AB610,1,7 1An Act to renumber 224.71 (1c) and 224.72 (3); to amend 15.09 (6), 224.72 (3)
2(title), 224.72 (5) (a), 224.72 (7m) (intro.), 224.77 (1m) (a), 224.80 (1) and 224.80
3(2) (a) 1.; and to create 15.187, 224.71 (1d), 224.72 (3) (b), 224.72 (3) (c), 224.72
4(7) (d) and (e), 224.72 (7m) (am), 224.72 (7p), 224.755 and 224.79 of the statutes;
5relating to: qualifications of certain agents of mortgage bankers and mortgage
6brokers, consumer mortgage brokerage agreements, granting rule-making
7authority, and providing a penalty.
Analysis by the Legislative Reference Bureau
This bill makes various changes to the laws governing mortgage banking and
mortgage brokering. Significant changes include:
Competency examinations
This bill establishes competency examination and continuing education
requirements applicable to certain agents, called loan originators, of mortgage
bankers and mortgage brokers. Current law does not contain any such
requirements. A loan originator is generally a person who finds or negotiates a
mortgage loan for or on behalf of a mortgage banker or mortgage broker. With certain
exceptions, this bill requires an applicant for registration as a loan originator to pass
a written examination covering primary and subordinate mortgage financing
transactions and the laws regulating mortgage bankers and mortgage brokers. This

requirement must be satisfied as a condition of the Division of Banking (division)
approving an application for registration as a loan originator. This examination
requirement first applies to persons who have applications pending on July 2, 2004.
With certain exceptions, the bill also requires each loan originator, as a
condition of renewing a registration, to successfully complete at least 16 hours of
education covering primary and subordinate mortgage financing transactions and
the laws regulating mortgage bankers and mortgage brokers or to pass an
examination or series of examinations demonstrating satisfactory knowledge of
these subjects. This requirement first applies to persons who have applications
pending on July 1, 2006.
The bill creates a loan originator council for the purpose of approving the
program of continuing education and the content of the competency examinations.
The division, by rule, must establish standards for the loan originator council to
follow in approving the program of continuing education and the content of the
competency examination.
Criminal background checks
With certain exceptions, the bill requires the employer of each applicant for
registration as a loan originator, or, in certain cases, for renewal of registration, to
obtain a criminal history search from the Department of Justice, showing the
applicant's criminal arrest and conviction record in this state. The employer must
submit the results of the search to the division. Under the bill, the division may not
issue or renew a registration if the results of the search indicate that the applicant
has been convicted of a felony and, as a result of the conviction, represents an
unreasonable risk of violating the subchapter of the statutes that generally governs
mortgage bankers, mortgage brokers, and loan originators.
Regulation of consumer brokerage agreements
Currently, the rules of DFI regulate the content of brokerage agreements. This
bill requires every brokerage agreement between a mortgage broker and a consumer
to be in writing, in the form prescribed by rule of the division, and to contain all
information required by rule of the division. Under the bill, the division must
promulgate these rules for the purpose of facilitating the comparison of similar
charges and total charges assessed by different mortgage brokers. The bill also
requires a mortgage broker to give a consumer a disclosure statement which contains
a brief explanation of the relationship between the consumer and the mortgage
broker under the brokerage agreement and the manner in which the mortgage
broker may be compensated, and any additional information required by rule of the
division. The mortgage broker must explain the content of the disclosure statement
and ensure that the consumer initials or signs the statement, acknowledging that
the consumer has read and understands the statement. Under the bill, a consumer
generally means an individual who seeks or acquires mortgage brokerage services
for personal, family, or household purposes. The rules required under these
provisions must be promulgated in consultation with the loan originator council.
Penalties and limitations on liability
This bill raises the maximum potential forfeiture (civil penalty) for certain
violations of the mortgage banking and mortgage brokering laws from $1,000 to

$2,000 and increases the maximum potential liability for these violations in certain
private causes of action from $1,000 to $2,000. The bill also raises the maximum
potential fine and imprisonment (criminal penalties) for violating a registration
requirement under the mortgage banking and mortgage brokering laws from $1,000
and six months to $2,000 and nine months.
Because this bill creates a new crime or revises a penalty for an existing crime,
the Joint Review Committee on Criminal Penalties may be requested to prepare a
report concerning the proposed penalty and the costs or savings that are likely to
result if the bill is enacted.
For further information see the state and local 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:
AB610, s. 1 1Section 1. 15.09 (6) of the statutes is amended to read:
AB610,3,102 15.09 (6) Reimbursement for expenses. Members of a council shall not be
3compensated for their services, but, except as otherwise provided in this subsection,
4members of councils created by statute shall be reimbursed for their actual and
5necessary expenses incurred in the performance of their duties, such reimbursement
6in the case of an elective or appointive officer or employee of this state who represents
7an agency as a member of a council to be paid by the agency which pays his or her
8salary. Members of the loan originator council under s. 15.187 (1) may not be
9reimbursed for their actual and necessary expenses incurred in the performance of
10their duties.
AB610, s. 2 11Section 2. 15.187 of the statutes is created to read:
AB610,3,15 1215.187 Same; councils. (1) Loan originator review council. There is
13created in the department of financial institutions a loan originator council. The
14council shall consist of the following members, appointed by the secretary of financial
15institutions for 4-year terms:
AB610,3,1616 (a) Three persons who are loan originators registered under s. 224.72 (1m).
AB610,4,2
1(b) Three persons who are agents of mortgage brokers registered under s.
2224.72 (1m) or agents of mortgage bankers registered under s. 224.72 (1m).
AB610,4,33 (c) The secretary of financial institutions or his or her designee.
AB610, s. 3 4Section 3. 224.71 (1c) of the statutes is renumbered 224.71 (1e).
AB610, s. 4 5Section 4. 224.71 (1d) of the statutes is created to read:
AB610,4,86 224.71 (1d) "Consumer" means a person other than an organization, as defined
7in s. 421.301 (28), who seeks or acquires mortgage brokerage services for personal,
8family, or household purposes.
AB610, s. 5 9Section 5. 224.72 (3) (title) of the statutes is amended to read:
AB610,4,1110 224.72 (3) (title) Additional requirement requirements for loan originator
11applicant.
AB610, s. 6 12Section 6. 224.72 (3) of the statutes is renumbered 224.72 (3) (a).
AB610, s. 7 13Section 7. 224.72 (3) (b) of the statutes is created to read:
AB610,4,2014 224.72 (3) (b) In addition to the requirements of sub. (2), each applicant for
15registration as a loan originator, other than an applicant employed by a subsidiary
16of a credit union or of an entity described under s. 224.71 (3) (b) 1., shall pass a written
17examination, approved by the loan originator council, covering primary and
18subordinate mortgage financing transactions and the provisions of this subchapter.
19The examination shall be administered by the technical college system board or a
20professional trade association whose members include loan originators.
AB610, s. 8 21Section 8. 224.72 (3) (c) of the statutes is created to read:
AB610,5,222 224.72 (3) (c) The employer of each applicant for registration as a loan
23originator, other than an applicant employed by a subsidiary of a credit union or of
24an entity described under s. 224.71 (3) (b) 1., shall obtain a criminal history search

1relating to the applicant from the records maintained by the department of justice
2and submit the results of the search to the division.
AB610, s. 9 3Section 9. 224.72 (5) (a) of the statutes is amended to read:
AB610,5,84 224.72 (5) (a) Loan originator. Except as provided in sub. (7m), upon receiving
5a properly completed application for registration as a loan originator and the fee
6specified in rules promulgated under sub. (8) and upon an applicant's compliance
7with sub. (3) (a) and, if required, sub. (3) (b)
, the division may issue to the applicant
8a certificate of registration as a loan originator.
AB610, s. 10 9Section 10. 224.72 (7) (d) and (e) of the statutes are created to read:
AB610,5,1710 224.72 (7) (d) 1. Except as provided in subd. 2., an applicant for renewal of a
11certificate of registration as a loan originator, other than an applicant employed by
12a subsidiary of a credit union or of an entity described under s. 224.71 (3) (b) 1., shall,
13as part of the application, submit evidence that is satisfactory to the division that,
14during the 2 years preceding the date of application, the applicant has successfully
15completed at least 16 hours of education approved by the loan originator council
16covering primary and subordinate mortgage financing transactions and the
17provisions of this subchapter.
AB610,5,2518 2. No later than June 30 annually, the technical college system board or a
19professional trade association whose members include loan originators shall
20administer an examination or series of examinations, approved by the loan
21originator council, on the educational subjects required under subd. 1. Any applicant
22who, as part of the application, submits evidence that is satisfactory to the division
23that the applicant has passed the examination or series of examinations under this
24subdivision during the 2 years immediately preceding the date of application is not
25required to comply with subd. 1.
AB610,6,5
1(e) If an applicant for renewal of a certificate of registration as a loan originator
2has changed employers since his or her criminal history was last searched under this
3paragraph or sub. (3) (c), the applicant's current employer shall obtain a criminal
4history search relating to the applicant from the records maintained by the
5department of justice and submit the results of the search to the division.
AB610, s. 11 6Section 11. 224.72 (7m) (intro.) of the statutes is amended to read:
AB610,6,97 224.72 (7m) Denial of application for issuance or renewal of registration.
8(intro.) The department division may not issue or renew a certificate of registration
9under this section if any of the following applies:
AB610, s. 12 10Section 12. 224.72 (7m) (am) of the statutes is created to read:
AB610,6,1411 224.72 (7m) (am) The information provided to the division under sub. (3) (c)
12or (7) (e) indicates that the applicant has been convicted of a felony and, as a result
13of the conviction, the applicant represents an unreasonable risk of violating this
14subchapter, in the opinion of the division.
AB610, s. 13 15Section 13. 224.72 (7p) of the statutes is created to read:
AB610,6,2016 224.72 (7p) Rules for approval of competency examinations and continuing
17education.
The division shall promulgate rules establishing standards for the
18approval by the loan originator council of examinations in the law of mortgage
19banking and mortgage brokering under subs. (3) (b) and (7) (d) and the curricula of
20education under sub. (7) (d).
AB610, s. 14 21Section 14. 224.755 of the statutes is created to read:
AB610,7,2 22224.755 Continuing education and examination records. A loan
23originator shall keep records documenting compliance with s. 224.72 (7) (d) for at
24least 4 years. The technical college system board and any professional trade
25association that administers examinations or provides education under s. 224.72 (7)

1(d) shall maintain records documenting attendance and examination performance
2for at least 4 years.
AB610, s. 15 3Section 15. 224.77 (1m) (a) of the statutes is amended to read:
AB610,7,64 224.77 (1m) (a) The division may assess against a person who is registered
5under this chapter a forfeiture of not more than $1,000 $2,000 for each violation
6enumerated under sub. (1) (a) to (o) or (r).
AB610, s. 16 7Section 16. 224.79 of the statutes is created to read:
AB610,7,16 8224.79 Consumer mortgage brokerage agreements and consumer
9disclosures.
(1) Form and content of consumer mortgage brokerage agreements.
10Every contract between a mortgage broker and a consumer under which the
11mortgage broker agrees to provide brokerage services to the consumer shall be in
12writing, in the form prescribed by rule of the division, and shall contain all
13information required by rule of the division. The division shall promulgate rules to
14administer this subsection in consultation with the loan originator council under s.
1515.187 (1). The division shall design these rules to facilitate the comparison of
16similar charges and total charges assessed by different mortgage brokers.
AB610,8,3 17(2) Consumer disclosure statement. Before entering into a contract with a
18consumer to provide brokerage services, a mortgage broker shall give the consumer
19a copy of a consumer disclosure statement, explain the content of the statement, and
20ensure that the consumer initials or signs the statement, acknowledging that the
21consumer has read and understands the statement. The consumer disclosure
22statement shall contain a brief explanation of the relationship between the consumer
23and the mortgage broker under the proposed contract, a brief explanation of the
24manner in which the mortgage broker may be compensated under the proposed
25contract, and any additional information required by rule of the division. The

1division shall promulgate rules to administer this subsection in consultation with
2the loan originator council under s. 15.187 (1) and, by rule, shall specify the form and
3content of the consumer disclosure statement required under this subsection.
AB610, s. 17 4Section 17. 224.80 (1) of the statutes is amended to read:
AB610,8,85 224.80 (1) Penalties. A person who violates s. 224.72 (1m) may be fined not
6more than $1,000 $2,000 or imprisoned for not more than 6 9 months or both. The
7district attorney of the county where the violation occurs shall enforce the penalty
8under this subsection on behalf of the state.
AB610, s. 18 9Section 18. 224.80 (2) (a) 1. of the statutes is amended to read:
AB610,8,1210 224.80 (2) (a) 1. Twice the amount of the cost of loan origination connected with
11the transaction, except that the liability under this subdivision may not be less than
12$100 nor greater than $1,000 $2,000 for each violation.
AB610, s. 19 13Section 19. Nonstatutory provisions.
AB610,8,1714 (1) Loan originator council; initial terms. Notwithstanding the length of
15terms specified for members of the loan originator council under section 15.187 (1)
16of the statutes, as created by this act, the initial members shall be appointed for the
17following terms:
AB610,8,1918 (a) The members specified under section 15.187 (1) (a) of the statutes, as
19created by this act, for terms expiring on July 1, 2005.
AB610,8,2120 (b) The members specified under section 15.187 (1) (b) of the statutes, as
21created by this act, for terms expiring on July 1, 2007.
AB610, s. 20 22Section 20. Initial applicability.
AB610,8,2523 (1) Competency examination. The treatment of section 224.72 (3) (b) of the
24statutes first applies to applications for a certificate of registration as a loan
25originator that are pending with the division of banking on July 2, 2004.
AB610,9,3
1(2) Continuing education. The treatment of section 224.72 (7) (d) of the
2statutes first applies to applications for renewal of a certificate of registration as a
3loan originator for the registration period beginning July 1, 2006.
AB610,9,44 (End)
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