HB2098 - 512R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 6-991.03, Arizona Revised Statutes, is amended to read:

START_STATUTE6-991.03. Licensing; renewal; qualifications; application; fees

A. A natural person shall not act as a loan originator unless the person is licensed under this article.

B. The superintendent shall not grant a loan originator license to a person, other than a natural person. An applicant for an original loan originator's license shall have done all of the following:

1. Satisfactorily completed a course of study, including at least twenty hours of education, for loan originators approved by the superintendent during the two three‑year period immediately preceding the time of application. The twenty hours of education must include at least all of the following:

(a) Three hours of federal law.

(b) Three hours of ethics, which shall include instruction on fraud, consumer protection and fair lending issues.

2. Completed late continuing education for the purposes of satisfying continuing education for the last year that the loan originator was in renewable status.

2. 3. Passed a loan originator's examination pursuant to section 6‑991.07. not more than one year before the granting of the license demonstrating The applicant shall demonstrate knowledge and understanding of the following:

(a) Federal laws.

(b) Laws of this state.

4. Retaken the loan originator's examination if the licensed loan originator failed to maintain a valid license for a period of five years or longer, not including any time during which the applicant is a registered loan originator.

3. 5. Obtained a unique identifier through the nationwide mortgage licensing system and registry established by the secure and fair enforcement for mortgage licensing act of 2008 (P.L. 110‑289; 122 Stat. 2810; 12 United States Code sections 5101 through 5116) or its successor.

4. 6. Deposited with the superintendent a bond executed by the applicant's employer or registered exempt person as principal and a surety company licensed to do business in this state as a surety pursuant to section 6‑903, 6-912 or 6‑943.

5. 7. Submitted fingerprints to the department for the purpose of a background investigation.

6. 8. Paid an amount to be determined by the superintendent for deposit in the mortgage recovery fund established pursuant to section 6‑991.09 or deposited with the superintendent a bond executed by the applicant's employer or registered exempt person as principal and a surety company licensed or approved to do business in this state for the benefit of any person aggrieved by any act, representation, transaction or conduct of a licensed loan originator that violates this title or the rules adopted pursuant to this title. Notwithstanding section 6‑903 or 6‑943, the amount of the bond shall be in an amount of not less than two hundred thousand dollars. Loan originators working under the employer or registered exempt person bond described in this paragraph do not have to contribute to the mortgage recovery fund.

C. A person shall make an application apply for a license or renewal of a license in writing in the manner prescribed by the superintendent and accompanied by the information prescribed by the superintendent.

D. Before submitting a renewal application, an applicant for renewal of a loan originator license shall have satisfactorily completed eight approved continuing education units that include at least:

1. Three hours of federal law.

2. Two hours of ethics, including instruction on fraud, consumer protection and fair lending issues.

3. Two hours of training related to lending standards for the nontraditional mortgage product marketplace.

E. Education courses taken before licensure shall be reviewed and approved by the nationwide mortgage licensing system and registry established by the secure and fair enforcement for mortgage licensing act of 2008 (P.L. 110‑289; 122 Stat. 2810; 12 United States Code sections 5101 through 5116) or its successor.

F. Continuing education courses shall be reviewed and approved by the nationwide mortgage licensing system and registry established by the secure and fair enforcement for mortgage licensing act of 2008 (P.L. 110‑289; 122 Stat. 2810; 12 United States Code sections 5101 through 5116) or its successor. A licensed loan originator:

1. May only receive credit for a continuing education course in the year in which the course is taken.

2. May not take the same approved course in the same year or successive years to meet the annual requirements for continuing education.

G. The nonrefundable application fee shall accompany each application for an original loan originator license.

H. A license issued pursuant to this article is not transferable or assignable.

I. At the superintendent's discretion, application fees may be waived if the applicant is a housing counselor certified by the United States department of housing and urban development and employed by a nonprofit agency.

J. Each mortgage broker, mortgage banker or registered exempt person shall submit to the nationwide mortgage licensing system and registry established by the secure and fair enforcement for mortgage licensing act of 2008 (P.L. 110‑289; 122 Stat. 2810; 12 United States Code sections 1501 5101 through 5116) or its successor reports of condition that are in a form and that contain information required by the nationwide mortgage licensing system.

K. The superintendent shall establish a process for loan originators to challenge information that the superintendent enters into the nationwide mortgage licensing system and registry. END_STATUTE

Sec. 2. Section 6-991.04, Arizona Revised Statutes, is amended to read:

START_STATUTE6-991.04. Issuance of license; notice from employing mortgage broker, mortgage banker or consumer lender or registered exempt person; renewal; inactive status; address change; fee

A. The superintendent, on determining that an applicant is qualified and has paid the required fees, shall issue a loan originator's license to the applicant evidenced by a continuous certificate. The superintendent shall grant or deny a license within one hundred twenty days after receiving the completed application and fees. An applicant who has been denied a license may not reapply for a license before one year from the date of the previous application.

B. On issuance of the license, the superintendent shall keep the loan originator's license until a mortgage broker or mortgage banker licensed pursuant to this chapter or a consumer lender employs the loan originator and the employer provides a written notice that the employer has hired the loan originator or until an exempt person who is registered pursuant to section 6‑912 provides a written notice that the exempt person has engaged the loan originator on an exclusive contract with the exempt person. The employer shall provide the notice before the loan originator begins working for the employer. Exempt persons who are registered pursuant to section 6‑912 shall provide the notice before the loan originator begins work under the exclusive contract with the exempt person. The notice shall be from an officer or other person authorized by the employer or registered exempt person. The notice shall contain a request for the loan originator's license and shall be dated, signed and notarized. On receipt of the request, the superintendent shall forward the loan originator's license to the employing mortgage broker, mortgage banker, consumer lender or registered exempt person.

C. Licenses shall be issued for a one-year period.

D. A loan originator shall make application apply for renewal on forms prescribed by the superintendent. The application shall include original certificates evidencing the loan originator's successful completion of eight continuing education units during the preceding one-year period by a continuing education provider approved by the superintendent.

E. A loan originator shall pay the renewal fee every year on or before December 31. Licenses not renewed by December 31 are suspended, and the licensee shall not act as a loan originator until the license is renewed or a new license is issued pursuant to this article. A person may renew a suspended license by paying the renewal fee plus a dollar amount to be determined by the superintendent for each day after December 31 that a license renewal fee is not received by the superintendent.

F. Licenses that are not renewed by January 31 of each year expire. A license shall not be granted to the holder of an expired license except as provided in this article for the issuance of an original license.

G. From December 1 through December 31 of each renewal period, a licensee may request inactive status for the following license period. The license shall be placed on inactive status after the licensee pays to the superintendent the inactive status renewal fee and surrenders the license to the superintendent. During inactive status, an inactive licensee shall not act as a loan originator. A licensee may not be on inactive status for more than two consecutive renewal periods in any ten year period. The license expires if the licensee violates this subsection.

H. At renewal an inactive licensee may return to active status by doing all of the following:

1. Providing the superintendent with evidence that the licensee has met the requirements of section 6‑991.03, subsection B.

2. Making a written request to the superintendent for reactivation.

3. Paying the annual licensing fee.

4. Providing the superintendent with proof that the licensee meets all other requirements for acting as a loan originator.

I. The mortgage broker, mortgage banker, consumer lender or registered exempt person shall keep and maintain at the principal place of business in this state the loan originator's license during the loan originator's employment or exclusive contract term. A copy of the loan originator's license shall be available for public inspection during regular business hours.

J. A loan originator shall immediately notify the superintendent of a change in the loan originator's residence address. The superintendent shall endorse the change of address on the license for a fee to be determined by the superintendent.

K. Within five business days after any licensee's employment termination, the employing mortgage broker, mortgage banker, consumer lender or registered exempt person shall do both of the following:

1. Notify the superintendent of the licensee's termination.

2. Return the license to the superintendent.

L. An applicant for a loan originator license who is currently registered with the nationwide mortgage licensing system and registry established by the secure and fair enforcement for mortgage licensing act of 2008 (P.L. 110‑289; 122 Stat. 2810; 12 United States Code sections 5101 through 5116) or its successor may be granted a temporary license for a period not to exceed one hundred eighty days.

M. The superintendent shall establish a process for loan originators to challenge information that the superintendent enters into the nationwide mortgage licensing system and registry. END_STATUTE