Michigan Laws 493.159 – Surety bond
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Terms Used In Michigan Laws 493.159
- Commissioner: means the director. See Michigan Laws 493.133
- Employee: means an individual who meets both of the following:
(i) Has an employment relationship acknowledged by that individual and the person that engages that individual to originate mortgage loans. See Michigan Laws 493.133Mortgage: The written agreement pledging property to a creditor as collateral for a loan. Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC Mortgage loan originator: means an individual who originates residential mortgage loans and meets all of the following:
(i) Is not an individual engaged solely as a loan processor or underwriter except as otherwise provided in section 5(3). See Michigan Laws 493.133Nationwide mortgage licensing system and registry: means a mortgage licensing system developed and maintained by the conference of state bank supervisors and the American association of residential mortgage regulators for the licensing and registration of licensed mortgage loan originators. See Michigan Laws 493.133 Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period. Originate: means to do any of the following for compensation or gain, or in the expectation of compensation or gain, in connection with a residential mortgage loan:
(i) Take a residential mortgage loan application. See Michigan Laws 493.133Sponsor: means a person that meets all of the following:
(i) Has a unique identifier in the nationwide mortgage licensing system and registry. See Michigan Laws 493.133Unique identifier: means a number or other identifier assigned by protocols established by the nationwide mortgage licensing system and registry. See Michigan Laws 493.133
(1) Subject to subsection (2), each mortgage loan originator must provide to the commissioner or be covered by a surety bond that meets the requirements of subsection (5). A surety bond provided under this subsection shall provide coverage for the mortgage loan originator in 1 of the following amounts:
(a) If the mortgage loan originator did not originate any mortgage loans in the preceding calendar year, or the sum of the principal amounts of mortgage loans originated by the mortgage loan originator in the preceding calendar year is less than $12,000,000.00, as determined by the commissioner, $10,000.00.
(b) If the sum of the principal amounts of mortgage loans originated by the mortgage loan originator in the preceding calendar year is $12,000,000.00 or more and less than $24,000,000.00, as determined by the commissioner, $25,000.00.
(c) If the sum of the principal amounts of mortgage loans originated by the mortgage loan originator in the preceding calendar year is $24,000,000.00 or more, as determined by the commissioner, $50,000.00.
(2) If a mortgage loan originator is an employee or exclusive agent of a sponsor and that sponsor provides the commissioner with a surety bond that satisfies the requirements of subsection (5), the commissioner may accept that surety bond in lieu of the mortgage loan originator’s surety bond obligation under subsection (1). The principal amount of a surety bond provided under this subsection shall provide coverage for all of the sponsor’s mortgage loan originators in 1 of the following amounts:
(a) If the sum of the principal amounts of mortgage loans closed or modified by the sponsor in the preceding calendar year is less than $12,000,000.00, as determined by the commissioner, $50,000.00.
(b) If the sum of the principal amounts of mortgage loans closed or modified by the sponsor in the preceding calendar year is $12,000,000.00 or more and less than $24,000,000.00, as determined by the commissioner, $150,000.00.
(c) If the sum of the principal amounts of mortgage loans closed or modified by the sponsor in the preceding calendar year is $24,000,000.00 or more, as determined by the commissioner, $250,000.00.
(3) The license of a mortgage loan originator who fails to meet the requirements of section 9(1)(g) or (h) is automatically subject to a condition that he or she may not originate mortgage loans under this act. A mortgage loan originator who is subject to a condition described in this subsection shall immediately cease originating mortgage loans and shall not originate mortgage loans until that condition is removed by the commissioner.
(4) Before the end of a calendar quarter, a sponsor that provides a surety bond under subsection (2) for its employees and exclusive agents shall submit a report to the commissioner that contains all of the following information about the surety bond in effect for the next calendar quarter:
(a) The name and unique identifier of the sponsor.
(b) The name of the surety issuing the bond.
(c) For each mortgage loan originator covered by the bond, his or her legal name, exactly as filed with the nationwide mortgage licensing system and registry, and unique identifier.
(5) All of the following apply to a surety bond provided under subsection (1) or (2):
(a) The bond shall be in a form as prescribed by the commissioner.
(b) The commissioner may promulgate rules with respect to the requirements for surety bonds under this section that the commissioner determines are necessary to accomplish the purposes of this act.
(c) If an action is commenced on a bond described in this section, the commissioner may require the filing of a new bond. If there is a recovery in that action, the mortgage loan originator or sponsor described in subsection (2) shall immediately provide to the commissioner a new surety bond that meets the requirements of this section.