Chapter 1301:8-7 Rules Relating to Mortgage Brokers

1301:8-7-01 [Effective until 1/4/2016] Definitions.

The definitions provided in section 1322.01 of the Revised Code and the following defined terms, shall apply to this rule chapter and shall serve as the division's interpretation unless the language of the rule indicates to the contrary:

(A) As used in Chapter 1322. of the Revised Code and this chapter, "mortgage broker" includes those persons operating under the authority of sections 1322.01 to 1322.12 of the Revised Code who hold certificates of registration issued pursuant to those sections, those persons who should have obtained certificates but did not, and persons whose business is physically located in Ohio but who exclusively solicit buyers from states other than Ohio.

(B) As used in Chapter 1322. of the Revised Code and this chapter, "loan officer" includes those individuals who hold licenses issued pursuant to sections 1322.01 to 1322.12 of the Revised Code and those individuals who should have obtained licenses but did not.

(C) As used in division (C) of section 1322.08 of the Revised Code, "at the time that the request for the mortgage is refused or denied" means no later than five business days from the day that the loan application has been refused or denied.

(D) "Services of a mortgage broker" as used in division (A) of section 1322.01 of the Revised Code include, but is not limited to, services concerning residential mortgage loans and loans used to refinance an existing residential mortgage.

(E) Division (C) of section 1322.01 of the Revised Code shall not be construed to prohibit registrants from contracting with third party providers for the administration of payroll, tax, benefits, or other similar services. Contracting with such a provider does not alter the employee-registrant relationship for purposes of sections 1322.01 to 1322.12 of the Revised Code or this chapter.

(F) "Person," as used in chapter 1322. of the Revised Code and this rule chapter, means a natural person, corporation, partnership, company, limited liability corporation, association, an unincorporated organization, or any other group however organized.

(G) "Control" as used in division (C)(1)(a) of section 1322.02 of the Revised Code and this chapter, means ownership, control, or power to vote twenty-five per cent or more of the outstanding shares of any class of voting securities of the other entity, directly or indirectly or acting through one or more other persons.

(H) "Subsidiary," as used in division (C)(1)(a) of section 1322.02 of the Revised Code and this rule chapter, means a business entity of which a bank, savings bank, savings and loan association, credit union, or credit union service organization owns or holds of record equity interests entitling the bank, savings bank, savings and loan association, credit union, or credit union service organization to exercise a majority of the voting power in the election of directors or similar essential governance decisions.

(I) "Real Estate Settlement Procedures Act" means the Real Estate Settlement Procedures Act, 12 U.S.C. Sections 2601 et seq., and rules promulgated thereunder including Regulation X, 24 C.F.R. Sections3500 et seq., as in effect on January 1, 2007.

(J) "Truth in Lending Act" means the Truth in Lending Act, 15 U.S.C. Sections 1601 et seq., and rules promulgated thereunder including Regulation Z, 12 C.F.R. sections226 et seq., as in effect on January 1, 2007.

(K) "Theft," as used in sections 1322.04 and 1322.041 of the Revised Code and this chapter, means those offenses set forth as a theft offense in division (K) of section 2913.01 of the Revised Code except for those offenses, other than theft, specifically enumerated in division (A)(8) of section 1322.03 and division (A)(2) of section 1322.031 of the Revised Code.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: R.C. Chapter 1322
Prior Effective Dates: 1-22-95, 9-1-06

1301:8-7-01 [Effective 1/4/2016] Definitions.

Unless otherwise specified, as used in Chapter 1322. of the Revised Code and in this chapter of the Administrative Code:

(A) "Advertisement" and "advertising" means any written or oral statement, illustration, or depiction, whether in English or any other language, that is designed to effect a sale or create interest in purchasing goods or services, whether it appears on or in a label, package, package insert, radio, television, cable television, brochure, newspaper, magazine, pamphlet, leaflet, circular, mailer, book insert, free standing insert, letter, catalogue, poster, chart, billboard, public transit card, point of purchase display, film, slide, audio program transmitted over a telephone system, telemarketing script, on-hold script, upsell script, training materials provided to telemarketing firms, program-length commercial ("infomercial"), the internet, cellular network, or any other medium. Promotional materials and items and web pages are included in the term advertisement and advertising.

(B) "At the time that the request for the mortgage is refused or denied" means no later than five business days from the day that the residential mortgage loan application has been refused or denied.

(C) "Borrower" means an individual who is assisted by a loan originator in applying for or obtaining a residential mortgage loan and includes, but is not limited to, a buyer.

(D) "Credit union service organization" means an entity that a credit union, chartered and lawfully doing business under the laws of this state, another state, or the United States, invests in or loans to and that primarily provides products or services to credit unions or their members.

(E) "Financial and mortgage information" means information about a borrower or potential borrower that is customary or necessary to include in a residential mortgage loan application.

(F) "For compensation or gain" means receives or expects to receive payment of money or anything of value in connection with the activities described in paragraph (I)(1) of this rule or as a result of any residential mortgage loan terms entered into as a result of such activities.

(G) "Leads" means financial and mortgage information about potential residential mortgage loan borrowers, including, but not limited to, information submitted by potential borrowers who fill out online questionnaires, contests, or surveys.

(H) "Licensee," as defined in division (D) of section 1322.01 of the Revised Code, includes a temporary licensee, except that section 1322.041 of the Revised Code shall not apply to a temporary licensee.

(I)

(1) "Loan originator," in accordance with section 1322.024 of the Revised Code, is expanded to mean an individual who for compensation or gain, or in anticipation of compensation or gain, does any of the following:

(a) Takes or offers to take a residential mortgage loan application;

(b) Assists or offers to assist a borrower in obtaining or applying to obtain a residential mortgage loan by, among other things, advising on loan terms, including rates, fees, and other costs;

(c) Offers or negotiates terms of a residential mortgage loan;

(d) Issues or offers to issue a commitment for a residential mortgage loan to a borrower;

(e) Performs the clerical or support duties of a loan processor or underwriter as an independent contractor.

(2) "Loan originator" does not include, in addition to those individuals listed in division (E)(2) of section 1322.01 of the Revised Code, any of the following:

(a) An individual who is an employee of a federal, state, or local government agency or housing finance agency and who acts as a loan originator only pursuant to his or her official duties as an employee of the federal, state, or local government agency or housing finance agency;

(b) An employee of a qualified exempt entity who acts solely as a loan processor or underwriter and who does not represent to the public, through advertising or other means of communicating, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the employee can or will perform any of the activities of a loan originator.

(J) "Mortgage banker" includes, in addition to those persons listed in divisions (G)(2)(h)(i) to (G)(2)(h)(iv) of section 1322.01 of the Revised Code, a person that makes, services, buys, or sells residential mortgage loans secured by a first lien, that underwrites the loans, and who meets any of the following criteria:

(1) The person has been designated as an approved lender by the United States department of agriculture (USDA) to offer the single family guaranteed rural housing program;

(2) The person has been directly approved by the "Federal Home Loan Bank of Cincinnati" (FHLB of Cincinnati) as a participating financial institution for the mortgage purchase program and complies with the underwriting and documentation requirements of the FHLB of Cincinnati.

(K) "Mortgage broker" includes, in addition to those persons listed in division (G)(1) of section 1322.01 of the Revised Code, a person who is physically located in this state but who regularly provides or offers to provide mortgage broker services only to borrowers or for property located in other states.

(L) "NMLS" means the "nationwide mortgage licensing system and registry" or "nationwide multi-state licensing system" or any subsequent name for the registry adopted by "Conference of State Bank Supervisors" and the "American Association of Residential Mortgage Regulators."

(M) "Originate," "originating," origination" or "act(ing) as a loan originator" means to do any of the acts set forth in paragraph (I)(1) of this rule.

(N) "Other equivalent consensual security interest" includes, but is not limited to, a retail installment sale as that term is defined in division (A) of section 1317.01 of the Revised Code and a land installment contract as defined in division (A) of section 5313.01 of the Revised Code.

(O) "Person" includes, without limitation, a natural person, corporation, limited liability company, partnership, association, or other entity listed in division (EE) of section 1701.01 of the Revised Code.

(P) "Principally" means more than fifty per cent of the total time worked in a calendar month, or in a longer period as determined by the superintendent for good cause shown.

(Q) "Qualified exempt entity" means a person holding a valid letter of exemption issued pursuant to section 1322.022 or 1322.023 of the Revised Code.

(R) "Resident of this state" does not include an individual who is purchasing a primary residence in another state.

(S) "Residential mortgage loan application" or "loan application" means a request, in any form, for an offer (or a response to a solicitation of an offer) of residential mortgage loan terms, and the information about the borrower or prospective borrower that is customary or necessary in a decision on whether to make such an offer.

(T) "Settlement service provider" means a person who provides settlement services as that term is defined in 12 C.F.R. 1024.2, as in effect on January 12, 2014.

(U) "Takes or offers to take a residential mortgage loan application" means receives a residential mortgage loan application for the purpose of facilitating a decision whether to extend an offer of residential mortgage loan terms to a borrower or prospective borrower (or to accept the terms offered by a borrower or prospective borrower in response to a solicitation), whether the application is received directly or indirectly from the borrower or prospective borrower.

(V) "Transaction of business as a mortgage broker in this state" means the origination of a residential mortgage loan in any of the following circumstances:

(1) For any resident of this state;

(2) For any property in this state;

(3) By a person who is physically located in this state but who regularly provides or offers to provide mortgage broker services only to borrowers or for property located in other states.

(W) "Underwrites the loans" means to perform clerical or support duties as that term is defined in 12 U.S.C. 5102(5)(B), as in effect on January 12, 2014, on behalf of a borrower and to either comply with the manual underwriting standards of or use the automated underwriting system required by the approving authority for a transaction made under that same authority. At the qualified exempt entity's discretion, the clerical or support duties of a loan processor or underwriter may be performed by an independent contractor holding an active loan originator license issued pursuant to Chapter 1322. of the Revised Code or a loan processing or underwriting company holding a valid letter of exemption issued pursuant to rule 1301:8-7-32 of the Administrative Code.

Replaces: 1301:8-7-01

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12, 1322.024
Rule Amplifies: R.C. Chapter 1322
Prior Effective Dates: 1/22/1995, 9/1/2006, 6/1/2007

1301:8-7-02 [Effective until 1/4/2016] Mortgage broker registration; office requirements and restrictions.

(A) For purposes of division (G) of section 1322.01 of the Revised Code and division (A)(2) of section 1322.02 of the Revised Code, a person "holds oneself out" by advertising or otherwise informing the public that the person engages in any of the activities indicated, including without limit through the use of business cards, stationery, brochures, rate lists, or an internet website.

(B) Division (G)(1) of section 1322.01 of the Revised Code, includes, but is not limited to, collecting data from buyers through any medium including the internet or telephone, distributing the information to multiple lenders who in turn provide loan terms which the lenders would be willing to provide to buyers based on the information submitted, then forwarding the loan terms to the buyers so that the buyers can contact the lender directly and charging or receiving any valuable consideration from the buyer, lender, or mortgage broker.

(C) Division (G)(2) of section 1322.01 of the Revised Code, includes, but is not limited to, soliciting personal financial and mortgage information from buyers through any medium including the internet or telephone, and providing that information to a mortgage broker and charging or receiving any valuable consideration for the information. This practice is commonly referred to as obtaining or generating "leads." For purposes of this rule, "personal financial and mortgage information" includes, but is not limited to, social security numbers and any financial account number such as a credit card or bank account number. Division (G)(3) of section 1322.01 of the Revised Code does not include persons or entities to whom the mortgage is originally payable if following their sale or assignment of the mortgage to a trust for the purposes of securitization that person or entity remains the servicer of that mortgage and in that capacity receives for the benefit of the trust purchaser or assignee one or more scheduled payments.

(D) As used in division (C)(1) of section 1322.02 of the Revised Code, the phrase "only with respect to business engaged in or authorized by" means that a person is exempt from registration and compliance under sections 1322.01 to 1322.12 of the Revised Code only while performing the work and/or activities specifically authorized by their charter, license, authority, approval, or certificate, or authorization described in division (C)(1)(g). However, if the person performs any activity not expressly authorized and the activity falls within the scope of sections 1322.01 to 1322.12 of the Revised Code, registration and compliance is required. The origination of mortgage loans that comply with the guidelines set forth by the United States department of housing and urban development, the federal national mortgage association, the federal home loan mortgage corporation or the United States department of veterans affairs in all respects except the size of the loans is not exempt from the registration and compliance requirements of chapter 1322. of the Revised Code unless the person originating the loan meets the definition of "mortgage banker" in division (C)(1)(g) of section 1322.02 of the Revised Code.

(E) In accordance with division (A)(1) of section 1322.02 of the Revised Code, a certificate of registration must be obtained from the superintendent of financial institutions for every office to be maintained by the person for the transaction of business as a mortgage broker in this state. A person must register a location as an office for the transaction of business as a mortgage broker in this state where any of the following activities occur or conditions exist:

(1) Financial and mortgage information is solicited from the public for sale to a mortgage broker;

(2) Records required by rule 1301:8-7-06 of the Administrative Code are maintained;

(3) Printed or electronic advertisements indicate that mortgage lending or brokering is conducted; or

(4) Any location that is held out as a location at which the registrant, an employee of the registrant, or any agent of the registrant provides mortgage broker services.

(F) A registrant may share office space with another person if:

(1) The physical arrangement of the shared space does not confuse or mislead buyers about the registrant's identity;

(2) Computer access to buyer files and/or personal financial information is limited to the registrant's employees in the absence of full disclosure and written consent of the buyer;

(3) Records required to be created and maintained under rule 1301:8-7-06arekeptseparate and inaccessible from any person not employed by the registrant.

(G) In accord with division (A)(1) of section 1322.02 of the Revised Code, every registrant shall maintain at all times at least one office located in the state of Ohio that meets the following minimum criteria:

(1) The office location shall be a physical location of at least one room in a building of secure construction, which does not include portable buildings, where:

(a) The registrant conducts mortgage broker activities pursuant to Chapter 1322. of the Revised Code;

(b) At least one licensed loan officer employed by the registrant has the ability to investigate and resolve questions and complaints from buyers; and

(c) Where a buyer who wishes to meet face-to-face with a licensed loan officer can bring all documents applicable to his or her application for or existing home mortgage for examination in conjunction with an inquiry, complaint or concern.

(2) The office location shall have a street address, and shall not be a post office box or similar designation. An unstaffed storage facility shall not meet the requirements of section 1322.02 of the Revised Code.

(H) The following restrictions and requirements apply to branch offices:

(1) A branch office shall not be a separate business entity. Each branch office and every employee of each branch office is the responsibility of the registrant and shall be under the direct control, management and supervision of the registrant.

(2) A branch office shall not pay its own operating expenses. Operating expenses shall include, but are not limited to, compensation of branch office employees, and payments for equipment, furniture, office rent, and other similar expenses incurred in operating a mortgage broker business. All assets and liabilities of the branch are assets and liabilities of the registrant and all income and expenses of the branch are income and expenses of the registrant and must be properly accounted for in the financial records and state and federal tax returns of the registrant. Compensation of a branch manager may be based on the income of the branch minus the operating expenses of the branch as long as the ultimate responsibility and payment of those operating expenses remain the responsibility of the registrant.

(3) A branch office shall not indemnify the registrant against damages incurred from any apparent, express, or implied agency representation, or from any actions of the branch or the employees working in, from or through the branch.

(4) A branch shall not maintain a banking account or accounts for the payment of expenses of that branch that is separate from the account or accounts of the registrant. All operating expenses must be paid from an account of the registrant, and may not be paid through or from any employee's personal account or any non-registrant account.

(5) A branch office shall not maintain lines of credit, warehouse agreements, or other investor agreements that are separate from those of the registrant.

(6) A branch office shall not maintain contractual relationships with vendors for items such as leases, telephones, utilities, and advertising in the name of the branch office. All contractual relationships must be by and through the registrant.

(7) All practices, policies, and procedures, including but not limited to those relating to employment and operations, must be originated and established by the registrant and must be applied consistently to the main office and all branches.

(I) A purported branch location which does not comply with division (H) of this rule, or any other arrangement where a registrant allows a separate entity to conduct mortgage business under the registrant's certificate of authority, sometimes referred to as "net branching," is not permissible.

(J) In a conspicuous place in each registered office, a registrant shall at all times post a copy of the certificate of registration issued for that office.

(K) The following statuses apply to certificates of registration:

(1) Pending. A person with a pending application or a mortgage broker certificate of registration is not licensed and is not authorized to conduct mortgage broker activities.

(2) Active. A person with an active certificate of registration is authorized to engage in mortgage broker activities.

(3) Suspended. Suspension is a disciplinary registration status. A person with a suspended certificate of registration is not permitted to conduct mortgage broker activities.

(a) Engaging in, or participating or assisting in any way in any conduct or activity for which a certificate of registration is required while a certificate of registration is suspended, constitutes a violation of division (A) of section 1322.02 of the Revised Code.

(b) A suspended certificate of registration is subject to revocation or any other administrative, disciplinary, or penal action for actionable conduct occurring before, during or after the certificate was suspended.

(c) A suspended certificate of registration may be returned to active status upon the following conditions:

(i) The superintendent believes that all conditions of the disciplinary action for which the certificate was suspended have been satisfied; and

(ii) The registrant is otherwise eligible and suitable to hold an active certificate.

(4) Revoked. Revocation is a disciplinary status. A person with a revoked certificate of registration is not permitted to engage in mortgage broker activities. Engaging in, or participating or assisting in any way in any conduct or activity for which a certificate of registration is required while a certificate of registration is revoked constitutes a violation of division (A) of section 1322.02 of the Revised Code.

(5) Denied. Denial is a disciplinary registration status. A person denied registration is not permitted to engage in mortgage broker activities. Engaging in, or participating or assisting in any way in any conduct or activity for which a certificate of registration is required while a certificate of registration is denied constitutes a violation of division (A) of section 1322.02 of the Revised Code.

(6) Cancelled. A person with a cancelled certificate of registration is not permitted to engage in mortgage broker activities. A cancelled certificate may not be reinstated. To receive a new certificate of registration a person must comply with rule 1301:8-7-03 of the Administrative Code for obtaining a certificate of registration. A certificate of registration may be cancelled on occurrence of the following:

(a) When the certificate of registration expires; or

(b) If the certificate of registration is surrendered in accordance with the following:

(i) A person may voluntarily surrender an active certificate of registration as long as the person is not under investigation by the division, or the superintendent has not issued a notice of opportunity for a hearing under Chapter 119. of the Revised Code. An investigation includes the review of any complaint made against or involving the person. A person may surrender the certificate of registration by submitting a notarized statement to the superintendent on a form prescribed by the superintendent.

(ii) Once a surrendered certificate of registration has been accepted by the division, the registration will be cancelled. A voluntary surrender that is accepted by the division will be effective immediately upon the division's acceptance, and not a later date.

(iii) A surrender will not affect the person's civil or criminal liability for acts committed before the surrender, and does not impair or affect the obligation of a preexisting lawful contract between the registrant and any person, including a buyer.

(7) Withdrawn. A person whose application has been withdrawn is not permitted to engage in mortgage broker activities. Engaging in, or participating or assisting in any way in any conduct or activity for which a certificate of registration is required while a certificate or registration is withdrawn constitutes a violation of division (A) of section 1322.02 of the Revised Code. A withdrawn application may not be reactivated. If the application of a person is withdrawn and the person later decides to re-apply, a new application must be completed and submitted.

(L) No registrant, through its operations manager or otherwise, shall fail to reasonably supervise a loan officer or other persons associated with the registrant or to establish reasonable procedures designed to avoid violations of Chapter 1322. of the Revised Code, or of Chapter 1301:8-7 of the Administrative Code, or violations of applicable state and federal consumer and lending laws or rules by loan officers or other persons associated with the registrant.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.01, 1322.02, 1322.06
Prior Effective Dates: 1-22-95, 9-1-06

1301:8-7-02 [Effective 1/4/2016] Registration, letters of exemption, office requirements and restrictions.

(A) A registrant shall register every office where any of the following activities occur or conditions exist:

(1) Leads are solicited or received, directly or indirectly, from residents of this state, for property in this state, or from a location physically in this state;

(2) Records pertaining to business conducted pursuant to Chapter 1322. of the Revised Code are maintained in paper form;

(3) A registrant's licensees originate residential mortgage loans for residents of this state, property in this state, or from a location physically in this state regardless of the location of the borrower or property.

(B) A qualified exempt entity shall seek and obtain an approved letter of exemption for every office where any of the following activities occur or conditions exist:

(1) Records pertaining to business conducted pursuant to Chapter 1322. of the Revised Code are maintained in paper form;

(2) A qualified exempt entity's licensees originate residential mortgage loans for residents of this state or property in this state.

(C) A registrant or qualified exempt entity may share office space with another person if:

(1) The physical arrangement does not confuse or mislead borrowers;

(2) Access to borrower files, financial and mortgage information of borrowers or potential borrowers, and all records required to be maintained by Chapter 1322. of the Revised Code, whether in electronic or paper form, is restricted to only the registrant's or qualified exempt entity's employees or licensees, and is maintained in compliance with applicable state and federal privacy laws.

(3) Notwithstanding paragraph (C)(2) of this rule, a registrant or qualified exempt entity may allow an independent contractor licensed pursuant to Chapter 1322. of the Revised Code or employees of a loan processing or underwriting company holding a valid letter of exemption issued pursuant to rule 1301:8-7-32 to access borrower files, financial and mortgage information of borrowers or potential borrowers, and all records required to be maintained by Chapter 1322. of the Revised Code, whether in electronic or paper form, for the purpose of conducting the clerical or support duties of loan processing or underwriting for the same registrant or qualified exempt entity.

(D) In accordance with division (A)(1) of section 1322.02 of the Revised Code, a registrant shall maintain at all times at least one registered office located in this state that meets all of the following criteria:

(1) The registered office shall be a physical location of at least one room in a building of secure construction, which does not include portable buildings;

(2) The registrant conducts mortgage broker activities pursuant to Chapter 1322. of the Revised Code at the registered office;

(3) At least one licensee employed by or associated with the registrant uses the registered office to principally transact business as a mortgage broker in this state and has the ability to investigate and resolve questions and complaints from buyers;

(4) A buyer who wishes to meet face-to-face with a licensee or employee of the registrant can bring all documents applicable to his or her loan application or existing residential mortgage loan for examination in conjunction with an inquiry or complaint; and

(5) The registered office shall have a street address, and shall not be a post office box or similar designation. Unstaffed, virtual or temporary office locations shall not meet the requirements of section 1322.02 of the Revised Code.

(E) The following restrictions and requirements apply to each additional office location maintained by the registrant, also referred to herein as branch offices:

(1) A branch office shall not be a separate business entity;

(2) A branch office shall not pay its own operating expenses for the transaction of business as a mortgage broker in this state. Operating expenses include, but are not limited to, compensation of branch office employees, and payments for equipment, furniture, office rent, utilities, advertising and other similar expenses incurred in operating a mortgage broker business. All assets and liabilities of the branch are assets and liabilities of the registrant and all income and expenses of the branch are income and expenses of the registrant and shall be properly accounted for in the financial records and state and federal tax returns of the registrant. Compensation of a branch manager may be based on the income of the branch minus the operating expenses of the branch as long as the ultimate responsibility and payment of those operating expenses remains the responsibility of the registrant;

(3) A branch office shall not indemnify, hold harmless, or defend a registrant against damages, losses, injury, or liability arising out of acts or omissions of the branch or employees or licensees working from the branch.

(4) A branch office shall not maintain a bank account for the payment of expenses that is separate from the bank accounts of the registrant. All operating expenses shall be paid from an account of the registrant, and may not be paid through or from any employee's personal account or any non-registrant account;

(5) A branch office shall not maintain its own lines of credit, warehouse agreements, or other investor agreements that are independent from those of the registrant;

(6) All practices, policies, and procedures, including but not limited to, those relating to employment and operations, shall be established by the registrant and shall be applied consistently to the main office and all branch offices.

(F) Any arrangement where a registrant allows another person to transact business as a mortgage broker in this state under the registrant's certificate of registration at a location that does not comply with paragraph (E) of this rule, sometimes referred to as "net branching," is not permissible.

(G) In a conspicuous place in each registered office, a registrant shall at all times post a copy of the certificate of registration issued for that office.

(H) A mortgage banker holding an approved letter of exemption is exempt from registration as a mortgage broker only for residential mortgage loan transactions that meet all of the following criteria:

(1) The residential mortgage loan transaction falls within one of the mortgage banker's specific approvals set forth in divisions (G)(2)(h)(i) to (G)(2)(h)(iv) of section 1322.01 of the Revised Code or paragraph (J) of rule 1301:8-7-01 of the Administrative Code and issued by the United States department of housing and urban development (FHA), federal national mortgage association (FNMA), federal home loan mortgage corporation (FHLMC), United States department of veterans affairs (VA), USDA, or FHLB of Cincinnati loan;

(2) The mortgage banker makes, services, buys, or sells the residential mortgage loans;

(3) The residential mortgage loans are secured by a first lien;

(4) The mortgage banker underwrites the loans.

(I) A mortgage banker shall not under the authority of its letter of exemption originate or make a residential mortgage loan that falls outside of the specific approvals issued to it by FHA, FNMA, FHLMC, VA, USDA, or FHLB of Cincinnati and which specific approvals were submitted to and approved by the superintendent in order to obtain the letter of exemption. A mortgage banker may under the authority of its letter of exemption originate or make a conventional jumbo FHA, FNMA, or FHLMC loan only if it has a specific approval issued to it by FHA, FNMA, or FHLMC, the underwriting and documentation of the conventional jumbo loan otherwise meets the requirements of that same approval, and the approval was submitted to and approved by the superintendent in order to obtain the letter of exemption. A mortgage banker shall not under the authority of its letter of exemption originate or make a residential mortgage loan which is secured by other than a first lien. A mortgage banker may hold an approved letter of exemption under Chapter 1322. of the Revised Code and a certificate of registration under sections 1321.51 to 1321.59 of the Revised Code.

(J) A mortgage banker holding an approved letter of exemption shall not act as a mortgage broker. A mortgage broker holding a certificate of registration may act as a mortgage banker without having to obtain an approved letter of exemption from the superintendent provided that all residential mortgage loan transactions shall comply with the requirements for loans made by a registered mortgage broker.

(K) A residential mortgage loan is primarily for personal, family, or household use if more than one half of the total loan amount is used for consumer purposes and not for business purposes. In assessing the purpose (or purposes, if the loan is a hybrid used for both consumer and business purposes), the superintendent shall consider the totality of the circumstances surrounding the loan and not merely the purpose of cash-out proceeds. If more than one half of the total loan amount is for business purposes, then the requirements of Chapter 1322. of the Revised Code do not apply.

(L) Notwithstanding paragraph (K) of this rule, a residential mortgage loan made to a borrower for purposes of investing in a dwelling to either lease, rent, or resell for profit is considered a business purpose loan and is not subject to the requirements of Chapter 1322. of the Revised Code unless the dwelling, or at least one unit of the dwelling in the case of a two to four family housing unit, will be occupied by the borrower or an immediate family member of the borrower. "Immediate family member" shall have the same meaning as set forth in division (R) of section 1322.01 of the Revised Code.

(M) Nothing in division (E)(2)(b) of section 1322.01 of the Revised Code prevents a person licensed under Chapter 4735. of the Revised Code or similar law of another state from receiving compensation for real estate brokerage activities performed for a mortgage lender or agent thereof who is also the owner of the property provided that the person does not act as a loan originator in the transaction.

(N) A registrant or qualified exempt entity shall not hold a certificate of registration issued pursuant to Chapter 4712. of the Revised Code.

(O) A registrant or qualified exempt entity shall not evade the limits on points and fees for qualified mortgages set forth in 12 C.F.R. 1026.43(e)(3), as in effect on January 12, 2014, by conducting business in conjunction with a person registered or who should be registered pursuant to Chapter 4712. of the Revised Code. Assisting a borrower with improving his or her credit record, history, or rating as well as removing adverse credit information are considered part of the normal activities of a registrant or qualified exempt entity.

Replaces: 1301:8-7-02

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12, 1322.024
Rule Amplifies: 1322.01, 1322.02 , 1322.022, 1322.023
Prior Effective Dates: 1/22/1995, 9/1/2006, 6/1/2007

1301:8-7-03 [Effective until 1/4/2016] Mortgage broker application for a certificate of registration-main office; branch office; issuance and expiration of certificate.

(A) To apply for a mortgage broker certificate of registration, an applicant must submit all of the following for the applicant's main office location:

(1) A non-refundable application fee of three hundred fifty dollars;

(2) A completed and properly executed "Application for a Mortgage Broker Certificate of Registration" form approved by the superintendent of the division of financial institutions. If the registration application is incomplete when submitted, it may be deemed unacceptable and returned for completion. An application is deemed incomplete if it does not have the necessary documents attached; if it is not accompanied by the appropriate fee(s); if any portion of it is not properly executed; if any portion of it is missing; or if any questions are unanswered, incompletely answered or missing any required details. An application for a mortgage broker certificate of registration requires submission of all of the following:

(a) A copy of the surety bond issued in compliance with section 1322.05 of the Revised Code and rule 1301:8-7-14 of the Administrative Code;

(b) Proof that the applicant has established a special account that fulfills the requirements of section 1322.08 of the Revised Code and rule 1301:8-7-05 of the Administrative Code;

(c) A letter of good standing issued by the Ohio secretary of state that is not more than sixty days old;

(d) A copy of the appointment of a statutory agent filed with the Ohio secretary of state upon whom process may be served. The secretary of state requires the statutory agent to be either a natural person that resides in Ohio, or a corporation that holds a license under the laws of Ohio that is authorized by its articles of incorporation to act as an agent and that has an Ohio business address;

(e) If the applicant will use a trade or alternative business name, a copy of the certificate of authority issued by the Ohio secretary of state must be included with the application. Trade or alternative business names, and service marks must comply with rule 1301:8-7-22 of the Administrative Code;

(f) A copy of the lease or rental agreement for the location at which the business will be transacted showing that the applicant is contractually responsible, or proof that the applicant owns the location. At least one office location must meet the minimum standards set forth in division (G) of rule 1301:8-7-02 of the Administrative Code;

(g) A photograph of the location at which the business will be transacted;

(h) If the application is for a location that is a residence, the applicant must submit proof that the applicant owns or is responsible for rent or lease of the residence, and:

(i) A certified copy of a zoning permit authorizing the use of the residence for commercial purposes; or

(ii) A written opinion or other document issued by the county or political subdivision where the residence is located certifying that the use of the residence to transact business as a mortgage broker is not prohibited;

(i) Evidence that the applicant's operations manager has successfully completed the examination required under division (A) of section 1322.051 of the Revised Code. The individual designated as an applicant's operations manager must be approved by the superintendent of the division of financial institutions, in accordance with rule 1301:8-7-12 of the Administrative Code, before the individual may sit for the examination.

(3) If the applicant is applying for a certificate of registration for more than one location, the applicant must submit a branch office application in accordance with division (B) of this rule for each location other than the main office.

(4) Any other information requested by the superintendent.

(B) To apply for a mortgage broker certificate of registration for a branch office, an applicant must submit all of the following:

(1) A non-refundable application fee of three hundred fifty dollars;

(2) A completed and properly executed "Branch Office Application for a Mortgage Broker Certificate of Registration" form approved by the superintendent of the division of financial institutions. If the branch office registration application is incomplete when submitted, it may be deemed unacceptable and returned for completion. An application is deemed incomplete if it does not have the necessary documents attached; if it is not accompanied by the appropriate fee(s); if any portion of it is not properly executed; if any portion 1301:8-7-03 2 of it is missing; or if any questions are unanswered, incompletely answered or missing any required details. An application for a mortgage broker certificate of registration for a branch office location requires of all of the following:

(a) Evidence that the registrant has complied with the surety bond requirements of section 1322.05 of the Revised Code and rule 1301:8-7-14 of the Administrative Code;

(b) A letter of good standing issued by the Ohio secretary of state that is not more than sixty days old;

(c) If the applicant will use a trade or alternative business name for the branch office location, a copy of the certificate of authority issued by the Ohio secretary of state must be included with the application. Trade or alternative business names, and service marks must comply with rule 1301:8-7-22 of the Administrative Code.

(d) A copy of the lease or rental agreement for the location at which the business will be transacted showing that the applicant is contractually responsible, or proof that the applicant owns the location. Branch office arrangements must comply with the provisions of rule 1301:8-7-02 of the Administrative Code.;

(e) A photograph of the location at which the business will be transacted; and

(f) If the application is for a location that is a residence, the applicant must submit proof that the applicant owns or is responsible for rent or lease of the residence, and;

(i) a certified copy of a zoning permit authorizing the use of the residence for commercial purposes; or

(ii) a written opinion or other document issued by the county or political subdivision where the residence is located certifying that the use of the residence to transact business as a mortgage broker is not prohibited.

(C) The division of financial institutions may not accept main office applications for mortgage broker certificates of registration in the months of April and May because of the volume of license renewals during those months. Any applications for initial registration received during April and May may not be accepted for filing and may be returned to the sender.

(D) Each question on the registration application, including any exhibit and attachment, is material to the licensing process. Submitting false or incomplete information or omitting information in connection with a registration application is grounds for denial or revocation of the registration certificate and may subject the applicant and individuals who signed the application to civil and or criminal penalties.

(E) If the information contained in an application for registration as a mortgage broker becomes inaccurate for any reason before the applicant becomes registered, the applicant shall be responsible for correcting the inaccurate information within thirty days of the change unless required otherwise by rule 1301:8-7-19 of the Administrative Code.

(F) An applicant may request the withdrawal of an application prior to a determination of the application being made by the superintendent of the division of financial institutions by submitting a written request that the application be withdrawn. A request to withdraw an application for a mortgage broker certificate of registration can only be submitted by those individuals who signed the application. The application may only be withdrawn with the permission of the superintendent.

(G) All application fees are non-refundable regardless of whether an application is withdrawn or denied.

(H) Filing an application for a mortgage broker certificate of registration does not authorize an applicant to act as a mortgage broker. To be authorized to act as a mortgage broker as defined in division (G) of section 1322.01 of the Revised Code, a person must hold an active certificate of registration for each location at which the person will conduct business as a mortgage broker.

(I) Upon approval of an application, a certificate of registration will be issued for the remainder of the annual registration period. A separate certificate of registration will be issued for each registered office identifying the office address, the name of the registrant, and any trade or alternative name to be used for the location.

(J) A certificate of registration may be renewed annually on or before the thirtieth day of April if the registrant complies with division (B) of section 1322.04 of the Revised Code and rule 1301:8-7-04 of the Administrative Code.

(K) Once a certificate of registration is issued, the registrant is under a continuing duty to update the information contained in the registration application, and to report to the division all changes or additions to information in the application within thirty days of the change unless required otherwise by rule 1301:8-7-19 of the Administrative Code. This does not relieve the registrant from any other filing, including relocation filings, required by law or rule.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.03
Prior Effective Dates: 1-22-95, 9-1-06

1301:8-7-03 [Effective 1/4/2016] Standards for applications, certificates of registration, letters of exemption, and licenses.

(A) Submitting an application for a certificate of registration, letter of exemption or license via the NMLS does not authorize the applicant to begin acting as a registrant, qualified exempt entity, or licensee. The applicant must first receive an active certificate of registration, letter of exemption or license from the superintendent to be authorized to begin acting as a registrant, qualified exempt entity, or licensee.

(B) Each question and answer on the NMLS, including any exhibit or attachment, is material to the application process. Submitting false or fraudulent information or omitting information is grounds to refuse to issue the certificate of registration, letter of exemption, or license and may subject the applicant and individuals who signed and attested to the application to administrative, civil, or criminal actions.

(C) Engaging in mortgage broker or loan origination activity on or after the first day of January by a person who fails to submit a renewal application via the NMLS by the thirty-first day of January constitutes activity without a certificate of registration or license in violation of Chapter 1322. of the Revised Code, and the person engaged in the violation may be subject to administrative, civil, or criminal actions.

(D) Registrants, qualified exempt entities, licensees, and applicants are responsible for ensuring that all information maintained on the NMLS is current and accurate. If information on the NMLS becomes out-of-date or inaccurate for any reason, the registrant, qualified exempt entity, licensee or applicant shall correct the information within ten business days of the change unless a different time frame is specified in Chapter 1322. of the Revised Code or rule 1301:8-7-19 of the Administrative Code.

(E) In order to apply for an active license, a licensee or applicant to be a licensee shall have a sponsorship request submitted via the NMLS on his or her behalf by the registrant or qualified exempt entity with whom the licensee or applicant seeks to be associated or employed.

(F) Having a sponsorship submitted via the NMLS is not sufficient to activate a license. To be authorized to originate residential mortgage loans for a registrant or qualified exempt entity, the sponsorship request must be approved by the superintendent and the loan originator must receive an active license from the superintendent.

(G) An individual or registered loan originator may obtain or maintain a license in escrow without having a sponsorship submitted via the NMLS on his or her behalf by a registrant or qualified exempt entity. The licensee shall not originate residential mortgage loans while his or her license is in escrow.

(H) A licensee shall not originate a residential mortgage loan for a transaction that is governed by sections 1321.51 to 1321.60 of the Revised Code unless the individual is licensed as a mortgage loan originator as that term is defined in division (P) of section 1321.51 of the Revised Code. An individual may obtain a loan originator license under Chapter 1322. of the Revised Code and a mortgage loan originator license under sections 1321.51 to 1321.60 of the Revised Code if the individual's sponsor is registered to originate loans pursuant to both statutes. An individual shall not be employed by or associated with more than one registrant or qualified exempt entity at any one time. For purposes of this paragraph, registrant includes a person registered under sections 1321.51 to 1321.60 of the Revised Code.

(I) When transferring to a different registrant or qualified exempt entity, or when a loan originator seeks to activate an escrowed license, a nonrefundable fifteen dollar fee plus applicable NMLS fees must be submitted via the NMLS.

(J) An applicant may request the withdrawal of an application for a certificate of registration, letter of exemption or license prior to a determination on the application being made by the superintendent by submitting a request via the NMLS. The application may only be withdrawn with the permission of the superintendent. An application withdrawn at the request of the applicant may only be re-activated within seven calendar days of the withdrawal for good cause shown and at the discretion of the superintendent. A withdrawn application does not prohibit a person from reapplying.

(K) An escrowed or suspended license is subject to all of the following:

(1) If a license is placed in escrow or suspended, the licensee shall comply with the continuing education requirements of section 1322.052 of the Revised Code. Placing a license in escrow or having a license suspended does not extend or toll the time for completion of the licensee's continuing education requirements;

(2) An escrowed or suspended license may be renewed pursuant to division (B) of section 1322.041 of the Revised Code;

(3) An escrowed or suspended license is subject to suspension, refusal, revocation, or any other administrative, civil, or criminal actions for conduct occurring before, during, or after the license was placed in escrow or suspended status.

(L) A suspended certificate of registration or letter of exemption is subject to all of the following:

(1) A suspended certificate of registration or letter of exemption may be renewed pursuant to division (C) of section 1322.04 or division (D) of sections 1322.022 and 1322.023 of the Revised Code, respectively;

(2) A suspended certificate of registration or letter of exemption is subject to refusal, revocation, or any other administrative, civil, or criminal actions for conduct occurring before, during or after the suspension.

(M) A suspended certificate of registration, letter of exemption, or license may be returned to active status if it meets all of the following:

(1) The superintendent believes that all conditions which led to the suspension have been remedied;

(2) The registrant, qualified exempt entity, or licensee is otherwise eligible to hold an active certificate of registration, letter of exemption, or license.

(N) A certificate of registration, letter of exemption or license may be surrendered in accordance with the following:

(1) A person may voluntarily surrender a certificate of registration, letter of exemption, or license unless the person is being investigated by the superintendent or another financial institution regulatory authority as defined in division (C) of section 1322.061 of the Revised Code, or a notice of opportunity for a hearing has been issued by the superintendent in accordance with Chapter 119. of the Revised Code. A person may surrender by submitting a written statement to the superintendent or by submitting a request via the NMLS. The certificate of registration, letter of exemption or license may only be surrendered with the permission of the superintendent;

(2) A surrendered certificate of registration, letter of exemption or license is subject to administrative, civil, or criminal actions for conduct occurring before, during or after the surrender and does not impair or affect the obligation of a pre-existing lawful contract between the registrant, qualified exempt entity or licensee and any person, including a borrower.

Replaces: 1301:8-7-03

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.02, 1322.022, 1322.023, 1322.031, 1322.041
Prior Effective Dates: 1/22/1995, 9/1/2006, 6/1/2007

1301:8-7-04 [Effective until 1/4/2016] Mortgage broker renewal application for registration; issuance of renewal certificate; expiration.

(A) A certificate of registration expires on the thirtieth day of April of each year regardless of when the certificate was issued.

(B) A registrant is responsible for ensuring that its renewal application is timely filed. The superintendent of the division of financial institutions will attempt to send reminder notices to registrants at the main office or e-mail address on file, but failure of a registrant to receive the reminder for any reason will not relieve the registrant of the renewal deadline.

(C) A renewal application must be timely filed to prevent any lapse in registration and in the ability to act as a mortgage broker:

(1) The renewal application must be received by the superintendent of the division of financial institutions no later than the thirtieth day of April. The registration of a person whose renewal application is received by the thirtieth day of April is considered active and the registrant may continue to engage in activities that require a certificate of registration.

(2) A renewal application received on the first day of May to the thirty-first day of May must include a one hundred dollar late fee in addition to regular renewal fees. The registration of a person whose renewal application is received on the first day of May to the thirty-first day of May is considered active and the person may continue to engage in activities that require a license.

(3) If a renewal application is received after the thirty-first day of May, the application will not be accepted for filing and will be returned to sender. The registration of a person whose license is received after the thirty-first day of May is expired. Expiration terminates the right to engage in any activity for which a certificate of registration is required. The person may obtain a new certificate of registration by complying with the requirements and procedures for obtaining an original certificate of registration.

(D) To be eligible for renewal, the registrant's operations manager must have fulfilled the annual continuing education requirements of the preceding calendar year, and the registrant must continuously satisfy all requirements of initial registration.

(E) A registrant who wishes to apply to renew its registration must submit:

(1) A non-refundable application fee of three hundred fifty dollars for each certificate of registration to be renewed. A renewal application received on the first day of May through the thirty-first day of May must include a one hundred dollar late filing fee for each certificate to be renewed;

(2) A completed registration renewal application form. If the renewal application is incomplete when submitted, it will not be accepted and will be returned for completion. An application is deemed incomplete if it does not have the necessary documents attached; if it is not accompanied by the appropriate fee(s); if any portion of it is not properly executed; if any portion of it is missing; or if any questions are unanswered, incompletely answered or missing any required details; and

(3) Any other information requested by the superintendent.

(F) A registrant cannot change its address by filing a renewal application and indicating a new address on the application. Address changes shall be made in compliance with division (H) of rule 1301:8-7-19 of the Administrative Code.

(G) Each question on the renewal registration application is material to the licensing process. Submitting false or incomplete information or omitting information in connection with a renewal registration application is grounds for denial or revocation of the certificate and may subject the applicant and those individuals who signed the application to civil or criminal penalties.

(H) Updating application information. If the information contained in a renewal application for a mortgage broker certificate of registration becomes inaccurate for any reason while the renewal application is pending, the applicant shall be responsible for correcting the inaccurate information within ten business days of the change.

(I) Withdrawal of application. An applicant may request the withdrawal of an application prior to a determination of the application being made by the superintendent of the division of financial institutions by submitting a written request that the application be withdrawn. A request to withdraw a renewal application for a mortgage broker certificate of registration can only be submitted by those individuals who signed the application. An application may only be withdrawn with the permission of the superintendent.

(J) Refunds. All application fees are non-refundable regardless of whether an application is withdrawn or denied.

(K) Upon approval of a renewal application, a certificate of registration will be issued for the remainder of the annual registration period, which ends the following thirtieth day of April.

Replaces: Part of 1301:8-7-04

Effective: 09/01/2006
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.04
Prior Effective Dates: 1-22-95

1301:8-7-04 [Rescinded effective 1/4/2016] Mortgage broker renewal application for registration; issuance of renewal certificate; expiration.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.04
Prior Effective Dates: 9/1/2006, 1/22/1995

1301:8-7-05 [Effective until 1/4/2016] Special account requirements.

(A) In accordance with section 1322.08 of the Revised Code, a registrant shall establish and maintain a non-interest bearing depository account that is insured by the federal deposit insurance corporation. The account shall be known as the "special account." The special account shall be separate and distinct from any other account, and shall be used for the sole purpose of collecting and dispersing monies for the payment of third party fees. The special account must be in the name of the registrant as it appears on its application and certificate of registration.

(B) All checks for the special account must bear upon the front of the check the identifying words, "special account." Checks must be pre-numbered by the supplier or printer, unless the registrant uses an automated check writing system, in which case all checks must be numbered in sequence.

(C) The special account must be reconciled monthly.

(D) Every registrant shall keep record of all deposits, withdrawals, and disbursements from the special account. This record shall include, but not be limited to:

(1) Date funds received;

(2) Party from whom funds are received and the purpose of the funds;

(3) Amount received;

(4) Date funds are deposited in the special account;

(5) Check number and date funds are disbursed;

(6) Party to whom funds are disbursed and purpose of disbursement;

(7) Any other documents necessary and sufficient to verify and explain record entries and identify the current balance in the special account.

(8) All funds received from buyers and made payable to the registrant or an employee of the registrant for the payment of third-party providers, whether specifically identified as such or not, must be deposited in the special account prior to the end of the forty-fifth business day following receipt.

(E) All deposits to the special account must be documented by a bank deposit slip which has been validated by bank imprint, or by an attached deposit receipt which bears the signature of an authorized representative of the mortgage broker indicating that the funds were actually deposited into the proper account.

(F) Receipt of funds by wire transfer or any means other than cash, check, or money order, must be posted in the same manner as other receipts. Any such transfer of funds must include a traceable identifying name or number supplied by the financial institution or transferring entity. The mortgage broker must also retain a receipt for the deposit of the funds which must contain the traceable identifying name or number supplied by the financial institution or transferring entity.

(G) Deposits to the special account must be limited to funds delivered and made payable to the mortgage broker or an employee of the mortgage broker for payment to third-party providers. The only exception to this rule are deposits made by the registrant for the payment of a service charge assessed by the financial institution where the account is held.

(H) Each registrant is responsible for the disbursement of all special account funds. Records must be created and maintained to identify to whom each disbursement is made and for which buyer the disbursement was made.

(I) When a registrant receives a check from closing which includes both the registrant's fee and a payment or payments for third party service providers, the following are approved methods for avoiding violating division (D)(2) of section 1322.08 of the Revised Code:

(1) The registrant at the time of deposit is to split the check at the teller window and route any moneys due to third party service providers to the special account, and moneys due the registrant to its general account; or

(2) The registrant deposits the entire check into the special account. After paying any and all moneys due to third party service providers and seeing to it that the buyer has received credit for all funds deposited in the special account, the registrant may transfer excess funds remaining in the special account into the registrant's general business bank account. This amount must be equal to the fee disclosed on the final HUD-1 Settlement Statement, less any amounts already received by the registrant, and must be duly recorded in the special account ledger. The registrant may at no time before the loan is closed transfer moneys from a special account to its general business bank account.

(J) Buyer funds held by the mortgage broker must be remitted to the buyer within five business days of the determination that all payments to third-party providers owed by the buyer have been satisfied.

Replaces: 1301:8-7-05

Effective: 09/01/2006
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.08
Prior Effective Dates: 1-22-95

1301:8-7-05 [Effective 1/4/2016] Special account requirements.

(A) In accordance with section 1322.08 of the Revised Code, a registrant shall establish and maintain a non-interest-bearing, depository special account. The special account shall be in the name of the registrant as it appears on its certificate of registration.

(B) The special account shall be reconciled at least monthly.

(C) A registrant shall keep records of all deposits, withdrawals, and disbursements from the special account. The records shall include the following:

(1) Date funds received;

(2) Party from whom funds are received and the purpose of the funds;

(3) Amount received;

(4) Date funds are deposited in the special account;

(5) Check number and date funds are disbursed;

(6) Party to whom funds are disbursed, purpose of disbursement and borrower for whom the disbursement was made;

(7) Any other documents necessary to verify and explain record entries and identify the current balance in the special account.

(D) All funds required to be deposited in the special account shall be deposited prior to the end of the tenth business day following receipt.

(E) All deposits to the special account shall be documented by a bank statement or deposit slip which has been validated by bank imprint confirming that the funds were actually deposited into the special account.

(F) Deposits to the special account shall be limited to funds delivered and made payable to the registrant for payment to bona fide third parties. Notwithstanding the foregoing sentence, a registrant may deposit funds into the special account for purposes of establishing and maintaining the special account.

(G) A registrant is responsible for the disbursement of all special account funds. Funds deposited in the special account shall not be commingled with other funds.

(H) When a registrant receives a check or wire transfer from closing which includes both the registrant's fee and a payment for a bona fide third party fee, the registrant shall instruct the depository institution to split the check or wire transfer and route any moneys due to a bona fide third party to the special account, and moneys due the registrant to its general account.

(I) After a registrant has satisfied all payments owed to bona fide third parties, and it is then determined that moneys must be refunded to a borrower, such refund must be remitted to the borrower within five business days.

Replaces: 1301:8-7-05

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.08
Prior Effective Dates: 9/1/2006, 1/22/1995

1301:8-7-06 [Effective until 1/4/2016] Recordkeeping.

(A) In accordance with division (B) of section 1322.06 of the Revised Code, a registrant shall maintain records pertaining to business transacted pursuant to sections 1322.01 to 1322.12 of the Revised Code for four calendar years. If the loan is not serviced by the registrant, the retention period commences on the date the loan is closed or, if the loan is not closed, the date of the withdrawal or turndown of the loan application. If the loan is serviced by the registrant, the retention period commences on the date the loan is paid in full or the date the licensee ceases to service the loan.

(B) If a person surrenders its certificate of registration or otherwise ceases to engage in business as a mortgage broker, such person shall nonetheless preserve the records required by this rule.

(C) All books and records shall be kept in this state in a registered office that is readily accessible to the division of financial institutions. Should a registrant wish to maintain such records elsewhere, it must submit a written request to the superintendent and receive written authorization prior to said books, accounts, and records being maintained in any place other than the registered in-state office location designated on the registration application.

(D) Any registrant who is granted approval to store its books and records in a location outside this state shall pay the division's travel, lodging and per diem expenses incurred in travel to examine such books and records. At the request of the superintendent, payment of the estimated travel, lodging and per diem expenses, as determined by the superintendent, shall be made in advance and placed on deposit with the division. After actual costs are determined, any excess funds shall be refunded to the registrant.

(E) All records shall be kept current and shall be available at all times during normal business hours for review by the division of financial institutions. Records should be legible and maintained in a type size that is clearly readable without magnification, and in conformity with any specific typeface or font size that may be required by state or federal law. Except where otherwise provided by federal or state law, records shall be maintained in English. When records are allowed to be in a language other than English, the registrant, at its expense, shall be responsible for providing the division with a full and accurate translation. For purposes of recordkeeping, "current" means within thirty business days from the date of the occurrence of the event required to be recorded.

(F) A registrant shall segregate the records relating to the business it conducts pursuant to sections 1322.01 to 1322.12 of the Revised Code from all other business records.

(G) Any books, accounts or records required to be maintained by this rule may be maintained in their original form, on microfiche or other electronic media, provided:

(1) The registrant obtains prior written approval from the superintendent; and

(2) At the request of the division, the records shall be printed on paper for inspection or examination without cost to the division, within forty-eight hours of the request.

(H) Every registrant must make, maintain, keep current and preserve the following books and records in a legible and readily accessible format:

(1) An alphabetical index of all buyers for whom the registrant has obtained mortgage loans, which lists the dates of the loan obtained for the buyers, the amounts of the loans, the individual responsible for originating the loan, and the identity of the lenders that funded or purchased the loan;

(2) HUD file. Each registrant shall create, maintain, keep current and preserve a file that contains a complete signed copy of each final HUD-1 and HUD-1A settlement statement, arranged chronologically, for each loan originated by the registrant on behalf of a buyer. The HUD file shall be maintained separately from the HUDs contained in the individual buyer files. Each HUD statement shall separately disclose all of the following, regardless of whether fees are paid outside of closing or are included in the amount of the loan:

(a) The amount, type, and identity of the recipient of each fee paid by the buyer in conjunction with loans originated by the registrant including, but not limited to appraisal fees, credit report fees, rate lock fees, yield spread premiums, courier fees, and title and settlement fees. This rule shall not be interpreted to require the disclosure of yield spread premiums and servicing release fees collected by registrants from investors as a result of the sale of mortgage loans on the secondary market; and

(b) The amount and type of every fee paid to the registrant by the buyer including, but not limited to, mortgage broker fees, application fees, document preparation fees, origination fees and underwriting fees.

(3) Individual Buyer Files. Each registrant shall create, maintain, and keep current, a separate file for each application received. Each individual buyer file shall contain, when applicable, at least the following:

(a) A copy of the original loan application signed and dated by the buyer and the individual originating the loan, including any attachments, supplements, or addenda thereto;

(b) Credit information such as written authorizations to order credit report(s), verifications, credit reports, and any correspondence regarding credit repair;

(c) Signed and dated copies of any and all contractual agreements or understandings, including, but not limited to, any interest rate lock-ins or loan commitments, broker or co-broker agreements, and all notes and memoranda of conversations or meetings with any mortgage applicant or any other party in connection with that mortgage loan application or its ultimate disposition;

(d) A copy of the original signed and dated mortgage loan origination disclosure statement, as well as any revised copies, as mandated by section 1322.062 of the Revised Code and in compliance with rule 1301:8-7-15 of the Administrative Code;

(e) Copies of all applicable federal disclosures given to the individual buyer, including but not limited to:

(i) The original dated, as well as any revised: Good Faith Estimate; HUD-1 and HUD 1-A settlement statements; Required Use Disclosure; Affiliated Business Arrangement Disclosure; and or Mortgage Servicing Disclosure, as required under the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. sections 2601 - 2617 , and the rules promulgated thereunder, known as Regulation X and codified in 24 C.F.R. Part 3500 and in effect on January 1, 2007. Each HUD statement shall comply with the disclosure requirements of paragraph (H)(2) of this rule;

(ii) The original dated, as well as any revised Truth in Lending Disclosure Statement, as required by the federal Truth in Lending Act, 15 U.S.C. sections 1601 - 1667 f., and the rules promulgated under the act, known as Regulation Z, found in 12 C.F.R. Part 226 and in effect on January 1, 2007; and

(iii) Copies of any disclosure required by the federal Equal Credit Opportunity Act, 15 U.S.C. sections 1691 - 1691 f, and the corresponding rules, titled Regulation B, found in 12 C.F.R. Part 202 effective January 1, 2007, including any required thirty-day notification; notice of right to receive a copy of the appraisal; and denial notices;

(f) A copy of each appraisal and the corresponding appraisal invoice;

(g) Receipts or other documentation acceptable to the superintendent for any fees collected by the registrant from the buyer on behalf of third-party service providers such as real estate appraisers, title companies, credit reporting services, and couriers, including receipts for any rate lock fees collected from buyers on behalf of mortgage lenders, or flood plain certification reports. This rule shall apply whether or not the collection or receipt of the fees occurs prior to the closing of the loan or the fees are paid to the registrant from the proceeds of the loan: and

(h) Copies of applicable disclosures required by state law.

(4) Special Account Records. Each registrant shall create, maintain, and keep current, records related to the special account required by section 1322.08 of the Revised Code. Such records shall comply with rule 1301:8-7-05 of the Administrative Code.

(5) Advertisement file. Each registrant shall create, maintain, and keep current, the advertisement file mandated by rule 1301:8-7-07 of the Administrative Code.

(6) General Business Records. The following general business records must be maintained and kept current:

(a) All correspondent agreements with lenders to whom loan applications are submitted;

(b) All checkbooks, check registers, bank statements, deposit slips, withdrawal slips, and cancelled checks or electronic images;

(c) Copies of any checks made payable to a registrant from a buyer or other entity paying a fee for the services of the registrant or an employee of the registrant;

(d) Documentation to support the source of and purpose for each receipt and disbursement of funds in order that the receipts may be reconciled to bank deposits and to the books of the registrant. HUD-1 and HUD-1A settlement statements are not acceptable proof of receipt for purposes of this rule;

(e) Copies of all federal tax withholding forms, reports of income for federal taxation, and evidence of payments to all employees, independent contractors and others compensated by the registrant in connection with the conduct of mortgage lending business;

(f) Copies of all contractual arrangements or understandings with employees, independent contractors, and third parties that relate in any way to the providing of mortgage broker services, including but not limited to any agreements for the pricing of goods or services, any investor contracts, any employment agreements, and any non-compete agreements;

(g) Copies of articles of incorporation, corporate minutes, and documents evidencing corporate name changes, change of ownership or officers; and

(h) Such other books and records as the superintendent of the division of financial institutions may from time to time specify in writing.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.06
Prior Effective Dates: 1-22-95, 9-1-06

1301:8-7-06 [Effective 1/4/2016] Recordkeeping.

(A) In accordance with division (B) of section 1322.06 of the Revised Code and division (C)(4) of section 1322.022 of the Revised Code, a registrant or qualified exempt entity shall maintain records pertaining to business transacted pursuant to Chapter 1322. of the Revised Code for four calendar years. The four-year retention period commences on the date the residential mortgage loan is closed or, if the residential mortgage loan is not closed, the date of the withdrawal or denial of the residential mortgage loan application. If the residential mortgage loan is serviced by a qualified exempt entity, the four-year retention period commences on the date the residential mortgage loan is paid in full or the date the registrant ceases to service the residential mortgage loan. The retention period for advertisements commences from the date the advertisements are published, broadcast or disseminated.

(B) A registrant or qualified exempt entity shall notify the superintendent via the NMLS of a change of location of its records pertaining to business conducted pursuant to Chapter 1322. of the Revised Code no later than five business days after the change.

(C) A registrant or qualified exempt entity who maintains its records pertaining to business transacted pursuant to Chapter 1322. of the Revised Code in a location outside Ohio shall pay the division's travel, lodging and per diem expenses incurred in travel to examine the books and records. At the request of the superintendent, payment of the estimated travel, lodging and per diem expenses, as determined by the superintendent, shall be made in advance and placed on deposit with the division. After actual costs are determined, any excess funds shall be refunded to the registrant or qualified exempt entity.

(D) All records shall be kept current and shall be available at all times during normal business hours for review by the superintendent. Records should be legible and maintained in a type size that is clearly readable without magnification and in conformity with any specific typeface or font size that may be required by state or federal law. Except when otherwise provided by federal or state law, records shall be maintained in English. When records are allowed to be in a language other than English, the registrant or qualified exempt entity, at its expense, shall be responsible for providing the superintendent with a full and accurate translation. For purposes of this rule, "current" means within thirty days from the date of the occurrence of the event required to be recorded.

(E) A registrant or qualified exempt entity shall segregate the records pertaining to business conducted pursuant to Chapter 1322. of the Revised Code from all other business records.

(F) Records pertaining to business conducted pursuant to Chapter 1322. of the Revised Code may be maintained in their original paper form or on an electronic storage media or system. Any records maintained on an electronic storage media or system shall meet all of the following requirements:

(1) The electronic storage media or system must preserve the records in a non-rewriteable, non-erasable format;

(2) The electronic storage media or system must verify automatically the quality and accuracy of the storage media recording process;

(3) The electronic storage media or system must serialize the original and the duplicate units of storage media, and affix a date and time for the required period of retention on both the original and duplicate;

(4) The electronic storage media or system must have the capacity to readily download indices and records preserved on the electronic storage media or system to any medium acceptable to the superintendent;

(5) Acceptable facilities and appropriate equipment must, at all times during normal business hours, be available to the superintendent for immediate, easily readable projection or production of electronic storage media or system images and for producing easily readable images;

(6) Immediate facsimile enlargement must be available upon the superintendent's request;

(7) A duplicate copy of the electronic record stored on any electronic media or system for the time required must be stored separately from the "original" electronic record;

(8) The electronic storage media or system must organize and index accurately all information maintained on both the original and duplicate storage media or system. At all times, a registrant or qualified exempt entity must be able to have indices of the electronic records being stored available for examination by the superintendent. Each index must also be duplicated and the duplicate copies must be stored separately from the original copy of each index. Original and duplicate indices must be preserved for the time required for the indexed records;

(9) An audit system will be in place providing for accountability regarding inputting of records and inputting any changes made to every original and duplicate record maintained and preserved. At all times, a registrant or qualified exempt entity must be able to have the results of the audit system available for examination by the superintendent. The audit results must be preserved for the time required for the audited records;

(10) All information necessary to access records and indices stored on the electronic storage media or system, a copy of the physical and logical file format of the electronic storage media or system, the field format of all different information types written on the electronic storage media or system, together with the appropriate documentation and information necessary to access records and indices will be maintained, kept current and provided promptly to the superintendent, upon request;

(11) No paper documents produced or reproduced by means of an electronic storage media or system shall be destroyed until the conditions of this paragraph have been met with regard to each paper document that is to be destroyed; and

(12) At the request of the division, the records shall be printed on paper for inspection or examination without cost to the division within forty-eight hours of the request. The superintendent may grant additional time for good cause shown upon receipt of a request for additional time from the registrant or qualified exempt entity.

(G) A registrant or qualified exempt entity shall create, maintain, keep current and preserve the following books and records:

(1) A searchable electronic spreadsheet of all borrowers for whom the registrant or qualified exempt entity has obtained residential mortgage loans. The spreadsheet shall contain for each borrower the closing date of the residential mortgage loan obtained for the borrower, the amount of the residential mortgage loan, the licensee responsible for originating the residential mortgage loan, the identity of the lender that funded or purchased the residential mortgage loan, the residential mortgage loan application date, the residential mortgage loan program type, the underwriter whose decision was relied upon to close and fund the residential mortgage loan, the property address, and the identifying loan number;

(2) A complete signed copy of every final settlement statement, arranged chronologically, for every residential mortgage loan originated by the registrant or qualified exempt entity on behalf of a borrower. The settlement statement file shall be maintained separately from the settlement statements contained in the individual borrower files.

(3) A borrower file for each application received which shall contain, when applicable, at least the following:

(a) A copy of the initial and final residential mortgage loan applications signed and dated by the borrower and the licensee originating the residential mortgage loan, including any attachments, supplements, or addenda thereto;

(b) Copies of verification documentation, including, but not limited to, written authorizations to order credit reports, income verifications, deposit and asset verification, all copies of the credit reports and any supplements to the credit report, and any correspondence to any person regarding credit repair;

(c) Copies of written or electronic communications, including, but not limited to, underwriting decisions, opinions or prequalification correspondence, interest rate lock-ins, residential mortgage loan commitments, and notes in connection with that residential mortgage loan application or its ultimate disposition;

(d) Copies of required state and federal disclosures or forms applicable to the borrower, both initial and any revised versions.

(e) A copy of each appraisal and the corresponding appraisal invoice and order form; and

(f) Receipts or other documentation for any fees collected by the registrant or qualified exempt entity from the borrower for payment to bona fide, third-party service providers.

(4) A file of all advertisements.

(5) General business records, including, but not limited to:

(a) All agreements with lenders to whom residential mortgage loan applications are submitted;

(b) All checkbooks, check registers, bank statements, deposit slips, withdrawal slips, and cancelled checks or electronic images;

(c) Copies of checks made payable to a registrant or qualified exempt entity from a borrower or other entity paying a fee for the services of the registrant, qualified exempt entity, or licensee;

(d) Documentation to support the source of and purpose for each receipt and disbursement of funds in order that the receipts may be reconciled to bank deposits and to the books of the registrant or qualified exempt entity. Settlement statements are not acceptable proof of receipt for purposes of this rule;

(e) Copies of all federal tax withholding forms, reports of income for federal taxation, and evidence of payments to all employees, independent contractors and others compensated by the registrant or qualified exempt entity in connection with the conduct of mortgage lending business;

(f) Copies of all contractual arrangements or understandings with employees, independent contractors, and third parties that relate in any way to the providing of residential mortgage broker or mortgage lending services, including but not limited to any agreements for the pricing of goods or services, any investor contracts, any employment agreements, and any non-compete agreements;

(g) Copies of organizational documents, including, but not limited to, articles of incorporation, corporate minutes, and documents evidencing corporate name changes, change of ownership or officers; and

(h) Such other books and records as the superintendent may require.

(H) In order to reduce the risk of consumer fraud and related harms, including identity theft, registrants and qualified exempt entities shall be required to comply with section 216 of the "Fair and Accurate Credit Transactions Act of 2003," 117 Stat. 1952 (amended 2010), 15 U.S.C. 1681w as in effect on January 12, 2014, section 501 of the "Gramm Leach Bliley Act," 113 Stat. 1338 (1999) (amended 2010), 15 U.S.C. 6801 as in effect on January 12, 2014, and the rules promulgated pursuant to those federal acts, including 16 C.F.R. Part 313 and 16 C.F.R. Part 682, as in effect January 12, 2014, pertaining to the maintenance, security, and disposal of consumer information and records.

Replaces: 1301:8-7-06

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.06
Prior Effective Dates: 1/22/1995, 9/1/2006, 6/1/2007

1301:8-7-07 [Effective until 1/4/2016] Advertising.

(A) As used in chapter 1322. of the Revised Code and this rule, "advertisement" and "advertising" mean any form of sales or promotional materials used in connection with a mortgage broker business, regardless of the medium used, including all material printed, published, displayed, distributed or broadcast. Information distributed by lenders to mortgage brokers solely for the use of the mortgage brokers and not for dissemination to the public is not considered advertisement and is not subject to this rule if the information is not distributed to the public and if the printed material conspicuously states that the document is not intended as an offer to extend credit nor a commitment to lend; the loan interest rates, fees, and terms presented herein are for illustrative purposes only and may not be currently available; and that the document has been prepared to assist mortgage brokers in illustrating some of the financing options available to buyers.

(B) Every advertisement placed, or caused to be placed, by a registrant shall:

(1) Clearly identify the registrant by stating the registrant's true name as printed on the registrant's certificate of registration. Where a registrant has received the approval of the superintendent of the division of financial institutions to conduct business under a trade or alternative name pursuant to rule 1301:8-7-22 of the Administrative Code, the registrant may use its true, trade or alternative name, or any combination of them, as they appear on the certificate of registration issued by the division. The words"mortgage broker" or the authorized use of trade names or insignia indicating membership in a mortgage or lending organization, although not part of the name, may be used by such registrant in advertising; and

(2) List the registrant's certificate of registration number; and

(3) Specify the registrant's office address as listed on the registrant's certificate of registration. Providing telephone numbers and or newspaper or post office box addresses without listing the address as printed on the registrant's certificate of registration is prohibited.

(C) The identifying information required by division (B) of this rule shall appear in any written advertisement using a font no smaller than ten point times new roman.

(D) Division (B) of this rule shall not apply to minimal promotional advertising done on pens, pencils, pocket calendars, balloons, coffee mugs and similar items. E-mail and internet addresses are considered minimal promotional advertising, but the content of a web page or e-mail is not. For the purpose of radio advertisements, a statement of the full business name and the number listed on the certificate of registration shall be sufficient to meet the requirements of this rule.

(E) All internet advertising shall comply with division (B) of this rule by either placing the name, registration number and office address on every viewable web page of the website within the registrant's ownership and or control, or place the name, registration number and office address on the home page and place a link to the home page on each additional web page. For purposes of this rule, a web page is one that may or may not scroll beyond the borders of the screen.

(F) A registrant shall not place, or cause to be placed, an advertisement that:

(1) States that loans or referrals will be made within a specified time after the loan application is received.

(2) Indicates that special terms, reduced rates, guaranteed rates, particular rates or any other special feature of mortgage loans are available unless the advertisement clearly states any limitations that apply.

(3) Uses unqualified superlatives including, but not limited to, "lowest rates," "lowest costs," "lowest payment plan," or "cheapest loans," or that makes offers that cannot be reasonably fulfilled or substantiated.

(4) Uses the words "new" or "reduced" or words of similar import in connection with costs for more than ninety days after the costs become effective.

(5) Indicates that mortgage loans are available to buyers with "previous bankruptcy," "no credit," "bad credit," or the like unless the advertisement clearly explains any limitations that apply, or states that "certain limitations apply, call for details." In any written advertisement, the actual limitations or the warning that "certain limitations apply, call for details" must appear in a font no smaller than ten point times new roman.

(6) Contains an official-looking emblem, that is designed to resemble an official government mailing, such as a mailing from the Internal Revenue Service or the U.S. Department of the Treasury.

(7) Contains warnings or notices citing codes or form numbers made to appear like government codes or form numbers that are not required to be shown on the mailing by the U.S. Postal Service.

(8) Advertises available interest rates without also disclosing the corresponding annual percentage rates as defined in and required by Federal Reserve Regulation Z, as amended, commonly known as the Truth-in-Lending Act.

(G) Information on an internet website maintained by a registrant or licensee which becomes outdated or expired, shall be updated within thirty (30) calendar days of the information becoming outdated or expired. Each website maintained by a registrant or licensee shall disclose the date upon which the information contained therein was most recently updated. If a registrant's or licensee's website is maintained on the registrant's or licensee's behalf by a third party, the registrant or licensee shall provide to the third party, a timely written notice, by mail, fax or electronic means, of any updates to outdated or expired information, so that such updates may be accomplished in accordance with this rule. A registrant or licensee who provides such timely notice shall not be in violation of this paragraph, if the third party fails to effect a requested change as notified.

(H) Every registrant shall maintain, in each registered location approved by the superintendent of financial institutions, a file of all advertising, including scripts of radio and television commercials, for a period of four years from the date the advertisements are published or disseminated.

Replaces: Part of 1301:8-7-07

Effective: 09/01/2006
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.09
Prior Effective Dates: 1-22-95

1301:8-7-07 [Effective 1/4/2016] Advertising.

(A) Every advertisement placed, or caused to be placed, by a registrant or licensee shall:

(1) State the name of the registrant as printed on its certificate of registration. If a registrant has been approved by the superintendent to conduct business using a trade name or fictitious name, the registrant may use its name, trade name, or fictitious name, or any combination of them, as they appear on its certificate of registration;

(2) State the registrant's certificate of registration number and NMLS unique identifier;

(3) State the full name or other names of the licensee as listed on the NMLS consumer access website, the licensee's license number, and NMLS unique identifier whenever a licensee's name is placed in an advertisement; and

(4) State the registrant's office address as listed on the registrant's certificate of registration.

(B) For purposes of paragraph (A)(2 of this rule, a registrant may opt to state only its NMLS unique identifier in lieu of stating both its certificate of registration number and NMLS unique identifier.

(C) For purposes of paragraph (A)(3) of this rule, a licensee may opt to state only his or her NMLS unique identifier in lieu of stating both the licensee's license number and NMLS unique identifier.

(D) When the information required by paragraphs (A) to (C) of this rule appears in a written advertisement, it shall be clearly legible to a reasonable borrower.

(E) Paragraphs (A) to (D) of this rule shall not apply to advertising done on pens, pencils, pocket calendars, balloons, coffee mugs, and similar promotional items.

(F) Website advertising shall comply with paragraphs (A) to (D) of this rule by placing the required information on every viewable web page of the website. In the alternative, maintaining a hyperlink on every viewable web page which links directly to a web page that contains the required information will satisfy the requirements of paragraphs (A) to (D) of this rule.

(G) A registrant shall keep its website advertising current. A registrant shall update or have updated its website advertising no later than thirty calendar days after any information becomes outdated or expired.

(H) It is a violation for a registrant or licensee to place or cause to be placed any advertisement that contains any material misrepresentation regarding any term of a residential mortgage loan, including, but not limited to:

(1) Guaranteeing or implying that residential mortgage loans will be approved or closed in an unreasonably short period of time given market conditions at the time of the advertisement.

(2) Indicating that special terms, reduced rates, guaranteed rates, particular rates or any other special feature of residential mortgage loans are available unless the advertisement clearly states any limitations that apply.

(3) Using unqualified superlatives including, but not limited to, "lowest rates," "lowest costs," "lowest payment plan," or "cheapest loans," or that makes offers that cannot be reasonably fulfilled or substantiated.

(4) Using the words "new" or "reduced" or similar words in connection with costs for more than ninety days after the costs become effective.

(5) Indicating that residential mortgage loans are available to borrowers with "previous bankruptcy," "no credit," "bad credit," or the like unless the advertisement clearly explains any limitations that apply, or states that "certain limitations apply, call for details." In any written advertisement, the actual limitations or the warning that "certain limitations apply, call for details" shall be clearly legible.

(6) Using an official government design, format, symbol, logo, or seal unless its use is required or allowed by the governmental entity.

(7) Using the name of a person or entity that confuses or misleads a borrower as to the true identity of the registrant placing or sending the advertisement regardless of any statement elsewhere in the advertisement identifying the true identity of the registrant or licensee.

(I) A violation of 12 C.F.R. 1014.2, 1014.3, or 1014.4, as in effect on January 12, 2014, shall constitute a violation of this rule.

(J) Licensees employed by or associated with qualified exempt entities shall not place or cause to be placed, an advertisement that fails to comply with this rule.

(K) Written or oral statements that are purely informational and not designed to effect or create interest in purchasing the services of a registrant or licensee are not subject to this rule.

Replaces: 1301:8-7-07

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.09
Prior Effective Dates: 1/22/1995, 9/1/2006

1301:8-7-08 [Effective until 1/4/2016] Loan officer license requirement; exemptions; license status.

(A) To be authorized to originate residential mortgage loan transactions with a registrant governed by chapter 1322. of the Revised Code, an individual must:

(1) hold an active loan officer license with the registrant for whom the individual is working; or

(2) hold an escrowed loan officer license and:

(a) have submitted a transfer application to the Division; and

(b) the registrant to which the individual is transferring must have received written confirmation from the superintendent in accordance with division (B)(2) of section 1322.031 of the Revised Code and division (B) of rule 1301:8-7-11 of the Administrative Code.

(B) Regardless of an individual's job title, an individual must hold an active loan officer license if the individual is not employed by and working for a person exempt from sections 1322.01 to 1322.12 of the Revised Code, and the individual performs any of the following either directly or indirectly, in person, in writing, electronically or telephonically:

(1) Holds oneself out by advertising or otherwise informing the public that the person engages in any loan origination activities, including without limit through the use of business cards, stationery, brochures, advertisements, rate lists or other promotional items;

(2) Discusses credit repair, credit qualifications or financial condition with buyers, or advises the buyer of actions necessary to improve the buyer's ability to obtain a mortgage loan;

(3) Signs, or presents to a buyer for signature, a loan application document, or signs a mortgage loan origination disclosure statement on behalf of a mortgage broker registrant;

(4) Quotes rates, fees, pricing, loan terms, describes available loan programs, or offers information as to the type of loan for which an individual may qualify;

(5) Provides assistance in taking and preparing an application for a mortgage loan;

(6) Discusses mortgage broker fees or obtains written authority from buyers to electronically debit their accounts;

(7) Solicits personal financial and mortgage information from buyers including social security numbers, bank account numbers or credit card numbers. Personal financial and mortgage information for purposes of this rule does not include generally available public information;

(8) Receives commissions, bonuses, or any other compensation based on the closing of loans or the fees realized on loans;

(C) The following statuses apply to loan officer licenses:

(1) Pending. An individual with a pending loan officer license application is not licensed and is not authorized to originate residential mortgage loans.

(2) Active. An individual with an active license is authorized to originate residential mortgage loans. A loan officer license is designated active only if the license is current and the division's records reflect that the licensee is employed by a registrant.

(3) Escrow. An individual with a license placed in escrow is not permitted to originate residential mortgage loans. An escrowed license is an inactive license. A loan officer license is placed in escrow if the licensee so requests, or if the licensee is no longer employed by a registrant.

(a) Engaging in, or participating or assisting in any way in any conduct or activity for which a loan officer license is required, while a license is in escrow status, constitutes a violation of division (B) of section 1322.02 of the Revised Code.

(b) If a license is placed in escrow, the licensee is not exempt from the continuing education requirements of section 1322.052 of the Revised Code and rule 1301:8-7-18 of the Administrative Code. Placing a license in escrow does not extend the time for completion of the licensee's continuing education requirements.

(c) Escrowed licenses must be renewed pursuant to division (B) of section 1322.041 of the Revised Code and rule 1301:8-7-10 of the Administrative Code.

(d) The escrow of a loan officer license does not impair or affect the obligation of a preexisting lawful contract between the employing registrant and any person, including a buyer.

(e) An escrowed license is subject to suspension, revocation, or any other administrative, disciplinary, or criminal action for actionable conduct occurring before, during, or after the license was placed in escrow status.

(f) A license may be returned to active status upon the following conditions:

(i) The person files a completed transfer application pursuant to rule 1301:8-7-11 of the Administrative Code and provides any other information requested by the superintendent; and

(ii) The licensee is otherwise eligible and suitable to hold an active license.

(4) Suspended. Suspension is a disciplinary license status. An individual with a suspended license is not permitted to originate residential mortgage loans.

(a) Engaging in, or participating or assisting in any way in any conduct or activity for which a loan officer license is required while a license is in suspended status, constitutes a violation of division (B) of section 1322.02(B) of the Revised Code.

(b) If a license is suspended, the licensee is not exempt from the continuing education requirements of section 1322.052 of the Revised Code and rule 1301:8-7-18 of the Administrative Code. The time for completion of the licensee's continuing education requirements is not tolled while the license is suspended.

(c) A suspension of a loan officer license does not impair or affect the obligation of a preexisting lawful contract between the employing registrant and any person, including a buyer.

(d) A suspended license is subject to revocation, or any other administrative disciplinary, or criminal action for actionable conduct occurring before, during, or after the license was suspended.

(e) A license may be returned to active status upon the following conditions:

(i) The superintendent believes that all conditions of the disciplinary action for which the license was suspended have been satisfied; and

(ii) The licensee is otherwise eligible and suitable to hold an active license.

(5) Revoked. Revocation is a disciplinary license status. An individual with a revoked license is not permitted to originate residential mortgage loans.

(a) Engaging in, or participating or assisting in any way in any conduct or activity for which a loan officer license is required when a license has been revoked, constitutes a violation of division (B) of section 1322.02 of the Revised Code.

(b) A revocation of a loan officer license does not impair or affect the obligation of a preexisting lawful contract between the employing registrant and any person, including a buyer.

(6) Denied. Denial is a disciplinary license status. An individual with a denied license is not permitted to originate residential mortgage loans. Engaging in, or participating or assisting in any way in any conduct or activity for which a loan officer license is required, when a license has been denied, constitutes a violation of division (B) of section 1322.02 of the Revised Code.

(7) Cancelled. An individual with a cancelled license is not permitted to originate residential mortgage loans. A cancelled license may not be reinstated. To receive a new license a person must comply with rule 1301:8-7-09 of the Administrative Code for obtaining a loan officer license. A license is cancelled on the occurrence of any of the following:

(a) when the license expires;

(b) if the license is surrendered in accordance with the following:

(i) A person may voluntarily surrender an active or escrowed loan officer license as long as the person is not under investigation by the division, or the superintendent has not issued a notice of opportunity for a hearing under chapter 119. of the Revised Code. An investigation includes the review of any complaint made against or involving the person. A person may surrender his or her license by submitting a notarized statement to the superintendent on a form prescribed by the superintendent.

(ii) Once a surrendered license has been accepted by the division, the license will be cancelled. A voluntary surrender that is accepted by the division will be effective immediately upon the division's acceptance, and not at a later date.

(iii) A surrender will not affect the person's civil or criminal liability for acts committed before the surrender, and does not impair or affect the obligation of a preexisting lawful contract between the employing registrant and any person, including a buyer.

(8) Withdrawn. An individual whose application has been withdrawn is not permitted to originate residential mortgage loans. Engaging in, or participating or assisting in any way in any conduct or activity for which a loan officer license is required, without an active license constitutes a violation of division (B) of section 1322.02 of the Revised Code. A withdrawn application may not be re-activated. If the application of an individual is withdrawn and the individual later decides to re-apply, a new application must be completed and submitted.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.01, 1322.02, 1322.051
Prior Effective Dates: 9-1-06

1301:8-7-08 [Rescinded effective 1/4/2016] Loan officer license requirement; exemptions; license status.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.01, 1322.02, 1322.051
Prior Effective Dates: 6/1/2007, 9/1/2006, 1/22/1995

1301:8-7-09 [Effective until 1/4/2016] Loan officer license application; issuance of loan officer license; license display.

(A) An individual who wishes to apply for a loan officer license must submit all of the following:

(1) A non-refundable application fee of one hundred dollars;

(2) A completed and properly notarized loan officer license application. If the loan officer license application is incomplete when submitted, it may be deemed unacceptable and returned for completion. An application is deemed incomplete if it does not have the necessary documents attached; if it is not accompanied by the appropriate fee; if any portion of it is not properly executed; if any portion of it is missing; or if any questions are unanswered, incompletely answered or missing any required details;

(a) The applicant must list his or her full legal name on the license application; and

(b) A post office box cannot be listed as a home address.

(3) A properly notarized certificate of employment completed and signed by a registrant's operations manager. The certificate verifies that upon issuance of a loan officer license, the registrant will employ the applicant as a loan officer;

(4) An approved criminal records check;

(5) Proof of completion of the pre-licensing education requirement set forth in division (A)(4) of section 1322.031 of the Revised Code; and

(6) Any other information requested by the superintendent.

(B) The division will not issue loan officer licenses from the tenth day of April to the thirtieth day of April due to the April thirtieth deadline for renewal applications.

(C) The division will not issue a loan officer license until an applicant has satisfactorily passed the examination required by division (B) of section 1322.051 of the Revised Code and rule 1301:8-7-17 of the Administrative Code.

(D) If an individual is denied a loan officer license by the division for failing to fully disclose his or her criminal record on a licensing application, the division will not accept a new application for a loan officer license from that individual for two years from the date of the final division order denying the prior license application.

(E) The division will not accept an application for a loan officer license from an individual who has a pending application on file, or from a licensee whose license is in active, suspended, or escrow status. Any attempt to transfer a license must be done in compliance with rule 1301:8-7-11 of the Administrative Code. Any attempt to renew a license must be done in accordance with rule 1301:8-7-10 of the Administrative Code.

(F) If an applicant previously held a loan officer license and failed to complete the continuing education requirement of section 1322.052 of the Revised Code, the prior education requirements must be completed before the superintendent will issue the applicant a new license. In addition, the superintendent may impose a fine pursuant to section 1322.10 of the Revised Code for the applicant's prior non-compliance with section 1322.052 of the Revised Code, or may refuse to issue the individual a new license if the superintendent finds that based on the past non-compliance, the applicant's character and general fitness do not command the confidence of the public and warrant the belief that the business will be operated honestly and fairly in compliance with sections 1322.01 to 1322.12 of the Revised Code.

(G) Each question on the license application is material to the licensing process. Submitting false or incomplete information or omitting information in connection with a license application is grounds for denial or revocation of the license.

(H) If the information contained in an application for licensure as a loan officer becomes inaccurate for any reason before the applicant becomes licensed, the applicant shall be responsible for correcting the inaccurate information within ten business days of the change. Any name change request must be made in compliance with division (I) of rule 1301:8-7-19 of the Administrative Code and must be accompanied by a copy of the name change order, such as, marriage license, divorce decree, or court order. Any address change must comply with division (H) of rule 1301:8-7-19 of the Administrative Code.

(I) An applicant may request the withdrawal of an application prior to a determination of the application being made by the superintendent of the division of financial institutions by submitting a written request that the application be withdrawn. A request to withdraw a loan officer license application can only be submitted by the applicant. The application may only be withdrawn with the permission of the superintendent.

(J) All application fees are non-refundable regardless of whether an application is withdrawn or denied.

(K) Filing a loan officer license application does not authorize an individual to originate mortgage loans. To be authorized to engage in any activity described in division (B) of rule 1301:8-7-08 of the Administrative Code, an individual must hold an active loan officer license.

(L) Upon approval of an application, a license will be issued in the legal name of the applicant, as listed on the licensing application, for the remainder of the annual licensure period. Licenses may be renewed annually on or before the thirtieth day of April if the licensee complies with division (B) of section 1322.041 of the Revised Code, and rule 1301:8-7-10 of the Administrative Code.

(M) Once a license is issued, a licensee is under a continuing duty to update the information contained in the application for a loan officer license, and to report to the division all changes or additions to information in the application within thirty days of any such change or addition. Any name change request must be accompanied by a copy of the name change order, such as, marriage license, divorce decree, or court order.

(N) License display. The original loan officer license shall be deposited with and maintained by the employing registrant at the registrant's main office. A copy of the license shall be prominently displayed in the office where the loan officer principally transacts business.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.031, 1322.041
Prior Effective Dates: 9-1-06

1301:8-7-09 [Rescinded effective 1/4/2016] Loan officer license application; issuance of loan officer license; license display.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.031, 1322.041
Prior Effective Dates: 6/1/2007, 9/1/2006

1301:8-7-10 [Effective until 1/4/2016] Loan officer renewal application for licensure; issuance of renewal license; expiration.

(A) All licenses expire on the thirtieth day of April of each year regardless of when the license was issued.

(B) A licensee is responsible for ensuring that his or her renewal application is timely filed. The division will attempt to send reminder notices to licensees at the home, work, or to an e-mail address on file, but failure of a licensee to receive the reminder for any reason will not relieve the licensee of the renewal deadline.

(C) A renewal application must be timely filed to prevent any lapse in licensing and the ability to originate residential mortgage loans:

(1) The application must be received by the division no later than the thirtieth day of April. The license of a person whose renewal application is received by the thirtieth day of April is considered active and the person may continue to engage in activities that require a license.

(2) Renewal applications received on the first day of May to the thirty-first day of May must include a one hundred dollar late fee in addition to regular renewal fees. The license of a person whose application is received on the first day of May to the thirty-first day of May is considered active and the person may continue to engage in activities that require a license.

(3) If a renewal application is received after the thirty-first day of May, the application will not be accepted for filing and will be returned. The license of a person whose application is received after the thirty-first day of May is expired. Expiration terminates the right to engage in any activity described in division (B) of rule 1301:8-7-08 of the Administrative Code. The individual may obtain a new license by complying with the requirements and procedures for obtaining an original license found in division (A) of section 1322.031 of the Revised Code, and division (A) of rule 1301:8-7-09 of the Administrative Code. Engaging in any activity described in division (B) of rule 1301:8-7-08 of the Administrative Code on or after the first day of May by an individual who fails to submit a renewal application to the division by the thirty-first day of May constitutes unlicensed activity in violation of division (B) of section 1322.02 of the Revised Code, and both the individual and the employing registrant may be subject to administrative and or criminal penalties.

(D) To be eligible for renewal, a loan officer must have fulfilled the annual continuing education requirements of the preceding calendar year, and must continuously satisfy all requirements of initial licensure.

(E) A licensee who wishes to apply to renew his or her license must submit:

(1) A non-refundable application fee of one hundred dollars and any applicable penalty fee for late filing as set forth in division (C)(2) of this rule;

(2) A completed license renewal application form approved by the superintendent of the division of financial institutions. If the renewal application is incomplete when submitted, it may be deemed unacceptable and returned for completion. An application is deemed incomplete if it does not have the necessary documents attached; if it is not accompanied by the appropriate fee(s); if any portion of it is not properly executed; if any portion of it is missing; or if any questions are unanswered, incompletely answered or missing any required details; and

(3) Any other information requested by the superintendent.

(F) A licensee cannot transfer his or her license by filing a renewal application through or with a new registrant. To transfer a license, a licensee must comply with rule 1301:8-7-11 of the Administrative Code.

(G) Each question on the license application is material to the licensing process. Submitting false or incomplete information or omitting information in connection with a license application is grounds for denial or revocation of the license and may subject the applicant to civil or criminal penalties.

(H) If the information contained in a renewal application for licensure as a loan officer becomes inaccurate for any reason before the applicant becomes licensed, the applicant shall be responsible for correcting the inaccurate information within ten days of the change. Any name change request must be made in compliance with division (I) of rule 1301:8-7-19 of the Administrative Code and must be accompanied by a copy of the name change order, such as, marriage license, divorce decree, or court order. Any address change must comply with division (H) of rule 1301:8-7-19 of the Administrative Code.

(I) An applicant may request the withdrawal of a renewal application prior to a determination of the application being made by the superintendent of the division of financial institutions by submitting a written request that the application be withdrawn. A request to withdraw a loan officer license application can only be submitted by the applicant. The application may only be withdrawn with the permission of the superintendent.

(J) All application fees are non-refundable regardless of whether an application is withdrawn or denied.

(K) Upon approval of a renewal application, a license will be issued for the remainder of the annual licensure period, which ends the following thirtieth day of April.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.041
Prior Effective Dates: 9-1-06

1301:8-7-10 [Rescinded effective 1/4/2016] Loan officer renewal application for licensure; issuance of renewal license; expiration.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.041
Prior Effective Dates: 6/1/2007, 9/1/2006

1301:8-7-11 [Effective until 1/4/2016] Loan officer license transfer.

(A) A licensee must file a transfer application when:

(1) The licensee desires to change his or her employment from one registrant to another; or

(2) The licensee wants to reactivate his or her license and to transfer the license from escrow to a registrant.

(B) Filing a transfer application does not authorize an individual to originate mortgage loans for the registrant to which the individual is transferring. To be authorized to originate mortgage loans for the registrant to which the individual is transferring, either the license must be transferred and a new license printed identifying the new registrant, or a completed transfer application must be filed with the division and the registrant to which the individual is transferring must have received written confirmation from the superintendent in accordance with division (E)(2) of section 1322.031 of the Revised Code.

(C) A transfer application will not be processed or granted until all required information is received. To apply for a license transfer, a licensee must submit:

(1) A non-refundable license transfer fee of fifteen dollars;

(2) A "Certificate of Employment" form approved by the superintendent of the division of financial institutions; and

(3) A properly completed "Loan Officer License Transfer" form approved by the superintendent of the division of financial institutions.

(D) Upon approval of a transfer application, a license will be issued for the remainder of the annual licensure period.

(E) All licenses expire annually on the thirtieth day of April. Compliance with section 1322.041 of the Revised Code and rule 1301:8-7-10 of the Administrative Code are required for renewal of a license.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.031
Prior Effective Dates: 9-1-06

1301:8-7-11 [Rescinded effective 1/4/2016] Loan officer license transfer.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.031
Prior Effective Dates: 6/1/2007, 9/1/2006

1301:8-7-12 [Effective until 1/4/2016] Operations manager.

(A) Each registrant or applicant for a mortgage broker certificate of registration shall designate one individual to act as the company's operations manager and must grant the individual sufficient authority over the mortgage broker business to carry out the duty of ensuring the daily operations and management of the business comply with all applicable state and federal laws.

(B) Only one individual shall be designated operations manager regardless of the number of registered office locations or employees.

(C) No individual shall be permitted to act as operations manager without being approved by the superintendent of the division of financial institutions. An individual may be put in place subject to the superintendent's approval, but the superintendent must receive a complete "Request for OM Approval" form within ten business days of the appointment.

(D) The superintendent of the division of financial institutions shall be authorized to do a criminal background check, obtain a credit report, and require a financial statement and other pertinent information as the superintendent may require to satisfy the superintendent that the mortgage broker business will be operated by the individual responsibly and in compliance with sections 1322.01 to 1322.12 of the Revised Code, any regulation adopted pursuant thereto, or any other state or federal law or regulation applicable to the business of mortgage lending

(E) To qualify for approval as an operations manager, the superintendent of the division of financial institutions must find that the individual is knowledgeable about the registrant's or applicant's activities conducted under sections 1322.01 to 1322.12 of the Revised Code, has sufficient authority over the registrant's daily activities and mortgage broker business to carry out the statutory responsibilities of an operations manager, and that the individual:

(1) Holds an active loan officer license issued by the division that is not subject to suspension, revocation or non-renewal;

If the individual has simultaneously applied for a loan officer license and approval as an operations manager, successful completion of the examination requirement for operations managers under division (A) of section 1322.051 of the Revised Code shall satisfy the examination requirement for loan officers under division (B) of section 1322.051 of the Revised Code. However, successful completion of the loan officer examination requirement of division (B) of section 1322.051 of the Revised Code shall not satisfy the operations manager examination requirement of division (A) of section 1322.051 of the Revised Code.

(2) Possesses at least three years of experience in the mortgage and lending field that complies with divisions (F) and (G) of this rule;

(3) Has, where applicable, successfully completed the pre-licensing education required by division (A)(5) of section 1322.03 of the Revised Code or met the alternative educational requirements set forth in paragraph (D) of 1301:8-7-28 of the Administrative Code; and

(4) Has successfully completed the examination requirement of division (A) of section 1322.051 of the Revised Code.

(a) An individual who has submitted a request for approval as operations manager is not eligible to sit for the examination until the superintendent of the division of financial institutions has received a completed "Request for OM Approval," including a criminal records check, and any other information required by the superintendent. The superintendent may refuse to permit an individual to sit for an examination if the request or criminal records check contains any information that could disqualify the individual for approval or if the superintendent has any other information which, if true, could disqualify the individual;

(b) If the individual fails to successfully complete the examination within ninety days of being notified by the superintendent that he or she has been approved to sit for the examination, the superintendent may consider the pending application for a mortgage broker certificate of registration that is dependent on the operations manager's approval, withdrawn, or the superintendent may suspend the registrant's mortgage broker certificate of registration until an individual is approved. If a registrant is unable to designate an individual who meets the approval of the superintendent within one hundred eighty days of termination date of the individual last approved as the registrant's operations manager, the superintendent may revoke the registrant's certificate of registration for operating without an approved operations manager.

(F) For purposes of division (E)(2) of this rule and division (A)(4) of section 1322.03 of the Revised Code, satisfactory proof of experience may include but is not limited to:

(1) Copy of IRS form W-2 for the tax years covering the experience requirement;

(2) Completed and signed IRS form 4506 which enables the division to verify the W-2; and

(3) Other documents or information required by the division necessary to verify completion of the experience requirement. Experience requirement may be verified by the division directly with the employer and tax authorities.

(G) For purposes of division (E)(2) of this rule and division (A)(4) of section 1322.03 of the Revised Code, the three years, or thirty-six months, of experience must have been gained lawfully within the six years preceding request for approval, but does not need to have been gained during consecutive months. The division counts each month toward the three year requirement. A fractional month of experience, at least twenty days long, qualifies as a full month. The experience must have been gained by directly soliciting, processing, placing and negotiating mortgage loans for or as a mortgage broker, or with a financial institution, mortgage lending institution, or other lending institution. The individual must have had direct contact and interaction with buyers during all phases of making or brokering real estate mortgage loans, and not compartmentalized experience in one phase, such as processing. Other experience related specifically to the business of mortgage loans may qualify, but will not include the following types of employment:

(1) Real estate salesperson or broker;

(2) Real estate appraiser;

(3) Real estate developer or contractor;

(4) Real estate owner or investor;

(5) Commercial or consumer lender;

(6) Title or escrow agent, owner or company;

(7) Certified public accountant, public accountant, accountant, controller, comptroller, or fiscal officer;

(8) Certified financial planner or similar designation;

(9) Professor, teacher, or presenter of classes, courses, or seminars regarding mortgage lending;

(10) Board member or senior officer of a financial or mortgage lending institution;

(11) Shareholder, partner, or member of a financial or mortgage lending institution;

(12) Insurance salesperson or broker;

(13) Securities salesperson, broker, or principal;

(14) Department store credit department, including retail and wholesale stores;

(15) School, college, or university credit or student loan department;

(16) Automobile, motorcycle, boat, or recreational vehicle dealer credit department. Mobile home or manufactured housing home-only lending or credit department.

(H) Any individual who wishes to present experience and or education which is not in accord with divisions (F) and (G) of this rule may petition the superintendent to consider alternative education or experience which the individual feels would satisfy the experience requirement. Such petition shall include documentation of the experience at issue and its relationship to mortgage activities.

(I) If the individual designated as the operations manager ceases to act as the operations manager for any reason, including division (N) of this rule, the registrant shall:

(1) Within thirty days, designate another individual as the operations manager;

(2) Within ten days after the designation described in division (I)(1) of this rule, notify the superintendent of the division of financial institutions by submitting a "Request for OM Approval" form to the division.

(J) Once the individual has been approved as the registrant's operations manager, the registrant shall receive from the superintendent of the division of financial institutions an approval letter indicating the name of the licensed loan officer who has been approved as the registrant's operations manager and the effective date of the approval. The approval letter shall be conspicuously posted in each of the registrant's registered offices.

(K) While acting as an operations manager, the individual is prohibited from working for any registrant in any capacity other than the registrant for which the individual has been designated as the operations manager.

(L) An operations manager shall record his or her loan officer identification number on mortgage loan origination disclosure statements in accord with division (A)(2) of rule 1301:8-7-15 of the Administrative Code.

(M) An operations manager is under a continuing duty to update the information contained in the request for approval as operations manager and any notification requirements of licensure under chapter 1322. of the Revised Code or this chapter.

(N) An individual acting as an operations manager must hold an active loan officer license at all times while serving as operations manager. Should the individual's license cease to be active for any reason, the individual's operations manager approval is automatically terminated.

(O) An individual approved as an operations manager must complete a minimum of six hours of approved continuing education every calendar year in compliance with section 1322.052 of the Revised Code and rule 1301:8-7-18 of the Administrative Code.

(P) If an individual is approved to act as an operations manager for a registrant and subsequently ceases serving in that capacity for any reason, but later desires to be reapproved, the individual shall submit a new "Request for OM Approval" form. The superintendent may waive re-submission of some or all documentation required for approval.

(Q) Those individuals approved by the superintendent of the division of financial institutions as an operations manager as of the effective date of this rule shall be issued, without charge, a loan officer license within sixty (60) days of the effective date of this rule; shall not be required to sit for a loan officer license examination under division (B) of section 1322.051 of the Revised Code, as the successful completion of the examination requirement of division (A) of section 1322.051 of the Revised Code shall satisfy the requirement of division (B) of that section; and shall be subject to the loan officer license renewal requirements of section 1322.041 of the Revised Code and rule 1301:8-7-10 of the Administrative Code.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.03, 1322.031, 1322.04, 1322.051, 1322.052
Prior Effective Dates: 9-1-06

1301:8-7-12 [Effective 1/4/2016] Operations manager.

(A) A registrant shall grant sufficient authority to its operations manager to carry out the duty of ensuring that the daily operations and management of the registrant's business complies with all state and federal laws, rules, and regulations applicable to the transaction of mortgage broker business.

(B) Only one individual shall be designated as operations manager regardless of the number of registered office locations or employees.

(C) No individual shall act as an operations manager without being approved by the superintendent. An individual may be designated to act as an operations manager subject to the superintendent's approval. The registrant shall submit a completed "Application to change Mortgage Broker Operations Manager" form to the superintendent within ten business days of the designation.

(D) To qualify for approval as an operations manager, the superintendent shall find that the individual possesses at least three years of experience in the mortgage and lending field that complies with paragraph (F) of this rule.

(E) For purposes of paragraph (D) of this rule and division (A)(4) of section 1322.03 of the Revised Code, satisfactory proof of experience shall include a current resume and may include, but is not limited to, the following:

(1) Copies of IRS form W-2s for the tax years covering the experience requirement;

(2) A completed and signed release and authorization which enables the superintendent to verify the W-2s; and

(3) Other documents or information required by the superintendent necessary to verify completion of the experience requirement. The experience requirement may be verified by the division directly with the employer and tax authorities.

(F) For purposes of paragraph (D) of this rule and division (A)(4) of section 1322.03 of the Revised Code, the three years, or thirty-six months, of experience shall have been gained lawfully within the six years preceding request for approval, but does not need to have been gained during consecutive months. The division counts each month toward the three year requirement. A fractional month of experience, at least twenty days long, qualifies as a full month. The experience may have been gained by directly soliciting, processing, placing and negotiating residential mortgage loans for or as a mortgage broker, or with a financial institution, mortgage lending institution, or other lending institution. The individual should have had direct contact and interaction with borrowers during all phases of making or brokering residential mortgage loans, and not compartmentalized experience in one phase of the process. Experience in all phases of processing, underwriting and closing or operations management is acceptable. Other experience related specifically to the business of residential mortgage lending may qualify, but will not include the following types of employment:

(1) Real estate salesperson or broker;

(2) Real estate appraiser;

(3) Real estate developer or contractor;

(4) Real estate owner or investor;

(5) Commercial or consumer lender;

(6) Title or escrow agent, owner or company;

(7) Certified public accountant, public accountant, accountant, controller, comptroller, or fiscal officer;

(8) Certified financial planner or similar designation;

(9) Professor, teacher, or presenter of classes, courses, or seminars regarding mortgage lending;

(10) Board member or senior officer of a financial or mortgage lending institution;

(11) Shareholder, partner, or member of a financial or mortgage lending institution;

(12) Insurance salesperson or broker;

(13) Securities salesperson, broker, or principal;

(14) Department store credit department, including retail and wholesale stores;

(15) School, college, or university credit or student loan department;

(16) Automobile, motorcycle, boat, or recreational vehicle dealer credit department.

(17) Mobile home or manufactured housing lending or credit department, unless acting as a licensed loan originator or mortgage loan originator.

(G) Any individual who wishes to present experience or education which is not in accord with paragraphs (E) and (F) of this rule may petition the superintendent to consider alternative education or experience which the individual reasonably believes would satisfy the experience requirement. Such petition shall include documentation of the experience at issue and a detailed explanation of its relationship to residential mortgage lending activities.

(H) An individual designated as operations manager shall have passed the written test administered to loan originators. No separate written test for operations managers is required.

Replaces: 1301:8-7-12

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.03, 1322.031, 1322.04, 1322.051, 1322.052
Prior Effective Dates: 9/1/2006, 6/1/2007

1301:8-7-13 [Effective until 1/4/2016] Division examinations and investigations.

(A) The superintendent of financial institutions may conduct an examination in accordance with division (A) of section 1322.06 of the Revised Code at any time and as often as the superintendent determines appropriate. Examinations may be scheduled or unscheduled, announced or unannounced.

(B) The superintendent of financial institutions may conduct an investigation in accordance with division (B) of section 1322.10 of the Revised Code at any time and as often as the superintendent determines necessary. Investigations may be scheduled or unscheduled, announced or unannounced.

(C) The superintendent of financial institutions or his authorized representatives shall be given free access to the offices, places of business, records, papers, and files in the possession or control of any persons and their employees subject to an examination conducted in accordance with division (A) of section 1322.06 of the Revised Code, or an investigation conducted under the authority of division (B) of section 1322.10 of the Revised Code

(D) To increase the effectiveness of examinations and investigations and to ensure the purposes of sections 1322.01 to 1322.12 of the Revised Code are being carried out, each registrant shall maintain office hours from nine a.m. to five p.m. on the second Thursday of the following months: February, April, June, August, October, and December. Should the superintendent of financial institutions or his authorized representatives appear at the office of a registrant to conduct an examination or investigation at any time between nine a.m. to five p.m. on any of these six days and be denied access to any office, record or file for any reason, such denial may be considered a violation of division (A) of section 1322.072 of the Revised Code.

(E) A registrant shall not be found in violation of division (A) of section 1322.072 of the Revised Code for failing to maintain office hours in compliance with division (D) of this rule if the registrant has received prior written authorization from the superintendent of financial institutions to close the office(s), and the written authorization is conspicuously posted on the front entrance doors of the registrant's office(s). Such authorization is at the sole discretion of the superintendent. Failure to comply with division (D) of this rule may be excused by the superintendent, in the superintendent's sole discretion, if the registrant or licensee can present evidence of a documented emergency outside the control of the registrant or licensee.

(F) As part or in furtherance of any examination pursuant to division (A) of section 1322.06 of the Revised Code, or any investigation in accordance with division (B) of section 1322.10 of the Revised Code, if the superintendent or his authorized representatives requests a written response, or the submission of books, records, documentation, or other information, the applicant, registrant, licensee, or person shall deliver a written response and any requested information within the time period specified in the request. If no time period is specified, the written response and any required submissions shall be delivered to the superintendent not later than thirty days after the date of such request, as indicated in the upper right hand corner of the request.

(G) Written responses pursuant to division (F) of this rule must address, in detail, the issues raised by the superintendent or his authorized representative. Summary responses such as "the issue is resolved" or "we are compliant" without further explanation will be considered non-responsive and may be considered a violation of division (A) of section 1322.072 of the Revised Code.

(H) Requests made by the superintendent or his authorized representatives pursuant to division (F) of this rule are deemed to be in furtherance of the superintendent's examination and investigation authority granted in sections 1322.01 to 1322.12 of the Revised Code. Failure to fully comply with divisions (F) or (G) of this rule may result in fines, suspension or revocation of any applicable license or registration.

Effective: 09/01/2006
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.06, 1322.10, 1322.072

1301:8-7-13 [Effective 1/4/2016] Division examinations and investigations.

(A) The superintendent or authorized division personnel may conduct an examination in accordance with division (A) of section 1322.06 of the Revised Code or an investigation in accordance with division (B) of section 1322.10 of the Revised Code during normal business hours and as often as the superintendent determines appropriate. Examinations and investigations may be scheduled or unscheduled, announced or unannounced.

(B) The superintendent or authorized division personnel shall be given free access to all offices, places of business, computers, books, papers, and records, whether electronic or hardcopy, in the possession, control or ownership of any registrant, qualified exempt entity, and their employees and licensees for the purpose of conducting an examination or investigation in accordance with Chapter 1322. of the Revised Code and this chapter.

(C) To increase the effectiveness of examinations and investigations and to ensure the purposes of Chapter 1322. of the Revised Code are being carried out, a registrant, qualified exempt entity, or licensee shall maintain office hours from nine a.m. to five p.m. on the second Thursday of the following months: February, April, June, August, October, and December. Should the superintendent or authorized division personnel appear at the office of a registrant, qualified exempt entity, or licensee to conduct an examination or investigation at any time between nine a.m. to five p.m. on any of these six days and be denied access to any office, record or file for any reason, such denial may be considered a violation of division (A) of section 1322.072 of the Revised Code.

(D) As part or in furtherance of any examination or investigation conducted in accordance with Chapter 1322. of the Revised Code or this rule chapter, if the superintendent or authorized division personnel requests a written response, or the submission of books, papers, and records, whether electronic or hardcopy, or any other information, the applicant, registrant, qualified exempt entity, licensee, or person shall deliver a written response and any requested information within the time period specified in the request. If no time period is specified, the written response and any required submissions shall be delivered to the superintendent not later than thirty days after the date of such request.

(E) Written responses submitted pursuant to paragraph (D) of this rule must address the issues raised by the examination or investigation to the superintendent's satisfaction.

Replaces: 1301:8-7-13

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.06, 1322.10, 1322.072
Prior Effective Dates: 9/1/2006

1301:8-7-14 [Effective until 1/4/2016] Surety bonds.

(A) A certificate of registration shall not be issued until the applicant for a mortgage broker certificate of registration obtains a corporate surety bond that complies with section 1322.05 of the Revised Code and the provisions of this rule.

(B) Each applicant for a mortgage broker certificate of registration shall obtain and each registrant shall continuously maintain a corporate surety bond that complies with the following:

(1) The surety bond shall be on the form prescribed by the division of financial institutions.

(2) The surety bond must be issued by a bonding company authorized to do business in this state, pursuant to division (A) of section 1322.05 of the Revised Code.

(3) The surety bond must be issued in the name of the applicant or registrant, and at the main office of the applicant or registrant. If the applicant or registrant uses a trade or alternative business name in compliance with rule 1301:8-7-22 of the Administrative Code, the trade or alternative name(s) shall be included on the bond.

(4) The term of the surety bond shall coincide with the term of registration, which runs from the first day of May to the thirtieth day of April. A bond may be issued for a period of more than one registration period, as long as the coverage is continuous and does not expire until the end of a registration period.

(5) The surety bond shall be in favor of the superintendent of financial institutions, and shall be for the exclusive benefit of any buyer injured by a violation by an employee, licensee, or registrant of any provision of sections 1322.01 to 1322.12 of the Revised Code.

(6) If the registrant or applicant has one registered location, the penal sum of the bond shall be at least fifty-thousand dollars. For each registered branch office location, the bond shall be increased by at least ten thousand dollars. One surety bond in the appropriate aggregate amount shall be accepted, regardless of the number of registered offices. An endorsement rider may be used to increase the amount of the bond when an additional office location becomes registered.

(C) Surety bonds required as a condition for registration under section 1322.05 of the Revised Code, shall be continuously maintained. Should a lapse in coverage occur, in compliance with division (F) of section 1322.05 of the Revised Code, the registrant shall cease all mortgage broker activity governed by chapter 1322. of the Revised Code until the registrant can present to the superintendent of the division of financial institutions evidence that the registrant has obtained a proper surety bond which extends through the duration of the registration period. A registrant that experiences a lapse in or break in coverage of its surety bond shall present evidence which satisfies the superintendent that the registrant conducted no mortgage broker or origination activities during the period in question. Failure to obtain a surety bond that complies with section 1322.05 of the Revised Code and the provisions of this rule within sixty days of the first date of a lapse in coverage, or engaging in any mortgage broker activity governed by chapter 1322. of the Revised Code without a proper bond in place, is grounds for revocation of the registrant's certificate of registration.

(D) Whenever the penal sum of the surety bond is reduced for any reason, in compliance with division (F) of section 1322.05 of the Revised Code, the registrant shall cease all mortgage broker activity governed by chapter 1322. of the Revised Code until the registrant can restore the bond to the full required value. Failure to obtain a surety bond that complies with section 1322.05 of the Revised Code and the provisions of this rule within sixty days of the first date the penal sum of the bond was reduced, or engaging in any mortgage broker activity governed by chapter 1322. of the Revised Code without a proper bond in place, is grounds for revocation of the registrant's certificate of registration.

Effective: 09/01/2006
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.05

1301:8-7-14 [Effective 1/4/2016] Surety bonds.

(A) With respect to a bond obtained by a registrant, or by a qualified exempt entity or loan processing or underwriting company in the same manner as a registrant, the following shall apply:

(1) The surety bond required by section 1322.05 of the Revised Code shall be on a form acceptable to the superintendent.

(2) The surety bond must be issued in the name of the registrant, qualified exempt entity, or loan processing or underwriting company and list the main office of the registrant, qualified exempt entity, or loan processing or underwriting company. If a trade or fictitious name is used, the trade or fictitious name shall be included on the bond.

(3) One surety bond in the appropriate aggregate amount shall be required to cover a registrant, qualified exempt entity, or loan processing or underwriting company regardless of the number of registered or exempted office locations. An endorsement rider may be used to increase or decrease the amount of the bond whenever an office location is established or closed.

(4) Whenever the penal sum of the surety bond is reduced below the required amount, the registrant, qualified exempt entity, or loan processing or underwriting company and licensees employed by or associated with them shall immediately cease originating residential mortgage loans until the bond has been restored to the full required value. Failure to restore the bond to the full required value within thirty days of the first date the penal sum of the bond was reduced is grounds for a fine, suspension, refusal to renew or revocation of the registrant's certificate of registration or a qualified exempt entity's or loan processing or underwriting company's approved letter of exemption.

(B) No licensee shall perform the clerical or support duties of a loan processor or underwriter as described in 12 U.S.C. 5102(4)(B), as in effect on January 12, 2014, in this state as an employee of a loan processing or underwriting company or as an independent contractor, unless either the licensee, or the loan processing or underwriting company on the licensee's behalf, has obtained and maintains in effect at all times a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state.

(C) With respect to an individual bond obtained by a licensee employed by or associated with a qualified exempt entity, by a licensee employed by a loan processing or underwriting company on a licensee's behalf, or by a licensee acting as an independent contractor performing clerical or support duties of a loan processor or underwriter as described in 12 U.S.C. 5102(4)(B), as in effect on January 12, 2014, the following shall apply:

(1) The surety bond required by section 1322.05 of the Revised Code shall be on a form acceptable to the superintendent;

(2) The surety bond must be issued in the name of the licensee and state the home address of the licensee as listed in the licensee's NMLS account.

Replaces: 1301:8-7-14

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.05
Prior Effective Dates: 9/1/2006

1301:8-7-15 [Effective until 1/4/2016] Mortgage loan origination disclosure statements and good faith estimates and other required disclosures to buyers.

(A) Within three business days after taking an application for a loan from a buyer, a registrant shall deliver to the buyer a "Mortgage Loan Origination Disclosure Statement" which shall be on the form approved by the division and posted on its web site for that purpose, and shall include:

(1) The name, address, and telephone number of each buyer;

(2) The typewritten name of the loan officer who originated the loan on behalf of the registrant, the loan officer identification number listed on the loan officer's license issued by the division, and the signature of the loan officer;

(3) The street address, telephone number and facsimile number of the registered office from which the loan officer is working and the number on the certificate of registration issued to the office by the division;

(4) A declaration of whether the buyer will be required to pay for the services of any bona fide third party service providers if the registrant is unable to assist the buyer in obtaining a mortgage loan;

(5) A clear description of the method by which the fee to be paid to the registrant by the buyer will be calculated and a good faith estimate of the total dollar amount of the fee, as required by division (A)(1)(f) of section 1322.062 of the Revised Code. The fee calculation method shall disclose any and all compensation received by the registrant from the buyer, regardless of how the compensation is identified on mortgage loan disclosures. The disclosure of the fees must be expressed as the total dollar amount of the fees the registrant anticipates receiving from the buyer for originating the loan. If the registrant bases its fees, in whole or in part, on a percentage of the principal amount of a loan, the registrant shall disclose the dollar amount of fees in the required good faith estimate by multiplying the percentage to be charged by the anticipated principal amount of the loan. Disclosure of ranges of dollar amounts or percentages, or statements that the fees are "to be determined" are prohibited;

(6) A statement informing the buyer that to the extent permitted by state and federal law the registrant may also receive compensation from the lender in the mortgage loan transaction;

(7) A description of all the services the registrant has agreed to perform for the buyer;

(8) Notice to the buyer that the buyer is not obligated to use the registrant's services in obtaining a residential mortgage loan;

(9) If the mortgage loan to be originated by the registrant will exceed ninety per cent of the value of the property involved, the boldface statement required by division (A)(1)(j) of section 1322.062 of the Revised Code as set forth by the form approved by the division and posted on its web site for this purpose; and

(10) A place for the signature of each buyer acknowledging receipt of the required "Mortgage Loan Origination Disclosure Statement."

(B) As used in division (B) of section 1322.062 of the Revised Code, the phrase "no later than twenty-four hours after the change occurs" shall not include those hours on Sundays and national holidays.

(C) As used in division (A)(1)(f) of section 1322.062 of the Revised Code, "the fee to be paid by the buyer to the registrant" means any and all broker compensation the registrant receives from the buyer, but does not include any fees paid to the registrant by lenders in the form of yield spread premiums or service release premiums, nor does the phrase include any fees collected by registrants from buyers on behalf of bona fide third party service providers.

(D) The good faith estimate statement required by division (D) of section 1322.062 of the Revised Code must disclose all of the following:

(1) All of the information required for estimates by the "Real Estate Settlement Procedures Act," 88 Stat. 1724, 12 U.S.C. 2601 et seq., in effect on January 1, 2007; and

(2) The "nature of relationship" and "notice to borrower" statements as written in division (D) of section 1322.062 of the Revised Code and set forth by the form approved by the division and posted on its web site for this purpose. The required "nature of relationship" and "notice to borrower" disclosure form shall be appended to the required good faith estimate disclosure.

(E) Timely disclosures.

(1) As used in division (B) of section 1322.064 of the Revised Code, the phrase "twenty-four hours after the change occurs" shall not include those hours on Sundays and national holidays.

(2) In order to document that notifications of material changes to the terms and conditions of loans required by division (B) of section 1322.062 of the Revised Code, division (A) of section 1322.063 of the Revised Code, and divisions (A)(1) and (A)(2) of section 1322.064 of the Revised Code are made to buyers in a timely manner, the registrant shall do one of the following:

(a) Obtain the signature of the buyer on a dated statement in which the buyer acknowledges the time and date that notification of the changes was received;

(b) Maintain a record by time-dated facsimile that the disclosures were provided by fax to and received by the buyer;

(c) Maintain a record by time-dated computer e-mail that the disclosures were provided by e-mail to and received by the buyer; or

(d) Maintain a record by time-dated overnight, express, or certified mail that the disclosures were provided by such mail and received by the buyer.

The disclosures required by section 1322.064 of the Revised Code shall be provided on the form approved by the division and posted on its web site for this purpose. Provided, however, that where the sole change is to the mortgage broker fees, then such change may be disclosed by the provision of a revised mortgage loan origination disclosure statement.

(F) A registrant shall maintain in its records for each loan file the disclosure form required herein, both the initial and any revised versions, as executed by the borrower(s) and the responsible loan officer.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2010
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.062

1301:8-7-15 [Effective 1/4/2016] Disclosures.

(A) The "Mortgage Loan Origination Disclosure Statement" shall be on a form which conforms to the model form posted on the division of financial institution's web site.

(B) As used in division (A)(1)(f) of section 1322.062 of the Revised Code, "the fee to be paid by the buyer to the registrant" means any and all compensation the registrant receives from the buyer, but does not include any fees collected by registrants from buyers on behalf of bona fide third party service providers.

(C) Timely disclosures.

(1) As used in division (B) of section 1322.062 and division (B) of section 1322.064 of the Revised Code, the phrase "twenty-four hours after the change occurs" shall not include Sundays and national holidays.

(2) In order to document that disclosures required by division (B) of section 1322.062, division (A) of section 1322.063, divisions (A)(1) and (A)(2) of section 1322.064, and division (A) of 1322.075 of the Revised Code are made to the borrower in a timely manner, the registrant or licensee shall do one of the following:

(a) Obtain the signature of the borrower on a dated statement in which the borrower acknowledges the time and date that notification of the changes was received;

(b) Maintain a record by time-dated facsimile that the disclosures were provided by fax to and received by the borrower;

(c) Maintain a record by time-dated computer e-mail that the disclosures were provided by e-mail to and received by the borrower; or

(d) Maintain a record by time-dated overnight, express, or certified mail that the disclosures were provided by such mail and received by the borrower.

(D) The disclosures required by section 1322.064 of the Revised Code shall be provided on a form acceptable to the superintendent which substantially conforms with the model form posted on the division's web site. As an alternative to providing the foregoing model form, the registrant or licensee may provide the federal revised good faith estimate (or revised loan estimate on or after August 1, 2015), and documentation of the reason for the revised good faith estimate (or revised loan estimate), as required by 12 C.F.R. 1024.7(f), as in effect on January 12, 2014. The acceptance of the alternative federal forms in lieu of the model state form for this disclosure does not alter the time within which the disclosure must be provided as set forth in division (B) of section 1322.064 of the Revised Code and paragraph (C) of this rule. If, however, the mortgage broker fees change, then the change must be disclosed by the provision of a revised mortgage loan origination disclosure statement as required by division (B) of section 1322.062 of the Revised Code in addition to any other disclosures that may be required by state or federal law.

(E) The affiliated business disclosure required by division (A) of section 1322.075 of the Revised Code shall be provided on a form acceptable to the superintendent which substantially conforms with the model form posted on the division's web site. As an alternative to providing the foregoing model form, the registrant or licensee may provide the affiliated business arrangement disclosure statement format notice required by 12 C.F.R. 1024.15(b), as in effect on January 12, 2014. The timing of the disclosure required by division (A) of section 1322.075 of the Revised Code shall be made in conformity with the timing specified in 12 C.F.R. 1024.15(b)(1), as in effect on January 12, 2014.

Replaces: 1301:8-7-15

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.062, 1322.064, 1322.075
Prior Effective Dates: 6/1/2007

1301:8-7-16 [Effective until 1/4/2016] Prohibited practices.

(A) As used in division (C) of section 1322.07 of the Revised Code, conduct that constitutes improper, fraudulent, or dishonest dealings includes, but is not limited to:

(1) Failing to return, upon receipt of a written request for their return from a buyer, all original documents provided to the registrant or loan officer by the buyer;

(2) Permitting a person to originate loans, or holding the person out as being able to originate loans, on the registrant's behalf unless the person is registered or licensed under sections 1322.01 to 1322.12 of the Revised Code;

(3) Sharing, splitting, or receiving any commission, discount, fee or other remuneration with, or compensating any person required to be licensed or registered under chapter 1322. of the Revised Code who is not so licensed or registered;

(4) Knowingly aiding, abetting, or conspiring with a person to circumvent the requirements of chapter 1322. of the Revised Code or chapter 1301:8-7 of the Administrative Code;

(5) Recommending or encouraging default or delinquency or continuation of an existing default or delinquency by a buyer on any existing indebtedness prior to closing a mortgage loan which refinances all or a portion of such existing indebtedness;

(6) Materially underestimating closing costs;

(7) Failing within a reasonable time to honor a check issued to the superintendent of the division of financial institutions after the superintendent has mailed a request for payment by certified mail to the person's last known business address as reflected by the superintendent's records;

(8) Engaging in any other practice which the superintendent of the division of financial institutions, by published interpretation, has determined to be improper, fraudulent or dishonest;

(9) Depositing any loan disbursement check that is not made payable to the registrant or licensee.

(B) For purposes of divisions (A)(3), (A)(4) and (A)(5) of this rule, it is expected that all registrants and licensees use reasonable diligence to determine whether persons are registered or licensed. Obtaining a copy of a person's license or certificate shall not be sufficient evidence of a current license or certificate of registrations since suspension, revocation and cancellation proceedings occur throughout the year. The division has provided various means to determine whether a person is registered or licensed:

(1) A list of current registrants and licensees is provided at the division's internet website.

(2) The division responds to telephone inquiries from eight a.m. to four-thirty p.m. each weekday, except holidays, and provides current information to callers. The division also responds to written inquiries.

(C) It is a prohibited practice to:

(1) Make false or misleading statements of a material fact, omissions of statements required by state law, or false promises regarding a material fact, through advertising or other means, or engage in a continued course of misrepresentations;

(2) Knowlingly make, propose, or solicit fraudulent, false, or misleading statements on any mortgage document or on any document related to a mortgage, including, but not limited to, a mortgage application, real estate appraisal, or real estate settlement or closing document. For purposes of this division, "fraudulent, false, or misleading statements" does not include mathematical errors, inadvertent transposition of numbers, typographical errors, or any other bona fide error; or

(3) Knowlingly instruct, solicit, propose, or otherwise cause a buyer to sign in blank a mortgage related document, including, but not limited to, a mortgage application, real estate appraisal, or real estate settlement or closing document.

Effective: 09/01/2006
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.07

1301:8-7-16 [Effective 1/4/2016] Prohibited practices.

As used in division (C) of section 1322.07 of the Revised Code, conduct that constitutes improper, fraudulent, or dishonest dealings includes, but is not limited to:

(A) Failing to return all original documents provided to the registrant or licensee by the borrower;

(B) Permitting an unlicensed individual to originate residential mortgage loans;

(C) Sharing or splitting any commission, discount, fee or other compensation for originating a residential mortgage loan with a person who is not licensed or registered under Chapter 1322. of the Revised Code but who should be licensed or registered;

(D) Knowingly aiding, abetting, or conspiring with a person to circumvent the requirements of Chapter 1322. of the Revised Code or this rule chapter;

(E) Recommending or encouraging default or delinquency or continuation of an existing default or delinquency by a borrower on any existing indebtedness prior to closing a residential mortgage loan which refinances all or a portion of such existing indebtedness;

(F) Promising to refinance a residential mortgage loan in the future at a lower interest rate or with more favorable terms;

(G) Materially underestimating closing costs;

(H) Depositing any residential mortgage loan disbursement check that is not made payable to the registrant, qualified exempt entity or licensee;

(I) Abandoning or improperly disposing of loan files containing financial and mortgage information of borrowers;

(J) Refusing or failing to fund a consummated loan, other than when an borrower rescinds the loan in accordance with 12 C.F.R. 1026.15 or 1026.23 (relating to the right of rescission), as in effect on January 12, 2014; or

(K) Any other conduct the superintendent determines constitutes improper, fraudulent, or dishonest dealings;

Replaces: 1301:8-7-16

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.07
Prior Effective Dates: 9/1/2006

1301:8-7-17 [Effective until 1/4/2016] Licensing examination.

(A) The following provisions concern the loan officer licensing examination required by division (B) of section 1322.051 of the Revised Code:

(1) Prior to the issuance of a license each licensee shall successfully complete a loan officer license examination, approved by the superintendent of the division of financial institutions.

(2) No individual shall be permitted to sit for an examination until the individual has been authorized to do so by the division of financial institutions. An individual who has submitted a loan officer application for approval is not eligible to sit for the examination until the superintendent of the division of financial institutions receives a completed application, including a criminal records check, and any other information required by the superintendent. The superintendent may refuse to permit an individual to sit for examination if the application or criminal records check contains any information that could disqualify the individual for approval or if the superintendent has any other information which, if true, could disqualify the individual.

(3) An applicant is only permitted to sit for an examination during his or her eligibility period of ninety days, which begins on the day the notice of authorization is sent to the applicant and examination provider.

(4) There is no limit as to how many times a person may test during his or her eligibility period. A fee may be assessed for each test.

(5) An application will be deemed deficient and withdrawn if the applicant fails to successfully complete the required loan officer examination within the ninety day period of eligibility.

(6) Successful completion of the examination requires a score of seventy per cent or higher. Successful completion of the examination alone, however, does not guarantee division approval of the individual's loan officer application.

(7) The examination will consist of questions including chapter 1322. of the Revised Code, mortgage loan processes and programs, definitions of terms basic to the industry, and general provisions of applicable state and federal laws.

(B) The following provisions apply to the operations manager examination required by division (A) of section 1322.051 of the Revised Code.

(1) An individual who has submitted a request for approval as operations manager is not eligible to sit for the examination until the superintendent of the division of financial institutions receives a completed "Request for OM Approval," including a criminal records check, and any other information required by the superintendent. The superintendent may refuse to permit an individual to sit for an examination if the request or criminal records check contains any information that could disqualify the individual for approval or if the superintendent has any other information which, if true, could disqualify the individual.

(2) If the individual fails to successfully complete the examination within ninety days of being notified by the superintendent that he or she has been approved to sit for the exam, the superintendent may consider the pending application for a mortgage broker certificate of registration that is dependent on the operations manager approval, withdrawn, or the superintendent may suspend the registrant's mortgage broker certificate of registration until an individual is approved. If a registrant is unable to designate an individual who meets the approval of the superintendent within one hundred eighty days of the termination date of the individual last approved as the registrant's operations manager, the superintendent may revoke the registrant's certificate of registration for operating without an approved operations manager.

(3) There is no limit as to how many times an individual may test during his or her eligibility period. A fee may be assessed for each test.

(4) Successful completion of the examination requires a score of seventy per cent or higher.

(5) The examination will consist of questions including chapter 1322. of the Revised Code, mortgage loan processes and programs, definitions of terms basic to the industry, and general provisions of applicable federal laws.

(6) Successful completion of the operations manager examination alone does not guarantee division approval of the individual as operations manager or the issuance of the applicant's certificate of registration.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.051
Prior Effective Dates: 9-1-06

1301:8-7-17 [Rescinded effective 1/4/2016] Licensing examination.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.051
Prior Effective Dates: 9/1/2006, 6/1/2007

1301:8-7-18 [Effective until 1/4/2016] Continuing Education.

(A) In this rule, the following definitions shall apply:

(1) "CE" means continuing education.

(2) "Approved CE" means a continuing education course that has been approved by the superintendent of the division of financial institutions for credit in accordance with section 1322.052 of the Revised Code. A continuing education course may be offered through classroom instruction, on-line computer learning, or video taped instruction.

(3) "Hour" shall mean sixty minutes of class time, of which fifty minutes shall be instruction, with a maximum of ten minutes of break per hour.

(4) "Attendee" is a licensee or license applicant who attends an Approved CE course.

(5) "Licensee" includes loan officers and operations managers.

(6) "Approved Provider" means a person approved by the superintendent of the division of financial institutions to offer Approved CE courses to attendees for credit and who is responsible for ensuring the division is timely informed of an attendee's completion of an Approved CE course.

(B) Each licensee shall complete at least six credit hours of approved CE for each calendar year. Credits earned in excess of six hours in any calendar year may not be carried over to the next calendar year. Credit will be given to an attendee who has a loan officer license application on file with the division at the time the attendee completes the approved CE course. The six credit hours may be obtained in a single program, course or activity or in separate courses, programs or activities.

(C) A licensee is exempt from the CE requirement of section 1322.052 of the Revised Code for the calendar year in which the licensee is first issued a license under section 1322.041 of the Revised Code. Should the individual's license be cancelled for any reason and the individual reapply and be issued a new license in a different calendar year, the exemption shall not apply and the individual will be required to complete a minimum of six credit hours of Approved CE each calendar year.

(D) When a licensee who is also a designated operations manager at the time the licensee completes any Approved CE course, credit shall be applied to both the individual's loan officer CE requirement and the registrant's operations manager's CE requirement. Should the licensee leave the employ of the registrant after earning CE credits, the credits earned by that licensee will not accrue to the benefit of any other registrant.

(E) Provider Approval. Application for Approved Provider status shall be made on a form prescribed by the superintendent and shall include the following:

(1) The name and address of the applicant;

(2) A sworn statement of whether the applicant has been convicted in the ten years preceeding submission of the application of any crime (misdemeanor or felony) involving real estate, mortgage lending, settlement services or appraisal work;

(3) A sworn statement of whether the applicant has filed for or received bankruptcy protection more than once within the ten years preceeding submission of the application;

(4) A sworn statement of whether the applicant has had any prior approval to conduct or offer education revoked, suspended or not renewed by any state or federal regulatory authority;

(5) The names and addresses of all persons or entities holding an interest of five percent or more in the applicant;

(6) A sworn statement of whether any person or entity holding an interest of five percent or more in the applicant has been convicted in the ten years preceeding submission of the application of any crime (misdemeanor or felony) involving real estate, mortgage lending, settlement services or appraisal work;

(7) A sworn statement of whether any person or entity holding an interest of five percent or more in the applicant has filed for or recieved bankruptcy protection more than once within the ten years preceeding submission of the application;

(8) An application for the approval of at least one CE course in the form established in division J of this rule;

(9) A certificate of good standing issued by the Ohio secretary of state that is not more than sixty days old if the applicant is a corporation, limited liability company, partnership, association, or any other entity required to register with the secretary as a domestic or foreign entity and if the entity is engaging in business under a trade name, then the applicant shall also provide proof of the applicable filing with the Ohio secretary of state. In the event the applicant is a natural person doing business under a trade name or other fictitious name, then proof that the person has made the appropriate filing with the Ohio secretary of state; and

(10) Any other information the superintendent requests.

(F) If the applicant submits an application that is incomplete or if the application lacks information deemed necessary by the division, the division may return the application with a letter indicating areas which must be addressed in order for the division to continue the approval process. If the division retains the incomplete application and notifies the applicant in writing that more information is needed and the applicant fails to submit the requested information within ninety days, the superintendent may consider the application withdrawn.

(G) The superintendent shall approve an application for an Approved Provider if the superintendent finds:

(1) The applicant has made all applicable filings with the Ohio secretary of state as set forth in paragraph (E)(9) of this rule;

(2) Neither the applicant nor any person or entity holding an interest of five percent or more in the applicant has been convicted in the ten years preceeding submission of the application of any crime (misdemeanor or felony) involving real estate, mortgage lending, settlement services or appraisal work;

(3) The applicant has not had any prior approval to conduct or offer education revoked, suspended or refused to be renewed by any state or federal regulatory authority; and

(4) Neither the applicant nor any person holding an interest of five percent or more have a history involving multiple bankruptcies that indicates that the applicant or such person is unable to effectively run a company, which could ultimately jeopardize the ability of attendees to receive CE credit.

(H) If a provider's application is approved the provider will be notified in writing of this approval as a CE provider at the time the provider's first course is approved.

(I) Once approved as a CE Provider the provider shall remain approved unless and until the superintendent finds the provider has not complied with this rule. If the superintendent finds the provider has not complied with this rule, the superintendent shall send notice , via certified mail, to the provider stating that the provider is no longer approved. Upon receipt of the notice, the provider will be permitted to offer any previously approved CE course that is scheduled to take place within thirty days of receipt of the notice to ensure the provider's non-compliance does not adversely affect attendees.

(J) Course approval. Courses consisting of more than twenty per cent video-taped information are not permitted, however online instruction courses may be approved. All requests for approval of a course must be made in the manner prescribed by the superintendent and shall contain the following information:

(1) A description of:

(a) The number of requested credit hours and length of the course. For purposes of this rule a credit hour must provide for no less than fifty minutes of instruction. Breaks, introductions, lunches, announcements, or other non-instruction time is to be excluded in calculating the credit hours requested. Each course shall be a minimum of one credit hour;

(b) The purpose or objective of the course and how the material offered will increase the knowledge of mortgage lending and related subjects for attendees;

(c) The course tutition and the provider's refund fee policy;

(d) The method of presentation;

(e) The time, date, and location of the course, if known. If the course will be offered more than once, the date, time and location for each offering shall be provided if known. The provider may submit for approval any additional dates not already submitted with the initial application for the course on an as-needed basis. Any additional date submission should be made at least ten days prior to the proposed additional date. Such submissions may be made by mail or by electronically emailing a completed and readable scanned image file of the additional date form approved by the superintendent to the person designated to receive additional date submissions. Additional dates submitted electronically shall be deemed received by the superintendent on the day the scanned image file is sent to the proper person designated by the superintendent; and

(f) The name and address of the course instructor.

(2) A detailed content outline which contains a description of each topic to be covered by the course. This outline must specify the time components spent on each topic and the description must be sufficiently detailed to justify the request for each credit hour. The outline shall contain:

(a) The proposed time component;

(b) The specific material to be covered in each time component; and

(c) The justification for the time allotted to each component to teach or instruct that component.

(3) A description of materials to be employed by the instructor in teaching the course including a copy of the promotional brochures currently in use or proposed to be used for the course once approved by the superintendent. If a course is advertised prior to gaining the approval of the division, all advertisements pertaining to that course disseminated prior to division approval must contain a conspicuous disclosure that continuing education credits are pending approval of the division.

(4) A description of how the course is to be administered, including the method of verification of attendance or completion of the course.

(K) Provider Practices and CE Course Rules.

(1) A course must be offered and presented as approved by the division.

(2) A provider must inform the division, in writing, of any change in a course's location, date or time no later than ten days prior to the course. The superintendent has the discretion to waive the ten day notice requirement where the circumstances for the change were beyond the control of the provider.

(3) Providers may not change a course's content or outline without prior written approval of the division. Failure to obtain such written approval in advance of the course may result in the denial of CE credit for the course and disapproval of the provider's approved status to offer CE credit.

(4) Providers must submit an attendance roster, in a form prescribed by the division, to the division within fifteen days after a course is completed. The roster shall contain the identifying information of any licensee who completed the course, the date the course was completed, and any other information requested by the superintendent. One roster shall be submitted for each course offering. Failure of a provider to timely submit the identifying information of any licensee who completed a course may result in the licensee not receiving credit for the course, and could result in the disapproval of the provider's ability to offer continuing education credits.

(5) The date the course is completed must be recorded and submitted to the division. Any other date, such as the date a provider receives a registration or proctor form or payment is received, is insignificant. Providing the division with any date other than the date a course is actually completed may result in the disapproval of a provider's right to offer continuing education.

(6) Providers shall issue each attendee a certificate of completion identifying the name of the course, the course location and completion date, and the full name of the Approved Provider.

(7) Providers shall not issue certificates of completion to persons who do not attend or complete the scheduled hours for any CE course.

(8) Providers shall be responsible for determining that the attendee or person completing the course is the actual person scheduled to complete the course.

(9) A course must be conducted as advertised and represented to the division. A course may not be offered for more credits than approved by the division, unless the division approves such modification prior to the course presentation. If an approved course is not offered in its entirety because of an emergency, the provider must notify the division within three business days of the course, and must provide a written account of the emergency, a schedule of what information was provided, and the course roster.

(10) The same title submitted to the division for approval must be the same title used for the course and advertising for the course.

(11) Any material or instruction given concerning an interpretation of sections 1322.01 to 1322.12 of the Revised Code must be accompanied with a disclaimer that the interpretation may differ from that of the division.

(12) The superintendent of the division of financial institutions or his representative may audit at no cost any course at any time with or without advanced notice to the instructor or provider.

(13) To avoid any conflict of interest or situations in which a provider or instructor may be called as a witness, while serving or acting as an Approved Provider or course instructor, the provider or instructor shall not represent a person against the division on a matter concerning continuing education.

(14) A provider may not discount prices for CE courses as an incentive, in exchange for, or as a promotion for any real estate, title, appraisal, lending or mortgage broker business affiliated with the provider or any person owning any interest in the provider.

(15) All courses must be open to all licensees and license applicants.

(16) The use of any course to promote any particular loan product, lender, mortgage broker or settlement service is prohibited.

(L) Requirements for distance education programs:

(1) For purposes of this rule, the term "distance education" refers to continuing education programs in which instruction is accomplished through the use of media whereby teacher and student are separated by distance and/or by time;

(2) The superintendent will approve a course in distance education for continuing education credit based upon a satisfactory review of the following criteria:

(a) The application materials submitted pursuant to paragraphs (E), (G), and (J) of this rule;

(b) The course is designed to assure that students actively participate in the instructional process while completing the course by utilizing techniques that require substantial student interaction with the instructor, other students, written course materials, or a computer program. With the exception of proctored home-study courses, the course design shall not permit students to sit passively and observe instruction or read instructional materials;

(c) The course, when taken without interruption, consists of no more than six hours of distance education;

(d) If in each unit of instruction there is no activity from the student after fifty minutes of instruction time, the course will shut down and the student will have to begin from the beginning of the unit;

(e) The provider gives students an orientation or information package which contains all necessary information about the course, including but not limited to information about the course subject matter and learning objective, procedures and requirements for satisfactory course completion, special requirements with regard to computer hardware and software or other equipment, and the availability of instructor or technical support;

(f) The provider gives appropriate instructor and technical support to enable students to satisfactorily complete the course;

(g) The provider utilizes procedures that provide reasonable assurance of student identity and that the student receiving the continuing education credit for completing the course actually performed all of the work required to complete the course;

(h) The provider controls navigation through the course to ensure students master the material on a unit-by-unit basis by use of some means of assessment such as a quiz;

(i) The provider utilizes a clock/time on each screen to control navigation through the course to ensure that course completion time equals the amount of continuing education credit hours received.

(3) Course rosters for distance education classes must be submitted to the superintendent every fifteen days.

(M) Instructor qualification. Instructors, seminar and conference leaders, lecturers, and others who present a continuing education requirement program must meet at least one of the following qualifications:

(1) Possession of a bachelor's or graduate degree in a related field to that in which the person is to teach, from a school listed as an institution of higher learning by the United States department of education, or from a comparable school of a foreign country; or

(2) Possession of a valid teaching credential or certificate from Ohio or another state authorizing the holder to teach in the field of instruction in which the person is to teach; or

(3) Three years full-time experience in real estate mortgage lending or law; or

(4) Any combination of at least three years of full-time experience relevant to the applicable field and college level education;

(5) Any person that has been disciplined through an administrative action by the Ohio division of financial institutions for a violation of Chapter 1322. of the Revised Code or the rule adopted thereunder is ineligible to serve as an instructor, seminar or conference leader or lecturer.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.052
Prior Effective Dates: 9-1-06

1301:8-7-18 [Effective 1/4/2016] Continuing education.

(A) In accordance with division (C)(2) of section 1322.052 of the Revised Code, a licensee or applicant to become a licensee shall be permitted to receive credit for a continuing education course in a year other than the year in which the course is taken in order to make up a deficiency in continuing education.

(B) A licensee or applicant to become a licensee shall make up any continuing education deficiency that occurred on or after January 1, 2010, regardless of the number of years that have passed since the violation.

(C) The superintendent shall comply with paragraph (D) of rule 1301-1-04 of the Administrative Code which permits an extension of the current continuing education reporting requirement for veterans meeting all of the criteria set forth in that rule.

Replaces: 1301:8-7-18

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.052
Prior Effective Dates: 9/1/2006, 6/1/2007

1301:8-7-19 [Effective until 1/4/2016] Notification requirements.

Registrants, licensees and applicants for a certificate of registration or license are required to keep all information on file with the division of financial institutions current, including but not limited to the following:

(A) Notification of sale, transfer, or hypothecation of stock, security, or other equitable, beneficial or ownership interest. If equitable, beneficial, or ownership interest in a registrant or applicant changes from the information provided on the registration application and the data on file with the division by an aggregate amount of five percent or more, the registrant or applicant is required to notify the superintendent of the division of financial institutions of such change and to submit the names, social security numbers, and addresses of any and all persons to which the interest was transferred within thirty days of the effective date of such transfer.

(B) Notification of action alleging injury by a violation of any provision of chapter 1322. of the Revised Code. Pursuant to division (B)(1) of section 1322.05 of the Revised Code within ten business days of the commencement of an action in any court in any jurisdiction brought by a buyer against a registrant or a loan officer of the registrant alleging injury by a violation of any provision of chapter 1322. of the Revised Code, the registrant shall notify the division by:

(1) Filing a "Notification of Action" form approved by the superintendent of the division of financial institutions;

(2) Attaching a copy of the complaint to the notification form described in paragraph (B)(1) of this rule; and

(3) Mailing the notification form and complaint described in paragraphs (B)(1) and (B)(2) of this rule, via certified mail, to the superintendent of the division of financial institutions.

For purposes of division (B) of section 1322.05 of the Revised Code and this rule, the term "commencement of an action" shall mean upon service of a filed court complaint.

(C) Notification of Judgment. A registrant shall, within ten business days of being served with notice of a judgment entered against the registrant or a loan officer of the registrant by a buyer injured by a violation of any provision of Chapter 1322. of the Revised Code, notify the superintendent of the division of financial institutions by:

(1) Filing a "Notification of Judgment" form approved by the superintendent of the division of financial institutions; and

(2) Attaching a copy of the judgment to the notification form described in paragraph (B)(1) of this rule; and

(3) Mailing the notification form and judgment described in paragraphs (B)(1) and (B)(2) of this rule, via certified mail, to the superintendent of the division of financial institutions.

(D) Notification of guilty plea or criminal conviction. All registrants, licensees and applicants for a certificate of registration or license are required to notify the superintendent of the division of financial institutions of any guilty plea or conviction of a criminal offense involving theft, receiving stolen property, embezzlement, forgery , fraud, passing bad checks, money laundering, or drug trafficking, or any criminal offense involving money or securities within thirty business days of such plea or conviction by:

(1) Filing a "Notification of Guilty Plea or Criminal Conviction" form approved by the superintendent of the division of financial institutions; and

(2) Attaching a certified copy of the judgment or plea entry to the notification form described in paragraph (B)(1) of this rule; and

(3) Mailing the notification form and judgment described in paragraphs (B)(1) and (B)(2) of this rule, via certified mail, to the superintendent of the division of financial institutions.

(E) Statutory Agent. Within ten business days of any change in a registrant's statutory agent designation or address, the registrant shall file with the superintendent of the division of financial institutions evidence that the registrant has filed such changes with the Ohio secretary of state.

(F) Office Closure. At least thirty days prior to the closure of a registered office location, the registrant shall notify the division by filing an "Notice of Office Closure--Part A" form approved by the division. The form shall indicate the custodian of the records and the location where the records will be maintained in compliance with rule 1301:8-7-06 of the Administrative Code. Within five business days after the closure, the certificate of registration issued to that location shall be surrendered to the division by returning it to the division along with the"Notice of Office Closure--Part B" form approved by the division.

Books and records must be maintained in compliance with rule 1301:8-7-06 of the Administrative Code, and must be accessible to the division, as such records remain subject to examination and or investigation under chapter 1322. of the Revised Code. Written notice must be sent to the division of any change in location or the custodian of the records.

The closure of an office and the surrender of a certificate will not affect a person's civil or criminal liability for acts committed before the surrender, and does not impair or affect the obligation of a preexisting lawful contract between the previous registrant and any person, including a borrower.

(G) Employment termination of loan officer or operations manager. If the employment of a loan officer or operations manager is terminated for any reason, a registrant shall return the individual's original loan officer license to the division of financial institutions within five business days after the termination by submitting the license along with the "Loan Officer Termination Notification" form approved by the division.

In accordance with division (C)(3) of rule 1301:8-7-08 of the Administrative Code, the unexpired, uncancelled license of the loan officer or operations manager returned to the division shall be held in escrow. A license held in escrow is considered inactive and the holder of an inactive license is not authorized to originate.

(H) Change of address. Registrants and licensees must notify the superintendent of the division of financial institutions of a change in business or residence address using the following procedures. Merely placing the new address on correspondence or filings with the division, or any other attempt other than the procedures outlined in this rule, is insufficient.

(1) Change of resident address for licensee. A licensee shall notify the superintendent of the division of financial institutions of a change in the licensee's resident address within thirty days of such change. This change of address shall be made on a form proscribed by the superintendent of financial institutions.

(2) Change of address of registered office. A registrant shall notify the superintendent of the division of financial institutions of an address change in any of the registrant's registered offices, at least thirty days prior to the effective date, by:

(a) Filing a completed "Mortgage Broker Office Relocation Application" form approved by the superintendent of the division of financial institutions, and attaching the following:

(i) A photograph of the new location showing a street view of the office;

(ii) A copy of the lease or rental agreement for the location at which the business will be transacted showing that the applicant is contractually responsible, or proof that the applicant owns the location;

(iii) If the application is for a location that is a residence, the applicant must submit:

(a) a certified copy of a zoning permit authorizing the use of the residence for commercial purposes; or

(b) a written opinion or other document issued by the county or political subdivision where the residence is located certifying that the use of the residence to transact business as a mortgage broker is not prohibited.

(iv) If the relocation concerns the registrant's main office, the registrant shall submit an updated surety bond, rider or endorsement reflecting the new address with the application described in section (i) above; and

(v) A non-refundable fifteen dollar relocation application fee.

(b) Upon approval of the relocation application, a new certificate of registration shall be issued reflecting the new address. The registrant shall surrender the old certificate of registration to the division within five business days of receipt of the certificate reflecting the new office location. The registrant shall display the new certificate in accordance with division (J) of rule 1301:8-7-02 of the Administrative Code.

(c) If the registrant intends to change its main office location to another registered office location, the registrant should not file a relocation application, but instead shall file a "Redesignation of Main Office Location" form approved by the superintendent of the division of financial institutions.

(I) Name change of loan officer or operations manager. A licensee must notify the superintendent of the division of financial institutions of a legal name change within thirty days of such change by filing a "Loan Officer/Operations Manager Name Change" form approved by the superintendent of the division of financial institutions, and attaching a copy of the name change order, such as a marriage license, divorce decree or court order. A new license will be printed reflecting the new name. Once the license has been issued with the licensee's new name, use of the licensee's prior name in connection with loan origination activities is prohibited.

(J) A registrant may, with the prior approval of the superintendent of the division of financial institutions, change its corporate name, its trade or business name, or service mark, provided:

(1) The registrant and the proposed new name or mark complies with division (A)(1) of section 1101.15 of the Revised Code;

(2) The proposed new name or mark is duly registered with the Ohio secretary of state;

(3) The registrant submits proof that the surety bond has been executed in the new name;

(4) The registrant has given the superintendent of the division of financial institutions at least thirty days prior notice of the proposed new name or mark; and

(5) The superintendent of the division of financial institutions determines that the new name or mark is not likely to mislead or confuse buyers.

(K) Upon approval of the registrant's new corporate, trade or business name, a new certificate of registration shall be issued reflecting the new name. The new certificate shall be displayed in compliance with division (J) of rule 1301:8-7-02 of the Administrative Code.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.021, 1322.031, 1322.05, 1322.07
Prior Effective Dates: 9-1-06

1301:8-7-19 [Effective 1/4/2016] Notification requirements.

The notification requirements in this administrative rule shall be made via the NMLS unless otherwise indicated. If notice of a change is required to be made before its effective date, the registrant or qualified exempt entity shall submit an "advance change notice" via the NMLS.

(A) A registrant or qualified exempt entity shall notify the superintendent at least fifteen days before the sale, transfer, or hypothecation of more than five per cent of the registrant's or qualified exempt entity's membership, partnership, or other equitable, beneficial, or ownership interest.

(B) A registrant or qualified exempt entity shall notify the superintendent at least fifteen days before changing any officers, control persons, or five per cent or more direct owners. New officers, control persons or five per cent or more direct owners that are individuals must be fingerprinted for the compilation of a criminal history background report by the federal bureau of investigation.

(C) A registrant or qualified exempt entity shall notify the superintendent at least fifteen days before changing its name, trade name, or fictitious name.

(D) A registrant or qualified exempt entity shall notify the superintendent at least fifteen days before changing the name or address of its statutory agent on file with the Ohio secretary of state.

(E) A registrant or qualified exempt entity shall notify the superintendent of a change of any office location listed on any of its certificates of registration or letters of exemption at least fifteen days before such change, and shall submit all of the following to the superintendent by uploading the documentation into its NMLS account or sending it directly to the division via mail:

(1) A copy of the lease or rental agreement for the new location or proof that the registrant or qualified exempt entity owns the new location;

(2) An updated surety bond, rider or endorsement reflecting the new address if its main office location has changed;

(F) A registrant or qualified exempt entity shall notify the superintendent of the termination of a licensee by removing its sponsorship of the licensee via the NMLS no later than five business days after the licensee's employment or association has been terminated.

(G) A registrant or qualified exempt entity shall notify the superintendent of the closure of any office location listed on a certificate of registration or letter of exemption no later than fifteen days after the closure. The registrant or qualified exempt entity shall identify the custodian of the records and the location where the records will be maintained in compliance with rule 1301:8-7-06 of the Administrative Code.

(H) A licensee shall notify the superintendent of a legal name change no later than fifteen days after such change and shall provide to the superintendent a copy of the name change order. Once the superintendent has issued a new license with the licensee's new name, the licensee shall not originate loans using the prior name.

(I) A person notifying the superintendent of a criminal conviction, guilty or nolo contendere plea, or revocation of the authority to act as a mortgage broker or loan originator in accordance with division (D) of section 1322.07 of the Revised Code shall submit a completed "Notification of Guilty Plea, Conviction or Revocation" form located on the division's website. The form shall be accompanied by a certified copy of the final judgment entry and supporting opinion, if any.

(J) A registrant, qualified exempt entity, or licensee notifying the superintendent of the filing of an action or judgment pursuant to division (B)(1)(a) or (B)(1)(b) of section 1322.05 of the Revised Code shall submit a completed "Notification of Action or Judgment" form located on the division's website. The form shall be accompanied by a certified copy of the final judgment entry and supporting opinion, if any.

Replaces: 1301:8-7-19

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.02, 1322.021, 1322.022, 1322.023, 1322.031, 1322.05, 1322.07
Prior Effective Dates: 9/1/2006, 6/1/2007

1301:8-7-20 [Effective until 1/4/2016] Compensation.

(A) Compensation and reimbursements of any kind paid to an employee of a mortgage broker must be paid by check drawn either on an account of the registrant, but not the special account established and maintained pursuant to section 1322.08 of the Revised Code and rule 1301:8-7-05 of the Administrative Code, or on an account of a third party payroll administrator acting as the registrant's agent, and cannot instead be given, transferred or paid to any other person for the benefit of the employee. The check must be written to the employee in the employee's legal name.

(B) A registrant may compensate an individual in accordance with division (A) of this rule after the expiration or cancellation of the individual's loan officer license for work performed while the individual held an active license if the work is verifiable by documentary evidence.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.01, 1322.02
Prior Effective Dates: 9-1-06

1301:8-7-20 [Effective 1/4/2016] Compensation.

(A) Compensation of any kind paid to a licensee employed by or associated with a registrant or qualified exempt entity shall be paid by check or electronic draft drawn on an account of the registrant or qualified exempt entity. Registrants shall not pay compensation from the special account maintained pursuant to section 1322.08 of the Revised Code. Compensation to a licensee may be paid on an account of a third party payroll administrator acting as the registrant's or qualified exempt entity's agent. The check or electronic draft must be written to the licensee in the licensee's legal name.

(B) A registrant or qualified exempt entity may compensate a licensee or former licensee in accordance with paragraph (A) of this rule after the expiration, cancellation, surrender, or transfer of the individual's license only for those origination activities performed while the individual was sponsored by the registrant or qualified exempt entity via the NMLS, provided the registrant or qualified exempt entity shall document to the superintendent's satisfaction that such compensation was for origination activities occurring during such sponsorship.

(C) A registrant or qualified exempt entity shall not pay compensation of any kind to a loan processor or to any individual in a manner designed to circumvent the licensing requirement of division (B)(1) of section 1322.02 of the Revised Code.

(D) Registrants, qualified exempt entities, and licensees shall comply with the loan originator compensation regulations set forth in 12 C.F.R. part 1026, as in effect on January 12, 2014.

Replaces: 1301:8-7-20

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.01, 1322.02, 1322.07, 1322.08
Prior Effective Dates: 9/1/2006, 6/1/2007

1301:8-7-21 [Effective until 1/4/2016] Character, general fitness, and financial responsibility.

In determining "character and general fitness" as those terms are used in division (A)(10) of section 1322.04 of the Revised Code and division (A)(6) of section 1322.04 1 of the Revised Code, the superintendent of the division of financial institutions shall consider, inter alia, whether the applicant, registrant or licensee:

(A) Has been found guilty in any court of competent jurisdiction of any felony;

(B) Has been found guilty in any court of competent jurisdiction of any misdemeanor involving any theft offense, deception, moral turpitude, or any offense listed in division (A)(8) of section 1322.03 and division (A)(2) of section 1322.031 ;

(C) Has been found liable in any court of competent jurisdiction for conduct constituting incompetence, misconduct or fraud in the origination of a residential mortgage loan, or in providing any financial, mortgage lending or real estate services;

(D) Has been refused or denied registration or licensing by any state or federal agency granted disciplinary or regulatory authority by state or federal law;

(E) Has been the subject of any suspension, expulsion, revocation, fine, censure or any other disciplinary action by any state or federal agency granted disciplinary or regulatory authority by state or federal law;

(F) Has knowingly violated any provision of Chapter 1322. of the Revised Code or any rule of Chapter 1301:8-7 of the Administrative Code, or has aided or abetted any person in violating any such provision;

(G) Has engaged in any conduct which would reflect on the reputation for honesty, integrity or competence in business and personal dealings of the applicant, registrant or licensee, including but not limited to the failure to provide complete and accurate information concerning the applicant's, registrant's or licensee's past;

(H) Has failed to fully satisfy any judgment or award issued by any court of competent jurisdiction, or any administrative fine imposed by any state or federal regulatory body;

(I) Has a record or pattern of disregard of the laws of this state, another state, or the United States;

(J) Has knowingly aided or abetted an unlicensed or unregistered person in violating any provision of Chapter 1322. of the Revised Code and the rules promulgated thereunder.

Effective: 06/11/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.03, 1322.031, 1322.04, 1322.041
Prior Effective Dates: 9-1-06

1301:8-7-21 [Effective 1/4/2016] Character, general fitness, and financial responsibility.

(A) In determining whether a person has the character and general fitness to command the confidence of the public and warrant the belief that the business will be operated honestly and fairly in compliance with the purposes of Chapter 1322. of the Revised Code and the rules adopted thereunder, the superintendent may consider, among other things, whether the person or an owner, officer or director thereof, has:

(1) Been convicted of, or pled guilty or nolo contendere in any court of competent jurisdiction to any felony;

(2) Been convicted of, or pled guilty or nolo contendere in any court of competent jurisdiction to any misdemeanor within seven years of the date of application;

(3) Been found liable in any court of competent jurisdiction for acts or omissions relating to residential or commercial mortgage lending services, real estate services, or any other financial products or services;

(4) Been refused or denied a professional registration or license by any state or federal agency granted disciplinary or regulatory authority by state or federal law;

(5) Had a professional license or registration suspended or revoked by any state or federal agency granted disciplinary or regulatory authority by state or federal law, including but not limited to, being placed on the HUD limited denials of participation list pursuant to 2 C.F.R. part 2424, as in effect on January 12, 2014;

(6) Been issued a cease and desist order or had a fine imposed by any court of competent jurisdiction or by any state or federal agency granted disciplinary or regulatory authority by state or federal law for conduct relating to a professional license or registration;

(7) Violated any provision of Chapter 1321., 1322., 4712., 4727., or 4728. of the Revised Code or sections 1315.21. to 1315.30, 1345.031, or 1349.25 to 1349.35 of the Revised Code or any rules promulgated thereto;

(8) Engaged in any conduct which would reflect negatively on the honesty or business repute of the person, including, but not limited to, the failure to provide complete and accurate information concerning the person's past; or

(9) A pattern of disregard of the laws of this state, another state, or the United States.

(B) In determining whether a person has the financial responsibility to command the confidence of the public and warrant the belief that the business will be operated honestly and fairly in compliance with the purposes of Chapter 1322. of the Revised Code and the rules adopted thereunder, the superintendent may consider, among other things, whether the person, or an owner, officer or director thereof, has:

(1) Any current outstanding civil or criminal judgments for money, restitution, or damages of any kind;

(2) Any current outstanding tax liens or other government liens;

(3) A foreclosure filed within the past five years whether residential or commercial;

(4) A bankruptcy filed within the past five years;

(5) Any current accounts that are past due, in collection, or charged off, and which in the aggregate exceed five thousand dollars.

(C) In assessing financial responsibility pursuant to paragraph (B) of this rule, the superintendent may consider mitigating factors, including, but not limited to:

(1) Involuntary loss of job or income;

(2) Divorce;

(3) Involuntary medical expenses incurred by the person or the person's spouse or dependent;

(4) Certified copies of satisfactions of judgments, tax liens or other government liens;

(5) Certified copies of bankruptcy discharge orders, schedules, or dismissal documents;

(6) Written evidence of a repayment plan or agreement with creditors; or

(7) Any other information the superintendent believes reflects circumstances beyond the control of the person.

(D) The superintendent shall not consider a bankruptcy as the sole basis for a finding that a person lacks the required financial responsibility; however, the superintendent may consider the facts and circumstances that lead to a bankruptcy.

Replaces: 1301:8-7-21

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.03, 1322.031, 1322.04, 1322.041
Prior Effective Dates: 9/1/2006, 6/1/2007

1301:8-7-22 [Effective until 1/4/2016] Trade names, alternative business names and service marks.

(A) A registrant may, with the prior approval of the superintendent of the division of financial institutions, use a trade name, service mark or alternative business name, provided:

(1) The trade name, service mark or alternative business name does not include the word or abbreviation "company," "co.," "corporation," "corp.," "incorporated," "inc," "limited liability company," "LLC," "limited liability partnership," "LLP," or any similar designation that would mislead a buyer into believing that a separate legal entity exists if it does not;

(2) The trade name, service mark or alternative business name complies with division (A)(1) of section 1101.15 of the Revised Code;

(3) The trade name, service mark or alternative business name is duly registered with the Ohio secretary of state pursuant to chapter 1329. of the Revised Code; and

(4) The registrant's surety bond is updated to reflect any and all trade and/or alternative business names.

(B) The superintendent of the division of financial institutions may deny an application to use a trade name, service mark or alternative business name if the superintendent believes that such name or mark would create a substantial risk of misleading or confusing buyers.

(C) The number of trade names, service marks or alternative business names that may be used by a registrant in this state shall not exceed three, unless:

(1) The registrant provides evidence to the superintendent that prohibiting it from using a fourth or subsequent trade name, alternative business name or service mark would produce a substantial and unreasonable hardship on the registrant beyond the mere ability to market under the new name, and the registrant can satisfy the superintendent that procedures have been established to assure that buyers will not be misled about the true identity of the registrant. The superintendent shall not grant an exception to the limitation of three trade or alternative business names or service marks under this paragraph except in extraordinary circumstances; or

(2) The registrant has, prior to the effective date of this rule, been approved to use four or more trade or alternative business names or service marks, in which case, the registrant may continue to use those names and or marks, but shall not be approved to use an additional trade or alternative business name or service mark until the total number of trade, alternative business names and service marks being used by that registrant is two or fewer, unless a larger number is permitted pursuant to division (C)(1).

(D) The registrant's true name and all trade and alternative business names shall appear on the certificate of registration issued by the division.

(E) A registrant may use its true name, any or all of its trade and alternative business names or services marks, or any combination of them, in its advertising.

(F) In closing documents, a registrant shall use its true name plus the alternative or trade name or service mark that it used in its contacts with the buyer involved in the transaction.

Effective: 09/01/2006
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.09

1301:8-7-22 [Effective 1/4/2016] Trade names, fictitious names and change of names.

(A) A registrant or qualified exempt entity may, with the prior approval of the superintendent, use a trade name or fictitious name, provided:

(1) The trade name or fictitious name complies with division (A)(1) of section 1101.15 of the Revised Code; and

(2) The trade name is registered with or the fictitious name is reported to the Ohio secretary of state in accordance with Chapter 1329. of the Revised Code.

(B) The superintendent may refuse to issue a certificate of registration or letter of exemption to use a name, trade name or fictitious name if the superintendent believes that such name would create a substantial risk of misleading or confusing the public.

(C) In closing documents and in any disclosures made pursuant to Chapter 1322. of the Revised Code or this rule chapter, a registrant or qualified exempt entity shall use the same name, trade name, or fictitious name that it has used during all of its contacts with the borrower involved in the transaction.

(D) A registrant or qualified exempt entity may change its name, trade name, or fictitious name, provided:

(1) It complies with paragraphs (A) and (B) of this rule;

(2) It submits proof that the surety bond has been issued in the new name unless, in the case of a qualified exempt entity, the bond is obtained by individual loan originators; and

(3) It has given the superintendent prior notice in accordance with paragraph (C) of rule 1301:8-7-19 of the Administrative Code.

Replaces: 1301:8-7-22

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.07, 1322.09
Prior Effective Dates: 9/1/2006

1301:8-7-23 [Effective until 1/4/2016] Mortgage broker appraisal misconduct.

(A) Division (G) of section 1322.07 of the Revised Code states that no mortgage broker, registrant, licensee, or applicant shall knowingly compensate, instruct, induce, coerce, or intimidate, or attempt to compensate, instruct, induce, coerce, or intimidate a person licensed or certified under Chapter 4763. of the Revised Code for the purpose of corrupting or improperly influencing the independent judgment of the person with respect to the value of the dwelling offered as security for repayment of a mortgage loan.

(B) Without limiting the scope or applicability to other acts or practices that may violate division (G) of section 1322.07 of the Revised Code a person is attempting to instruct or induce "a person licensed or certified under Chapter 4763. of the Revised Code for the purpose of corrupting or improperly influencing the independent judgment of the person with respect to the value of the dwelling offered as security for repayment of a mortgage loan" if:

(1) In the case of any refinance loan or non-purchase second mortgage loan, a registrant, licensee, mortgage broker employee, or person acting at their direction identifies on the appraisal order form or communicates by any other means to any person licensed or certified under Chapter 4763. of the Revised Code either the loan amount or any other express or implied statement of the anticipated or desired appraisal value. A refinance loan for purposes of this rule provision includes any subsequent first mortgage loan on the borrower's primary residence or other property subject to coverage pursuant to division (A) of section 1322.01 of the Revised Code; or

(2) In the case of any purchase money mortgage loan including any second mortgage loan connected to a sale transaction, a registrant, licensee, mortgage broker employee, or person acting at their direction, except as set forth herein, identifies on the appraisal order form or communicates by any other means to any person licensed or certified under Chapter 4763. of the Revised Code either the loan amount of any other express or implied statement of the anticipated or desired appraisal value. This prohibition does not preclude the sales price of the property from being disclosed or providing a copy of the sales agreement to a person licensed or certified under Chapter 4763. of the Revised Code.

If the registrant or licensee, however, is aware that a previous sales agreement at a lower price within the previous thirty days between the buyer and seller had been made for the property, the appraiser must be apprised of the earlier agreement and provided a copy of the agreement which shall be appended to any appraisal the registrant or licensee provides to the lender or anticipated purchaser of the note

(C) Nothing herein shall prevent a registrant, its employees or agents from:

(1) Requesting in writing or by electronic transmittal that the appraiser who prepared the appraisal report consider additional appropriate information when acting upon a good faith belief that the appraisal contains an error or is professionally deficient. Any appraisal review or revision request cannot be based on the grounds that the valuation is not high enough to qualify the buyer for the proposed loan; or

(2) Communicating information to an appraiser required by state or federal law, or by the "Uniform Standards of Professional Appraisal Practice," as in effect on January 1, 2007, as promulgated by the "Appraisal Standards Board of the Appraisal Foundation," including, without limitation, a copy of a previously completed appraisal report provided to a person licensed or certified under Chapter 4763. of the Revised Code for the purpose of an appraisal review.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2010
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.01, 1322.07

1301:8-7-23 [Effective 1/4/2016] Mortgage broker appraisal misconduct.

(A) A violation of division (G) of section 1322.07 of the Revised Code may include, but is not limited to, the following:

(1) In the case of any refinance of a residential mortgage loan or non-purchase second residential mortgage loan, a person states on the appraisal order form or communicates, directly or indirectly, to any person licensed or certified under Chapter 4763. of the Revised Code either the loan amount or any other express or implied statement of the anticipated or desired appraisal value;

(2) In the case of any purchase money residential mortgage loan including any second residential mortgage loan connected to a sale transaction, a person states on the appraisal order form or communicates, directly or indirectly, to any person licensed or certified under Chapter 4763. of the Revised Code either the loan amount or any other express or implied statement of the anticipated or desired appraisal value. The foregoing sentence does not prohibit the sales price of the property from being disclosed or providing a copy of the signed purchase contract to a person licensed or certified under Chapter 4763. of the Revised Code;

(B) If a registrant or licensee becomes aware that a borrower and seller have entered into a previous purchase contract for a property at a lower price within the previous thirty days, the registrant or licensee shall inform the person licensed or certified under Chapter 4763. of the Revised Code of the earlier contract and provide a copy of the contract which shall be appended to any appraisal the registrant or licensee provides to the lender or anticipated purchaser of the note.

(C) Nothing herein shall prevent a registrant, its employees, agents or licensees from:

(1) Requesting in writing or by electronic transmittal that the person licensed or certified under Chapter 4763. of the Revised Code who prepared the appraisal report consider additional appropriate information when acting upon a good faith belief that the appraisal contains an error or is professionally deficient. Any appraisal review or revision request cannot be based on the grounds that the valuation is not high enough to qualify the borrower for the proposed residential mortgage loan; or

(2) Communicating information to a person licensed or certified under Chapter 4763. of the Revised Code that is required by state or federal law, or by any applicable appraisal standards including, without limitation, a copy of a previously completed appraisal report provided to a person licensed or certified under Chapter 4763. of the Revised Code for the purpose of an appraisal review.

Replaces: 1301:8-7-23

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.07
Prior Effective Dates: 6/1/2007

1301:8-7-24 [Effective until 1/4/2016] Restrictions on promises of future refinancing.

(A) Any promise to refinance a loan in the future at a lower interest rate or with more favorable terms may only be conditioned upon the property's appraised value, the prompt and timely payment of debt, and the borrower's income and credit score at the time of the refinance application remaining stable or increasing. The promise of future refinancing shall set forth the interest rate with specificity, the type of loan, and the term of the loan.

(B) Any promise to refinance not authorized and signed by the registrant's operations manager or appropriate corporate officer, or which is made in nonconformity with this rule, shall constitute a dishonest and improper business practice.

(C) A "promise" for purposes of this section shall mean any representation or communication that is reasonably understood by an ordinary buyer to commit the mortgage broker to assist the buyer in obtaining a loan with a lower interest rate or with more favorable terms at a latter time and states or infers that such a loan will be available.

Effective: 06/11/2007
R.C. 119.032 review dates: 11/15/2009
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.07

1301:8-7-24 [Rescinded effective 1/4/2016] Restrictions on promises of future refinancing.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.07
Prior Effective Dates: 6/1/2007

1301:8-7-25 [Effective until 1/4/2016] Affiliated business disclosures.

(A) Disclosures required by division (A) of section 1322.075 of the Revised Code shall be made as an addendum to any affiliated business relationship disclosure required by federal law pursuant to 24 C.F.R. Part 3500.15 as in effect on January 1, 2007 and 12 U.S.C. section 2607 as in effect on January 1, 2007. If an affiliated business relationship disclosure is not required and applicable under 24 C.F.R. Part 3500.15 as in effect on January 1, 2007 and 12 U.S.C. section 2607 as in effect on January 1, 2007, then the disclosure shall be provided on a separate form. Proof of the disclosure shall be evidenced by obtaining the borrower's signature with date, which signature shall be requested at the time of disclosure. The signed copy shall be kept as a record of the registrant. The disclosure, if made in conjunction with a related federal affiliated business relationship disclosure shall be made at the time or times permitted by federal law for its counterpart. The disclosure, if made where there is no related federal affiliated business relationship disclosure, shall be made at the time of each referral or at the time that the good faith estimate is provided as required by division (D) of section 1322.062 of the Revised Code.

(B) The term "settlement service provider" as used in section 1322.075 of the Revised Code includes, but is not limited to, title service providers, document preparation servicers, processors, and other bona fide third parties compensated for their services in connection with closing the mortgage loan.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2010
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.062, 1322.075

1301:8-7-25 [Rescinded effective 1/4/2016] Affiliated business disclosures.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.062, 1322.075
Prior Effective Dates: 6/1/2007

1301:8-7-26 [Effective 1/4/2016] Challenge to information maintained in the NMLS.

(A) For purposes of division (H) of section 1322.061 of the Revised Code, an individual who has applied for, holds, or held a loan originator license may challenge information entered into the NMLS by the superintendent. Such challenge shall be in writing and must set forth the specific information being challenged and include supporting evidence. The grounds for a challenge shall be limited to the accuracy of the information entered into the NMLS by the superintendent, controlled by the superintendent, and pertaining to the individual's own license record. An individual shall not challenge substantive allegations, findings of fact or conclusions of law in prior orders issued by the superintendent or other disciplinary actions. Challenges are limited to clerical errors.

(B) The superintendent shall review the information submitted by the individual. If the superintendent determines that the information entered into the NMLS is incorrect, the superintendent shall enter the correct information and notify the individual in writing that the information has been corrected. If the superintendent determines that the information entered into the NMLS is correct, the superintendent shall notify the individual in writing of the reasons for this determination and that the information will not be changed.

(C) The determination of the superintendent is final and not subject to further challenge pursuant to this rule or appeal pursuant to Chapter 119. of the Revised Code.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12, 1322.061(H)
Rule Amplifies: 1322.061

1301:8-7-27 [Effective until 1/4/2016] Expedited hearing upon automatic suspension.

(A) Upon the issuance of any order of suspension pursuant to division (F) of section 1322.10 of the Revised Code, notice of the suspension shall be mailed by the division to the subject registrant or licensee by certified mail, return receipt requested, not later than the business day next succeeding such order. Such notice shall specify the particular basis in law for the suspension and shall set a date, not more than thirty days later than the date of the order of suspension, for a hearing on the continuation or termination of such suspension. A copy of the notice shall be mailed to the attorney or other representative of record if the party has legal representation. For good cause the superintendent may continue such hearing on application of any interested party. In conducting such hearing the superintendent shall have all the authority and powers set forth in section 1322.10 of the Revised Code. Following such hearing the superintendent shall by order either confirm or terminate such suspension. The superintendent shall issue its final adjudicatory order within thirty days after receiving the hearing examiner's report and recommendation. A failure to issue the order within that time results in the dissolution of the suspension order but does not invalidate any subsequent final adjudicatory order.

(B) If the suspension under division (F)(1) of section 1322.10 of the Revised Code is confirmed, and prior to or within three business days of such order of confirmation, the superintendent has issued a notice seeking a suspension penalty of a set duration, a denial of registration or licensure, or revocation of registration or licensure, together with any fine as penalty permitted by section 1322.10 of the Revised Code, then said suspension shall remain in place until a ruling on the merits of that subsequent administrative action or settlement is entered by the superintendent of financial institutions. If no notice is so issued, then the confirmed suspension shall end thirty days from the entry of the suspension confirmation order.

(C) Nothing herein shall prevent or impair the authority of the superintendent from seeking injunctive relief in a court of common pleas as provided in division (B) of section 1322.10 of the Revised Code.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2010
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.10

1301:8-7-27 [Effective 1/4/2016] Expedited hearing upon automatic suspension.

An order of suspension issued pursuant to division (F) of section 1322.10 of the Revised Code shall set a date, not more than thirty days later than the date of the order of suspension, for a hearing on the continuation or termination of such suspension. For good cause shown, the superintendent may continue such hearing on its own motion or the motion of the registrant or licensee.

Replaces: 1301:8-7-27

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.12, 1322.10(F)(3)
Rule Amplifies: 1322.10
Prior Effective Dates: 6/1/2007

1301:8-7-28 [Effective until 1/4/2016] Pre-licensing education.

(A) Provider approval.

(1) Persons having "Approved Provider" status for continuing education in accordance with paragraph (E) of rule 1301:8-7-18 of the Administrative Code shall be deemed to be authorized to provide pre-licensing education.

(2) The following other entities may offer pre-licensing education upon approval of the superintendent and thereby become an "Approved Provider" for pre-licensing education:

(a) Colleges or universities;

(b) Community or junior colleges;

(c) Mortgage broker, or mortgage banker, or financial institution trade association, or related organizations;

(d) State or federal agencies or commissions; or

(e) Institutions approved by the state board of career colleges and schools.

(B) Application for course approvals to provide pre-licensing education.

(1) Any person seeking to offer pre-licensing education courses to operations managers and loan officers shall apply to the superintendent of financial institutions for approval of the courses on forms prescribed by the superintendent. The application forms must be submitted to the superintendent at least thirty days prior to the initial date of the proposed course. The application form shall include the following information:

(a) The name, address and telephone number of the person proposing to offer the course, and the names and duties of all persons affiliated in an official capacity with the course;

(b) The policy regarding attendance and the procedure for record-keeping of attendance;

(c) A summary of the course, including:

(i) The maximum number of participants per session;

(ii) The time, date, and location of the course. If the course will be offered more than once within a six month period, the time, date, and location for each course shall be provided if known. The provider may submit for approval any additional dates not already submitted with the initial application for the course on an as-needed basis. Any additional date submission should be made at least ten days prior to the proposed additional date. Such submissions may be made by mail or by electronically emailing a completed and readable scanned image file of the additional date form approved by the superintendent to the person designated to receive additional date submissions. Additional dates submitted electronically shall be deemed received by the superintendent on the day the scanned image file is sent to the proper person designated by the superintendent;

(iii) The duration of the course;

(iv) The form of the transcript;

(v) Textbooks and student materials prescribed;

(vi) An outline or syllabus of the entire program of courses demonstrating conformity with the requirements of division (A)(5) of section 1322.03 of the Revised Code and division (A)(4) of section 1322.03 1 of the Revised Code;

(vii) Attendance or participation fees;

(viii) A sample of any intended advertising;

(ix) The number of credit hours. A credit hour consists of fifty minutes of instruction. Breaks, introductions, lunches, announcements of other non-instruction time is to be excluded in calculating the credit hours requested. Each course shall be of a length as set forth by division (A)(5) of section 1322.03 of the Revised Code and division (A)(4) of section 1322.03 1 of the Revised Code for that subject. Food shall not be served during instruction time.

(x) The title of the course offering.

(d) The names and qualifications of teachers and instructors; and

(e) Any other information required by the superintendent to determine whether the proposed offering will assist operations managers or loan officers in obtaining skill, knowledge, or competency in the mortgage broker business.

(2) An approved provider must inform the division, in writing, of any change in a course's location, date or time no later than ten days prior to the course. The superintendent has the discretion to waive the ten day notice requirement where the circumstances for the change were beyond the control of the provider.

(3) The approved provider shall give a transcript to each attendee of the course within three business days following the course date. A copy of each transcript shall be maintained by the approved provider for a period of five years. The transcript shall include all applicable information as set forth on the form approved by the division and posted on its web site for that purpose, including:

(a) The attendee's name and address, and driver's license number or other document used for identification purposes;

(b) Course title and certification number;

(c) Date conducted;

(d) Address location where the course was conducted; and

(e) The attendee's hours for each program segment of study.

(C) Course approval criteria.

(1) The superintendent, when acting on an application for approval of a pre-licensing education course, shall apply the following criteria:

(a) The program of study shall consist of a minimum of twenty-four hours of live classroom instruction. Courses consisting of more than twenty per cent of videotaped information or on-line instruction are not permitted. No offering will be approved in which classroom instruction exceeds twelve credit hours in any one day;

(b) For any course offered, the instructor for that course shall have the requisite training and experience in real estate mortgage lending or law to make the instructor competent to present approved course material or information. The instructor shall submit a resume to the division outlining the instructor's experience as part of the course application. The superintendent may consider any combination of, or any single matter of, an instructor's training and experience when approving an instructor;

(c) Passage of an examination by an attendee shall not be a requirement for successful completion of a pre-licensing education course; and

(d) The courses for pre-licensing education shall focus on assisting operations managers or loan officers in obtaining skill, knowledge, or competency in the areas set forth in division (A)(5) of section 1322.03 of the Revised Code and division (A)(4) of section 1322.03 1 of the Revised Code.

(2) Nothing herein shall limit the superintendent's authority to disapprove any application that fails to meet the standards of this rule.

(D) Equivalent/alternative education criteria.

(1) Pre-licensing education credit may be granted to operation manager applicants for certain post-secondary education course work related specifically to the business of mortgage loans that the superintendent determines meets the requirements of division (A)(5)(a) of section 1322.03 of the Revised Code.

(2) Course work will be eligible for consideration and credit only when successfully completed as a part of the applicant's major in finance, economics, or business administration for which a bachelor's or graduate degree was awarded by an accredited four year college or university.

(E) Pre-licensing education credit hours earned shall be good for a period of five years from the certificate date of completion.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2010
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.031, 1322.04, 1322.041

1301:8-7-28 [Rescinded effective 1/4/2016] Pre-licensing education.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.031, 1322.04, 1322.041
Prior Effective Dates: 6/1/2007

1301:8-7-29 [Effective until 1/4/2016] Public actions database.

When a judgment under section 1322.11 of the Revised Code becomes final, for purposes of division (B)(5) of section 1322.11 of the Revised Code:

(A) The clerk of court shall submit a copy of the judgment and supporting opinions to the division of financial institutions either in paper format via the United States postal service, or in an electronic format acceptable by the superintendent to an email address designated by the division of financial institutions.

(B) The clerk of court shall submit to the division of financial institutions on the first day of each January, April, July, and October, copies of all judgments and supporting opinions required to be reported under section 1322.11 of the Revised Code from the immediately preceding three months.

Effective: 06/01/2007
R.C. 119.032 review dates: 11/15/2010
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.11

1301:8-7-29 [Rescinded effective 1/4/2016] Public actions database.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 05/01/2015
Promulgated Under: 119.03
Statutory Authority: 1322.12
Rule Amplifies: 1322.11
Prior Effective Dates: 6/1/2007

1301:8-7-30 [Effective until 1/4/2016] Temporary loan originator license application.

(A) Pursuant to division (C) of section 1322.042 of the Revised Code, the application for a temporary loan originator license shall be accompanied by a nonrefundable application fee of one hundred fifty dollars and all other required fees, including any fees required by the "Nationwide Mortgage Licensing System and Registry."

(B) A temporary loan originator license shall be valid for ninety days from the date of issuance. The superintendent of financial institutions may extend the expiration of the temporary license an additional thirty days upon receiving a written request from the temporary loan originator at least five business days prior to the expiration date on the license.

(C) The term of a temporary loan originator license begins on the issuance date and ends on the expiration date as printed on the temporary license.

Effective: 06/07/2013
R.C. 119.032 review dates: 06/07/2018
Promulgated Under: 119.03
Statutory Authority: 1322.12, 1322.042
Rule Amplifies: 1322.042

1301:8-7-30 [Effective 1/4/2016] Temporary loan originator license application.

(A) Pursuant to division (C) of section 1322.042 of the Revised Code, the application for a temporary loan originator license shall be accompanied by a nonrefundable application fee of one hundred fifty dollars and all other required fees, including any fees required by the "Nationwide Mortgage Licensing System and Registry."

(B) A temporary loan originator license shall be valid for ninety days from the date of issuance. The superintendent of financial institutions may extend the expiration of the temporary license an additional thirty days upon receiving a written request from the temporary loan originator at least five business days prior to the expiration date on the license.

(C) The term of a temporary loan originator license begins on the issuance date and ends on the expiration date as printed on the temporary license.

(D) For purposes of evaluating an applicant's experience in the field of residential mortgage lending, the superintendent shall consider the same proof and experience as set forth in paragraphs (F) and (G) of rule 1301:8-7-12 of the Administrative Code, except that the applicant must have at least two years of experience in the field of residential mortgage lending in the five years immediately preceding the date of application.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 06/07/2018
Promulgated Under: 119.03
Statutory Authority: 1322.042(F)
Rule Amplifies: 1322.042
Prior Effective Dates: 06/07/2013

1301:8-7-31 [Effective 1/4/2016] Nonprofit organizations exemption.

(A) In addition to the criteria set forth in division (G)(2)(i) of section 1322.01 of the Revised Code, a nonprofit organization is exempt from registration if it does all of the following:

(1) Promotes affordable housing or provides homeownership education;

(2) Conducts its activities in a manner that serves the public or charitable purposes, rather than commercial purposes;

(3) Receives funding and revenue and charges fees in a manner that does not incentivize it or its employees to act other than in the best interests of its clients;

(4) Compensates its employees in a manner that does not incentivize employees to act other than in the best interests of its clients; and

(5) Provides or identifies for the borrower residential mortgage loans with terms favorable to the borrower and comparable to mortgage loan and housing assistance provided under government housing assistance programs.

(B) The burden of proving the exemption is on the nonprofit organization.

(C) The nonprofit organization shall submit an application for a letter of exemption via the NMLS for each office where residential mortgage loans are originated for Ohio residents, Ohio property, or from a location physically in Ohio regardless of the location of the borrowers or property. The applicant shall be responsible for any fee required by the NMLS.

(D) The application shall include books, records, and any additional information the superintendent deems necessary to substantiate that the applicant meets the criteria in division (G)(2)(i) of section 1322.01 of the Revised Code and paragraph (A) of this rule. The applicant shall submit documentation that it has complied with the requirements of 12 C.F.R. 1026.36(f)(3), as in effect on January 12, 2014, for all employees acting as a loan originator for Ohio residents, Ohio property, or from a location physically in Ohio regardless of the location of the borrowers or property. If the superintendent determines that the nonprofit organization has met the aforementioned criteria and requirements, the superintendent shall issue a letter of exemption to the nonprofit organization which shall expire on the thirty-first day of December and may be renewed on or before that date by submitting a renewal application via the NMLS and providing all of the documentation required by this paragraph.

(E) The nonprofit organization shall keep and maintain records of all residential mortgage loan transactions in the same manner as is required of registrants.

(F) The superintendent shall examine the books and records of the nonprofit organization periodically to determine if it continues to meet all of the criteria in division (G)(2)(i) of section 1322.01 of the Revised Code and paragraph (A) of this rule. Examinations shall be conducted in accordance with rule 1301:8-7-13 of the Administrative Code.

(G) If the superintendent determines that the nonprofit organization does not qualify for the exemption, the nonprofit organization shall immediately cease originating residential mortgage loans until such time as it has obtained a certificate of registration. Failure to cease originating residential mortgage loans without a certificate of registration or loan originator license is a violation of Chapter 1322. of the Revised Code and may be subject to administrative, civil and criminal penalties.

(H) An employee of a nonprofit organization that holds a valid letter of exemption is exempt from having to obtain a loan originator license only with respect to his or her work duties to the nonprofit organization and only with respect to residential mortgage loans with terms that are favorable to the borrower.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.024, 1322.12
Rule Amplifies: 1322.01

1301:8-7-32 [Effective 1/4/2016] Loan processors and underwriters.

(A) In accordance with 12 U.S.C. 5103(b)(2), as in effect on January 12, 2014, an independent contractor shall not perform the clerical or support duties as defined in 12 U.S.C. 5102(5)(B), as in effect on January 12, 2014, of a loan processor or underwriter for residential mortgage loans involving property in this state without first having obtained a loan originator license issued pursuant to Chapter 1322. of the Revised Code.

(B) An individual who performs only clerical or support duties as defined in 12 U.S.C. 5102(5)(B) is not required to obtain a loan originator license if both of the following apply:

(1) The individual is an employee of a registrant, qualified exempt entity, depository institution, or loan processing or underwriting company that holds a valid letter of exemption issued pursuant to this rule;

(2) The individual performs such clerical or support duties at the direction of and subject to the supervision and instruction of a either a licensee employed by or associated with the same registrant, qualified exempt entity, or loan processing or underwriting company, or a registered loan originator employed by the same depository institution.

(C) The loan processing or underwriting company seeking exemption from registration shall submit an application for a letter of exemption via the NMLS for its main office location before engaging in the activities of a loan processor or underwriter for residential mortgage loans involving property in this state. The applicant shall be responsible for any fee required by the NMLS.

(D) The application shall be in a form prescribed by the superintendent and shall include all of the following:

(1) The loan processing or underwriting company's business name and state of incorporation or business registration;

(2) The names of the owners, officers, members, or partners having control of the loan processing or underwriting company;

(3) The names of all licensees employed by the the loan processing or underwriting company;

(4) An attestation stating all of the following:

(a) All employees who perform clerical or support duties are either licensees or they perform only clerical or support duties at the direction of and subject to the supervision and instruction of a licensee employed by the same loan processing or underwriting company.

(b) The licensees assign, authorize, and monitor every loan processor or underwriter employee's performance of clerical or support duties.

(c) The licensees exercise traditional supervisory responsibilities, including, but not limited to, training, mentoring, and evaluation of every loan processor or underwriter employee.

(d) The loan processing or underwriting company always performs clerical or support duties for others pursuant to a written contract.

(e) No licensee or employee of the loan processing or underwriting company is also a licensee or employee of any entity for whom it performs clerical or support duties.

(5) A surety bond for all licensees which may be issued in the same manner as is permitted for registrants;

(6) An acknowledgment of understanding that the loan processing or underwriting company is subject to the regulatory authority of the division of financial institutions;

(7) Any further reasonable information that the superintendent may require.

(E) If the superintendent determines that the loan processing or underwriting company honestly made the attestation required under paragraph (D)(4) of this rule and otherwise qualifies for exemption, the superintendent shall issue a letter of exemption which shall expire on the thirty-first day of December and may be renewed on or before that date by submitting an application that meets the requirements of paragraph (D) of this rule.

(F) The burden of proving the exemption is on the loan processing or underwriting company.

(G) The loan processing or underwriting company shall keep and maintain records of all residential mortgage loan transactions for the portion of the transaction it conducts in the same manner as is required of registrants.

(H) The superintendent may examine the books and records of the loan processing or underwriting company as often as the superintendent deems necessary for the purpose of substantiating the loan processing or underwriting company's exempt status. Examinations shall be conducted in accordance with rule 1301:8-7-13 of the Administrative Code.

(I) If the superintendent determines that the loan processing or underwriting company does not qualify for the exemption, the loan processing or underwriting company shall immediately cease engaging in loan processing or underwriting activities for residential mortgage loans involving property in this state. Failure to cease engaging in loan processing or underwriting activities without a valid letter of exemption is a violation of Chapter 1322. of the Revised Code and may be subject to administrative, civil or criminal actions.

(J) An employee of a loan processing or underwriting company that holds a valid letter of exemption may perform clerical or support duties from any location provided a licensee of the same loan processing or underwriting company maintains adequate supervision of the loan processor's or underwriter's performance, including, but not limited to, training, mentoring, and evaluation of the loan processor or underwriter.

(K) An employee of loan processing or underwriting company that holds a valid letter of exemption is exempt from having to obtain a loan originator license only with respect to the clerical or support duties performed for such independent contractor or loan processing or underwriting company.

(L) An independent contractor, or a licensee or employee of a loan processing or underwriting company shall not also be employed by or associated with any entity for whom it performs clerical or support duties.

(M) In order to reduce the risk of consumer fraud and related harms, including identity theft, independent contractors and loan processing or underwriting companies performing clerical or support duties shall be required to comply with section 216 of the "Fair and Accurate Credit Transactions Act of 2003," 117 Stat. 1952 (amended 2010), 15 U.S.C. 1681w, as in effect on January 12, 2014, section 501 of the "Gramm Leach Bliley Act," 113 Stat. 1338 (1999) (amended 2010), 15 U.S.C. 6801, as in effect on January 12, 2014, and the rules promulgated pursuant to those federal acts, including 16 C.F.R. part 313 and 16 C.F.R. part 682, as in effect January 12, 2014, pertaining to the maintenance, security, and disposal of consumer information and records.

(N) "At the direction of and subject to the supervision and instruction of" means all of the following:

(1) The individual performing clerical or support duties meets the definition of "employee" set forth in paragraph (O) of this rule.

(2) The supervisory individual directing, supervising and instructing the loan processor or underwriter employee shall be an individual listed in paragraphs (P)(1) to (P)(5) of this rule;

(3) The supervisory individual assigns, authorizes, and monitors the loan processor or underwriter employee's performance of clerical or support duties;

(4) The supervisory individual exercises traditional supervisory responsibilities, including, but not limited to, the training, mentoring, and evaluation of the loan processor or underwriter employee.

(O) For purposes of this exemption, "employee" means an individual for whom the loan processing or underwriting company, in addition to providing a wage or salary, pays social security and unemployment taxes, provides workers' compensation coverage, and withholds local, state, and federal income taxes. Nothing herein prohibits a loan processing or underwriting company from entering into an agreement with a professional employer organization as that term is defined in division (D) of section 4125.01 of the Revised Code, provided the loan processing or underwriting company retains all direction and control over its shared employees' performance of clerical or support duties.

(P) "Independent contractor" means an individual who performs the clerical or support duties as defined in 12 U.S.C. 5102(5)(B), as in effect on January 12, 2014, of a loan processor or underwriter other than at the direction of and subject to the supervision and instruction of any of the following individuals:

(1) An individual licensed as a loan originator pursuant to Chapter 1322. of the Revised Code;

(2) An individual licensed as a mortgage loan originator pursuant to sections 1321.51 to 1321.60 of the Revised Code;

(3) An individual licensed as a registered loan originator as defined in division (I) of section 1322.01 of the Revised Code;

(4) An individual licensed as a registered mortgage loan originator as defined in division (S) of section 1321.51 of the Revised Code;

(5) An individual who is not required to be licensed pursuant to paragraph (I)(2)(a) of this rule 1301:8-7-01 (government employees exclusion) or paragraph (H) of rule 1301:8-7-31(nonprofit exclusion) of the Administrative Code.

(Q) "Loan processing or underwriting company" means a person, other than an independent contractor, registrant, or qualified exempt entity, who performs only clerical or support duties as defined in 12 U.S.C. 5102(5)(B), as in effect on January 12, 2014, of a loan processor or underwriter for one or more unaffiliated registrants, qualified exempt entities, or entities exempt from registration pursuant to division (G)(2)(b) of section 1322.01 of the Revised Code.

Effective: 1/4/2016
Five Year Review (FYR) Dates: 07/20/2020
Promulgated Under: 119.03
Statutory Authority: 1322.024, 1322.12
Rule Amplifies: 1322.01