Colorado House Bill 1110
The Governor of Colorado signed into law HB 1110, which establishes a new registration requirement for appraisal management companies. The legislation is effective July 1, 2013.
Under the legislation, “appraisal management company” means, in connection with valuing properties collateralizing mortgage loans or mortgages incorporated into a securitization, any external third party authorized either by a creditor in a consumer credit transaction secured by a consumer’s principal dwelling that oversees a network or panel of licensed or certified appraisers or by an underwriter of, or other principal in, the secondary mortgage markets that oversees a network or panel of licensed or certified appraisers. The term does not include a mortgage company, or its subsidiary, that manages a panel of appraisers who are engaged to provide appraisal services on mortgage loans either originated by the mortgage company or funded by the mortgage company with its own funds.
Connecticut Senate Bill 97
The Governor of Connecticut signed into law SB 97, which amends current mortgage licensing requirements. The legislation has varying effective dates, which are noted below.
The legislation adds newly defined terms and also amends current terms. “Dwelling” is a newly defined term, which has the same meaning as under TILA. The definition of “mortgage broker” is amended to mean a person who (a) for compensation or gain with the expectation of gain (i) takes a residential mortgage loan application or (ii) offers or negotiates terms of a residential mortgage loan; and (b) is not the prospective source of the funds for the residential mortgage loan. These changes are effective October 1, 2012.
The legislation provides that loan processors or underwriters must be licensed. The following are exempt from the licensure requirement: (1) an employee of a licensed mortgage lender, correspondent lender or broker who engages in loan processor or underwriter activities (a) in connection with residential mortgage loans either originated or made by such licensee; and (b) at the direction of and subject to the supervision of a licensed mortgage loan originator of such licensee; (2) an employee of a person exempt from licensure (i.e. banks, credit unions, certain subsidiaries, etc.) who engages in loan processor or underwriter activities at the direction of and subject to the supervision of either a licensed mortgage loan originator or registered mortgage loan originator of such exempt person.
The legislation amends the requirements relative to qualified individuals and branch managers. The legislation provides that effective November 1, 2012, the qualified manager and branch managers must also be licensed as a mortgage loan originator.
To renew a mortgage lender, correspondent or broker license, the legislation also provides that effective November 1, 2012 each qualified individual and branch manager must be licensed as a mortgage loan originator and complete any applicant continuing education requirements.
Under current law, the commissioner has the authority to suspend, revoke or refuse to renew a mortgage lender, correspondent lender or broker license if the commissioner finds that the licensee or certain other persons, including an agent of the licensee, has committed certain prohibited acts. The legislation defines the term agent to include any settlement agent used by the licensee. “Settlement agent” means the person specified in any HUD-1 settlement statement or other settlement statement, provided such settlement agent has been selected by the licensee. These changes are effective October 1, 2012.
Florida House Bill 887
The Governor of Florida signed into law HB 887 and HB 517, which amend current provisions regarding appraisal management companies. Specifically, the legislation amends certain definitions and adds additional exemptions from the registration requirement. The legislation is effective October 1, 2012.
As amended, the registration requirement does not apply to: (1) any financial institution that owns and operates an internal appraisal office, business unit or department; or (2) an appraisal management company that is a subsidiary owned and controlled by a financial institution that is regulated by a federal financial institution regulatory agency.
Georgia HB 110
The Governor signed into law HB 110, which sets forth provisions under which a county or municipal corporation may establish a vacant or foreclosed property registry. The legislation provides that effective July 1, 2012, a county or municipal corporation may establish by ordinance or resolution a registration requirement for vacant or foreclosed real property. Any such registry must be compliant with the requirements of the legislation. Any requirements of a registry already in effect as of July 1, 2012 which are in conflict with the legislation are preempted.
A registry may require the payment of administrative fees for registration, which must not exceed $100.00 per registration. A registry may also require penalties for failure to register or failure to update information not to exceed $1,000.00.
Illinois Senate Bill 1692
The Illinois Governor signed SB 1692, which amends current law relative to high-risk home loans. The legislation is effective January 1, 2013.
High-Risk Home Loans
The legislation amends the definition of high-risk home loan. As amended, “high-risk home loan” means a consumer credit transaction, other than a reverse mortgage, that is secured by the consumer’s principal dwelling if: (1) at the time of origination, the APR exceeds by more than six percentage points (for a first lien mortgage) or eight percentage points (for a junior mortgage) the average prime offer rate (as opposed to U.S. Treasury securities) for a comparable transaction as of the date on which the interest rate for the transaction is set; (2) the loan documents permit the creditor to charge or collect prepayment fees or penalties more than 36 months after the transaction closing or such fees exceed, in the aggregate, more than 2% of the amount prepaid; or (3) the total points and fees payable in connection with the transaction will exceed (a) 5% of the total loan amount for a transaction of $20,000 or more or (b) the lesser of 8% of the total loan amount or $1,000 for a transaction of less than $20,000.
The legislation also amends substantive restrictions applicable to high-risk home loans, which are not discussed herein.
Illinois House Bill 4521
The Governor of Illinois signed into law HB 4521, which amends provisions of the Residential Mortgage License Act (“License Act”) and provisions relative to the predatory lending database. The total monthly consumer debt of the borrower must now be reported to the database. The legislation is currently effective.
Indiana 2012 Dollar Adjustments
The Indiana Department of Financial Institutions released dollar amount changes under the Uniform Consumer Credit Code. These changes are effective July 1, 2012 through June 30, 2014.
Under the high-cost loan provisions, for loans with a principal amount of $40,000 or greater, points and fees are limited to 5%. Effective July 1, 2012, this dollar amount is increased to $44,000.
Additionally, for subordinate lien loans the permissible late charge is increased from $17.50 to $18.00.
Kansas Senate Bill 345
The Governor of Kansas signed into law SB 345, which establishes a registration requirement for appraisal management companies. The legislation is effective July 1, 2012.
Under the legislation, “appraisal management company” means an individual, firm, partnership, association, corporation, LLC, or any other business entity acting as an external third party authorized either by a creditor of a consumer credit transaction secured by a consumer’s principal dwelling or by an underwriter of or other principal in the secondary mortgage markets: (1) that performs appraisal management services; and (2) oversees an appraiser panel of more than 15 appraisers certified or licensed in Kansas or a total of more than 25 appraisers certified or licensed in Kansas and in any other jurisdiction.
Kentucky House Bill 409
The Governor of Kentucky signed into law HB 409, which amends current provisions regarding mortgage licensing requirements. Specifically, the legislation provides for additional exemption from the mortgage loan company, broker and loan originator licensing requirement. The legislation is effective July 11, 2012.
Maine Senate Bill 321
The Governor of Maine signed into law SB 321, which amends the Maine Criminal Code regarding bad checks. Specifically, the legislation provides for another means of proving an individual issuing or negotiating a bad check knew it would not be honored. The legislation is effective August 29, 2012.
Maryland Senate Bill 302
The Governor of Maryland signed into law SB 302, which amends current provisions regarding mortgage licensing exemptions. This legislation is effective January 1, 2013.
Current law provides a licensing exemption for any person who makes three or fewer mortgage loans per calendar year; and brokers no more than one mortgage loan per calendar year. This legislation removes this exemption. The legislation also revises the exemptions for certain bank subsidiaries and affiliates.
New Hampshire Senate Bill 153
The Governor of New Hampshire signed into law SB 153, which creates new provisions governing appraisal management companies. The legislation is effective August 6, 2012.
Appraisal management companies are required to be registered by the real estate appraiser board.
“Appraisal management company” means, in connection with valuing properties collateralizing mortgage loans or mortgages incorporated into a securitization, any external third party authorized either by a creditor of a consumer credit transaction secured by a consumer’s principal dwelling or by an underwriter of, or other principal in, the secondary mortgage markets: (a) to recruit, select and retain appraisers; (b) to contract with licensed and certified appraisers to perform appraisal assignments; (c) to manage the process of having an appraisal performed, including providing administrative duties such as receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and underwriters, collecting fees from creditors and underwriters for services provided, and reimbursing appraisers for services performed; or (d) to review and verify the work of appraisers.
South Carolina Senate Bill 1319
The Governor of South Carolina signed into law SB 1319, which creates a new section of law relative to closing or settlement protection. Specifically, the legislation provides that a title insurer may issue closing or settlement protection to a person who is a party to a transaction in which a title insurance policy will be issued. The title insurer may not provide any other coverage that purports to indemnify against improper acts or omissions of a person with regard to settlement or closing services.
South Carolina Dollar Amount Adjustments
The South Carolina Department of Consumer Affairs has released the dollar amounts under the Consumer Protection Code for the period of July 1, 2012 through June 30, 2014. Effective July 1, 2012, the prepayment penalty threshold is increased to $240,000.00. Therefore, beginning July 1, 2012 a prepayment penalty may not be charged for loans of $240,000.00 or less. There is no limit on prepayment penalties for loans of greater than $240,000.00.
Virginia House Bill 210
The Governor of Virginia signed into law HB 210, which establishes a licensing requirement for appraisal management companies. The provisions of the legislation are effective July 1, 2012, except that the licensing of appraisal management companies becomes effective July 1, 2014.
Under the legislation, the Virginia Real Estate Appraiser Board (“Board”) may issue licenses to appraisal management companies upon review of a completed application. “Appraisal management company” (“AMC”) means a person or entity that (1) manages independent contract appraisers, (2) enters into agreements with one or more independent appraisers to conduct appraisals, and (3) receives requests and fees for the appraisals from clients.
Virginia Senate Bill 409
The Governor of Virginia signed into law SB 409, which amends the requirements regarding recording taxes for deeds of trust and mortgages. Specifically, the legislation removes an exemption from recording taxes for refinances by the same lender. The legislation is effective July 1, 2012.
The legislation provides that when recording a security instrument which modifies the terms of an existing debt with the same lender, recording tax is due only on amounts which exceed the existing debt.
The legislation removes an exemption for refinances by the same lender. Current law provides that for refinance deeds of trust or mortgages by the same lender, recording tax is due only on the amount of new money which exceeds the existing debt. The legislation removes this exemption.
Virginia Senate Bill 734
The Governor of Virginia signed into law HB 734, which amends current provisions regarding deed recording requirements. This legislation provides that no deed or instrument in which property is transferred may be recorded unless (1) the amount of the consideration is stated on the first page of the document to be recorded; and (2) certification of the clerk of court that the tax has been paid is affixed to the document. This legislation is effective July 1, 2012.
West Virginia Licensing Regulations
The West Virginia Commissioner of Banks adopted final regulations which revise the regulations governing licensed mortgage lenders, brokers and loan originators. The final regulations are effective May 1, 2012.
The final regulations amend the record-keeping requirements applicable to licensed mortgage lenders and brokers to include the retention of emails. A lender must also maintain an itemization of all fees and charges imposed on each loan and received by the lender and by any third-parties. The itemization must include the nature and amount of each fee or charge and the identity of the recipient.
The final regulations also provide that the documentation requirement of the borrower’s ability to repay is not applicable only if the loan qualifies under guidelines established by the West Virginia Housing Development Fund, the Veterans Administration, or a non-profit housing provider licensed under West Virginia law.
The final rules add a new section regarding the tangible net benefit determination. Under this new section, a broker and lender licensee must document tangible net benefit to the borrower before arranging or making any residential mortgage loan that refinances an existing residential mortgage loan that closed within 24 months of the proposed refinancing. This duty exists even if the broker or lender did not arrange or make the existing loan that will be refinanced.