Chapter 145
2011 -- S 0507 SUBSTITUTE A AS
AMENDED
Enacted 06/29/11
A N A C T
RELATING TO FINANCIAL INSTITUTIONS
Introduced By: Senators Picard, and Gallo
Date Introduced: March 10, 2011
It is enacted by the
General Assembly as follows:
SECTION 1. Section 19-4-3 of the General Laws in Chapter
19-4 entitled "Regulatory
Oversight" is hereby
amended to read as follows:
19-4-3. Records of
examinations and reports. -- (a) The director
or the director's
designee shall preserve a full record of each examination. The
records and information contained
in reports of the regulated institution, other than
information required by law to be filed, may be
provided by the director or the director's designee to the
regulated institution examined and, upon
written request, to the federal bureau of investigation, the
bank regulatory or federal deposit insuring agencies,
other state banking regulatory agencies, the
Rhode Island state police, or the .
(b) Confidential
treatment. – (1) Documents, materials or other information in the
possession or control of the division of banking that are
obtained by or disclosed to the director or
the director's designee or any other person in the course
of an examination or investigation made
pursuant to this chapter shall be confidential by law and
privileged, shall not be subject to the
Access to Public Records Act, chapter 38-2, shall not
be subject to subpoena, and shall not be
subject to discovery or admissible in evidence in any private
civil action. However, the director
is authorized to use the documents, materials or other
information in the furtherance of any
regulatory or legal action brought as a part of the director's
official duties.
(2) Neither the
director nor any person who received documents, materials or other
information while acting under the authority of the director or
with whom such documents,
materials or other information are shared pursuant to this
section shall be permitted or required to
testify in any private civil action concerning any
confidential documents, materials, or
information subject to this section.
(3) In order to
assist in the performance of the director's duties, the director:
(i)
May share documents, materials or other information, including the confidential
and
privileged documents, materials or information subject to
subsection 19-14-3(b) with other state,
federal and international regulatory agencies and federal
deposit insuring agencies, with the
Conference of State Banking Supervisors
("CSBS"), and its affiliates and subsidiaries, and with
state, federal, and international law enforcement
authorities, provided that the recipient agrees in
writing to maintain the confidentiality and privileged status
of the document, material or other
information, and has verified in writing the legal authority to
maintain confidentiality.
(ii)
May receive documents, materials or information, including otherwise
confidential
and privileged documents, materials or information from
other state, federal and international
regulatory agencies and federal deposit insuring agencies, from
the Conference of State Banking
Supervisors ("CSBS"), and its affiliates and
subsidiaries, and from state, federal, and international
law enforcement authorities, and shall maintain as
confidential or privileged any document,
material or information received with notice or the
understanding that it is confidential or
privileged under the laws of the jurisdiction that is the source
of the document, material or
information; and
(iii)
May enter into written agreements with other state, federal and international
regulatory agencies and federal depositing insuring agencies,
with the Conference of State
Banking Supervisors ("CSBS"), and its
affiliates and subsidiaries, and with state, federal and
international law enforcement authorities governing sharing and use
of information provided
pursuant to this section consistent with this section.
(4) The sharing of
information by the director pursuant to this section shall not constitute
a delegation of regulatory authority or rulemaking, and
the director is solely responsible for the
administration, execution and enforcement of the provisions of this
section.
(5) No waiver of any
applicable privilege or claim of confidentiality in the document,
materials or information shall occur as a result of disclosure
to the director under this section or
as a result of sharing as authorized in subsection
19-14-3(b).
(6) Documents,
materials or other information filed in the possession or control of CSBS
pursuant to this section shall be confidential by law and
privileged, shall not be subject to the
Access to Public Records Act, chapter 38-2, shall not
be subject to subpoena, and shall not be
subject to discovery or admissible in evidence in any private
civil action.
(b) (c)
The imparting of this information by the director or the director's designee
other
than according to the provisions of this chapter shall be
sufficient cause for removal, and any
such deputy, assistant, or officer, who, except in the
discharge of his or her official duty and other
than as set out above, imparts this information shall be
liable for a fine of not exceeding one
thousand dollars ($1,000) and this deputy or assistant may
also be removed from office or
employment by the director or the director's designee. These
records, examinations, and reports
are not subject to the Access to Public Records Act,
section 38-2-1 et seq.
SECTION 2. Section 19-14-23 of the General Laws in Chapter
19-14 entitled "Licensed
Activities" is hereby
amended to read as follows:
19-14-23.
Examinations and investigations. -- (a) For the
purpose of discovering
violations of this title or securing information lawfully
required, the director or the director's
designee(s) may at any time investigate the loans and business
and examine the books, accounts,
records and files used therein, of every licensee and person
who shall be engaged in any activity
that requires a license under this title, whether the
person shall act or claim to act as principal or
agent, or under or without the authority of this title. For
that purpose the director or the director's
designee(s) shall have free access to the offices and places of
business, books, accounts, paper,
records, files, and safes, of all such persons. The director or
the director's designee(s) shall have
authority to require the attendance of and to examine under
oath any person whose testimony may
be required relative to the loans or the business or to
the subject matter of any examination,
investigation, or hearing.
(b) The director or the
director's designee shall make an examination of the affairs,
business, office, and records of each licensee and branch
location at least once every eighteen
(18) months. The director or
the director's designee may accept in lieu of an examination of the
business of a licensed mortgage loan originator, the
examination by the director or the director's
designee of the licensed lender(s) or licensed loan broker who
employ the licensed mortgage loan
originator and/or who employed the licensed mortgage loan
originator during the period under
examination. The total cost of an examination made pursuant to
this section shall be paid by the
licensee or person being examined, and shall include the
following expenses:
(1) One hundred fifty
percent (150%) of the total salaries and benefits plus one hundred
percent (100%) for the travel and transportation expenses for
the examining personnel engaged in
the examinations. The cost of an examination of a
mortgage loan originator licensee shall be
limited to twenty-five percent (25%) of the total salary and
benefits for the personnel engaged in
an examination specific to a mortgage loan originator.
The fees shall be paid to the director to and
for the use of the state. The examination fees shall be
in addition to any taxes and fees otherwise
payable to the state;
(2) All reasonable
technology costs related to the examination process. Technology costs
shall include the actual cost of software and hardware
utilized in the examination process and the
cost of training examination personnel in the proper use
of the software or hardware; and
(3) All necessary and
reasonable education and training costs incurred by the state to
maintain the proficiency and competence of the examination
personnel. All such costs shall be
incurred in accordance with appropriate state of
procedures.
(c) All expenses
incurred pursuant to subsections (b)(2) and (b)(3) of
this section shall be
allocated equally to each licensee, other than licensed
mortgage loan originators, no more
frequently than annually and shall not exceed an annual average
assessment of fifty dollars
($50.00) per company for any given
three (3) calendar year period. All
revenues collected
pursuant to this section shall be deposited as general
revenues. That assessment shall be in
addition to any taxes and fees otherwise payable to the state.
(d) The provisions of
section 19-4-3 shall apply to records of examinations or
investigations of licensees; provided, however, the director
or the director's designee is authorized
to make public the number of valid consumer complaints
as determined by the director or the
director's designee filed against the licensee for a twelve (12)
month period immediately
preceding the request for the information.; and
provided, further, that promptly following the
completion of any examination under subsection 19-14-23(b), the
director or the director's
designee shall provide to the person examined a copy of the
written report of the examination,
together with a notice requiring the person examined to file a
written response or rebuttal to the
comments and recommendations contained in the examination
report within thirty (30) days of
receipt thereof or such longer period as the director or the
director's designee may specify.
(e) If the director or
his or her designee has reason to believe that any person required to
be licensed under this chapter is conducting a business
without having first obtained a license
under this chapter, or who after the denial, suspension, or
revocation of a license is conducting
that business, the director or his or her designee may
issue an order to that person commanding
him or her to cease and desist from conducting that
business. The order shall provide an
opportunity to request a hearing to be held not sooner than three
(3) days after issuance of that
order to show cause why the order should not become final.
Any order issued pursuant to this
section shall become final if no request for a hearing is
received by the director or his or her
designee within thirty (30) days of the issuance of the order.
The order may be served on any
person by mailing a copy of the order, certified mail,
return receipt requested, and first class mail
to that person at any address at which that person has
done business or at which that person lives.
Any hearing held pursuant to this section shall be
governed in accordance with chapter 35 of title
42. If that person fails to comply with an order of
the director or his or her designee after being
afforded an opportunity for a hearing, the superior court for
upon complaint of the department to restrain and enjoin
that person from violating this chapter.
(f) The director may
impose an administrative assessment, as well as the penalties
provided for under section 19-14-26, against any person named
in an order issued under
subsection (e) or, in accordance with the rules and regulations
promulgated pursuant to section
19-14-30, against any person who violates or
participates in the violation of any of the applicable
provisions of this title, or any regulation promulgated pursuant
to any provisions of this title. The
amount of the administrative assessment may not exceed one
thousand dollars ($1,000) for each
violation of this chapter or each act or omission that
constitutes a basis for issuing the order. Any
person aggrieved by an administrative assessment shall have
the opportunity to request a hearing
to be held in accordance with chapter 35 of title 42
within thirty (30) days of the imposition of
such administrative assessment.
SECTION 3. Sections 19-14.10-3, 19-14.10-4 and 19-14.10-14
of the General Laws in
Chapter 19-14.10 entitled
"An Act Adopting the Federal Secure and Fair Enforcement for
Mortgage Licensing Act of
2009" are hereby amended to read as follows:
19-14.10-3.
Definitions. -- For purposes of this chapter, the
following definitions shall
apply:
(1) "Depository
institution" has the same meaning as in section 3 of the Federal Deposit
Insurance Act, and includes any credit union.
(2) "Federal
banking agencies" means 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,
and the Federal Deposit Insurance Corporation.
(3) "Immediate
family member" means a spouse, child, sibling, parent, grandparent, or
grandchild. This includes stepparents, stepchildren,
stepsiblings, and adoptive relationships.
(4)
"Individual" means a natural person.
(5) (i) "Loan processor or
underwriter" means an individual who performs clerical or
support duties as an employee at the direction of and subject
to the supervision and instruction of
a person licensed as a lender or as a loan broker, or
exempt from licensing under chapters 19-14,
or 19-14.1.
(ii) For purposes of subsection
(5)(i), "clerical or
support duties" may include subsequent
to the receipt of an application:
(A) The receipt,
collection, distribution, and analysis of information common for the
processing or underwriting of a residential mortgage loan; and
(B) Communicating with
a consumer 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 counseling
consumers about residential mortgage
loan rates or terms.
(iii) Representatives
to the public. - An individual engaging solely in loan processor or
underwriter activities, shall not represent to the public,
through advertising or other means of
communicating or providing information including the use of
business cards, stationery,
brochures, signs, rate lists, or other promotional items, that
such individual can or will perform
any of the activities of a mortgage loan originator.
(6) (i) "Mortgage loan
originator" means:
(A) An individual who,
for compensation or gain or in the expectation of compensation
or gain:
(I) Takes a residential
mortgage loan application; or
(II) Offers or
negotiates terms of a residential mortgage loan;
(B) Does not include an
individual engaged solely as a loan processor or underwriter
except as otherwise provided in subsection 19-14.10-4(c);
(C) Does not include a
person or entity that only performs real estate brokerage activities
and is licensed or registered in accordance with
compensated by a lender, a mortgage broker, or other mortgage
loan originator or by any agent of
such lender, mortgage broker, or other mortgage loan
originator;
(D) Does not include a
person or entity solely involved in extensions of credit relating to
timeshare plans, as that term is defined in section 101(53D) of
title 11, United States Code, as
amended; and
(E) Does not include a
person (or its employees) engaged in servicing mortgage loans.
For purposes of this exclusion, "servicing
mortgage loans" means, on behalf of the note holder,
collecting and receiving payments, including payments of
principal, interest, escrow amounts,
and other sums due, on obligations due and owing to the
note holder pursuant to a residential
mortgage loan, and, when the borrower is in default, or in
reasonably foreseeable likelihood of
default, working with the borrower on behalf of the note
holder and pursuant to the contract
between the person servicing mortgage loans and the note
holder, to modify but not refinance,
either temporarily or permanently, the obligations, or
otherwise finalizing collection of the
obligation through the foreclosure process.
(ii) "Real estate
brokerage activity" means any activity that involves offering or
providing real estate brokerage services to the public,
including:
(A) Acting as a real
estate agent or real estate broker for a buyer, seller, lessor,
or lessee
of real property;
(B) Bringing together
parties interested in the sale, purchase, lease, rental, or exchange
of real property;
(C) Negotiating, on
behalf of any party, any portion of a contract relating to the sale,
purchase, lease, rental, or exchange of real property (other
than in connection with providing
financing with respect to any such transaction);
(D) Engaging in any
activity for which a person engaged in the activity is required to be
registered or licensed as a real estate agent or real
estate broker under any applicable law; and
(E) Offering to engage
in any activity, or act in any capacity, described in subparagraphs
(A), (B), (C), or (D) of this
section.
(7) "Nationwide
Mortgage Licensing System and Registry" means a mortgage licensing
system developed and maintained by the conference of state
bank supervisors and the American
association of residential mortgage regulators for the licensing
and registration of licensed
mortgage loan originators.
(8)
"Nontraditional mortgage product" means any mortgage product other
than a thirty
(30) year fixed rate
mortgage.
(9) "Person"
means a natural person, corporation, company, limited liability company,
partnership, association, or any other entity however organized.
(10) "Registered
mortgage loan originator" means any individual who:
(i)
Meets the definition of mortgage loan originator and is an employee of:
(A) A depository
institution;
(B) A subsidiary that
is:
(I) (1)
Owned and controlled by a depository institution; and
(II) (2)
Regulated by a Federal banking agency; or
(C) An institution
regulated by the farm credit administration; and
(D) (ii) Is registered with, and maintains a unique identifier
through, the nationwide
mortgage licensing system and registry.
(11) "Residential
mortgage loan" means any loan primarily for personal, family, or
household use that is secured by a mortgage, deed of trust, or
other equivalent consensual security
interest on a dwelling (as defined in section 103(v) of the
Truth in Lending Act) or residential real
estate upon which is constructed or intended to be
constructed a dwelling (as so defined).
(12) "Residential
real estate" means any real property located in
which is constructed or intended to be constructed a
dwelling.
(13) "SAFE
Act" means the Secure and Fair Enforcement for Mortgage Licensing Act,
comprising sections 1501-1517 of the Housing and Economic
Recovery Act of 2008, Public
Laws 110-289.
(13) (14)
"Unique identifier" means a number or other identifier assigned by
protocols
established by the nationwide mortgage licensing system and
registry.
19-14.10-4.
License and registration required. -- (a) An individual,
unless specifically
exempted from this chapter under subsection (b) of this
section, shall not engage in the business
of a mortgage loan originator with respect to any
dwelling located in this state without first
obtaining and maintaining annually a license under this
chapter. Each licensed mortgage loan
originator must register with and maintain a valid unique
identifier issued by the nationwide
mortgage licensing system and registry.
(b) The following
individuals are exempt from this chapter:
(1) Registered mortgage
loan originators, when acting for an entity described in
subparagraphs 19-14.10-3(10)(i)(A),
(B), or (C) are exempt from this chapter.
(2) Any individual who offers
or negotiates terms of a residential mortgage loan with or
on behalf of an immediate family member of the
individual.
(3) Any individual who
offers or negotiates terms of a residential mortgage loan secured
by a dwelling that served as the individual's residence.
(4) A licensed attorney
who negotiates the terms of a residential mortgage loan on behalf
of a client as an ancillary matter to the attorney's
representation of the client, unless the attorney
is compensated by a lender, a mortgage broker, or other
mortgage loan originator or by any agent
of such lender, mortgage broker, or other mortgage loan
originator.
(5) A licensed attorney
when performing loan closing services for a licensed lender,
licensed loan broker, or for an entity exempt from licensing
under subdivision 19-14.1-10(a)(4);
(6) A mortgage loan
originator: (i) Who is
employed by a lender or loan broker licensed
under chapter 19-14 and/or 19-14.1; (ii) Who works at a
qualified location; (iii) Who is registered
with, and maintains a unique identifier through the
nationwide mortgage licensing system and
registry; (iv) Who acts as a mortgage loan originator for
residential mortgage loans secured by
dwellings (as defined in Section 103(v) of the Truth in Lending
Act) constructed or to be
constructed on real property located in states other than
registered as required by applicable law in each state in which
such real property is located. As
used herein, the term "qualified location" means
a location licensed under this chapter which
serves as the primary place of employment of at least one
mortgage loan originator licensed under
chapter 19-14.10.
(c) An individual loan
processor or underwriter who is an independent contractor may
not engage in the activities of a loan processor or
underwriter unless such independent contractor
loan processor or underwriter obtains and maintains a
license under chapters 19-14 and 19-14.10.
Each independent contractor loan processor or
underwriter licensed as a mortgage loan originator
must have and maintain a valid unique identifier issued by
the nationwide mortgage licensing
system and registry.
(d) For the purposes of
implementing an orderly and efficient licensing process the
director or the director's designee may establish licensing
rules or regulations and interim
procedures for licensing and acceptance of applications. For
previously registered or licensed
individuals the director or the director's designee may establish
expedited review and licensing
procedures as follows:
(1) A mortgage loan
originator applicant whose employer at the time of application for a
mortgage loan originator license is an entity described in
subparagraphs 19-14.10-3(10)(i)(A),
(B), or (C) and who has been assigned a unique
identifier through the nationwide mortgage
licensing system and registry and who has completed and filed
with the director or the director's
designee all information, documents and requirements for
licensure pursuant to this chapter shall
be permitted to continue to act as a mortgage loan
originator for the period prior to action being
taken on his or her application by the director or the
director's designee;
(2) A mortgage loan
originator applicant who has been assigned a unique identifier
through the nationwide mortgage licensing system and registry
and who has completed and filed
with the director or the director's designee all
information, documents and requirements for
licensure pursuant to this chapter and whose employer at the
time of application for a mortgage
loan originator license is a lender or loan broker
licensed under chapter 19-14 and 19-14.1, shall
be permitted to continue to act as a mortgage loan
originator for the period prior to action being
taken on his or her application by the director or
director's designee if the applicant and a senior
officer or principal of such lender or loan broker files
written attestation to the director or the
director's designee that:
(i)
The applicant is currently or has within the six (6) month period prior to the
date of
the application been acting as a registered mortgage loan
originator in this state or as a state-
licensed mortgage loan originator in another state, in either
case under the provisions of Section
1507 of the SAFE Act;
(ii) The applicant has
never had a mortgage loan license or registration denied, revoked,
or suspended in any governmental jurisdiction; and
(iii) the applicant has not been convicted of a felony that would
otherwise authorize the
director or the director's designee to deny the applicant a
license.
(3) Any provisional
authority to act as a mortgage loan originator issued pursuant to this
subsection (d) shall expire on the earlier of: (i) The date on which the director or the director's
designee issues or denies the application for the license; or
(ii) One hundred twenty (120) days
from the date of application for the license.
(4) The director or the
director's designee may deny or suspend the rights of a lender or
loan broker licensed under chapter 19-14 or 19-14.1 to
employ a mortgage loan originator under
this subsection (d) if the director or the director's
designee finds that such lender or loan broker, a
senior official or principal thereof, or the applicant
failed to exercise due diligence and good faith
when submitting the attestations required in subdivision
(d)(1) or (d)(2) above.
19-14.10-14.
Surety bond required. -- (a) Each mortgage
loan originator shall be
covered by a surety bond in accordance with this section. In
the event that the mortgage loan
originator is an employee of a lender or loan broker licensed
under chapter 19-14, the surety bond
of such lender or loan broker as required in accordance
with the provisions of such chapter,
increased to any higher amount, and adjusted by the amounts required by this
section can be used
in lieu of the mortgage loan originator's surety bond
requirement.
(1) The surety bond
shall provide coverage for each mortgage loan originator in an
amount as prescribed in subsection (b) of this section.
(2) The surety bond
shall be in a form as prescribed by the director or the director's
designee.
(3) The director or the
director's designee may promulgate rules or regulations with
respect to the requirements for such surety bonds as are
necessary to accomplish the purposes of
this chapter.
(b) The penal sum of
the surety bond shall be maintained in an amount that reflects the
dollar amount of loans originated as determined by the
director or the director's designee by
regulation adopted within one hundred twenty (120) days of the
effective date of this section.
(c) When an action is
commenced on a licensee's bond the director or the director's
designee may require the filing of a new bond.
(d) Immediately upon
recovery upon any action on the bond the licensee shall file a new
bond.
(e) A minimum net
worth shall be continuously maintained for mortgage loan originators
in accordance with this section. In the event that the
mortgage loan originator is an employee, a
lender or loan broker licensed under chapter 19-14, the net
worth can be used in lieu of the
mortgage loan originator's minimum net worth requirement.
In addition:
(1) Minimum net
worth shall be maintained in an amount that reflects the dollar amount
of loans originated as determined by the director or the
director's designee.
(2) The director
or the director's designee shall within one hundred twenty (120) days of
the effective date of this section promulgate rules or
regulations with respect to the requirements
for minimum net worth surety bonds as are
necessary to accomplish the purposes of this chapter.
SECTION 4. This act shall take effect upon passage.
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LC01228/SUB A
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