OLR Bill Analysis
AN ACT CONCERNING MORTGAGE LOAN ORIGINATORS
This bill creates a new classification of mortgage loan originator called an insurance producer originator. An "insurance producer originator" helps find loan applicants for an insurer-affiliated mortgage lender. The bill subjects insurance producer originators to registration requirements similar to those already applicable to mortgage originators. It imposes specific record retention and advertisement restrictions on insurance producer originators. The bill also makes technical and conforming changes.
EFFECTIVE DATE: October 1, 2003
DEFINITIONS
The bill defines an "insurance producer originator" as a licensed insurance producer retained by only one insurer-affiliated mortgage lender for a fee, commission, or other valuable consideration to solicit or find loan applicants for the lender. This person must sell, solicit, or negotiate only insurance issued by the insurer with whom the lender is affiliated and must do so from a Connecticut location that the person owns or leases and occupies.
The bill defines an "insurer-affiliated mortgage lender" as a mortgage lender that is an affiliate of the insurer and is exempt from licensing as a first mortgage lender.
The bill specifies that the definition of a "first mortgage broker" does not include an originator (an individual retained by a mortgage lender or first mortgage broker to find first mortgage loans) or insurance producer originator.
INSURANCE PRODUCER ORIGINATOR REGISTRATION REQUIREMENTS
The bill requires the insurer-affiliated mortgage lender retaining an insurance producer originator to apply for the originator's registration on a form the banking commissioner provides. It prohibits anyone from acting as an insurance producer originator (1) without being registered or (2) for more than one person. An insurance producer originator's registration is not effective during any period when he is not associated with an insurer-affiliated mortgage lender. The bill also requires both the insurance producer originator and the insurer-affiliated mortgage lender promptly to notify the commissioner, in writing, if the insurance producer originator's services are terminated.
The bill applies to insurance producer originators the same registration provisions already applicable to mortgage originators. It requires the commissioner to register an insurance producer originator unless (1) he finds that the applicant has made a material misstatement in the application or (2) the insurance producer originator or retaining insurer-affiliated mortgage lender named in the application lack sufficient financial responsibility, character, reputation, integrity, or general fitness. The bill also allows the commissioner to suspend, revoke, or refuse to renew an insurance producer originator's registration for the same reasons he can act on a mortgage loan originator's registration. These include all the grounds on which he can deny a registration or if he finds that the registrant (1) committed fraud, (2) misappropriated funds, or (3) misrepresented material particulars in a mortgage transaction.
The bill requires evidence of an originator's registration to be kept at the location for which it was issued and to be available for public inspection. Registrations are not transferable or assignable, and insurance producer originators need only notify the commissioner in writing before changing their location. The bill prohibits a registrant from using a name other than the one on his registration. It requires applicants promptly to notify the commissioner in writing of any change in the information on their initial or renewal registration application. And the bill states that an insurance producer originator registration remains in force and effect until it has been surrendered, revoked, suspended, or expires.
REGISTRATION FEE
The bill requires an application for an insurance producer originator registration to include a $ 100 registration fee, or a $ 50 fee if it is filed within one year before the insurance producer originator's existing registration expires. Insurance producer originators' registrations expire at the close of business on September 30 of the even-numbered year after they are issued unless they are renewed. The bill requires insurance producer originators to file their renewal applications, including the appropriate registration fee, for the next two years starting October 1.
RECORDS
The bill requires insurance producer originator registrants to keep adequate records of each loan transaction at the location they name in their registration, or make the records available at that location within five days after the commissioner requests them to do so. The records must provide (1) a copy of any disclosures required under the Truth-in-Lending Act, (2) the loan's purpose, and (3) an exact copy of the note and mortgage deed. The bill requires registrants to keep these records for at least two years from the transaction date, or a longer period if required by another provision of law.
ADVERTISEMENTS
The bill prohibits insurance producer originator registrants from advertising or causing to be advertised in Connecticut a first mortgage loan unless the advertisement clearly and conspicuously identifies the insurer affiliated mortgage lender who retained the registrant and discloses their relationship.
ADVANCE FEES
The bill prohibits insurance producer originators from accepting an advance fee unless it is on behalf of the insurer-affiliated mortgage lender who retained them.
COMMITTEE ACTION
Banks Committee
Joint Favorable Substitute
Yea |
19 |
Nay |
0 |