61-2c-301 - Prohibited conduct -- Violations of the chapter.
61-2c-301. Prohibited conduct -- Violations of the chapter.
(1) A person transacting the business of residential mortgage loans in this state may not:
(a) give or receive compensation or anything of value in exchange for a referral ofresidential mortgage loan business;
(b) charge a fee in connection with a residential mortgage loan transaction:
(i) that is excessive; or
(ii) if the person does not comply with Section 70D-2-305;
(c) give or receive compensation or anything of value in exchange for a referral ofsettlement or loan closing services related to a residential mortgage loan transaction;
(d) do any of the following to induce a lender to extend credit as part of a residentialmortgage loan transaction:
(i) make a false statement or representation;
(ii) cause false documents to be generated; or
(iii) knowingly permit false information to be submitted by any party;
(e) give or receive compensation or anything of value, or withhold or threaten towithhold payment of an appraiser fee, to influence the independent judgment of an appraiser inreaching a value conclusion in a residential mortgage loan transaction, except that it is not aviolation of this section for a licensee to withhold payment because of a bona fide disputeregarding a failure of the appraiser to comply with the licensing law or the Uniform Standards ofProfessional Appraisal Practice;
(f) violate or not comply with:
(i) this chapter;
(ii) an order of the commission or division; or
(iii) a rule made by the division;
(g) fail to respond within the required time period to:
(i) a notice or complaint of the division; or
(ii) a request for information from the division;
(h) make false representations to the division, including in a licensure statement;
(i) for a residential mortgage loan transaction beginning on or after January 1, 2004,engage in the business of residential mortgage loans with respect to the transaction if the personalso acts in any of the following capacities with respect to the same residential mortgage loantransaction:
(i) appraiser;
(ii) escrow agent;
(iii) real estate agent;
(iv) general contractor; or
(v) title insurance producer;
(j) order a title insurance report or hold a title insurance policy unless the person providesto the title insurer a copy of a valid, current license under this chapter;
(k) engage in unprofessional conduct as defined by rule;
(l) engage in an act or omission in transacting the business of residential mortgage loansthat constitutes dishonesty, fraud, or misrepresentation;
(m) engage in false or misleading advertising;
(n) (i) fail to account for money received in connection with a residential mortgage loan;
(ii) use money for a different purpose from the purpose for which the money is received;
or
(iii) except as provided in Subsection (4), retain money paid for services if the servicesare not performed;
(o) fail, within 90 calendar days of a request from a borrower who has paid for anappraisal, to give a copy of an appraisal ordered and used for a transaction to the borrower;
(p) engage in an act that is performed to:
(i) evade this chapter; or
(ii) assist another person to evade this chapter;
(q) recommend or encourage default, delinquency, or continuation of an existing defaultor delinquency, by a mortgage applicant on an existing indebtedness before the closing of aresidential mortgage loan that will refinance all or part of the indebtedness;
(r) in the case of the principal lending manager of an entity or a branch office of anentity, fail to exercise reasonable supervision over the activities of:
(i) unlicensed staff; and
(ii) a mortgage loan originator who is affiliated with the principal lending manager;
(s) pay or offer to pay an individual who does not hold a license under this chapter forwork that requires the individual to hold a license under this chapter;
(t) in the case of a dual licensed title licensee as defined in Section 31A-2-402:
(i) provide a title insurance product or service without the approval required by Section31A-2-405; or
(ii) knowingly provide false or misleading information in the statement required bySubsection 31A-2-405(2);
(u) represent to the public that the person can or will perform any act of a mortgage loanoriginator if that person is not licensed under this chapter because the person is exempt underSubsection 61-2c-102(1)(g)(ii)(A), including through:
(i) advertising;
(ii) a business card;
(iii) stationery;
(iv) a brochure;
(v) a sign;
(vi) a rate list; or
(vii) other promotional item; or
(v) (i) engage in an act of loan modification assistance without being licensed under thischapter;
(ii) engage in an act of foreclosure rescue that requires licensure as a real estate agent orreal estate broker under Chapter 2, Division of Real Estate, without being licensed under thatchapter;
(iii) request or require a person to pay a fee if:
(A) the person is required to pay the fee before entering into a written agreementspecifying what one or more acts of loan modification assistance will be completed if the fee ispaid; or
(B) in a case when the residential mortgage loan that is the subject of the loanmodification assistance is foreclosed within one year of the day on which the person enters into awritten agreement, the person is required to forfeit the fee for any reason;
(iv) induce a person seeking a loan modification to hire the licensee to engage in an act
of loan modification assistance by:
(A) suggesting to the person that the licensee has a special relationship with the person'slender or loan servicer; or
(B) falsely representing or advertising that the licensee is acting on behalf of:
(I) a government agency;
(II) the person's lender or loan servicer; or
(III) a nonprofit or charitable institution;
(v) recommend or participate in a loan modification that requires a person to:
(A) transfer title to real property to the licensee or to a third party with whom the licenseehas a business relationship or financial interest;
(B) make a mortgage payment to a person other than the person's loan servicer; or
(C) refrain from contacting the person's:
(I) lender;
(II) loan servicer;
(III) attorney;
(IV) credit counselor; or
(V) housing counselor; or
(vi) for an agreement for loan modification assistance entered into on or after May 11,2010, engage in an act of loan modification assistance without offering in writing to the personentering into the agreement for loan modification assistance a right to cancel the agreementwithin three business days after the day on which the person enters the agreement.
(2) Whether or not the crime is related to the business of residential mortgage loans, it isa violation of this chapter for a licensee or a person who is a certified education provider to doany of the following with respect to a criminal offense that involves moral turpitude:
(a) be convicted;
(b) plead guilty or nolo contendere;
(c) enter a plea in abeyance; or
(d) be subjected to a criminal disposition similar to the ones described in Subsections(2)(a) through (c).
(3) A principal lending manager does not violate Subsection (1)(r) if:
(a) in contravention of the principal lending manager's written policies and instructions,an affiliated licensee of the principal lending manager violates:
(i) this chapter; or
(ii) rules made by the division under this chapter;
(b) the principal lending manager established and followed reasonable procedures toensure that affiliated licensees receive adequate supervision;
(c) upon learning of a violation by an affiliated licensee, the principal lending managerattempted to prevent or mitigate the damage;
(d) the principal lending manager did not participate in or ratify the violation by anaffiliated licensee; and
(e) the principal lending manager did not attempt to avoid learning of the violation.
(4) Notwithstanding Subsection (1)(n)(iii), a licensee may, upon compliance with Section70D-2-305, charge a reasonable cancellation fee for work done originating a mortgage if themortgage is not closed.
Amended by Chapter 184, 2010 General Session
Amended by Chapter 379, 2010 General Session