32-9-124. Prohibitions -- required disclosure. (1) A mortgage broker, mortgage lender, or mortgage loan originator may not do any of the following:
     (a) retain original documents owned by the borrower and submitted in connection with the loan application;
     (b) directly or indirectly employ any scheme to defraud or mislead a borrower, a mortgage lender, or any other person;
     (c) make any misrepresentation or deceptive statement in connection with a residential mortgage loan, including but not limited to interest rates, points, costs at closing, or other financing terms or conditions;
     (d) fail to pay a bona fide third party later than 30 days after recording of the loan closing documents or 90 days after completion of the bona fide third-party service, whichever is earlier, unless otherwise agreed by the parties;
     (e) accept any fees or compensation at closing that were not disclosed as required by state or federal law;
     (f) accept any fees or compensation in excess of those allowed by state or federal law;
     (g) sign a borrower's application or related documents on behalf of or in lieu of another mortgage broker, mortgage lender, or mortgage loan originator;
     (h) (i) assist or aid and abet any person in the conduct of business under this part without a valid license as required under this part; or
     (ii) conduct any business covered by the provisions of the Secure and Fair Enforcement for Mortgage Licensing Act, Title V of the Housing and Economic Recovery Act of 2008, Public Law 110-289, without holding a valid license as required under this part;
     (i) fail to comply with this part or rules promulgated under this part or fail to comply with any other state or federal laws, including the rules and regulations adopted pursuant to those laws, applicable to any business authorized by or conducted under this part;
     (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 government agency or the nationwide mortgage licensing system and registry or in connection with any investigation conducted by the department or another governmental agency.
     (2) A mortgage lender may not do any of the following:
     (a) 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;
     (b) disburse the mortgage loan proceeds to a closing agent in any form other than, as applicable:
     (i) direct deposit to a borrower's account;
     (ii) wire;
     (iii) bank or certified check;
     (iv) attorney's check drawn on a trust account; or
     (v) other form as specifically authorized by applicable law;
     (c) disburse the proceeds of a mortgage loan without sufficient collected funds on hand at the time of the disbursement in the account upon which the funds are drawn;
     (d) fail to disburse funds in accordance with a loan commitment to make a mortgage loan that was accepted by the borrower;
     (e) fail to take the actions required to effect a release of the lender's security interest in the property as described in 71-1-212;
     (f) advertise that a mortgage applicant will have unqualified access to credit without disclosing what material limitations on the availability of credit exist, such as the percentage of down payment required, that a higher rate or points could be required, or that restrictions as to the maximum principal amount of the mortgage loan offered could apply;
     (g) advertise a mortgage loan for which a prevailing rate is indicated in the advertisement unless the advertisement specifically states that the expressed rate could change or not be available at commitment or closing;
     (h) advertise mortgage loans, including rates, margins, discounts, points, fees, commissions, or other material information, including material limitations on mortgage loans, unless the person is able to make advertised mortgage loans to a reasonable number of qualified applicants; or
     (i) falsely advertise or misuse names in violation of 18 U.S.C. 709.
     (3) Prior to providing residential mortgage services to a borrower, the mortgage loan originator working for a mortgage broker, in addition to other disclosures required by this part, subsection (3), and other state and federal laws, shall provide to the borrower a written disclosure containing substantially the following language, which must be signed by the borrower:
     "MORTGAGE LOAN ORIGINATION DISCLOSURE
     (Name of licensee) is a licensed mortgage loan originator in Montana authorized to provide mortgage loan origination services to you in connection with your real estate loan. Lenders whose loan products we distribute generally provide their loan products to us at a wholesale rate. The rate you pay may be higher.
     SECTION 1. NATURE OF RELATIONSHIP. In connection with this mortgage loan:
     (1) (name of licensee) is acting as an independent contractor and not as your agent;
     (2) (name of licensee) enters into separate independent contractor agreements with various lenders; and
     (3) while (name of licensee) seeks to assist you in meeting your financial needs, (name of licensee) does not distribute products of all lenders or investors in the market and cannot guarantee the lowest price or best terms available.
     SECTION 2. OUR COMPENSATION.
     (1) The retail price (name of licensee) offers you, including the interest rate, total points, and fees, will include (name of licensee's) compensation.
     (2) In some cases, (name of licensee) may be paid all of (name of licensee's) compensation by either you or the lender.
     (3) Alternatively, (name of licensee) may be paid a portion of (name of licensee's) compensation by both you and the lender. For example, in some cases, if you would rather pay a lower interest rate, you may pay more money in upfront points and fees. Also, in some cases, if you would rather pay less money up front, you may be able to pay some or all of our compensation indirectly through a higher interest rate, in which case (name of licensee) will be paid directly by the lender.
     (4) (Name of licensee) may also be paid by the lender based on the value of the mortgage loan or related servicing rights in the market place or based on other services, goods, or facilities performed or provided by (name of licensee) to the lender.
     By signing below, you acknowledge that you have received a copy of this disclosure."
     (4) The disclosure must include the address of the department's division of banking and financial institutions, the division's phone number and website, and a statement informing borrowers that the division can provide information about whether a mortgage broker or mortgage loan originator is licensed as well as other legally available information.
     (5) The disclosure must include the state license number and the unique identifier issued by the nationwide mortgage licensing system and registry for the mortgage loan originator.

     History: En. Sec. 16, Ch. 516, L. 2003; amd. Sec. 11, Ch. 498, L. 2007; amd. Sec. 25, Ch. 321, L. 2009.