68th OREGON LEGISLATIVE ASSEMBLY--1995 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2978
House Bill 2791
Sponsored by Representative JOHNSON (at the request of Oregon
Mortgage Bankers Association)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Modifies definitions of mortgage banker, mortgage banking loan,
mortgage broker and mortgage loan. Allows Director of Department
of Consumer and Business Services to adopt rule allowing refund
of mortgage banker and mortgage broker licensing fees. Allows
director to set duration of mortgage banker and mortgage broker
licenses that are renewed.
A BILL FOR AN ACT
Relating to mortgages; creating new provisions; and amending ORS
59.840, 59.850 and 59.855.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 59.840 is amended to read:
59.840. As used in ORS 59.840 to 59.960:
(1) 'Director' means the Director of the Department of Consumer
and Business Services.
(2) 'Fraud,' 'deceit' and 'defraud' are not limited to
common-law deceit.
(3) 'License' means a license issued to a mortgage banker or
mortgage broker under ORS 59.840 to 59.960.
(4) 'Mortgage banker':
(a) Means any person who for compensation or in the expectation
of compensation:
(A) Either directly or indirectly makes, negotiates or offers
to make or negotiate a mortgage banking loan or a mortgage loan;
and
(B) Services or sells a mortgage banking loan.
(b) Does not include:
(A) A banking institution, as defined in ORS 706.005; a
national bank, as defined in ORS 706.005; an extranational
institution, as defined in ORS 706.005 authorized to carry on a
banking or trust business in this state; a foreign institution,
as defined in ORS 706.005 authorized to carry on a banking or
trust business in this state; a federal association, as defined
in ORS 722.004; or a savings association, as defined in ORS
722.004 authorized to carry on business in this state.
(B) A bank holding company, as defined in the federal Bank
Holding Company Act of 1956 as amended, 12 U.S.C. 1841-1850
(1982), holding an institution described in subparagraph (A) of
this paragraph; a savings and loan holding company as defined in
section 408 of the National Housing Act, 12 U.S.C. 1730a (1982),
holding an association described in subparagraph (A) of this
paragraph; a credit union, as defined in ORS 723.006; a federally
chartered credit union; the subsidiaries and affiliates of the
bank holding company, savings and loan holding company, credit
union or federally chartered credit union; or subsidiaries and
affiliates of institutions described in subparagraph (A) of this
paragraph, provided that the appropriate statutory regulatory
authority is exercising control over or is regulating or
supervising the persons listed in this subparagraph in their
mortgage banking activities in accordance with the purposes of
ORS 41.580, 59.015, 59.115, 59.127, 59.165 to 59.235, 59.265,
59.840 to 59.960, 59.992, 59.996, 166.715, 646.605, 647.010,
697.025 and 705.165.
(C) A person who makes a { - mortgage - } loan { + secured
by an interest in real estate + } with the person's own moneys,
for the person's own investment and who is not engaged in the
business of making { - mortgage - } loans { + secured by an
interest in real estate + }.
(D) An attorney licensed in this state who negotiates { +
mortgage banking loans or + } mortgage loans in the ordinary
course of business, unless the business of negotiating
{ + mortgage banking loans or + } mortgage loans constitutes
substantially all of the attorney's professional activity.
(E) A person who, as seller of real property, receives one or
more mortgages or deeds of trust as security for a separate money
obligation.
(F) An agency of any state or of the United States.
(G) A person who receives a mortgage or deed of trust on real
property as security for an obligation payable on an installment
or deferred payment basis and arising out of materials furnished
or services rendered in the improvement of that real property or
any lien created without the consent of the owner of the real
property.
(H) A person who funds a { + mortgage banking loan or + }
mortgage loan which has been originated and processed by a
licensee or by an exempt person and who does not maintain a place
of business in this state in connection with funding
{ + mortgage banking loans or + } mortgage loans, does not
directly or indirectly solicit borrowers in this state for the
purpose of making { + mortgage banking loans or + } mortgage
loans and does not participate in the negotiation of { +
mortgage banking loans or + } mortgage loans. For the purpose of
this subparagraph, 'negotiation of { + mortgage banking loans
or + } mortgage loans' does not include setting the terms under
which a person may buy or fund a { + mortgage banking loan or
a + } mortgage loan originated by a licensee or exempt person.
(I) A nonprofit federally tax exempt corporation certified by
the United States Small Business Administration and organized to
promote economic development within this state whose primary
activity consists of providing financing for business expansion.
(J) A licensee licensed under ORS chapter 725 or a mortgage
broker.
(K) A retirement or pension fund.
(L) An insurer as defined in ORS 731.106.
(M) A court appointed fiduciary.
(N) Any other person designated by rule or order of the
director.
(5) 'Mortgage banking loan' means a loan { + , extension of
credit or a retail sales contract + } that is funded exclusively
from the mortgage banker's own resources, which is directly or
indirectly secured by a mortgage or deed of trust or any lien
interest on real estate and which is created with the consent of
the owner of the real property. For purposes of this subsection,
' own resources' means any of the following:
(a) Cash, corporate capital, warehouse credit lines at
financial institutions defined in ORS 706.005 or other sources
that are liability items of the mortgage banker's financial
statements for which its assets are pledged;
(b) Correspondent contracts between the mortgage banker and a
bank, savings bank, trust company, savings and loan association,
credit union, profit sharing or pension trust, a licensee under
ORS chapter 725 or an insurance company; or
(c) The mortgage banker's affiliates' cash, corporate capital,
warehouse credit lines at financial institutions defined in ORS
706.005 or other sources that are liability items on the
affiliates' financial statements for which the affiliates' assets
are pledged. As used in this paragraph, 'affiliates' means
entities that, directly or indirectly, through one or more
intermediaries controls, are controlled by or are under common
control with the entity specified.
(6) 'Mortgage broker':
(a) Means a person who:
(A) Engages all or part of the time, for the account of others
or for the person's own account, in the business of selling real
estate paper whether as issuer, agent or principal to persons
other than persons enumerated in ORS 59.035 (4);
(B) Engages all or part of the time, for the account of others
or for the person's own account, in the business of accepting
funds from one or more persons other than persons enumerated in
ORS 59.035 (4) for investment in real estate paper; or
(C) For compensation, or in the expectation of compensation,
either directly or indirectly makes, negotiates or offers to make
or negotiate a mortgage loan.
(b) Does not include:
(A) A banking institution, as defined in ORS 706.005; a
national bank, as defined in ORS 706.005; an extranational
institution, as defined in ORS 706.005 authorized to carry on a
banking or trust business in this state; a foreign institution,
as defined in ORS 706.005 authorized to carry on a banking or
trust business in this state; a federal association, as defined
in ORS 722.004; or a savings association, as defined in ORS
722.004 authorized to carry on business in this state.
(B) A bank holding company, as defined in the federal Bank
Holding Company Act of 1956 as amended, 12 U.S.C. 1841-1850
(1982), holding an institution described in subparagraph (A) of
this paragraph; a savings and loan holding company as defined in
section 408 of the National Housing Act, 12 U.S.C. 1730a (1982),
holding an association described in subparagraph (A) of this
paragraph; a credit union, as defined in ORS 723.006; a federally
chartered credit union; the subsidiaries and affiliates of the
bank holding company, savings and loan holding company, credit
union or federally chartered credit union; or subsidiaries and
affiliates of institutions described in subparagraph (A) of this
paragraph, provided that the appropriate statutory regulatory
authority is exercising control over or is regulating or
supervising the persons listed in this subparagraph in their
mortgage brokering activities in accordance with the purposes of
ORS 41.580, 59.015, 59.115, 59.127, 59.165 to 59.235, 59.265,
59.840 to 59.960, 59.992, 59.996, 166.715, 646.605, 647.010,
697.025 and 705.165.
(C) A person who purchases real property and issues an
obligation to finance the transaction to the seller incidentally
to the sale.
(D) A real estate licensee as defined in ORS 696.010 who
performs services solely incidental to the practice of
professional real estate activity as defined in ORS 696.010,
unless the real estate licensee performs the functions of a
mortgage banker or a mortgage broker as defined in this section.
(E) A person licensed under the provisions of ORS chapter 725
or a mortgage banker.
(F) A person who makes a { - mortgage - } loan { + secured
by an interest in real estate + } with the person's own moneys,
for the person's own investment and who is not engaged in the
business of making { - mortgage - } loans { + secured by an
interest in real estate + }.
(G) An attorney licensed in this state who negotiates mortgage
loans in the ordinary course of business, unless the business of
negotiating mortgage loans constitutes substantially all of the
attorney's professional activity.
(H) A person who, as seller of real property, receives one or
more mortgages or deeds of trust as security for a separate money
obligation.
(I) An agency of any state or of the United States.
(J) A person who receives a mortgage or deed of trust on real
property as security for an obligation payable on an installment
or deferred payment basis and arising out of materials furnished
or services rendered in the improvement of that real property or
any lien created without the consent of the owner of the real
property.
(K) A person who funds a mortgage loan which has been
originated and processed by a licensee or by an exempt person and
who does not maintain a place of business in this state in
connection with funding mortgage loans, does not directly or
indirectly solicit borrowers in this state for the purpose of
making mortgage loans and does not participate in the negotiation
of mortgage loans. For the purpose of this subparagraph, '
negotiation of mortgage loans' does not include setting the terms
under which a person may buy or fund a mortgage loan originated
by a licensee or exempt person.
(L) A nonprofit federally tax exempt corporation certified by
the United States Small Business Administration and organized to
promote economic development within this state whose primary
activity consists of providing financing for business expansion.
(M) Any other person designated by rule or order of the
director.
(7) 'Mortgage loan' means a loan, { + extension of credit or
retail sales contract, + } other than a mortgage banking loan,
secured by a mortgage or deed of trust or any lien interest on
real estate created with the consent of the owner of the real
estate.
SECTION 2. ORS 59.850 is amended to read:
59.850. (1) The Director of the Department of Consumer and
Business Services by rule shall establish procedures for
licensing mortgage bankers or mortgage brokers. The director may
coordinate licensing with any national registration or licensing
system.
(2) An applicant for a license as a mortgage banker or mortgage
broker, or a managing partner, director, executive officer or
other individual occupying a similar position or performing
similar functions for the applicant, shall have, during the five
years immediately preceding the time of application, not less
than three years' experience in the mortgage business, three
years' experience negotiating loans in a related business
satisfactory to the director or three years' equivalent lending
experience in a related business satisfactory to the director.
(3) If a license as a mortgage banker or mortgage broker is
issued to a person other than an individual, at least one
managing partner, director, executive officer or other individual
occupying a similar position or performing similar functions for
the person shall, at all times during the term of the license,
satisfy the experience requirement described in subsection (2) of
this section.
(4) Every applicant for a license as a mortgage banker or
mortgage broker shall file with the director a corporate surety
bond or irrevocable letter of credit issued by a commercial bank
as defined in ORS 706.005 as the director may approve by rule
running to the State of Oregon in the sum of $10,000.
(5) If the application, surety bond or irrevocable letter of
credit and fees are in order and the director is satisfied that
the application should not be denied upon one or more of the
grounds specified in ORS 59.865, 59.870 or 59.875, the director
shall license the mortgage banker or mortgage broker.
(6) A licensee shall amend the license application when there
are material changes in the information contained in the original
application.
(7) The director shall:
(a) Charge and collect fees for initial and renewal license
applications; and
(b) Set by rule all fees required under this section. Fees
shall be set to reflect those amounts sufficient to meet the
costs of administering ORS 59.840 to 59.960, including those
amounts sufficient to establish and maintain a reasonable
emergency fund.
(8) The fees under this section are not refundable { + except
for those fees that the director determines by rule may be
refundable + }.
SECTION 3. ORS 59.855 is amended to read:
59.855. (1) { - Every - } { + The initial + } license of a
mortgage banker or mortgage broker expires one year after the
date of issuance unless the Director of the Department of
Consumer and Business Services establishes a different expiration
date for purposes of coordination with any national registration
or licensing system.
(2) The director by rule shall establish procedures for
renewing licenses of mortgage bankers and mortgage brokers. { +
The rule shall specify the duration of renewed licenses. + }
(3) If there is a change in the partners, directors, officers,
persons occupying similar positions or performing similar
functions, or persons directly or indirectly controlling a
mortgage banker or mortgage broker, written notification of the
change shall promptly be filed with the director. No fee shall be
required for the notification.
SECTION 4. { + Section 5 of this Act is added to and made a
part of ORS 59.840 to 59.960. + }
SECTION 5. { + ORS 59.840 to 59.960 may be cited as the
'Oregon Mortgage Lender Law.' + }
SECTION 6. { + The provisions of ORS 59.855 (1993 Edition)
shall apply to the duration of a license issued or renewed under
ORS 59.840 to 59.960 until the effective date of the rule
required to be adopted under ORS 59.855 as amended by section 3
of this Act establishes the duration of a renewed license. + }
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