Title of Regulation: 10VAC5-161. Mortgage Loan Originators (adding 10VAC5-161-10 through 10VAC5-161-60).

Statutory Authority: §§ 6.1-431.21 (effective July 1, 2009) and 12.1-13 of the Code of Virginia.

Public Hearing Information:

July 9, 2009 - 10 a.m. - State Corporation Commission Courtroom, Tyler Building, 2nd Floor, Richmond, VA

Public Comments: Public comments may be submitted until 5 p.m. on June 22, 2009.

Agency Contact: Nicholas Kyrus, Deputy Commissioner, Bureau of Financial Institutions, P.O. Box 1197, Richmond, VA 23218, telephone (804) 371-9690, FAX (804) 371-9416, or email nick.kyrus@scc.virginia.gov.

Summary:

The proposed regulations implement the provisions of Chapters 273 and 453 of the 2009 Acts of Assembly relating to licensure of individual mortgage loan originators. The proposed regulations specify the individuals subject to licensure; prescribe the conditions; fees and procedure for licensing, prescribe the conditions; fees and procedure for annual license renewal; establish the amount of surety bond necessary for licensing; and specify the reports and notices required in connection with licensing.

AT RICHMOND, MAY 6, 2009

Ex Parte: In re: Proposed Rules Governing
Licensing of Mortgage Loan Originators

CASE NO. BFI-2009-00290

ORDER TO TAKE NOTICE

In the 2009 session of the Virginia General Assembly, Chapters 273 and 453 were enacted creating a new Chapter 16.1 in Title 6.1 of the Code of Virginia ("Chapter 16.1" or the "Chapter"). Chapter 16.1 provides for the mandatory licensing of all "mortgage loan originators," as therein defined, by the State Corporation Commission ("Commission") by July 1, 2010. Licensing is to be accomplished in coordination with the Nationwide Mortgage Licensing System and Registry, a registration and licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, in accordance with the Federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

Under § 6.1-431.21 of the aforesaid Chapter 16.1, the Commission is authorized to promulgate rules and regulations deemed appropriate to effect the purposes and provisions of the Chapter. The Commissioner of Financial Institutions has proposed that the Commission adopt regulations implementing the provisions of the Chapter relating to individuals subject to licensure, license application procedure, conditions and fees for license applications and renewals, surety bond amounts, and required reports and notices.

IT IS THEREFORE ORDERED THAT:

(1) The proposed regulations are appended hereto and made part of the record in this case.

(2) Written comments must be filed with the Clerk, State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218, on or before June 22, 2009, and shall contain a reference to Case No. BFI-2009-00290.

(3) Interested persons desiring to electronically submit comments may do so by following the instructions at the Commission's website: http://www.scc.virginia.gov/case.

(4) The Commission shall conduct a hearing in the Commission's Courtroom, Second Floor, Tyler Building, 1300 East Main Street, Richmond, Virginia, at 10:00 a.m. on July 9, 2009, to consider adoption of the proposed regulations.

(5) The proposed regulations shall be posted on the Commission's website at the above Internet address.

(6) An attested copy of this Order, together with a copy of the proposed regulations, shall be sent to the Registrar of Regulations for publication in the Virginia Register.

AN ATTESTED COPY hereof shall be sent to the Commissioner of Financial Institutions who shall forthwith mail a copy of this Order and the proposed regulations to all Chapter 16 licensees and such other interested persons as he may designate

CHAPTER 161
MORTGAGE LOAN ORIGINATORS

10VAC5-161-10. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Bureau" means the State Corporation Commission's Bureau of Financial Institutions.

"Licensee," "mortgage loan originator," "person," "registered mortgage loan originator," "registry," "residential mortgage loan," and "unique identifier" shall have the meanings ascribed to them in § 6.1-431.1 of the Code of Virginia.

10VAC5-161-20. Individuals subject to licensure.

A. In order to act as a mortgage loan originator on or after July 1, 2010, the following individuals must obtain a license:

1. Individuals acting as mortgage loan originators who are employees or exclusive agents of persons licensed under Chapter 16 (§ 6.1-408 et seq.) of Title 6.1 of the Code of Virginia;

2. Individuals, other than registered mortgage loan originators, acting as mortgage loan originators who are employees or exclusive agents of persons exempt from licensure under Chapter 16 (§ 6.1-408 et seq.) of Title 6.1 of the Code of Virginia; and

3. Individuals acting as independent contractors performing residential mortgage loan processing and underwriting activities.

B. Individuals who are coemployees of professional employer organizations or staffing services shall be deemed to be employees of the client company.

10VAC5-161-30. License application procedure.

A. Applications for a mortgage loan originator license shall be made through the registry in accordance with instructions from the registry and the bureau. In connection with such applications, the individual seeking a license shall furnish the registry all required information concerning his identity, personal history and experience, and fingerprints, and shall pay or cause to be paid through the registry required registry fees and an application fee of $150.

B. Within five days after registration with the registry, a bond with corporate surety on a commission-approved form and in an amount conforming to 10VAC5-161-50 shall be filed with the bureau, together with such further information as the bureau may require concerning the applicant's qualifications for licensure. In the case of individuals described in 10VAC5-161-20 A 1 and 2, the bond shall be filed by the person for whom the applicant will perform mortgage loan origination services. Filing of a bond under this subsection by a person licensed under Chapter 16 (§ 6.1-408 et seq.) of Title 6.1 of the Code of Virginia shall constitute compliance with § 6.1-413 of the Code of Virginia if the bond is in the amount required under § 6.1-413 of the Code of Virginia. In the case of individuals described in 10VAC5-161-20 A 3, the bond shall be filed by the individual applicant. In either case the person filing the bond shall, unless such information is contained in a prior filing under Chapter 16 of Title 6.1 of the Code of Virginia, simultaneously provide information to the bureau concerning his or its dollar volume of residential mortgage loans originated, processed, or underwritten during the immediately preceding calendar year.

C. If the bureau requests information to complete a deficient application and the information is not received within 60 days of the bureau's request, the application shall be deemed abandoned unless a request for an extension of time is received and approved by the bureau prior to the expiration of the 60-day period.

10VAC5-161-40. Conditions of licensure and renewals.

A. A mortgage loan originator license will be granted only if the individual meets the following conditions:

1. Application is made in accordance with 10VAC5-161-30;

2. The individual has obtained a unique identifier from the registry;

3. The individual's criminal history record contains no disqualifying convictions under § 6.1-431.8 of the Code of Virginia;

4. The individual has completed the prelicensing education prescribed by § 6.1-431.9 of the Code of Virginia.

5. The individual has achieved an acceptable score on the qualified written test prescribed by § 6.1-431.10 of the Code of Virginia; and

6. The individual possesses the financial responsibility, character, and general fitness required for licensure.

B. Licenses shall be subject to renewal each calendar year unless granted within 90 days before the end of the preceding calendar year. In order to renew a license, a licensee must apply for renewal through the registry on or before the end of the current license year in accordance with instructions from the registry and the bureau. The licensee shall furnish the registry and the bureau all required information and documentation and shall pay or cause to be paid through the registry all required registry fees and a license renewal fee of $100.

C. A mortgage loan originator license will be renewed only if the licensee meets the following conditions:

1. License renewal application is made in accordance with subsection B of this section;

2. The licensee continues to meet the conditions for initial licensure; and

3. The licensee has obtained the continuing education prescribed in § 6.1-431.11 of the Code of Virginia.

D. If a licensee fails to timely meet the conditions specified in subsection C of this section, but meets such conditions before March 1 of a renewal year and pays a reinstatement fee of $30, his license will be reinstated.

10VAC5-161-50. Surety bond amount.

The surety bond amount required to be filed and maintained by or on behalf of the licensee shall be set and adjusted as necessary annually by the bureau in accordance with the following scale, based upon residential mortgage loans originated, processed or underwritten, as the case may be, during the preceding calendar year:

LOANS	BOND AMOUNT
$0 - $5,000,000	$25,000
$5,000,001 - $20,000,000	$50,000
$20,000,001 - $50,000,000	$75,000
$50,000,001 - $100,000,000	$100,000
over $100,000,000	$150,000

10VAC5-161-60. Required reports and notices.

A. On or before March 1 of each year, each person for whom an individual described in 10VAC5-161-20 A 1 or 2 performs services shall file an annual report with the bureau stating the amount of residential mortgage loans made or brokered during the preceding calendar year, identifying all licensees performing services for that person, and providing such additional information as the bureau may require. Timely filing of the annual report required by Chapter 16 (§ 6.1-408 et seq.) of Title 6.1 of the Code of Virginia by a person licensed under that chapter shall constitute compliance with this subsection by that person if the annual report contains the information specified in this subsection.

B. On or before March 1 of each year, each licensee who is an individual described in 10VAC5-161-20 A 3 shall file an annual report with the bureau stating the amount of residential mortgage loans processed or underwritten and providing such additional information as the bureau may require.

C. Each licensee shall give notice to the bureau, either directly for a notice under subdivision 1 of this subsection or through the registry for other notices required by this section, within five days after the occurrence of any of the following events:

1. Cessation of activities for which a license is required, upon receipt of which notice the individual's license will be placed in inactive status and the individual shall not engage in activities requiring licensure under this chapter until such time as the individual meets the description in 10VAC5-161-20 A 1, 2, or 3 and other provisions of this chapter;

2. Termination of employment or exclusive agency as a mortgage loan originator for a person licensed or exempt from licensing under Chapter 16 of Title 6.1 of the Code of Virginia, upon receipt of which notice the individual's license will be placed in inactive status and the individual shall not engage in activities requiring licensure under this chapter until such time as the individual meets the description in 10VAC5-161-20 A 1, 2, or 3 and other provisions of this chapter;

3. Commencement of employment or exclusive agency as a mortgage loan originator for a new person licensed or exempt from licensing under Chapter 16 of Title 6.1 of the Code of Virginia, in which event the new person shall comply with the surety bond filing requirements of 10VAC5-161-30 B and 10VAC5-161-50; or

4. Surrender of a license, in which case the licensee shall mail his license to the bureau immediately upon giving notice of surrender of the license.