INTRODUCTION: Regulation B-2014-02 supersedes and replaces Mortgage Broker Regulation B-96-1.
Section 1. Authority and Purpose
This regulation is promulgated pursuant to Title 8 V.S.A. Section 15 and Section 2214. Its purpose is to set forth rules for the licensing and regulation of Mortgage Brokers.
Section 2. Individuals Authorized to Act as Mortgage Loan Originators under the Mortgage Broker’s License.
(a) A Mortgage Broker license may be issued to a partnership, corporation, or other legal entity, as well as to an individual.
(b) The licensee must identify in the Nationwide Mortgage Licensing System and Registry (“NMLS”), and sponsor, all employees who are authorized to act as a mortgage loan originator on behalf of the licensee. Such individuals must have a mortgage loan originator license in an “approved” status and must have his/her sponsorship accepted by the Commissioner prior to acting as a mortgage loan originator under the Mortgage Broker’s license. The Commissioner shall be notified immediately of any changes to the individuals authorized to act as mortgage loan originators on behalf of the Mortgage Broker.
(c) No individual may act as a mortgage loan originator under the Mortgage Broker’s license without the prior approval of the Commissioner.
(d) All individuals authorized to act as a mortgage loan originator under the Mortgage Broker’s license must be assigned to a licensed location of the Mortgage Broker. All mortgage loan originators must live within a reasonable commuting distance from the licensed location to which they are assigned. All advertisements and solicitations must use a licensed location. (For example, an authorized mortgage loan originator may not use a home address for advertisements, solicitations, business cards, or correspondence unless such home address is one of the Mortgage Broker’s licensed locations.)
(e) All authorized individuals must be an employee of the Mortgage Broker (i.e., a W-2 employee) and not an independent contractor (i.e., a 1099 independent contractor).
(f) An independent contractor must obtain his/her/its own Mortgage Broker license.
(g) No individual may be authorized to act as a mortgage loan originator under more than one Mortgage Broker license at any one time.
Section 3. Surrender of Mortgage Broker License
(a) A licensee that does not intend to renew a Mortgage Broker license must surrender the license by filing a request for surrender through the NMLS and by delivering the original Mortgage Broker license to the Commissioner. Failure to renew the license (or surrender the license) in a timely manner may result in the suspension, termination, or refusal to renew the license and may result in the imposition of administrative fines and penalties.
(b) A Mortgage Broker that surrenders its license is still obligated to file: (i) a quarterly mortgage call report for the last quarter in which the licensee is active; and (ii) a final annual report. Failure to deliver the reports to the Commissioner in a timely manner may result in the suspension, termination, or refusal to renew the license and may result in the imposition of administrative fines and penalties.
Section 4. Contract Requirements
(a) Before a Mortgage Broker takes any fee or collects any charges, or at the time the prospective borrower submits a signed application, whichever first occurs, the Mortgage Broker and the prospective borrower must both sign a contract that sets forth:
(i) the particulars of the service to be performed by the Mortgage Broker, including specifics as to what shall constitute reasonable efforts on the part of the Mortgage Broker to perform the agreed upon service;
(ii) that the Mortgage Broker shall represent the interests of the prospective borrower rather than those of any lender; and
(iii) all fees received by the Mortgage Broker for services.
(b) Any amount received by the Mortgage Broker in excess of the amount set forth in the approved form of the Mortgage Broker contract shall be reimbursed to the prospective borrower.
(c) The form of the contract must be approved by the Commissioner prior to use by the Mortgage Broker. The Appendix contains a sample form of Mortgage Broker contract that is approved by the Commissioner.
(d) The Mortgage Broker shall not use any form of Mortgage Broker contract that has not been approved by the Commissioner for use by the Mortgage Broker.
Section 5. Segregated Accounts
(a) Any money collected from the prospective borrower by the Mortgage Broker must be deposited in one or more accounts in a federally insured bank. The Mortgage Broker has a fiduciary duty with respect to the funds in the account(s), and shall use the funds only for purposes consistent with the contract required under 8 V.S.A. § 2219, consistent with 8 V.S.A. §2218, and consistent with this regulation. The account(s) must be segregated from the personal accounts and operating or other business accounts of the Mortgage Broker. The funds of prospective borrowers are not required to be segregated from the funds of other prospective borrowers.
(b) Repayment of charges collected from the prospective borrower shall be governed by the application, the contract, and applicable state and federal law.
Section 6. Quarterly Mortgage Call Reports
Each Mortgage Broker shall file a quarterly mortgage call report through the NMLS. The quarterly mortgage call report shall be in such form, shall contain such information, and shall be filed with such frequency as the NMLS may require.
Currently, the NMLS requires that quarterly mortgage call reports shall be filed within 45 days of the end of each calendar quarter:
Quarter 1 data (January 1 – March 31) is due by May 15;
Quarter 2 data (April 1 – June 30) is due by August 14;
Quarter 3 data (July 1 – September 30) is due by November 14;
Quarter 4 data (October 1 – December 31) is due by February 14.
Failure to file accurate and timely reports may result in the suspension, termination, or refusal to renew the license and may result in the imposition of administrative fines and penalties.
Section 7. Prohibited Mortgage Broker Activities
A Mortgage Broker may not act as the lender in connection with any loan closing including, without limitation:
(a) A Mortgage Broker may not, in its own name, provide a prospective borrower with a rate lock, extend a rate lock, or accept discount points or any other funds from a prospective borrower for the purpose of buying down a rate of interest. A Mortgage Broker may, however, forward a lender's rate lock to a prospective borrower provided the rate lock is on behalf of the lender and is in the lender's name.
(b) A Mortgage Broker may not accept and keep escrow waiver fees or other fees that are associated with the terms and conditions of the loan.
(c) A Mortgage Broker may not issue a commitment letter or be identified as the lender in any commitment letter.
(d) A Mortgage Broker may not close a loan in its own name.
Section 8. Other Vermont Law
In addition to the requirements of 8 V.S.A. chapter 73, Mortgage Brokers are subject to the requirements of 8 V.S.A. §§ 10201-10205 (financial privacy). The loans placed by the Mortgage Broker may be subject to all or part of the requirements of 8 V.S.A. §§ 10403 (prohibition against discrimination), 10404 (mortgage loan escrow accounts), 9
V.S.A. chapter 4 (permitted charges, actuarial method, prohibition against prepayment penalties), Banking Bulletin 29 (nontraditional lending), and Banking Bulletin 32 (subprime lending). Pursuant to a Mortgage Broker’s obligation to represent the interests of the borrower, Mortgage Brokers shall not knowingly negotiate, place, assist in placement, or find Vermont mortgage loans that violate Vermont or federal laws or regulations. This is not intended to be an exhaustive list; other laws and regulations may also apply.
Section 9. Effective Date
This Regulation shall become effective on October 1, 2014.
APPENDIX: Regulation B-2014-02
BROKER/PROSPECTIVE BORROWER AGREEMENT
This agreement is between [name of prospective borrower(s)] (individually and jointly the "Borrower" or "you") and [name of mortgage broker] ("Mortgage Broker") located at [address of mortgage broker].
Property to be financed:
1. Mortgage Broker will assist Borrower in securing financing for the above-referenced property. Mortgage Broker's services include, but are not limited to, the following (check appropriate boxes):
[ ] Counseling on available mortgage products; Counseling on general mortgage qualification procedures and requirements; Assistance in obtaining information required to complete the mortgage application; Assistance in processing the loan application and in meeting conditions of the loan commitment; and Coordinating the closing.
[ ] Other (describe)
Mortgage Broker represents your interests while performing the above services. The services are consultative only. You will rely on your own judgment in deciding which available loan product best suits your needs and financial means.
2. You agree to provide true, complete, and accurate information to Mortgage Broker.
3. Mortgage Broker is compensated for arranging a mortgage loan. Mortgage Broker's compensation may be paid either by you or by the lender, but not by both.
[ ] The maximum fee you will pay Mortgage Broker will not be more than (check appropriate box):
[ ] $ _________
[ ] ___% of the loan amount.
[ ] The maximum fee or other compensation Mortgage Broker will receive from the lender will be not more than ____% of the loan amount.
4. All fees and charges payable to any third party will be disclosed on the federal Good Faith Estimate and on the federal HUD-1 Settlement Statement. Effective August 1, 2015, all fees and charges payable to any third party will be disclosed on the federally required Loan Estimate disclosure and the federally required Closing Disclosure.
5. Mortgage Broker does not distribute the products of all lenders and cannot guarantee the lowest price or the best terms.
6. Mortgage Broker will not be making the loan to you. The lender, not the Mortgage Broker, underwrites your loan application, approves or denies your loan application, and sets the terms and conditions of your loan. Mortgage Broker acts only to facilitate your mortgage loan application.
7. Signing this contract does not obligate you to obtain a mortgage loan through this Mortgage Broker nor does it constitute a mortgage loan approval.
8. In the event you terminate your relationship with Mortgage Broker prior to the closing of any loan, you are relieved from all obligations under this Agreement, other than the payment of any actual third party fees disclosed on the Good Faith Estimate or the federally required Loan Estimate, as applicable, and actually incurred by the Mortgage Broker.
9. There is no other mortgage broker agreement between the Borrower and the Mortgage Broker.
Borrower and Mortgage Broker agree to the above terms and conditions. Borrower authorizes the release of all information (including the release of credit reports to the lender) required by the lender relating to the disposition and status of the mortgage application .
NOTICE TO CONSUMER: Do not sign this agreement before you read it. You are entitled to a copy of this agreement.
REGULATION B-2014-03: NON-DISCRIMINATION IN FINANCIAL SERVICES
SECTION ONE: AUTHORITY, SCOPE, AND PURPOSE
1.1 This Regulation is issued by the Department of Financial Regulation pursuant to authority granted by 8 V .S.A. § 15; 8 V .S.A. § 1 0403; and 3 V.S .A. § 831 (a).
1.2 This Regulation applies to all creditors, as defined in Federal Regulation B, Equal Credit Opportunity Act, offering personal and/or commercial credit services in Vermont.
1.3 The purpose of this Regulation is to implement 8 V.S.A. § 10403, entitled "Prohibition on discrimination based on sex, marital status, race, color, religion , national origin, age, sexual orientation, gender identity, or disability" and to identify requirements of the Vermont law which supplement Federal Regulation B, Equal Credit Opportunity Act, as revised effective December 30, 2011 and thereafter.
SECTION TWO: GENERAL RULES
2.1 Each applicant against whom adverse action is taken shall receive a written statement of reasons for such action from the creditor.
(a) A creditor may not provide a written disclosure of the right to a statement of reasons
in lieu of providing an actual statement, as is permitted by 12 CFR section 202.9 (a)(2).
(b) A creditor may not comply with sub-section 2.1 herein by providing a statement of reasons only upon request by the applicant as is permitted by 12 CFR section 202.3 (d)(3)(i).
2.2 For commercial credit only, a statement of reasons meets the requirements of subsection 2.1 herein only if it contains the specific reasons for adverse action taken, and cites the specific documentation or business judgment which supports the adverse decision on the application.
(a) "Documentation" includes, but is not limited to, all borrower supplied external documents , credit reports, appraisals, business or market projections, demographic data, tax returns, financial history, business records or government surveys and reports.
(b) "Business Judgment" includes any subjective method of evaluation used in lieu of or in addition to an empirically derived, demonstrably and statistically sound, credit scoring system.
1.1 This regulation ("Regulation") is issued pursuant to 8 V.S.A. §§ 15, 2214, 2766, 2914, 11301, and 30401.
1.2 This Regulation applies to:
a. financial institutions as defined in 8 V.S.A. § 11101(32);
b. credit unions as defined by 8 V.S.A. § 30101(5);
c. independent trust companies regulated under 8 V.S.A. Chapter 77; and
d. all other state licensed financial businesses regulated under Parts 2, 5, and 6 of Title 8 V.S.A., including: Licensed Lenders; Mortgage Brokers; Loan Servicers; Sales Finance Companies; Money Servicers; Check Cashing & Currency Exchangers; and Debt Adjusters
The types of Institutions included in these definitions shall include federally or nationally chartered Institutions, insofar as this Regulation does not contravene paramount federal law.
1.3 The general intent of this Regulation is to require that an Institution be able to rebuild a transaction for seven years from the date of the transaction or seven years from the payoff date of a loan, as applicable. Notwithstanding the foregoing, this Regulation requires that certain records be held longer than seven years and gives Institutions the option to hold some records for less than seven years, as set forth in Appendix I.
1.4 This Regulation applies to records created on or after July 1, 2014.
1.5 This Regulation does not apply to those records created prior to July 1, 2014. The retention period applicable to such records shall be the period required at the time such record was created.
SECTION TWO: PROCEDURES
2.1 An Institution shall adopt and implement a written record management policy that includes:
a. retention periods for all of the Institution’s records;
b. the manner of retention;
c. the method of disposal of such records upon expiration of the retention period; and
d. procedures to protect records from theft, fire, vandalism, loss, damage, or unauthorized access.
In addition to the retention requirements, any record that contains confidential information should be treated in accordance with the Institution’s confidentiality, privacy, and security policies.
2.2 Institutions shall retain all records for at least the minimum time period specified in this Regulation.
2.3 If the Institution does not maintain a record enumerated in this Regulation, but maintains a similar record with equivalent information, the Institution's records shall be retained for the period of time specified herein for such equivalent records.
2.4 In the event a retention period imposed by other state laws or regulations, federal laws or regulations, court orders, other governmental agencies, or Institution policies conflicts with the retention period set forth in this Regulation, the longer retention period shall control.
2.5 Records that are not specifically enumerated in this Regulation, but that are subject to retention requirements pursuant to other state laws or regulations, federal laws or regulation, court orders, or Institution policies, shall be retained for the period specified by such applicable requirement.
2.6 Records that are not specifically enumerated in Appendix I of this Regulation and that are not subject to retention requirements pursuant to other state laws or regulations, federal laws or regulation, court orders, or Institution policies may be destroyed at the end of seven (7) years from the date of the transaction or at the end of seven (7) years from the payoff date of a loan, as applicable, upon authorization of the Institution’s governing body.
2.7 Records that are not specifically enumerated in Appendix I, that are not subject to retention requirements pursuant to other state laws or regulations, federal laws or regulations, or court orders, and are not part of an actual transaction or loan may be destroyed at the discretion of the Institution as specified in its record retention policy as authorized by the Institution’s governing body.
2.8 The content of the record and not the medium in which it is sent or received determines the applicable record retention period. (For example, a document received by e-mail may be correspondence, a promissory note, or a casualty liability policy depending on the content of the e-mail.)
2.9 All records must be maintained in a form and manner that is consistent with reasonable business practices and with any applicable law or regulation. Without limiting the foregoing, records may be maintained in original form, as a copy thereof, or in a manner that can accurately produce, regenerate, or transmit the original record. Records retained in paper, photograph, microprocess, magnetic, digital, mechanical or electronic media, or in or by any other information storage device or process which forms a durable medium shall be treated as the equivalent of original records for purposes of compliance with this Regulation.
2.10 Institutions shall dispose of records in accordance with the Vermont Document Safe Destruction Act, 9 V.S.A. Chapter 62, subchapter 4, or any successor to such Act, to the extent such Act applies to the Institution.
SECTION THREE: ELECTRONIC DATA PROCESSING
3.1 Retention periods specified for records listed in this Regulation apply to equivalent records produced or maintained by means of electronic data processing.
3.2 An Institution shall adopt and implement a written policy to protect electronic data processing files from theft, fire, vandalism, loss, damage, or unauthorized access.
SECTION FOUR: SANCTIONS
4.1 In addition to any other sanctions available to the Commissioner, violations of this Regulation are subject to the provisions of 8 V.S.A. Chapter 201, subchapter 6.
RECORDS THAT REQUIRE PERMANENT RETENTION
Articles of Incorporation or Other Association, Bylaws and Other Records of Organization, Amendments, etc.
Administration - General
Capital Stock Certificates - Cancelled
Administration - General
Capital Stock Certificate Records and/or Stubs
Administration - General
Capital Stock Ledger (Shareholders)
Administration - General
Capital Stock Transfer Ledger/Register
Administration - General
Certificates of Authority/Approval, Charter
Administration - General
Charged-off Asset Records
Investments, Loans, Loans - Real Estate
General Ledger (Income & Expense, Statement of Condition)
Accounting & Auditing, General Ledger
Member Lists - Non-profit, Cooperative, Limited Liability and Mutual Entities
Administration - General
Minutes Book of Meetings (Stockholder, Members, Directors)
Administration - General
Minutes of Audit, Credit & Supervisory Committee Meetings
Administration - General
Minutes of Investment &Trust Committee Meetings
Administration - General
Reports of Examination and Responses – State and Federal
REGULATION B-06-1: Pertaining to State-Chartered Credit Unions
(Revised effective July 1, 2014)
INTRODUCTION: Regulation B-06-1 supersedes former credit union regulation B-83-1, and is promulgated by the Commissioner under the authority established by 8 V.S.A. Section 30203.
Section I. Minimum Bond Coverage
1. The governing body of each credit union shall acquire and maintain a blanket fidelity bond covering the directors, officers, employees, members of official committees, attorneys at law, and other agents with protection against loss to the credit union caused by dishonesty, burglary, robbery, larceny, theft, holdup, forgery or alteration of instruments, misplacement, or mysterious disappearance and for faithful performance of duty. (See Title 8, V.S.A., Sections 31302(3) and 31602(a)). This Section I prescribes the amount of minimum bond coverage required for all credit unions, which in no way absolves the governing body of their responsibility as noted in this regulation and in applicable statute.
2. The governing body of each credit union shall, at least annually, carefully review the bond and insurance coverage in force in order to ascertain its adequacy in relation to the exposure and potential risks facing the credit union and to the minimum requirements set forth herein by the Department of Banking, Insurance, Securities and Health Care Administration (the “Department”).
3. The form of surety bond, at a minimum, shall satisfy the requirements of 8 V.S.A. §31602. The credit union shall receive written confirmation from the bonding company that the surety bond, at a minimum, covers the directors, officers, employees, members of official committees, attorneys at law, and other agents and that the bond provides protection against loss caused by dishonesty, burglary, robbery, larceny, theft, holdup, forgery or alteration of instruments, misplacement or mysterious disappearance, and for faithful performance of duty.
4. The following schedule sets forth the minimum coverage and maximum deductible requirements:
lesser of assets or $100,000
$250,000 plus $50,000 for each million or fraction thereof of assets over $4,000,000
$2,000 plus 1/1000 of the total assets
$2,550,000 plus $10,000 for each million or fraction thereof of assets over $50,000,000
$2,000 plus 1/1000 of the total assets up to a maximum deductible of $200,000
It shall be the duty of the governing body to provide proper protection to meet potential risks by obtaining adequate bond and insurance coverage in excess of the above minimum requirements when circumstances require such additional coverage.
5. (a) Notwithstanding the minimum coverage requirements set forth in subsection 4 above, the minimum coverage required under this regulation for a credit union shall be increased to be equal to the greater of either of the following amounts:
(1) The aggregate amount of the daily cash fund (plus maximum anticipated daily money receipts) on the credit union's premises, or
(2) The aggregate amount of the credit union's money placed in transit in any one shipment.
(b) Such increased limits must be obtained no more than 30 days after the discovery of the need for such increase.
(c) Notwithstanding subsection 5(a), no increase in coverage shall be required when a credit union temporarily increases its cash fund because of an unusual event that cannot reasonably be expected to recur. The Commissioner shall determine whether this subsection applies to a given situation.
6. The Commissioner may require additional coverage for any credit union when, in the Commissioner's opinion, the surety bonds in force are inadequate. The credit union shall obtain such additional coverage within 30 days after the date of written notice.
Section II. Directors Acknowledgment of Report of Examination; Examination Expenses
The Department must receive a properly completed Directors Acknowledgment of Report of Examination, and payment of any invoice for examination expenses, no later than thirty (30) calendar days after the date of the transmittal letter to the credit union accompanying the report of examination or the invoice for examination expenses, as applicable.
Section III. Real Estate Loans
1. A credit union may grant loans or lines of credit secured by an instrument providing a direct lien(s) on real property owned, in whole or in part, by one or more members.
2. Each contract between the credit union and the borrower shall include a provision that the credit union may, at its option, declare immediately due and payable all or any part of the loan if all or any part of the real property securing the loan is sold or transferred by the borrower without the prior written consent of the credit union.
Section IV. Delinquent Loans
A loan shall be deemed delinquent if payment has not been made thereon for a period of two (2) or more months after the most recent contractual payment was due and not paid. In calculating whether a particular loan is delinquent, no consideration is to be given to partial payments, unless in the aggregate they total one or more contractual payment.
Section V. [Reserved]
Section VI - Community Development Credit Unions
1. For purposes of this section and 8 V.S.A. §30101(3):
(a) "Low income members" shall include (1) those members whose annual income falls at or below the lower level standard of living classification as established by the Bureau of Labor Statistics and as updated by the Employment and Training Administration of the U.S. Department of Labor, (2) those members who are residents of a public housing project who qualify for such residency because of low income, (3) those members who qualify as recipients in a community action program, and (4) those members who are enrolled as full-time or part-time students in a college, university, high school, or vocational school.
(b) "Predominantly" is so defined as a simple majority.
2. A credit union which is designated by the Commissioner as a community development credit union as defined in 8 V.S.A. §30101(3) may receive and hold deposits on account from non-members, provided the National Credit Union Administration concurs with the Commissioner's designation and confirms in writing to the Commissioner that such accounts will be insured to the same extent as member deposits.
3. The burden of demonstrating that a credit union is a community development credit union shall be on the credit union seeking such designation. After receiving such designation, the governing body shall regularly review its membership list, and report on an annual basis to the Commissioner, to ensure that it continues to qualify as a community development credit union.
4. The rate of interest paid on any non-member deposits shall not exceed the rate being paid on member share certificates with similar terms and conditions.
Section VII Fixed Assets
1. Definitions. As used in this section VII:
(a) “Abandoned premises” means real property previously used to transact credit union business but no longer used for that purpose and real property originally acquired for future expansion for which the credit union no longer contemplates such use.
(b) “Fixed assets” means premises, furniture, fixtures and equipment.
(c) “Premises” means any office, branch office, service center, parking lot, other facility, or other real property where the credit union transacts or intends to transact business.
(d) “Furniture, fixtures, and equipment” means all office furnishings, office machines, computer hardware and software, automated terminals, and heating and cooling equipment.
2. (a) A credit union may invest in real property (including both improved or unimproved real property) or leasehold improvements, which the credit union is using or intends to use as its premises, provided the aggregate of all such investments shall not exceed six percent of the credit union’s share accounts and total retained earnings.
(b) Additionally, a credit union may invest in furniture, fixtures, and equipment provided the aggregate of all such investments does not exceed one and one-half percent of the credit union’s share accounts and retained earnings.
3. A credit union shall not exceed the limitations set forth in this section without the express prior written consent of the Commissioner.
4. Premises Not Currently Used To Transact Credit Union Business.
(a) When a credit union acquires premises for future expansion and does not fully occupy the space within one year, the credit union must have a board resolution in place by the end of that year with definitive plans for full occupation. Premises are fully occupied when the credit union, or a combination of the credit union, CUSOs, or vendors, use the entire space on a full-time basis. CUSOs and vendors must be using the space primarily to support the credit union or to serve the credit union’s members. The credit union must make any plans for full occupation available to the Department and its examiner upon request.
(b) When a credit union acquires premises for future expansion, the credit union must partially occupy the premises within one year and must substantially occupy the premises within three years. Premises are “partially occupied” when the credit union is using some part of the space on a fulltime basis. Premises are “substantially occupied” when the credit union (or combination of credit union, CUSOs, or vendors as described in subsection 4(a) above) occupies at least 60% of the space on a fulltime basis. The Commissioner may waive this occupation requirement in writing upon written request.
(c) A credit union must make diligent efforts to dispose of abandoned premises and any other real property not intended for use in the conduct of credit union business. The credit union must seek fair market value for the property, and record its efforts to dispose of abandoned premises. After premises have been abandoned for four years, the credit union must publicly advertise the property for sale. Unless otherwise approved in writing by the Department, the credit union must complete the sale within five years of abandonment.
Reasonable Commuting Distance from Residence to Office of Employment
The Department of Financial Regulation (the "Department") accepts applications for Mortgage Loan Originator ("MLO") licenses through the Nationwide Mortgage Licensing System and Registry ("NMLS" or "NMLSR").
A MLO is defined as an individual who: (a) takes a residential mortgage loan application or (b) offers or negotiates the terms of a residential mortgage loan. 8 VSA §2200(17). A MLO must be "an employee actively employed at a licensed location of, and supervised and sponsored by, only one licensed lender or licensed mortgage broker operating in this state." 8 VSA §2201(b)(l)(emphasis added). Alternatively, a MLO may be an individual sole proprietor who is also licensed as a mortgage broker or lender. 8 VSA §2201(b)(2).
Vermont licensed lenders and licensed mortgage brokers are licensed on a location by location basis. 8 VSA §§ 2206, 2208. All MLOs must work from the physical location as it appears on the mortgage broker's or lender's license. Neither statute nor the Department permits a MLO to telecommute. Therefore, the MLO's physical work location must be within a reasonable commuting distance from the MLO's home address as shown on NMLS Form MU4.
In determining a "reasonable commuting distance", the Department considered the following factors: geographic accessibility of the physical work location; the quality of the roads; customarily available sources of transportation; and usual travel time. Having weighed these considerations, the MLO's physical work location must be not more than fifty (50) miles from the MLO's home address.
In cases where the distance is greater than fifty (50) miles, a request for exemption from the "reasonable commuting distance" standard may be submitted by the MLO and the employing firm. An exemption will be granted or denied at the Department's discretion after a careful review of the facts set out in the request for exemption.
(This Bulletin Supersedes and Replaces Banking Bulletin No. 27)
Mobile Home Retail Installment Contract Disclosure
This Bulletin is issued pursuant to Title 9 V.S.A. § 2603(e), for the purposes of specifying the form and content of the disclosures required by Title 9 V.S.A. § 2603(e) (the "Disclosure"), to increase the flow of information to consumers and encourage them to take advantage of a competitive market. A retail seller shall provide to a potential buyer at the time an application is taken, a written disclosure in a form approved by the Commissioner of the Department of Financial Regulation.
A model disclosure is attached. A retail seller that uses the model disclosure will be deemed to have used a written disclosure in a form approved by the Commissioner. Any changes to this model disclosure must be approved by the Commissioner.
The attached disclosure must be provided to potential buyers beginning February 1, 2014. Any seller wishing to use a customized form must utilize the attached recommended disclosure form until a request for a modification is submitted to the Department and the Commissioner has approved the modified form in writing. The Disclosure shall be printed on a single sheet of colored paper that is easily distinguished from all other disclosures, applications or other documents presented to the buyer of the mobile home. Except as otherwise required herein, the print shall be in a size equal to at least 12 point type.
The Disclosure shall:
A. Contain the following notice in uppercase letters and in a size equal to at least 14 point bold type and otherwise distinguishable from all other text of the Disclosure:
YOU MAY BE ELIGIBLE FOR A LOAN WITH A LOWER INTEREST RATE, AND/OR LESS EXPENSIVE FINANCING COSTS, POINTS, OR FEES FROM ANOTHER LENDER
B. Include a statement informing the borrower(s) that they can obtain a list of lenders participating in Vermont Housing Finance Agency programs and other lenders by contacting the Vermont Department of Financial Regulation at 802-828-3307 or writing to the Department at 89 Main Street, Montpelier, VT 05602-3101. Information may also be accessed via the internet at www.dfr.vermont.gov.
C. Be signed and dated by the seller and the buyers involved in the purchase.
Transition – Prior to February 1, 2014 a retail seller may use either the form attached to Banking
Bulletin No. 27 or the form attached to this Banking Bulletin. Dated this 27th day of November 2013
Susan L. Donegan
[DISCLOSURE MUST BE PRINTED ON COLORED PAPER]
Mobile Home Retail Installment Contract Disclosure
YOU MAY BE ELIGIBLE FOR A LOAN WITH A LOWER INTEREST RATE, AND/OR LESS EXPENSIVE FINANCING COSTS, POINTS, OR FEES FROM ANOTHER LENDER
A list of lenders licensed or chartered by the State of Vermont may be obtained by calling the Banking Division of the Vermont Department of Financial Regulation at 802-828-3307 or writing to the Department of Financial Regulation at 89 Main Street, Montpelier, VT 05620. Information may also be obtained via the internet at www.dfr.vermont.gov. In addition, a list of nationally and federally chartered lenders with offices in Vermont may be obtained from the Department.
You may also contact the Vermont Housing Finance Agency for a list of lenders participating in VHFA programs. Additional information about VHFA participating lenders can be obtained via the internet at www.vhfa.org/homeownership or by calling 802-864-5743.
You may also contact your local Neighborworks Homeownership Center, www.vthomeownership.org, or you may contact the Champlain Housing Trust (www. champlainhousingtrust.org/announcements/manufactured- home-replacement- program, 802-527-2361) about their Manufactured Home Replacement Program.
(This Bulletin Supersedes and Replaces Banking Bulletin No. 17)
Home Loan Escrow Accounts
This Bulletin is issued pursuant to 8 V.S.A. §10404, which governs home loan escrow accounts in Vermont. For purposes of this Bulletin and 8 V.S.A. §10404, an “escrow account” means an account into which a borrower is required under the terms of a residential real estate loan agreement to make periodic payments of property taxes, insurance premiums or other similar charges." 8 V.S.A. §10404 (a)(2).
Section 10404 (b) generally requires that lenders pay interest on the funds deposited into an escrow account.
Section 10404 (g) provides that, "the lender shall provide annually, or upon request of the borrower, financial statements relating to the borrower's escrow account in a manner and on a form approved by the commissioner." (emphasis added)
Lenders that use a form of Annual Escrow Account Disclosure Statement as set forth in the federal Real Estate Settlement Procedures Act ("RESPA") and its applicable regulations will be deemed to have issued an escrow account financial statement in a manner and form approved by the commissioner, provided the statement includes interest, if any, paid into the escrow account.
Lenders are reminded that current Vermont law only permits a one month cushion on escrow accounts, not the two month cushion under RESPA. 8 V.S.A. §10404 (c).
All lenders making loans secured by Vermont residential real estate must comply with the requirements of 8 V.S.A. §10404 and this Bulletin if the lender requires that the borrower maintain an escrow account. This applies to all lenders regardless of the source of the funds.
Lenders are directed to the Vermont Home Loan Escrow Account statute (currently found at 8
V.S.A. §10404) for additional information and restrictions regarding escrow accounts.
The Department has reviewed the Banking Bulletins issued by the Commissioner and the Commissioner has determined that a number of existing bulletins are either no longer necessary or have been rendered irrelevant by the passage of time or changed circumstances.
The following Banking Bulletins are WITHDRAWN: Banking Bulletin #1 (Revised) – Payment Order Accounts
Banking Bulletin #3 – Practices by Institutions Regarding Maturing Certificates of Deposit
Banking Bulletin #4 – Negotiable Order of Withdrawal "NOW" Accounts
Banking Bulletin #5 – Loans and Investment Not Otherwise Qualifying or Permitted
Banking Bulletin #6 – Loans to Officers
Banking Bulletin #7 - Loans versus Commitments
Banking Bulletin #8 – State Chartered Credit Unions Rate of Interest
Banking Bulletin #9 – Service Charges on Dormant Accounts
Banking Bulletin #10 – Adjustable Rate Loans Secured by Subordinate Liens on Residential Real Estate of Two Units or Less Which are Owner-Occupied
Reg. B-98-2 (High Rate, High Point Notices for Residential Real Estate Loans)
This Bulletin clarifies the Declared Rate for purposes of 9 V.S.A. §104 (High Rate Loans) and Regulation B-98-2 (High Rate, High Point Notices for Residential Real Estate Loans).
Both 9 V.S.A. §104 and Regulation B-98-2 refer to 32 V.S.A. §3108 for purposes of establishing the Declared Rate. Title 32 V.S.A. §3108 was amended by Act No. 143 of the 2012 Vermont legislative session. As amended, §3108 establishes an interest rate to be applied to the overpayment of taxes ("overpayment rate'') and then establishes a different interest rate to be applied to the underpayment of taxes ("underpayment rate"). An October 16, 2012 memorandum from the Commissioner of Taxes establishes the overpayment rate at 3.6% and establishes the underpayment rate at 5.6% for calendar year 2013. (A copy of the Commissioner of Taxes memorandum is attached to this Bulletin.)
The establishment of two rates under §3108 could create confusion about which rate applies for purposes of 9 V .S.A. §104 and Regulation B-98-2. To avoid such confusion, the Commissioner declares that the Declared Rate for purposes of 9 V.S.A. §104 and Regulation B-98-2 shall be the overpayment rate established by 32 V.S.A. §3108.
Consequently, for purposes of 9 V.S.A. §104 and Regulation B-98-2 the Declared Rate for calendar year 2013 shall be 3.6%.
Stephen W. Kimbell Commissioner
Vermont Department of Financial Regulation
TO: Commissioner, Deputy Commissioner, General Counsel, Division Directors, Policy Analysts and Staff Attorneys
FROM: Susan Mesner, Senior Economist
DATE: October 16, 2012
SUBJECT: 2013 Interest Rates
Act 143 (2012) amended the law that governs the calculation of interest rates in Vermont for underpayment and overpayment of tax liabilities. The annual rate for overpayments is now rounded up to the nearest quarter percent, with the quarterly rate rounded to the nearest whole tenth of a percent. The annual rate for underpayments is set at 200 basis points above the rate for overpayments.
The average prime loan rate charged by banks (as determined by the Board of Governors of the Federal Reserve System) for the 12-month period beginning October 1, 2011 and ending September 30, 2012 was 3.25%. Rounded up to the nearest quarter percent, the annual rate for 2012 is 3.25%. When converted to a monthly rate, the result is 0.27% per month.
Under 32 V.S.A. § 3108(a), the monthly rate is rounded up to the nearest whole tenth of a percent, producing aninterest rate in 2013 of 0.3% per month for overpayments, and an annual rate of 3.6%. The 2013 annual interest rate for underpayments is 5.6%, or 0.5% per month.
These rates apply to interest that accrues in calendar year 2013.