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Regular Session, 2011
HOUSE BILL NO. 492
BY REPRESENTATIVES HENDERSON AND ARNOLD
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
FINANCIAL INSTITUTIONS: Provides relative to exemptions to licensure requirements
for residential mortgage loan originators
AN ACT1
To amend and reenact R.S. 6:1083(16) and 1087(E)(9) and to enact R.S. 6:1087(E)(10),2
relative to residential mortgage lenders; to establish an exemption from licensure as3
a residential mortgage loan originator; to delete provisions defining an employee of4
a registered mortgage loan originator; to provide for severability; to provide for an5
effective date; and to provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 6:1083(16) and 1087(E)(9) are hereby amended and reenacted and8
R.S. 6:1087(E)(10) is hereby enacted to read as follows: 9
§1083. Definitions10
As used in this Chapter:11
* * *12
(16) "Registered mortgage loan originator" means any individual who meets13
the definition of mortgage loan originator and is an employee of a depository14
institution or a subsidiary that is either owned and controlled by a depository15
institution and regulated by a federal banking agency or an institution regulated by16
the Farm Credit Administration and is registered with, and maintains a unique17
identifier through, the Nationwide Mortgage Licensing System and Registry. For the18
purposes of this Paragraph, "employee" shall include a natural person who is an19
agent of a depository institution or its controlled and regulated subsidiary acting20 HB NO. 492
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under the management and supervision of the depository institution or its controlled1
regulated subsidiary and subject to the oversight of a banking agency, but only if:2
(a) The natural person enters into a written agreement prohibiting the3
individual from soliciting, processing, negotiating, or placing a mortgage loan with4
a person other than the institution or its controlled and regulated subsidiary.5
(b) The natural person would not be barred from licensure pursuant to R.S.6
6:1088(E)(2), (3), or (4), as determined by the commissioner.7
(c) The natural person acknowledges that he is subject to the authority of the8
commissioner under R.S. 6:1091 and 1092, as applicable.9
(d) A financial institution acceptable to the commissioner shall have:10
(i) Provided an undertaking of accountability supported by a surety bond11
equal to one million dollars, to meet the requirement of R.S. 6:1088(G)(1) and to12
cover all of the natural persons who are considered to be employees under this13
Section, which undertaking includes full and direct financial responsibility for the14
loan origination activities of each such natural person.15
(ii) Paid an annual fee of one half the license fee for a mortgage loan16
originator under R.S. 6:1088.2(A)(4) times the number of natural persons who are17
considered exclusive agents under this Section as of December thirty-first of the18
preceding year, as determined by the commissioner.19
(iii) Provided a business plan acceptable to the commissioner that sets forth20
the education program for the natural persons, the handling of consumer complaints21
related to the natural persons, and the supervision of the loan origination activities22
of the natural persons. The provisions of the business plan shall be the following:23
(aa) The commissioner shall have forty-five days in which to accept or deny24
the business plan from its receipt. If the commissioner does not accept or reject the25
plan within forty-five days, the plan will be deemed accepted. If the plan is rejected26
within forty-five days, the commissioner shall make recommendations in writing to27
the financial institution as to changes in the plan that would render it acceptable.28 HB NO. 492
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(bb) If the plan is rejected, the financial institution shall have forty-five days1
to make recommended changes to the plan and resubmit it to the commissioner for2
reconsideration.3
(cc) The commissioner shall have fifteen days from the receipt of the4
resubmitted plan to accept or deny the resubmitted plan. If the resubmitted plan is5
not accepted or rejected within fifteen days, the plan shall be deemed accepted.6
(dd) The denial of the plan or dissatisfaction with the substance of the plan7
shall entitle the applicant to a hearing before the division of administrative law,8
provided the applicant has filed notice requesting the hearing with the commissioner9
within fifteen days of the receipt of the commissioner's decision. The commissioner10
shall forward the request and any supporting documents to the division of11
administrative law within ten days. Such hearing shall be scheduled to take place12
within sixty days from the date a request is received by the division of administrative13
law, unless continued by all parties, and a decision shall be rendered as expeditiously14
as possible.15
(ee) Any applicant aggrieved by the division of administrative law's decision16
shall be entitled to judicial review pursuant to R.S. 49:950 et seq. in the Nineteenth17
Judicial District Court, which shall conduct a de novo review. Such action is entitled18
to priority and preference over all other pending civil matters such that a decision19
should be rendered as expeditiously as possible.20
* * *21
§1087. Exemptions; annual registration statement; fees22
* * *23
E. The following shall be exempt from the provisions of this Part applicable24
to persons engaged in residential mortgage lending activities as a residential25
mortgage loan originator:26
* * *27 HB NO. 492
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(9) Any individual who meets all of the following requirements:1
(a) In any consecutive twelve-month period, originates five or fewer2
residential mortgage loans exclusively for a single federally chartered depository3
institution and the loans are closed.4
(b) Is contractually prohibited from soliciting, processing, negotiating, or5
placing a residential mortgage loan with a person other than the single federally6
chartered depository institution.7
(c) Enrolls with the Office of Financial Institutions as an individual who8
originates exclusively with a single federal depository institution until the time any9
registration with the Nationwide Mortgage Licensing System and Registry10
(NMLS&R) is required for the individual by federal law or regulation and a suitable11
category is created for that registration with NMLS&R. Enrollment pursuant to this12
Subparagraph must be renewed annually with the Office of Financial Institutions.13
(d) Is not barred from licensure pursuant to R.S. 6:1088(E)(2), (3), or (4), as14
determined by the commissioner of financial institutions.15
(e) Is sponsored by a life insurance company or an affiliate of the company16
which is authorized to engage in business in this state and which is a licensed17
mortgage loan broker or originator, and which sponsorship shall include all of the18
following:19
(i) Providing an undertaking of accountability supported by a surety bond20
equal to one million dollars, to meet the requirement of R.S. 6:1088(G)(1) and to21
cover all of the persons who are exempt pursuant to this Paragraph, which22
undertaking includes full and direct financial responsibility for the loan origination23
activities of each such exempt person.24
(ii) Paying an annual fee on behalf of the individual exempted pursuant to25
this Paragraph in the amount of one half the license fee for a mortgage loan26
originator pursuant to R.S. 6:1088.2(A)(4) to the Office of Financial Institutions.27
(10) The commissioner may exempt mortgage servicer loss mitigation28
specialists if he determines that an exemption of a mortgage servicer loss mitigation29 HB NO. 492
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specialist is compliant with the minimum standards set forth in P.L. 110-289, Title1
V.2
* * *3
Section 2. If the secretary of the United States Department of Housing and Urban4
Development or the director of the Consumer Financial Protection Bureau by final5
administrative decision determines that R.S. 6:1087(E)(9) or application of R.S.6
6:1087(E)(9) to any person or circumstance is considered to be in conflict with the federal7
Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (P.L. 110-289), or any8
rules or regulations adopted pursuant to that act, R.S. 6:1087(E)(9) shall be held invalid;9
however, the remainder of Louisiana law implementing the federal act or the application of10
the provisions thereof to other persons or circumstances shall not be affected. In the event11
the provisions of R.S. 6:1087(E)(9) are null and void or otherwise held invalid, and until12
such time, any person acting according to this provision of invalidity shall be deemed in13
compliance with the provisions of Louisiana law implementing the federal act and any14
transactions of any type covered in Louisiana law implementing the federal act are hereby15
deemed to be lawful and in full force and effect. 16
Section 3. Any licensing requirement for any person operating pursuant to the17
exception found in R.S. 6:1087(E)(9), should the provisions of R.S. 6:1087(E)(9) be null and18
void or otherwise held invalid, shall not be effective until one hundred eighty days after the19
secretary of the United States Department of Housing and Urban Development or the20
director of the Consumer Financial Protection Bureau makes such a determination of21
invalidity in writing. This period shall not commence until the commissioner of financial22
institutions has concurred in this determination and posted official notice of this action on23
the Office of Financial Institution's official website. The commissioner shall also notify in24
writing any individual or sponsoring entity enrolled pursuant to this Chapter or any other25
person requesting notice of such action.26
Section 4. If any provision of R.S. 6:1087(E)(9) or the application thereof is null and27
void, or otherwise held invalid, such invalidity shall not affect other provisions or28 HB NO. 492
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application of R.S. 6:1087 which can be given effect without the invalid provisions or1
application and to this end the provisions of R.S. 6:1087(E)(9) are hereby declared severable.2
Section 5. This Act shall become effective upon signature by the governor or, if not3
signed by the governor, upon expiration of the time for bills to become law without signature4
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If5
vetoed by the governor and subsequently approved by the legislature, this Act shall become6
effective on the day following such approval.7
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Henderson HB No. 492
Abstract: Provides an exemption from licensure for certain persons engaged in residential
mortgage lending activities as residential mortgage loan originators.
Present law defines "registered mortgage loan originator" as any individual who meets the
definition of mortgage loan originator and is an employee of a depository institution or a
subsidiary that is either owned and controlled by a depository institution and regulated by
a federal banking agency or an institution regulated by the Farm Credit Administration and
is registered with, and maintains a unique identifier through, the Nationwide Mortgage
Licensing System and Registry (NMLS&R).
Proposed law retains present law.
Present law provides that for the purposes of present law, "employee" shall include a natural
person who is an agent of a depository institution or its controlled and regulated subsidiary
acting under the management and supervision of the depository institution or its controlled
regulated subsidiary and subject to the oversight of a banking agency, but only if:
(1)The natural person enters into a written agreement prohibiting the individual from
soliciting, processing, negotiating, or placing a mortgage loan with a person other
than the institution or its controlled and regulated subsidiary.
(2)The natural person would not be barred from licensure pursuant to present law, as
determined by the commissioner of financial institutions.
(3)The natural person acknowledges that he is subject to the authority of the
commissioner pursuant to present law, as applicable.
(4)A financial institution acceptable to the commissioner shall have:
(a)Provided an undertaking of accountability supported by a surety bond equal
to $1 million to meet the requirement of present law and to cover all of the
natural persons who are considered to be employees under present law,
which undertaking includes full and direct financial responsibility for the
loan origination activities of each such natural person. HB NO. 492
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(b)Paid an annual fee of one half the license fee for a mortgage loan originator
under present law times the number of natural persons who are considered
exclusive agents pursuant to present law as of Dec. 31 of the preceding year,
as determined by the commissioner.
(c)Provided a business plan acceptable to the commissioner that sets forth the
education program for the natural persons, the handling of consumer
complaints related to the natural persons, and the supervision of the loan
origination activities of the natural persons. The provisions of the business
plan shall be the following:
(i)The commissioner shall have 45 days in which to accept or deny the
business plan from its receipt. If the commissioner does not accept
or reject the plan within 45 days, the plan will be deemed accepted.
If the plan is rejected within 45 days, the commissioner shall make
recommendations in writing to the financial institution as to changes
in the plan that would render it acceptable.
(ii)If the plan is rejected, the financial institution shall have 45 days to
make recommended changes to the plan and resubmit it to the
commissioner for reconsideration.
(iii)The commissioner shall have 15 days from the receipt of the
resubmitted plan to accept or deny the resubmitted plan. If the
resubmitted plan is not accepted or rejected within 15 days, the plan
shall be deemed accepted.
(iv)The denial of the plan or dissatisfaction with the substance of the plan
shall entitle the applicant to a hearing before the division of
administrative law, provided the applicant has filed notice requesting
the hearing with the commissioner within 15 days of the receipt of
the commissioner's decision. The commissioner shall forward the
request and any supporting documents to the division of
administrative law within 10 days. Such hearing shall be scheduled
to take place within 60 days from the date a request is received by the
division of administrative law, unless continued by all parties, and a
decision shall be rendered as expeditiously as possible.
(v)Any applicant aggrieved by the division of administrative law's
decision shall be entitled to judicial review pursuant to present law
in the 19th JDC, which shall conduct a de novo review. Such action
is entitled to priority and preference over all other pending civil
matters such that a decision should be rendered as expeditiously as
possible.
Proposed law deletes present law.
Present law provides exemptions from the provisions of present law applicable to certain
persons engaged in residential mortgage lending activities as a residential mortgage loan
originator.
Proposed law retains present law and adds an exemption for any individual who meets all
of the following requirements:
(1)In any consecutive 12-month period, originates five or fewer residential mortgage
loans exclusively for a single federally chartered depository institution and the loans
are closed. HB NO. 492
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(2)Is contractually prohibited from soliciting, processing, negotiating, or placing a
residential mortgage loan with a person other than the single federally chartered
depository institution.
(3)Enrolls with the Office of Financial Institutions as an individual who originates
exclusively with a single federal depository institution until the time any registration
with the NMLS&R is required for the individual by federal law or regulation and a
suitable category is created for that registration with NMLS&R. Enrollment
pursuant to proposed law must be renewed annually with the Office of Financial
Institutions.
(4)Is not barred from licensure pursuant to proposed law, as determined by the
commissioner of financial institutions.
(5)Is sponsored by a life insurance company or an affiliate of the company which is
authorized to engage in business in this state and which is a licensed mortgage loan
broker or originator, and which sponsorship shall include all of the following:
(a)Providing an undertaking of accountability supported by a surety bond equal
to $1 million to meet the requirement of proposed law and to cover all of the
persons who are exempt pursuant to proposed law, which undertaking
includes full and direct financial responsibility for the loan origination
activities of each such exempt person.
(b)Paying an annual fee on behalf of the individual exempted pursuant to
proposed law in the amount of one half the license fee for a mortgage loan
originator pursuant to proposed law to the Office of Financial Institutions.
Present law authorizes the commissioner of financial institutions to exempt mortgage
servicer loss mitigation specialists if he determines that an exemption of a mortgage servicer
loss mitigation specialist is compliant with the minimum standards of the federal Secure and
Fair Enforcement for Mortgage Licensing Act of 2008.
Proposed law retains present law.
Proposed law provides that, if the secretary of the U.S. Dept. of Housing and Urban
Development or the director of the Consumer Financial Protection Bureau by final
administrative decision determines that proposed law or application of proposed law to any
person or circumstance is considered to be in conflict with the federal Secure and Fair
Enforcement for Mortgage Licensing Act of 2008, or any rules or regulations adopted
pursuant to that act, proposed law shall be held invalid; however, the remainder of La. law
implementing the federal act or the application of the provisions thereof to other persons or
circumstances shall not be affected.
Proposed law provides that, in the event the provisions of proposed law are null and void or
otherwise held invalid, and until such time, any person acting according to the provision of
invalidity in proposed law shall be deemed in compliance with the provisions of proposed
law and any transactions of any type covered in proposed law shall be deemed to be lawful
and in full force and effect.
Proposed law provides that any licensing requirement for any person operating pursuant to
the exception found in proposed law, should the provisions of proposed law be null and void
or otherwise held invalid, shall not be effective until 180 days after secretary of the U.S.
Dept. of Housing and Urban Development or the director of the Consumer Financial
Protection Bureau makes such determination of invalidity in writing. This period shall not
commence until the commissioner of financial institutions has concurred in this
determination and posted official notice of this action on the Office of Financial Institution's
official website. The commissioner shall also notify in writing any individual or sponsoring HB NO. 492
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entity enrolled pursuant to proposed law or any other person requesting notice of such
action.
Proposed law provides that, if any provision of proposed law or the application thereof is
null and void, or otherwise held invalid, such invalidity shall not affect other provisions or
application of proposed law which can be given effect without the invalid provisions or
application and to this end the provisions of proposed law shall be declared severable.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 6:1083(16) and 1087(E)(9); Adds R.S. 6:1087(E)(10))