SB 275-2_ Filed 03/09/2012, 17:39 ChairPerson
Adopted 3/9/2012



COMMITTEE REPORT

    Mr. Speaker: Pursuant to Joint Rule 20, your Committee on Rules and Legislative Procedures, to which was referred Engrossed Senate Bill 275 because it conflicts with HEA 1294-2012 without properly recognizing the existence of HEA 1294-2012, has had Engrossed Senate Bill 275 under consideration and begs leave to report back to the House with the recommendation that Engrossed Senate Bill 275 be corrected as follows:

    Page 2, delete line 42.
    Delete pages 3 through 7.
    Page 8, delete lines 1 through 10, begin a new paragraph and insert:
    "SECTION 3. IC 23-2-5-3, AS AMENDED BY HEA1294-2012, SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2014]: Sec. 3. (a) As used in this chapter, "loan broker license" means a license issued by the commissioner authorizing a person to engage in the loan brokerage business.
    (b) As used in this chapter, "licensee" means a person that is issued a license under this chapter.
    (c) As used in this chapter, "loan broker" means any person who, in return for any consideration from any source procures, attempts to procure, or assists in procuring, a residential mortgage loan from a third party or any other person, whether or not the person seeking the loan actually obtains the loan. "Loan broker" does not include:
        (1) any supervised financial organization (as defined in IC 26-1-4-102.5), including a bank, savings bank, trust company, savings association, or credit union;
        (2) any other financial institution that is:
            (A) regulated by any agency of the United States or any state; and
            (B) regularly actively engaged in the business of making consumer loans that are not secured by real estate or taking assignment of consumer sales contracts that are not secured by real estate;


        (3) any insurance company;
        (4) any person arranging financing for the sale of the person's product; or
        (5) a creditor that is licensed under IC 24-4.4-2-402.
    (d) As used in this chapter, "loan brokerage business" means a person acting as a loan broker.
    (e) As used in this chapter, "mortgage loan origination activities" means performing any of the following activities for compensation or gain in connection with a residential mortgage loan:
        (1) Receiving or recording a borrower's or potential borrower's residential mortgage loan application information in any form for use in a credit decision by a creditor.
        (2) Offering to negotiate or negotiating terms of a residential mortgage loan.
    (f) As used in this chapter, "borrower's residential mortgage loan application information" means the address of the proposed residential real property to be mortgaged and borrower's essential personal and financial information necessary for an informed credit decision to be made on the borrower's mortgage loan application.
    (g) As used in this chapter, "mortgage loan originator" means an individual engaged in mortgage loan origination activities. The term does not include a person who:
        (1) performs purely administrative or clerical tasks on behalf of a mortgage loan originator or acts as a loan processor or underwriter;
        (2) performs only real estate brokerage activities and is licensed in accordance with IC 25-34.1 or the applicable laws of another state, unless the person is compensated by a creditor, a loan broker, a mortgage loan originator, or any agent of a creditor, a loan broker, or a mortgage loan originator; or
        (3) is involved only in extensions of credit relating to time share plans (as defined in 11 U.S.C. 101(53D)).
    (h) As used in this chapter, "mortgage loan originator license" means a license issued by the commissioner authorizing an individual to act as a mortgage loan originator on behalf of a loan broker licensee.
    (i) As used in this chapter, "person" means an individual, a partnership, a trust, a corporation, a limited liability company, a limited liability partnership, a sole proprietorship, a joint venture, a joint stock company, or another group or entity, however organized.
    (j) As used in this chapter, "ultimate equitable owner" means a

person who, directly or indirectly, owns or controls ten percent (10%) or more of the equity interest in a loan broker licensed or required to be licensed under this chapter, regardless of whether the person owns or controls the equity interest through one (1) or more other persons or one (1) or more proxies, powers of attorney, or variances.
    (k) As used in this chapter, "principal manager" means an individual who:
        (1) has at least three (3) years of experience:
            (A) as a mortgage loan originator; or
            (B) in financial services;
        that is acceptable to the commissioner; and
        (2) is principally responsible for the supervision and management of the employees and business affairs of a loan broker licensee.
    (l) As used in this chapter, "principal manager license" means a license issued by the commissioner authorizing an individual to act as:
        (1) a principal manager; and
        (2) a mortgage loan originator;
on behalf of a loan broker licensee.
    (m) As used in this chapter, "bona fide third party fee", with respect to a residential mortgage loan, includes any of the following:
        (1) Fees for real estate appraisals. However, if the residential mortgage loan is governed by Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (12 U.S.C. 3331 through 3352), the fee for an appraisal performed in connection with the loan is not a bona fide third party fee unless the appraisal is performed by a person that is licensed or certified under IC 25-34.1-3-8.
        (2) Fees for title examination, abstract of title, title insurance, property surveys, or similar purposes.
        (3) Notary and credit report fees.
        (4) Fees for the services provided by a loan broker in procuring possible business for a creditor if the fees are paid by the creditor.
    (n) As used in this chapter, "branch office" means any fixed physical location from which a loan broker licensee holds itself out as engaging in the loan brokerage business.
    (o) As used in this chapter, "loan processor or underwriter" means an individual who:
        (1) is employed by a loan broker licensee and acts at the direction of, and subject to the supervision of, the loan broker licensee or a licensed principal manager employed by the loan broker

licensee; and
        (2) performs solely clerical or support duties on behalf of the loan broker licensee, including any of the following activities with respect to a residential mortgage loan application received by the loan broker licensee:
            (A) The receipt, collection, distribution, and analysis of information commonly used in the processing or underwriting of a residential mortgage loan.
            (B) Communicating with a borrower or potential borrower to obtain the information necessary for the processing or underwriting of a residential mortgage loan, to the extent that the communication does not include:
                (i) offering or negotiating loan rates or terms; or
                (ii) counseling borrowers or potential borrowers about residential mortgage loan rates or terms.
    (p) As used in this chapter, "real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including any of the following:
        (1) Acting as a real estate broker or salesperson for a buyer, seller, lessor, or lessee of real property.
        (2) Bringing together parties interested in the sale, lease, or exchange of real property.
        (3) Negotiating, on behalf of any party, any part of a contract concerning the sale, lease, or exchange of real property, other than in connection with obtaining or providing financing for the transaction.
        (4) Engaging in any activity for which the person performing the activity is required to be licensed under IC 25-34.1 or the applicable laws of another state.
        (5) Offering to engage in any activity, or to act in any capacity with respect to any activity, described in subdivisions (1) through (4).
    (q) As used in this chapter, "registered mortgage loan originator" means a mortgage loan originator who:
        (1) is an employee of:
            (A) a depository institution;
            (B) a subsidiary that is:
                (i) owned and controlled by a depository institution; and
                (ii) regulated by a federal financial institution regulatory agency (as defined in 12 U.S.C. 3350(6)); or


            (C) an institution regulated by the Farm Credit Administration; and
        (2) is registered with and maintains a unique identifier with the Nationwide Mortgage Licensing System and Registry.
    (r) As used in this chapter, "residential mortgage loan" means a loan that is or will be used primarily for personal, family, or household purposes and that is secured by a mortgage (or another equivalent consensual security interest) on a dwelling (as defined in Section 103(w) of the federal Truth in Lending Act (15 U.S.C. 1602(w)) or on residential real estate on which a dwelling is constructed or intended to be constructed.
    (s) As used in this chapter, "personal information" includes any of the following:
        (1) An individual's first and last names or first initial and last name.
        (2) Any of the following data elements:
            (A) A Social Security number.
            (B) A driver's license number.
            (C) A state identification card number.
            (D) A credit card number.
            (E) A financial account number or debit card number in combination with a security code, password, or access code that would permit access to the person's account.
        (3) With respect to an individual, any of the following:
            (A) Address.
            (B) Telephone number.
            (C) Information concerning the individual's:
                (i) income or other compensation;
                (ii) credit history;
                (iii) credit score;
                (iv) assets;
                (v) liabilities; or
                (vi) employment history.
    (t) As used in this chapter, personal information is "encrypted" if the personal information:
        (1) has been transformed through the use of an algorithmic process into a form in which there is a low probability of assigning meaning without use of a confidential process or key; or
        (2) is secured by another method that renders the personal

information unreadable or unusable.
    (u) As used in this chapter, personal information is "redacted" if the personal information has been altered or truncated so that not more than the last four (4) digits of:
        (1) a Social Security number;
        (2) a driver's license number;
        (3) a state identification number; or
        (4) an account number;
are accessible as part of the personal information.
    (v) As used in this chapter, "depository institution" has the meaning set forth in the Federal Deposit Insurance Act (12 U.S.C. 1813(c)) and includes any credit union.
    (w) As used in this chapter, "state licensed mortgage loan originator" means any individual who:
        (1) is a mortgage loan originator;
        (2) is not an employee of:
            (A) a depository institution;
            (B) a subsidiary that is:
                (i) owned and controlled by a depository institution; and
                (ii) regulated by a federal financial institution regulatory agency (as defined in 12 U.S.C. 3350(6)); or
            (C) an institution regulated by the Farm Credit Administration;
        (3) is licensed by a state or by the Secretary of the United States Department of Housing and Urban Development under Section 1508 of the S.A.F.E. Mortgage Licensing Act of 2008 (Title V of P.L.110-289); and
        (4) is registered as a mortgage loan originator with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.
    (x) As used in this chapter, "unique identifier" means a number or other identifier that:
        (1) permanently identifies a mortgage loan originator; and
        (2) is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry and the federal financial institution regulatory agencies to facilitate:
            (A) the electronic tracking of mortgage loan originators; and
            (B) the uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators.


    (y) As used in this chapter, "residential real estate" means real property:
        (1) that is located in Indiana; and
        (2) upon which a dwelling is constructed or intended to be constructed.".
    Renumber all SECTIONS consecutively.
    (Reference is to ESB 275 as reprinted February 21, 2012.)

______________________________________

Representative Torr, Chairperson

______________________________________

Representative Austin, R.M.M.

______________________________________

Representative Davis, Sponsor


JR 027501/DI 50
2012