2013 Wisconsin Act 360

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

360,1 Section 1. 224.71 (1br) of the statutes is created to read:

224.71 (1br) "Bona fide nonprofit organization" means an organization that is described in section 501 (c) (3) of the Internal Revenue Code and exempt from federal income tax under section 501 (a) of the Internal Revenue Code, that is certified by the federal department of housing and urban development or the Wisconsin Housing and Economic Development Authority, and that does all of the following:

(a) Promotes affordable housing or provides home ownership education or similar services.

(b) Conducts its activities in a manner that serves public or charitable purposes.

(c) Receives funding and revenue and charges fees in a manner that does not create an incentive for itself or its employees to act other than in the best interests of its clients.

(d) Compensates its employees in a manner that does not create an incentive for its employees to act other than in the best interests of its clients.

(e) Provides to, or identifies for, the borrower residential mortgage loans with terms favorable to the borrower and comparable to residential mortgage loans and housing assistance provided under government housing assistance programs.

360,2 Section 2. 224.71 (1c) of the statutes is amended to read:

224.71 (1c) "Branch office" means an office or place of business, other than the principal office, located in this state or another state, where a mortgage loan originator, mortgage banker, or mortgage broker conducts business with residents of this state engages in the mortgage loan business subject to this subchapter.

360,3 Section 3. 224.71 (1f) of the statutes is amended to read:

224.71 (1f) "Dwelling" has the meaning given in 15 USC 1602 (v) (w).

360,4 Section 4. 224.71 (1g) of the statutes is created to read:

224.71 (1g) "Employee" means an individual whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person, and whose compensation for federal income tax purposes is reported, or required to be reported, on a W-2 form issued by the controlling person.

360,5 Section 5. 224.71 (1gh) of the statutes is created to read:

224.71 (1gh) (a) Except as provided in par. (b), "expungement" means to have stricken or obliterated from a record of criminal conviction all references to the defendant's name and identity.

(b) For a criminal conviction entered in another state, "expungement" has the meaning given under the laws of the state where the criminal conviction is entered.

360,6 Section 6. 224.71 (1h) of the statutes is amended to read:

224.71 (1h) "Federal banking agency" means the board of governors of the federal reserve system, the U.S. office of the comptroller of the currency, the U.S. office of thrift supervision, the national credit union administration, or the federal deposit insurance corporation.

360,7 Section 7. 224.71 (1r) of the statutes is created to read:

224.71 (1r) "Housing finance agency" means any authority that is all of the following:

(a) Chartered by a state to help meet the affordable housing needs of the residents of the state.

(b) Supervised directly or indirectly by the state government.

(c) Subject to audit and review by the state in which it operates.

360,8 Section 8. 224.71 (2) (intro.) of the statutes is amended to read:

224.71 (2) (intro.) "Loan processor or underwriter" means an individual who, as an employee, performs clerical or support duties at the direction of and subject to the supervision and instruction of a mortgage loan originator licensed under s. 224.725 or exempt from licensing under s. 224.726 (1) 224.725 (1m), which clerical or support duties may include any of the following occurring subsequent to the receipt of a residential mortgage loan application:

360,9 Section 9. 224.71 (3) (a) (intro.), 1., 2. and 3. of the statutes are renumbered 224.71 (3) (intro.), (c), (d) and (e), and 224.71 (3) (intro.), as renumbered, is amended to read:

224.71 (3) (intro.) "Mortgage banker" means a person who is not excluded by par. (b) and who does any of the following:

360,10 Section 10. 224.71 (3) (b) (intro.) and 7. of the statutes are repealed.

360,11 Section 11. 224.71 (3) (b) 8. of the statutes is renumbered 224.72 (1r) (a).

360,12 Section 12. 224.71 (3) (b) 9. of the statutes is renumbered 224.72 (1r) (b).

360,13 Section 13. 224.71 (3) (b) 10. of the statutes is renumbered 224.72 (1r) (d).

360,14 Section 14. 224.71 (3) (b) 11. of the statutes is renumbered 224.72 (1r) (g).

360,15 Section 15. 224.71 (3) (b) 12. of the statutes is renumbered 224.72 (1r) (h).

360,16 Section 16. 224.71 (4) of the statutes is repealed and recreated to read:

224.71 (4) "Mortgage broker" means a person who, for compensation or gain or in the expectation of compensation or gain, does any of the following but does not make an underwriting decision or close a residential mortgage loan:

(a) Assists a person in obtaining or applying to obtain a residential mortgage loan.

(b) Holds himself, herself, or itself out as being able to assist a person in obtaining or applying to obtain a residential mortgage loan.

(c) Engages in table funding.

360,17 Section 17. 224.71 (6) (a) (intro.), 1. and 2. of the statutes are renumbered 224.71 (6) (intro.), (c) and (d), and 224.71 (6) (intro.), as renumbered, is amended to read:

224.71 (6) (intro.) "Mortgage loan originator" means an individual who is not excluded by par. (b) and who, for compensation or gain or in the expectation of compensation or gain, does any of the following:

360,18 Section 18. 224.71 (6) (b) (intro.) and 4. of the statutes are repealed.

360,19 Section 19. 224.71 (6) (b) 1. of the statutes is renumbered 224.725 (1m) (c) and amended to read:

224.725 (1m) (c) An individual engaged solely as a loan processor or underwriter, unless the individual is an independent contractor or represents to the public, through advertising or another means of communication such as the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator.

360,20 Section 20. 224.71 (6) (b) 2. of the statutes is renumbered 224.725 (1m) (d).

360,21 Section 21. 224.71 (6) (b) 3. of the statutes is renumbered 224.725 (1m) (e).

360,23 Section 23. 224.71 (7) of the statutes is amended to read:

224.71 (7) "Nationwide mortgage licensing system and registry" means the licensing and registration system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for licensed mortgage loan originators and mortgage loan originators exempt from licensing under s. 224.726 (1) 224.725 (1m) or, if this system is no longer maintained, any system established by the secretary of the federal department of housing and urban development under P.L. 110-289, Title V, section 1509.

360,25 Section 25. 224.71 (13) (c) of the statutes is amended to read:

224.71 (13) (c) Negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than in connection with providing financing for the transaction. For purposes of this paragraph, providing financing for the transaction does not include use by a licensee under s. 452.03 of forms approved under s. REEB 16.03, Wis. Adm. Code.

360,26 Section 26. 224.71 (13c) of the statutes is created to read:

224.71 (13c) "Registered entity" means a depository institution that voluntarily registers with the division for the purpose of sponsoring licensed mortgage loan originators that are under the depository institution's direct supervision and control.

360,27 Section 27. 224.71 (13g) (intro.) of the statutes is created to read:

224.71 (13g) "Registered mortgage loan originator" means any individual who is all of the following:

360,28 Section 28. 224.71 (13m) of the statutes is created to read:

224.71 (13m) "Regularly engage," with respect to an individual, means that any of the following applies:

(a) The individual engaged in the business of a mortgage loan originator on more than 5 residential mortgage loans, in this state or another state, in the previous calendar year or expects to engage in the business of a mortgage loan originator on more than 5 residential mortgage loans, in this state or another state, in the current calendar year.

(b) The individual is acting on behalf of a person who is, or is required to be, licensed as a mortgage lender, mortgage banker, or mortgage broker in this state or another state.

(c) The individual is acting on behalf of a registered entity.

360,29 Section 29. 224.72 (1m) of the statutes is amended to read:

224.72 (1m) License required. A Except as provided in sub. (1r), a person may not conduct business or act as a mortgage banker or mortgage broker, use the title "mortgage banker" or "mortgage broker," or advertise or otherwise portray himself, herself, or itself as a mortgage banker or mortgage broker, unless the person has been issued a mortgage banker or mortgage broker license by the division.

360,30 Section 30. 224.72 (1r) (intro.), (c), (e) and (f) of the statutes are created to read:

224.72 (1r) License exemptions. (intro.) The following persons shall not be required to be licensed under this section or comply with the other provisions of this subchapter:

(c) A federal, state, or local government agency or housing finance agency.

(e) A bona fide nonprofit organization that does not operate in a commercial context and that is exempt under this paragraph. To qualify for an exemption under this paragraph, an organization shall certify, on a form prescribed by the division, that it is a bona fide nonprofit organization and shall provide documentation as required by the division. To maintain this exemption, the organization shall file the prescribed certification and accompanying documentation with the division by December 31 of each year.

(f) A mortgage banker that meets all of the following criteria:

1. The mortgage banker engaged in the business of a mortgage banker on 5 or fewer residential mortgage loans during the previous calendar year.

2. The mortgage banker expects to serve as the prospective source of financing, or to perform other phases of origination or servicing, on 5 or fewer residential mortgage loans in the current calendar year.

3. The mortgage banker does not advertise or otherwise hold himself, herself, or itself out as a "mortgage banker."

360,31 Section 31. 224.72 (2) (c) 2. of the statutes, as affected by 2013 Wisconsin Act 36, is amended to read:

224.72 (2) (c) 2. The department division may not disclose any information received under subd. 1. to any person except as follows:

a. The department division may disclose information under subd. 1. to the department of revenue for the sole purpose of requesting certifications under s. 73.0301 and to the department of workforce development for the sole purpose of requesting certifications under s. 108.227.

b. The department division may disclose information under subd. 1. a. to the department of children and families in accordance with a memorandum of understanding under s. 49.857.

360,32 Section 32. 224.72 (2m) of the statutes is renumbered 224.72 (2m) (a).

360,33 Section 33. 224.72 (2m) (b) and (c) of the statutes are created to read:

224.72 (2m) (b) 1. A principal office of a mortgage banker or mortgage broker shall be located in either this state or another state. Except as provided in subd. 2., a principal office may not be located in a residence.

2. A principal office of a mortgage banker or mortgage broker located in a residence on the effective date of this subdivision .... [LRB inserts date], may continue to be located in that residence after this date but may not thereafter be relocated to any residence with a different address.

(c) A branch office of a mortgage banker or mortgage broker shall be located in either this state or another state. A branch office may be located in a residence.

360,34 Section 34. 224.72 (4) (a) 2. of the statutes is amended to read:

224.72 (4) (a) 2. File with the division a commercial surety bond which is in the amount of $300,000 for a mortgage banker or $120,000 for a mortgage broker, is issued by a surety company authorized to do business in this state, secures the applicant's faithful performance of all duties and obligations of a mortgage banker or mortgage broker, is payable to the division for the benefit of persons to whom the mortgage banker or mortgage broker provided services as a mortgage banker or mortgage broker, is issued on a form that is acceptable to the division and provides that the bond may not be terminated without at least 30 60 days' written notice to the division.

360,35 Section 35. 224.72 (4n) of the statutes is repealed.

360,36 Section 36. 224.722 of the statutes is created to read:

224.722 Registered entities. (1) A depository institution may apply for registered entity status with the division. The application shall be on forms and in the manner prescribed by the division and the applicant shall pay the same fee as that established by rule under s. 224.72 (8) for mortgage bankers. The application shall be accompanied by a commercial surety bond in the amount of $300,000 that is issued by a surety company authorized to do business in this state and is written on a form that is acceptable to the division.

(2) Upon the filing of an application for registered entity status and the payment of the required fee, the division shall make an investigation of the applicant. If the application is complete, and the division has no concerns regarding the applicant's character, general fitness, or financial responsibility, the division shall register the applicant as a registered entity.

(3) Each registered entity shall register with the division each branch office where a mortgage loan originator sponsored by the registered entity engages in business as a mortgage loan originator. Applications for branch office registration shall be made on forms and in the manner prescribed by the division and shall be accompanied by the same fee as that established by rule for branch offices of mortgage bankers.

(5) A depository institution's registered entity status, and the registration of all of its registered branch offices, expires on December 31 of each year.

(6) A registered entity may apply to renew its registered entity status, and the registration of all of its registered branch offices, by timely submitting, on forms and in the manner prescribed by the division, a completed renewal application for the registered entity and for each branch office, along with the applicable fee under sub. (1) or (3). The division may not renew registered entity status under this section unless the division finds that the registered entity continues to meet the minimum standards for registration under this section.

(7) If a registered entity fails to satisfy the minimum standards for renewal of its registration, its registration shall expire. If a registered entity fails to satisfy any requirement under sub. (6) for renewing its registration of a branch office, the registration for that branch office shall expire.

(8) A registered entity shall cooperate with, and provide access to records and documents required by, the division to carry out examinations in accordance with s. 224.74 (2) of mortgage loan originators that are sponsored by the registered entity.