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Mortgage Loan Companies

The Division of Financial Institutions regulates second mortgage lenders and non-depository lenders who make other types of loans in amounts of more than five thousand dollars in Ohio under Sections 1321.20, 1321.51 to 1321.60 and 1321.99 of the Ohio Revised Code.

Registration

A person wishing to register under the Ohio Mortgage Loan Act must submit an application, a fingerprint card, a registration fee and a nonrefundable investigation fee. The Division must investigate the financial condition, responsibility, experience character and general fitness of the applicant, including requesting a criminal background check. The applicant must have assets of at least fifty thousand dollars per branch office readily available for use in the business and a net worth of fifty thousand dollars.

Certificates of registration may be renewed annually by filing a renewal application, paying an annual registration fee and, if the Division determines it is necessary, paying an annual assessment based on the amount of interest and other finance charges collected by the registrant. If an office is to be relocated, the registrant must obtain a new certificate of registration from the Division prior to conducting business at the new location.

Compliance

Registrants must comply with specific recordkeeping, advertising and business practices as outlined by statute or rule. For example, all loan office locations must be registered, certificates of registration must be conspicuously posted, the interest rates and fees that may be charged on loans are limited and certain records must be maintained for two years.

The Division can investigate registrants and anyone who appears to be operating without a certificate of registration, and has the power to issue subpoenas as part of the investigative process. The Division may also issue cease and desist orders, impose monetary fines, or revoke or suspend a certificate of registration, subject to the Administrative Procedures Act.

Testing

Experior Assessments, LLC, the company who will conduct all the testing of mortgage broker operations managers and loan officers, has released its Candidate Information Bulletin (CIB) for test takers. You can view or print the CIB at http://www.experioronline.com/ohmortbrokers.htm. The CIB provides information about how to register for the test, includes a list of source materials used to create the test, and provides some sample test questions. The Division is not providing any supplementary study materials for loan officers or operations managers to use to prepare for the test.

The Division has received several thousand loan officer applications and criminal background checks and we are currently entering the information into our database. This information is transmitted electronically to Experior, who will soon begin sending out information to loan officer licensees and the operations managers for companies registered under the Ohio Mortgage Broker Act (OMBA). It is important to remember that no one can sit for the test at an Experior location without first having received written authorization to do so from Experior. Once loan officers and operations managers receive copies of the CIB and authorizations from Experior, they can register to take the applicable test by mail, by fax, by phone, or by way of the internet.

Sec. 1322.041. (A) Upon the conclusion of the investigation required under division (B) of section 1322.031 of the Revised Code, the superintendent of financial institutions shall issue a loan officer license to the applicant if the superintendent finds that the following conditions are met:

(1) The application is accompanied by the application fee. If a check or other draft instrument is returned to the superintendent for insufficient funds, the superintendent shall notify the licensee by certified mail, return receipt requested, that the license issued in reliance on the check or other draft instrument will be canceled unless the licensee, within thirty days after receipt of the notice, submits the application fee and a one-hundred-dollar penalty to the superintendent. If the licensee does not submit the application fee and penalty within that time period, or if any check or other draft instrument used to pay the fee or penalty is returned to the superintendent for insufficient funds, the license shall be canceled immediately without a hearing and the licensee shall cease activity as a loan officer.

(2) The applicant complies with sections 1322.01 to 1322.12 of the Revised Code.

(3) The applicant has not been convicted of or pleaded guilty to any criminal offense described in division (A)(2) of section 1322.031 of the Revised Code, or, if the applicant has been convicted of or pleaded guilty to such an offense, the applicant has proven to the superintendent, by a preponderance of the evidence, that the applicant's activities and employment record since the conviction show that the applicant is honest, truthful, and of good reputation, and there is no basis in fact for believing that the applicant will commit such an offense again.

(4) The applicant has not been subject to an adverse judgment for conversion, embezzlement, misappropriation of funds, fraud, misfeasance or malfeasance, or breach of fiduciary duty, or, if the applicant has been subject to such a judgment, the applicant has proven to the superintendent, by a preponderance of the evidence, that the applicant's activities and employment record since the judgment show that the applicant is honest, truthful, and of good reputation, and there is no basis in fact for believing that the applicant will be subject to such a judgment again.

(5) The applicant's character and general fitness command the confidence of the public and warrant the belief that the business will be operated honestly and fairly in compliance with the purposes of sections 1322.01 to 1322.12 of the Revised Code.

(B) The license issued under division (A) of this section may be renewed annually on or before the thirtieth day of April if the superintendent finds that all of the following conditions are met:

(1) The renewal application is accompanied by a nonrefundable renewal fee of one hundred dollars. If a check or other draft instrument is returned to the superintendent for insufficient funds, the superintendent shall notify the licensee by certified mail, return receipt requested, that the license renewed in reliance on the check or other draft instrument will be canceled unless the licensee, within thirty days after receipt of the notice, submits the renewal fee and a one-hundred-dollar penalty to the superintendent. If the licensee does not submit the renewal fee and penalty within that time period, or if any check or other draft instrument used to pay the fee or penalty is returned to the superintendent for insufficient funds, the license shall be canceled immediately without a hearing and the licensee shall cease activity as a loan officer.

(2) On and after January 1, 2003, the loan officer has completed, during the immediately preceding calendar year, at least six hours of continuing education as required under section 1322.052 of the Revised Code.

(3) The applicant meets the conditions set forth in divisions (A) (2) to (5) of this section.

(4) The applicant's license is not subject to an order of suspension or revocation by the superintendent.

(C)(1) Subject to division (C) (2) of this section, if a license renewal application or renewal fee is received by the superintendent after the thirtieth day of April, the license shall not be considered renewed, and the applicant shall cease activity as a loan officer.

(2) Division (C)(1) of this section shall not apply if the applicant, no later than the thirty-first day of May, submits the renewal application and fee and a one-hundred-dollar penalty to the superintendent.

Sec. 1322.05. (A) No registrant shall conduct business in this state, unless the registrant has obtained and maintains in effect at all times a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state. The bond shall be in favor of the superintendent of financial institutions and in the penal sum of at least fifty thousand dollars and an additional penal sum of ten thousand dollars for each location, in excess of one, at which the registrant conducts business. The term of the bond shall coincide with the term of registration. A copy of the bond shall be filed with the superintendent. The bond shall be for the exclusive benefit of any buyer injured by a violation by an employee, licensee, or registrant of any provision of sections 1322.01 to 1322.12 of the Revised Code. The aggregate liability of the corporate surety for any and all breaches of the conditions of the bond shall not exceed the penal sum of the bond.

(B) (1) The registrant shall give notice to the superintendent by certified mail of any action that is brought by a buyer against the registrant or loan officer of the registrant alleging injury by a violation of any provision of sections 1322.01 to 1322.12 of the Revised Code, and of any judgment that is entered against the registrant or loan officer of the registrant by a buyer injured by a violation of any provision of sections 1322.01 to 1322.12 of the Revised Code. The notice shall provide details sufficient to identify the action or judgment, and shall be filed with the superintendent within ten days after the commencement of the action or notice to the registrant of entry of a judgment.

(2) A corporate surety, within ten days after it pays any claim or judgment, shall give notice to the superintendent by certified mail of the payment, with details sufficient to identify the person and the claim or judgment paid.

(C) Whenever the penal sum of the corporate surety bond is reduced by one or more recoveries or payments, the registrant shall furnish a new or additional bond under this section, so that the total or aggregate penal sum of the bond or bonds equals the sum required by this section, or shall furnish an endorsement executed by the corporate surety reinstating the bond to the required penal sum of it.

(D) The liability of the corporate surety on the bond to the superintendent and to any buyer injured by a violation of any provision of sections 1322.01 to 1322.12 of the Revised Code shall not be affected in any way by any misrepresentation, breach of warranty, or failure to pay the premium, by any act or omission upon the part of the registrant, by the insolvency or bankruptcy of the registrant, or by the insolvency of the registrant's estate. The liability for any act or omission that occurs during the term of the corporate surety bond shall be maintained and in effect for at least two years after the date on which the corporate surety bond is terminated or canceled.

(E) The corporate surety bond shall not be canceled by the registrant or the corporate surety except upon notice to the superintendent by certified mail, return receipt requested. The cancellation shall not be effective prior to thirty days after the superintendent receives the notice.

(F) No registrant shall fail to comply with this section. Any registrant that fails to comply with this section shall cease all mortgage broker activity in this state until the registrant complies with this section.

Sec. 1322.051. (A) Each person designated under division (A)(3) of section 1322.03 of the Revised Code to act as operations manager for a mortgage broker business shall submit to an examination approved by the superintendent of financial institutions.

(B) Each licensee, within ninety days after the original issuance of the loan officer license, shall successfully complete an examination approved by the superintendent. Failure to comply with this division results in the termination of the license by operation of law.

Sec. 1322.052. On and after January 1, 2002, each licensee and each person designated under division (A)(3) of section 1322.03 of the Revised Code to act as operations manager for a mortgage broker business shall complete at least six hours of continuing education every calendar year. To fulfill this requirement, the six hours of continuing education must be offered in a course or program of study approved by the superintendent of financial institutions.

Sec. 1322.06. (A) As often as the superintendent of financial institutions considers it necessary, the superintendent may examine the registrant's records pertaining to business transacted pursuant to sections 1322.01 to 1322.12 of the Revised Code.

(B) A registrant shall maintain records pertaining to business transacted pursuant to sections 1322.01 to 1322.12 of the Revised Code for four years. No registrant shall fail to comply with this division.