Bill Summary – FastDemocracy

Stricken language would be deleted from and underlined language would be added to present law.
                                           Act 531 of the Regular Session
 State of Arkansas                    As Engrossed:       S3/3/21
 93rd General Assembly                        A Bill
 Regular Session, 2021                                                             SENATE BILL 149
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 By: Senator J. Dismang
 By: Representative Maddox
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                                   For An Act To Be Entitled
                AN ACT TO AMEND THE FAIR MORTGAGE LENDING ACT; TO
                MODIFY CERTAIN DEFINITIONS UNDER THE FAIR MORTGAGE
                LENDING ACT; TO CLARIFY THE QUALIFICATIONS FOR
                LICENSURE UNDER THE FAIR MORTGAGE LENDING ACT; TO
                PROVIDE A PROCESS TO ALLOW A LOAN OFFICER TO WORK
                REMOTELY; TO MODIFY THE PROCESS FOR A CHANGE OF NAME
                OR ADDRESS OF A LICENSEE UNDER THE FAIR MORTGAGE
                LENDING ACT; TO REQUIRE A LICENSEE TO ESTABLISH
                CYBERSECURITY POLICY AND PROCEDURE; AND FOR OTHER
                PURPOSES.
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                                               Subtitle
                         TO AMEND THE FAIR MORTGAGE LENDING ACT.
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 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
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        SECTION 1.        Arkansas Code  23-39-502(3), concerning the definition of
 "branch office" under the Fair Mortgage Lending Act, is amended to read as
 follows:
                (3)      Branch office means a location that is separate and
 distinct from the licensee's principal place of business and includes a net
 branch or any location from which business is conducted under the license or
 in the name of the mortgage broker, mortgage banker, or mortgage servicer:
                          (A)   The address of which appears on business cards,
 stationery, or advertising used by the licensee in connection with business
 conducted under this subchapter at the branch office;
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     As Engrossed:    S3/3/21                                                      SB149
                     (B)    At which the licensee's name, advertising, promotional
 materials, or signage suggests that mortgage loans are originated, solicited,
 accepted, negotiated, funded, or serviced or from which mortgage loan
 commitments or interest rate guarantee agreements are issued; or
                     (C)    Which, due to the actions of any employee, associate,
 loan officer, or transitional loan officer of the licensee, may be construed
 by the public as a branch office of the licensee where mortgage loans are
 originated, solicited, accepted, negotiated, funded, or serviced or from
 which mortgage loan commitments or interest rate guarantee agreements are
 issued;
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      SECTION 2.     Arkansas Code  23-39-502(13), concerning the definition of
 "managing principal" under the Fair Mortgage Lending Act, is amended to read
 as follows:
               (13)(A)     Managing principal means a person who meets the
 requirements of  23-39-508 and who agrees to be primarily responsible for
 the operations of a licensed mortgage broker, mortgage banker, or mortgage
 servicer.
                     (B)    "Managing principal" includes a qualifying individual;
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      SECTION 3.     Arkansas Code  23-39-502(17), concerning the definition of
 "mortgage servicer" under the Fair Mortgage Lending Act, is amended to read
 as follows:
      (17)(A)     Mortgage servicer means a person that receives or has the
 right to receive from or on behalf of a borrower:
                             (A)(i)    Funds or credits in payment for a mortgage
 loan; or
                             (B)(ii)   The taxes or insurance associated with a
 mortgage loan.
                     (B)    In the case of a home equity conversion mortgage or a
 reverse mortgage, "mortgage servicer" includes a person that makes a payment
 to the borrower;
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      SECTION 4.     Arkansas Code  23-39-503(d)(1), concerning the license of
 a loan officer under the Fair Mortgage Lending Act, is amended to read as
 follows:
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     As Engrossed:      S3/3/21                                                         SB149
      (d)(1)(A)      The license of a loan officer or a transitional loan officer
 terminates when the loan officer's or transitional loan officer's employment
 by or relationship with a mortgage broker or mortgage banker licensed under
 this subchapter terminates.
                      (B)     A transitional loan officer license terminates when
 the transitional loan officer's employment by or relationship with a mortgage
 broker or mortgage banker licensed under this subchapter terminates.
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      SECTION 5.      Arkansas Code  23-39-505(a)(4), concerning the information
 required by an applicant for a license under the Fair Mortgage Lending Act,
 is amended to read as follows:
              (4)    In addition to any other information required under this
 subchapter or rules adopted by the commissioner, the application shall
 contain information the commissioner deems necessary and shall include the
 following:
                      (A)     For a license as a mortgage banker, mortgage broker,
 or mortgage servicer:
                               (i)   The applicant's name, address, and Social
 Security number federal employer identification number;
                               (B)(ii)   The applicant's form of business and place
 of organization, including without limitation:
                                     (i)(a)      A copy of the applicant's
 organizational and governance documents; and
                                     (ii)(b)      If the applicant is a foreign entity,
 a copy of the certificate of authority from the Secretary of State;
                               (C)(i)(iii)       The applicant's proposed method of and
 locations for doing business, if applicable including whether the applicant
 is proposing to be licensed as a mortgage broker, mortgage banker, or
 mortgage servicer.;
                                     (ii)     The applicant's proposed method of doing
 business shall include whether the applicant is proposing to be licensed as a
 mortgage broker, mortgage banker, or mortgage servicer;
                               (D)(i)(iv)     The applicant's proposed locations for
 doing business;
                               (v)   The qualifications, business history, and
 financial condition of the applicant and a managing principal of the
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     As Engrossed:    S3/3/21                                                       SB149
 applicant.; and
                             (vi)   A disclosure of a beneficial interest in an
 affiliated industry business held by the applicant or by a principal,
 officer, director, or employee of the applicant; and
                    (B)     For a license as a loan officer, transitional loan
 officer, or managing principal of an applicant:
                             (i)    The applicant's name, address, and Social
 Security number; and
                             (ii)   The qualifications, and business history, and
 financial condition of the individual or managing principal of an applicant,
 of persons under subdivision (a)(4)(D)(i) of this section shall include
 including:
                                    (a)   A description of an injunction or
 administrative order, including a denial to engage in a regulated activity by
 any state or federal authority that had jurisdiction over the applicant;
                                    (b)   A Disclosure of a conviction of a
 misdemeanor involving fraudulent dealings or moral turpitude or relating to
 any aspect of the mortgage industry, the securities industry, the insurance
 industry, or any other activity pertaining to financial services;
                                    (c)   A Disclosure of a felony conviction; and
                                    (d)   Fingerprints for submission to the Federal
 Bureau of Investigation and any governmental agency or entity authorized to
 receive fingerprints for a state, national, and international criminal
 background check; and.
                    (E)     A disclosure of a beneficial interest in an affiliated
 industry business held by the applicant or by a principal, officer, director,
 or employee of the applicant.
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      SECTION 6.    Arkansas Code  23-39-505(d), concerning the designation of
 a managing principal under the Fair Mortgage Lending Act, is amended to read
 as follows:
      (d)     Each applicant for a license as a mortgage broker, mortgage
 banker, or mortgage servicer shall identify in its application one (1) person
 meeting the requirements of subsection (c) of this section to serve as the
 applicant's managing principal.
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     As Engrossed:       S3/3/21                                                   SB149
      SECTION 7.       Arkansas Code  23-39-505(h), concerning the qualifications
 of a loan officer under the Fair Mortgage Lending Act, is repealed.
      (h)    Any general partner, manager of a limited liability company, or
 officer of a corporation who individually meets the requirements under
 subsection (b) of this section shall be deemed to have met the qualifications
 for licensure as a loan officer upon filing a written application with the
 commissioner in the form prescribed by the commissioner and payment of the
 applicable fee.
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      SECTION 8.       Arkansas Code  23-39-506(c), concerning the renewal of a
 loan officer license under the Fair Mortgage Lending Act, is amended to read
 as follows:
      (c)(1)      Each licensed loan officer wishing to renew a license shall:
                       (1)(A)   File an application with the commissioner in the
 form prescribed by the commissioner between November 1 and December 31 of the
 calendar year;
                       (2)(B)   Comply with the continuing education requirements
 as required by rules promulgated by the commissioner; and
                       (3)(C)   Pay an annual renewal fee of fifty dollars
 ($50.00).
               (2)    If an initial loan officer license is issued between
 November 1 through December 31 of the calendar year, the loan officer is not
 required to file a renewal application until the subsequent renewal period.
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      SECTION 9.       Arkansas Code  23-39-509(d), concerning the business
 location of a mortgage broker, mortgage banker, or mortgage servicer under
 the Fair Mortgage Lending Act, is amended to read as follows:
      (d)(1)      A principal place of business or branch office from which a
 mortgage broker, mortgage banker, or mortgage servicer conducts mortgage loan
 activity or business shall be a physical address.
               (2)    Mortgage loan activity or business includes without
 limitation the address appearing on business cards, stationery, promotional
 materials, or advertising.
               (3)    The commissioner may by rule or order impose terms and
 conditions under which a loan officer may conduct mortgage loan activity or
 business from a location that is not licensed under this subchapter as a
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     As Engrossed:       S3/3/21                                                       SB149
 principal place of business or branch office.
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      SECTION 10.        Arkansas Code  23-39-509(e), concerning notice of a
 change of address that is required by a mortgage broker, mortgage banker, or
 mortgage servicer under the Fair Mortgage Lending Act, is amended to read as
 follows:
      (e)(1)     A mortgage banker, mortgage broker, or mortgage servicer shall
 report a change of address of the principal place of business, a branch
 office, or a location in which the files pertaining to mortgage loan
 transactions are maintained within thirty (30) days after the change not use
 any name or address to conduct mortgage loan activity or business other than
 the name and address specified on the license issued by the commissioner.
               (2)(A)     A licensee that does not comply with subdivision (e)(1)
 of this section shall pay a late fee of two hundred fifty dollars ($250)
 mortgage broker, mortgage banker, or mortgage servicer may change the name of
 the licensee or address of the principal place of business or branch office
 specified on the most recent filing with the commissioner if:
                        (A)(i)     At least thirty (30) calendar days before the
 change, the licensee files a notice of the change with the commissioner.
                                 (ii)   If necessary, the licensee shall provide a bond
 rider or endorsement, or addendum, as applicable, to the surety bond on file
 with the commissioner that reflects the new name or change of address of the
 licensee's principal place of business; and
                        (B)    All or part of the late fee may be waived by the
 commissioner for good cause The commissioner does not disapprove the name
 change or the change of address in writing or request additional information
 within the thirty-day time frame described in subdivision (e)(2)(A)(i) of
 this section.
               (3)    The commissioner may revoke or suspend the license of a
 mortgage broker, mortgage banker, or mortgage servicer who fails to pay a
 late fee assessed under subdivision (e)(2) of this section.
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      SECTION 11.        Arkansas Code  23-39-510, concerning the duties of a
 licensee under the Fair Mortgage Lending Act, is amended to add additional
 subsections to read as follows:
      (d)(1)     A mortgage broker, mortgage banker, or mortgage servicer
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     As Engrossed:    S3/3/21                                                  SB149
 licensed or required to be licensed under this subchapter shall establish,
 implement, update, and enforce written physical security and cybersecurity
 policies and procedures reasonably designed to ensure the confidentiality,
 integrity, and availability of physical and electronic records and
 information.
            (2)     A policy or procedure described in subdivision (d)(1) of
 this section shall be tailored to the size and sophistication of the mortgage
 broker, mortgage banker, or mortgage servicer.
            (3)     The commissioner may impose additional conditions by rule or
 order to clarify the requirements of a policy or procedure described in
 subdivision (d)(1) of this section.
      (e)   A mortgage broker, mortgage banker, or mortgage servicer shall
 establish, enforce, and maintain policies and procedures reasonably designed
 to achieve compliance with this subchapter and any other state law or rule or
 federal law or regulation that is applicable to any business the licensee is
 authorized to conduct in this state.
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      SECTION 12.     Arkansas Code  23-39-514(i)(2), concerning the authority
 of the Securities Commissioner to require an applicant or licensee to pay a
 fee for an examination under the Fair Mortgage Lending Act, is amended to
 read as follows:
            (2)     The applicant or licensee shall pay a fee for each
 examination under subdivision (i)(1) of this section, not to exceed one
 hundred fifty dollars ($150) per examiner for each day or part of a day
 during which any examiners are absent from the office of the commissioner for
 the purpose of conducting the an examination is conducted.
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                                   /s/J. Dismang
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                                 APPROVED: 4/1/21
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Statutes affected: 
Old version SB149 Original - 1-19-2021 01:01 PM: 23-39-502(3), 23-39-502(13), 23-39-502(17), 23-39-503(d), 23-39-505(a), 23-39-505(d), 23-39-505(h), 23-39-506(c), 23-39-509(d), 23-39-509(e), 23-39-510, 23-39-514(i)
Old version SB149 V2 - 3-3-2021 01:38 PM: 23-39-502(3), 23-39-502(13), 23-39-502(17), 23-39-503(d), 23-39-505(a), 03-03-2021, 23-39-505(d), 23-39-505(h), 23-39-506(c), 23-39-509(d), 23-39-509(e), 23-39-510, 23-39-514(i)
SB 149: 23-39-502(3), 23-39-502(13), 23-39-502(17), 23-39-503(d), 23-39-505(a), 03-03-2021, 23-39-505(d), 23-39-505(h), 23-39-506(c), 23-39-509(d), 23-39-509(e), 23-39-510, 23-39-514(i)
Act 531: 23-39-502(3), 23-39-502(13), 23-39-502(17), 23-39-503(d), 23-39-505(a), 03-03-2021, 23-39-505(d), 23-39-505(h), 23-39-506(c), 23-39-509(d), 23-39-509(e), 23-39-510, 23-39-514(i)
Old version of SB 149 - 03-03-21: 23-39-502(3), 23-39-502(13), 23-39-502(17), 23-39-503(d), 23-39-505(a), 03-03-2021, 23-39-505(d), 23-39-505(h), 23-39-506(c), 23-39-509(d), 23-39-509(e), 23-39-510, 23-39-514(i)
Old version of SB 149 - 01-19-21: 23-39-502(3), 23-39-502(13), 23-39-502(17), 23-39-503(d), 23-39-505(a), 23-39-505(d), 23-39-505(h), 23-39-506(c), 23-39-509(d), 23-39-509(e), 23-39-510, 23-39-514(i)