(1) Definitions. As used in this rule, the
term:
(a) "Adverse credit history information"
means the following:
1. Personal bankruptcy
within the previous year.
2.
Bankruptcy within the previous year of any organization based on events that
occurred while the relevant person was a control person.
3. Outstanding tax lien or other governmental
lien.
4. Outstanding judgment based
upon grounds of fraud, embezzlement, misrepresentation, or deceit.
5. Open collection account or charged-off
account that remains unpaid, except accounts related solely to unpaid medical
expenses.
6. Foreclosure on
personally owned property within the last 5 years.
(b) "Charged-off" means an account that has
been identified by the creditor as an uncollectable debt.
(c) "Relevant person" means each loan
originator applicant and each control person of a mortgage broker and mortgage
lender license applicant. If the mortgage broker or mortgage lender license
applicant is a natural person, he or she is a relevant person under this
rule.
(2) Adverse Credit
History Information. If a relevant person's credit report or responses to the
license application contains adverse credit history information, the Office
will notify the applicant in writing of the specific items constituting adverse
credit history information. The notification will also inform the applicant of
the:
(a) Opportunity to explain the
circumstances surrounding the specific items and provide any other relevant
information that the applicant wishes the Office to consider surrounding the
specific items;
(b) Documents that
the Office requires in order to complete its review of the specific items. The
requested documents provided by the applicant must be legible. Documents that
are typically requested by the Office include, but are not limited to:
1. Copies of satisfaction of
judgment.
2. Copies of satisfaction
of outstanding tax liens or other governmental liens.
3. Copies of court documents that reflect the
substance of the matter and how the matter was resolved or
adjudicated.
4. Copies of account
statements or letters from the creditors explaining the current status of
accounts. For security purposes, the relevant person may redact all but the
last four (4) digits of the account number prior to submitting the document to
the Office.
5. Copies of tax
returns, pay stubs, or other documentation of income.
If the documents requested above cannot be obtained, the
relevant person shall submit evidence of that fact in order for the license
application to be deemed complete. Evidence that documents cannot be obtained
shall consist of a written statement from the agency's or creditor's records
custodian that is written on the agency's or creditor's letterhead; indicates
that the agency or the creditor does not have any record of such matter or that
the record was lost, damaged, or destroyed, or cannot otherwise be produced and
provide a statement as to why the record cannot be produced; and is signed by
the agency's or creditor's records
custodian.
(3) Procedure for Reviewing Adverse Credit
History Information.
(a) When deciding whether
to approve an application for licensure as a loan originator, mortgage broker,
or mortgage lender, the Office must make a determination regarding whether the
relevant person has demonstrated that he or she possesses the character,
general fitness, and financial responsibility to warrant the Office's
determination that the relevant person will operate honestly, fairly, and
efficiently. In making this determination, the Office will consider the
following information:
1. The relevant
person's entire credit history as reflected in the credit report.
2. The information provided by the relevant
person under subsection (2).
3. The
responses contained in the license application.
4. The previous licensing history with the
Office including whether the relevant person was named in any regulatory action
by the Office.
5. Other information
that reflects upon an applicant's character, general fitness, or financial
responsibility.
6. The time and
context of the information available and any pattern of behavior the
information may demonstrate.
(b) Based on the totality of the
circumstances as developed under paragraph (a), the Office will make a
determination as to whether the relevant person has demonstrated that he or she
possesses the character, general fitness, and financial responsibility to
warrant the Office's determination that the relevant person will operate
honestly, fairly, and efficiently. In considering the totality of the
circumstances, the fact that an applicant has been a debtor in a bankruptcy or
been the control person of a bankrupt organization shall not be the sole basis
of the Office's determination to deny the issuance of a
license.
