Michigan Laws 493.74 – Licensee or registrant; prohibited conduct
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(1) A licensee or registrant shall not transfer or assign a secondary mortgage loan or a security directly representing an interest in 1 or more secondary mortgage loans before the disbursement of 75% or more of the proceeds of the secondary mortgage loan to, or for the benefit of, the borrower. This subsection shall not apply to any of the following:
(a) A land contract not considered to be an equitable secondary mortgage.
Terms Used In Michigan Laws 493.74
- Appraisal: A determination of property value.
- Broker: means a person who, directly or indirectly, does 1 or both of the following:
(i) Serves or offers to serve as an agent for a person attempting to obtain a secondary mortgage loan. See Michigan Laws 493.51Commissioner: means the commissioner of the office of financial and insurance regulation of the department of energy, labor, and economic growth or his or her authorized representatives. See Michigan Laws 493.51 Contract: A legal written agreement that becomes binding when signed. Control person: means a director or executive officer of a licensee or registrant or a person who has the authority to participate in the direction, directly or indirectly through 1 or more other persons, of the management or policies of a licensee or registrant. See Michigan Laws 493.51 Credit report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. Source: OCC Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries. Depository financial institution: means a state or nationally chartered bank, state or federal chartered savings and loan association, savings bank, or credit union, or any other institution whose deposits are insured by an agency of the federal government. See Michigan Laws 493.51 Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts Escrow: Money given to a third party to be held for payment until certain conditions are met. Financial licensing act: means any of the financial licensing acts, as that term is defined in section 2 of the consumer financial services act, 1988 PA 161, MCL 487. See Michigan Laws 493.51 Fraud: Intentional deception resulting in injury to another. in writing: shall be construed to include printing, engraving, and lithographing; except that if the written signature of a person is required by law, the signature shall be the proper handwriting of the person or, if the person is unable to write, the person's proper mark, which may be, unless otherwise expressly prohibited by law, a clear and classifiable fingerprint of the person made with ink or another substance. See Michigan Laws 8.3q Lender: means a person who, directly or indirectly, makes or offers to make secondary mortgage loans. See Michigan Laws 493.51 Licensee: means a person licensed or required to be licensed under this act. See Michigan Laws 493.51 Mortgage: 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 Person: means an individual, corporation, limited liability company, partnership, association, or other legal entity. See Michigan Laws 493.51 Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land. Registrant: means a person that is registered or required to register as a broker, lender, or servicer under this act. See Michigan Laws 493.51 Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action. Secondary mortgage loan: means a loan that has a term of 90 days or more; that is made to a person for personal, family, or household purposes; and that is secured by a mortgage on an interest in real property that is used as a dwelling and is subject to a lien of 1 or more outstanding mortgages. See Michigan Laws 493.51 Servicer: means a person who, directly or indirectly, services or offers to service secondary mortgage loans. See Michigan Laws 493.51 shall not apply: means that the pertinent provision is not operative as to certain persons or things or in conjunction with a particular date or dates. See Michigan Laws 8.4c state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
(b) A loan made under a state or federal government program that allows the lender to escrow more than 25% of the proceeds for a limited period of time.
(c) A construction loan.
(d) A secondary mortgage loan that provides in writing that the loan proceeds shall be disbursed to or for the benefit of the borrower in installments or upon the request of the borrower or upon the completion of renovations or repairs to the dwelling situated on the real property subject to the secondary mortgage loan.
(2) It is a violation of this act for a licensee or registrant to do any of the following:
(a) Suppress or withhold from the commissioner any information that the licensee or registrant possesses that would make the licensee or registrant ineligible for licensing or registration under this act or would warrant the commissioner’s denial of a license or registration application.
(b) Violate any provisions of 1966 PA 125, MCL 565.161 to 565.164, regulating the handling of mortgage escrow accounts by mortgagees.
(c) Until proper disbursement is made, fail to place in a trust or escrow account held by a depository financial institution in a manner approved by the commissioner any money, funds, deposits, checks, drafts, or other negotiable instruments received by a broker, lender, or servicer that is the portion of a payment on a secondary mortgage loan that the person is obligated to pay to a third party. The deposits shall include amounts paid to the holder of the secondary mortgage loan, amounts for property taxes and insurance premiums, and amounts paid under an agreement that requires, if the secondary mortgage loan is not closed, the amounts paid shall be refunded to the prospective borrower, or if the secondary mortgage loan is closed, the amounts paid shall be applied to fees and costs incurred at the time the secondary mortgage loan is closed. Fees and costs include, but are not limited to, title insurance premiums and recording fees. Fees and costs do not include amounts paid to cover costs incurred to process the secondary mortgage loan application, to obtain an appraisal, or to receive a credit report.
(d) Refuse to permit an examination or investigation by the commissioner of the books and affairs of the licensee or registrant, or refuse or fail, within a reasonable time, to furnish any information or make a report that may be required by the commissioner under this act.
(e) Be convicted of a felony, or any misdemeanor of which an essential element is fraud.
(f) Refuse or fail to pay within a reasonable time expenses assessed under this act.
(g) Fail to make restitution after having been ordered to do so by the commissioner or an administrative agency, or fail to make restitution or pay damages to persons injured by the licensee’s or registrant’s business transactions after having been ordered to do so by a court.
(h) Fail to make a secondary mortgage loan pursuant to, and in accordance with, a written commitment to make a secondary mortgage loan issued to, and accepted by, a person when the person has timely and completely satisfied all the conditions of the commitment prior to the expiration of the commitment.
(i) Require a prospective borrower to deal exclusively with the licensee or registrant in regard to a secondary mortgage loan application.
(j) Take a security interest in real property before closing the secondary mortgage loan to secure payment of fees assessed in connection with a secondary mortgage loan application.
(k) Except as otherwise provided under section 14e, knowingly permit a person to violate an order that has been issued under this act or any other financial licensing act that prohibits that person from being employed by, an agent of, or a control person of the licensee or registrant.