Contents 454F-1 Definitions 454F-1.5 Registration with NMLS required 454F-1.6 Presumption of control 454F-1.7 Duties of a mortgage loan originator company's qualified individual and branch manager 454F-1.8 Sponsorship by mortgage loan originator company, exempt sponsoring mortgage loan originator company, 454F-2 Exemptions 454F-2.5 Exempt sponsoring mortgage loan originator company; registration 454F-3 Requirement of licensure 454F-4 License and registration; application; issuance 454F-4.5 Automatic secondary review of license application 454F-4.8 Decision denying application subject to administrative hearing 454F-4.9 Abandoned applications 454F-5 Issuance of license 454F-6 Pre-licensing and re-licensing; education of mortgage loan originators 454F-7 Testing of mortgage loan originators 454F-8 Standards for license renewal 454F-8.5 Reinstatement of expired licenses 454F-9 Continuing education; mortgage loan originators 454F-10 Authority to require license 454F-10.5 Authorized places of business; designation of qualified individuals and branch managers; branch offices; 454F-10.6 Voluntary cessation of operation; surrender of license 454F-10.7 Change in control of a licensee; fees 454F-11 NMLS registry information; challenge process 454F-12 Enforcement authorities; violations; penalties 454F-13 Repealed 454F-14 Confidentiality 454F-15 Investigation and examination authority 454F-16 Mortgage call reports 454F-17 Prohibited practices 454F-18 Powers of commissioner 454F-19 Unique identifier shown 454F-20 Report to NMLS 454F-21 Repealed 454F-22 Mortgage loan originator, mortgage loan originator company, exempt sponsoring mortgage loan 454F-23 Payment of fees 454F-24 Mortgage servicer companies; mortgage loan originators 454F-25 Nonprofit organizations; mortgage loan originators 454F-26 Repealed 454F-41 Mortgage loan recovery fund; use of fund; fees 454F-42 Statute of limitation; recovery from fund 454F-43 Management of fund 454F-44 Standing 454F-45 Subrogation of rights 454F-46 Waiver of rights 454F-47 Disciplinary action against licensee

     §454F-17  Prohibited practices.  It shall be a violation of this chapter for a licensee or person subject to this chapter to:

     (1)  Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person;

     (2)  Engage in any unfair or deceptive practice related to mortgage loan origination activities toward any person;

     (3)  Obtain property by fraud or misrepresentation;

     (4)  Solicit or enter into any contract with a borrower that provides in substance that the person or individual subject to this chapter may earn a fee or commission through "best efforts" to obtain a loan even though no loan is actually obtained for the borrower;

     (5)  Solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting;

     (6)  Conduct any business covered by this chapter without holding a valid license as required under this chapter, or assist or aid and abet any person in the conduct of business under this chapter without a valid license as required under this chapter;

     (7)  Fail to make disclosures as required by this chapter and any other applicable state or federal law including rules or regulations adopted pursuant to state or federal law;

     (8)  Fail to comply with this chapter or any order or rule issued or adopted under the authority of this chapter, or fail to comply with any other state or federal law, including the rules and regulations adopted pursuant to state or federal law applicable to any business authorized or conducted pursuant to this chapter;

     (9)  Make, in any manner, any false or deceptive statement or representation, including with regard to the rates, points, or other financing terms or conditions for a residential mortgage loan, or engage in bait and switch advertising;

    (10)  Negligently or knowingly make any false statement or provide any misleading information or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or NMLS, including an application for a license under this chapter, or in connection with any examination or investigation conducted by the commissioner or another government agency;

    (11)  Make any payment, threat, or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan, or make any payment, threat, or promise, directly or indirectly, to any appraiser of a property for the purpose of influencing the independent judgment of the appraiser with respect to the value of a property;

    (12)  Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer;

    (13)  Fail to truthfully account for moneys belonging to a party to a residential mortgage loan transaction;

    (14)  Deliver a misleading or deceptive communication or advertisement, whether written, electronic, or oral, when marketing or soliciting a residential mortgage loan; provided that:

         (A)  A communication or advertisement that uses the name or trademark of a financial institution as defined in section 412:1-109 or its affiliates or subsidiaries, or infers that the communication or advertisement is from, endorsed by, is related to, or is the responsibility of the financial institution is a misleading or deceptive communication;

         (B)  Advertising that a specific interest rate, points, or financial terms are available when the rates, points, or financial terms are not actually available is a misleading or deceptive communication;

    (15)  Fill in or complete any blank on a final residential mortgage loan application that requests material information including financial information without adequate supporting documentation provided by the borrower;

    (16)  Fill in or complete any blank on any mortgage or note evidencing or securing the residential mortgage loan which relates to the amount, interest rate, term, or monthly payment of the residential mortgage loan;

    (17)  Originate a residential mortgage loan based primarily on the current market value of the borrower's collateral rather than on the borrower's ability to repay the loan according to its terms; provided that the sale of the property is made to a bona fide buyer; and provided further that this paragraph shall not apply to a reverse mortgage as defined under title 12 Code of Federal Regulations section 226.33;

    (18)  Advertise terms of a residential mortgage loan in violation of section 226.16 or 226.24 of Regulation Z of the Board of Governors of the Federal Reserve System; or

    (19)  Encourage a borrower to misrepresent, inflate, or fabricate the source or amount of a borrower's actual income or assets in the application or underwriting process for a residential mortgage loan. [L Sp 2009, c 32, pt of §2; am L 2010, c 84, §22; am L 2011, c 194, §12; am L 2013, c 168, §20]