32-9-123. Surety bond or net worth requirement -- notice of legal action. (1) (a) A mortgage loan originator must be covered by a surety bond in accordance with this section. If a mortgage loan originator is an employee of or exclusive agent for a licensed mortgage lender or mortgage broker, the surety bond of the licensed mortgage lender or mortgage broker may be used in lieu of a mortgage loan originator's surety bond.
     (b) The department shall use the proceeds of the surety bonds to reimburse borrowers or bona fide third parties who successfully demonstrate a financial loss because of an act of a mortgage broker, mortgage lender, or mortgage loan originator that violates the provisions of this part.
     (2) (a) A mortgage broker or mortgage lender is required to maintain one surety bond for each entity license.
     (b) The amount of the required surety bond must be calculated by combining the annual loan production amounts for all persons originating residential mortgage loans and for all business locations of the mortgage broker or mortgage lender and must be in the following amount:
     (i) $25,000 for a combined annual loan production that does not exceed $50 million a year;
     (ii) $50,000 for annual loan production of $50 million but not exceeding $100 million a year; or
     (iii) $100,000 for annual loan production of more than $100 million a year.
     (3) (a) In lieu of a surety bond, a mortgage broker may meet a minimum net worth requirement.
     (b) Minimum net worth must be maintained in an amount determined by the department that reflects the dollar amount of loans originated.
     (c) The department shall adopt rules with respect to the requirements for minimum net worth as are necessary to accomplish the purposes of this part.
     (4) Evidence that a mortgage broker is approved by the department of housing and urban development to originate loans insured by the federal housing administration must be considered as satisfying the net worth requirement provided that the actual net worth determined in the department of housing and urban development's approval is equivalent to the bond amount set forth for the corresponding dollar amount range set forth in subsections (2)(b)(i) through (2)(b)(iii).
     (5) A mortgage broker, mortgage lender, or mortgage loan originator shall give notice to the department by certified mail within 15 days of the mortgage broker's, mortgage lender's, or mortgage loan originator's obtaining knowledge of the initiation of an investigation or the entry of a judgment in a criminal or civil action. The notice must be given if the investigation or the legal action is in any state and involves a mortgage broker, mortgage lender, anyone having an ownership interest in a mortgage broker entity or mortgage lender entity, or a mortgage loan originator. In the case of a legal action, the notice must include a copy of the criminal or civil judgment.

     History: En. Sec. 15, Ch. 516, L. 2003; amd. Sec. 9, Ch. 498, L. 2007; amd. Sec. 22, Ch. 321, L. 2009.