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Have You Heard about Missouri’s Emergency Rules under the Mortgage Act?

On April 5, 2010, Emergency Mortgage Broker Rules issued pursuant to the Missouri Secure and Fair Enforcement for Mortgage Licensing and Residential Mortgage Brokers Licensing Act (Mortgage Act), were filed by the Missouri Division of Finance on the website of the Office of the Missouri Secretary of State. The Emergency Rules became effective April 18, 2010 and expire January 26, 2011.

The Missouri Register published the Emergency Rules on May 17, 2010. On the same day, the Missouri Register published for comment proposed Mortgage Broker Rules filed by the Missouri Division of Finance (the Proposed Rules). The Proposed Rules are identical to the Emergency Rules, with the exception of one additional Rule being added in the Proposed Rules – 20 CSR 1140-30.290 - In-State Office Waiver for Servicers, which establishes procedures and qualifications needed for mortgage loan servicers to obtain a waiver for a full in-state service office requirement. The Emergency Rules and the Proposed Rules are hereinafter referred to together as the New Rules.

Much of the old Mortgage Broker Rules, 20 CSR 1140-30.010 – 20 CSR 1140-30.120, survive in the New Rules. The old Rules are just found in new citations and updated in accordance with the Mortgage Act. For example, rescinded 20 CSR 1140-30.040 Operations and Supervision, which established operations and supervision guidelines concerning net worth, audit reports, escrow, change in business activities, change in ownership, bonding requirements, servicing, and full service offices can now be found in New Rules 20 CSR 1140-30.240 Operations and Supervision of Residential Mortgage Loan Brokers, 20 CSR 1140-30.250 Change in Business Activities, 20 CSR 1140-30.260 Full-Service Office Requirement, and 20 CSR 1140-30.310 Bonding Requirements. However, some provisions of the old Mortgage Broker Rules were not carried forward into the New Rules. Advertising requirements in rescinded 20 CSR 1140-30.070 Advertising, are not found in the New Rules. Rescinded Rule 20 CSR 1140-30.080 concerning general practice guidelines for mortgage brokers in the areas of loan brokerage agreements and loan brokerage disclosures have not been carried forward. The borrower information document requirement found in old Rule 20 CSR 1140-30.090 Loan Application Practices also no longer exists.

The New Rules create some obligations not found in the old Mortgage Broker Rules. In that mortgage loan originators were not licensed until the adoption of the Mortgage Act, there is new 20 CSR 1140-30.210 Licensing of Mortgage Loan Originators. 20 CSR 1140-30.220 Self- Reporting Requirements, establishes self-reporting requirements for mortgage loan originators, brokers, or any of a broker’s directors, principal stockholders, members, partners, or individuals who influence management. There is a New Rule which establishes the procedures by which a mortgage loan originator can challenge information submitted by the Director of the Missouri Division of Finance to the Nationwide Mortgage Licensing System and Registry – 20 CSR 1140-30.230.

Statements for or in opposition to the Proposed Rules must be received 30 days after publication of the Proposed Rules in the Register (June 16, 2010). No public hearing has been scheduled.

For questions about the Missouri rules, contact Aline C. Ryan at 410-865-5410 or acryan@hudco.com.

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