September 7, 2006, Introduced by Reps. Casperson, Marleau, Amos, Vander Veen, Taub, Mortimer, Baxter, Emmons, Jones, Booher, David Law, Pastor and Shaffer and referred to the Committee on Banking and Financial Services.
A bill to amend 1987 PA 173, entitled
"Mortgage brokers, lenders, and servicers licensing act,"
by amending section 29 (MCL 445.1679), as amended by 1996 PA 210.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 29. (1) A person, or any owner, partner, member, officer,
director, trustee, employee, agent, broker, or their representative
acting
on the authority of such that
person, who willfully or
intentionally does any of the following is guilty of a misdemeanor
punishable by a fine of not more than $5,000.00, or imprisonment
for not more than 3 years, or both:
(a) Engages in this state in the business of a mortgage
broker, mortgage lender, or mortgage servicer without a license or
registration required under this act.
(b) Transfers or assigns a mortgage loan or a security
directly representing an interest in 1 or more mortgage loans
before the disbursement of 75% or more of the proceeds of the
mortgage loan to, or for the benefit of, the borrower. This
subdivision does not apply to any of the following:
(i) A land contract not considered to be an equitable mortgage.
(ii) A loan made under a state or federal government program
that allows the lender to escrow more than 25% of the loan proceeds
for a limited period of time.
(iii) A construction loan.
(iv) A loan that provides in writing that the loan proceeds
shall be disbursed to or for the benefit of the borrower in
installments or upon the request of the borrower or upon the
completion of renovations or repairs to the dwelling situated on
the real property subject to the mortgage loan.
(c) Transfers or assigns a mortgage loan or a security
representing an interest in 1 or more mortgage loans to an
individual investor unless 1 or more of the following apply:
(i) The transfer or assignment is made through a broker-dealer
which is a member of the New York stock exchange.
(ii) The transfer or assignment is made through a broker-dealer
who meets all of the following criteria:
(A) The broker-dealer is registered under the uniform
securities
act, Act No. 265 of the Public Acts of 1964, being
sections
451.501 to 451.818 of the Michigan Compiled Laws 1964 PA
265, MCL 451.501 to 451.818.
(B) The broker-dealer is not an affiliate of the mortgage
lender unless the person acquired the broker-dealer registration,
directly
or indirectly, before September 1, 1987 under
Act No. 265
of
the Public Acts of 1964 the
uniform securities act, 1964 PA
265, MCL 451.501 to 451.818, was affiliated with a mortgage lender
before September 1, 1987, and has continuously maintained that
registration subsequent to September 1, 1987. For purposes of this
subparagraph, if an aggregate of more than 10% of the outstanding
voting stock or interest in a corporation, unincorporated
organization, partnership, or other legal entity that is a broker-
dealer or mortgage lender is sold, transferred, assigned, or
otherwise conveyed subsequent to September 1, 1987, the
registration shall
be is not considered to not have
been
continuously maintained.
(C) The broker-dealer acquired the mortgage loan or security
on a firm commitment.
(iii) The transfer or assignment is made to a person who the
transferor or assignor believes, or has reasonable grounds to
believe, is 1 of the following:
(A) A business entity having either net income from operations
after taxes in excess of $100,000.00 in its last fiscal year or its
latest 12-month period, or a net worth in excess of $1,000,000.00
at the time of purchase.
(B) An individual who, after the purchase, has an investment
of
more than $50,000.00 in such loans or securities mortgage
loans or securities representing an interest in 1 or more mortgage
loans, including installment payments to be made within 1 year
after purchase by the individual, has either personal income before
taxes in excess of $100,000.00 for his or her last fiscal year or
latest 12-month period and is capable of bearing the economic risk,
or net worth in excess of $1,000,000.00, and has the knowledge and
experience in financial and business matters that he or she is
capable of evaluating the merits and risks of the prospective
investment, or has obtained the advice of an attorney, certified
public accountant, or investment adviser registered under the
investment advisers act of 1940, 15 USC 80b-1 to 80b-21, or an
investment
adviser registered under Act No. 265 of the Public Acts
of
1964 the uniform securities
act, 1964 PA 265, MCL 451.501 to
451.818, with respect to the merits and risks of the prospective
investment.
(iv) A transferor or assignor does not maintain its principal
place of business in this state and the transferee or assignee is
not a resident of this state and does not maintain its principal
place of business in this state.
(d) Coerce or induce a real estate appraiser to inflate the
value of real property used as collateral for a mortgage loan by
doing any of the following:
(i) Representing or implying that a real estate appraiser will
not be selected to conduct an appraisal of the real property or
selected for future appraisal work unless the appraiser agrees in
advance to a value, range of values, or minimum value for the real
property.
(ii) Representing or implying that a real estate appraiser will
not be paid for an appraisal unless the appraiser agrees in advance
to a value, range of values, or minimum value for the real
property.
(2) If the commissioner finds that a licensee or registrant
has violated this act or the rules promulgated under this act, the
commissioner may do 1 or more of the following:
(a) Assess a civil fine against the licensee, registrant, or a
person who controls the licensee or registrant of not more than
$1,000.00 for each violation, except that the licensee, registrant,
or a person shall not be fined more than $10,000.00 for a
transaction resulting in more than 1 violation, plus the costs of
investigation.
(b) Suspend or revoke a license or registration or refuse to
issue a license or renew a license or registration.
(c) Require the licensee or registrant or a person who
controls the licensee or registrant to make restitution to each
injured individual, if the commissioner finds that the violation of
this act or a rule promulgated under this act resulted in an injury
to 1 or more individuals.
(3) A civil fine assessed under subsection (2) may be sued for
and recovered by and in the name of the commissioner and may be
collected and enforced by summary proceedings by the attorney
general. Each individual injured by a violation of this act or a
rule shall
constitute is a separate violation. In determining
under subsection (2) the amount of a fine, whether to suspend or
revoke a license or registration, whether to refuse to issue or
renew a license, or the amount of restitution, the commissioner
shall consider the extent to which the violation was a knowing and
willful violation, the extent of the injury suffered because of the
violation, the corrective action taken by the licensee or
registrant to ensure that the violation will not be repeated, and
the record of the licensee or registrant in complying with this
act. Any proceedings under this subsection shall be subject to the
procedures
of the administrative procedures act of 1969, Act No.
306
of the Public Acts of 1969, being sections 24.201 to 24.328 of
the
Michigan Compiled Laws 1969
PA 306, MCL 24.201 to 24.328.
(4) Subsection (2) does not apply to a violation of this act
that results from a bona fide error that occurs notwithstanding the
adoption and observance of reasonable procedures intended to
prevent the occurrence of the error.