declaration of Intent to Engage Solely in Loan Processing may withdraw the declaration by filing Form OFR (Declaration of Intent to Engage Solely in Loan Processing) indicating on the form the person s intent to withdraw the declaration. 69V Application Procedure for a Mortgage Broker Branch Office License. (1) Each mortgage broker desiring to obtain a mortgage broker branch office license shall apply to the Office of Financial Regulation by submitting the following: (a) A completed Uniform Mortgage Branch Office Form, MU3, filed through the registry; (b) The statutory nonrefundable application fee of $225 filed through the registry; (2) Request for additional information. The Office shall review each mortgage broker branch office application and inform the licensee of any request for additional information required to complete its review. The additional information must be received by the Office within 45 days from the date of the request. Failure by the licensee to respond within 45 days from the date of the request shall be contrued by the Office as grounds for denial of the renewal request. (3) Uniform Mortgage Branch Office Form, MU3 is incorporated by reference in Rule 69V , F.A.C.. 69V Application Procedure for a Mortgage Lender License. (1) Each person desiring to obtain licensure as a mortgage lender shall apply to the Office by submitting the following: (a) A completed Uniform Mortgage Lender/Mortgage Broker Form, MU1, filed through the Registry; (b) The statutory nonrefundable application fee of $500 filed through the Registry; (c) The statutory nonrefundable mortgage guaranty fund assessment fee of $100, if required by Section , F.S., filed through the Registry; Rev 2/24/ All Rights Reserved by FMBS

105 (d) Designate a qualified principal loan originator who meets the requirements of Section , F.S.; (e) For each of the applicant s control persons, submit fingerprints to a live scan vendor approved by the Florida Department of Law Enforcement and published on the Florida Department of Law Enforcement s website ( e0da50/livescan.aspx) for submission to the Florida Department of Law Enforcement and the Federal Bureau of Investigation for a state criminal background check and a Federal criminal background check. The cost of fingerprint processing shall be borne by the applicant and paid directly to the live scan vendor; (f) For each of the applicant s control persons, authorize the Registry to obtain and make available to the Office an independent credit report; (g) Submit a copy of the applicant s financial audit report in compliance with Section (2)(f), F.S. (2) Request for Additional Information. Within 30 days of receipt the Office shall review each mortgage lender application and inform the application of any request for additional information required to complete its review. The additional information must be received by the Office within 45 days from the date of the request. Failure by the applicant to respond within 45 days from the date of the request shall be construed by the Office of Financial Regulation as grounds for denial for failure to provde the requested information. (3) Amendments to Pending Applications. If the information contained in Form MU1 or any amendment thereto becomes inaccurate for any reason the applicant shall file an amendment through the Registry correcting such information within 15 days of the change. An amendment changing answers to question 9 on the Form MU1 or question 8 on Uniform Mortgage Biographical Statement & Consent Form, MU2, shall be considered a material change to the application and grounds for denial of the application. (4) Withdrawal of Application. An applicant may request withdrawal of an application prior to a determination of the application being made by the Office by filing such request through the Registry. (5) Upon approval of an application, a mortgage lender license will be issued with an expiration date of December 31 for the year in which the license was issued. Any license granted from October 1, 2010 to December 31, 2010 expires on December 31, (6) Uniform Mortgage Lender/Mortgage Broker Form, MU1, and Uniform Mortgage Biographical Statement & Consent Form, MU2, are incorporated by reference in Rule 69V , F.A.C. Rev 2/24/ All Rights Reserved by FMBS

106 69V Mortgage Lender License Renewal. (1) In order to renew an active mortgage lender license a mortgage lender licensee must submit the following to the Office no later than December 31 of each calendar year in which the licensee wishes to renew the license: (a) A completed renewal submission as required by the Registry submitted through the Registry. (b) Submit a payment of $575 through the Registry for the following: 1. $475 nonrefundable renewal fee; and 2. $100 nonrefundable mortgage broker guaranty fund fee, if required by Section , F.S. (c) Submit $25 to the Office for each control person listed on the licensee s Form MU1 to cover the further costs of a criminal background check. (d) Authorize the Registry to obtain and make available to the Office an independent credit report on each control person listed on the licensee s Form MU1. (e) Submit a nonrefundable renewal fee of $225 for each branch office license through the Registry at the time of renewing the mortgage lender license. (2) For the purposes of this rule, the requirements in paragraphs (1)(c) and (d) above are not required if the control person is currently licensed as a loan originator and has filed through the Registry a renewal submission of the loan originator license. (3) Request for additional information. The Office shall review each mortgage lender renewal request and inform the licensee of any request for additional information required to complete its review. The additional information must be received by the Office within 30 days from the date of the request. Failure by the licensee to respond 30 days from the date of the request shall be contrued by the Office as grounds for denial of the renewal request. (4) Upon the Office determining that a renewal request has been completed the Office shall determine if the licensee continues to meet the minimum standards for licensure as set forth in Section , F.S., and Rules 69V and 69V , F.A.C. If a licensee continues to meet the minimum standards for licensure the Office shall renew the mortgage broker license which shall be valid until December 31 of the year following the expiration date of the mortgage broker license. If a licensee does not continue to meet the minimum standards for licensure the Office shall deny the renewal request pursuant to Section (2), F.S. (5) Uniform Mortgage Lender/Mortgage Broker Form, MU1, is incorporated by reference in Rule 69V , F.A.C. Rev 2/24/ All Rights Reserved by FMBS

107 69V Application procedure for a Mortgage Lender Branch Office License. (1) Each mortgage lender desiring to obtain a mortgage lender branch office license shall apply to the Office of Financial Regulation by submitting the following: (a) A completed Uniform Mortgage Branch Office Form, MU3, filed through the Registry; (b) The statutory nonrefundable application fee of $225 filed through the Registry; (2) Request for additional information. The Office shall review each mortgage lender branch office application and inform the licensee of any request for additional information required to complete its review. The additional information must be received by the Office within 45 days from the date of the request. Failure by the licensee to respond within 45 days from the date of the request shall be contrued by the Office as grounds for denial of the renewal request. (3) Uniform Mortgage Branch Office Form, MU3, is incorporated by reference in Rule 69V , F.A.C. 69V Amendments, Change of Name, Change of Entity and Change in Control or Ownership (1) Each person licensed as a loan originator, mortgage broker, or mortgage lender which proposes to change its name, form of business organization, or any other information contained in any initial application form or any amendment thereto, must file an amendment through the Registry pursuant to Sections and , F.S., not later than 30 days after the effective date of the change. (2) Each licensed mortgage broker or mortgage lender which proposes to change any of the control persons listed on the initial application or amendment thereto must file an amendment through the Registry not later than 30 days prior to the effective date of the change or within 2 business days after the date the licensee first received notice of the change. In the event an amendment filed pursuant to this rule results in the addition of new control person not previously disclosed on the license such person is subject to the fingerprinting and credit report requirements required in Sections and , F.S., unless the new control person is currently licensed as a loan originator at the time the amendment is filed through the Registry. Amendments required to be filed pursuant to this rule must be accomplished by filing an amendment through the Registry and on same uniform forms required for initial licensure. Only those amendments filed through the Registry will be considered compliant with this rule. Upon filing an amendment pursuant to this rule the Office shall evaluate the licensee to determine if it continues to meet the minimum standards for licensure. The Office may take administrative action in accordance with Section , F.S., if the Office determines the licensee no longer meets the minimum standards for licensure. Rev 2/24/ All Rights Reserved by FMBS

108 69V Disciplinary Guidelines. (1) Pursuant to Sections and , F.S., listed below is a range of disciplinary guidelines from which disciplinary penalties will be imposed upon any person guilty of violating Chapter 494, F.S. The disciplinary guidelines are based upon a single-act violation of each provision listed. Multiple acts of the violated provisions or a combination of violations may result in a higher penalty than that for a single, isolated violation. For purposes of this rule, the order of penalties, ranging from lowest to highest is: notice of noncompliance, reprimand, fine, probation, suspension, and revocation. Nothing in this rule shall preclude any discipline imposed upon a person pursuant to a stipulation or settlement agreement, nor shall the range of penalties set forth in this rule preclude the Office of Financial Regulation from issuing a letter of guidance when appropriate. (2) As provided in Sections and , F.S., the Office of Financial Regulation may, in addition to other disciplinary penalties, place a licensee, registrant, or applicant on probation. The placement of the licensee, registrant, or applicant on probation shall be for such a period of time and subject to such conditions as the Office of Financial Regulation may specify. (3) The maximum penalties are a fine of up to $25, and/or as listed below for each count or separate offense: (a) (1) (b) (2) Probation (c) (3) (d) (4) (e) (1)(a)-(c) Probation (f) (g) (1) (h) (2) (i) (3) (j) (4)(a)-(c) (k) (5) (l) (6) (m) (7) (n) (8) (o) (9) (p) (10) (q) (11) (r) (12) (s) (1) (t) (2) Rev 2/24/ All Rights Reserved by FMBS

109 (u) (3) (v) (4) (w) (2) (x) (3) (y) (1) (z) (aa) (1) (bb) (2) (cc) (1) (dd) (1) (ee) (2) (ff) (3) (gg) (1)(a)-(b) (hh) (2)(a)-(c) (ii) (3)(a)-(c) (jj) (4) (kk) (5) (ll) (6) (mm) (1)(a) (nn) (1)(b) (oo) (2) (pp) (3) (qq) (1) (rr) (2) (ss) (3) (tt) (4) (uu) (2)(a)-(q) (vv) (2) (ww) (3) (xx) (yy) (1)(a)-(d) (zz) (2) (aaa) (3) (bbb) (4) (ccc) (1)(c) (ddd) (1)(c) (eee) (fff) (2) Probation Probation Probation Probation Probation Probation Probation Probation Probation Probation Probation Probation Reprimand Probation Probation Rev 2/24/ All Rights Reserved by FMBS

110 (ggg) (1) (hhh) (2) (iii) (3) (jjj) (4) (kkk) (5) (lll) (6) (mmm) (7) (nnn) (8) (ooo) (9) (ppp) (1)(a)-(d) (qqq) (2) (rrr) (3) (sss) (4) (ttt) (1) (uuu) (2) (vvv) (3) (www) (4)(a)-(c) (xxx) (1) (yyy) (2) (zzz) (aaaa) (2)(a)-(q) (bbbb) (1) (cccc) (2) (dddd) (3) (eeee) (1)(a)-(d) (ffff) (2) (gggg) (3) (hhhh) (4) (iiii) (5) (jjjj) (1)(a)-(c) (kkkk) (1) (llll) (2) (mmmm) (3) (nnnn) (4) (oooo) (5) (pppp) (6) (qqqq) (7) Probation Probation Probation Probation Reprimand Probation Probation Probation Probation Probation Probation Probation Suspension Probation Rev 2/24/ All Rights Reserved by FMBS

111 (4) (a) In the presence of aggravating or mitigating circumstances which are supported by clear and convincing evidence, the Office of Financial Regulation shall be entitled to deviate from the above guidelines in imposing discipline upon any person. (b) Aggravating or mitigating circumstances may include, but are not limited to, the following: 1. The severity of the violation. 2. The degree of harm to the consumer or public. 3. The number of times the violations previously have been committed by the person. 4. The disciplinary history of the person. 5. The status of the person at the time the violation was committed. 69V Out of State Examination Costs. For examinations conducted out of state, the licensee shall pay the travel expense and per diem subsistence allowance provided for state employees in Section , F.S. 69V Lock-in Statement. A lock-in agreement which includes applicable information as required by Sections (1)(a)-(e), F.S., and the following statement meets the requirement of Section (1)(f), F.S. (1) Florida law requires that the lender shall make a good faith effort to process the mortgage loan application and stand ready to fulfill the terms of its lock-in agreement before the expiration date of the lock-in agreement or any extension thereof. (2) Any lock-in agreement received by the lender by mail or through a mortgage broker must be signed by the lender in order to become effective. The borrower may rescind any lock-in agreement until a written confirmation of the agreement has been signed by the lender and mailed to the borrower or to the mortgage broker pursuant to its contractual relationship with the borrower. If a borrower elects to so rescind, the lender shall promptly refund any lock-in fee paid. (3) If the loan does not close before the expiration date of the lock-in agreement through no substantial fault of the borrower, the borrower may withdraw the application, whereupon the lender shall promptly refund to the borrower any lockin fee paid by the borrower. Rev 2/24/ All Rights Reserved by FMBS

112 69V Third-party Fee Accounts. All third-party fees and refundable application fees received by a mortgage broker shall be recorded on Form OFR , Mortgage Brokerage Deposit Account Form, or on a format which is substantially similar to Form OFR Failure to maintain a record of account activity in a current manner is a violation of this rule. Form OFR is incorporated by reference in subsection 69V (1), F.A.C. 69V Books and Records (1) Books, accounts, and records that are required to be maintained at the principal place of business shall be made available to the Office of Financial Regulation for review, upon the Office of Financial Regulation s request. (2) (a) A licensee may maintain required books, accounts, and records at a location other than the principal place of business. Each licensed mortgage broker or mortgage lender which proposes to change the location of books, accounts, and records must file an amendment to Form MU1 through the Registry not later than 30 days prior to the effective date of the change. (b) The books, accounts, and records must be stored in a building of stationary construction wherein the books, accounts, and records will be kept in a secured location under conditions, which will not lead to the damage or destruction of the records. (3) If the Office of Financial Regulation is notified by a licensee that it will maintain the books, accounts, and records at a location other than the principal place of business, such books, accounts, and records shall be made available to the Office of Financial Regulation for review within 3 business days from the date of a written request by the Office of Financial Regulation and at a reasonable and convenient location in this State designated by the Office of Financial Regulation. (4) All books, accounts, and records must be maintained for 3 years from the date of original entry. For the purpose of this rule, original entry means the date the documentation was originated by the licensee or received by the licensee. (5) The penalty for maintaining books, accounts, and records at a location other than the principal place of business, without written notification to the Office of Financial Regulation, shall be the issuance of a notice of noncompliance for a first offense. Any subsequent finding of a violation of this rule during an examination or investigation shall be a $500 fine. (6) Uniform Mortgage Lender/Mortgage Broker Form, MU1, is incorporated by reference in Rule 69V , F.A.C Rev 2/24/ All Rights Reserved by FMBS

113 69V Mortgage Brokerage Files. (1) Each mortgage broker shall maintain a file for each mortgage broker transaction. The files shall be maintained in a central location and in an alphabetical or numerical sequence. (2) Each file shall contain at least the following: (a) Mortgage broker agreement pursuant to Section , F.S.; (b) Copy of signed closing statement or documentation of denial or cancellation of the mortgage loan application; and (c) A copy of the good faith estimate of costs pursuant to Section (3)(c), F.S. Q: What do you do with correspondence from borrowers? A: Put a copy in loan file Q: What document does not need to be retained in a loan file? a. Signature card for all authorized signers on account b. Bank statements c. Deposit slips d. Cancelled checks (3) Supporting documentation shall be maintained for all expenses or fees paid by the licensee on behalf of the client indicating the amount and the date paid. A canceled check maintained in a separate file shall be considered proof of payment of fees and expenses. (4) If the mortgage broker issues to the client a written commitment for the loan on behalf of the lender then the following must be maintained in the file: (a) A copy of the written commitment issued by the mortgage broker; and (b) A copy of the written commitment provided by the lender. (5) If the mortgage broker issues to the client a written lock-in for the loan on behalf of the lender then the following must be maintained in the file: (a) A copy of the written lock-in issued by the mortgage broker; and (b) A copy of the written lock-in provided by the lender. (6) If the mortgage broker receives a mortgage loan application, then the mortgage broker shall maintain a copy in the file. Rev 2/24/ All Rights Reserved by FMBS

114 (7) If the loan is funded by a non-institutional investor then the file must also include the following: (a) 1. A copy of the appraisal or opinion of value of the mortgage property and a signed and dated acknowledgment by the non-institutional investor of receipt of the appraisal or opinion of value, or 2. A copy of a waiver of the appraisal dated and executed by the non-institutional investor. (b) 1. A receipt acknowledging that the non-institutional investor has been furnished with title insurance or a legal opinion of title, or 2. A written waiver thereof. (c) On a junior mortgage, documentation that the non-institutional lender has been furnished with a statement showing the balance owed and status of the liens that will be superior to the lien being funded by the non-institutional investor. (d) A signed and dated acknowledgment by the noninstitutional investor of receipt of the recorded mortgage or other instrument securing a note or assignment. (e) If applicable, documentation that said licensee has disclosed that it is acting (directly or indirectly) as a borrower or principal in that transaction. (8) In addition to the foregoing specific documentation, all documentation originated, received, or related to the mortgage loan from the application through the final disposition must be maintained for three (3) years from the date of the original entry. Original entry means the date the documentation was originated by the mortgage broker or received by the mortgage broker. For each broker transaction, files and documentation shall be maintained and remain complete for three (3) years from the date of original entry of the last document in the file. (9) (a) The penalty for failure to maintain files and required documentation (incidental and isolated clerical errors or omissions shall not be considered a violation) shall be: 1. If the licensee has numerous instances of incomplete files and missing documentation, the fine shall be $300. For the purpose of this rule, numerous shall mean at least three (3), and a percentage equal or greater to 20% of the files examined. 2. If the licensee fails to maintain files and documentation such that an audit trail of all mortgage transactions is provided, the penalty shall be a fine of $1,000 and a six-month suspension of the licensee. (b) 1. The failure to provide a good faith estimate of costs shall be a fine of $250 per file. 2. Providing a commitment to a client without first obtaining a written commitment by the lender shall be a fine of $250 per file. 3. Providing a lock-in for a loan without first obtaining a written lock-in by the lender shall be a fine of $250 per file. 4. The total fine under paragraph (9)(b) shall not exceed $2, per administrative complaint in addition to other penalties. Rev 2/24/ All Rights Reserved by FMBS

115 (c) 1. The penalty for failure to provide a disclosure required in subsection (7) above shall be a fine of $250 per file. 2. The penalty for gross negligence in maintaining documentation required in subsection (7) shall be revocation. 3. The penalty for failure to provide a non-institutional investor with the documentation required in subsection (4) herein shall be a fine of $250 per file up to an aggregate of $2,500 per administrative complaint in addition to other penalties. (10) For purposes of Section , F.S., a violation of the above rule, other than subsection (7) and subparagraph (9)(a)2. above shall be considered a minor violation. Any portion of this section that is deemed to be a minor violation for a first offense shall be a notice of noncompliance. 69V Mortgage Brokerage and Lending Transaction Journal (1) Each mortgage brokerage business and lender acting in the capacity of a mortgage brokerage business shall maintain a journal of mortgage brokerage transactions, which shall include, at least, the following information: (a) Name of applicant; (b) Date applicant applied for the mortgage loan; (c) Disposition of the mortgage loan application. The Mortgage Brokerage and Lending Transaction Journal shall indicate the result of the brokerage transaction. The disposition of the case shall be categorized as one of the following: loan funded, loan denied, application withdrawn, or other (with explanation); (d) Name of lender, if applicable. ***SUBJECT PROPERTY ADDRESS NOT REQUIRED IN THE JOURNAL*** Q: What is not needed in the Loan Journal? a. Name of applicant c. Date of application b. Name of the lender d. Disposition Q: What does not need to be in the mortgage brokerage or lending transactional journal? a. The address of the property c. Date of application b. Name of lender if known at time of application d. Disposition Rev 4/20/ All Rights Reserved by FMBS

116 (2) The journal shall be maintained in a format which is substantially similar to Form OFR , Mortgage Brokerage and Lending Transaction Journal. (3) The Mortgage Brokerage and Lending Transaction Journal shall be maintained in the principal office or in each branch office where mortgage brokerage transactions are originated. The Mortgage Brokerage and Lending Transaction Journal shall be kept current. The failure to initiate an entry to the Mortgage Brokerage and Lending Transaction Journal within seven (7) business days from the date the brokerage transaction is entered into, shall be deemed to be a failure to keep the Mortgage Brokerage and Lending Transaction Journal current. (4) The penalty for failure to maintain the Mortgage Brokerage and Lending Transaction Journal or to keep the same current (incidental and isolated clerical errors or omissions shall not be considered a violation) shall be the issuance of a notice of noncompliance for a first offense. Any subsequent finding of a violation of this rule during an examination or investigation shall be a fine of $500. The penalty for any intentional violation of this rule shall be a fine of $500 and suspension of the license. (5) Form OFR is incorporated by reference in subsection 69V (1), F.A.C. 69V Mortgage Lender Files. (1) Each mortgage lender shall maintain a file for each mortgage loan application received. The files shall be maintained in a central location and in an alphabetical or numerical sequence. (2) Each file shall contain the following: (a) A copy of the good faith estimate. (b) The original mortgage loan application, or copy thereof, containing the disclosures set forth in subsection (1), F.S. (c) Copy of the closing statement as required by subsection (3), F.S., or documentation demonstrating that the mortgage loan application was cancelled or denied. (d) Copy of any written lock-in agreement, if issued, containing the requirements set forth in Section , F.S. (e) Copy of any written commitment, if issued, containing the disclosures set forth in Section , F.S. (f) Copy of written disclosures of any conflict of interest as required by Section , F.S. (3) Each mortgage lender shall maintain supporting documentation of all expenses or fees paid by the mortgage lender. The supporting documentation shall indicate the name and address of the person paid, the amount and date of the payment, and a description of the products or services purchased. Invoices from third parties involving multiple loans, maintained in a central file, need not be copied and placed in each individual loan file. A canceled check maintained in a separate file shall be considered proof of payment of fees and expenses. Rev 2/24/ All Rights Reserved by FMBS

117 4) If the mortgage lender sells a mortgage loan to a non-institutional investor then each file must contain the following: (a) 1. A copy of the appraisal or opinion of value of the mortgage property and a signed and dated acknowledgement of receipt of same by the noninstitutional investor; or 2. A copy of a waiver of the appraisal or opinion of value dated and executed by the noninstitutional investor. (b) 1. A receipt acknowledging that the noninstitutional investor has been furnished with mortgagee s title insurance, or a legal opinion of title by an attorney licensed in Florida, pursuant to subsection (1)(b), F.S.; or 2. A written waiver thereof with the wording required by subsection (1)(b)3., F.S. (c) On a junior mortgage, a copy of the statement furnished to the noninstitutional investor showing the balance owed and the status of the liens that will be superior to the liens being recorded in the favor of the noninstitutional investor in this loan transaction. (d) A copy of the written disclosure to the noninstitutional investor if the mortgage lender is directly or indirectly acting as a borrower or principal in the transaction. (e) A signed and dated acknowledgement by the noninstitutional investor of receipt of the recorded mortgage or other instrument securing a note or assignment, or a signed acknowledgement by the licensee attesting that the aforementioned documentation was delivered to the noninstitutional investor. However, the mortgage lender may hold such documents in its possession for the use and benefit of the noninstitutional investor if: 1. The noninstitutional investor shall request same in writing; and 2. Said written request acknowledges the right of the noninstitutional investor to the possession of the original documents at any time; and 3. Said written request confirms the right of the noninstitutional investor to at any time terminate the agreement with the mortgage lender and request that the mortgage lender deliver all such documents to the noninstitutional investor forthwith. The written request, which includes subparagraphs 1. through 3. above, may be maintained in one location separate from the mortgage loan file. (f) A copy of the original note evidencing proper endorsement of the note by the lender to the noninstitutional investor. (g) A copy of the written servicing agreement if the loan is to be serviced by the mortgage lender. (5) If the mortgage lender acts as a mortgage broker it must comply with the file requirement set forth in Rule 69V , F.A.C. (6) A mortgage lender which services a mortgage loan for a noninstitutional investor shall enter into a written servicing agreement with the noninstitutional investor prior to servicing the mortgage loan. The mortgage lender may enter into a master servicing agreement with the noninstitutional investor, and such master agreement may be maintained in one central location. A master servicing agreement is not required to be copied and placed in each individual loan file. Rev 2/24/ All Rights Reserved by FMBS

118 (7) All documentation originated or received by a mortgage lender must be maintained for three years from the date of original entry. Original entry means the date the documentation was originated or received by the licensee. For each lending transaction, files and documentation shall be maintained and remain complete for three years from the original entry date of the last document. (8) (a) The penalty for failure to maintain files and required documentation (incidental and isolated clerical errors or omissions shall not be considered a violation) shall be: 1. If the mortgage lender has numerous instances of incomplete files and missing documentation the fine shall be $300 for a first offense. For the purpose of this rule numerous shall mean at least three incomplete files and a percentage equal or greater than 20% of the files examined. 2. If the mortgage lender fails to maintain an audit trail of all mortgage transactions, the penalty shall be a fine of $1,000 and a six month suspension of the license of the mortgage lender. (b) The penalty for failure to provide or maintain a copy of the good faith estimate of costs shall be a fine of $250 per file up to an aggregate of $2,500 per administrative complaint in addition to other penalties. (c) 1. The penalty for failure to provide a non-institutional investor with the documentation required in subsection (4) herein shall be a fine of $250 per file up to an aggregate of $2,500 per administrative complaint in addition to other penalties. 2. The penalty for gross negligence in maintaining documentation required in subsection (4) shall be revocation of the license. (d) Repeat violations of the requirements of this rule shall subject the licensee to the maximum penalties under Section (2), F.S. (9) For purposes of Section , F.S., a violation of the above rule, other than subsection (4) and subparagraph (8)(a)2. above, shall be considered a minor violation. Any portion of this section that is deemed to be a minor violation for a first offense shall be a notice of noncompliance. 69V Mortgage Brokerage and Lending Transaction Journal (1) Each mortgage lender shall maintain a Mortgage Brokerage and Lending Transaction Journal, which shall include, at least, the following information: (a) Name of applicant; (b) Date applicant applied for the mortgage loan; (c) Disposition of the mortgage loan application. The journal shall indicate the result of the lending transaction. The disposition of the transaction shall be categorized as one of the following: loan funded, loan denied, or application withdrawn. (d) Name of lender, if applicable. (2) The journal shall be maintained on Form OFR , Mortgage Brokerage and Lending Transaction Journal, or a form substantially similar. Rev 2/24/ All Rights Reserved by FMBS

119 (3) In lieu of maintaining Form OFR , each mortgage lender may maintain the Home Mortgage Disclosure Act loan/application register, Form FR HMDA-LAR, found at 12 C.F.R., part 203, Appendix A (2010) if all lending transactions are recorded on this form. The form is hereby incorporated by reference and may be accessed through the Government Printing Office website (4) The Mortgage Brokerage and Lending Transaction Journal shall be maintained in the principal office or in each branch office where mortgage lender transactions are originated. The Mortgage Brokerage and Lending Journal shall be kept current. The failure to initiate an entry to the Mortgage Brokerage and Lending Transaction Journal within 7 business days from the date the transaction was entered into, shall be deemed to be a failure to keep the Mortgage Brokerage and Lending Transaction Journal current. (5) The penalty for failure to maintain the Mortgage Brokerage and Lending Transaction Journal or to keep the same current (incidental or isolated clerical errors or omissions shall not be considered a violation) shall be the issuance of a notice of noncompliance for a first offense. Any subsequent finding of a violation of this rule during an examination or investigation shall be a fine of $500. The penalty for intentional or continued violations of this rule shall be a fine of $500 and suspension of the license. (6) Form OFR is incorporated by reference in subsection 69V (1), F.A.C. 69V Financial Guaranty in Lieu of Uniform Single Audit (1) A mortgage lender which services an aggregate value of less than $7.5 million dollars in outstanding mortgage loans and elects to provide a fidelity bond, financial guaranty bond, fidelity insurance, or other financial guaranty providing protection against theft, loss or other illegal diversion of funds in lieu of the single line audit required shall have such financial guaranty in full force and effect by the lender s first fiscal year end. The financial guaranty shall designate the Office of Financial Regulation as the recipient of the amount of the financial guaranty. (2) A mortgage lender electing to provide a financial guaranty in lieu of the single line audit shall document (monthly) the aggregate value of mortgage loans serviced on Form OFR , Calculation of Aggregate Value of Mortgage Loans Serviced. The lender shall maintain work-papers substantiating the aggregate value documented. (3) The minimum amount of the financial guaranty for each fiscal year shall be determined by calculating the amount of payments (including payoffs) received monthly by the servicer for the previous twelve (12) month period, then averaging the three (3) highest months. A lender electing to provide a financial guaranty in lieu of the single line audit shall document (monthly) the amount serviced on Form OFR Rev 2/24/ All Rights Reserved by FMBS

120 (4) (a) The penalty for failure to maintain adequate documentation as required in subsections (2) and (3), shall be a $1,000 fine and a two (2) year probation with the condition that a single line audit be initiated within thirty (30) days. (b) A lender that has elected to provide a financial guaranty in lieu of the single line audit and increases the aggregate value of mortgages serviced above the $7,500,000 threshold shall immediately notify the Office of Financial Regulation and initiate a single line audit within sixty (60) days. (c) A mortgage lender licensee which services loans without a single line audit or sufficient financial guaranty shall be fined $1,000 and the license shall be revoked. (5) For purposes of Section , F.S., a violation of the above rule shall not be considered a minor violation. (6) Form OFR is incorporated by reference in subsection 69V (1), F.A.C. 69V Noninstitutional Investor Funds Account All money received by a mortgage lender from a noninstitutional investor for disbursement at a mortgage loan closing shall be recorded and updated on Form OFR or on a format which is substantially similar to Form OFR Form OFR is incorporated by reference in subsection 69V (1), F.A.C. Florida Office of Financial Regulation (OFR) Mission Statement The mission of the Florida Office of Financial Regulation is to protect the citizens of Florida by carrying out the banking, securities and financial laws of the state efficiently and effectively and to provide regulation of business that promotes the sound growth and development of Florida s economy. REAL AND PERSONAL PROPERTY - LIENS, GENERALLY Chapter Redemption and sale - The right of redemption upon all sales under this part shall exist in favor of the person whose interest is sold and may be exercised in the same manner as is or may be provided for redemption of real property from sales under mortgages. Rev 2/24/ All Rights Reserved by FMBS

121 REAL AND PERSONAL PROPERTY - RECORD OF CONVEYANCES OF REAL ESTATE Chapter Acknowledgment and proof; validation of certain acknowledgments; legalization or authentication before foreign officials. To entitle any instrument concerning real property to be recorded, the execution must be acknowledged by the party executing it, proved by a subscribing witness to it, or legalized or authenticated by a civil-law notary or notary public who affixes her or his official seal, before the officers and in the form and manner following: (1) WITHIN THIS STATE. An acknowledgment or proof made within this state may be made before a judge, clerk, or deputy clerk of any court; a United States commissioner or magistrate; or a notary public or civil-law notary of this state, and the certificate of acknowledgment or proof must be under the seal of the court or officer, as the case may be. All affidavits and acknowledgments heretofore made or taken in this manner are hereby validated. (2) WITHOUT THIS STATE BUT WITHIN THE UNITED STATES Acknowledgment or proof made out of this state but within the United States may be made before a civil-law notary of this state or a commissioner of deeds appointed by the Governor of this state; a judge or clerk of any court of the United States or of any state, territory, or district; a United States commissioner or magistrate; or a notary public, justice of the peace, master in chancery, or registrar or recorder of deeds of any state, territory, or district having a seal, and the certificate of acknowledgment or proof must be under the seal of the court or officer, as the case may be. If the acknowledgment or proof is made before a notary public who does not affix a seal, it is sufficient for the notary public to type, print, or write by hand on the instrument, I am a Notary Public of the State of ;;(state);;, and my commission expires on ;;(date);;. (3) WITHIN FOREIGN COUNTRIES. If the acknowledgment, legalization, authentication, or proof is made in a foreign country, it may be made before a commissioner of deeds appointed by the Governor of this state to act in such country; before a notary public of such foreign country or a civil-law notary of this state or of such foreign country who has an official seal; before an ambassador, envoy extraordinary, minister plenipotentiary, minister, commissioner, charge d affaires, consul general, consul, vice consul, consular agent, or other diplomatic or consular officer of the United States appointed to reside in such country; or before a military or naval officer authorized by the Laws or Articles of War of the United States to perform the duties of notary public, and the certificate of acknowledgment, legalization, authentication, or proof must be under the seal of the officer. A certificate legalizing or authenticating the signature of a person executing an instrument concerning real property and to which a civil-law notary or notary public of that country has affixed her or his official seal is sufficient as an acknowledgment. For the purposes of this section, the term civil-law notary means a civil-law notary as defined in chapter 118 or an official of a foreign country who has an official seal and who is authorized to make legal or lawful the execution of any document in that jurisdiction, in which jurisdiction the affixing of her or his official seal is deemed proof of the execution of the document or deed in full compliance with the laws of that jurisdiction. All affidavits, legalizations, authentications, and acknowledgments heretofore made or taken in the manner set forth above are hereby validated. Rev 2/24/ All Rights Reserved by FMBS

122 REAL ESTATE CONTRACT (FAR/BAR) This universally accepted document was created by the Florida Association of Realtors, (FAR) and the Florida Bar, (the legal community) (BAR). It is used as a contract for the sale and purchase of real property in Florida. The lender keeps the original FAR /BAR. Of significant interest is paragraph IV - Related to financing. Paragraph IV states: FINANCING: (a) if the purchase price of any part is to be financed by a third-party, this contract is conditioned on buyer obtaining a written commitment within days after effective date for (CHECK ONE: fixed or adjustable or a fixed or adjustable rate loan for the principal amount of $ at an interest rate no to exceed %, discount and origination fees not to exceed % of the principal amount and a term of years. Buyer will make application within days after effective date and will use reasonable diligence to obtain the loan commitment and thereafter to satisfy the terms and conditions of the commitment and close the loan. Buyer shall pay all loan expenses. If the buyer fails to obtain the commitment or fails to waive Buyer's rights under this subparagraph within the time for obtaining the commitment or, after diligent effort, fails to meet the terms and conditions of the commitment, then either party thereafter, by written notice to the other, may cancel the Contract and Buyer shall be refunded the deposit. (b) The existing mortgage described in Paragraph III(c) above has a (CHECK ONE ONLY a variable interest rate, or a fixed interest rate of % per annum. At time of title transfer, some fixed interest rates are subject to increase. If increased, the rate shall not exceed % per annum. Seller shall, within days after Effective Date, furnish a form each mortgagee stating principal balance, method of payment, interest rate and status of mortgage. If buyer has agreed to assume a mortgage which requires approval of buyer by the mortgagee for assumption, the Buyer shall promptly obtain the necessary application and diligently complete and return it to the mortgagee. Any mortgage charge(s) not to exceed $ shall be paid by Buyer. If Buyer is not accepted by mortgagee or the requirements for assumption are not in accordance with the terms of this contract or mortgagee makes a charge in excess of the stated amount, Seller or Buyer may rescind this Contract by written notice to the other party unless either elects to pay the increase in interest rate of excess mortgage charges. Q: What is a FAR/BAR? A: RE Sales Contract Q: Who keeps the original FAR/BAR? A: The Lender Q: Who can cancel a FAR/BAR before it is binding? A: Buyer or Seller Rev 2/24/ All Rights Reserved by FMBS

123 THE APPLICATION PROCESS To help insure the integrity and completeness of each loan package delivered to FNMA, FNMA provides lenders with a standard credit documentation form. The Uniform Residential Loan Application, (Form 1003), is used throughout the mortgage industry. Form 1003 requests sufficient information concerning a borrower's financial position to enable underwriters, (those who do financial analysis to determine the borrower's ability to repay a loan), to make a prudent decision about the borrower's ability and willingness to repay the mortgage debt. The application is the most important document in the residential lending process. Section IX of the Federal UCC states that borrower has acknowledged and agreed that any loan application falsification is a Federal crime. BASICS OF MORTGAGE FINANCING 1. AD VALOREM TAXES ON FLORIDA REAL ESTATE - Ad valorem taxes are paid on Florida real estate. Taxes are determined by "assessed value", (what value the county property appraiser's office has placed on the real property) and by mileage, (the rate of taxation to be paid). If a property was assessed to be worth $100,000 and the millage rate was 5.15, (.00515, each mil =.001) the taxes would amount to $ per year. 2. HOMESTEAD TAX EXEMPTION (ORIGINAL) - Some property owners in Florida can apply for and receive a "homestead" exemption for their property taxes. To receive this tax exemption, a person must be a head of family owning real property and residing therein. This exemption lowers the assessed value of your home by $25,000 and therefore lowers your total property taxes. If you re annual property tax bill is lowered by applying for and receiving a homestead exemption, your monthly mortgage payment would also be lowered since the lender is taking a lesser amount each month to escrow for taxes. First $25,000 of assessed value = $0.00 Real Estate Taxes Tax Savings = $400 to $ ADDITIONAL HOMESTEAD EXEMPTION (AMENDMENT 1) - Effective January 1, 2008 homeowners will receive an additional exemption from the overburden of local taxation. Assessed value of between $50,000 - $75,000 will receive this additional exemption, this exemption applies only to the city and county portions of the assessment it does NOT apply to school tax part of the assessment. $50,000 - $75,000 additional homestead exemption, BUT only on 1. City 2. County Tax Savings $200 to $300 Rev 2/24/ All Rights Reserved by FMBS

124 Q: The amendment 1 homestead tax assessment does not apply to which of the following? I. City Taxes III. County Taxes II. Sales Tax IV. School Taxes a. I & II c. II & III b. II & IV d. I, III, & IV 4. ADDITIONAL INFORMATION ON AD VALOREM TAXES - Ad valorem means "according to value". As mentioned above, this means that ad valorem taxes are based on the assessed value of the real property. City and county taxes are calculated and charged annually. Real estate tax liens are filed against real property each year. In Florida, real property is assessed at just value, (the County Property Appraiser's assessed value of the property), as of January 1; taxes become a lien as of January 1; the taxes become due and payable on November 1; and become delinquent if not paid by April 1 of the following year. Therefore, real estate taxes are paid in arrears. Real Estate Taxes -> Accruing ->Jan 1, 2010 Real Estate Taxes -> DUE -> Nov 1, 2010 Real Estate Taxes -> LATE -> Jan 1, 2011 Real Estate Taxes -> Delinquent -> Apr 1, 2011 DISCOUNTS Taxes are discounted at the following rates: Paid in November 4% discount Paid in December 3% discount Paid in January 2% discount Paid in February 1% discount MILLAGE RATES A mil is defined as 1/10th of 1%, 3 mils = 3/10ths of 1% =.003 (20 mils =.020) (25 mils =.025) RECORDING IN THE PUBLIC RECORDS According to the Statute of Frauds, certain oral contracts are not enforceable. As such, lenders want to make sure that mortgage contracts are in writing and enforceable. To that end, documents are recorded with the Clerk of the Circuit Court in the county where the property is located to inform the public of certain facts relating to ownership and liens on real property. Deeds and mortgages are recorded to provide "constructive notice" which has the legal effect of showing the public a copy of the documents recorded. Rev 2/24/ All Rights Reserved by FMBS