SB-0833, As Passed House, February 13, 2008

SUBSTITUTE FOR

SENATE BILL NO. 833

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~~ An owner, partner, member,

officer, director, trustee, employee, agent, broker, or ~~their~~ other

person, or a representative acting on the authority of ~~such~~ that

person ~~who~~ that willfully or intentionally does any of the

following is guilty of a misdemeanor punishable by a fine of not

more than ~~$5,000.00,~~ $15,000.00 or imprisonment for not more than 3

~~years~~ 1 year, 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 or acts as a loan officer in

this state without a loan officer 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.

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 considered to not have been continuously

maintained.

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, including

Senate Bill No. 833 as amended November 1, 2007

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, 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.

(2) <<If Subject to subsections (4) and (5), if>> the commissioner

finds that a licensee, or registrant,

or loan officer 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

loan officer registrant or a person who controls the licensee, or

registrant, or loan officer registrant of not more than $1,000.00

for each violation, except that the licensee, registrant, or loan

officer registrant or a the 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 loan

officer registration or refuse to issue a license or renew a

license, or registration, or loan officer registrant.

registrant or a person who controls the licensee, or registrant, or

loan officer 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 a separate violation. In determining under

subsection (2) the amount of a fine, whether to suspend or revoke a

license, or registration, or loan officer registration, whether to

refuse to issue or renew a license or loan officer registration, 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, or loan

officer registrant to ensure that the violation will not be

repeated, and the record of the licensee, or registrant, or loan

officer registrant in complying with this act. Any proceedings

under this subsection ~~shall be~~ are subject to the procedures of the

administrative procedures act of 1969, ~~Act No. 306 of the Public~~

Senate Bill No. 833 as amended November 1, 2007

~~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.

<<(5) If a loan officer registrant violates section 22b(e)(ii), the commissioner shall revoke his or her loan officer registration. Revocation of a loan officer registration under this subsection does not affect the commissioner's authority to pursue any other remedy available under subsection (2) for that violation.>>

Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 94th Legislature are

enacted into law:

(a) Senate Bill No. 826.

(b) Senate Bill No. 827.

(d) Senate Bill No. 829.

(e) Senate Bill No. 830.

(f) Senate Bill No. 831.

(g) Senate Bill No. 832.

(h) House Bill No. 5287.

(i) House Bill No. 5288.

(j) House Bill No. 5289.

(k) House Bill No. 5290.

(l) House Bill No. 5291.