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Subject 80-11-4 LICENSING

Rule 80-11-4-.01 Repealed and Reserved

Rule 80-11-4-.02 Repealed and Reserved

Rule 80-11-4-.03 Licensing Requirements; Registrants; Exemptions; Term for Bond

(1) The Department will take appropriate action against all persons found to be improperly engaging in mortgage brokerage or lending activities without a license or valid exemption. In accordance with O.C.G.A. § 7-1-1018(a), if proper evidence is provided to the Department within thirty (30) days of the date the Order is issued that shows the person had the proper license or was acting pursuant to a valid exemption at the time noted in the Order, the Order shall be rescinded by the Department.
(2) The exemption from licensing provided pursuant to O.C.G.A. § 7-1-1001(14) to an employee of a licensee or exemptee applies only to natural persons who meet all of the following criteria:
(a) An employee must be employed by just one licensee or exemptee and work exclusively for that person;
(b) An employee may not solicit, process, or place loans for anyone else while claiming the exemption;
(c) An employee's procedures and activities must be supervised by the licensee or exemptee on a daily basis, and the licensee or exemptee is responsible for the actions of such employees. This requirement is intended to make it clear that employers control and are accountable for the actions of their employees; and
(d) An employee may not be paid or compensated for performance of mortgage activity as an independent contractor or on a 1099 basis, except as specifically provided for in paragraph (3) of this rule.
(3) The exemption from licensing provided pursuant to O.C.G.A. § 7-1-1001(17)only applies to a natural person acting in the capacity as an independent contractor working under an exclusive written contract for a licensee that is a wholly owned subsidiary of a financial holding company or bank holding company, savings bank holding company, or thrift holding company, under conditions and limitations as set forth in O.C.G.A. § 7-1-1001(17) and applies only if all of the following criteria are met:
(a) The independent contractor may only work in the capacity of a mortgage broker and may only broker loans to the licensed subsidiary or its affiliates;
(b) The licensee must provide annually, or more often if required by the Department, a list of each of the independent contractors brokering loans for the licensee under this exemption. This list must be submitted electronically in a form prescribed by the Department. The licensee must certify at the time of submission that each independent contractor brokering loans for them under this exemption are working under a current Undertaking of Accountability, in a form prescribed by the Department;
(c) The surety bond required pursuant to O.C.G.A. § 7-1-1001(17)must be in full force and effect at all times, unless or until such time as the licensee is no longer licensed. In the event that the licensee is no longer licensed, all independent contractors brokering loans for the licensee as independent contractors under this exemption must cease all mortgage brokerage activity immediately upon termination of said license. In the event that the required surety bond coverage falls below the amounts required by O.C.G.A. § 7-1-1001(17), the licensee must immediately provide coverage sufficient to meet the requirements as set forth therein, or the license will be subject to revocation or suspension. Adequacy of bond coverage will be determined annually by the Department based on the list of independent contractors as provided by the licensee in Rule 80-11-4-.03(3)(b).
(4) Registrants shall complete all information as indicated on the Department's application. Registrants must submit financial information as provided in O.C.G.A. §§ 7-1-1003.2 and 7-1-1010, are subject to books and records requirements as provided in O.C.G.A. § 7-1-1009, and must submit an annual fee to the Department. Registrants must provide updated consumer contact information to the Department, and are responsible for resolving consumer complaints satisfactorily and in conformity with the Department's guidelines and timeframes. Fines will apply for failure to comply with any Georgia mortgage laws or rules.

Rule 80-11-4-.04 Temporary License. Repealed and Reserved

Rule 80-11-4-.05 Knowing Purchase, Sale or Transfer of Loan or Loan Application from Unlicensed Entity, Mortgage Loan Originator Sponsorship Excluded

(1) It is prohibited for any person to knowingly purchase, sell or transfer a mortgage loan or loan application to or from an unlicensed mortgage loan originator, mortgage lender or broker, unless that entity is exempt from licensure or qualified to operate under the temporary authority provisions of 12 U.S.C § 5117. It is expected that all persons who purchase loans use reasonable diligence to determine whether the entities they do business with are licensed or exempt from licensure. To that end, the department makes available through NMLS Consumer Access information as to whether an entity is licensed.
(2) Obtaining a copy of an entity's annual license shall not be sufficient evidence of a current license since revocation proceedings occur throughout the year.
(3) Failure by a licensee to exercise reasonable diligence to determine whether an entity is licensed or exempt from licensure may result in a fine or other administrative action, including, but not limited to, license revocation.
(4) The mere act of sponsoring an employee seeking licensure from the Department as a mortgage loan originator through the Nationwide Multistate Licensing System and Registry shall not be regarded in and of itself as engaging in the mortgage business with an unlicensed person as long as the applicant is not performing for the sponsoring licensee or registrant those regulated activities set forth in O.C.G.A. § 7-1-1000(22)unless qualified to operate under the temporary authority provisions of 12 U.S.C. § 5117.

Rule 80-11-4-.06 Reserved

Rule 80-11-4-.07 Loan Processors as Brokers

(1) Mortgage brokers include persons who directly or indirectly solicit, process, place or negotiate or offer mortgage loans for others. A loan processor is a mortgage broker and will require a mortgage broker license to process loans on Georgia real property that meet the definition of "mortgage loan" in O.C.G.A. § 7-1-1000(21).
(2) A loan processor employed as a W-2 employee of a Georgia Residential Mortgage Act licensee who meets all of the qualifications for exemption under O.C.G.A. § 7-1-1001 does not require a license. A loan processor who works as an independent contractor or who owns or controls a company that does loan processing is required to have a license.
(3) Generally, to process a loan means to collect and/or verify from a borrower or other person, information that is necessary to underwrite or to submit for underwriting, a mortgage loan application package. Activities including but not limited to the following may qualify as loan processing:
(a) Reviewing, and processing real estate loan applications.
(b) Ordering, obtaining and evaluating credit reports, real estate appraisals, flood certifications, location surveys, termite inspections, well/septic inspections, surveys, etc.
(c) Ordering, obtaining, and evaluating real property ownership information, including a title insurance policy insuring lender's valid lien position. Title insurance companies that handle only title insurance for a particular loan are not loan processors.
(d) Communicating with applicants as necessary to obtain additional information needed to process a loan.
(e) Obtaining verifications of income, employment, address, etc. as requested by a broker, lender or mortgage loan originator.
(f) Performing escrow account analyses; taking steps required to establish escrow accounts.
(g) Providing certain real estate loan disclosures on behalf of lender.
(h) Compiling and transmitting completed real estate loan application packages to lenders.
(i) Maintaining, collecting, and/or reporting any data necessary to comply with applicable statutory and regulatory requirements.
(4) Persons who are otherwise exempt from licensing in O.C.G.A. § 7-1-1001, so long as they provide only the services contemplated in their exemption, will not be considered loan processors.

Rule 80-11-4-.08 Restrictions on Employment and Licensing

(1) No person who has been an officer, director, partner or ultimate equitable owner of a licensee that has had its license revoked, denied or suspended, may perform any of those roles at another licensee or registrant for five years from the date of the final order.
(2) Felony convictions; restrictions on the employee and the licensee:
(a) O.C.G.A. § 7-1-1004 provides that no person employed by or directing the affairs of any licensee may be a convicted felon. Licensees are obligated by that statute to do their own background checks on covered employees. Licensees, however, are responsible to see that no convicted felons are employed or direct the affairs of their business. The department administers fingerprint checks on officers and directors and others where needed.
(b) O.C.G.A. § 7-1-1004 provides for remedies to "cure" a felony conviction. These remedies must be completed and in place prior to employment. Hiring or continuing to employ a person with an unremedied felony conviction subjects a licensee to revocation of its license.
(c) If a licensee discovers that an employee or director/officer is a felon who has not satisfactorily "cured" the conviction, the violation of O.C.G.A. § 7-1-1004 must be immediately corrected or the license will be subject to revocation. Such individuals with felony convictions are ineligible for an employee exemption and are in violation of O.C.G.A. § 7-1-1019, also a felony, and O.C.G.A. §§ 7-1-1004 and 7-1-1002. The licensee employer is in violation of O.C.G.A. §§ 7-1-1004 and 7-1-1002.
(d) A cease and desist order to a person for failure to meet the employee exemption due to a violation of the felony provisions of O.C.G.A. § 7-1-1004 shall become final in 30 days without a hearing. Such a person must show within those 30 days, by certified court documents that the record is erroneous, or, that the "cure" provisions in O.C.G.A. § 7-1-1004 were completed prior to employment, in order to stop the order from becoming final. In the event such proof is provided, the order will be rescinded.
(3) Cease and desist orders may be issued against persons required to be licensees or registrants or against employees of those parties. All of the provisions of O.C.G.A. § 7-1-1018, including injunction, apply to actions against all such persons.
(4) The Department may regularly publish information identifying persons and natural persons to whom final administrative actions have been issued.

Rule 80-11-4-.09 Challenges to Information Entered into the Nationwide Multistate Licensing System and Registry

A mortgage broker or lender licensee or registrant may challenge information entered by the Department into the Nationwide Multistate Licensing System and Registry. All challenges must be sent to the Department in writing addressed to the attention of the Deputy Commissioner of Non-Depository Financial Institutions. Once received, the Department shall consider the merits of the challenge raised and provide the licensee or registrant with a written reply that shall be the agency's final decision in response thereto.

Rule 80-11-4-.10 Verification of Lawful Presence Citizenship Affidavit

(1) Pursuant to O.C.G.A. § 50-36-1, the Department is required to obtain an affidavit verifying the lawful presence of every natural person that submits an application for a license as a mortgage broker or mortgage lender or a registration on behalf of an individual, business, corporation, partnership, limited liability company, or any other business entity. For businesses, corporations, partnerships, limited liability companies, and other business entities (collectively "company applicant"), only an owner or executive officer that is authorized to act on behalf of the company applicant is authorized to submit the required signed and sworn affidavit.
(2) In the event the individual that executed the lawful presence affidavit on behalf of the company applicant is no longer an owner or executive officer of the licensee or registrant, the licensee or registrant must notify the Department within ten (10) business days following the date of the occurrence and provide the Department with an affidavit from a current owner or executive officer verifying his or her lawful presence on behalf of the licensee or registrant. The failure to disclose within ten (10) business days that the owner or executive officer that executed the lawful presence affidavit is no longer in that position with the licensee or registrant or to timely submit a new affidavit from a current owner or executive officer may subject the license or registration to revocation, suspension, or other administrative action.

Rule 80-11-4-.11 Information on the Nationwide Multi-State Licensing System and Registry

(1) It shall be the sole responsibility of each applicant for a mortgage lender or mortgage broker licensee, each applicant for a registration, each licensed mortgage broker and mortgage lender, and each registrant to keep current at all times its information on the Nationwide Multi-State Licensing System and Registry ("NMLSR"). Amendments to any information on file with the NMLSR must be made by the applicant, licensee, or registrant within ten (10) business days of the date of the event necessitating the change. The Department shall have no responsibility for any communication not received by an applicant, licensee, or registrant due to its failure to maintain current contact information on the NMLSR as required.
(2) Amendments to any responses to disclosure questions on an NMLSR MU-1 by an applicant for a mortgage lender or mortgage broker license, an applicant for a registration, a licensed mortgage lender or mortgage broker, or a registrant must be made within ten (10) business days following the date of the event necessitating the change. Failure by an applicant for a mortgage lender or mortgage broker license or an applicant for a registration to timely update the applicant's NMLSR MU-1 may result in the denial of the application. In the case of a licensed mortgage lender or mortgage broker or a registrant, failure to timely update any disclosure information on the NMLSR MU-1 may result in the revocation of its license or registration.
(3) It shall be the responsibility of each applicant for a mortgage lender or mortgage broker licensee, each applicant for a registration, each licensed mortgage broker and mortgage lender, and each registrant to ensure that its control persons keep current at all times their information on the Nationwide Multi-State Licensing System and Registry ("NMLSR"). Amendments to any information on file with the NMLSR must be made by the control person within ten (10) business days of the date of the event necessitating the change. For purposes of this rule, control person means any individual that has the power, either directly or indirectly, to direct or cause the direction of management and policies of an applicant, licensee, or registrant, whether through the ownership of voting or nonvoting securities, by contract, or otherwise.
(4) Amendments to any responses to disclosure questions on an NMLSR MU-2 by a control person must be made within ten (10) business days following the date of the event necessitating the change. Failure by a control person of an applicant for a mortgage lender or mortgage broker license or an applicant for a registration to timely update the control person's NMLSR MU-2 may result in the denial of the application. In the case of a licensed mortgage lender or mortgage broker or a registrant, failure by a control person to timely update any disclosure information on the NMLSR MU-4 may result in the revocation of the mortgage broker or mortgage lender license or registration.

Rule 80-11-4-.12 License Renewal Periods and Requirements for Mortgage Brokers, Mortgage Lenders, and Mortgage Originators

(a) For purposes of this rule the Nationwide Multistate Licensing System and Registry (NMLSR) is defined as a uniform multi-state administration of an automated licensing system for mortgage brokers, mortgage lenders, and mortgage loan originators. The department's participation in NMLSR is authorized by O.C.G.A. § 7-1-1003.5.
(b) All applications for new licenses or registrations must be made through NMLSR. Fees for new applications include an initial Department investigation fee and the appropriate application fee for the application type. Applications for new licenses and registrations which are approved between November 1 and December 31 in any year will not be required to file a renewal application for the next calendar year. All fees are non-refundable.
(c) All licenses and registrations issued pursuant to the Georgia Residential Mortgage Act shall expire on December 31 of each year, and an application for renewal shall be made annually between November 1 and December 31 each year. Subsequent renewal applications and/or license fees must be received on or before December 1 of each year or the applicant will be assessed a late fee as set forth in these rules by license or registration type. A renewal application is not deemed received until all required information, including documentation of any required continuing education coursework, and corresponding fees, has been provided by the licensee. A proper renewal application not received on or before the December 1 renewal application deadline of each year cannot be assured of issuance or renewal prior to January 1, at which time the license or registration will expire. Unless a proper application has been received any license or registration which is not renewed on or before December 31 will require the applicant to file a reinstatement application in order to conduct mortgage business in the State after that date.