DAR File No. 32348

Commerce, Real Estate

R162-205-1

Residential Mortgage Unprofessional Conduct

NOTICE OF PROPOSED RULE

DAR File No.: 32348
Filed: 02/03/2009, 09:26
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 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 the authority to punish those who do not safeguard personal information.

Summary of the rule or change:

This rule change makes it an unprofessional practice to dispose of records in violation of administrative rule. An accompanying rule amendment (Rule R162-204) explains the proper disposal procedures. (DAR NOTE: The proposed amendment to Rule R162-204 is under DAR No. 32347 in this issue, March 1, 2009, of the Bulletin.)

State statutory or constitutional authorization for this rule:

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

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.

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 and may be punished if they do not. 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, occassioned 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 [email protected]

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.

R162-205. Residential Mortgage Unprofessional Conduct.

R162-205-1. Residential Mortgage Unprofessional Conduct.

205.1 Unprofessional conduct includes the following acts:

205.1.1 conducting the business of residential mortgage loans, including soliciting or marketing, in the licensee's individual name, the principal lending manager's individual name, or any name other than the name of the licensed mortgage entity with which the individual's principal lending manager is affiliated;

205.1.2 failing to remit to third party service providers the appraisal fees, inspection fees, credit reporting fees, insurance premiums, or other similar fees which have been collected from a borrower;

205.1.3 withholding payment owed, as determined by a court of competent jurisdiction to a third party service provider in connection with the business of residential mortgage loans;

205.1.4 charging for services not actually performed;

205.1.5 charging a borrower more for third party services than the actual cost of those services;

205.1.6 filling out or altering any Real Estate Purchase Contract or other contract for the sale of real property, or any addenda [thereto]to the contract;

205.1.7 making any alteration to any appraisal of real property;

205.1.8 unless acting as a real estate licensee and not as a mortgage licensee:

(a) providing a buyer or seller of real estate with comparative market analysis or otherwise assisting a buyer or seller to determine the offering price or sales price of real estate;

(b) representing or assisting a buyer or seller of real estate in negotiations concerning a possible sale of real estate, except that a mortgage licensee may advise a borrower about the consequences that the terms of a purchase agreement may have on the terms and availability of various mortgage products;

(c) performing any other acts that require a real estate license under Title 61, Chapter 2;

(d) advertising the sale of real estate by use of any advertising medium, except that a mortgage licensee may:

(i) advertise real estate owned by the licensee as a "for sale by owner";

(ii) provide advertising to a property owner who has not signed an agency agreement with a real estate licensee and is selling the real estate "for sale by owner", so long as the advertising provides clear and distinguishable identification, contact information, function and responsibility of both the property owner and the mortgage licensee; or

(iii) advertise in conjunction with a real estate brokerage, so long as the advertising provides clear and distinguishable identification, contact information, function and responsibility of both the real estate licensee and the mortgage licensee.

205.1.9 disposing of records in violation of R162-204.1.3

 

KEY: residential mortgage loan origination

Date of Enactment or Last Substantive Amendment: [December 27, 2007]2009

Notice of Continuation: December 13, 2006

Authorizing, and Implemented or Interpreted Law: 61-2c-301(1)(k)