Ohio Code 1322.32 – Corporate surety bond; notice of action or judgment
(A)(1) No registrant shall conduct business in this state, unless the registrant has obtained and maintains in effect at all times a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state. The bond shall be in favor of the superintendent of financial institutions and in the penal sum of one-half per cent of the aggregate loan amount of residential mortgage loans originated in the immediately preceding calendar year, but not exceeding one hundred fifty thousand dollars. Under no circumstances, however, shall the bond for mortgage lenders and mortgage brokers be less than fifty thousand dollars and an additional penal sum of ten thousand dollars for each location, in excess of one, at which the registrant conducts business. The bond amount for registrants that engage exclusively in the business of mortgage servicing shall be a minimum of one hundred fifty thousand dollars. The term of the bond shall coincide with the term of registration. A copy of the bond shall be filed with the superintendent. The bond shall be for the exclusive benefit of any buyer injured by a violation by an employee of the registrant, mortgage loan originator employed by or associated with the registrant, or registrant of any provision of this chapter or any rule adopted thereunder. The aggregate liability of the corporate surety for any and all breaches of the conditions of the bond shall not exceed the penal sum of the bond.
Terms Used In Ohio Code 1322.32
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Bond: includes an undertaking. See Ohio Code 1.02
- Buyer: includes an individual whose mortgage loan is serviced by a mortgage servicer. See Ohio Code 1322.01
- Employee: means an individual for whom a mortgage broker, mortgage lender, or mortgage servicer, in addition to providing a wage or salary, pays social security and unemployment taxes, provides workers' compensation coverage, and withholds local, state, and federal income taxes. See Ohio Code 1322.01
- Entity: means a business organization, including a sole proprietorship. See Ohio Code 1322.01
- Individual: means a natural person. See Ohio Code 1322.01
- Licensee: means any individual who has been issued a mortgage loan originator license under this chapter. See Ohio Code 1322.01
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgage: means the consensual interest in real property located in this state, including improvements to that property, securing a debt evidence by a mortgage, trust indenture, deed of trust, or other lien on real property. See Ohio Code 1322.01
- Mortgage broker: means an entity that for compensation or gain, or in the expectation of compensation or gain, obtains, attempts to obtain, or assists in obtaining a residential mortgage loan for a borrower from a mortgage lender. See Ohio Code 1322.01
- Mortgage lender: means an entity that for compensation or gain, or in the expectation of compensation or gain consummates a residential mortgage loan, advances funds, offers to advance funds, or commits to advancing funds for a borrower. See Ohio Code 1322.01
- 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 for compensation or gain, or in the expectation of compensation or gain, does any of the following:
(a) Takes a residential mortgage loan application;
(b) Assists or offers to assist a buyer in obtaining or applying to obtain a residential mortgage loan by, among other things, advising on loan terms, including rates, fees, and other costs;
(c) Offers or negotiates terms of a residential mortgage loan;
(d) Issues or offers to issue a commitment for a residential mortgage loan to a buyer. See Ohio Code 1322.01
- Mortgage servicer: means a person that, for compensation or gain for itself or on behalf of the holder of a residential mortgage loan, holds the servicing rights for more than five residential mortgage loans, records mortgage payments on its books for more than five residential mortgage loans, or performs other functions to carry out the residential mortgage holder's obligations or rights under the mortgage agreement for more than five residential mortgage loans including, when applicable, the receipt of funds from the mortgagor to be held in escrow for payment of real estate taxes and insurance premiums and the distribution of such funds to the taxing authority and insurance company. See Ohio Code 1322.01
- Person: means an individual, sole proprietorship, corporation, company, limited liability company, partnership, limited liability partnership, trust, or association. See Ohio Code 1322.01
- Registrant: means any person that has been issued a certificate of registration under this chapter. See Ohio Code 1322.01
- Rule: includes regulation. See Ohio Code 1.59
- state: means the state of Ohio. See Ohio Code 1.59
- Superintendent of financial institutions: includes the deputy superintendent for consumer finance as provided in section 1181. See Ohio Code 1322.01
(2)(a) No licensee who is employed by or associated with a person or entity holding a valid letter of exemption under division (B)(1) of section 1322.05 of the Revised Code shall conduct business in this state, unless either the licensee or the person or entity on the licensee’s behalf has obtained and maintains in effect at all times a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state. The bond shall be in favor of the superintendent of financial institutions and in the penal sum of one-half per cent of the aggregate loan amount of residential mortgage loans originated in the immediately preceding calendar year, but not exceeding one hundred thousand dollars. Under no circumstances, however, shall the bond be less than fifty thousand dollars. The term of the bond shall coincide with the term of licensure. A copy of the bond shall be filed with the superintendent. The bond shall be for the exclusive benefit of any buyer injured by a violation by the licensee of any provision of this chapter or any rule adopted thereunder. The aggregate liability of the corporate surety for any and all breaches of the conditions of the bond shall not exceed the penal sum of the bond.
(b) Licensees covered by a corporate surety bond obtained by a registrant, or by a person or entity holding a valid letter of exemption under division (B)(1) of section 1322.05 of the Revised Code, they are employed by or associated with shall not be required to obtain an individual bond.
(B)(1)(a) The registrant shall give notice to the superintendent by certified mail of any action that is brought by a buyer against the registrant, mortgage loan originator, or employee alleging injury by a violation of any provision of this chapter or any rule adopted thereunder, and of any judgment that is entered against the registrant, mortgage loan originator, or employee by a buyer injured by a violation of any provision of this chapter or any rule adopted thereunder. The notice shall provide details sufficient to identify the action or judgment, and shall be filed with the superintendent within ten days after the commencement of the action or notice to the registrant of entry of a judgment.
(b) The licensee shall give notice to the superintendent by certified mail of any action that is brought by a buyer against the licensee alleging injury by a violation of any provision of this chapter or any rule adopted thereunder, and of any judgment that is entered against the licensee by a buyer injured by a violation of any provision of this chapter or any rule adopted thereunder. The notice shall provide details sufficient to identify the action or judgment, and shall be filed with the superintendent within ten days after the commencement of the action or notice to the licensee of entry of a judgment. A person or entity holding a valid letter of exemption under division (B)(1) of section 1322.05 of the Revised Code that secures bonding for the licensees employed by or associated with the person or entity shall report such actions or judgments in the same manner as is required of registrants.
(2) A corporate surety, within ten days after it pays any claim or judgment, shall give notice to the superintendent by certified mail of the payment, with details sufficient to identify the person and the claim or judgment paid.
(C) Whenever the penal sum of the corporate surety bond is reduced by one or more recoveries or payments, the registrant or licensee shall furnish a new or additional bond under this section, so that the total or aggregate penal sum of the bond or bonds equals the sum required by this section, or shall furnish an endorsement executed by the corporate surety reinstating the bond to the required penal sum of it.
(D) The liability of the corporate surety on the bond to the superintendent and to any buyer injured by a violation of any provision of this chapter or any rule adopted thereunder shall not be affected in any way by any misrepresentation, breach of warranty, or failure to pay the premium, by any act or omission upon the part of the registrant or licensee, by the insolvency or bankruptcy of the registrant or licensee, or by the insolvency of the registrant’s or licensee’s estate. The liability for any act or omission that occurs during the term of the corporate surety bond shall be maintained and in effect for at least two years after the date on which the corporate surety bond is terminated or canceled.
(E) The corporate surety bond shall not be canceled by the registrant, the licensee, or the corporate surety except upon notice to the superintendent by certified mail, return receipt requested. The cancellation shall not be effective prior to thirty days after the superintendent receives the notice.
(F) No registrant or licensee employed by or associated with a person or entity holding a valid letter of exemption under division (B)(1) of section 1322.05 of the Revised Code shall fail to comply with this section. Any registrant or licensee that fails to comply with this section shall cease all mortgage lender, mortgage broker, mortgage servicer, or mortgage loan originator activity in this state until the registrant or licensee complies with this section.
Last updated June 22, 2021 at 2:24 PM