HB 1125

1	A bill to be entitled
2	An act relating to mortgage brokering and lending;
3	amending s. 494.001, F.S.; revising definitions; amending
4	s. 494.0014, F.S.; authorizing the Office of Financial
5	Regulation to impose fines; amending s. 494.0029, F.S.;
6	authorizing the office to take certain adverse actions on
7	permits of certain mortgage business schools; providing
8	additional requirements for such schools; amending s.
9	494.00295, F.S.; providing an additional professional
10	continuing education requirement; authorizing the office
11	to offer professional continuing education programs;
12	specifying requirements for electronically transmitted and
13	distance education courses; amending s. 494.0033, F.S.;
14	revising mortgage broker license applicant requirements;
15	authorizing an additional fee for reviewing mortgage
16	broker's license tests; providing for review of the
17	testing process; amending s. 494.0038, F.S.; providing
18	additional disclosure requirements for mortgage brokerage
19	businesses; amending s. 494.004, F.S.; specifying an
20	additional notification requirement for mortgage broker
21	licensees; authorizing the commission to adopt rules;
22	amending s. 494.0041, F.S.; specifying additional acts
23	constituting grounds for certain disciplinary actions;
24	providing for fines and penalties; amending s. 494.0064,
25	F.S.; providing additional requirements for renewals of
26	mortgage lender's licenses; amending s. 494.0067, F.S.;
27	providing additional requirements for mortgage lender
28	licenses; providing disclosure requirements; amending s.
29	494.0072, F.S.; specifying additional acts constituting
30	grounds for certain disciplinary actions; providing fines
31	and penalties; amending s. 494.0073, F.S.; providing for
32	application of certain provisions to mortgage brokerage
33	businesses; providing for adoption of rules by the
34	Financial Services Commission; providing an effective
35	date.
36
37	Be It Enacted by the Legislature of the State of Florida:
38
39	Section 1.  Subsection (2) of section 494.001, Florida
40	Statutes, is amended, and subsections (32), (33), and (34) are
41	added to that section, to read:
42	494.001  Definitions.--As used in ss. 494.001-494.0077, the
43	term:
44	(2)  "Act as a loan originator" means being employed by a
45	mortgage lender or correspondent mortgage lender, for
46	compensation or gain or in the expectation of compensation or
47	gain, to negotiate, or offer to negotiate, or assist any
48	licensed or exempt entity in negotiating the making of a
49	mortgage loan, including, but not limited to, working with a
50	licensed or exempt entity to structure a loan or discussing
51	terms and conditions necessary for the delivery of a loan
52	product. A natural person whose activities are ministerial and
53	clerical, which may include quoting available interest rates or
54	loan terms and conditions, is not acting as a loan originator.
55	(32)  "Mortgage loan application" means a submission of a
56	borrower's financial information in anticipation of a credit
57	decision, whether written or computer-generated, relating to a
58	mortgage loan. If the submission does not state or identify a
59	specific property, the submission is an application for a
60	prequalification and not an application for a mortgage loan
61	under this part. The subsequent addition of an identified
62	property to the submission converts the submission to an
63	application for a mortgage loan.
64	(33)  "Mortgage brokerage fee" means the total compensation
65	to be received by a mortgage business for acting as a mortgage
66	broker.
67	(34)  "Business day" means any calendar day except Sunday
68	or a legal holiday.
69	Section 2.  Subsection (4) is added to section 494.0014,
70	Florida Statutes, to read:
71	494.0014  Cease and desist orders; administrative fines;
72	refund orders.--
73	(4)  The office may impose upon any person who makes or
74	brokers a loan, or any mortgage business school, a fine for
75	violations of any provision of ss. 494.001-494.00295 or any rule
76	or order issued under ss. 494.001-494.00295 in an amount not
77	exceeding $5,000 for each separate count or offense.
78	Section 3.  Paragraph (f) is added to subsection (1) and
79	paragraphs (g) and (h) are added to subsection (2) of section
80	494.0029, Florida Statutes, to read:
81	494.0029  Mortgage business schools.--
82	(1)
83	(f)  In addition to the remedies set forth in s. 494.0014,
84	the office may revoke, suspend, or place on probation the permit
85	of any mortgage business school that fails to meet the
86	requirements of this section, subject to all reasonable
87	conditions that the office specifies.
88	(2)
89	(g)  A school permitted under this section must conduct
90	classes on the basis of a 50-minute classroom hour in accordance
91	with the requirements of this chapter and commission rules.
92	(h)  Each school permitted under this section is
93	responsible for developing procedures to confirm, and for
94	actually confirming, the identity of each student attending any
95	course offering.
96	Section 4.  Section 494.00295, Florida Statutes, is amended
97	to read:
98	494.00295  Professional continuing education.--
99	(1)  Mortgage brokers, and the principal representatives
100	and loan originators of a mortgage lender, correspondent
101	mortgage lender, or mortgage lender pursuant to s. 494.0065,
102	must successfully complete at least 14 hours of professional
103	continuing education covering primary and subordinate mortgage
104	financing transactions and the provisions of this chapter during
105	the 2-year period immediately preceding the renewal deadline for
106	a mortgage broker, mortgage lender, correspondent mortgage
107	lender, or mortgage lender pursuant to s. 494.0065. A minimum of
108	4 hours shall cover the provisions of this chapter and the rules
109	adopted under this chapter. At the time of license renewal, a
110	licensee must certify to the office that the professional
111	continuing education requirements of this section have been met.
112	Licensees shall maintain records documenting compliance with
113	this subsection for a period of 4 years. The requirements for
114	professional continuing education are waived for the license
115	renewal of a mortgage broker who has completed the 24-hour
116	prelicensing classroom education requirement of s. 494.0033(3)
117	within 90 days of for the biennial license period immediately
118	following the period in which the person became licensed as a
119	mortgage broker. The requirements for professional continuing
120	education for a principal representative are waived for the
121	license renewal of a mortgage lender, correspondent mortgage
122	lender, or mortgage lender pursuant to s. 494.0065 for the
123	biennial license period immediately following the period in
124	which the principal representative completed the 24 hours of
125	classroom education and passed a written test in order to
126	qualify to be a principal representative.
127	(2)  Professional continuing education programs must
128	contribute directly to the professional competency of the
129	participants, may only be offered by permitted mortgage business
130	schools, the office, or entities specifically exempted from
131	permitting as mortgage business schools, and may include
132	electronically transmitted or distance education courses.
133	(3)(a)  All electronically transmitted courses shall
134	require that the time spent attending electronically transmitted
135	professional education courses is equal to the number of
136	qualifying hours awarded to participants for course attendance.
137	Before allowing a course participant to complete a course and
138	receive a certificate of course completion, the course provider
139	shall ensure that the course participant has:
140	1.  Logged the required number of hours for the particular
141	timed module.
142	2.  Completed a test that comprehensively covers the course
143	content for the particular timed module.
144	3.  Correctly answered all test questions for the
145	particular timed module.
146	(b)  All distance education course participants shall
147	successfully complete a test that comprehensively covers course
148	content in order to receive a certificate of course completion.
149	Distance education providers shall not provide answers to test
150	questions to course participants and shall not issue a
151	certificate of course completion to any course participant who
152	has failed to correctly answer at least 75 percent of the total
153	test questions. The test must consist of at least 100 questions.
154	(4)(3)  The commission shall adopt rules pursuant to ss.
155	120.536(1) and 120.54 necessary to administer this section,
156	including rules governing qualifying hours for professional
157	continuing education programs and standards for electronically
158	transmitted or distance education courses, including course
159	completion requirements.
160	Section 5.  Paragraphs (a) and (b) of subsection (2) of
161	section 494.0033, Florida Statutes, are amended to read:
162	494.0033  Mortgage broker's license.--
163	(2)  Each initial application for a mortgage broker's
164	license must be in the form prescribed by rule of the
165	commission. The commission may require each applicant to provide
166	any information reasonably necessary to make a determination of
167	the applicant's eligibility for licensure. The office shall
168	issue an initial license to any natural person who:
169	(a)  Is at least 18 years of age and has a high school
170	diploma or its equivalent.
171	(b)  Has passed a written test adopted and administered by
172	the office, or has passed an electronic test adopted and
173	administered by the office or a third party approved by the
174	office, which is designed to determine competency in primary and
175	subordinate mortgage financing transactions as well as to test
176	knowledge of ss. 494.001-494.0077 and the rules adopted pursuant
177	thereto. The commission may prescribe by rule an additional fee
178	that may not exceed $100 for the electronic version of the
179	mortgage broker test. The commission may waive by rule the
180	examination requirement for any person who has passed a test
181	approved by the Conference of State Bank Supervisors, the
182	American Association of Residential Mortgage Regulators, or the
183	United States Department of Housing and Urban Development if the
184	test covers primary and subordinate mortgage financing
185	transactions. The commission may adopt rules prescribing an
186	additional fee that may not exceed $50 for an applicant to
187	review his or her completed and graded mortgage broker test. The
188	commission may adopt rules regarding the administration of the
189	testing process, including, but not limited to, procedures
190	relating to pretest registration, test security, scoring,
191	content, result notification, retest procedures and fees,
192	postexamination review, and challenge provisions.
193
194	The commission may require by rule information concerning any
195	such applicant or person, including, but not limited to, his or
196	her full name and any other names by which he or she may have
197	been known, age, social security number, qualifications and
198	educational and business history, and disciplinary and criminal
199	history.
200	Section 6.  Section 494.0038, Florida Statutes, is amended
201	to read:
202	494.0038  Mortgage broker disclosures.--
203	(1)(a)1.  A person may not receive a mortgage brokerage fee
204	for acting as a mortgage brokerage business except pursuant to a
205	written mortgage brokerage agreement between the mortgage
206	brokerage business and the borrower that is signed and dated by
207	the business and the borrower.
208	2.  The written mortgage brokerage agreement must be
209	executed within 3 days after accepting a mortgage loan
210	application, describe the services to be provided by the
211	mortgage brokerage business, and specify the amount and terms of
212	the mortgage brokerage fee that the mortgage brokerage business
213	is to receive.
214	(b)1.  If the mortgage brokerage business is to receive any
215	payment of any kind from the lender, the maximum total dollar
216	amount of the payment must be disclosed to the borrower in the
217	written mortgage brokerage agreement as described in paragraph
218	(a). The commission may prescribe by rule an acceptable form for
219	disclosure of brokerage fees received from the lender. The
220	mortgage brokerage agreement must state the nature of the
221	relationship with the lender, describe how compensation is paid
222	by the lender, and describe how the mortgage interest rate
223	affects the compensation paid to the mortgage brokerage
224	business. If any of the rates, points, fees, and other terms
225	quoted by or on behalf of the lender are to be received by the
226	mortgage brokerage business, such fact shall be specifically
227	disclosed to the borrower.
228	2.  The exact amount of any payment of any kind by the
229	lender to the mortgage brokerage business must be disclosed in
230	writing to the borrower within 3 business days after the
231	mortgage brokerage business is made aware of the exact amount of
232	the payment from the lender but no later than 3 business days
233	prior to the execution of the closing or settlement statement.
234	The licensee bears the burden of proving such notification was
235	provided to the borrower. If the mortgage brokerage fee is for
236	brokering a loan for a particular program under which the
237	brokerage fee varies according to the terms of the loan, the
238	brokerage fee may be disclosed as a range of fees at the time of
239	application. The mortgage broker shall, in such instance,
240	disclose the nature of the fee arrangement to the borrower, and
241	the exact amount of the fee must be disclosed at settlement or
242	closing.
243	(c)  The commission may prescribe by rule what constitutes
244	a mortgage brokerage fee and the form of disclosure of brokerage
245	fees.
246	(2)  At the time a written mortgage brokerage agreement is
247	executed by the borrower or at the time the mortgage brokerage
248	business accepts an application fee, credit report fee, property
249	appraisal fee, or any other third-party fee, but not fewer than
250	3 business days prior to execution of the closing or settlement
251	statement, the mortgage brokerage business shall disclose in
252	writing to any applicant for a mortgage loan the following
253	information:
254	(a)  That such mortgage brokerage business may not make
255	mortgage loans or commitments. The mortgage brokerage business
256	may make a commitment and may furnish a lock-in of the rate and
257	program on behalf of the lender when the mortgage brokerage
258	business has obtained a written commitment or lock-in for the
259	loan from the lender on behalf of the borrower for the loan. The
260	commitment must be in the same form and substance as issued by
261	the lender.
262	(b)  That such mortgage brokerage business cannot guarantee
263	acceptance into any particular loan program or promise any
264	specific loan terms or conditions.
265	(c)  A good faith estimate, signed and dated by the
266	borrower, that discloses of the total amount of each of the fees
267	that the borrower may reasonably expect to pay if the loan is
268	closed, including, but not limited to, fees earned by the
269	mortgage brokerage business, lender fees, third-party fees, and
270	official fees, together with credit report fee, property
271	appraisal fee, or any other third-party fee and the terms and
272	conditions for obtaining a refund of such fees, if any. Any
273	amount collected in excess of the actual cost shall be returned
274	within 60 days after rejection, withdrawal, or closing. The good
275	faith estimate must identify the recipient of all payments
276	charged the borrower and, except for all fees to be received by
277	the mortgage brokerage business, may be disclosed in generic
278	terms, such as, but not limited to, paid to lender, appraiser,
279	officials, title company, or any other third-party service
280	provider. This requirement does not supplant or is not a
281	substitute for the written mortgage brokerage agreement
282	described in subsection (1).
283	(3)  The disclosures required by this subsection must be
284	furnished in writing at the time an adjustable rate mortgage
285	loan is offered to the borrower and whenever the terms of the
286	adjustable rate mortgage loan offered materially change prior to
287	closing. The broker shall furnish the disclosures relating to
288	adjustable rate mortgages in a format prescribed by ss. 226.18
289	and 226.19 of Regulation Z of the Board of Governors of the
290	Federal Reserve System, as amended, its commentary, as amended,
291	and the federal Truth in Lending Act, 15 U.S.C. ss. 1601 et
292	seq., as amended, together with the Consumer Handbook on
293	Adjustable Rate Mortgages, as amended, published by the Federal
294	Reserve Board and the Federal Home Loan Bank Board or a suitable
295	substitute for such handbook. The licensee bears the burden of
296	proving such disclosures were provided to the borrower. The
297	commission may adopt rules establishing criteria as to what
298	constitutes a material change and what constitutes a suitable
299	substitute for the handbook.
300	(4)(3)  If the mortgage brokerage agreement includes a
301	nonrefundable application fee, the following requirements are
302	applicable:
303	(a)  The amount of the application fee, which must be
304	clearly denominated as such, shall be clearly disclosed.
305	(b)  The specific services that will be performed in
306	consideration for the application fee shall be disclosed.
307	(c)  The application fee must be reasonably related to the
308	services to be performed and may not be based upon a percentage
309	of the principal amount of the loan or the amount financed.
310	(5)(4)  A mortgage brokerage business may not accept any
311	fee in connection with a mortgage loan other than an application
312	fee, credit report fee, property appraisal fee, or other third-
313	party fee prior to obtaining a written commitment from a
314	qualified lender.
315	(6)(5)  Any third-party fee entrusted to a mortgage
316	brokerage business shall immediately, upon receipt, be placed
317	into a segregated account with a financial institution located
318	in the state the accounts of which are insured by the Federal
319	Government. Such funds shall be held in trust for the payor and
320	shall be kept in the account until disbursement. Such funds may
321	be placed in one account if adequate accounting measures are
322	taken to identify the source of the funds.
323	(7)(6)  All mortgage brokerage fees shall be paid to a
324	mortgage brokerage business licensee.
325	(8)(7)  This section does not prohibit a mortgage brokerage
326	business from offering products and services, in addition to
327	those offered in conjunction with the loan origination process,
328	for a fee or commission.
329	Section 7.  Subsection (8) is added to section 494.004,
330	Florida Statutes, to read:
331	494.004  Requirements of licensees.--
332	(8)  In every mortgage loan transaction, each licensee
333	under ss. 494.003-494.0043 shall notify a borrower of any
334	material changes in the terms of a mortgage loan previously
335	offered to the borrower within 3 business days after being made
336	aware of such changes by the lender but not less than 3 business
337	days before the signing of the settlement or closing statement.
338	The licensee bears the burden of proving such notification was
339	provided and accepted by the borrower. The commission may adopt
340	rules establishing criteria as to what constitutes a material
341	change.
342	Section 8.  Paragraph (v) is added to subsection (2) of
343	section 494.0041, Florida Statutes, to read:
344	494.0041  Administrative penalties and fines; license
345	violations.--
346	(1)  Whenever the office finds a person in violation of an
347	act specified in subsection (2), it may enter an order imposing
348	one or more of the following penalties against the person:
349	(a)  Revocation of a license or registration.
350	(b)  Suspension of a license or registration subject to
351	reinstatement upon satisfying all reasonable conditions that the
352	office specifies.
353	(c)  Placement of the licensee, registrant, or applicant on
354	probation for a period of time and subject to all reasonable
355	conditions that the office specifies.
356	(d)  Issuance of a reprimand.
357	(e)  Imposition of a fine in an amount not exceeding $5,000
358	for each count or separate offense.
359	(f)  Denial of a license or registration.
360	(2)  Each of the following acts constitutes a ground for
361	which the disciplinary actions specified in subsection (1) may
362	be taken:
363	(v)  In any mortgage transaction, violating any provision
364	of the federal Real Estate Settlement Procedure Act, as amended,
365	12 U.S.C. ss. 2601 et seq., the federal Truth In Lending Act, as
366	amended, 15 U.S.C. ss. 1601 et seq., or any regulations adopted
367	under such acts.
368	Section 9.  Subsection (1) of section 494.0064, Florida
369	Statutes, is amended to read:
370	494.0064  Renewal of mortgage lender's license; branch
371	office license renewal.--
372	(1)(a)  The office shall renew a mortgage lender license
373	upon receipt of a completed renewal form, certification from the
374	licensee that the licensee currently meets the minimum net worth
375	requirements of s. 494.0061 or s. 494.0065, certification from
376	the licensee that during the preceding 2 years the licensee's
377	principal representative and loan originators have completed the
378	professional continuing education requirements of s. 494.00295,
379	and the nonrefundable renewal fee of $575. The office shall
380	renew a correspondent lender license upon receipt of a completed
381	renewal form, certification from the licensee that the licensee
382	currently meets the minimum net worth requirements of s.
383	494.0062, certification from the licensee that during the
384	preceding 2 years the licensee's principal representative and
385	loan originators have completed the professional continuing
386	education requirements of s. 494.00295, and a nonrefundable
387	renewal fee of $475. Each licensee shall pay at the time of
388	renewal a nonrefundable fee of $325 for the renewal of each
389	branch office license.
390	(b)  A licensee shall also submit, as part of the renewal
391	form, certification that during the preceding 2 years the
392	licensee's principal representative and loan originators have
393	completed the professional continuing education requirements of
394	s. 494.00295.
395	Section 10.  Subsection (8) and paragraph (a) of subsection
396	(10) of section 494.0067, Florida Statutes, are amended, and
397	subsections (11) and (12) are added to that section, to read:
398	494.0067  Requirements of licensees under ss. 494.006-
399	494.0077.--
400	(8)  Each licensee under ss. 494.006-494.0077 shall provide
401	an applicant for a mortgage loan a good faith estimate of the
402	costs the applicant can reasonably expect to pay in obtaining a
403	mortgage loan. The good faith estimate of costs shall be mailed
404	or delivered to the applicant within a reasonable time after the
405	licensee receives a written loan application from the applicant.
406	The estimate of costs may be provided to the applicant by a
407	person other than the licensee making the loan. The good faith
408	estimate must identify the recipient of all payments charged to
409	the borrower and, except for all fees to be received by the
410	mortgage brokerage business and the mortgage lender or
411	correspondent mortgage lender, may be disclosed in generic
412	terms, such as, but not limited to, paid to appraiser,
413	officials, title company, or any other third-party service
414	provider. The licensee bears the burden of proving such
415	disclosures were provided to the borrower. The commission may
416	adopt rules that set forth the disclosure requirements of this
417	section.
418	(10)(a)  Each mortgage lender or correspondent mortgage
419	lender licensee shall require the principal representative and
420	all loan originators, not currently licensed as mortgage brokers
421	pursuant to s. 494.0033, who perform services for the licensee
422	to complete 14 hours of professional continuing education during
423	each biennial license period. The education shall cover primary
424	and subordinate mortgage financing transactions and the
425	provisions of this chapter and the rules adopted under this
426	chapter.
427	(11)  The disclosures in this subsection must be furnished
428	in writing at the time an adjustable rate mortgage loan is
429	offered to the borrower and whenever the terms of the adjustable
430	rate mortgage loan offered have a material change prior to
431	closing. The lender shall furnish the disclosures relating to
432	adjustable rate mortgages in a format prescribed by ss. 226.18
433	and 226.19 of Regulation Z of the Board of Governors of the
434	Federal Reserve System, as amended, its commentary, as amended,
435	and the federal Truth in Lending Act, 15 U.S.C. ss. 1601 et
436	seq., as amended, together with the Consumer Handbook on
437	Adjustable Rate Mortgages, as amended, published by the Federal
438	Reserve Board and the Federal Home Loan Bank Board or a suitable
439	substitute for the handbook. The licensee bears the burden of
440	proving such disclosures were provided to the borrower. The
441	commission may adopt rules establishing criteria as to what
442	constitutes a material change and what constitutes a suitable
443	substitute for the handbook.
444	(12)  In every mortgage loan transaction, each licensee
445	under ss. 494.006-494.0077 shall notify a borrower of any
446	material changes in the terms of a mortgage loan previously
447	offered to the borrower within 3 business days after being made
448	aware of such changes by the lender but not less than 3 business
449	days before the signing of the settlement or closing statement.
450	The licensee bears the burden of proving such notification was
451	provided and accepted by the borrower. The commission may adopt
452	rules establishing criteria as to what constitutes a material
453	change.
454	Section 11.  Paragraph (v) is added to subsection (2) of
455	section 494.0072, Florida Statutes, subsection (3) of that
456	section is amended, and subsection (5) is added to that section,
457	to read:
458	494.0072  Administrative penalties and fines; license
459	violations.--
460	(1)  Whenever the office finds a person in violation of an
461	act specified in subsection (2), it may enter an order imposing
462	one or more of the following penalties against that person:
463	(a)  Revocation of a license or registration.
464	(b)  Suspension of a license or registration, subject to
465	reinstatement upon satisfying all reasonable conditions that the
466	office specifies.
467	(c)  Placement of the licensee or applicant on probation
468	for a period of time and subject to all reasonable conditions
469	that the office specifies.
470	(d)  Issuance of a reprimand.
471	(e)  Imposition of a fine in an amount not exceeding $5,000
472	for each count or separate offense.
473	(f)  Denial of a license or registration.
474	(2)  Each of the following acts constitutes a ground for
475	which the disciplinary actions specified in subsection (1) may
476	be taken:
477	(v)  In any mortgage transaction, violating any provision
478	of the federal Real Estate Settlement Procedure Act, as amended,
479	12 U.S.C. ss. 2601 et seq., the federal Truth In Lending Act, as
480	amended, 15 U.S.C. ss. 1601 et seq., or any regulations adopted
481	under such acts.
482	(3)  A mortgage lender or correspondent mortgage lender is
483	subject to the disciplinary actions specified in subsection (1)
484	if any officer, member, director, control person, joint
485	venturer, or ultimate equitable owner of a 10-percent or greater
486	interest in the mortgage lender or correspondent mortgage
487	lender, associate, or employee of the mortgage lender or
488	correspondent mortgage lender violates or has violated any
489	provision of subsection (2).
490	(5)  A principal representative of a mortgage lender or
491	correspondent mortgage lender is subject to the disciplinary
492	actions specified in subsection (1) for violations of subsection
493	(2) by associates or employees in the course of an association
494	or employment with the correspondent mortgage lender or the
495	mortgage lender. The principal representative is only subject to
496	suspension or revocation for associate or employee actions if
497	there is a pattern of repeated violations by associates or
498	employees or if the principal broker or principal representative
499	had knowledge of the violations.
500	Section 12.  Section 494.0073, Florida Statutes, is amended
501	to read:
502	494.0073  Mortgage lender or correspondent mortgage lender
503	when acting as a mortgage brokerage business.--Sections 494.006-
504	494.006-494.0077 do not prohibit a mortgage lender or
505	correspondent mortgage lender from acting as a mortgage
506	brokerage business. However, in mortgage transactions in which a
507	mortgage lender or correspondent mortgage lender acts as a
508	mortgage brokerage business, the provisions of ss. 494.0038,
509	494.0042, 494.004(8), and 494.0043(1), (2), and (3) apply.
510	Section 13.  This act shall take effect October 1, 2007.

CODING: Words stricken are deletions; words underlined are additions.