Whereas, The deferred operation of this act would tend to defeat its purpose, which is to immediately provide for the licensing of certain mortgage lenders and brokers, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.
Be it enacted by the Senate and House of Representatives
in General Court assembled, and by the authority of the same,
SECTION 1. Section 87PP of chapter 112 of the General Laws, as appearing in the 1990 Official Edition, is hereby amended by striking out, in lines 29 to 31, inclusive, the words ", or negotiates or offers or attempts or agrees to negotiate a loan secured or to be secured by mortgage or other encumbrance upon real estate".
SECTION 2. Said section 87PP of said chapter 112, as so appearing, is hereby further amended by striking out, in lines 37 and 38, the words ", or in a loan secured or to be secured by mortgage or other encumbrance on real estate".
SECTION 3. The General Laws are hereby amended by inserting after chapter 255D the following chapter:- `tuc CHAPTER 255E. LICENSING OF CERTAIN MORTGAGE LENDERS AND BROKERS.
Section 1. As used in this chapter the following words shall, unless the context otherwise requires, have the following meanings:-
"Commissioner", the commissioner of banks.
"Mortgage broker", any person who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly negotiates, places, assists in placement, finds or offers to negotiate, place, assist in placement or find mortgage loans on residential property for others.
"Mortgage lender", any person engaged in the business of making mortgage loans, or issuing commitments for mortgage loans.
"Mortgage loan", a loan to a natural person made primarily for personal, family or household purposes secured wholly or partially by a mortgage on residential property.
"Residential property", real property located in the commonwealth having thereon a dwelling house with accommodations for four or less separate households and occupied, or to be occupied, in whole or in part by the obligor on the mortgage debt.
Section 2. No person shall act as a mortgage broker or mortgage lender with respect to residential property unless first obtaining a license from the commissioner; provided, however, that any person who is employed by or associated with a licensed mortgage broker or mortgage lender in the capacity of a mortgage broker or mortgage lender under the direction of said licensed mortgage broker or mortgage lender shall not be required to obtain such license. The provisions of this chapter shall not apply to any mortgage lender making fewer than five mortgage loans within any period of twelve consecutive months; provided, however, that in computing the number of mortgage loans, there shall be counted in the loans of more than one partnership, association, trust or corporation, the majority interest of which are owned or controlled directly or indirectly by the same person or persons, partnerships, associations, trusts or corporations and including in the loans of a partnership or company not incorporated the loans of the several members thereof. The provisions of this chapter shall not apply to any person who acts as a mortgage broker fewer than five times within any period of twelve consecutive months. The provisions of this chapter shall not apply to a bank as defined in section one of chapter one hundred and sixty-seven, a national banking association, a federally chartered credit union, a federal savings and loan association, a federal savings bank, or any subsidiary or affiliate of the above, a company licensed to carry on the business of making small loans under the provisions of section ninety-six of chapter one hundred and forty, insurance company, or to any bank, trust company, savings bank, savings and loan association, credit union or insurance company organized under the laws of any other state; provided, however, that except as provided herein, such provisions shall apply to any subsidiary or affiliate, as defined by the commissioner, of any such exempted entity and of a bank holding company established in accordance with state or federal law; and provided, further, that such provisions shall not apply to any instrumentality created by the United States or any state or to any nonprofit, public or independent post-secondary educational institution within the commonwealth authorized by law to grant degrees by the commonwealth, or by any agency or instrumentality thereof, for mortgage loans made by any such educational institution to its faculty or staff or to a real estate broker or real estate salesman as defined in section eighty-seven PP of chapter one hundred and twelve who, in connection with services performed in a prospective real estate transaction, provides mortgage information or assistance to a buyer if such real estate broker or real estate salesman is not compensated for the same in addition to the compensation received from the seller for such real estate services. The commissioner may adopt, amend or repeal rules and regulations, which may include an adequate capitalization requirement for mortgage lenders, to aid in the administration and enforcement of this chapter.
Section 3. The application for a license shall be in writing and in the form prescribed by the commissioner and shall contain the name and address or addresses where the business of the applicant is located and if the applicant is a partnership, association, corporation or other form of business organization, the names and addresses of each member, director and principal officer thereof. Such application shall also include a description of the activities of the applicant, in such detail and for such periods, as the commissioner may require, as well as such further information as the commissioner may require. Each application for a license shall be accompanied by an investigation fee. Investigation and license fees shall be determined annually by the commissioner of administration under the provisions of section three B of chapter seven.
Section 4. Upon the filing of an application for a license, if the commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant, and of the partners or members thereof if the applicant is a partnership or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated honestly, fairly, soundly and efficiently in the public interest consistent with the purposes of this chapter, he shall thereupon issue the applicant a license to engage in the business of a mortgage lender or mortgage broker. If the commissioner shall not so find, he shall not issue a license and he shall notify the applicant of the denial. Within twenty days thereafter, he shall enter upon his records a written decision and findings containing the reasons supporting the denial and shall forthwith give written notice thereof by registered mail to the applicant. Within thirty days after the date of such notice, the applicant may appeal from such denial to the superior court for Suffolk county, sitting in equity. The court shall hear all pertinent evidence and determine the facts and upon the facts as so determined, review said denial and, as justice and equity may require, affirm the same or order the commissioner to issue such license. The commissioner shall approve or deny every application for a license within ninety days after the filing thereof, but any failure of the commissioner to act within such period shall not be deemed to be an approval of any such application.
Section 5. Each license shall state the address at which the business is to be conducted and shall state the name of the licensee. If a licensee intends to carry on such business at any place other than the address on the license, he shall so notify the commissioner, in writing, at least thirty days prior thereto. Such notice shall contain the address of any such place and such other information as the commissioner may require; provided, however, that any such business shall at all times be conducted in the name of the licensee as it appears on the license. A copy of such license shall be prominently posted in each place of business of the licensee. Such copies for places of business at addresses other than that appearing on the license may be obtained at a reasonable cost, as determined by the commissioner. Such license shall not be transferrable or assignable and shall expire annually on April first. Any change of location or closing of a place of business of the licensee, either at the address stated on the license or at a place other than said address stated on the license, shall require prior written notice thereof to the commissioner. Such notice shall be in writing setting forth the reason therefor and shall be filed with the commissioner at least thirty days prior to any such relocation or closing. If there shall be any change among the members, officers, partners or directors of any licensee, the licensee shall notify the commissioner in a timely manner of the name, address and occupation of each new member, officer, partner or director, and provide such other information as the commissioner may require.
Section 6. The commissioner may suspend or revoke any license issued pursuant to this chapter if said commissioner finds that:
(i) the licensee has violated any provision of this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; or
(ii) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license.
Except as provided in section seven, no license shall be revoked or suspended except after notice and a hearing thereon pursuant to chapter thirty A.
A licensee may surrender a license by delivering to the commissioner written notice that it thereby surrenders such license, but such surrender shall not affect the civil or criminal liability of the licensee for acts committed before such surrender.
No revocation, suspension or surrender of any license shall impair or affect the obligation of any pre-existing lawful contract between the licensee and any person.
Section 7. (a) If the commissioner determines, after giving notice of and opportunity for a hearing, that a licensee has engaged in or is about to engage in an act or practice constituting a violation of a provision of this chapter or a rule, regulation or order hereunder, he may order such licensee to cease and desist from such unlawful act or practice and take such affirmative action as in his judgment will effect the purposes of this chapter.
(b) If the commissioner makes written findings of fact that the public interest will be irreparably harmed by delay in issuing an order under subsection (a) he may issue a temporary cease and desist order. Upon the entry of a temporary cease and desist order, the commissioner shall promptly notify, in writing, the licensee affected thereby that such order has been so entered, the reasons therefor, and that within twenty days after the receipt of a written request from such licensee, the matter will be scheduled for hearing to determine whether or not such temporary order shall become permanent and final. If no such hearing is requested and none is ordered by the commissioner, the order shall remain in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after giving notice of and opportunity for a hearing to the licensee subject to said order, shall, by written finding of facts and conclusions of law, vacate, modify or make permanent the order.
(c) No order under this section, except an order issued pursuant to subsection (b), may be entered without prior notice of and opportunity for a hearing. The commissioner may vacate or modify an order under this section upon finding that the conditions which required such an order have changed and that it is in the public interest to so vacate or modify.
Any order issued pursuant to this section shall be subject to review as provided in chapter thirty A.
Section 8. Each licensee shall annually, on or before a date to be determined by the commissioner, file a report with the commissioner giving such information as said commissioner may require concerning its business and operations during the preceding calendar year.
The licensee shall keep and use within the commonwealth such books, records and accounts as will enable the commissioner to determine whether such licensee is complying with the provisions of this chapter and rules and regulations lawfully made pursuant thereto by the commissioner and any other law, rule and regulation applicable to the conduct of its business as a mortgage broker or mortgage lender. Every licensee shall preserve such books, records and accounts for at least three years. Preservation of such books, records and accounts by photographic reproduction thereof or records in photographic form shall constitute compliance with the requirements of this section.
Each licensee shall, when directed by the commissioner, permit the commissioner or his duly authorized representative to inspect its relevant records and evidence of compliance with this chapter or any rule or regulation issued thereunder and with any other law, rule and regulation applicable to the conduct of the business for which it is licensed under this chapter. For the purposes of such inspection, the commissioner or his representative shall have access to the offices and place of business, books, accounts, papers, records and files of all such licensees. The commissioner and any person designated by him may require the attendance and testimony of all persons as he may deem necessary relative to such business. The total cost for any such inspection, which shall be paid by the licensee within thirty days after the receipt of invoice therefor, shall be determined by the commissioner of administration under the provisions of section three B of chapter seven.
Section 9. The commissioner may enforce the provisions of this chapter, or restrain any violations thereof, by filing a civil action in any court of competent jurisdiction.
Section 10. Whoever violates any provision of section two or any rule or regulation made thereunder by the commissioner shall be punished by a fine of not more than five hundred dollars, or by imprisonment for not more than six months, or both such fine and imprisonment. Each day such violation occurs or continues shall be deemed a separate offense.
SECTION 4. The commissioner of banks is hereby authorized to promulgate rules and regulations to implement the provisions of this act.
SECTION 5. Sections one, two and three of this act shall take effect on January first, nineteen hundred and ninety-two.