DAR File No. 32347

Commerce, Real Estate

R162-204

Residential Mortgage Record Keeping Requirements

NOTICE OF PROPOSED RULE

DAR File No.: 32347
Filed: 02/03/2009, 09:25
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

Utah's laws require record retention for records kept by mortgage licensees, but the laws do not address how to properly dispose of the records. Mortgage files contain highly sensitive personal information. Recently the Division has learned of abandoned files in dumpsters, storage units, and empty offices. The Division needs to outline minimum guidelines for mortgage record disposal.

Summary of the rule or change:

The rule requires mortgage entities to dispose of records in a manner that safeguards personal information. Another rule amendment (Rule R162-205) makes it an unprofessional practice to dispose of records in violation of this rule change. (DAR NOTE: The proposed amendment to Rule R162-205 is under DAR No. 32348 in this issue, March 1, 2009, of the Bulletin.)

State statutory or constitutional authorization for this rule:

Subsection 61-2c-103(3)(c)

Anticipated cost or savings to:

the state budget:

The rule change will not impact the state budget since the Division already tracks the storage and retention of records.

local governments:

The rule change will not impact local governments' budgets since they do not employ mortgage licensees who will have to comply with the rule.

small businesses and persons other than businesses:

The rule change shouldn't impact small businesses unless they are careless with their records. The majority of mortgage businesses already properly destroy records. Those who do not, will be required to do so. However, the rule permits internal disposition, such as shredding, so the cost should be minimal.

Compliance costs for affected persons:

The rule change shouldn't impact affected persons unless they are careless with their records. The majority of mortgage businesses already properly destroy records. Those who do not, will be required to do so. However, the rule permits internal disposition, such as shredding, so the cost should be minimal. Those who do not internally dispose of the records will have to pay for a document management company to destroy the records. However, individuals who are protected from identity theft due to this rule change will experience a significant cost savings when they are protected from the headaches of identity theft, occasioned by the abandonment of mortgage records.

Comments by the department head on the fiscal impact the rule may have on businesses:

This rule filing establishes standards regarding the proper disposal of records maintained by licensees. No fiscal impact to businesses is anticipated beyond those discussed in the rule summary. Francine Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Real Estate
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY UT 84111-2316

Direct questions regarding this rule to:

Mark Steinagel at the above address, by phone at 801-530-6744, by FAX at 801-530-6749, or by Internet E-mail at msteinagel@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

03/31/2009

This rule may become effective on:

04/07/2009

Authorized by:

Mark Steinagel, Director

R162. Commerce, Real Estate.

R162-204. Residential Mortgage Record Keeping Requirements.

R162-204-1. Residential Mortgage Record Keeping Requirements.

204.1.1 Entity Requirements. An entity licensed under the Utah Residential Mortgage Practices Act [must]shall maintain for the period set forth in Utah Code Section 61-2c-302 the following records:

(a) Application forms;

(b) Disclosure forms;

(c) Truth-in-Lending forms;

(d) Credit reports and the explanations [therefor]to the credit reports;

(e) Conversation logs;

(f) Verifications of employment, paycheck stubs, and tax returns;

(g) Proof of legal residency, if applicable;

(h) Appraisals, appraisal addenda, and records of communications between the appraiser and the registrant or lender;

(i) Underwriter denials;

(j) Notices of adverse action;

(k) Loan approval; and

(l) All other records required by underwriters involved with the transaction.

204.1.2. Principal Lending Manager Requirements. Except as provided in Subsection 204.1.2.1, the principal lending manager of an entity [shall be]is responsible to make the records set forth in Section 204.1.1 available to the Division as provided in Utah Code Annotated Section 61-2c-302(3).

204.1.2.1. Defunct entity. If a licensed entity ceases doing business in Utah, [the owners and directors]an owner or director of the entity, rather than the principal lending manager, [are]is responsible to make the records set forth in Section 204.1.1 available to the Division.[ instead of the principal lending manager(s) who were affiliated with the entity during the period of time for which the records are sought.]

204.1.3. Disposal of Records. If an entity licensed under the Utah Residential Mortgage Practices Act disposes of the records under this section after the end of the retention schedule in Utah Code Section 61-3c-302, the entity shall dispose of the records in a reasonable manner that safeguards any personal information, as defined in Utah Code Annotated Section 13-44-102.

 

KEY: residential mortgage loan origination

Date of Enactment or Last Substantive Amendment: [October 2, 2007]2009

Notice of Continuation: December 13, 2006

Authorizing, and Implemented or Interpreted Law: 61-2c-302