MAJOR CHANGES TO OHIO MORTGAGE LOAN ACT AND OHIO MORTGAGE BROKER ACT
Buried in the Ohio Budget Bill, Ohio H.B. No. 1, are almost 100 pages revising the Ohio Mortgage Loan Act and the Ohio Mortgage Broker Act. Some of the new provisions are designed to bring Ohio into compliance with the Federal Secure and Fair Enforcement of Mortgage Licensing Act of 2008 (S.A.F.E. Act).
The S.A.F.E. Act requires licensing or registration of loan originators. In the federal law “loan originator” is defined as a person who takes a residential mortgage loan application and offers or negotiates the terms of a residential mortgage loan for compensation or gain. The federal law is described as creating a floor for state licensing requirements and also creates a national registry system.
The new Ohio law provisions in the budget bill, in addition to creating a new licensing category for loan originators, makes numerous changes in the Ohio Mortgage Loan Act and Ohio Mortgage Broker Act. These changes include:
- Making it easier for the Division to revoke, suspend or refuse to renew a MLA certificate of registration by eliminating the requirement that the violation continue after a notice of violation is provided to the registrant;
- Giving the Division the authority to take action based on violations of federal law or any law applicable to the MLA registrant;
- Restricting the permitted points and prepayment penalties in the MLA by incorporating the restrictions on points and prepayment penalties in the Ohio civil interest statute;
- Adding a requirement that certain real estate related fees be paid to a third party to be permitted under the MLA;
- Adding numerous new prohibited practices to the MLA, including cross reference to unfair, deceptive or unconscionable acts or practices in the Consumer Sales Practices Act;
- Requiring MLA registrants to comply with the federal Fair Debt Collection Practices Act when collecting the registrant’s own debts;
- Making numerous changes in the licensing and registration process under the MLA and Mortgage Broker Act, including continuing education requirements; and
- Expanding the Division’s rule making authority.
As these provisions were included in the state’s biennial appropriations bill, exceeding 3,000 pages, these changes were NOT subject to public hearings and debate.
The new provisions take effect January 1, 2010. Individuals holding valid certificates of registration or licenses are not required to be in compliance with the new requirements until the first renewal after January 1, 2010.
Please contact us with any questions or for more information on specific changes.
- Darrell Dreher and Elizabeth Anstaett