AB471: Bill Text

1. The mortgage broker must act in the borrower's best interest and in the utmost good faith. The mortgage broker may not compromise the borrower's rights or interests in favor of the mortgage broker's or any other person's.

2. The mortgage broker may not accept, give, or charge any undisclosed compensation or realize any undisclosed remuneration that inures to the benefit of the mortgage broker on an expenditure made for the borrower.

3. The mortgage broker must carry out all lawful instructions given by the borrower.

4. The mortgage broker must disclose to the borrower all material facts of which the mortgage broker has knowledge that might reasonably affect the borrower's rights or interests or ability to receive the borrower's intended benefit from the residential mortgage loan. This does not include facts that are reasonably susceptible to the knowledge of the borrower.

5. The mortgage broker must use reasonable care in performing the mortgage broker's duties.

6. The mortgage broker must account to the borrower for all money and property received by the mortgage broker as the borrower's agent.

The bill does not prohibit a mortgage broker from contracting or collecting a fee for services provided, if the services were disclosed to the borrower before they were provided. The bill also does not require a mortgage broker to obtain a loan containing terms or conditions not available to the mortgage broker or to obtain a loan for the borrower from a mortgage lender with whom the mortgage broker does not have a business relationship.

These duties may not be waived. The bill requires a mortgage broker, in each brokerage services contract and related disclosure statement, to identify the parties' agency relationship and the mortgage broker's duties.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB471, s. 1 Section 1. 224.79 (title) of the statutes is amended to read:

AB471,3,3 224.79 (title) Mortgage brokerage agreements and disclosures; mortgage broker agency relationship and duties.

AB471, s. 2 Section 2. 224.79 (3) of the statutes is created to read:

AB471,3,8 224.79 (3) Mortgage broker agency relationship and duties. (a) In this subsection, "borrower" means the residential mortgage loan applicant or investor on whose behalf a mortgage broker provides, or contracts to provide, mortgage brokerage services.

AB471,3,10 (b) A mortgage broker, at all times when acting in the capacity of a mortgage broker, has an agency relationship with the borrower.

AB471,3,11 (c) A mortgage broker owes all of the following duties to the borrower:

AB471,3,15 1. The mortgage broker shall act in the borrower's best interest and in the utmost good faith toward the borrower, and may not compromise the borrower's rights or interests in favor of another's rights or interests, including those of the mortgage broker.

AB471,4,4 2. The mortgage broker may not accept, give, or charge any undisclosed compensation or realize any undisclosed remuneration, through direct or indirect means, that inures to the benefit of the mortgage broker on an expenditure made for the borrower.

AB471,4,6 3. The mortgage broker shall carry out all lawful instructions given by the borrower.

AB471,4,11 4. The mortgage broker shall disclose to the borrower all material facts of which the mortgage broker has knowledge that might reasonably affect the borrower's rights or interests or ability to receive the borrower's intended benefit from the residential mortgage loan, but not facts that are reasonably susceptible to the knowledge of the borrower.

AB471,4,13 5. The mortgage broker shall use reasonable care in performing the mortgage broker's duties.

AB471,4,15 6. The mortgage broker shall account to the borrower for all money and property received by the mortgage broker as the borrower's agent.

AB471,4,18 (d) Nothing in this subsection prohibits a mortgage broker from contracting or collecting a fee for services provided, if the services were disclosed to the borrower before they were provided.

AB471,4,23 (e) Nothing in this subsection requires a mortgage broker to obtain a residential mortgage loan containing terms or conditions not available to the mortgage broker in the mortgage broker's usual course of business or to obtain a residential mortgage loan for the borrower from a mortgage lender with whom the mortgage broker does not have a business relationship.

AB471,4,24 (f) The duties imposed under par. (c) may not be waived.

AB471,5,3 (g) Every contract under sub. (1), and every disclosure statement under sub. (2), shall identify the agency relationship described in par. (b) and the mortgage broker's duties imposed under par. (c).

AB471, s. 3 Section 3. Effective date.

AB471,5,6 (1) This act takes effect on January 1, 2010, or on the first day of the 3rd month beginning after publication, whichever is later.

AB471,5,7 (End)