USA Statutes : arizona
Title : Banks and Financial Institutions
Chapter : MORTGAGE BROKERS AND MORTGAGE BANKERS
6-901 Definitions
In this article, unless the context otherwise requires:
1. "Affiliate" means an entity which directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with the entity
specified.
2. "Compensation" means anything of value or any benefit including points,
commissions, bonuses, referral fees, loan origination fees and other similar fees but
excluding periodic interest resulting from the application of the note rate of interest
to the outstanding principal balance remaining unpaid from time to time.
3. "Investor" means a person who lends or invests money in mortgage loans.
4. "License" means a license issued under this article.
5. "Licensee" means a person licensed under this article.
6. "Mortgage broker" means a person who is not exempt under section 6-902 and who
for compensation or in the expectation of compensation either directly or indirectly
makes, negotiates or offers to make or negotiate a mortgage loan.
7. "Mortgage loan" means a loan secured by a mortgage or deed of trust or any lien
interest on real estate located in this state created with the consent of the owner of
the real estate.
8. "Mortgage loan closing" means the day by which all documents relating to the
mortgage loan have been executed and recorded and all monies have been accounted for
under the terms of the escrow instructions.

6-902 Exemptions
A. This article does not apply to:
1. A person who does business under any other law of this state, or law of any
other state while regulated by a state agency of such other state or the United States,
relating to banks, savings banks, trust companies, savings and loan associations, profit
sharing and pension trusts, credit unions, insurance companies or consumer lenders, or
receivership, including directly or indirectly making, negotiating or offering to make or
negotiate a mortgage loan if the mortgage transactions are regulated by the other law or
are under the jurisdiction of a court. Subsidiaries and service corporations of these
institutions shall not be exempt and shall be subject to the provisions of this article
unless preempted by federal law.
2. A person who makes a mortgage loan:
(a) With his own monies.
(b) For his own investment.
(c) Without intent to resell.
(d) And is not engaged in the business of making mortgage loans.
3. A person who funds a mortgage loan which has been originated and processed by a
licensee, by a mortgage banker licensed in this state or by a person exempt under
paragraph 1 of this subsection and who meets all of the following:
(a) Does not maintain a place of business in this state in connection with funding
mortgage loans.
(b) Does not directly or indirectly solicit borrowers in this state for the purpose
of making mortgage loans.
(c) Does not participate in the negotiation of mortgage loans.
4. A person who, as seller of real property, receives one or more mortgages or
deeds of trust as security for a purchase money obligation.
5. A person who is licensed to practice law in this state, but is not actively and
principally engaged in the business of negotiating mortgage loans, if this person renders
services in the course of his practice as an attorney at law.
6. A person who receives a mortgage or deed of trust on real property as security
for an obligation payable on an installment or deferred payment basis and arising out of
materials furnished or services rendered in the improvement of that real property or any
lien created without the consent of the owner of the real property.
7. A person who is licensed pursuant to article 2 or 3 of this chapter.
8. An agency of any state or of the United States.
9. A nonprofit federally tax exempt corporation certified by the United States
small business administration and organized to promote economic development within this
state whose primary activity consists of providing financing for business expansion.
10. An institutional investor as defined in section 6-971 unless the institutional
investor makes a mortgage loan other than a commercial mortgage loan as defined in
section 6-971.
B. For the purposes of:
1. Subsection A, paragraph 3 of this section, "originate" includes loans closed in
a name other than that of the licensee, a mortgage banker licensed in this state or
exempt person only if the person in whose name the loan is closed meets the other
requirements of subsection A, paragraph 3 of this section.
2. Subsection A, paragraph 3, subdivision (c) of this section, "negotiation of
mortgage loans" does not include setting the terms under which a person may buy a
mortgage loan originated by a licensee or a person exempt under subsection A, paragraph 1
of this section.

6-903 Licensing of mortgage brokers required;qualifications; application; bond; fees; renewal
A. A person shall not act as a mortgage broker if he is not licensed under this
article.
B. The superintendent shall not grant a mortgage broker's license to a person,
other than a natural person, who is not registered to do business in this state on the
date of granting the license. An applicant for an original mortgage broker's license
shall:
1. Have not less than three years' experience as a mortgage broker, or equivalent
lending experience in a related business during the five years immediately preceding the
time of application.
2. Have satisfactorily completed a course of study approved by the superintendent
during the three years immediately preceding the time of application.
3. Have passed a mortgage broker's test, pursuant to section 6-908, not more than
one year before the granting of the license.
C. A person shall make an application for a license or for a renewal of a license
in writing on the forms, in the manner and accompanied by the information prescribed by
the superintendent. The superintendent may require additional information on the
experience, background, honesty, truthfulness, integrity and competency of the applicant
and any responsible individual designated by the applicant. If the applicant is a person
other than a natural person, the superintendent may require information as to the
honesty, truthfulness, integrity and competency of any officer, director, shareholder or
other interested party of the association, corporation or group.
D. The nonrefundable application fee and annual renewal fee are as prescribed in
section 6-126. The nonrefundable application fee shall accompany each application for an
original license only. The superintendent shall deposit, pursuant to sections 35-146 and
35-147, the monies in the state general fund.
E. If a licensee is a person other than a natural person, the license issued to it
entitles all officers, directors, members, partners, trustees and employees of the
licensed corporation, partnership, association or trust to engage in the mortgage
business if one officer, director, member, partner, employee or trustee of the person is
designated in the license as the individual responsible for the person under this
article. If a licensee is a natural person, the license entitles all employees of the
licensee to engage in the mortgage business. If the natural person is not a resident of
this state, an employee of the licensee shall be designated in the license as the
individual responsible for the licensee under the provisions of this article. For
purposes of this subsection an employee does not include an independent contractor. A
responsible individual shall be a resident of this state, shall be in active management
of the activities of the licensee governed by this article and shall meet the
qualifications set forth in subsection B of this section for a licensee.
F. A licensee shall notify the superintendent that its responsible individual will
cease to be in active management of the activities of the licensee within ten days of
learning that fact. The licensee has ninety days after the notification is received by
the superintendent within which to replace the responsible individual with a qualified
replacement and to so notify the superintendent. If the license is not placed under
active management of a qualified responsible individual and if notice is not given to the
superintendent within the ninety day period, the license of the licensee expires.
G. Every person licensed as a mortgage broker shall deposit with the
superintendent, before doing business as a mortgage broker, a bond executed by the
licensee as principal and a surety company authorized to do business in this state as
surety. The bond shall be conditioned on the faithful compliance of the licensee,
including his directors, officers, members, partners, trustees and employees, with this
article. The bond is payable to any person injured by the wrongful act, default, fraud
or misrepresentation of the licensee or his employees and to this state for the benefit
of the person injured. Only one bond is required for any person, firm, association or
corporation irrespective of the number of officers, directors, members, partners or
trustees who are employed by or are members of such firm, association or corporation. No
suit may be commenced on the bond after the expiration of one year following the
commission of the act on which the suit is based, except that claims for fraud or mistake
are limited to the limitation period provided in section 12-543, paragraph 3. If an
injured person commences an action for a judgment to collect from the bond, the injured
person shall notify the superintendent of the action in writing at the time of the
commencement of the action and shall provide copies of all documents relating to the
action to the superintendent on request.
H. The bond required by this section shall be ten thousand dollars for licensees
whose investors are limited solely to institutional investors, and fifteen thousand
dollars for licensees whose investors include any noninstitutional investors.
I. For purposes of subsection H of this section:
1. "Institutional investor" means a state or national bank, a state or federal
savings and loan association, a state or federal savings bank, a state or federal credit
union, a federal government agency or instrumentality, a quasi-federal government agency,
a financial enterprise, a licensed real estate broker or salesman, a profit sharing or
pension trust, or an insurance company.
2. "Investor" means any person who directly or indirectly provides funds to a
mortgage broker which funds are, or are intended to be, used in the making of a loan, and
any person who purchases a loan, or any interest therein, from a mortgage broker or in a
transaction that has been directly or indirectly arranged or negotiated by a mortgage
broker.
J. Notwithstanding section 35-155, in lieu of the bond described in this section,
an applicant for a license or a licensee may deposit with the superintendent a deposit in
the form of cash or alternatives to cash in the same amount as the bond required under
subsection G of this section. The superintendent may accept any of the following as an
alternative to cash:
1. Certificates of deposits or investment certificates which are payable or
assigned to the state treasurer, issued by banks or savings banks doing business in this
state and fully insured by the federal deposit insurance corporation or any successor
institution.
2. Certificates of deposit, investment certificates or share accounts which are
payable or assigned to the state treasurer, issued by a savings and loan association
doing business in this state and fully insured by the federal deposit insurance
corporation or any successor institution.
3. Certificates of deposit, investment certificates or share accounts which are
payable or assigned to the state treasurer, issued by a credit union doing business in
this state and fully insured by the national credit union administration or any successor
institution.
K. The superintendent shall deposit the cash or alternatives to cash received under
this section with the state treasurer. The state treasurer shall hold the cash or
alternatives to cash in the name of this state to guarantee the faithful performance of
all legal obligations of the person required to post bond pursuant to this section. The
person is entitled to receive any accrued interest earned from the alternatives to
cash. The state treasurer may impose a fee to reimburse the state treasurer for
administrative expenses. The fee shall not exceed ten dollars for each cash or
alternatives to cash deposit and shall be paid by the applicant or licensee. The state
treasurer may prescribe rules relating to the terms and conditions of each type of
security provided by this section.
L. In addition to such other terms and conditions as the superintendent prescribes
by rule or order, the principal amount of the deposit shall be released only on written
authorization of the superintendent or on the order of a court of competent
jurisdiction. The principal amount of the deposit shall not be released before the
expiration of three years from the first to occur of any of the following:
1. The date of substitution of a bond for a cash alternative.
2. The surrender of the license.
3. The revocation of the license.
4. The expiration of the license.
M. A licensee or an employee of the licensee shall not advertise for or solicit
mortgage business in any manner without using the name and license number as issued on
the mortgage broker's principal place of business license, except that a licensee may
employ or refer to the commonly used name and any trademarks or service marks of any
affiliate. If a license is issued in the name of a natural person, nothing in the
advertising or solicitation may imply the license is in the name of another person or
entity. For the purpose of this subsection, "advertise" does not include business cards,
radio and television advertising directed at national or regional markets and promotional
items except if those items contain rates or terms on which a mortgage loan may be
obtained.
N. A licensee shall not employ any person unless the licensee:
1. Conducts a reasonable investigation of the background, honesty, truthfulness,
integrity and competency of the employee before hiring.
2. Keeps a record of the investigation for not less than two years after
termination.
O. A license is not transferable or assignable and control of a licensee may not be
acquired through a stock purchase or other device without the prior written consent of
the superintendent. Written consent shall not be given if the superintendent finds that
any of the grounds for denial, revocation or suspension of a license as set forth in
section 6-905 are applicable to the acquiring person. For the purpose of this subsection
"control" means the power to vote more than twenty per cent of outstanding voting shares
of a licensed corporation, partnership, association or trust.
P. The licensee is liable for any damage caused by any of his employees while
acting as an employee of the licensee.
Q. A licensee shall comply with the requirements of section 6-114 relating to
balloon payments.
R. The examination and course of study requirements of this section shall be waived
by the superintendent for any person applying for a license who, within the six months
immediately prior to the submission of the application, has been a licensee or a
responsible person pursuant to this chapter. 6-904 Issuance of license; renewal; inactivestatus; branch office license; application; fee
A. The superintendent, on determining that the applicant is qualified and has paid
the fees, shall issue a mortgage broker's license to the applicant which is evidenced by
a continuous certificate. The superintendent shall grant or deny a license within one
hundred twenty days after receipt of the completed application and fees. An applicant
who has been denied a license may not reapply for such a license before one year from the
date of the previous application.
B. A licensee shall pay the renewal fee on or before September 30. Licenses not
renewed by September 30 are suspended, and the licensee shall not act as a mortgage
broker until the license is renewed or a new license is issued pursuant to this
article. A person may renew a suspended license by paying the renewal fee plus
twenty-five dollars for each day after September 30 that a license renewal fee is not
received by the superintendent and making application for renewal as prescribed by the
superintendent. Licenses which are not renewed by October 31 expire. A license shall
not be granted to the holder of an expired license except as provided in this article for
the issuance of an original license.
C. On or before September 30, a licensee may request inactive status for the
following license year, and the license shall be placed on inactive status after payment
to the superintendent of the inactive status renewal fee prescribed in section 6-126,
subsection C and the surrender of the license to the superintendent. During inactive
status, an inactive licensee is not required to maintain a bond and shall not act as a
mortgage broker. A licensee may not be on inactive status for more than two consecutive
years, nor for more than four years in any ten year period. The license is deemed
expired on violation of any of the limitations of this subsection.
D. An inactive licensee may return to active status notwithstanding the
requirements of section 6-903, subsection B by making a written request to the
superintendent for reactivation and paying the prorated portion of the annual assessment
that would have been charged to the licensee. The licensee shall also provide the
superintendent with proof that the licensee meets all of the other requirements for
acting as a mortgage broker, including required bond coverage or the deposit of a cash
alternative.
E. A licensee shall prominently display the mortgage broker license in the office
of the mortgage broker.
F. Every licensed mortgage broker shall designate and maintain a principal place of
business in this state for the transaction of business. The license shall specify the
address of his principal place of business. If a licensee wishes to maintain one or more
locations in addition to a principal place of business, he shall first obtain a branch
office license from the superintendent and designate a person for each branch office to
oversee the operations of that office. The licensee shall submit a fee as set forth in
section 6-126 for each branch office license. If the superintendent determines that the
applicant is qualified, the superintendent shall issue a branch office license indicating
the address of the branch office. The licensee shall conspicuously display the branch
office license in the branch office. If the address of the principal place of business
or of any branch office is changed, the licensee shall immediately notify the
superintendent of the change and the superintendent shall endorse the change of address
on the license for a fee as prescribed in section 6-126.

6-905 Denial, suspension or revocation oflicenses
A. The superintendent may deny a license to a person or suspend or revoke a
license if the superintendent finds that an applicant or licensee:
1. Is insolvent as defined in section 47-1201.
2. Has shown that he is not a person of honesty, truthfulness and good character.
3. Has violated any applicable law, rule or order.
4. Refuses to permit an examination by the superintendent of the licensee's books
and affairs or refuses or fails, within a reasonable time, to furnish any information or
make any report that may be required by the superintendent.
5. Has been convicted in any state of a felony or any crime of breach of trust or
dishonesty.
6. Has had a final judgment entered against him in a civil action upon grounds of
fraud, deceit or misrepresentation and the conduct on which the judgment is based
indicates that it would be contrary to the interest of the public to permit such person
to be licensed or to control or manage a licensee.
7. Has had an order entered against him involving fraud, deceit or
misrepresentation by an administrative agency of this state, the federal government or
any other state or territory of the United States and that the facts relating to the
order indicate that it would be contrary to the interest of the public to permit such
person to be licensed or to control or manage a licensee.
8. Has made a material misstatement or suppressed or withheld information on the
application for a license or any document required to be filed with the superintendent.
B. If a person to whom a license is issued or who has applied for a license under
this article is indicted or informed against for forgery, embezzlement, obtaining money
under false pretenses, extortion, criminal conspiracy to defraud or a like offense or
offenses, and a certified copy of the indictment or information or other proper evidence
of the indictment or information is filed with the superintendent, the superintendent may
suspend the license issued to the licensee or refuse to grant a license to an applicant
pending trial on the indictment.
C. If a licensee is other than a natural person, it is sufficient cause for the
suspension or revocation of the license if an officer, director, member, partner,
trustee, employee, while acting in the course of the mortgage broker business, or person
entitled to vote more than twenty per cent of the outstanding voting shares of the
licensed corporation, partnership, association or trust has acted or failed to act in the
same manner as would be cause for suspending or revoking a license of the party as an
individual. If a licensee is a natural person, it is sufficient cause for the suspension
or revocation of the license if an employee of the person, while acting as an employee,
has acted or failed to act in the course of the mortgage broker business of the licensee
in the same manner as would be cause for suspending or revoking a license of the party as
an owner.

6-906 Required accounting practices andrecords; escrow of monies; disclosure
A. Every mortgage broker shall keep and maintain at all times correct and complete
records as prescribed by the superintendent which will enable him to determine whether
the licensee is conducting his business in accordance with this article. If the mortgage
broker operates two or more licensed places of business in this state, after notifying
the superintendent, he may maintain such records at his principal place of business in
this state, except that a mortgage broker, with the approval of the superintendent, may
maintain the records outside of this state. For records kept outside this state, a
mortgage broker shall make the records available to the superintendent in this state not
more than three business days after demand and provide for the acceptance of collect
calls or provide a toll free telephone number to borrowers to obtain information from the
records if the licensed place of business in this state cannot readily provide the
information requested by the borrowers. Every mortgage broker shall maintain original
documents or clearly legible copies of all mortgage loan transactions for not fewer than
five years from the date of the mortgage loan closing.
B. Every mortgage broker shall observe generally accepted accounting principles and
practices.
C. A mortgage broker shall immediately deposit all monies received by the mortgage
broker in an escrow account with an escrow agent licensed pursuant to chapter 7 of this
title. Withdrawals shall only be disbursed according to the terms of the escrow
instructions. The escrow agent shall not be the mortgage broker. A mortgage broker,
however, may accept an appraisal fee, which the mortgage broker shall only use to obtain
an appraisal, a credit investigation fee and a fee in connection with an application for
a mortgage loan. The mortgage broker shall not commingle the appraisal fee or credit
investigation fee with other monies of the mortgage broker. A mortgage broker shall not
accept any monies or documents in connection with an application for a mortgage loan in
an amount of two hundred thousand dollars or less, except as provided in this section and
pursuant to a written agreement. The parties shall sign the written agreement and the
agreement shall contain terms pertaining to the disposition of the monies and documents,
whether the loan is finally consummated or not, the term for which the agreement is to
remain in force before return of the monies and documents for nonperformance can be
required and an itemized list of all estimated costs to the borrower of obtaining the
mortgage loan including all costs charged by third parties. The licensee shall preserve
all agreements between the parties involved in the transaction and all contracts,
agreements and escrow instructions to or with the depository. All documents provided by
the borrower or at the expense of the borrower to the mortgage broker, including any
appraisals, are the property of the borrower and shall, at the borrower's request, be
returned to the borrower or transferred to any person designated by the borrower without
further expense to the borrower if the loan is not consummated, provided that any such
document is not prohibited by law from being transferred or returned.
D. Before a mortgage loan closing on residential real property designed principally
for the occupancy of from one to four families, a licensee shall fully comply, to the
extent applicable, with the real estate lending disclosure requirements of title I of the
consumer credit protection act (15 United States Code sections 1601 through 1666j), the
real estate settlement procedures act (12 United States Code sections 2601 through 2617)
and the regulations promulgated under those acts.

6-907 Required disclosure to investors
A. Before payment of any money by an investor in connection with a mortgage loan, a
licensee shall provide to an investor that is not a financial institution, state or
national bank, state or federal savings and loan association, state or federal savings
bank, state or federal credit union, financial enterprise, licensed real estate broker or
salesman, profit sharing or pension trust or insurance company:
1. An opinion from an independent source stating the value of the property subject
to the mortgage loan being made or sold. The opinion shall state the value of the
property as it exists on the date of the opinion.
2. A copy of the preliminary title report that states the condition of title and
discloses any encumbrances, assessments and liens of record on the property securing the
mortgage loan being made or sold.
3. A disclosure statement which includes the following information:
(a) The name and address of the fee owner of the property securing the mortgage
loan being made or sold.
(b) Information relative to the ability of the borrower to meet the obligations of
the mortgage loan.
(c) A legal description or address of the property securing the mortgage loan being
made or sold.
(d) The existence of any improvements on the property or any utilities on or
adjacent to the property which will serve the property.
(e) The terms and conditions of the mortgage loan being made or sold, including the
principal balance owed and the status of principal and interest payments thereon.
(f) The terms and conditions of all liens on the property securing the mortgage
loan being made or sold.
(g) A statement as to whether the mortgage broker is acting as principal or agent
in the transaction.
(h) Any additional information prescribed by the superintendent.
B. After using his best efforts to verify all of the information required by this
section the licensee shall sign the statement attesting to the validity of the
information to the best of his knowledge and belief. The licensee shall maintain a record
of acknowledgment from the lender of the receipt of this information for not less than
two years from the date of the mortgage loan closing.

6-908 Testing committee; testing of applicants;approval by superintendent; definition
A. The superintendent shall establish a testing committee to create, periodically
update and establish standards for passing a test for mortgage brokers. The committee
shall consist of five members appointed by the superintendent once every two years. Four
of the members shall be licensees appointed from nominations submitted by licensees and
one of the members shall be an employee of the department. Licensees who serve as
members of the committee shall serve without expense to this state. The test is subject
to the approval of the superintendent.
B. Each applicant for an original license, before issuance of the license, shall
personally take and pass the written test given under the supervision of the
department. The test must reasonably examine the applicant's knowledge of:
1. The obligations between principal and agent, the applicable canons of business
ethics, the provisions of this article and the rules adopted under this article.
2. The arithmetical computations common to mortgage brokerage.
3. The principles of real estate lending.
4. The general purposes and legal effect of mortgages, deeds of trust and security
agreements.
C. The department shall administer the test to applicants for licenses not less
than once every six months. The department shall reasonably prescribe the time, place
and conduct of testing and collect a fee for administration of the test to be assessed to
all persons taking the test. The fee is fifty dollars per testing. An applicant may not
take the test more than two times within a twelve month period.
D. All tests shall be given, conducted and graded in a fair and impartial manner
and without unfair discrimination between individuals tested. The committee shall inform
the applicant of the result of the test within thirty days.
E. For testing purposes the department shall prepare a handbook for mortgage
brokers and distribute it to all applicants for a fee of not to exceed the actual cost of
producing and distributing the handbook.
F. For the purposes of this section "applicant" means a person who has submitted a
completed application in the form prescribed by law, accompanied by a letter of inquiry
to a surety company authorized to do business in this state regarding the procurement of
a bond pursuant to section 6-903, to be issued upon completion of all requirements for
the granting of a license.

6-909 Prohibited acts
A. Except for employment verifications, verifications of mortgages and loans, and
deposit or account verifications, a person, in connection with or incidental to the
making of any mortgage loan, shall not induce, require or permit any document to be
signed by a party to the transaction if such document contains any blank spaces to be
filled in after it has been signed, except that the party may specifically authorize the
licensee or the escrow agent handling the transaction, in writing, to complete certain
blank spaces.
B. A person is not entitled to receive compensation in connection with arranging
for or negotiating a mortgage loan if such person is not licensed pursuant to this
article. A mortgage broker shall not pay compensation to, contract with or employ as an
independent contractor a person who is acting as a mortgage broker or mortgage banker but
who is not licensed under this chapter.
C. A person engaged in the mortgage business shall not knowingly advertise,
display, distribute, broadcast or televise, or cause or permit to be advertised,
displayed, distributed, broadcast or televised, in any manner whatever, any false,
misleading or deceptive statement or representation with regard to the rates, terms or
conditions for a mortgage loan. The charges or rates of charge, if stated, shall be set
forth in such manner as to prevent misunderstanding by prospective borrowers.
D. A mortgage broker shall not request or require a person seeking a mortgage loan
on real property designed principally for the occupancy of from one to four families in
an amount of two hundred thousand dollars or less to enter into an agreement which
prohibits the person from seeking the loan from another source.
E. A mortgage broker shall not, except in good faith, delay or cause delay in the
closing of a loan that results in increased costs to a borrower.
F. A mortgage broker shall not record or cause to be recorded any document which
would give rise to liability under section 33-420.
G. A mortgage broker shall not, for compensation, either directly or indirectly
make or negotiate or offer to make or negotiate a loan that is either:
1. Less than five thousand dollars.
2. Not secured by a mortgage or deed of trust or other lien interest in real
property.
H. A person who is employed by a licensee to act in the capacity of a mortgage
broker shall not be concurrently employed by any other licensee to act as a mortgage
broker, except with the prior written approval of all the concurrently employing
licensees.
I. A mortgage broker shall not collect compensation for rendering services as a
real estate broker or real estate salesman unless both of the following apply:
1. The mortgage broker is licensed pursuant to title 32, chapter 20.
2. The mortgage broker has disclosed to the person from whom the compensation is
collected that the mortgage broker is receiving compensation both for mortgage broker
services, if applicable, and for real estate broker or real estate salesman services.
J. A licensee shall not accept any assignment of the borrower's wages or salary in
connection with activities governed by this article.
K. A mortgage broker shall not receive or disburse monies in servicing or arranging
a mortgage loan except as provided in section 6-906, subsection C.
L. A mortgage broker shall not make a false promise or misrepresentation or conceal
an essential or material fact in the course of the mortgage broker business.
M. A mortgage broker shall not fail to truthfully account for the monies belonging
to a party to a mortgage loan transaction or fail to disburse monies in accordance with
his agreements.
N. A mortgage broker shall not engage in illegal or improper business practices.
O. A mortgage broker shall not record a mortgage or deed of trust if monies are
not available for the immediate disbursal to the mortgagor unless, before that recording,
the mortgage broker informs the mortgagor in writing of a definite date by which payment
shall be made and obtains the mortgagor's written permission for the delay.
P. A mortgage broker shall not require a person seeking a loan secured by real
property to obtain property insurance coverage in an amount that exceeds the replacement
cost of the improvements as established by the property insurer.

6-910 Noncompliance not to affect validity ofloan
A failure to comply with this article does not affect the validity or enforceability
of any debt, mortgage, deed of trust or any other lien interest on real estate. A person
acquiring a mortgage loan or any interest in a mortgage loan as mortgagee or beneficiary
or as an assignee, holder or transferee or as a pledgee or the holder of a security
interest is not required to ascertain whether this article has been complied with.

6-941 Definitions
In this article, unless the context otherwise requires:
1. "Affiliate" means an entity which directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with the entity
specified.
2. "Compensation" means anything of value or any benefit including points,
commissions, bonuses, referral fees, loan origination fees and other similar fees but
excluding periodic interest resulting from the application of the note rate of interest
to the outstanding principal balance remaining unpaid from time to time.
3. "License" means a license issued under this article.
4. "Licensee" means a person licensed under this article.
5. "Mortgage banker" means a person who is not exempt under section 6-942 and who
for compensation or in the expectation of compensation either directly or indirectly
makes, negotiates or offers to make or negotiate a mortgage banking loan or a mortgage
loan.
6. "Mortgage banking loan" means a loan which is funded exclusively from the
mortgage banker's own resources, which is directly or indirectly secured by a mortgage or
deed of trust or any lien interest on real estate located in this state and which is
created with the consent of the owner of the real property. For the purposes of this
paragraph, "own resources" means any of the following:
(a) Cash, corporate capital, warehouse credit lines at commercial banks, savings
banks or savings and loan associations or other sources that are liability items on the
mortgage banker's financial statements for which its assets are pledged.
(b) Correspondent contracts between the mortgage banker and a bank, savings bank,
trust company, savings and loan association, credit union, profit sharing or pension
trust, consumer lender or insurance company.
(c) The mortgage banker's affiliates' cash, corporate capital, warehouse credit
lines at commercial banks or other sources that are liability items on the affiliates'
financial statements for which the affiliates' assets are pledged.
7. "Mortgage banking loan closing" means the day by which all documents relating to
the mortgage banking loan or mortgage loan have been executed and recorded and all monies
have been accounted for.
8. "Mortgage loan" means any loan, other than a mortgage banking loan, secured by a
mortgage or deed of trust or any lien interest on real estate located in this state and
created with the consent of the owner of the real estate.

6-942 Exemptions
A. This article does not apply to:
1. A person who does business under any other law of this state, or any other state
while regulated by a state agency of such other state, or of the United States, relating
to banks, savings banks, trust companies, savings and loan associations, profit sharing
and pension trusts, credit unions, insurance companies or consumer lenders, or
receiverships, including directly or indirectly making, negotiating or offering to make
or negotiate a mortgage banking loan or a mortgage loan if the mortgage transactions are
regulated by the other law or are under the jurisdiction of a court.
2. A person who makes a mortgage banking loan or a mortgage loan:
(a) With his own monies.
(b) For his own investment.
(c) Without intent to resell.
(d) And is not engaged in the business of making mortgage loans or mortgage banking
loans.
3. A person who funds a mortgage loan or mortgage banking loan which has been
originated and processed by a licensee, by a mortgage broker licensed in this state or by
a person exempt under paragraph 1 of this subsection and who meets all of the following:
(a) Does not maintain a place of business in this state in connection with funding
mortgage loans or mortgage banking loans.
(b) Does not directly or indirectly solicit borrowers in this state for the purpose
of making mortgage loans.
(c) Does not participate in the negotiation of mortgage loans.
4. A person who, as seller of real property, receives one or more mortgages or
deeds of trust as security for a purchase money obligation.
5. A person who is licensed to practice law in this state, but is not actively and
principally engaged in the business of negotiating mortgage banking loans or mortgage
loans, if this person renders services in the course of his practice as an attorney at
law.
6. A person who receives a mortgage or deed of trust on real property as security
for an obligation payable on an installment or deferred payment basis and arising out of
materials furnished or services rendered in the improvement of that real property or any
lien created without the consent of the owner of such real property.
7. A person who is licensed pursuant to article 1 or 3 of this chapter.
8. An agency of any state or of the United States.
9. A nonprofit federally tax exempt corporation certified by the United States
small business administration and organized to promote economic development within this
state whose primary activity consists of providing financing for business expansion.
10. An institutional investor as defined in section 6-971 unless the institutional
investor makes either:
(a) A mortgage loan other than a commercial mortgage loan as defined in section
6-971.
(b) A mortgage banking loan other than a commercial mortgage loan as defined in
section 6-971.
B. Subsidiaries and service corporations of institutions exempt under subsection A,
paragraph 1 of this section shall not be exempt and shall be subject to the provisions of
this article unless preempted by federal law.
C. For the purposes of:
1. Subsection A, paragraph 3 of this section, "originate" includes loans closed in
a name other than that of the licensee, a mortgage broker licensed in this state or
exempt person only if the person in whose name the loan is closed meets the other
requirements of subsection A, paragraph 3 of this section.
2. Subsection A, paragraph 3, subdivision (c) of this section, negotiation of
mortgage loans does not include setting the terms under which a person may buy a mortgage
loan originated by a licensee or a person exempt under subsection A, paragraph 1 of this
section.

6-943 Licensing of mortgage bankers required; qualifications; application; bond; fees; renewal
A. A person shall not act as a mortgage banker if he is not licensed under this
article.
B. The superintendent shall not grant a mortgage banker's license to a person,
other than a natural person, who is not registered to do business in this state on the
date of application for a license. The superintendent shall not issue a mortgage banker's
license or a renewal of a license to an applicant unless the applicant meets all of the
requirements prescribed in subsection C of this section. The superintendent shall
determine whether the applicant meets the requirements based on the application, and
evidence presented at a hearing, if any, or any other evidence that the superintendent
may have regarding qualifications of the applicant.
C. In order to qualify for a mortgage banker license or a renewal of a license an
applicant shall:
1. Have not fewer than three years' experience in the business of making mortgage
banking loans or equivalent lending experience in a related business. If the applicant
is a person other than a natural person, the responsible individual shall meet this
requirement.
2. Have engaged or intend to engage in the business of making mortgage loans or
mortgage banking loans.
3. Either:
(a) Be authorized to do business with any of the following:
(i) The federal housing administration.
(ii) The veterans administration.
(iii) The federal national mortgage association.
(iv) The federal home loan mortgage corporation.
(b) Notwithstanding paragraph 5 of this subsection, at all times have and maintain
a net worth of not less than two hundred fifty thousand dollars.
4. Provide the superintendent with a current audited financial statement or that of
its parent company prepared by an independent certified public accountant in accordance
with generally accepted accounting principles including:
(a) The certified public accountant's opinion as to the fairness of the
presentation in conformity with generally accepted accounting principles.
(b) A balance sheet prepared within the previous six months and certified by the
licensee. The superintendent may require a more recent balance sheet.
(c) A statement of operations and retained earnings and a statement of changes in
financial position provided the applicant has commenced operations.
(d) Notes to the financial statement if applicable.
5. At all times have and maintain a net worth of not less than one hundred thousand
dollars.
D. A person shall make an application for a license or for a renewal of a license
in writing on the forms, in the manner and accompanied by the information prescribed by
the superintendent including the requirements prescribed in subsection C of this section.
The superintendent may require additional information on the experience, background,
honesty, truthfulness, integrity and competency of the applicant and any responsible
individual designated by the applicant. If the applicant is a person other than a natural
person, the superintendent may require information as to the honesty, truthfulness,
integrity and competency of any officer, director, shareholder, member, partner, trustee,
employee or other interested party of the association, corporation or group.
E. The nonrefundable application fee and annual renewal fee shall be as prescribed
in section 6-126. The nonrefundable application fee shall accompany each application for
an original license only.
F. If a licensee is a person other than a natural person, the license issued to it
entitles all officers, directors, members, partners, trustees and employees of the
licensed corporation, partnership, association or trust to engage in the mortgage banking
business if one officer, director, member, partner, employee or trustee of the person is
designated in the license as the individual responsible for the person under this
article. If a licensee is a natural person, the license entitles all employees of the
licensee to engage in the mortgage banking business. If the natural person is not a
resident of this state, an employee of the licensee shall be designated in the license as
the individual responsible for the licensee under the provisions of this article. For
the purposes of this article an employee does not include an independent contractor. For
the purposes of this article, a responsible individual shall be a resident of this state,
shall be in active management of the activities of the licensee governed by this article
and shall have not less than three years' experience in the business of making mortgage
banking loans or equivalent experience in a related business.
G. A licensee shall notify the superintendent that its responsible individual will
cease to be in active management of the licensee within ten days of learning that fact.
Not more than ninety days after the superintendent receives the notice, the licensee
shall place itself under the active management of a qualified responsible person and
notify the superintendent. If the licensee is not placed under active management of a
qualified responsible individual and if notice is not received by the superintendent
within the ninety day period, the license of the licensee expires.
H. Every person licensed as a mortgage banker shall deposit with the
superintendent, before doing business as a mortgage banker, a bond executed by the
licensee as principal and a surety company authorized to do business in this state as
surety. The bond shall be conditioned on the faithful compliance of the licensee,
including his directors, officers, members, partners, trustees and employees, with this
article. Only one bond is required for a person, firm, association or corporation
irrespective of the number of officers, directors, members, partners or trustees who are
employed by or are members of the firm, association or corporation. The bond is payable
to any person injured by the wrongful act, default, fraud or misrepresentation of the
licensee and to this state for the benefit of any injured person. The coverage shall be
maintained in the minimum amount prescribed in this subsection, computed on a base
consisting of the total assets of the licensee plus the unpaid balance of loans which it
has contracted to service for others as of the end of the licensee's fiscal year.

    Base                          Minimum Bond
    Not over $1,000,000           $25,000 for the first $500,000 plus
 

$5,000 for each $100,000 or fraction
thereof over $500,000

    $1,000,001 to $10,000,000     $50,000 plus $5,000 for each $1,800,000
 

or fraction thereof over $1,000,000

    $10,000,001 to $100,000,000   $75,000 plus $5,000 for each $18,000,000
 

or fraction thereof over $10,000,000

    $100,000,001 and over         $100,000
 

No suit may be commenced on the bond after the expiration of one year following the
commission of the act on which the suit is based, except that claims for fraud or mistake
are limited to the limitation period provided in section 12-543, paragraph 3. If any
injured person commences an action for a judgment to collect on the bond, the injured
person shall notify the superintendent of the action in writing at the time of the
commencement of the action and shall provide copies of all documents relating to the
action to the superintendent on request.
I. Notwithstanding subsection H of this section, the bond required shall be
twenty-five thousand dollars for licensees whose investors are limited solely to
institutional investors.
J. For purposes of subsection I of this section:
1. "Institutional investor" means a state or national bank, a state or federal
savings and loan association, a state or federal savings bank, a state or federal credit
union, a federal government agency or instrumentality, a quasi-federal government agency,
a financial enterprise, a licensed real estate broker or salesman, a profit sharing or
pension trust, or an insurance company.
2. "Investor" means any person who directly or indirectly provides funds to a
mortgage banker which funds are, or are intended to be, used in the making of a loan, and
any person who purchases a loan, or any interest therein, from a mortgage banker or in a
transaction that has been directly or indirectly arranged or negotiated by a mortgage
banker.
K. Notwithstanding section 35-155, in lieu of the bond described in this section,
an applicant for a license or a licensee may deposit with the superintendent a deposit in
the form of cash or alternatives to cash in the amount prescribed in subsection H or I of
this section, as applicable. The superintendent may accept any of the following as an
alternative to cash:
1. Certificates of deposit or investment certificates which are payable or assigned
to the state treasurer, issued by banks or savings banks doing business in this state and
fully insured by the federal deposit insurance corporation or any successor institution.
2. Certificates of deposit, investment certificates or share accounts which are
payable or assigned to the state treasurer, issued by a savings and loan association
doing business in this state and fully insured by the federal deposit insurance
corporation or any successor institution.
3. Certificates of deposit, investment certificates or share accounts which are
payable or assigned to the state treasurer, issued by a credit union doing business in
this state and fully insured by the national credit union administration or any successor
institution.
L. The superintendent shall deposit the cash or alternatives to cash received under
this section with the state treasurer. The state treasurer shall hold the cash or
alternatives to cash in the name of this state to guarantee the faithful performance of
all legal obligations of the person required to post bond pursuant to this section. The
person is entitled to receive any accrued interest earned from the alternatives to cash.
The state treasurer may impose a fee to reimburse the state treasurer for administrative
expenses. The fee shall not exceed ten dollars for each cash or alternatives to cash
deposit and shall be paid by the applicant or licensee. The state treasurer may prescribe
rules relating to the terms and conditions of each type of security provided by this
section.
M. In addition to such other terms and conditions as the superintendent prescribes
by rule or order, the principal amount of the deposit shall be released only on written
authorization of the superintendent or on the order of a court of competent jurisdiction.
The principal amount of the deposit shall not be released before the expiration of three
years from the first to occur of any of the following:
1. The date of substitution of a bond for a cash alternative.
2. The surrender of the license.
3. The revocation of the license.
4. The expiration of the license.
N. A licensee or an employee of the licensee shall not advertise for or solicit
mortgage banking business in any manner without using the name and license number as
issued on the mortgage banker's principal place of business license, except that a
licensee may also employ or refer to the commonly used name and any trademarks or service
marks of any affiliate. If a license is issued in the name of a natural person, nothing
in the advertising or solicitation may imply that the license is in the name of another
person or entity. For the purpose of this subsection "advertise" does not include
business cards, radio and television advertising directed at national or regional markets
and promotional items except if those items contain rates or terms on which a mortgage
loan or mortgage banking loan may be obtained.
O. A licensee shall not employ any person unless the licensee:
1. Conducts a reasonable investigation of the background, honesty, truthfulness,
integrity and competency of the employee before hiring.
2. Keeps a record of the investigation for not less than two years after
termination.
P. The licensee is liable for any damage caused by any of his employees while
engaged in the business of making mortgage loans or mortgage banking loans.
Q. A licensee shall comply with the requirements of section 6-114 relating to
balloon payments.
R. Notwithstanding subsection C, paragraph 4 of this section, licensees and
applicants whose own resources are derived exclusively from correspondent contracts
between mortgage bankers and banks, savings banks, trust companies, savings and loan
associations, credit unions, profit sharing or pension trusts, consumer lenders or
insurance companies shall provide the superintendent with a current financial statement
or that of its parent company prepared in accordance with generally accepted accounting
principles including:
1. A balance sheet prepared within the previous six months and certified by the
licensee. The superintendent may require a more recent balance sheet.
2. A statement of operations and retained earnings and a statement of changes in
financial position provided the applicant has commenced operations.
3. Notes to the financial statement if applicable.
S. In addition to the grounds specified in section 6-945, subsection A, failure of
a licensee to operate the business of making mortgage loans or mortgage banking loans for
a continuous period of twelve months or more shall constitute grounds for revocation of
such license. The superintendent, upon good cause shown, may extend the time for
operating such business for a single fixed period which shall not exceed twelve months.

6-944 Issuance of license; renewal; branchoffice license; application; fee
A. The superintendent, if he determines that the applicant has met the requirements
set forth in section 6-943, subsection C, is qualified and has paid the fees, shall issue
a mortgage banker's license to the applicant evidenced by a continuous certificate. The
license is not transferable or assignable. An applicant who has been denied a license
may not reapply for such a license before one year from the date of the previous
application. A person may not acquire control of a licensee through a stock purchase or
other device without the prior written consent of the superintendent. Written consent
shall not be given if the superintendent finds that any of the grounds for denial,
revocation or suspension of a license as set forth in section 6-945 are applicable to the
acquiring person. For the purpose of this subsection, "control" means the power to vote
more than twenty per cent of outstanding voting shares of a licensed corporation,
partnership, association or trust.
B. A licensee shall make an application and pay the renewal fee set forth in
section 6-126 on or before March 31 but not sooner than February 1 of each
year. Licenses not renewed by March 31 are suspended and the licensee shall not act as a
mortgage banker until his license is renewed or a new license is issued pursuant to this
article. A person may renew a suspended license by paying the renewal fee plus
twenty-five dollars for each day after March 31 that a license renewal fee is not
received by the department and making application for renewal as prescribed by the
superintendent. Licenses which are not renewed by April 30 expire. A license shall not
be granted to the holder of an expired license except as provided in this article for the
issuance of an original license.
C. A licensee shall prominently display the mortgage banker license in the office
of the mortgage banker.
D. Every licensed mortgage banker shall designate and maintain a principal place of
business in this state for the transaction of business. The license shall specify the
address of his principal place of business. If a licensee wishes to maintain one or more
locations in addition to a principal place of business, he shall first obtain a branch
office license from the superintendent and designate a person for each branch office to
oversee the operations of that office. The licensee shall submit a fee as prescribed in
section 6-126 for each branch office license. If the superintendent determines that the
applicant is qualified, the superintendent shall issue a branch office license indicating
the address of the branch office. The licensee shall conspicuously display the branch
office license in the branch office. If the address of the principal place of business
or of any branch office is changed, the licensee shall notify the superintendent before
the change and the superintendent shall endorse the change of address on the license for
a fee as prescribed in section 6-126.

6-945 Denial, suspension or revocation oflicenses
A. The superintendent may deny a license to a person or suspend or revoke a
license if the superintendent finds that an applicant or licensee:
1. Is insolvent as defined in section 47-1201.
2. Has shown that he is not a person of honesty, truthfulness and good character.
3. Refuses to permit an examination by the superintendent of the licensee's books
and affairs or refuses or fails, within a reasonable time, to furnish any information or
make any report that may be required by the superintendent.
4. Has been convicted in any state of a felony or any crime involving breach of
trust or dishonesty.
5. Has had a final judgment entered against the applicant or licensee in a civil
action on grounds of fraud, deceit or misrepresentation and the conduct on which the
judgment is based indicates that it would be contrary to the interest of the public to
permit such person to be licensed or to control or manage a licensee.
6. Has had an order entered against the applicant or licensee involving fraud,
deceit or misrepresentation by any administrative agency of this state, the federal
government or any other state or territory of the United States and that the facts
relating to the order indicate that it would be contrary to the interest of the public to
permit the person to be licensed or to control or manage a licensee.
7. Has violated any applicable law, rule or order.
B. If any person to whom a license is issued or who has applied for a license under
this article is indicted or informed against for forgery, embezzlement, obtaining money
under false pretenses, extortion, criminal conspiracy to defraud, or a like offense or
offenses, and a certified copy of the indictment or information or other proper evidence
of such indictment or information is filed with the superintendent, the superintendent
may suspend the license issued to the licensee or refuse to grant a license to an
applicant pending trial on the indictment or information.
C. If a licensee is other than a natural person, it is sufficient cause for the
denial, suspension or revocation of the license if an officer, director, member, partner,
trustee, employee, while acting in the course of the mortgage banker business, or person
entitled to vote more than twenty per cent of the outstanding voting shares of the
licensed corporation, partnership, association or trust has acted or failed to act in the
same manner as would be cause for suspending or revoking a license of the party as an
individual. If a licensee is a natural person, it is sufficient cause for the suspension
or revocation of the license if an employee of the person has acted or failed to act in
the course of the mortgage banker business of the licensee in the same manner as would be
cause for suspending or revoking a license of the party as an owner.
D. The superintendent shall grant or deny a license within one hundred twenty days
after receipt of the completed application and fees. 6-946 Required accounting practices andrecords; refundable deposits; periodic impoundment payments;disclosure
A. Every mortgage banker shall keep and maintain at all times correct and complete
records clearly reflecting the financial condition of the business as prescribed by the
superintendent that will enable him to determine whether the licensee is conducting his
business in accordance with this article. If the mortgage banker operates two or more
licensed places of business in this state, after notifying the superintendent, he may
maintain the records at his principal place of business in this state, except that a
mortgage banker, with the approval of the superintendent, may maintain the records
outside of this state. A mortgage banker shall, for records kept outside of this state,
make the records available to the superintendent in this state not more than three
business days after demand and provide for the acceptance of collect calls or provide a
toll free telephone number to borrowers to obtain information from the records if the
licensed places of business in this state cannot readily provide the information
requested by the borrowers. Every mortgage banker shall maintain original documents, or
clearly legible copies, of all mortgage banking loan transactions and mortgage loan
transactions, unless the mortgage banking loan or mortgage loan is paid in full or the
mortgage banking loan or mortgage loan and its servicing are sold, for not fewer than two
years after the date of the mortgage banking loan closing or the date of the last
disbursement of monies by the licensee, whichever occurs last. With the approval of the
superintendent, a licensee that uses a computer or mechanical record keeping system is
not required to keep a written copy of the records if the licensee is able to generate
all information required by this section in a timely manner for examination or for other
purposes.
B. Every mortgage banker shall observe generally accepted accounting principles and
practices.
C. If a mortgage banker requires an advance or fee to be paid in connection with an
application for a mortgage banking loan or mortgage loan, there shall be a written
agreement. The parties shall sign the written agreement, and the agreement shall contain
terms pertaining to the payment of the fee or disposition of the advance or fee, whether
the loan is finally consummated or not, and the term for which the agreement is to remain
in force before return of the advance or fee for nonperformance can be
required. Advances or fees shall be immediately deposited in a trust account in a bank,
savings bank or savings and loan association that is fully insured by the federal deposit
insurance corporation or any successor agency and shall not be commingled with other
monies. The trust account shall designate the licensee as trustee and shall provide for
withdrawal of the monies without previous notice. Withdrawals shall only be disbursed
according to the terms of the agreement. A licensee who receives advances or fees shall
preserve and on request make available to the superintendent all deposits, withdrawal
receipts and statements of account rendered by the bank or savings and loan
association. The licensee shall further preserve all agreements between the parties
involved in the transaction and all contracts, agreements and instructions to or with the
depository and shall keep an accurate accounting of each separate bank account in which
the trust funds have been deposited. If the loan is declined by or on behalf of the
lender or cancelled by the applicant, all documents provided by or at the expense of the
applicant, including any appraisal, are the property of the applicant. At the
applicant's discretion, said documents shall be returned or transferred to any financial
institution or enterprise so designated without additional consideration except for fees
for which the applicant has previously contracted, provided that any such document is not
prohibited by law from being transferred or returned.
D. If periodic payments are to be collected from the mortgagor to provide for
payments by the mortgagee of taxes, assessments, insurance premiums, ground rents or
other current charges against the real estate security, the estimated payment amount
stated to the mortgagor by the mortgage banker shall be such that the total of these
payments collected for each category during the tax or other period will approximate the
actual tax or other payment when due. All such periodic payments of taxes, assessments,
insurance premiums, ground rents and other current charges shall be accounted for
annually to the borrower and, to the extent monies have been collected for payment, shall
be paid promptly by the mortgage banker.
E. Before a mortgage banking loan closing on residential real property designed
principally for the occupancy of from one to four families, a licensee shall fully
comply, to the extent they apply, with the real estate lending disclosure requirements of
title I of the consumer credit protection act (15 United States Code sections 1601
through 1666j), the real estate settlement procedures act (12 United States Code sections
2601 through 2617) and the regulations promulgated under those acts.

6-947 Prohibited acts
A. Except for employment verifications and deposit or account verifications, a
person in connection with or incidental to the making of any mortgage banking loan or
mortgage loan shall not induce, require or permit any document to be signed by a party to
the transaction if the document contains any blank spaces to be filled in after it has
been signed, except that the party may specifically authorize the licensee or the escrow
agent handling the transaction, in writing, to complete blank spaces in certain
documents.
B. A person is not entitled to receive compensation in connection with arranging
for or negotiating a mortgage banking loan or mortgage loan if the person is not licensed
pursuant to this article. A mortgage banker shall not pay compensation to, contract with
or employ as an independent contractor a person who is acting as a mortgage broker or
mortgage banker but who is not licensed under this chapter.
C. A mortgage banker may not commingle monies of borrowers or monies held for the
benefit of borrowers with monies of the mortgage banker.
D. A person engaged in the mortgage banking business shall not knowingly advertise,
display, distribute, broadcast or televise, or cause or permit to be advertised,
displayed, distributed, broadcast or televised, in any manner whatever, any false,
misleading or deceptive statement or representation with regard to the rates, terms or
conditions for a mortgage banking loan or mortgage loan. The charges or rates of charge,
if stated, shall be set forth in a clear and concise manner.
E. A mortgage banker shall not request or require a person seeking a mortgage
banking loan or mortgage loan, on real property designed principally for the occupancy of
from one to four families, in an amount of two hundred thousand dollars or less to enter
into an agreement which prohibits the person from seeking the loan from another source.
F. A mortgage banker shall not, except in good faith, delay or cause delay in the
closing of a loan that results in increased costs to a borrower.
G. A mortgage banker shall not record or cause to be recorded any document which
would give rise to liability under section 33-420.
H. A person who is employed by a licensee to act in the capacity of a mortgage
banker shall not be concurrently employed by any other licensee to act in the capacity of
a mortgage banker, except with the prior written approval of all such concurrently
employing licensees.
I. A mortgage banker shall not collect compensation for rendering services as a
real estate broker or real estate salesman unless both of the following apply:
1. The mortgage banker is licensed pursuant to title 32, chapter 20.
2. The mortgage banker has disclosed to the person from whom the compensation is
collected that the mortgage banker is receiving compensation both for mortgage banker
services, if applicable, and for real estate broker or real estate salesman services.
J. A licensee shall not accept any assignment of the borrower's wages or salary in
connection with activities governed by this article.
K. A mortgage banker shall not, for compensation, either directly or indirectly
make or negotiate or offer to make or negotiate a loan of money in an amount of ten
thousand dollars or less that is not secured by a mortgage or deed of trust or other lien
interest in real property.
L. A mortgage banker shall not make a false promise or misrepresentation or conceal
an essential or material fact in the course of the mortgage banker business.
M. A mortgage banker shall not fail to truthfully account for the monies belonging
to a party to a mortgage loan or mortgage banking loan transaction or fail to disburse
monies in accordance with his agreements.
N. A mortgage banker shall not record a mortgage or deed of trust if monies are
not available for the immediate disbursal to the mortgagor unless, before that recording,
the mortgage banker informs the mortgagor in writing of a definite date by which payment
shall be made and obtains the mortgagor's written permission for the delay.
O. A mortgage banker shall not require a person seeking a loan secured by real
property to obtain property insurance coverage in an amount that exceeds the replacement
cost of the improvements as established by the property insurer.

6-948 Noncompliance not to affect validity ofloan
A failure to comply with the provisions of this article does not affect the validity
or enforceability of any debt or any mortgage, deed of trust or lien interest on real
estate. A person acquiring a mortgage banking loan or mortgage loan or any interest in a
mortgage banking loan or mortgage loan as mortgagee or beneficiary or as an assignee,
holder or transferee or as a pledgee or the holder of a security interest is not required
to ascertain whether this article has been complied with.

6-971 Definitions
In this article, unless the context otherwise requires:
1. "Affiliate" means an entity that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with the specified
entity.
2. "Commercial mortgage banker" means a person who engages in the following:
(a) Originating commercial mortgage loans.
(b) Servicing commercial mortgage loans.
(c) Either directly or indirectly making, negotiating or offering to make or
negotiate commercial mortgage loans.
3. "Commercial mortgage loan" means a loan that is directly or indirectly secured
by a mortgage or deed of trust or any lien interest on commercial property and created
with the consent of the owner of the commercial property.
4. "Commercial mortgage loan closing" means the day by which all documents relating
to the commercial mortgage loan have been executed and recorded and all monies have been
accounted for under the terms of the escrow instructions.
5. "Commercial property" means real estate that is located in this state and that
is not used for a one to four family residence.
6. "Compensation" means anything of value or any benefit including points,
commissions, bonuses, referral fees, loan origination fees and other similar fees but
excluding periodic interest resulting from the application of the note rate of interest
to the outstanding principal balance remaining unpaid from time to time.
7. "Institutional investor" means a person who in the regular course of business
makes commercial mortgage loans of more than two hundred fifty thousand dollars that are
funded exclusively from the institutional investor's own resources.
8. "Investor" means a person who directly or indirectly provides monies to a
commercial mortgage banker that are, or are intended to be, used to make a loan, and any
person who purchases a loan, or any interest in a loan, from a commercial mortgage banker
or in a transaction that has been directly or indirectly arranged or negotiated by a
commercial mortgage banker.
9. "License" means a license issued under this article.
10. "Licensee" means a person who is licensed under this article.
11. "Own resources" means any of the following:
(a) Cash, corporate capital, warehouse credit lines at commercial banks, savings
banks or savings and loan associations or other sources that are liability items on the
person's financial statements.
(b) Correspondent contracts between the commercial mortgage banker and an
institutional investor, bank, savings bank, trust company, savings and loan association,
credit union, profit sharing or pension trust, consumer lender or insurance company.
(c) The person's affiliates' cash, corporate capital, warehouse credit lines at
commercial banks or other sources that are liability items on the affiliates' financial
statements for which the affiliates' assets are pledged.
12. "Servicing commercial mortgage loans" means collecting payments at a location in
this state on commercial mortgage loans, including:
(a) Principal.
(b) Interest.
(c) Trust items such as hazard insurance premiums, taxes and various reserves on an
obligation under the terms of the obligation.
(d) Operational procedures covering accounting, bookkeeping, insurance, tax
records, loan payment follow-up, delinquency loan follow-up, loan analysis and property
valuation.

6-972 Exemptions
This article does not apply to:
1. Institutional investors.
2. A person who funds a commercial mortgage loan that was originated and processed
by a licensee or by an institutional investor and who meets all of the following
conditions:
(a) Does not maintain a place of business in this state in connection with funding
commercial mortgage loans.
(b) Does not directly or indirectly solicit borrowers in this state for the purpose
of making commercial mortgage loans.
(c) Does not participate in negotiating commercial mortgage loans. For purposes of
this subdivision, "negotiating commercial mortgage loans" does not include setting the
terms under which a person may buy or make a commercial mortgage loan originated by a
licensee, a mortgage banker or a mortgage broker licensed pursuant to article 1 or 2 of
this chapter, or an institutional investor.
3. A person who as a seller of commercial property receives one or more mortgages
or deeds of trust as security for a purchase money obligation.
4. A person who is licensed to practice law in this state but is not actively and
principally engaged in the business of negotiating commercial mortgage loans, if this
person renders services in the course of his practice as an attorney at law.
5. A person who receives a mortgage or deed of trust on commercial property as
security for an obligation payable on an installment or deferred payment basis and
arising out of materials furnished or services rendered in improving that commercial
property or any lien created without the consent of the owner of commercial property.
6. A person who is licensed pursuant to article 1 or 2 of this chapter.
7. An agency of any state or of the United States.
8. A nonprofit federally tax exempt corporation certified by the United States
small business administration, organized to promote economic development in this state
and whose primary activity consists of providing financing for business expansion.
9. A bank, savings bank, trust company, savings and loan association, profit
sharing trust, pension trust, credit union, insurance company, consumer lender or
receivership if it is regulated by this state, another state, the United States or a
court with respect to its commercial mortgage business.

6-973 Licensing commercial mortgage bankersrequired; qualifications
A. A person shall not act as a commercial mortgage banker without a license issued
under this article.
B. A person who engages in commercial mortgage banking need not be licensed under
article 1 or 2 of this chapter or chapter 7 of this title if the person is licensed under
this article.
C. The superintendent shall not grant a commercial mortgage banker's license to a
person, other than a natural person, who is not registered to do business in this state
on the date the license is granted. The superintendent shall not issue to or renew a
commercial mortgage banker's license of an applicant unless the applicant meets all of
the requirements prescribed in subsection D of this section. The superintendent shall
determine whether the applicant meets the requirements based on the application, and
evidence presented at a hearing, if any, or any other evidence that the superintendent
may have regarding the applicant's qualifications.
D. In order to qualify for a commercial mortgage banker's license or a renewal of
such a license an applicant shall:
1. Have at least three years' experience in the commercial mortgage business or
equivalent experience in a related business. If the applicant is not a natural person,
the responsible individual shall meet this requirement.
2. Have made in the past or intend to make or negotiate or offer to make or
negotiate commercial mortgage loans.
3. Provide the superintendent with a current audited financial statement or that of
its parent company prepared by an independent certified public accountant according to
generally accepted accounting principles including:
(a) The certified public accountant's opinion as to the fairness of the
presentation according to generally accepted accounting principles.
(b) A balance sheet prepared within the immediately preceding six months and
certified by the licensee. The superintendent may require a more recent balance sheet.
(c) If the applicant has begun operations, a statement of operations and retained
earnings and a statement of changes in financial position.
(d) Notes to the financial statement if applicable.
4. Have and maintain at all times a net worth of at least one hundred thousand
dollars.
E. Notwithstanding subsection D, paragraph 3 of this section, licensees and
applicants whose own resources are derived exclusively from correspondent contracts with
institutional investors shall provide the superintendent with a current financial
statement or that of its parent company prepared according to generally accepted
accounting principles including:
1. A balance sheet prepared within the immediately preceding six months and
certified by the licensee. The superintendent may require a more recent balance sheet.
2. If the applicant has begun operations, a statement of operations and retained
earnings and a statement of changes in financial position.
3. Notes to the financial statement if applicable.

6-974 Application for license; issuance ordenial; fees
A. A person shall apply for a license or for a renewal of a license in writing on
the forms, in the manner and accompanied by the information prescribed by the
superintendent. The superintendent may require additional information on the experience,
background, honesty, truthfulness, integrity and competency of the applicant and any
responsible individual designated by the applicant. If the applicant is a person other
than a natural person, the superintendent may require this information as to the honesty,
truthfulness, integrity and competency of any officer, director, shareholder, member,
partner, trustee, employee or other interested party of the firm, association or
corporation.
B. The superintendent, on determining that the applicant is qualified, shall issue
a commercial mortgage banker's license to the applicant that is evidenced by a continuous
certificate. The superintendent shall grant or deny a license within one hundred twenty
days after receiving the completed application. An applicant who has been denied a
license may not reapply for a license before one year after the date of the previous
application.
C. The nonrefundable application fee and annual renewal fee are as prescribed by
the superintendent. Application fees and annual renewal fees shall be based upon the
cost to the department to process the application and regulate licensees. The
nonrefundable application fee shall accompany each application for an original license
only. The superintendent shall deposit, pursuant to sections 35-146 and 35-147, the
monies in the state general fund.

6-975 Bond or other security
A. Each licensed commercial mortgage banker shall deposit with the superintendent,
before doing business as a commercial mortgage banker, a bond executed by the licensee as
principal and a surety company authorized to do business in this state as surety. The
bond shall be conditioned on the licensee's faithful compliance, including the directors,
officers, members, partners, trustees and employees, with this article. Only one bond is
required for any person, firm, association or corporation regardless of the number of
officers, directors, members, partners or trustees who are employed by or are members of
the firm, association or corporation.
B. The bond is payable to any person who is injured by the wrongful act, default,
fraud or misrepresentation of the licensee or the licensee's employees and to this state
for the benefit of the person injured. No suit may be commenced on the bond after the
expiration of one year following the commission of the act on which the suit is based,
except that claims for fraud or mistake are limited to the limitation period prescribed
in section 12-543, paragraph 3. If an injured person commences an action for a judgment
to collect on the bond, the injured person shall notify the superintendent of the action
in writing when the action is commenced and shall provide copies of all documents
relating to the action to the superintendent on request.
C. The bond required by this section is twenty-five thousand dollars for licensees
whose investors are limited solely to institutional investors and one hundred thousand
dollars for licensees whose investors include any other investors.
D. Notwithstanding section 35-155, in lieu of the bond described in this section,
an applicant for a license or a licensee may deposit with the superintendent a deposit in
the form of cash or alternatives to cash in the same amount as the bond required under
subsection C of this section. The superintendent may accept any of the following as an
alternative to cash:
1. Certificates of deposit, investment certificates or share accounts that are
payable or assigned to the state treasurer, issued by banks, savings banks or savings and
loan associations doing business in this state and fully insured by the federal deposit
insurance corporation or any successor institution.
2. Certificates of deposit, investment certificates or share accounts that are
payable or assigned to the state treasurer, issued by a credit union doing business in
this state and fully insured by the national credit union administration or any successor
institution.
E. The superintendent shall deposit the cash or alternatives to cash received under
this section with the state treasurer. The state treasurer shall hold the cash or
alternatives to cash in the name of this state to guarantee the faithful performance of
all legal obligations of the person required to post bond pursuant to this section. The
person is entitled to receive any accrued interest earned from the alternatives to
cash. The state treasurer may impose a fee to reimburse the state treasurer for
administrative expenses. The fee shall be paid by the applicant or licensee. The state
treasurer may prescribe rules relating to the terms and conditions of each type of
security provided by this section.
F. In addition to such other terms and conditions as the superintendent prescribes
by rule or order, the principal amount of the deposit shall be released only on written
authorization of the superintendent or on the order of a court of competent
jurisdiction. The principal amount of the deposit shall not be released before the
expiration of three years after the first to occur of any of the following:
1. The date of substitution of a bond for a cash alternative.
2. The surrender of the license.
3. The revocation of the license.
4. The expiration of the license.

6-976 Responsible individual; employees
A. A license entitles the licensee and all officers, directors, members, partners,
trustees and employees of the licensee to engage in commercial mortgage banking if one
officer, director, member, partner, employee or trustee of the person is designated in
the license as the individual responsible for the licensee under this article. If the
natural person is not a resident of this state, an employee of the licensee shall be
designated in the license as the individual responsible for the licensee under this
article. For purposes of this subsection "employee" does not include an independent
contractor.
B. A responsible individual shall be a resident of this state, shall be active in
managing the activities of the licensee governed by this article and shall meet the
qualifications prescribed by section 6-973, subsection D, paragraph 1 for a licensee. A
licensee shall notify the superintendent that its responsible individual will cease to be
active in managing the activities of the licensee within ten days of learning of that
fact. Within ninety days after the notification is received by the superintendent the
licensee shall replace the responsible individual with a qualified replacement and notify
the superintendent. If the license is not placed under active management of a qualified
responsible individual and if notice is not given to the superintendent within the ninety
day period, the license of the licensee expires.
C. A licensee shall not employ any person unless the licensee:
1. Conducts a reasonable investigation of the background, honesty, truthfulness,
integrity and competency of the employee before hiring.
2. Keeps a record of the investigation for at least two years after termination.
D. The licensee is liable for any damages caused by any employee while acting as an
employee of the licensee.

6-977 Displaying and using licensenumber
A. A licensee shall prominently display the commercial mortgage banker license in
the office of the commercial mortgage banker.
B. A licensee or an employee of the licensee shall not advertise for or solicit
commercial mortgage loans in any manner without using the name and license number as
issued on the commercial mortgage banker's principal place of business license, except
that a licensee may employ or refer to the commonly used name and any trademarks or
service marks of any affiliate. If a license is issued in the name of a natural person,
nothing in the advertising or solicitation may imply that the license is in the name of
another person or entity. For the purposes of this subsection, "advertise" does not
include business cards, radio and television advertising directed at national or regional
markets and promotional items unless those items contain rates or terms on which a
commercial mortgage loan may be obtained.

6-978 Consent of superintendent fortransferring, assigning or acquiring control of licensee;definition
A license is not transferable or assignable and control of a licensee may not be
acquired through a stock purchase or any other device without the prior written consent
of the superintendent. The superintendent shall not give written consent if he finds
that any of the grounds for denial, revocation or suspension of a license as set forth in
section 6-982 apply to the acquiring person. For the purpose of this section, "control"
means the power to vote more than twenty per cent of the outstanding voting shares of a
licensed corporation, partnership, association or trust.

6-979 Principal place of business; branchoffice license; change of address
A. Each licensed commercial mortgage banker shall designate and maintain a
principal place of business in this state to transact business. The license shall
specify the address of his principal place of business.
B. If a licensee wishes to maintain one or more locations in addition to a
principal place of business, the licensee shall first obtain a branch office license from
the superintendent and designate a person for each branch office to oversee the
operations of that office.
C. If the superintendent determines that the licensee is qualified, the
superintendent shall issue a branch office license indicating the address of the branch
office. The licensee shall conspicuously display the branch office license in the branch
office.
D. If the address of the principal place of business or of any branch office is
changed, the licensee shall immediately notify the superintendent of the change and the
superintendent shall endorse the change of address on the license.

6-980 Annual renewal; expiration on failure torenew
A. Licenses that are not renewed by March 31 are suspended, and the licensee shall
not act as a commercial mortgage banker until the license is renewed or a new license is
issued pursuant to this article.
B. A person may renew a suspended license by making an application for renewal as
prescribed by the superintendent.
C. Licenses that are not renewed by April 30 expire. A license shall not be
granted to the holder of an expired license except as provided in this article for
issuing an original license.

6-981 Inactive status
A. On or before March 31, a licensee may request inactive status for the following
license year, and the license shall be placed on inactive status after surrendering the
license to the superintendent.
B. During inactive status, an inactive licensee is not required to maintain a bond
and shall not act as a commercial mortgage banker.
C. A licensee may not be on inactive status for more than two consecutive years or
for more than four years in any ten year period. The license is deemed expired on
violation of any of the limitations of this subsection.
D. An inactive licensee may return to active status notwithstanding section 6-973,
subsection D by making a written request to the superintendent for reactivation. The
licensee shall also provide the superintendent with proof that the licensee meets all of
the other requirements for acting as a commercial mortgage banker, including required
bond coverage or the deposit of a cash alternative.

6-982 Denial, suspension or revocation oflicenses
A. The superintendent may deny a license to a person or suspend or revoke a license
if the superintendent finds that an applicant or licensee:
1. Is insolvent as defined in section 47-1201.
2. Has shown that the licensee or any person acting under the license is not a
person of honesty, truthfulness and good character.
3. Refuses to permit an examination by the superintendent of the licensee's books
and affairs or refuses or fails, within a reasonable time, to furnish any information or
make any report that may be required by the superintendent.
4. Has been convicted in any state of a felony or any crime of breach of trust or
dishonesty.
5. Has had a final judgment entered against the licensee in a civil action upon
grounds of fraud, deceit or misrepresentation and the conduct on which the judgment is
based indicates that it would be contrary to the interest of the public to permit the
person to be licensed or to control or manage a licensee.
6. Has had an order entered against the licensee involving fraud, deceit or
misrepresentation by any administrative agency of this state, the federal government or
any other state or territory of the United States and that the facts relating to the
order indicate that it would be contrary to the interest of the public to permit the
person to be licensed or to control or manage a licensee.
7. Has violated any applicable law, rule or order.
B. If a person to whom a license is issued or who has applied for a license under
this article is indicted or informed against for forgery, embezzlement, obtaining money
under false pretenses, extortion, criminal conspiracy to defraud or a similar offense or
offenses, and a certified copy of the indictment or information is filed with the
superintendent, the superintendent may suspend the license issued to the licensee or deny
a license to an applicant pending trial on the indictment or information.
C. If a licensee is other than a natural person, it is sufficient cause to suspend
or revoke the license if an officer, director, member, partner, trustee, employee, while
acting in the course of the commercial mortgage banker business, or person entitled to
vote more than twenty per cent of the outstanding voting shares of the licensed
corporation, partnership, association or trust has acted or failed to act in the same
manner as would be cause to suspend or revoke a license of the party as an
individual. If a licensee is a natural person, it is sufficient cause to suspend or
revoke the license if an employee of the person, while acting as an employee, has acted
or failed to act in the course of the commercial mortgage banker business of the licensee
in the same manner as would be cause to suspend or revoke a license of the party as an
owner.

6-983 Required accounting practices andrecords; escrow of monies; disclosure
A. A commercial mortgage banker shall keep and maintain at all times correct and
complete records as prescribed by the superintendent that will enable the superintendent
to determine whether the licensee is complying with this article. If the commercial
mortgage banker operates two or more licensed places of business in this state, after
notifying the superintendent, he may maintain such records at his principal place of
business in this state, except that a commercial mortgage banker, with the approval of
the superintendent, may maintain the records outside of this state. For records kept
outside this state, a commercial mortgage banker shall make the records available to the
superintendent in this state not more than three business days after demand and shall
provide for the acceptance of collect calls or provide a toll free telephone number to
borrowers to obtain information from the records if the licensed place of business in
this state cannot readily provide the information requested by the borrowers. A
commercial mortgage banker shall maintain original documents or clearly legible copies of
all commercial mortgage loan transactions for at least two years from the date of the
commercial mortgage loan closing.
B. A commercial mortgage banker shall observe generally accepted accounting
principles and practices.
C. If a commercial mortgage banker requires an advance or fee to be paid in
connection with an application for a commercial mortgage loan there shall be a written
agreement. The parties shall sign the written agreement, and the agreement shall contain
terms pertaining to the payment of the fee or disposition of the advance or fee, whether
the loan is finally consummated or not, and a term for which the agreement is to remain
in force before return of the advance or fee for nonperformance can be required. The
licensee shall immediately deposit advances or fees in a trust account in a bank, savings
bank or savings and loan association that is fully insured by the federal deposit
insurance corporation or any successor agency, and the advances or fees shall not be
commingled with other monies. The trust account shall designate the licensee as trustee
and shall provide for withdrawing the monies without previous notice. Withdrawals shall
only be disbursed according to the terms of the agreement. A licensee who receives
advances or fees shall preserve and on request make available to the superintendent all
deposits, withdrawal receipts and statements of account rendered by the bank, savings
bank or savings and loan association. The licensee shall further preserve all agreements
between the parties involved in the transaction and all contracts, agreements and
instructions to or with the depository and shall keep an accurate accounting of each
separate bank account in which the trust monies have been deposited. If the loan is
declined by or on behalf of the lender or canceled by the applicant, all documents
provided by or at the expense of the applicant, including any appraisal, are the property
of the applicant. At the applicant's discretion, the documents shall be returned or
transferred to any designated financial institution or enterprise without additional
consideration except for fees for which the applicant has previously contracted, if the
document is not prohibited by law from being transferred or returned.
D. If periodic payments are to be collected from the mortgagor to provide for
payments by the mortgagee of taxes, assessments, insurance premiums, ground rents or
other current charges against the real estate security, the estimated payment amount
stated to the mortgagor by the commercial mortgage banker shall be such that the total of
these payments collected for each category during the tax or other period will
approximate the actual tax or other payment when due. The licensee shall annually
account to the borrower for all such periodic payments of taxes, assessments, insurance
premiums, ground rents and other current charges and, to the extent monies have been
collected for payment, shall pay them promptly.

6-984 Prohibited acts
A. Except for employment verifications and deposit or account verifications, a
person shall not induce, require or permit any document in connection with making a
commercial mortgage loan to be signed by a party to the transaction if the document
contains any blank spaces to be filled in after it has been signed unless the party has
specifically authorized the licensee or the escrow agent in writing to complete those
blank spaces.
B. A person is not entitled to receive compensation in connection with arranging
for or negotiating a commercial mortgage loan if the person is not licensed pursuant to
or is not exempt from this article, except that a commercial mortgage banker, mortgage
banker or mortgage broker licensed pursuant to this article or article 1 or 2 of this
chapter may compensate a person who is a resident of another state and who meets the
licensing requirements, if any, of the other state in connection with arranging for or
negotiating a commercial mortgage loan.
C. A commercial mortgage banker may not commingle monies of borrowers or monies
held for the benefit of borrowers with monies of the commercial mortgage banker.
D. A person engaged in commercial mortgage banking shall not knowingly advertise,
display, distribute, broadcast or televise, or cause or permit to be advertised,
displayed, distributed, broadcast or televised, in any manner whatever, a false,
misleading or deceptive statement or representation with regard to the rates, terms or
conditions for a commercial mortgage loan. The charges or rates of charge, if stated,
shall be set forth in a clear and concise manner.
E. A commercial mortgage banker shall not, except in good faith, delay or cause
delay in the closing of a loan that results in increased costs to a borrower.
F. A commercial mortgage banker shall not record or cause to be recorded a document
that would give rise to liability under section 33-420.
G. A person who is employed by a licensee to act in the capacity of a commercial
mortgage banker shall not be concurrently employed by any other licensee to act in the
capacity of a commercial mortgage banker, except with the prior written approval of all
concurrently employing licensees.
H. A commercial mortgage banker shall not collect compensation for rendering
services as a real estate broker or real estate salesperson unless both of the following
apply:
1. The commercial mortgage banker is licensed pursuant to title 32, chapter 20.
2. The commercial mortgage banker has disclosed to the person from whom the
compensation is collected that the commercial mortgage banker is receiving compensation
both for commercial mortgage banking and for services as a real estate broker or
salesperson.
I. A licensee shall not accept any assignment of the borrower's wages or salary in
connection with activities governed by this article.
J. A commercial mortgage banker shall not make or negotiate or offer to make or
negotiate, for compensation, either directly or indirectly, a loan of money that is not
secured by a mortgage or deed of trust or any other lien interest in real property or if
the real estate security is a one to four family residence.
K. A commercial mortgage banker shall not make a false promise or misrepresentation
or conceal an essential or material fact in the course of the commercial mortgage banker
business.
L. A commercial mortgage banker shall not fail to truthfully account for the monies
belonging to a party to a commercial mortgage loan or commercial mortgage banking loan
transaction or fail to disburse monies in accordance with the agreements.
M. A commercial mortgage banker shall not record a mortgage or deed of trust if
monies are not available for the immediate disbursal to the mortgagor unless, before that
recording, the commercial mortgage banker informs the mortgagor in writing of a definite
date by which payment shall be made and obtains the mortgagor's written permission for
the delay.

6-985 Noncompliance not to affect validity ofloan
A failure to comply with a provision of this article does not affect the validity or
enforceability of any debt or any mortgage, deed of trust or lien interest on real
estate. A person who acquires a commercial mortgage loan or an interest in a commercial
mortgage loan as mortgagee or beneficiary, as an assignee, holder or transferee or as a
pledgee or the holder of a security interest is not required to ascertain compliance with
this article.