§ 397-A:5 — License Application; Requirements; Investigation

New Hampshire § 397-A:5

• Jurisdiction: New Hampshire
• Title XXXV: BANKS AND BANKING; LOAN ASSOCIATIONS; CREDIT UNIONS
• Ch. 397-A: LICENSING OF NONDEPOSITORY MORTGAGE BANKERS, BROKERS, AND SERVICERS

Text

I. To be considered for mortgage banker, mortgage broker, or mortgage servicer licensing, each person shall complete and file an application with the department, through the Nationwide Multistate Licensing System and Registry using the Nationwide Multistate Licensing System and Registry form. At a minimum, the application shall state the primary business address of the applicant, the applicant's tax identification number, the address of its principal office and all branch offices, and a list of the principals of the applicant. Each principal shall provide his or her social security number and shall authorize the commissioner to conduct a background check. The applicant shall submit any other information that the commissioner may require including, but not limited to, the applicant's form and place of organization, the applicant's proposed method of doing business, the qualifications and business history of the applicant and its principals, and the applicant's financial condition and history. The applicant shall disclose whether the applicant or any of its principals has ever been issued or been the subject of an injunction or administrative order, has ever been convicted of a misdemeanor involving financial services or a financial services-related business or any fraud, false statements or omissions, theft or any wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses or has ever been convicted of any felony.
II. (a) Unless the mortgage banker, mortgage broker, or mortgage servicer applicant is a publicly traded corporation, the department shall complete a background investigation and criminal history records check on the applicant's principals and any person in a similar position or performing similar functions. If the applicant is a subsidiary, the department shall complete a background investigation and criminal history records check on the individuals who are indirect owners.
(b) The persons described in subparagraph (a) shall submit to the department a criminal history records release form, as provided by the New Hampshire division of state police, which authorizes the release of the person's criminal records, if any. The person shall submit with the release form a complete set of fingerprints taken by a qualified law enforcement agency or an authorized employee of the banking department. In the event that the first set of fingerprints is invalid due to insufficient pattern, a second set of fingerprints is necessary in order to complete the criminal history records check. If, after 2 attempts, a set of fingerprints is invalid due to insufficient pattern, the department may, in lieu of the criminal history records check, accept police clearances from every city, town, or county where the person has lived during the past 5 years.
(c) The department shall submit the criminal history records release form to the New Hampshire division of state police which shall conduct a criminal history records check through its records and through the Federal Bureau of Investigation. Upon completion of the background investigation, the division of state police shall release copies of the criminal conviction records to the department. The department shall maintain the confidentiality of all criminal history records information received pursuant to this paragraph.
(d) The department may require the applicant or licensee to pay the actual costs of each background investigation and criminal history records check.
(e) The department may rely on criminal records checks reported through the Nationwide Multistate Licensing System and Registry in lieu of subparagraphs (b) and (c).
III. (a) The mortgage banker, mortgage broker, or mortgage servicer license issued for the licensee's principal place of business shall be referred to as a "principal office license." Each additional license issued for New Hampshire mortgage lending, brokering, or servicing activity occurring in a location that is separate from the licensee's principal place of business shall be referred to as a "branch office license."
(b) Each mortgage banker, mortgage broker, or mortgage servicer license application shall be accompanied by a nonrefundable application fee of $500 for each separate office location to be licensed. Sums collected under this chapter shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the commissioner, consumer credit administration division.
(c) Each mortgage banker, mortgage broker, or mortgage servicer applicant shall be required to submit to the department detailed financial information sufficient for the commissioner to determine the applicant's ability to conduct the business of a mortgage banker, a mortgage broker, or a mortgage servicer with financial integrity. The application shall include a balance sheet, income statement, cash flow statement, statement of owner's equity, and note disclosure, and shall be prepared in accordance with generally accepted accounting principles. An applicant or licensee shall demonstrate and maintain a minimum positive net worth in the amount of at least $25,000. Minimum net worth shall be maintained in an amount that reflects the dollar amount of loans originated as determined by the commissioner. Net worth statements provided in connection with a license application under this section shall be subject to review and verification during the course of any examination or investigation conducted under the authority of RSA 397-A:12. Each mortgage banker and mortgage servicer applicant shall post a continuous surety bond in the minimum amount of $100,000 to the commissioner that shall be increased under conditions set by rule. Each mortgage broker shall post a continuous surety bond in the minimum amount of $50,000 to the commissioner that shall be increased under conditions set by rule. Surety bonds shall provide coverage in an amount that reflects the dollar amount of loans originated by each mortgage loan originator employed by or retained by the mortgage banker, mortgage broker, or mortgage servicer as determined by the commissioner. Surety bonds shall include a provision requiring the surety to give written notice to the commissioner 30 days in advance of the cancellation or termination of the bond. Every bond shall provide that no recovery may be made against the bond unless the state makes a claim for recovery or the person brings suit naming the licensee within 6 years after the act upon which the recovery or suit is based. When an action is commenced on a licensee's bond, the licensee shall immediately file a new bond. Immediately upon recovery upon any action on the bond the licensee shall file a new bond.
(d) No person shall be issued or continue to hold a mortgage banker or mortgage broker license unless at least one person employed full-time in a supervisory capacity at the company's principal office shall have been actively engaged in the mortgage business in a similar supervisory capacity for a minimum of 3 of the preceding 5 years.
(e) Mortgage bankers and mortgage servicers shall designate an individual contact person who shall be a control person of their organization to communicate with department personnel on foreclosure workouts and foreclosure avoidance procedures. The contact person shall have authority to facilitate foreclosure workouts, and foreclosure avoidance procedures. The contact person shall be named in the license application and the mortgage banker or mortgage servicer shall update the department with a new or interim contact person whenever the designated contact person changes, within 7 business days of such change.
IV. Every applicant for mortgage banker, mortgage broker, or mortgage servicer licensing under this chapter shall file with the commissioner irrevocable consent appointing the commissioner to receive service of any lawful process in any noncriminal suit, action, or proceeding against the applicant or the applicant's successor, executor, or administrator which arises under this chapter or any rule or order under this chapter after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. A person who has filed such a consent in connection with a previous registration need not file another. When any person, including any nonresident of this state, engages in conduct prohibited or made actionable by this chapter or any rule or order under this chapter, and such person has not filed a consent to service of process under this section and personal jurisdiction over such person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to such person's appointment of the commissioner to receive service of any lawful process. Service may be made by leaving a copy of the process in the office of the commissioner along with $5, but is not effective unless:
(a) The plaintiff, who may be the attorney general in a suit, action, or proceeding instituted by him or her, forthwith sends a notice of the service and a copy of the process by certified mail to the defendant or respondent at such person's last address on file with the commissioner; and
(b) The plaintiff's affidavit of compliance with this paragraph is filed in the case on or before the date specified by the court on the summons, if any, or within such further time as the court allows.
IV-a. To be considered for originator licensing, the applicant shall complete and file an application with the department, through the Nationwide Multistate Licensing System and Registry, using the Nationwide Multistate Licensing System and Registry form. The application shall be signed under oath by both the originator applicant and the licensed mortgage banker, mortgage broker, or mortgage servicer for whom the individual will originate mortgage loans. Each licensed mortgage originator shall register with and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry. At a minimum, the application shall state the primary business address of the applicant and the applicant's social security number and shall authorize the commissioner to conduct a background check. The applicant shall submit any other information that the commissioner and the Nationwide Multistate Licensing System and Registry may require including, but not limited to, the applicant's residential and employment history. The applicant shall disclose his or her financial, criminal, regulatory civil, arbitration, civil litigation, and employment termination history, including but not limited to, whether the applicant has ever been issued or been the subject of an injunction or administrative order or has ever been charged with or convicted of a misdemeanor or any felony. Each license application shall be accompanied by a nonrefundable license fee of $100. A mortgage originator's license may be transferred during a calendar year from one mortgage banker, mortgage broker, or mortgage servicer to another upon payment of a $50 fee and approval by the commissioner. Sums collected under this chapter shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the commissioner, consumer credit administration division.
IV-b. Each mortgage loan originator operating in New Hampshire and each mortgage loan originator making or brokering mortgage loans on New Hampshire real property and each principal of a mortgage banker, mortgage broker, or mortgage servicer shall, in addition to other requirements in New Hampshire law and regulations, prior to licensure:
(a) Furnish to the Nationwide Multistate Licensing System and Registry information concerning the applicant's or principal's identity, including:
(1) Fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check; and
(2) Personal history and experience in a form prescribed by the commissioner and the Nationwide Multistate Licensing System and Registry including the submission of authorization for the Nationwide Multistate Licensing System and Registry and the commissioner to obtain:
(A) An independent credit report obtained from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act;
(B) Information related to any administrative, civil, or criminal findings by any law enforcement entity, court, or governmental jurisdiction;
(C) Criminal history record information; and
(D) Other background information as may be required by the commissioner.
(b) For the purposes of this paragraph and in order to reduce the points of contact which the Federal Bureau of Investigation may have to maintain for subparagraphs (a)(1) and (a)(2)(B), the commissioner may use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting information from and distributing information to the department of justice or any governmental agency.
(c) For the purposes of this paragraph and in order to reduce the points of contact which the commissioner may have to maintain for purposes of subparagraphs (a)(2)(A) and (B), the commissioner may use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting and distributing information to and from any source so directed by the commissioner.
IV-c. (a) The commissioner shall not issue a mortgage loan originator license unless the commissioner makes at a minimum the following findings that the applicant:
(1) Has never had a mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation shall not be deemed a revocation; and
(2) Has not been convicted of, or pled guilty or nolo contendere to:
(A) Any felony in a domestic, foreign, or military court occurring at any time during the 10-year period prior to the date of the application that has not been pardoned; or
(B) Any felony in a domestic, foreign, or military court at any time that has not been pardoned and which involves an act of fraud, dishonesty, theft, or a breach of trust or money laundering, or other crime concerning financial services or a financial services-related business including crimes related to making false statements or omissions, any theft or wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses; and
(C) Any felony more than 10 years prior the date of application that has not been pardoned, except that if the felony is not for an act of fraud, dishonesty, theft, or a breach of trust or money laundering, or other crime concerning financial services or a financial services-related business including crime related to making false statements, or omissions, any theft or wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses, the commissioner may allow licensure by rule or order; and
(3) [Repealed].
(4) Has never been convicted of, or pled guilty or nolo contendere in a domestic, foreign, or military court to, a misdemeanor that has not been pardoned and which involves an act of fraud, dishonesty, theft, or a breach of trust or money laundering or other misdemeanor concerning financial services or a financial services-related business, including a crime related to making false statements or omissions, any theft or wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses, except that for such a misdemeanor conviction occurring more than 10 years prior to the date of application, the commissioner may allow licensure by rule or order; and
(5) Has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purposes of this chapter. For purposes of this subparagraph a person has shown that he or she is not financially responsible when he or she has shown a disregard in the management of his or her own financial condition. A determination that an individual has not shown financial responsibility may include, but not be limited to:
(A) Bankruptcies filed within the previous 10 years;
(B) Current outstanding judgments, except judgments solely as a result of medical expenses;
(C) Current outstanding tax liens or other government liens and filings;
(D) Foreclosures within the previous 3 years;
(E) A pattern of serious delinquent accounts within the past 3 years; and
(6) Is covered by a surety bond maintained by the mortgage banker, mortgage servicer, or mortgage broker who employs or retains the originator. The surety bond shall provide coverage for each mortgage loan originator in an amount that reflects the dollar amount of loans originated as determined by the commissioner; and
(7) Has completed at least 20 hours of education approved in accordance with subparagraph (c), which shall include at least:
(A) Three hours of federal law and regulations;
(B) Three hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues;
(C) Two hours of training related to lending standards for the nontraditional mortgage product marketplace; and
(D) Two hours of New Hampshire mortgage law education if the person did not previously pass a written test specific to New Hampshire mortgage laws; and
(8) Has passed a written test that meets the test requirement described in subparagraph (d).
(b) The commissioner may conditionally approve an application for a mortgage loan originator license if the applicant is currently licensed as a loan originator in another state and has met the requirements of subparagraph (a)(1) through (a)(7)(C). The conditionally approved mortgage loan originator license shall expire after 60 days if the applicant fails to provide the commissioner with proof that the applicant has obtained 2 hours of New Hampshire mortgage law education required by subparagraph (a)(7)(D) and passed a written test as required by subparagraph (a)(8).
(c) Pre-licensing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards. Review and approval of a pre-licensing education course shall include review and approval of the course provider. Pre-licensing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Multistate Licensing System and Registry. The pre-licensing education requirements approved by the Nationwide Multistate Licensing System and Registry for any state shall be accepted as credit towards completion of pre-licensing education requirements in New Hampshire. An individual previously licensed under this chapter subsequent to July 31, 2009 who applies for a new license shall prove that he or she has completed all of the continuing education requirements for the year in which the license was last held.
(d)(1) For purposes of subparagraph (a)(8), an individual shall pass, in accordance with the standards established under this subparagraph, a qualified written test developed by the Nationwide Multistate Licensing System and Registry and administered by a test provider approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards.
(2) A written test shall not be treated as a qualified written test for purposes of this subparagraph unless the test adequately measures the applicant's knowledge and comprehension in appropriate subject areas, including but not limited to:
(A) Ethics.
(B) Federal law and regulation pertaining to mortgage origination.
(C) State law and regulation pertaining to mortgage origination.
(D) Federal and state law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.
(3) Nothing in this paragraph shall prohibit a test provider approved by the Nationwide Multistate Licensing System and Registry from providing a test at the location of the employer of the applicant or the location of any subsidiary or affiliate of the employer of the applicant, or the location of any entity with which the applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.
(4) An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than 75 percent correct answers to questions. An individual may retake a test 3 consecutive times with each consecutive taking occurring at least 30 days after the preceding test. After failing 3 consecutive tests, an individual shall wait at least 6 months before taking the test again.
(5) A licensed mortgage originator who fails to maintain a valid license for a period of 5 years or longer shall retake the test, not taking into account any time during which such individual is a registered mortgage loan originator.
IV-d. (a) In addition to other provisions in New Hampshire law and rules, in order to be eligible to renew a license, a mortgage originator shall:
(1) Meet and continue to meet the minimum standards for license issuance under paragraph IV-c;
(2) Satisfy the annual continuing education requirements described in paragraph IV-e; and
(3) Pay the annual originator license renewal fee of $100.
(b) The license of a mortgage loan originator failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the Nationwide Multistate Licensing System and Registry. The commissioner may deny or refuse to renew a mortgage loan originator's license for failure to meet minimum standards, for failure to pay outstanding fees or fines, for violation of state or Federal law and regulations, and for other good cause.
(c) Unless the commissioner has refused to renew or has denied a mortgage originator's application for renewal, an originator's license shall remain in force until it has been surrendered, revoked, or suspended, or terminates or expires in accordance with the provisions of this chapter, including subparagraph (b). Each license shall expire on December 31 of each calendar year.
(d) The initial license term shall begin on the day the application is approved. The license shall expire on December 31 of the year in which the license term began, unless the initial license date is between November 1 and December 31, in which instance the initial license term shall run through December 31 of the following year.
IV-e. (a) In order to renew a license, an originator shall complete at least 8 hours of education approved in accordance with subparagraph (b), which shall include at least:
(1) Three hours of federal law and regulations;
(2) Two hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and
(3) Two hours of training related to lending standards for the nontraditional mortgage product marketplace.
(b) For purposes of subparagraph (a), continuing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider. Continuing education may be offered either in a classroom or online or by any other means approved by the Nationwide Multistate Licensing System and Registry.
(c) A mortgage originator shall:
(1) Only receive credit for a continuing education course in the year in which the course is taken; and
(2) Not take the same approved course in the same or successive years to meet the annual requirements for continuing education.
(d) A mortgage originator who is an approved instructor of an approved continuing education course may receive credit for the mortgage originator's own annual continuing education requirement at the rate of 2 hours' credit for every 1 hour taught.
(e) Successful completion of the continuing education requirements approved by the Nationwide Multistate Licensing System and Registry for any state shall be accepted as credit towards completion of the continuing education requirements in New Hampshire.
(f) A licensed mortgage loan originator who subsequently becomes unlicensed must complete the continuing education requirements for the last year in which the license was held prior to issuance of a new or renewed license.
IV-f. (a) Mortgage originators who hold a valid New Hampshire mortgage originator's license on July 30, 2016 shall complete all the requirements of paragraphs IV-b, IV-c, IV-d, and IV-e prior to renewal of their licenses for the 2017 calendar year.
(b) The commissioner may by order establish interim procedures for licensing and acceptance of applications. For previously registered or licensed individuals, the commissioner may establish expedited review and licensing procedures.
IV-g. In order to fulfill the purposes of this chapter, the commissioner is authorized to establish relationships or contracts with the Nationwide Multistate Licensing System and Registry or other entities designated by the Nationwide Multistate Licensing System and Registry to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to this chapter.
V. (a) Upon the applicant's filing of the complete application and payment of the required fee, the commissioner shall have, in accordance with RSA 541-A:29, up to 120 days to investigate and determine whether the applicant's financial resources, experience, personnel, and record of past or proposed conduct warrant the public's confidence and the issuance of a license.
(b) The commissioner shall determine whether the mortgage banker or mortgage broker applicant's proposed interest rates and fees are in accordance with the interest rates and fees charged by other first or second mortgage lenders, and whether said rates and fees will promote a free and competitive market.
(c) The applicant's principals shall meet the requirements of 397-A:5, IV-b and 397-A:5, IV-c(a)(1) through (5).
VI. (a) In addition to any other duties imposed upon the commissioner by law, the commissioner shall require mortgage bankers, mortgage brokers, mortgage servicers, and mortgage loan originators to be licensed and registered through the Nationwide Multistate Licensing System and Registry. In order to carry out this requirement, the commissioner is authorized to participate in the Nationwide Multistate Licensing System and Registry. For this purpose, the commissioner may establish by rule, order, or otherwise the procedures, requirements, and standards as necessary, including but not limited to:
(1) Background checks for:
(A) Criminal history through fingerprint or other databases;
(B) Civil or administrative records;
(C) Credit history;
(D) Any other information as deemed necessary by the Nationwide Multistate Licensing System and Registry;
(2) The payment of fees to apply for or renew licenses through the Nationwide Multistate Licensing System and Registry;
(3) The setting or resetting as necessary of renewal or reporting dates; and
(4) Requirements for amending or surrendering a license or any other such activities as the commissioner deems necessary for participation in the Nationwide Multistate Licensing System and Registry.
(b) The commissioner shall establish a process whereby mortgage loan originators may challenge information entered into the Nationwide Multistate Licensing System and Registry by the commissioner.
VII. Licensees shall comply with the provisions of the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. Section 1639 et seq., as amended.
VIII. A license shall not be issued and effective unless the applicant or licensee is licensed or registered in the state where its principal office is located. This paragraph shall not apply to a mortgage loan originator.
IX. Non-federally insured credit unions which employ loan originators, as defined in the S.A.F.E. Mortgage Licensing Act of 2008, Public Law 110-289, Title V, shall register such employees with the Nationwide Multistate Licensing System and Registry by furnishing the information concerning the employees' identities set forth in section 1507(a)(2) of Public Law 110-289, Title V.

Legislative History

2016, 289:1, eff. Aug. 20, 2016. 2017, 103:2, eff. Aug. 7, 2017; 184:1, eff. Aug. 28, 2017. 2018, 196:14, eff. Aug. 7, 2018; 318:32, eff. Aug. 24, 2018. 2019, 36:6-11, 51, I, eff. May 15, 2019. 2021, 51:6, eff. July 24, 2021. 2024, 368:2, eff. Oct. 22, 2024.