Guam Secure and Fair Enforcement for Mortgage Licensing Act of 2010 (Public Law 30-151 - An Act to add a new Article 3 to Chapter 36 of Title 18, Guam Code Annotated, relative to the establishment of a secure and fair enforcement for Mortgage Licensing Act)

P.O. Box 2950 Hagatfia, GC 96932 Tel: (671) 472-8931 • Fax: (671) 477-4826 • Email: governor@'guam.gov Felix P. Camacho Governor Michael W Cruz. ,u > Lieutenant Governor The Honorable Judith T. Won Pat, Ed.D. Speaker Mina' Trenta Na Liheslaturan Guahan 155 Hessler Street Hagatfia, Guam 96910 Dear Speaker Won Pat: MAY 2 6 2010 Transmitted herewith is Substitute Bill No. 351-30 (COR) "AN ACT TO ADD A NEW ARTICLE 3 TO CHAPTER 36 OF TITLE 18, GUAM CODE ANNOTATED, RELATIVE TO THE ESTABLISHMENT OF A SECURE AND FAIR ENFORCEMENT FOR MORTGAGE LICENSING ACT", which I signed into law on May 25, 2010 as Public Law 30-151. Sinseru yan Magahet, MICHAEL W. CRUZ, M.D. I Maga 'lahen Guahan para pa 'go Acting Governor of Guahan Attachment: copy of Bill 3D -;o- Ofp-0 Office of the Speaker Judith~• Won Pat, Ed. D. Date -~ 'nmt :~ ~~ by-""""""------= ,. I MINA'TRENTA NA LIHESLATURAN GllAHAN 2010 (SECOND) Regular Session CERTIFICATION OF PASSAGE OF AN ACT TO I MAGA'LAHEN GUAfIAN This is to certify that Substitute Bill No. 351-30 (COR), "AN ACT TO ADD A NEW ARTICLE 3 TO CHAPTER 36 OF TITLE 18, GUAM CODE ANNOTATED, RELATIVE TO THE ESTABLISHMENT OF A SECURE AND FAIR ENFORCEMENT FOR MORTGAGE LICENSING ACT", was on the 3rd day of May, 2010, duly and Attested: ~ Ro:cyf Respicio Acting Legislative Secretary ina Rose Mufia Barnes Acting Speaker ·~th Th~ A~t was received by I M.aga'lahen Gwlhan this ( ".J day of--'-;,, t---' 2010, at l LP · '/1) o'clock -f-.M. APPROVED: f'll<!W.CRUZ,t! G(MllllRrlGu#l ... • MAY 2 5 2010 Date: P bl. L N P.L. 30-151 u 1c aw o. I MINA 'TRENTA NA LIHESLATURAN GUAHAN 2010 (SECOND) Regular Session Bill No. 351-30 (COR) As substituted by the Committee on Appropriations, Taxation, Banking, Insurance, Retirement and Land, and amended. Introduced by: v. c. pangelinan B. J.F. Cruz T. C. Ada V. Anthony Ada F. B. Aguon, Jr. F. F. Blas, Jr. E. J.B. Calvo J. V. Espaldon Judith P. Guthertz, DP A T. R. Mufia Barnes Adolpho B. Palacios, Sr. R. J. Respicio Telo Taitague Ray Tenorio Judith T. Won Pat, Ed.D. AN ACT TO ADD A NEW ARTICLE 3 TO CHAPTER 36 OF TITLE 18, GUAM CODE ANNOTATED, RELATIVE TO THE ESTABLISHMENT OF A SECURE AND FAIR ENFORCEMENT FOR MORTGAGE LICENSING ACT. 1 BE IT ENACTED BY THE PEOPLE OF GUAM: 2 Section 1. There is hereby added a new Article 3 to Chapter 36 of Title 18 3 of the Guam Code Annotated to read: 4 "Article 3 5 Guam Secure and Fair Enforcement for Mortgage Licensing Act 6 of 2010 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 §36301. §36302. §36303. §36304. §36305. §36306. §36307. §36308. §36309. §36310. §36311. §36312. §36313. §36314. §36315. §36316. §36317. §36318. §36319. §36320. §36321. §36322. Title. Legislative Findings and Intent. Definitions. License and Registration Required. Guam License and Registration Application and Issuance. Issuance of License. Pre-Licensing and Re-Licensing Education of Loan Originators. Testing of Loan Originators. Standards for License Renewal. Continuing Education for Mortgage Loan Originators. Authority to Require License. Nationwide Mortgage Licensing System and Registry Information Challenge Process. Enforcement Authorities, Violations and Penalties. Surety Bond Required. Minimum Net Worth Required. Confidentiality. Investigation and Examination Authority. Prohibited Acts and Practices. Mortgage Call Reports. Report to Nationwide Mortgage Licensing System and Registry. Privately Insured Credit. Unique Identifier Shown. 2 1 2 §36323. §36324. Effective Date. Severability. 3 §36301. Title. This Act may be cited as the "Guam Secure and 4 Fair Enforcement for Mortgage Licensing Act of 2010, or Guam S.A.F.E. 5 Mortgage Licensing Act of 201 0." 6 §36302. Legislative Findings and Intent. 7 I Liheslaturan Guahan finds that the activities of mortgage loan 8 originators and the origination or offering of financing for residential real 9 property have a direct, valuable and immediate impact upon Guam's 10 consumers, Guam's economy, the neighborhoods and communities of 11 Guam, and the housing and real estate industry. 12 I Liheslaturan Guahan finds that accessibility to mortgage credit is 13 vital to Guam's residents. 14 I Liheslatura also finds that it is essential for the protection of the 15 residents of Guam and the stability of Guam's economy that reasonable 16 standards for licensing and regulation of the business practices of mortgage 17 loan originators be imposed. 18 I Liheslatura further finds that the obligations of mortgage loan 19 originators to consumers in connection with originating or making 20 residential mortgage loans are such as to warrant the regulation of the 21 mortgage lending process. The purpose of this Act is to protect consumers 22 seeking mortgage loans and to ensure that the mortgage lending industry is 23 operating without unfair, deceptive, and fraudulent practices on the part of 24 mortgage loan originators. 25 Therefore, I Liheslaturan Guahan establishes within this Act: 26 (a) System of Supervision and Enforcement. An effective system 27 of supervision and enforcement of the mortgage lending industry, including: 3 1 (1) The authority to issue licenses to conduct business under 2 this Act, including the authority to write rules or regulations or adopt 3 procedures necessary to the licensing of persons covered under this 4 Act. 5 (2) The authority to deny, suspend, condition or revoke 6 licenses issued under this Act. 7 (3) The authority to examme, investigate and conduct 8 enforcement actions as necessary to carry out the intended purposes of 9 this Act, including the authority to subpoena witnesses and 10 documents, enter orders, including cease and desist orders, order 11 restitution and monetary penalties and order the removal and ban of 12 individuals from office or employment. 13 (b) Broad Administrative Authority. That the Commissioner shall 14 have the broad administrative authority to administer, interpret and enforce 15 this Act, and promulgate rules or regulations implementing this Act, in order 16 to carry out the intentions of I Liheslatura. 17 §36303. Definitions. 18 For purposes of this Act, the following definitions shall apply: 19 (a) Commissioner means Guam's Banking and Insurance 20 Commissioner. 21 (b) Depository Institution has the same meanmg as m 22 Section 3 of the Federal Deposit Insurance Act. It means any bank or 23 savings association, including any credit union. 24 (c) Federal Banking Agencies means the Board of Governors 25 of the Federal Reserve System, the Comptroller of the Currency, the 26 Director of the Office of Thrift Supervision, the National Credit Union 27 Administration, and the Federal Deposit Insurance Corporation. 4 1 2 3 4 5 6 7 8 9 10 1 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 (d) Immediate Family Member means a spouse, child, sibling, parent, grandparent, or grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships. ( e) Individual means a natural person. ( f) Loan Processor or Underwriter means an individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of a person licensed, or exempt from licensing. (g) Clerical or Support Duties. For purposes of this Subsection, the term "Clerical or Support Duties" may include subsequent to the receipt of an application: ( 1) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and (2) communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms. (h) Representations to the public. An individual engaging solely in loan processor or underwriter activities, shall not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator. 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (i) Mortgage Loan Originator means an individual who for compensation or gain or in the expectation of compensation or gain: loan; ( 1) takes a residential mortgage loan application; or (2) offers or negotiates terms of a residential mortgage (A) does not include an individual engaged solely as a loan processor or underwriter; (B) does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with Guam law, unless the person or entity is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator; and (C) does not include a person or entity solely 16 involved in extensions of credit relating to timeshare 17 plans, as that term is defined in Section 101(53D) of Title 18 11, United States Code. 19 G) Real Estate Brokerage Activity means any activity that involves 20 offering or providing real estate brokerage services to the public, including: 21 ( 1) acting as a real estate agent or real estate broker for a 22 buyer, seller, lessor, or lessee of real property; 23 (2) bringing together parties interested in the sale, purchase, 24 lease, rental, or exchange of real property; 25 (3) negotiating, on behalf of any party, any portion of a 26 contract relating to the sale, purchase, lease, rental, or exchange of 6 • 1 real property ( other than in connection with providing financing with 2 respect to any such transaction); 3 (4) engaging in any activity for which a person engaged in 4 the activity is required to be registered or licensed as a real estate 5 agent or real estate broker under any applicable law; and 6 (5) offering to engage in any activity, or act in any capacity, 7 described in Subsections (1), (2), (3), or (4) of this Subsection G). 8 (k) Nationwide Mortgage Licensing System and Registry means a 9 mortgage licensing system developed and maintained by the Conference of 10 State Bank Supervisors and the American Association of Residential 11 Mortgage Regulators for the licensing and registration of licensed mortgage 12 loan originators. 13 (1) Nontraditional Mortgage Product means any mortgage product 14 other than a thirty (30) year fixed rate mortgage. 15 (m) Person means a natural person, corporation, company, limited 16 liability company, partnership, or association. 17 (n) Registered Mortgage Loan Originator means any individual 18 who: 19 20 21 22 23 24 25 26 27 ( 1) meets the definition of mortgage loan originator and is an employee of: (A) a depository institution; (B) a subsidiary that is: (i) owned and controlled by a depository institution; and (ii) regulated by a Federal banking agency; or (iii) an institution regulated by the Farm Credit Administration; and 7 1 (iv) is registered with, and maintains a unique identifier 2 through, the Nationwide Mortgage Licensing System and 3 Registry. 4 ( o) Residential Mortgage Loan means any loan primarily for 5 personal, family, or household use that is secured by a mortgage, deed of 6 trust, or other equivalent consensual security interest on a dwelling ( as 7 defined in Section 103(v) of the Truth in Lending Act) or residential real 8 estate upon which is constructed or intended to be constructed a dwelling ( as 9 so defined). 10 (p) Residential Real Estate means any real property located in 11 Guam, upon which is constructed or intended to be constructed a dwelling. 12 ( q) Unique Identifier means a number or other identifier assigned 13 by protocols established by the Nationwide Mortgage Licensing System and 14 Registry. 15 §36304. License and Registration Required. 16 (a) General. An individual, unless specifically exempted from this 17 Act under Subsection ( c) of this Section, shall not engage in the business of 18 a mortgage loan originator with respect to any dwelling located in Guam 19 without first obtaining and maintaining annually a license under this Act. 20 Each licensed mortgage loan originator must register with and maintain a 21 valid unique identifier issued by the Nationwide Mortgage Licensing System 22 and Registry. 23 (b) Effective Date. In order to facilitate an orderly transition to 24 licensing and to minimize disruption in the mortgage marketplace, the 25 effective date for Subsection (a) of this Section shall be July 31, 2010, or 26 such later date approved by the Secretary of the U.S. Department of Housing 8 1 and Urban Development, pursuant to the authority granted under Public Law 2 110-289, Section 1508(a). 3 ( c) Exemption from this Act. The following are exempt from this 4 Act: 5 ( 1) Registered Mortgage Loan Originators, when acting for 6 an entity described in §36303 (n); 7 (2) Any individual who offers or negotiates terms of a 8 residential mortgage loan with or on behalf of an immediate family 9 member of the individual; 10 (3) Any individual who offers or negotiates terms of a 11 residential mortgage loan secured by a dwelling that served as the 12 individual's residence; or 13 ( 4) A licensed attorney who negotiates the terms of a 14 residential mortgage loan on behalf of a client as an ancillary matter to 15 the attorney's representation of the client, unless the attorney is 16 compensated by a lender, a mortgage broker, or other mortgage loan 17 originator or by any agent of such lender, mortgage broker, or other 18 mortgage loan originator. 19 ( d) Independent Contractor Loan Processors or Underwriters. A 20 loan processor or underwriter who is an independent contractor may not 21 engage in the activities of a loan processor or underwriter unless such 22 independent contractor loan processor or underwriter obtains and maintains 23 a license under §36304(a). Each independent contractor loan processor or 24 underwriter licensed as a mortgage loan originator must have and maintain a 25 valid unique identifier issued by the Nationwide Mortgage Licensing System 26 and Registry. 9 1 ( e) Commissioner Authority to Establish Licensing Rules, 2 Regulations or Interim Procedures and Accept Early Applications. For the 3 purposes of implementing an orderly and efficient licensing process, the 4 Commissioner may establish licensing rules or regulations and interim 5 procedures for licensing and acceptance of applications, pursuant to the 6 Administrative Adjudication Law. For previously registered or licensed 7 individuals, the Commissioner may establish expedited review and licensing 8 procedures, pursuant to the Administrative Adjudication Law. 9 10 §36305. (a) Guam License and Registration Application and Issuance. Application Form. Applicants for a license shall apply in a 11 form as prescribed by the Commissioner. Each such form shall contain 12 content as set forth by rule, regulation, instruction or procedure of the 13 Commissioner and may be changed or updated as necessary by the 14 Commissioner in order to carry out the purposes of this Act. 15 (b) Commissioner May Establish Relationships or Contracts. In 16 order to fulfill the purposes of this Act, the Commissioner is authorized to 17 establish relationships or contracts with the Nationwide Mortgage Licensing 18 System and Registry, or other entities designated by the Nationwide 19 Mortgage Licensing System and Registry, to collect and maintain records 20 and process transaction fees or other fees related to licensees or other 21 persons subject to this Act. 22 (c) Waive or Modify Requirements. For the purpose of 23 participating in the Nationwide Mortgage Licensing System & Registry, the 24 Commissioner is authorized to waive or modify, in whole or in part, by rule, 25 regulation or order, any or all of the requirements of this Chapter, and to 26 establish new requirements as reasonably necessary to participate in the 27 Nationwide Mortgage Licensing System & Registry. 10 1 ( d) Background Checks. In connection with an application for 2 licensing as a mortgage loan originator, the applicant shall, at a minimum, 3 furnish to the Nationwide Mortgage Licensing System and Registry 4 information concerning the applicant's identity, including: 5 (1) fingerprints for submission to the Federal Bureau of 6 Investigation, and any governmental agency or entity authorized to 7 receive such information for a state, national and international 8 criminal history background check; and 9 (2) personal history and experience in a form prescribed by 10 the Nationwide Mortgage Licensing System and Registry, including 11 the submission of authorization for the Nationwide Mortgage 12 Licensing System and Registry and the Commissioner to obtain the 13 following: 14 (A) an independent credit report obtained from a 15 consumer reporting agency described in Section 603(p) of the 16 Fair Credit Reporting Act; and (B) information related to any administrative, civil or criminal findings by any governmental jurisdiction. 17 18 19 ( e) Agent for Purposes of Requesting and Distributing Criminal 20 Information. For the purposes of this Section and in order to reduce the 21 points of contact which the Federal Bureau of Investigation may have to 22 maintain for purposes of Subsection ( d)(l) and (2)(B) of this Section, the 23 Commissioner may use the Nationwide Mortgage Licensing System and 24 Registry as a channeling agent for requesting information from and 25 distributing information to the Department of Justice or any governmental 26 agency. 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 (f) Agent for Purposes of Requesting and Distributing Non Criminal Information. For the purposes of this Section and in order to reduce the points of contact which the Commissioner may have to maintain for purposes of Subsection (d)(2)(A) and (B) of this Section, the Commissioner may use the Nationwide Mortgage Licensing System and Registry as a channeling agent for requesting and distributing information to and from any source so directed by the Commissioner. §36306. Issuance of License. The Commissioner shall not issue a mortgage loan originator license unless the Commissioner makes, at a minimum, the following findings: (a) No License Revocation. The applicant has never had a mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation shall not be deemed a revocation. (b) No Felony Conviction. The applicant has not been convicted of, or pled guilty or nocontendere to, a felony in a domestic, foreign, or military court: (1) during the seven (7)-year period preceding the date of the application for licensing and registration; or (2) at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering; and (3) provided that any pardon of a conviction shall not be a conviction for purposes of this Subsection. ( c) Character and Fitness. The applicant has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a 12 1 2 3 4 5 6 7 8 9 10 1 1 12 13 14 15 16 determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purposes of this Act. (1) For purposes of this Subsection, a person has shown that he or she is not financially responsible when he or she has shown a disregard in the management of his or her own financial condition. A determination that an individual has not shown financial responsibility may include, but not be limited to: (A) current outstanding judgments, except judgments solely as a result of medical expenses; (B) current outstanding tax liens or other government liens and filings; (C) foreclosures within the past three (3) years; (D) a pattern of seriously delinquent accounts within the past three (3) years. ( d) Pre-Licensing Education. The applicant has completed the pre 17 licensing education requirement described in §36307 of this Act. 18 ( e) Written Test. The applicant has passed a written test that meets 19 the test requirement described in §36308 of this Act. 20 (f) Surety Bond or Minimum Net Worth Requirement. The 21 applicant has met the surety bond requirement of §36314 or the minimum 22 net worth requirement of §36315 on this Act. 23 §36307. Pre-Licensing and Re-Licensing Education of Loan 24 Originators. 25 (a) Minimum Educational Requirements. In order to meet the pre 26 licensing education requirement referred to in §36306 ( d) of this Act, a 13 1 person shall complete at least twenty (20) hours of education approved in 2 accordance with Subsection (b) of this Section, which shall include at least: (1) three (3) hours of Federal law and regulations; 3 4 (2) three (3) hours of ethics, which shall include instruction on 5 fraud, consumer protection, and fair lending issues; and 6 (3) two (2) hours of training related to lending standards for the 7 nontraditional mortgage product marketplace. 8 (b) Approved Educational Courses. For the purposes of Subsection 9 (a) of this Section, pre-licensing education courses shall be reviewed, and 10 approved by the Nationwide Mortgage Licensing System and Registry based 11 upon reasonable standards. Review and approval of a pre-licensing 12 education course shall include review and approval of the course provider. 13 ( c) Approval of Employer and Affiliate Educational Courses. 14 Nothing in this Section shall preclude any pre-licensing education course, as 15 approved by the Nationwide Mortgage Licensing System and Registry that 16 is provided by the employer of the applicant or an entity which is affiliated 1 7 with the applicant by an agency contract, or any subsidiary or affiliate of 18 such employer or entity. 19 ( d) Venue of Education. Pre-licensing education may be offered 20 either in a classroom, online or by any other means approved by the 21 Nationwide Mortgage Licensing System and Registry. 22 ( e) Reciprocity of Education. The pre-licensing education 23 requirements approved by the Nationwide Mortgage Licensing System and 24 Registry in Subsections (a)(l), (2) and (3) of this Section for any State shall 25 be accepted as credit towards completion of pre-licensing education 26 requirements in Guam. 14 1 (f) Re-Licensing Education Requirements. A person previously 2 licensed under this Act, subsequent to the Effective Date of this Act and 3 applying to be licensed again, must prove that they have completed all of the 4 continuing education requirements for the year in which the license was last 5 held. 6 §36308. Testing of Loan Originators. 7 (a) Testing of Loan Originators, General. In order to meet the 8 written test requirement referred to in §36306 (e) of this Act, an individual 9 shall pass, in accordance with the standards established under this 10 Subsection, a qualified written test developed by the Nationwide Mortgage 11 Licensing System and Registry and administered by a test provider approved 12 by the Nationwide Mortgage Licensing System and Registry based upon 13 reasonable standards. 14 (b) Qualified Test. A written test shall not be treated as a qualified 15 written test for purposes of Subsection (a) of this Section, unless the test 16 adequately measures the applicant's knowledge and comprehension in 17 appropriate subject areas, including: 18 19 20 21 22 23 (1) Ethics; (2) Federal law and regulation pertaining to mortgage origination; (3) Guam law and regulation pertaining to mortgage origination; (4) Federal and Guam law and regulation, including 24 instruction on fraud, consumer protection, the nontraditional mortgage 25 marketplace, and fair lending issues. 26 ( c) Testing Location. Nothing in this Section shall prohibit a test 27 provider approved by the Nationwide Mortgage Licensing System and 15 1 Registry from providing a test at the location of the employer of the 2 applicant or the location of any subsidiary or affiliate of the employer of the 3 applicant, or the location of any entity with which the applicant holds an 4 exclusive arrangement to conduct the business of a mortgage loan originator. 5 ( d) Minimum Competence: 6 (1) Passing Score. An individual shall not be considered to 7 have passed a qualified written test unless the individual achieves a 8 test score of not less than seventy-five percent (75%) correct answers 9 to questions. 10 (2) Initial Retests. An individual may retake a test three (3) 11 consecutive times with each consecutive taking occurring at least 12 thirty (30) days after the preceding test. 13 (3) Subsequent Retests. After failing three (3) consecutive 14 tests, an individual shall wait at least six (6) months before taking the 15 test again. 16 ( 4) Retest After Lapse of License. A licensed mortgage loan 17 originator who fails to maintain a valid license for a period of five (5) 18 years or longer shall retake the test, not taking into account any time 19 during which such individual is a registered mortgage loan originator. 20 §36309. Standards for License Renewal. 21 (a) General. The minimum standards for license renewal for 22 mortgage loan originators shall include the following: 23 ( 1) The mortgage loan originator continues to meet the minimum 24 standards for license issuance under §36305 (a) through (f) of this 25 Act. 26 27 (2) The mortgage loan originator has satisfied the annual continuing education requirements described in §36310 of this Act. 16 1 (3) The mortgage loan originator has paid all required fees for 2 renewal of the license. 3 (b) Failure to Satisfy Minimum Standards for License Renewal. 4 The license of a mortgage loan originator failing to satisfy the minimum 5 standards for license renewal shall expire. The Commissioner may adopt 6 procedures for the reinstatement of expired licenses consistent with the 7 standards established by the Nationwide Mortgage Licensing System and 8 Registry. 9 §36310. Continuing Education for Mortgage Loan Originators. 10 (a) General. In order to meet the annual continuing education 11 requirements referred to in §36309 (a)(2), a licensed mortgage loan 12 originator shall complete at least eight (8) hours of education approved in 13 accordance with Subsection (b) of this Section, which shall include at least: 14 (1) three (3) hours of Federal law and regulations; 15 (2) two (2) hours of ethics, which shall include instruction 16 on fraud, consumer protection, and fair lending issues; and 17 (3) two (2) hours of training related to lending standards for 18 the nontraditional mortgage product marketplace. 19 (b) Approved Educational Courses. For the purposes of Subsection 20 (a) of this Section, continuing education courses shall be reviewed, and 21 approved by the Nationwide Mortgage Licensing System and Registry based 22 upon reasonable standards. Review and approval of a continuing education 23 course shall include review and approval of the course provider. 24 ( c) Approval of Employer and Affiliate Educational Courses. 25 Nothing in this Section shall preclude any education course, as approved by 26 the Nationwide Mortgage Licensing System and Registry, that is provided 27 by the employer of the mortgage loan originator, or an entity which is 17 1 affiliated with the mortgage loan originator by an agency contract, or any 2 subsidiary or affiliate of such employer or entity. 3 ( d) Venue of Education. Continuing education may be offered 4 either in a classroom, online or by any other means approved by the 5 Nationwide Mortgage Licensing System and Registry. 6 ( e) Calculation of Continuing Education Credits. A licensed 7 mortgage loan originator: 8 (I) except for §36309 (b) and Subsection (i) of this Section, 9 may only receive credit for a continuing education course in the year 10 in which the course is taken; and 11 (2) may not take the same approved course in the same or 12 successive years to meet the annual requirements for continuing 13 education. 14 (f) Instructor Credit. A licensed mortgage loan originator who is 15 an approved instructor of an approved continuing education course may 16 receive credit for the licensed mortgage loan originator's own annual 17 continuing education requirement at the rate of two (2) hours credit for every 18 one (I) hour taught. 19 (g) Reciprocity of Education. A person having successfully 20 completed the education requirements approved by the Nationwide 21 Mortgage Licensing System and Registry in Subsections (a)(l), (2) and (3) 22 of this Section for any State shall be accepted as credit towards completion 23 of continuing education requirements in Guam. 24 (h) Lapse in License. A licensed mortgage loan originator who 25 subsequently becomes unlicensed must complete the continuing education 26 requirements for the last year in which the license was held prior to issuance 27 of a new or renewed license. 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (i) Make up of Continuing Education. A person meeting the requirements of §36309 (a)(l) and (3) of this Act may make up any deficiency in continuing education as established by rule or regulation of the Commissioner. §36311. Authority to Require License. In addition to any other duties imposed upon the Commissioner by law, the Commissioner shall require mortgage loan originators to be licensed and registered through the Nationwide Mortgage Licensing System and Registry. In order to carry out this requirement, the Commissioner is authorized to participate in the Nationwide Mortgage Licensing System and Registry. For this purpose, the Commissioner may establish Rules and Regulations as necessary, pursuant to the Administrative Adjudication Law, including, but not limited to: (a) Background Checks. Background checks for: (1) (2) (3) criminal history through fingerprint or other databases; civil or administrative records; Credit history; or ( 4) any other information as deemed necessary by the Nationwide Mortgage Licensing System and Registry. (b) Fees. The payment of fees to apply for or renew licenses through the Nationwide Mortgage Licensing System and Registry; ( c) Setting Dates. The setting or resetting as necessary of renewal or reporting dates; and ( d) Other requirements for amending or surrendering a license or 25 any other such activities as the Commissioner deems necessary for 26 participation in the Nationwide Mortgage Licensing System and Registry. 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 §36312. Nationwide Mortgage Licensing System and Registry Information Challenge Process. The Commissioner shall establish a process whereby mortgage loan originators may challenge information entered into the Nationwide Mortgage Licensing System and Registry by the Commissioner. §36313. Enforcement Authorities, Violations and Penalties. (a) In order to ensure the effective supervision and enforcement of this Act, the Commissioner may, pursuant to the Administrative Adjudication Law: ( 1) Deny, suspend, revoke, condition or decline to renew a license for a violation of this Act, rules or regulations issued under this Act, or order or directive entered under this Act. (2) Deny, suspend, revoke, condition or decline to renew a license if an applicant or licensee fails at any time to meet the requirements of §36306 or §36309 of this Act, or withholds information or makes a material misstatement in an application for a license or renewal of a license. (3) Order restitution against persons subject to this Act for violations of this Act. (4) Impose fines on persons subject to this Act pursuant to Subsections (b), (c) and (d) of this Section. (5) Issue orders or directives under this Act as follows: (A) Order or direct persons subject to this Act to cease and desist from conducting business, including immediate temporary orders to cease and desist. 20 1 2 3 4 5 6 7 8 9 10 11 (b) (B) Order or direct persons subject to this Act to cease any harmful activities or violations of this Act, including immediate temporary orders to cease and desist. (C) Enter immediate temporary orders to cease business under a license or interim license issued pursuant to the authority granted under §36304 ( e) of this Act if the Commissioner determines that such license was erroneously granted or the licensee is currently in violation of this Act; (D) Order or direct such other affirmative action as the Commissioner deems necessary. The Commissioner may impose a civil penalty on a mortgage 12 loan originator or person subject to this Act, if the Commissioner finds, on 13 the record after notice and opportunity for hearing, that such mortgage loan 14 originator or person subject to this Act has violated or failed to comply with 15 any requirement of this Act or any regulation prescribed by the 16 Commissioner under this Act or order issued under authority of this Act. 1 7 ( c) The maximum amount of penalty for each act or omission 18 described in Subsection (b) of this Section shall be Twenty-five Thousand 19 Dollars ($25,000). 20 ( d) Each violation or failure to comply with any directive or order 21 of the Commissioner is a separate and distinct violation or failure. 22 §36314. Surety Bond Required. 23 (a) Coverage, Form and Regulations. Each mortgage loan 24 originator shall be covered by a surety bond in accordance with this Section. 25 In the event that the mortgage loan originator is an employee or exclusive 26 agent of a person subject to this Act, the surety bond of such person subject 21 1 to this Act can be used in lieu of the mortgage loan originator's surety bond 2 requirement. 3 ( 1) The surety bond shall provide coverage for each 4 mortgage loan originator in an amount as prescribed in Subsection (b) 5 of this Section. 6 (2) The surety bond shall be in a form as prescribed by the 7 Commissioner. 8 (3) The Commissioner may promulgate rules or regulations 9 with respect to the requirements for such surety bonds as are 10 necessary to accomplish the purposes of this Act. 11 (b) Penal Sum of Surety Bond. The penal sum of the surety bond 12 shall be maintained in an amount that reflects the dollar amount of loans 13 originated, as determined by the Commissioner. 14 (c) Action on Bond. When an action is commenced on a licensee's 15 bond, the Commissioner may require the filing of a new bond. 16 ( d) New Bond. Immediately upon recovery upon any action on the 17 bond, the licensee shall file a new bond. 18 §36315. Minimum Net Worth Required. 19 (a) A minimum net worth shall be continuously maintained for 20 mortgage loan originators in accordance with this Section. In the event that 21 the mortgage loan originator is an employee or exclusive agent of a person 22 subject to this Act, the net worth of such person subject to this Act can be 23 used in lieu of the mortgage loan originator's minimum net worth 24 requirement. 25 ( 1) Minimum net worth shall be maintained in an amount that 26 reflects the dollar amount of loans originated, as determined by the 27 Commissioner. 22 1 (2) The Commissioner may promulgate rules or regulations, in 2 accordance with the Administrative Adjudication Law, with respect to 3 the requirements for minimum net worth as are necessary to 4 accomplish the purposes of this Act. 5 §36316. Confidentiality. 6 In order to promote more effective regulation and reduce regulatory 7 burden through supervisory information sharing: 8 (a) Protections. Except as otherwise provided in Public Law 9 110-289, Section 1512, the requirements under any Federal law or 10 Guam law regarding the privacy or confidentiality of any information 11 or material provided to the Nationwide Mortgage Licensing System 12 and Registry, and any privilege arising under Federal or State law 13 (including the rules of any Federal or State court) with respect to such 14 information or material, shall continue to apply to such information or 15 material after the information or material has been disclosed to the 16 Nationwide Mortgage Licensing System and Registry. Such 17 information and material may be shared with all State and Federal 18 regulatory officials with mortgage industry oversight authority 19 without the loss of privilege or the loss of confidentiality protections 20 provided by Federal law or Guam law. 21 22 23 24 25 26 27 (b) Agreements and Sharing Arrangements. For these purposes, the Commissioner is authorized to enter into agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators, or other associations representing governmental agencies as established by rule, regulation or order of the Commissioner. 23 1 2 3 4 5 6 7 8 9 10 1 1 12 13 14 15 ( c) Non-applicability of Certain Requirements. Information or material that is subject to a privilege or confidentiality under Subsection (a) of this Section shall not be subject to: (1) disclosure under any Federal or State law governing the disclosure to the public of information held by an officer or an agency of the Federal Government or the respective State; or (2) subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Nationwide Mortgage Licensing System and Registry with respect to such information or material, the person to whom such information or material pertains waives, in whole or in part, in the discretion of such person, that privilege. ( d) Public Access to Information. This Section shall not apply with 16 respect to the information or material relating to the employment history of, 17 and publicly adjudicated disciplinary and enforcement actions against, 18 mortgage loan originators that is included in the Nationwide Mortgage 19 Licensing System and Registry for access by the public. 20 §36317. Investigation and Examination Authority. 21 In addition to any authority allowed under this Act, the 22 Commissioner shall have the authority to conduct investigations and 23 examinations as follows: 24 (a) Authority to Access Information. For purposes of initial 25 licensing, license renewal, license suspension, license conditioning, license 26 revocation or termination, or general or specific inquiry or investigation to 27 determine compliance with this Act, the Commissioner shall have the 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 authority to access, receive and use any books, accounts, records, files, documents, information or evidence, including, but not limited to: (I) criminal, civil and administrative history information, including nonconviction data as specified in Title 9, Guam Code Annotated, the Criminal and Correctional Code; (2) personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act; and (3) any other documents, information or evidence the Commissioner deems relevant to the inquiry or investigation, regardless of the location, possession, control or custody of such documents, information or evidence. (b) Investigation, Examination, and Subpoena Authority. For the purposes of investigating violations or complaints arising under this Act, or for the purposes of examination, the Commissioner may review, investigate, or examine any licensee, individual or person subject to this Act, as often as necessary in order to carry out the purposes of this Act. The Commissioner may direct, subpoena, or order the attendance of and examine under oath all persons whose testimony may be required about the loans or the business or subject matter of any such examination or investigation, and may direct, subpoena, or order such person to produce books, accounts, records, files, and any other documents the Commissioner deems relevant to the inquiry. ( c) Availability of Books and Records. Each licensee, individual or person subject to this Act shall make available to the Commissioner upon request the books and records relating to the operations of such licensee, individual or person subject to this Act. The Commissioner shall have access to such books and records, and interview the officers, principals, 25 1 mortgage loan originators, employees, independent contractors, agents, and 2 customers of the licensee, individual or person subject to this Act 3 concerning their business. 4 ( d) Reports and Other Information as Directed. Each licensee, 5 individual or person subject to this Act shall make or compile reports or 6 prepare other information as directed by the Commissioner in order to carry 7 out the purposes of this Section, including, but not limited to: 8 ( 1) accounting compilations; 9 (2) information lists and data concerning loan transactions in 10 a format prescribed by the Commissioner; or 11 (3) such other information deemed necessary to carry out the 12 purposes of this Section. 13 ( e) Control Access to Records. In making any examination or 14 investigation authorized by this Act, the Commissioner may control access 15 to any documents and records of the licensee or person under examination or 16 investigation. The Commissioner may take possession of the documents and 17 records or place a person in exclusive charge of the documents and records 18 in the place where they are usually kept. During the period of control, no 19 individual or person shall remove or attempt to remove any of the 20 documents and records except pursuant to a court order or with the consent 21 of the Commissioner. Unless the Commissioner has reasonable grounds to 22 believe the documents or records of the licensee have been, or are at risk of 23 being altered or destroyed for purposes of concealing a violation of this Act, 24 the licensee or owner of the documents and records shall have access to the 25 documents or records as necessary to conduct its ordinary business affairs. 26 (f) Additional Authority. In order to carry out the purposes of this 27 Section, the Commissioner may: 26 1 ( 1) retain attorneys, accountants, or other professionals and 2 specialists as examiners, auditors, or investigators to conduct or assist 3 in the conduct of examinations or investigations; 4 (2) enter into agreements or relationships with other 5 government officials or regulatory associations in order to improve 6 efficiencies and reduce regulatory burden by sharing resources, 7 standardized or uniform methods or procedures, and documents, 8 records, information or evidence obtained under this Section; 9 (3) use, hire, contract or employ public or privately available 10 analytical systems, methods or software to examine or investigate the 11 licensee, individual or person subject to this Act; 12 ( 4) accept and rely on examination or investigation reports 13 made by other government officials within or without Guam; or 14 ( 5) accept audit reports made by an independent certified 15 public accountant for the licensee, individual or person subject to this 16 Act in the course of that part of the examination covering the same 17 general subject matter as the audit and may incorporate the audit 18 report in the report of the examination, report of investigation or other 19 writing of the Commissioner. 20 (g) Effect of Authority. The authority of this Section shall remain 21 in effect, whether such a licensee, individual or person subject to this Act 22 acts or claims to act under any licensing or registration law of Guam, or 23 claims to act without such authority. 24 (h) Withhold Records. No licensee, individual or person subject to 25 investigation or examination under this Section may knowingly withhold, 26 abstract, remove, mutilate, destroy, or secrete any books, records, computer 27 records, or other information. 27 1 §36318. Prohibited Acts and Practices. 2 It is a violation of this Act for a person or individual subject to this 3 Act to: 4 5 6 7 8 9 10 1 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 (a) directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person; (b) engage in any unfair or deceptive practice toward any person; ( c) obtain property by fraud or misrepresentation; ( d) solicit or enter into a contract with a borrower that provides in substance that the person or individual subject to this Act may earn a fee or commission through "best efforts" to obtain a loan even though no loan is actually obtained for the borrower; ( e) solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting; (f) conduct any business covered by this Act without holding a valid license as required under this Act, or assist, or aid and abet any person in the conduct of business under this Act without a valid license as required under this Act ; (g) fail to make disclosures as required by this Act and any other applicable Guam or Federal law including regulations thereunder; (h) fail to comply with this Act or rules or regulations promulgated under this Act, or fail to comply with any other State or Federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under this Act; 28 1 2 3 4 5 6 7 8 9 10 1 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (i) make, in any manner, any false or deceptive statement or representation including, with regard to the rates, points, or other financing terms or conditions for a residential mortgage loan, or engage in bait and switch advertising; (j) negligently make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry, or m connection with any investigation conducted by the Commissioner or another governmental agency; (k) make any payment, threat or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan, or make any payment threat or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property; (1) collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by this Act; (m) cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer; and (n) fail to truthfully account for monies belonging to a party to a residential mortgage loan transaction. 29 1 §36319. Mortgage Call Reports. 2 Each mortgage licensee shall submit to the Nationwide Mortgage 3 Licensing System and Registry reports of condition, which shall be in such 4 form and shall contain such information as the Nationwide Mortgage 5 Licensing System and Registry may require. 6 §36320. Report to Nationwide Mortgage Licensing System and 7 Registry. 8 The Commissioner is required to report regularly violations of this 9 Act, as well as enforcement actions and other relevant information, to the 10 Nationwide Mortgage Licensing System and Registry, subject to the 11 provisions contained in §36316 of this Act. 12 §36321. Privately Insured Credit. 13 Non-federally insured credit unions which employ loan originators, as 14 defined in PL 110-289, Title V, the S.A.F.E. Act, shall register such 15 employees with the Nationwide Mortgage Licensing System and Registry by 16 furnishing the information concerning the employees' identity set forth in 17 Section l 507(a)(2) of PL 110-289, Title V. 18 §36322. Unique Identifier Shown. 19 The unique identifier of any person originating a residential mortgage 20 loan shall be clearly shown on all residential mortgage loan application 21 forms, solicitations or advertisements, including business cards or websites, 22 and any other documents as established by rule, regulation or order of the 23 Commissioner. 24 §36323. Effective Date. 25 The effective date of this Act shall be July 31, 2010. 30 1 §36324. Severability. 2 If any provision of this Act or its application to any person or 3 circumstance is held invalid, the remainder of the Act or the application of 4 the provision to other persons or circumstances is not affected." 31