Montana Code Annotated 2021



Part 1. Montana Mortgage Act

Mortgage Servicer Capital Requirements

32-9-171. Mortgage servicer capital requirements. (1) The following definitions apply to this section:

(a) "Liquidity" means unrestricted cash and cash equivalents, investment grade securities that are available for sale or held for trade, and unused and available portion of committed servicing advance lines.

(b) "Operating reserves" are funds set aside in anticipation of future payments or obligations and are included in liquidity.

(c) "Tangible net worth" means total equity minus receivables due from affiliated entities, minus goodwill and other intangible assets, and minus the carrying value of pledged assets net of the associated liabilities of the pledged assets. Tangible net worth does not include money held in borrower escrow accounts.

(2) A mortgage servicer operating as an approved servicer by a government-sponsored enterprise shall maintain liquidity, operating reserves, and tangible net worth that meet the standards set by the government-sponsored enterprise. If approved by more than one government-sponsored enterprise, the mortgage servicer must meet the highest standard of the government-sponsored enterprises for which it is approved. The department may define by rule the list of government-sponsored enterprises.

(3) (a) A mortgage servicer with a portfolio of only nongovernment-sponsored enterprise loans shall maintain a minimum tangible net worth of $1 million or maintain a $1 million surety bond.

(b) A mortgage servicer with a portfolio of nongovernment-sponsored enterprise loans shall maintain liquidity, including operating reserves, of 0.00035 times the unpaid principal balance of the portfolio.

(4) A mortgage servicer with 25 or fewer loans, a mortgage servicer that is wholly owned and controlled by one or more depository institutions regulated by a state or federal banking agency, or a mortgage servicer that is also licensed as an escrow business may apply to the department to waive or adjust one or more of the capital requirements in subsections (2) and (3). In considering such a request, the department will consider whether the mortgage servicer has a positive net worth and adequate operating reserves.

(5) The continuous maintenance of the minimum liquidity, operating reserves, and tangible net worth required under this section is necessary for continued licensure under this part. Failure to meet or maintain these minimum standards may constitute grounds for denial of an application, issuance of a cease and desist order, license suspension, or license revocation.

History: En. Sec. 1, Ch. 65, L. 2019.