Chapter 161. Mortgage Loan Originators
10VAC5-161-10. Definitions.
A. The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:
"Bureau," "commission," "commissioner," and "person" shall have the meanings ascribed to them in § 6.2-100 of the Code of Virginia.
"Chapter 16" means Chapter 16 (§ 6.2-1600 et seq.) of Title 6.2 of the Code of Virginia.
"Chapter 17" means Chapter 17 (§ 6.2-1700 et seq.) of Title 6.2 of the Code of Virginia.
"Employee," "licensee," "mortgage loan originator," "registered mortgage loan originator," "registry," "residential mortgage loan," and "unique identifier" shall have the meanings ascribed to them in § 6.2-1700 of the Code of Virginia.
"Exclusive agent" for purposes of Chapter 17 and this chapter means an individual who engages in the business of a mortgage loan originator solely on behalf of a particular mortgage broker or mortgage lender, and not on his own behalf or on behalf of any other person. The term does not include an employee of a mortgage broker or a mortgage lender.
"License application" means a written request for a mortgage loan originator license pursuant to Chapter 17 and this chapter.
B. Any term or phrase not defined in Chapter 17 or this chapter shall be construed in accordance with 12 CFR Parts 1007 and 1008.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 25, Issue 25, eff. August 17, 2009; amended, Virginia Register Volume 28, Issue 26, eff. August 15, 2012; Volume 30, Issue 2, eff. September 15, 2013.
10VAC5-161-20. Individuals subject to licensure.
A. Unless exempt from licensure pursuant to subsection B of § 6.2-1701 of the Code of Virginia, the following individuals who engage in the business of a mortgage loan originator shall obtain and maintain annually a license pursuant to Chapter 17 and this chapter:
1. Individuals who are employees or exclusive agents of a person licensed under Chapter 16. Individuals whose wages or other compensation is paid by either professional employer organizations or organizations that provide staffing services shall become and remain exclusive agents of a person licensed under Chapter 16. In the case of individuals who are exclusive agents of a person licensed under Chapter 16, the individuals and person licensed under Chapter 16 shall comply with such conditions as the commissioner may prescribe pursuant to subsection A of § 6.2-1601 of the Code of Virginia.
2. Individuals, other than registered mortgage loan originators, who are employees or exclusive agents of a person exempt from licensure under Chapter 16.
3. Individuals who are not employees or exclusive agents of either a person licensed under Chapter 16 or a person exempt from such licensure.
B. For purposes of Chapter 17 and this chapter:
1. An individual takes an application for a residential mortgage loan if the individual receives a residential mortgage loan application for the purpose of facilitating a decision whether to extend an offer of residential mortgage loan terms to a borrower or prospective borrower, or to accept the terms offered by a borrower or prospective borrower in response to a solicitation.
2. An individual offers or negotiates the terms of a residential mortgage loan if the individual:
a. Presents for consideration by a borrower or prospective borrower particular residential mortgage loan terms;
b. Communicates directly or indirectly with a borrower or prospective borrower for the purpose of reaching a mutual understanding about prospective residential mortgage loan terms; or
c. Recommends, refers, or steers a borrower or prospective borrower to a particular lender or set of residential mortgage loan terms, in accordance with a duty to or incentive from any person other than the borrower or prospective borrower.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 25, Issue 25, eff. August 17, 2009; amended, Virginia Register Volume 28, Issue 26, eff. August 15, 2012; Volume 30, Issue 2, eff. September 15, 2013.
10VAC5-161-30. License application procedure.
A. License applications shall be submitted through the registry in accordance with instructions from the registry and the bureau. In connection with such license applications, the applicant shall furnish the registry with all required information concerning his identity, personal history and experience, and fingerprints, and shall pay or cause to be paid through the registry required registry fees and a license application fee of $150.
B. Within five days after submitting a license application through the registry, a bond with corporate surety on a commission-approved form and in an amount conforming to 10VAC5-161-50 shall be filed with the bureau, together with such further information as the bureau may require concerning the applicant's qualifications for licensure. In the case of individuals described in 10VAC5-161-20 A 1 and 2, the bond shall be filed (or documentation shall be filed indicating that the applicant is covered by a bond previously filed) by the person for whom the applicant will engage in the business of a mortgage loan originator. Filing of a bond under this subsection by a person licensed under Chapter 16 shall constitute compliance with § 6.2-1604 of the Code of Virginia if the bond is in the amount required under § 6.2-1604 of the Code of Virginia. In the case of individuals described in 10VAC5-161-20 A 3, the bond shall be filed by the individual applicant. In either case the person filing the bond shall, unless such information is contained in a prior filing under Chapter 16, simultaneously provide information to the bureau concerning the dollar volume of residential mortgage loans originated by such person during the immediately preceding calendar year.
C. If the bureau requests information to complete a deficient license application and the information is not received within 60 days of the bureau's request, the license application shall be deemed abandoned unless a request for an extension of time is received and approved by the bureau prior to the expiration of the 60-day period. However, this provision shall not be construed to prohibit the commission from denying a license application that does not meet the requirements of Chapter 17 or this chapter.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 25, Issue 25, eff. August 17, 2009; amended, Virginia Register Volume 28, Issue 26, eff. August 15, 2012.
10VAC5-161-40. Conditions of licensure and renewals.
A. A mortgage loan originator license will be granted only if an individual meets the following conditions:
1. The individual has submitted a license application in accordance with 10VAC5-161-30;
2. The individual has obtained a unique identifier from the registry;
3. The individual has never had a mortgage loan originator license revoked by any governmental authority;
4. The individual's criminal history record contains no disqualifying convictions under § 6.2-1707 of the Code of Virginia;
5. The individual has completed the prelicensing education prescribed by § 6.2-1708 of the Code of Virginia;
6. The individual has achieved an acceptable score on the qualified written test prescribed by § 6.2-1709 of the Code of Virginia; and
7. The commission finds that the individual possesses the financial responsibility, character, and general fitness required for licensure by § 6.2-1706 of the Code of Virginia and 10VAC5-161-45.
B. Licenses shall expire at the end of each calendar year unless renewed by the commission on or after November 1 of the same calendar year. To request license renewal, a licensee shall (i) submit a license renewal application through the registry on or before the end of the current license year in accordance with instructions from the registry and the bureau; (ii) furnish the registry and the bureau with all required information and documentation; (iii) pay or cause to be paid through the registry all required registry fees and a license renewal fee of $100; (iv) obtain the continuing education prescribed in § 6.2-1710 of the Code of Virginia; and (v) comply with any other renewal requirements imposed by the registry.
C. A mortgage loan originator license will be renewed only if the commission finds that the following conditions have been met:
1. The licensee has satisfied the requirements of subsection B of this section; and
2. The licensee has complied with Chapter 17 and this chapter, and continues to meet the conditions for initial licensure.
D. If (i) a licensee fails to timely meet the requirements specified in subsection B of this section, but meets such requirements and pays a reinstatement fee of $30 before March 1 of the following calendar year, and (ii) the commission makes the findings specified in subsection C of this section, his license shall be reinstated and renewed.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 25, Issue 25, eff. August 17, 2009; amended, Virginia Register Volume 28, Issue 26, eff. August 15, 2012.
10VAC5-161-45. Financial responsibility, character, and general fitness.
A. Except as otherwise provided in this subsection, an applicant shall be found to have the financial responsibility required by § 6.2-1706 of the Code of Virginia.
1. An applicant shall not be found to have the financial responsibility required by § 6.2-1706 if the commission finds that the applicant has one or more of the following:
a. One or more outstanding judgments or collection accounts that in the aggregate exceed $2,000;
b. One or more outstanding tax liens or other governmental liens that in the aggregate exceed $1,000;
c. One or more delinquent accounts, including any charged-off accounts but excluding any items in subdivision 1 a or b of this subsection, that in the aggregate exceed $3,000;
d. One or more foreclosures within the past seven years; or
e. Such other debts as the commission deems relevant.
2. Notwithstanding subdivision 1 of this subsection, an applicant shall be found to have the financial responsibility required by § 6.2-1706 if the commission determines that (i) the applicant has demonstrated good faith efforts to satisfy all of the outstanding debts enumerated in subdivision 1 of this subsection and (ii) one or more of the following substantially impeded the applicant's ability to satisfy his outstanding debts:
a. Loss of income;
b. Divorce;
c. Medical expenses;
d. Natural disaster; or
e. Such other unanticipated events or circumstances that the commission deems relevant.
B. An applicant shall be found to have the character and general fitness required by § 6.2-1706 of the Code of Virginia unless one or more of the following are applicable:
1. The applicant has been convicted of, or pled guilty or nolo contendere to, a crime involving: (i) financial services or a financial services-related business, (ii) fraud, (iii) a false statement or omission, (iv) felony theft or wrongful taking of property, (v) bribery, (vi) perjury, (vii) forgery, (viii) counterfeiting, (ix) extortion, (x) breach of trust, (xi) money laundering, or (xii) dishonesty. However, in evaluating any of these crimes, the commission may take into account, among other things, the length of time elapsed since the offense was committed, the age of the applicant at the time of the offense, and the nature of the offense.
2. The commission finds that (i) the applicant made a material misrepresentation or omission in either his license application or any other information furnished by the applicant in conjunction with such license application or (ii) a third party made a material misrepresentation or omission in support of the applicant's request for a mortgage loan originator license and the applicant failed to promptly notify the bureau after becoming aware of the misrepresentation or omission. However, in evaluating a misrepresentation or omission, the commission may take into account, among other things, any explanation given for the misrepresentation or omission. For purposes of this subdivision, a misrepresentation or omission shall be considered material if the commission would consider the stated or omitted information to be important in the investigation of an applicant's request for a mortgage loan originator license.
3. The commission possesses other information that demonstrates that the applicant lacks the character or general fitness required by § 6.2-1706 of the Code of Virginia.
C. Pursuant to § 6.2-1716 of the Code of Virginia, the commission may suspend or revoke any license issued under Chapter 17 at any time following the issuance of such license if the commission finds, based on the criteria set forth in this section, that a licensee no longer possesses the financial responsibility, character, or general fitness to warrant belief that such person will act as a mortgage loan originator efficiently and fairly, in the public interest, and in accordance with law.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 28, Issue 26, eff. August 15, 2012; Errata, 28:25 VA.R. 2076 August 13, 2012.
10VAC5-161-50. Surety bond amount.
The surety bond amount required to be filed and maintained by or on behalf of the licensee shall be set and adjusted as necessary annually by the bureau in accordance with the following scale based upon residential mortgage loans originated during the preceding calendar year:
| LOANS | BOND AMOUNT |
| $0 - $5,000,000 | $25,000 |
| $5,000,001 - $20,000,000 | $50,000 |
| $20,000,001 - $50,000,000 | $75,000 |
| $50,000,001 - $100,000,000 | $100,000 |
| over $100,000,000 | $150,000 |
Statutory Authority
§ 6.2-1720 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 25, Issue 25, eff. August 17, 2009.
10VAC5-161-60. Required reports and notices; information in registry.
A. Each person for whom an individual described in 10VAC5-161-20 A 1 or A 2 engages in the business of a mortgage loan originator shall file quarterly mortgage call reports through the registry stating the amount of residential mortgage loans made or brokered during the preceding quarter, identifying all licensees performing services for that person, and providing such additional information as the bureau may require. Call reports shall be in such form, contain such information, and be submitted with such frequency and by such dates as the registry may require. Timely filing of the reports required by Chapter 16 by a person licensed under that chapter shall constitute compliance with this subsection by that person if the reports contain the information specified in this subsection.
B. Each licensee who is an individual described in 10VAC5-161-20 A 3 shall file quarterly mortgage call reports through the registry stating the amount of residential mortgage loans originated during the preceding quarter and providing such additional information as the bureau may require. Call reports shall be in such form, contain such information, and be submitted with such frequency and by such dates as the registry may require.
C. Each licensee shall give notice to the bureau through the registry within five days after the occurrence of either of the following events:
1. Termination of, or separation from, employment or exclusive agency as a mortgage loan originator for a person licensed or exempt from licensing under Chapter 16. A licensee who is no longer an employee or exclusive agent of a person licensed or exempt from licensing under Chapter 16 shall not engage in activities requiring licensure under Chapter 16 until such time as (i) the individual obtains a mortgage broker license under Chapter 16 or (ii) the individual becomes a bona fide employee or exclusive agent of a person who is licensed or exempt from licensing under Chapter 16 and the requirements set forth in clauses (i) and (ii) of subdivision 2 of this subsection have been satisfied.
2. Commencement of employment or exclusive agency as a mortgage loan originator for a person licensed or exempt from licensing under Chapter 16. A licensee who becomes an employee or exclusive agent of a person licensed or exempt from licensing under Chapter 16 shall not engage in activities requiring licensure under Chapter 16 until (i) the person licensed or exempt from licensing under Chapter 16 has complied with the surety bond filing requirements of § 6.2-1703 of the Code of Virginia, 10VAC5-161-30 B, and 10VAC5-161-50 and (ii) the bureau has received a sponsorship request through the registry.
D. Pursuant to subsection B of § 6.2-1711 of the Code of Virginia, each licensee shall notify the commissioner through the registry within 10 days of any change of residential or business address. A licensee described in 10VAC5-161-20 A 1 or A 2 shall be deemed to have complied with this requirement if a person licensed or exempt from licensing under Chapter 16 timely submits such notice on behalf of its employee or exclusive agent.
E. Each licensee shall ensure that all residential mortgage loans that close as a result of the licensee engaging in the business of a mortgage loan originator are included in quarterly mortgage call reports submitted to the registry.
F. The commissioner shall establish a process whereby mortgage loan originators may challenge information entered into the registry by the bureau.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 25, Issue 25, eff. August 17, 2009; amended, Virginia Register Volume 28, Issue 26, eff. August 15, 2012; Volume 30, Issue 2, eff. September 15, 2013; Volume 33, Issue 18, eff. May 15, 2017.
10VAC5-161-70. Responding to requests from the Bureau of Financial Institutions; disposal of records..
A. When the bureau requests a written response, books, records, documentation, or other information from a licensee, the licensee shall deliver a written response as well as any requested books, records, documentation, or information within the time period specified in the bureau's request. If no time period is specified, a written response as well as any requested books, records, documentation, or information shall be delivered by the licensee to the bureau not later than 30 days from the date of such request. In determining the specified time period for responding to the bureau and when considering a request for an extension of time to respond, the bureau shall take into consideration the volume and complexity of the requested written response, books, records, documentation, or information and such other factors as the bureau determines to be relevant under the circumstances. Requests made by the bureau pursuant to this subsection are deemed to be in furtherance of the investigation and examination authority provided for in § 6.2-1713 of the Code of Virginia.
B. If a licensee disposes of records containing a consumer's personal financial information following the expiration of any applicable record retention periods, such records shall be shredded, incinerated, or otherwise disposed of in a secure manner.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 28, Issue 26, eff. August 15, 2012.
10VAC5-161-75. Bona fide nonprofit organizations.
A. An organization may request that the commission designate it as a bona fide nonprofit organization for purposes of Chapter 17 and this chapter by (i) submitting its request on a form prescribed by the commissioner, (ii) paying a nonrefundable fee of $200, and (iii) furnishing such information concerning the criteria in subsection B of this section as the commissioner may require. If the registry is capable of processing these requests, the organization shall submit its request through the registry and shall pay or cause to be paid any fees imposed by the registry in addition to the fee payable to the commission.
B. The commission shall designate an organization as a bona fide nonprofit organization only if (i) the organization has satisfied the requirements of subsection A of this section and (ii) the commission finds that the organization:
1. Has the status of a tax-exempt organization under § 501(c)(3) of the Internal Revenue Code of 1986.
2. Promotes affordable housing or provides homeownership education or similar services.
3. Conducts its activities in a manner that serves public or charitable purposes rather than commercial purposes.
4. Charges fees and receives funding and revenue in a manner that does not incentivize it or its employees to act other than in the best interests of its clients.
5. Compensates its employees in a manner that does not incentivize employees to act other than in the best interests of its clients.
6. Provides or identifies for a borrower residential mortgage loans with terms that are (i) favorable to the borrower and (ii) comparable to mortgage loans and housing assistance provided under government housing assistance programs. For purposes of this subdivision and subdivision B 10 of § 6.2-1701 of the Code of Virginia, loan terms shall be considered favorable to the borrower if the terms are consistent with loan origination in a public or charitable context rather than a commercial context.
7. Meets any other criteria that the commission deems relevant.
C. If the commission is unable to make all of the findings required by subsection B of this section, the commission shall notify the organization in writing and provide the basis for its determination.
D. A bona fide nonprofit organization shall give written notice to the bureau within five days of the following: (i) any change in, or revocation of, the organization's tax-exempt status under § 501(c)(3) of the Internal Revenue Code of 1986 or (ii) any change in the organization's mission, policies, or practices that is inconsistent with any of the criteria enumerated in subsection B of this section.
E. When the bureau requests a written response, books, records, documentation, or other information from a bona fide nonprofit organization, the organization shall deliver a written response as well as any requested books, records, documentation, or information within the time period specified in the bureau's request or, if no time period is specified, not later than 30 days from the date of such request. In determining the specified time period for responding to the bureau and when considering a request for an extension of time to respond, the bureau shall take into consideration the volume and complexity of the requested written response, books, records, documentation or information and such other factors as the bureau determines to be relevant under the circumstances. Requests made by the bureau pursuant to this subsection are deemed to be in furtherance of the investigation and examination authority provided for in § 6.2-1701.1 of the Code of Virginia.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 30, Issue 2, eff. September 15, 2013.
10VAC5-161-80. Enforcement; civil penalties..
A. Failure to comply with any provision of Chapter 17 or this chapter may result in civil penalties, license suspension, license revocation, the entry of a cease and desist order, or other appropriate enforcement action.
B. Pursuant to § 6.2-1719 of the Code of Virginia, an individual required to be licensed under Chapter 17 shall be subject to a separate civil penalty of up to $2,500 for every violation of Chapter 17, this chapter, or other law or regulation applicable to the conduct of the individual's business. Furthermore, if an individual violates any provision of Chapter 17, this chapter, or other law or regulation applicable to the conduct of the individual's business in connection with multiple borrowers, loans, or prospective loans, the individual shall be subject to a separate civil penalty for each borrower, loan, or prospective loan. For example, if an individual originates five loans and the individual violates two applicable laws in connection with each of the five loans, the individual shall be subject to a maximum civil penalty of $25,000.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 28, Issue 26, eff. August 15, 2012.
10VAC5-161-90. Commission authority.
The commission may, at its discretion, waive or grant exceptions to any provision of this chapter for good cause shown.
Statutory Authority
§§ 6.2-1720 and 12.1-13 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 30, Issue 2, eff. September 15, 2013.
Forms (10VAC5-161)
Application for Determination of a Bona Fide Non-Profit Status, Form CCB-8821 (undated)