LRB-4235/2
ARG:jld&bjk:ph
2009 - 2010 LEGISLATURE
February 22, 2010 - Introduced by Representatives Fields and Parisi. Referred to
Committee on Financial Institutions.
AB765,1,4
1An Act to repeal 224.71 (3) (b) 7. and 224.71 (4) (b) 9. and (6) (b) 4.;
to renumber
2and amend 224.72 (4) (a) 2.;
to amend 224.72 (4) (a) 4.; and
to create 224.72
3(4) (a) 2. a. and b. of the statutes;
relating to: licensing requirements for
4mortgage bankers and mortgage brokers.
Analysis by the Legislative Reference Bureau
Under current law, a person may not act as a mortgage banker, mortgage
broker, or mortgage loan originator unless the person is licensed as such with the
Division of Banking in the Department of Financial Institutions (division). A
mortgage banker is, with certain exceptions, a person who originates residential
mortgage loans (loans) for itself or for another person; sells loans or interests in loans
to another person; or services loans or provides escrow services. A mortgage broker
is, with certain exceptions, a person who, on behalf of a loan applicant or an investor
and for commission or other compensation, finds a loan or negotiates a loan or loan
commitment. A mortgage loan originator is, with certain exceptions, an individual
who takes a residential mortgage loan application or offers or negotiates terms of a
residential mortgage loan for compensation or gain. State and federally chartered
financial institutions are not mortgage bankers or mortgage brokers. In
2009
Wisconsin Act 2 (Act 2), provisions of the federal Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 were adopted into state law. Act 2 made extensive
changes related to the regulation of mortgage loan originators and also made some
changes related to the regulation of mortgage bankers and mortgage brokers,
including changes related to minimum net worth and bonding amounts for mortgage
bankers and mortgage brokers.
Under current law (after Act 2), an applicant for a mortgage banker license
must file with the division a bond in the amount of $300,000 to secure the applicant's
faithful performance of duties and obligations and must submit evidence of a
minimum net worth of $250,000. An applicant for a mortgage broker license must
file with the division a bond in the amount of $120,000 to secure the applicant's
faithful performance of duties and obligations and must submit evidence of a
minimum net worth of $100,000.
This bill reduces, with one exception, the amount of the bond and net worth
requirements for mortgage banker and mortgage broker applicants. Under the bill,
an applicant for a mortgage banker license must file a bond in an amount that ranges
from $100,000 to $300,000, depending on the annual amount of the mortgage
banker's loan originations, and must submit evidence of a minimum net worth of
$100,000. An applicant for a mortgage broker license must file a bond in an amount
that ranges from $50,000 to $100,000, depending on the annual amount of the
mortgage broker's loan originations, and must submit evidence of a minimum net
worth of $50,000.
Under current law, there are exceptions that expressly exclude the Department
of Veterans Affairs (DVA), when administering its veterans housing loan program,
from being considered a mortgage banker or mortgage broker and that exclude its
employees from being considered mortgage loan originators.
This bill eliminates these exceptions applicable to DVA and its employees.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB765, s. 1
1Section
1. 224.71 (3) (b) 7. of the statutes is repealed.
AB765,3,46
224.72
(4) (a) 2. (intro.) File with the division a commercial surety bond
which
7is in the amount of $300,000 for a mortgage banker or $120,000 for a mortgage
8broker, that is issued by a surety company authorized to do business in this state,
9secures the applicant's faithful performance of all duties and obligations of a
10mortgage banker or mortgage broker, is payable to the division for the benefit of
1persons to whom the mortgage banker or mortgage broker provided services as a
2mortgage banker or mortgage broker, is issued on a form that is acceptable to the
3division
and, provides that the bond may not be terminated without at least 30 days'
4written notice to the division
., and is in the following amount:
AB765, s. 4
5Section
4. 224.72 (4) (a) 2. a. and b. of the statutes are created to read:
AB765,3,116
224.72
(4) (a) 2. a. For a mortgage banker, $100,000 if the mortgage banker has
7residential mortgage loan originations in a calendar year of less than $10,000,000;
8$200,000 if the mortgage banker has residential mortgage loan originations in a
9calendar year of at least $10,000,000 but less than $50,000,000; and $300,000 if the
10mortgage banker has residential mortgage loan originations in a calendar year of at
11least $50,000,000.
AB765,3,1612
b. For a mortgage broker, $50,000 if the mortgage broker has residential
13mortgage loan originations in a calendar year of less than $10,000,000; $75,000 if the
14mortgage broker has residential mortgage loan originations in a calendar year of at
15least $10,000,000 but less than $50,000,000; and $100,000 if the mortgage broker
16has residential mortgage loan originations in a calendar year of at least $50,000,000.
AB765,3,2419
224.72
(4) (a) 4. Submit evidence that establishes, to the division's satisfaction,
20a minimum net worth of
$250,000 $100,000 for a mortgage banker or
$100,000 21$50,000 for a mortgage broker. Evidence of net worth shall include the submission
22of recent financial statements accompanied by a written statement by an
23independent certified public accountant attesting that he or she has reviewed the
24financial statements in accordance with generally accepted accounting principles.
