§ 61-2c-209. Sponsorship -- Affiliation.

(1)

(a) The division may not license an individual, and an individual licensed under this chapter may not conduct the business of residential mortgage loans unless:

(i) if licensed as a mortgage loan originator, the individual:

(A) is sponsored by an entity licensed under this chapter; and

(B) is affiliated with the sponsoring entity's principal lending manager; or

(ii) if licensed as a lending manager, the individual is sponsored by an entity licensed under this chapter.

(b) The division may not license any entity and an entity licensed under this chapter may not conduct the business of residential mortgage loans unless the entity:

(i) sponsors a principal lending manager;

(ii) identifies at least one control person for the entity; and

(iii) provides a list of the mortgage loan originators sponsored by the entity.

(2)

(a) A mortgage loan originator's license automatically becomes inactive the day on which:

(i) the mortgage loan originator is not sponsored by an entity licensed under this chapter;

(ii) the license of the entity with which the mortgage loan originator is sponsored becomes inactive or terminates;

(iii) the mortgage loan originator is not affiliated with a principal lending manager; or

(iv) the license of the principal lending manager with whom the mortgage loan originator is affiliated becomes inactive or terminates.

(b) A lending manager's license automatically becomes inactive the day on which:

(i) the lending manager is not sponsored by an entity licensed under this chapter; or

(ii) the license of the entity with which the lending manager is sponsored becomes inactive or terminates.

(c) A entity licensed under this chapter automatically becomes inactive the day on which the entity's sponsorship with its principal lending manager terminates.

(3)

(a) A person whose license is inactive may not transact the business of residential mortgage loans.

(b) To activate an inactive mortgage loan originator license, an individual shall:

(i) provide evidence that the individual:

(A) is sponsored by an entity that holds an active license under this chapter; and

(B) is affiliated with a principal lending manager who holds an active license under this chapter; and

(ii) pay a fee to the division set in accordance with Section 63J-1-504.

(c) To activate an inactive lending manager license, an individual shall:

(i) provide evidence that the individual is sponsored by an entity that holds an active license under this chapter; and

(ii) pay a fee to the division set in accordance with Section 63J-1-504.

(d) To activate an inactive license held by an entity, an entity shall:

(i) provide evidence of the entity's sponsorship of a principal lending manager; and

(ii) pay a fee to the division set in accordance with Section 63J-1-504.

(4)

(a) A mortgage loan originator shall conduct the business of residential mortgage loans only:

(i) through the entity by which the individual is sponsored; and

(ii) in the business name under which the sponsoring entity's principal lending manager is authorized by the division to do business.

(b) An individual licensed under this chapter may not:

(i) engage in the business of residential mortgage loans on behalf of more than one entity at the same time;

(ii) be sponsored by more than one entity at the same time;

(iii) transact the business of residential mortgage loans for the following at the same time:

(A) an entity licensed under this chapter; and

(B) an entity that is exempt from licensure under Section 61-2c-105; or

(iv) if the individual is a mortgage loan originator, receive consideration for transacting the business of residential mortgage loans from any person except the principal lending manager of the mortgage loan originator's sponsoring entity.

(c) This Subsection (4) does not restrict the number of:

(i) different lenders a person may use as a funding source for a residential mortgage loan; or

(ii) entities in which an individual may have an ownership interest, regardless of whether the entities are:

(A) licensed under this chapter; or

(B) exempt under Section 61-2c-105.

(5) The division by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, may make rules that:

(a) define what constitutes:

(i) affiliation; or

(ii) sponsorship; and

(b) provide procedures by which:

(i) an individual who is licensed under this chapter may provide evidence of sponsorship by an entity that is licensed under this chapter;

(ii) a mortgage loan originator may provide evidence of affiliation with a principal lending manager; and

(iii) an entity licensed under this chapter may:

(A) provide evidence of its sponsorship of a principal lending manager;

(B) identify at least one control person for the entity; and

(C) provide a list of the one or more mortgage loan originators that the entity sponsors.

Amended by Chapter 166, 2012 General Session