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| Rule |
Rule 1301:8-7-01 | Definitions.
Effective:
September 1, 2024
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. The term advertisement and advertising includes
web pages and social media posts, but does not include de minimis promotional
items such as pens, pencils, balloons, and coffee mugs. (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 mortgage loan originator in applying for or
obtaining a residential mortgage loan and includes a buyer. (D) "Clerical or support
duties" has the same meaning as "administrative or clerical
tasks" as defined in division (A) of section 1322.01 of the Revised
Code. (E) "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. (F) "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. (G) "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. (H) "Leads" means financial and mortgage
information about potential residential mortgage loan borrowers, including
information submitted by potential borrowers who fill out online
questionnaires, contests, or surveys. (I) (1) "Mortgage loan
originator," in accordance with section 1322.02 of the Revised Code,
includes 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) Performs the clerical or support duties of a loan
processor or underwriter as an independent contractor. (2) "Mortgage loan
originator" does not include:, : (a) Individuals listed in division (AA)(2) of section
1322.01 of the Revised Code; (b) An employee of a federal, state, or local government
agency or housing finance agency and who acts as a mortgage 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; (c) 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 mortgage loan originator. (J) "Mortgage broker" includes, in addition to
those persons listed in division (Y) 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. (K) "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." (L) "Originate," "originating,"
"origination," and "act as a mortgage loan originator" mean
to do any of the acts set forth in paragraph (I)(1) of this rule or in division
(AA)(1) of section 1322.01 of the Revised Code. (M) "Other equivalent consensual security
interest" includes 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. (N) "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. (O) "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. (P) "Qualified exempt entity" means a person
holding a valid letter of exemption issued pursuant to section 1322.05 of the
Revised Code. (Q) "Resident of this state" does not include an
individual who is purchasing a primary residence in another state. (R) "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. (S) "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 May 1, 2024. (T) "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. (U) "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.
Last updated September 3, 2024 at 8:45 AM
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Rule 1301:8-7-02 | Registration, letters of exemption, office requirements and restrictions.
Effective:
September 1, 2024
(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) 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 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 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. (E) 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 (D) of this rule, sometimes referred to as "net
branching," is not permissible. (F) 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 may 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. (G) Notwithstanding paragraph (F) 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
any immediate family member of the borrower. For the purposes of this
paragraph, "immediate family" has the same meaning as set forth in
division (R) of section 1322.01 of the Revised Code. (H) Nothing in division (AA)(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 mortgage loan originator in the transaction. (I) A registrant or qualified exempt entity shall not hold
a certificate of registration issued pursuant to Chapter 4712. of the Revised
Code.
Last updated September 3, 2024 at 8:46 AM
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Rule 1301:8-7-03 | Standards for applications, certificates of registration, letters of exemption, and licenses.
Effective:
September 1, 2024
(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. (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) 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, a current
sponsorship request must be approved by the superintendent and the mortgage
loan originator must receive an active license from the
superintendent. (F) 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. (G) 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. An
applicant may reapply following a withdrawn application. (H) An escrowed or suspended license is subject to all of
the following: (1) 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 under
section 1322.28 of the Revised Code; (2) An escrowed or
suspended license may be renewed pursuant to division (B) of section 1322.21 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. (I) 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 1322.10 or division (D) of section 1322.05 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. (J) 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. (K) 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 1322.36 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.
Last updated September 3, 2024 at 8:46 AM
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Rule 1301:8-7-06 | Recordkeeping.
Effective:
September 1, 2024
(A) In accordance with division (B) of
section 1322.34 of the Revised Code and division (C)(3) of section 1322.05 of
the Revised Code, 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) As used in division (E) of section
1322.34 of the Revised Code, "estimated costs of the examination"
includes, in addition to the proportionate costs of the salaries of division of
financial institutions employees who conduct the examination, 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 costs of the examination, 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 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 property address, and the identifying loan
number; (2) 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 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
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 all 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. (3) A file of all
advertisements. (4) General business records,
including: (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 canceled 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 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 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) A registrant or qualified exempt
entity shall comply with rules promulgated under 15 U.S.C. 1681w and 15 U.S.C.
, including 16 C.F.R. Part 313 and 16 C.F.R. Part 682, as those rules are in
effect May 1, 2024.
Last updated September 3, 2024 at 8:46 AM
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Rule 1301:8-7-07 | Advertising.
Effective:
September 1, 2024
(A) Every advertisement placed, or caused
to be placed, by a registrant or licensee shall, in manner or form that is
reasonably understandable to the average borrower: (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 the licensee's NMLS unique
identifier in lieu of stating both the licensee's license number and NMLS
unique identifier. (D) It is a violation for a registrant to fail to update
its website within thirty calendar days after any information becomes outdated
or expired. (E) 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: (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 "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. (F) A violation of 12 C.F.R. 1014.2, 1014.3, or 1014.4, as
in effect on May 1, 2024, shall constitute a violation of this
rule. (G) The provisions in this rule apply to licensees employed
by or associated with qualified exempt entities. (H) 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.
Last updated September 3, 2024 at 8:46 AM
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Rule 1301:8-7-12 | Operations manager.
Effective:
September 1, 2024
(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 may 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 demonstrating
compliance with paragraph (D) of this rule and division (B) of section 1322.12
of the Revised Code, a registrant shall, along with the application referenced
in paragraph (C) of this rule, submit satisfactory proof of experience for the
individual designated to act as operations manager. Such proof may include the
following: (1) A current
resume; (2) Copies of IRS form W-2s for the tax
years covering the experience requirement; and (3) A completed and signed release and
authorization which enables the superintendent to verify the W-2s. The experience requirement in division (B) of
section 1322.12 of the Revised Code may be verified by the division directly
with the employer and tax authorities. The superintendent may request any
additional documents or information that may be necessary to verify the
experience requirement. (F) For purposes of paragraph (D) of this
rule and division (B) of section 1322.12 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 should include documentation of the
experience at issue and a detailed explanation of its relationship to
residential mortgage lending activities. The determination of whether to accept
alternative education or experience is within the sole discretion of the
superintendent. (H) An individual designated as
operations manager shall have passed the written test administered to mortgage
loan originators. No separate written test for operations managers is
required.
Last updated September 3, 2024 at 8:46 AM
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Rule 1301:8-7-13 | Division examinations and investigations.
Effective:
September 1, 2024
(A) The superintendent or authorized
division personnel may conduct an examination in accordance with division (A)
of section 1322.34 of the Revised Code or an investigation in accordance with
division (B) of section 1322.50 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) 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. The determination of whether any
response is satisfactory is within the sole discretion of the superintendent.
Last updated September 3, 2024 at 8:47 AM
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Rule 1301:8-7-14 | Surety bonds.
Effective:
September 1, 2024
(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 1322.32 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 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 , the
following shall apply: (1) The surety bond
required by section 1322.32 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. (D) The surety bond required by division
(A)(1) of section 1322.32 of the Revised Code shall be in the penal sum of
one-half per cent of the aggregate loan amount of all residential mortgage
loans originated within and outside this state in the immediately preceding
calendar year, but not exceeding one hundred fifty thousand
dollars.
Last updated September 3, 2024 at 8:47 AM
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Rule 1301:8-7-15 | Disclosures.
Effective:
September 1, 2024
The affiliated business disclosure referenced in
division (A)(1) of section 1322.42 of the Revised Code shall comply with 12
C.F.R. 1024.15(b), as in effect May 1, 2024, and be made in conformity with the
timing specified in 12 C.F.R. 1024.15(b)(1), as in effect May 1, 2024.
Last updated September 3, 2024 at 8:47 AM
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Rule 1301:8-7-16 | Prohibited practices.
Effective:
September 1, 2024
Conduct that constitutes improper, fraudulent, or
dishonest dealings under division (C) of section 1322.40 of the Revised Code
includes the following: (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 May 1, 2024; (K) Evading the limits on points and fees
for qualified mortgages set forth in 12 C.F.R. 1026.43(e)(3), as in effect on
May 1, 2024, 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;
or (L) Any other conduct the superintendent determines
constitutes improper, fraudulent, or dishonest dealings.
Last updated September 3, 2024 at 8:47 AM
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Rule 1301:8-7-18 | Continuing education.
Effective:
September 1, 2024
(A) In accordance with division (C)(2) of
section 1322.28 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) 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, applies to the continuing education requirements in section
1322.28 of the Revised Code.
Last updated September 3, 2024 at 8:47 AM
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Rule 1301:8-7-19 | Notification requirements.
Effective:
September 1, 2024
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 lender, mortgage servicer, mortgage broker, or mortgage loan
originator in accordance with division (D) of section 1322.40 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.
Last updated September 3, 2024 at 8:48 AM
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Rule 1301:8-7-20 | Compensation.
Effective:
September 1, 2024
(A) Compensation of any kind paid to a
licensee employed by or associated with a registrant or qualified exempt entity
shall be: (1) Paid by check or
electronic draft; (2) Paid from the account
of the registrant or qualified exempt entity, or account of a third party
payroll administrator acting as the registrant's or qualified exempt
entity's agent; and (3) Paid or made payable
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 May 1, 2024.
Last updated September 3, 2024 at 8:48 AM
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Rule 1301:8-7-21 | Character, general fitness, and financial responsibility.
Effective:
September 1, 2024
(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 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 section 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
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: (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.
Last updated September 3, 2024 at 8:48 AM
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Rule 1301:8-7-22 | Trade names, fictitious names and change of names.
Effective:
September 1, 2024
(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 mortgage 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.
Last updated September 3, 2024 at 8:48 AM
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Rule 1301:8-7-23 | Mortgage broker appraisal misconduct.
Effective:
September 1, 2024
(A) A violation of division (G) of
section 1322.40 of the Revised Code may include 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. However, it is not a violation if the sales price of the property is
disclosed or a copy of the signed purchase contract is provided 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.
Last updated September 3, 2024 at 8:48 AM
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Rule 1301:8-7-26 | Challenge to information maintained in the NMLS.
Effective:
September 1, 2024
(A) For purposes of division (H) of
section 1322.36 of the Revised Code, an individual who has applied for, holds,
or held a mortgage 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.
Last updated September 3, 2024 at 8:48 AM
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Rule 1301:8-7-31 | Nonprofit organizations exemption.
Effective:
September 1, 2024
(A) In addition to the criteria set forth
in divisions (F)(1) to (F)(6) of section 1322.01 of the Revised Code, a bona
fide nonprofit organization is also required to: (1) Be registered and
maintain current registration status with the charitable law section of the
Ohio attorney general's office; or (2) Possess a valid
letter of exemption from the charitable law section of the Ohio attorney
general's office. (B) An organization seeking a letter of
exemption as a bona fide nonprofit organization pursuant to division (F)(7) of
section 1322.014 of the Revised Code has the burden of establishing entitlement
to the letter of exemption. (C) An organization seeking a letter of
exemption shall be responsible for paying any applicable fees and submitting 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. (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 May 1, 2024, for all employees
acting as a mortgage 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) In accordance with rule 1301:8-7-13 of the Administrative
Code, the superintendent may examine the books and records of the bona fide
nonprofit organization periodically to determine if it continues to meet all of
the criteria in division (F) of section 1322.01 of the Revised
Code. (G) An employee of a nonprofit organization that holds a
valid letter of exemption is exempt from having to obtain a mortgage 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.
Last updated September 3, 2024 at 8:49 AM
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Rule 1301:8-7-32 | Loan processors and underwriters.
Effective:
September 1, 2024
(A) For purposes of division (AA)(2)(h)
of section 1322.01 of the Revised Code, "loan processing or underwriting
company" means an entity that performs only clerical or support duties for
one or more unaffiliated registrants or qualified exempt entities. (B) For purposes of division (AA)(2)(h)
of section 1322.01 of the Revised Code, "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. (C) A loan processing or underwriting company seeking a letter of
exemption pursuant to division (AA)(2)(h) of section 1322.01 of the Revised
Code shall be responsible for paying any applicable fees and submitting 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. (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 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 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 fully and honestly completed the application process 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, as provided in division (B) of section 1322.34
of the Revised Code and rule 1301:8-7-06 of the Administrative
Code. (H) The superintendent may, in accordance
with rule 1301:8-7-13 of the Administrative Code, 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. (I) 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 training,
mentoring, and evaluation of the loan processor or underwriter. (J) An employee of loan processing or underwriting company
that holds a valid letter of exemption is exempt from having to obtain a
mortgage loan originator license only with respect to the clerical or support
duties performed for such loan processing or underwriting company. (K) An employee of a loan processing or underwriting
company shall not also be employed by or associated with any entity for whom
the loan processing or underwriting company performs clerical or support
duties. (L) A loan processing or underwriting company performing
clerical or support duties shall comply with rules promulgated under 15 U.S.C.
1681w and 15 U.S.C. 6801, including 16 C.F.R. Part 313 and 16 C.F.R. Part 682,
as those rules are in effect May 1, 2024.
Last updated September 3, 2024 at 8:49 AM
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