Reverse Mortgage OregonInverted mortgage Oregon
Oregon Governor Katherine Brown on August 2 passed the Senate Bill 98 ("S 98"), the Oregon Mortgage Credit Servicicer Practices Act ("Servicer Act"), which provides for the granting of licenses for private mortgage loans. The S 98 provides for a specific mortgage credit service licence, separately from the mortgage banking or mortgage broking licence acquired under the Oregon Mortgage Lender Law.
Oregon has adopted the Services Act to join the vast majority of countries that licence construction finance services. A number of states still do not licence private mortgage credit brokers, both New Jersey and Pennsylvania, who are considering a mortgage credit broker licence bill. While the Oregon Servicicer Act entered into force with the Governor's signing, the Act specifically provides that the Servicicer Act will enter into force on 1 January 2018 and that it will "apply to housing credit services operations that take place on or after the [operative] date".
Under the Servicer Act, "a private mortgage holder may not directly or indirectly serve a private mortgage in that State unless the holder receives or renewed a licence under section 4 of this Act 2017. "According to the Servicer Act, the word "servicing" means "servicing a home construction credit. a) receive a regular periodical disbursement from a Mortgagor under the conditions of a private mortgage lending, comprising all funds for the contribution to an Trust Bank Accounts established by the Mortgagor pursuant to the Real Estate Settlement Procedures Act, 12 U.S.C. 2609; c) disburse an amount to a Mortgagor if the private mortgage lending is a home equity converting mortgage or a reverse mortgage.
However, the Servicicer Act does not explicitly designate a mortgage broker as one who buys or owns mortgage lending activities. The licence requirement, however, covers one that directly and indirectlly serves a private mortgage. Some other states that licence private mortgage intermediaries have imposed a licence requirement for those who serve mortgage credit intermediaries to those who purchase and maintain mortgage credit serving privileges rather than actually serving mortgage credit intermediaries.
Responding to our request, Oregon's regulatory authorities basically stated that they were working on a set of rules that would make it clear when a provider of a private mortgage service would be regarded as "indirect" to a private mortgage service to require a private mortgage licence. Oregon regulatory authorities, as we see it, are considering whether a licence should be necessary when a Oregon regulatory service provider becomes apparent to the customer, either through face-to-face communication with the customer, through another service where the name of the Oregon regulatory service provider is used in the service delivery or when the Oregon regulatory service provider is a crucial part of the service delivery mechanism.
It is enough to say that for the time being the question of whether a company that only has the right to service mortgage lending needs a licence under the Servicer Act is an open question. Companies that only have service privileges for mortgage lending should try to track whether a service policy is suggested and make comments on such a policy, which has been made public by Oregon regulatory authorities.
Additionally to the definition of a private mortgage credit service provider who (i) obtains regular period mortgage installments or (ii) makes capital, interest or other sums related to private mortgage credit to creditors or others to whom such installments are owed, the Service Act also requires a license commitment for those who make installments to home equities exchange mortgage borrower ("HECM") or reverse mortgage borrower.
Oregon's Services Act, which provides for the granting of licenses to those who lend money to those borrowing from HECMs/reversed mortgage credits, follows most of the other state mortgage license legislation passed in recent years. It also regulates companies that make credit changes, as it provides a separate definition of a "change management system for housing loans".
" There is a broad definition of the concept of "change services for housing loans": a) A bargaining or agreement, an offering or an attempted bargaining or arranging, a variation in a borrower's obligation to repay or condition a private mortgage credit, which includes, but is not restricted to:
1. A failure to recover one or more due repayments; 2. A variation in the interest rates; 3. A variation in the settlement or redemption schedules; 4. A replacement of different credit covenants; 5. A replacement of a different rating of the credit; 7. A decrease in capital. b ) Collection or attempted collection of information to be transmitted to a respondent carrying out a house credit amendment process.
While the Servicer Act governs the implementation of an amendment to housing loans, the Servicer Act does not explicitly request the approval of those companies that only do so. The Oregon regulatory authorities responded to our request by stating that those who only provide change handling for private mortgage loans must now be approved as mortgage originators or creditors.
Consequently, a private mortgage credit provider licence should not be necessary to make changes to private mortgage loans, but the current rules of the Servicicer Act governing changes to private mortgage loans may have to be respected. Be aware that merely gathering or trying to gather information in order to transmit it to a third party performing a change request would represent the provision of a change request for home loans.
There are certain exceptions to licencing under the Service Act, some of which are clear, while others are ambiguous and pose issues regarding their use. There is also an entitlement under the Servicicer Act for the Director of the Oregon Department of Consumer and Business Services (the "Director") to appoint, by regulation or order, any party who is exempted from service license and not otherwise exempted from license.
Derogations in the Servicer Act are only applicable to licences, so a royalty-free company must respect the practical requirements of the Servicer Act which generally applies to those servicing mortgage lending. An " Oregon Audited Statute ("ORS") Section 706 " term meaning a single banking establishment. 008, is excluded from licencing under the Servicer Act.
Otherwise, subsidiary companies or affiliated companies of banks are not excluded. An individual who is licensed under ORS Section 725. 140, the section of which is contained in the State Consumer Financing Act, is exempted from Servicer Act licence, but a licence holder under the State Mortgage Lender Act, ORS 86A.
095, is not exempted from mortgage broker license. Nevertheless, a licenced mortgage lender in Oregon may be able to make use of an exception to licencing not found under other license acts for state mortgage lenders. License requirements under the Servicicer Act do not extend to "any individual or affiliated company of the individual servicing less than 5,000 private mortgage credits in all transactions within the United States during the fiscal year, except those that the individual or affiliated company receives or has.
Minimal, it seems sensible to come to the conclusion that a unit serving less than 5,000 private mortgage credits in the United States during a single year would not need a license. In view of the text of this clause, it also seems that a company would not need to be licenced as a provider of mortgage lending in order to serve mortgage lending (i) it is created or otherwise acquired and held, or (ii) it comes from or is acquired and held by an affiliated company, whether the number of such mortgage lending transactions exceed 5,000.
Although the Servicer Act does not provide tax exemption for a mortgage lender under the Oregon Mortgage Lender Law, a mortgage lender under licence in Oregon should be able to serve up to 5,000 mortgages a year throughout the country that he or his subsidiary has received or acquired without also having to own a licence under the Servicer Act, unless the mortgage lender under licence serves 5,000 or more mortgages a year for third party national use.
The Oregon regulatory authorities have corroborated this opinion. There is also an exemption under the Service Act of'a finance or banking holdin' entity, both within the meaning of ORS 706'. 008 where the finance or banking parent does not exercise more than a controlling interest in an affiliated undertaking or a banking parent within the meaning of 12 U.S.C. 1841(d) and does not act as an intermediary for housing loans.
It would not need an indemnity if a finance or banking holding-company did not act as a construction finance intermediary. Responding to our request, Oregon's regulatory authorities affirmed that the purpose of this exception is nothing other than to affirm that such holdings are not licensed to provide services unless they are servicing housing exposures.
With the entry into force of the Servicicer Act on 1 January 2018, state regulatory authorities have indicated that they anticipate that those servicing housing finance will receive approval by 1 January 2018. However, the Servicicer Act gives the Directors the power to determine by way of general policy whether an Applicant for a Servicicer Licence will request a licence through the Nationwide Mortgage Licensing System and Registry ("NMLSR") "instead of or in conjunction with the submission of the request to the Directors.
The regulatory authorities are working on a scheme required under the Servicer Act before certain certification conditions, such as the filing fees and the amount of the guarantee, can be established. Under the Servicer Act, the Director may assess the requester and, inter alia, the requester's "controllers" when deciding whether to grant a licence to the requester.
Either a licence holder must appoint and hold a head office from which the licence holder will service housing finance in Oregon and must also appoint a resident representative in the State, or if a licence holder does not hold a head office in Oregon, the licence holder must nevertheless appoint a resident representative in the State.
The state regulatory authorities have acknowledged that a state bureau is not obliged to obtain a licence as a provider of housing finance. Licensees licensed by Fannie Mae, Freddie Mac or Ginnie Mae to serve housing finance are considered to be in compliance with the cash, working reserve and physical capital provisions of the Servicicer Act.
It also lays down certain practical rules for those servicing mortgage credit, which include the valuation of charges, trust deposits and communications in writing to the consumer. These practical guidelines are not restricted to licence holders, but cover all companies that manage Oregon housing mortgage lending. The Servicer Act governs the amendment of housing construction credits.
Providers of these paid service are required to comply with the practicalities of the Servicer Act for these paid service offerings.