II 110th CONGRESS 2d Session S. 2595 IN THE SENATE OF THE UNITED STATES February 6, 2008 Mrs. Feinstein (for herself and Mr. Martinez) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To create a national licensing system for residential mortgage loan originators, to develop minimum standards of conduct to be enforced by State regulators, and for other purposes.
1.
Short title; table of contents
(a)
Short title
This Act may be cited as the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 or S.A.F.E. Mortgage Licensing Act of 2008. (b)
Table of contents
The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Purposes and methods for establishing a mortgage licensing system and registry. Sec. 3. Definitions. Sec. 4. License or registration required. Sec. 5. State license and registration application and issuance. Sec. 6. Standards for State license renewal. Sec. 7. System of registration administration by Federal banking agencies. Sec. 8. Secretary of Housing and Urban Development backup authority to establish a loan originator licensing system. Sec. 9. Backup authority to establish a nationwide mortgage licensing and registry system. Sec. 10. Fees. Sec. 11. Background checks of loan originators. Sec. 12. Confidentiality of information. Sec. 13. Liability provisions. Sec. 14. Enforcement under HUD backup licensing system. Sec. 15. Preemption of State law. Sec. 16. Reports and recommendations to Congress. Sec. 17. Study and reports on defaults and foreclosures
2.
Purposes and methods for establishing a mortgage licensing system and registry
In order to increase uniformity, reduce regulatory burden, enhance consumer protection, and reduce fraud, the States, through the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, are hereby encouraged to establish a Nationwide Mortgage Licensing System and Registry for the residential mortgage industry that accomplishes all of the following objectives: (1)Provides uniform license applications and reporting requirements for State-licensed loan originators. (2)Provides a comprehensive licensing and supervisory database. (3)Aggregates and improves the flow of information to and between regulators. (4)Provides increased accountability and tracking of loan originators. (5)Streamlines the licensing process and reduces the regulatory burden. (6)Enhances consumer protections and supports anti-fraud measures. (7)Provides consumers with easily accessible information, offered at no charge, utilizing electronic media, including the Internet, regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators.
3.
Definitions
For purposes of this Act, the following definitions shall apply: (1)
Federal banking agencies
The term Federal banking agencies means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration, and the Federal Deposit Insurance Corporation. (2)
Depository institution
The term depository institution has the same meaning as in section 3 of the Federal Deposit Insurance Act, and includes any credit union. (3)
Loan originator
(A)
In general
The term loan originator— (i)means an individual who— (I)takes a residential mortgage loan application; (II)assists a consumer in obtaining or applying to obtain a residential mortgage loan; or (III)offers or negotiates terms of a residential mortgage loan, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain; (ii)includes any individual who represents to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that such individual can or will provide or perform any of the activities described in clause (i); (iii)does not include any individual who is not otherwise described in clause (i) or (ii) and who performs purely administrative or clerical tasks on behalf of a person who is described in any such clause; and (iv)does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless the person or entity is compensated by a lender, a mortgage broker, or other loan originator or by any agent of such lender, mortgage broker, or other loan originator. (B)
Other definitions relating to loan originator
For purposes of this subsection, an individual assists a consumer in obtaining or applying to obtain a residential mortgage loan by, among other things, advising on loan terms (including rates, fees, other costs), preparing loan packages, or collecting information on behalf of the consumer with regard to a residential mortgage loan. (C)
Administrative or clerical tasks
The term administrative or clerical tasks means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan. (D)
Real estate brokerage activity defined
The term real estate brokerage activity means any activity that involves offering or providing real estate brokerage services to the public, including— (i)acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property; (ii)listing or advertising real property for sale, purchase, lease, rental, or exchange; (iii)providing advice in connection with sale, purchase, lease, rental, or exchange of real property; (iv)bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property; (v)negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with providing financing with respect to any such transaction); (vi)engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and (vii)offering to engage in any activity, or act in any capacity, described in clause (i), (ii), (iii), (iv), (v), or (vi). (4)
Loan processor or underwriter
(A)
In general
The term loan processor or underwriter means an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of— (i)a State-licensed loan originator; or (ii)a registered loan originator. (B)
Clerical or support duties
For purposes of subparagraph (A), the term clerical or support duties may include— (i)the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and (ii)communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms. (5)
Nationwide Mortgage Licensing System and Registry
The term Nationwide Mortgage Licensing System and Registry means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing and registration of State-licensed loan originators and the registration of registered loan originators or any system established by the Secretary under section 9. (6)
Registered loan originator
The term registered loan originator means any individual who— (A)meets the definition of loan originator and is an employee of a depository institution or a wholly-owned subsidiary of a depository institution; and (B)is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry. (7)
Residential mortgage loan
The term residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act) or residential real estate upon which is constructed or intended to be constructed a dwelling (as so defined). (8)
Secretary
The term Secretary means the Secretary of Housing and Urban Development. (9)
State-licensed loan originator
The term State-licensed loan originator means any individual who— (A)is a loan originator; (B)is not an employee of a depository institution or any wholly-owned subsidiary of a depository institution; and (C)is licensed by a State or by the Secretary under section 8 and registered as a loan originator with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry. (10)
Subprime mortgage
The term subprime mortgage means a residential mortgage loan— (A)that is secured by real property that is used or intended to be used as a principal dwelling; (B)that is typically offered to borrowers having weakened credit histories and reduced repayment capacity, as measured by lower credit scores, debt-to-income ratios, and other relevant criteria; and (C)the characteristics of which may include— (i)low initial payments based on a fixed introductory rate that expires after a short period and then adjusts to a variable index rate plus a margin for the remaining term of the loan; (ii)very high or no limits on how much the payment amount or the interest rate may increase (referred to as payment caps or rate caps) on reset dates; (iii)limited or no documentation of the income of the borrower; (iv)product features likely to result in frequent refinancing to maintain an affordable monthly payment; and (v)substantial prepayment penalties or prepayment penalties that extend beyond the initial fixed interest rate period. (11)
Unique identifier
The term unique identifier means a number or other identifier that— (A)permanently identifies a loan originator; and (B)is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry and the Federal banking agencies to facilitate electronic tracking of loan originators and uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against loan originators.
4.
License or registration required
(a)
In general
An individual may not engage in the business of a loan originator without first— (1)obtaining and maintaining, through an annual renewal— (A)a registration as a registered loan originator; or (B)a license and registration as a State-licensed loan originator; and (2)obtaining a unique identifier. (b)
Loan processors and underwriters
(1)
Supervised loan processors and underwriters
A loan processor or underwriter who does not represent to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that such individual can or will perform any of the activities of a loan originator shall not be required to be a State-licensed loan originator or a registered loan originator. (2)
Independent contractors
A loan processor or underwriter may not work as an independent contractor unless such processor or underwriter is a State-licensed loan originator or a registered loan originator.
5.
State license and registration application and issuance
(a)
Background checks
In connection with an application to any State for licensing and registration as a State-licensed loan originator, the applicant shall, at a minimum, furnish to the Nationwide Mortgage Licensing System and Registry information concerning the applicant’s identity, including— (1)fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check; and (2)personal history and experience, including authorization for the System to obtain— (A)an independent credit report obtained from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act; and (B)information related to any administrative, civil or criminal findings by any governmental jurisdiction. (b)
Issuance of license
The minimum standards for licensing and registration as a State-licensed loan originator shall include the following: (1)The applicant has never had a loan originator or similar license revoked in any governmental jurisdiction. (2)The applicant has never been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court. (3)The applicant has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the loan originator will operate honestly, fairly, and efficiently within the purposes of this Act. (4)The applicant has completed the pre-licensing education requirement described in subsection (c). (5)The applicant has passed a written test that meets the test requirement described in subsection (d). (c)
Pre-licensing education of loan originators
(1)
Minimum educational requirements
In order to meet the pre-licensing education requirement referred to in subsection (b)(4), a person shall complete at least 20 hours of education approved in accordance with paragraph (2), which shall include at least— (A)3 hours of Federal law and regulations; (B)3 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and (C)2 hours of training related to lending standards for the subprime mortgage marketplace. (2)
Approved educational courses
For purposes of paragraph (1), pre-licensing education courses shall be reviewed, and approved by the Nationwide Mortgage Licensing System and Registry. (3)
Limitation and standards
(A)
Limitation
To maintain the independence of the approval process, the Nationwide Mortgage Licensing System and Registry shall not directly or indirectly offer pre-licensure educational courses for loan originators. (B)
Standards
In approving courses under this section, the Nationwide Mortgage Licensing System and Registry shall apply reasonable standards in the review and approval of courses. (d)
Testing of loan originators
(1)
In general
In order to meet the written test requirement referred to in subsection (b)(5), an individual shall pass, in accordance with the standards established under this subsection, a qualified written test developed by the Nationwide Mortgage Licensing System and Registry and administered by an approved test provider. (2)
Qualified test
A written test shall not be treated as a qualified written test for purposes of paragraph (1) unless— (A)the test consists of a minimum of 100 questions; and (B)the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including— (i)ethics; (ii)Federal law and regulation pertaining to mortgage origination; (iii)State law and regulation pertaining to mortgage origination; and (iv)Federal and State law and regulation, including instruction on fraud, consumer protection, subprime mortgage marketplace, and fair lending issues. (3)
Minimum competence
(A)
Passing score
An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than 75 percent correct answers to questions. (B)
Initial retests
An individual may retake a test 3 consecutive times with each consecutive taking occurring in less than 14 days after the preceding test. (C)
Subsequent retests
After 3 consecutive tests, an individual shall wait at least 14 days before taking the test again. (D)
Retest after lapse of license
A State-licensed loan originator who fails to maintain a valid license for a period of 5 years or longer shall retake the test, not taking into account any time during which such individual is a registered loan originator. (e)
Mortgage call reports
Each mortgage licensee shall submit to the Nationwide Mortgage Licensing System and Registry reports of condition, which shall be in such form and shall contain such information as the Nationwide Mortgage Licensing System and Registry may require.
6.
Standards for State license renewal
(a)
In general
The minimum standards for license renewal for State-licensed loan originators shall include the following: (1)The loan originator continues to meet the minimum standards for license issuance. (2)The loan originator has satisfied the annual continuing education requirements described in subsection (b). (b)
Continuing education for state-licensed loan originators
(1)
In general
In order to meet the annual continuing education requirements referred to in subsection (a)(2), a State-licensed loan originator shall complete at least 8 hours of education approved in accordance with paragraph (2), which shall include at least— (A)3 hours of Federal law and regulations; (B)2 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and (C)2 hours of training related to lending standards for the subprime mortgage marketplace. (2)
Approved educational courses
For purposes of paragraph (1), continuing education courses shall be reviewed, and approved by the Nationwide Mortgage Licensing System and Registry. (3)
Calculation of continuing education credits
A State-licensed loan originator— (A)may only receive credit for a continuing education course in the year in which the course is taken; and (B)may not take the same approved course in the same or successive years to meet the annual requirements for continuing education. (4)
Instructor credit
A State-licensed loan originator who is approved as an instructor of an approved continuing education course may receive credit for the originator’s own annual continuing education requirement at the rate of 2 hours credit for every 1 hour taught. (5)
Limitation and standards
(A)
Limitation
To maintain the independence of the approval process, the Nationwide Mortgage Licensing System and Registry shall not directly or indirectly offer any continuing education courses for loan originators. (B)
Standards
In approving courses under this section, the Nationwide Mortgage Licensing System and Registry shall apply reasonable standards in the review and approval of courses.
7.
System of registration administration by Federal banking agencies
(a)
Development
(1)
In general
The Federal banking agencies shall jointly, through the Federal Financial Institutions Examination Council, develop and maintain a system for registering employees of depository institutions or subsidiaries of depository institutions as registered loan originators with the Nationwide Mortgage Licensing System and Registry. The system shall be implemented before the end of the 1-year period beginning on the date of the enactment of this Act. (2)
Registration requirements
In connection with the registration of any loan originator who is an employee of a depository institution or a wholly-owned subsidiary of a depository institution with the Nationwide Mortgage Licensing System and Registry, the appropriate Federal banking agency shall, at a minimum, furnish or cause to be furnished to the Nationwide Mortgage Licensing System and Registry information concerning the employees’s identity, including— (A)fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check; and (B)personal history and experience, including authorization for the Nationwide Mortgage Licensing System and Registry to obtain information related to any administrative, civil or criminal findings by any governmental jurisdiction. (b)
Coordination
(1)
Unique identifier
The Federal banking agencies, through the Financial Institutions Examination Council, shall coordinate with the Nationwide Mortgage Licensing System and Registry to establish protocols for assigning a unique identifier to each registered loan originator that will facilitate electronic tracking and uniform identification of, and public access to, the employment history of and publicly adjudicated disciplinary and enforcement actions against loan originators. (2)
Nationwide mortgage licensing system and registry development
To facilitate the transfer of information required by subsection (a)(2), the Nationwide Mortgage Licensing System and Registry shall coordinate with the Federal banking agencies, through the Financial Institutions Examination Council, concerning the development and operation, by such System and Registry, of the registration functionality and data requirements for loan originators. (c)
Consideration of factors and procedures
In establishing the registration procedures under subsection (a) and the protocols for assigning a unique identifier to a registered loan originator, the Federal banking agencies shall make such de minimis exceptions as may be appropriate to paragraphs (1)(A) and (2) of section 4(a), shall make reasonable efforts to utilize existing information to minimize the burden of registering loan originators, and shall consider methods for automating the process to the greatest extent practicable consistent with the purposes of this Act.
8.
Secretary of Housing and Urban Development backup authority to establish a loan originator licensing system
(a)
Back up licensing system
If, by the end of the 1-year period, or the 2-year period in the case of a State whose legislature meets only biennially, beginning on the date of the enactment of this Act or at any time thereafter, the Secretary determines that a State does not have in place by law or regulation a system for licensing and registering loan originators that meets the requirements of sections 5 and 6 and subsection (d) of this section, or does not participate in the Nationwide Mortgage Licensing System and Registry, the Secretary shall provide for the establishment and maintenance of a system for the licensing and registration by the Secretary of loan originators operating in such State as State-licensed loan originators. (b)
Licensing and registration requirements
The system established by the Secretary under subsection (a) for any State shall meet the requirements of sections 5 and 6 for State-licensed loan originators. (c)
Unique identifier
The Secretary shall coordinate with the Nationwide Mortgage Licensing System and Registry to establish protocols for assigning a unique identifier to each loan originator licensed by the Secretary as a State-licensed loan originator that will facilitate electronic tracking and uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against loan originators. (d)
State licensing law requirements
For purposes of this section, the law in effect in a State meets the requirements of this subsection if the Secretary determines the law satisfies the following minimum requirements: (1)A State loan originator supervisory authority is maintained to provide effective supervision and enforcement of such law, including the suspension, termination, or nonrenewal of a license for a violation of State or Federal law. (2)The State loan originator supervisory authority ensures that all State-licensed loan originators operating in the State are registered with Nationwide Mortgage Licensing System and Registry. (3)The State loan originator supervisory authority is required to regularly report violations of such law, as well as enforcement actions and other relevant information, to the Nationwide Mortgage Licensing System and Registry. (e)
Temporary extension of period
The Secretary may extend, by not more than 12 months, the 1-year or 2-year period, as the case may be, referred to in subsection (a) for the licensing of loan originators in any State under a State licensing law that meets the requirements of sections 5 and 6 and subsection (d) if the Secretary determines that such State is making a good faith effort to establish a State licensing law that meets such requirements, license mortgage originators under such law, and register such originators with the Nationwide Mortgage Licensing System and Registry. (f)
Limitation on HUD-licensed loan originators
Any loan originator who is licensed by the Secretary under a system established under this section for any State may not use such license to originate loans in any other State. (g)
Contracting authority
The Secretary may enter into contracts with qualified independent parties, as necessary to efficiently fulfill the obligations of the Secretary under this Section.
9.
Backup authority to establish a nationwide mortgage licensing and registry system
If at any time the Secretary determines that the Nationwide Mortgage Licensing System and Registry is failing to meet the requirements and purposes of this Act for a comprehensive licensing, supervisory, and tracking system for loan originators, the Secretary shall establish and maintain such a system to carry out the purposes of this Act and the effective registration and regulation of loan originators.
10.
Fees
The Federal banking agencies, the Secretary, and the Nationwide Mortgage Licensing System and Registry may charge reasonable fees to cover the costs of maintaining and providing access to information from the Nationwide Mortgage Licensing System and Registry, to the extent that such fees are not charged to consumers for access to such system and registry.
11.
Background checks of loan originators
(a)
Access to records
Notwithstanding any other provision of law, in providing identification and processing functions, the Attorney General shall provide access to all criminal history information to the appropriate State officials responsible for regulating State-licensed loan originators to the extent criminal history background checks are required under the laws of the State for the licensing of such loan originators. (b)
Agent
For the purposes of this section and in order to reduce the points of contact which the Federal Bureau of Investigation may have to maintain for purposes of subsection (a), the Conference of State Bank Supervisors or a wholly owned subsidiary may be used as a channeling agent of the States for requesting and distributing information between the Department of Justice and the appropriate State agencies.
12.
Confidentiality of information
(a)
System confidentiality
Except as otherwise provided in this section, any requirement under Federal or State law regarding the privacy or confidentiality of any information or material provided to the Nationwide Mortgage Licensing System and Registry or a system established by the Secretary under section 9, and any privilege arising under Federal or State law (including the rules of any Federal or State court) with respect to such information or material, shall continue to apply to such information or material after the information or material has been disclosed to the system. Such information and material may be shared with all State and Federal regulatory officials with mortgage industry oversight authority without the loss of privilege or the loss of confidentiality protections provided by Federal and State laws. (b)
Nonapplicability of certain requirements
Information or material that is subject to a privilege or confidentiality under subsection (a) shall not be subject to— (1)disclosure under any Federal or State law governing the disclosure to the public of information held by an officer or an agency of the Federal Government or the respective State; or (2)subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Nationwide Mortgage Licensing System and Registry or the Secretary with respect to such information or material, the person to whom such information or material pertains waives, in whole or in part, in the discretion of such person, that privilege. (c)
Coordination with other law
Any State law, including any State open record law, relating to the disclosure of confidential supervisory information or any information or material described in subsection (a) that is inconsistent with subsection (a) shall be superseded by the requirements of such provision to the extent State law provides less confidentiality or a weaker privilege. (d)
Public access to information
This section shall not apply with respect to the information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators that is included in Nationwide Mortgage Licensing System and Registry for access by the public.
13.
Liability provisions
The Secretary, any State official or agency, any Federal banking agency, or any organization serving as the administrator of the Nationwide Mortgage Licensing System and Registry or a system established by the Secretary under section 9, or any officer or employee of any such entity, shall not be subject to any civil action or proceeding for monetary damages by reason of the good-faith action or omission of any officer or employee of any such entity, while acting within the scope of office or employment, relating to the collection, furnishing, or dissemination of information concerning persons who are loan originators or are applying for licensing or registration as loan originators.
14.
Enforcement under HUD backup licensing system
(a)
Summons authority
The Secretary may— (1)examine any books, papers, records, or other data of any loan originator operating in any State which is subject to a licensing system established by the Secretary under section 8; and (2)summon any loan originator referred to in paragraph (1) or any person having possession, custody, or care of the reports and records relating to such loan originator, to appear before the Secretary or any delegate of the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give testimony, under oath, as may be relevant or material to an investigation of such loan originator for compliance with the requirements of this Act. (b)
Examination authority
(1)
In general
If the Secretary establishes a licensing system under section 8 for any State, the Secretary shall appoint examiners for the purposes of administering such section. (2)
Power to examine
Any examiner appointed under paragraph (1) shall have power, on behalf of the Secretary, to make any examination of any loan originator operating in any State which is subject to a licensing system established by the Secretary under section 8 whenever the Secretary determines an examination of any loan originator is necessary to determine the compliance by the originator with this Act. (3)
Report of examination
Each examiner appointed under paragraph (1) shall make a full and detailed report of examination of any loan originator examined to the Secretary. (4)
Administration of oaths and affirmations; evidence
In connection with examinations of loan originators operating in any State which is subject to a licensing system established by the Secretary under section 8, or with other types of investigations to determine compliance with applicable law and regulations, the Secretary and examiners appointed by the Secretary may administer oaths and affirmations and examine and take and preserve testimony under oath as to any matter in respect to the affairs of any such loan originator. (5)
Assessments
The cost of conducting any examination of any loan originator operating in any State which is subject to a licensing system established by the Secretary under section 8 shall be assessed by the Secretary against the loan originator to meet the Secretary’s expenses in carrying out such examination. (c)
Cease and desist proceeding
(1)
Authority of secretary
If the Secretary finds, after notice and opportunity for hearing, that any person is violating, has violated, or is about to violate any provision of this Act, or any regulation thereunder, with respect to a State which is subject to a licensing system established by the Secretary under section 8, the Secretary may publish such findings and enter an order requiring such person, and any other person that is, was, or would be a cause of the violation, due to an act or omission the person knew or should have known would contribute to such violation, to cease and desist from committing or causing such violation and any future violation of the same provision, rule, or regulation. Such order may, in addition to requiring a person to cease and desist from committing or causing a violation, require such person to comply, or to take steps to effect compliance, with such provision or regulation, upon such terms and conditions and within such time as the Secretary may specify in such order. Any such order may, as the Secretary deems appropriate, require future compliance or steps to effect future compliance, either permanently or for such period of time as the Secretary may specify, with such provision or regulation with respect to any loan originator. (2)
Hearing
The notice instituting proceedings pursuant to paragraph (1) shall fix a hearing date not earlier than 30 days nor later than 60 days after service of the notice unless an earlier or a later date is set by the Secretary with the consent of any respondent so served. (3)
Temporary order
Whenever the Secretary determines that the alleged violation or threatened violation specified in the notice instituting proceedings pursuant to paragraph (1), or the continuation thereof, is likely to result in significant dissipation or conversion of assets, significant harm to consumers, or substantial harm to the public interest prior to the completion of the proceedings, the Secretary may enter a temporary order requiring the respondent to cease and desist from the violation or threatened violation and to take such action to prevent the violation or threatened violation and to prevent dissipation or conversion of assets, significant harm to consumers, or substantial harm to the public interest as the Secretary deems appropriate pending completion of such proceedings. Such an order shall be entered only after notice and opportunity for a hearing, unless the Secretary determines that notice and hearing prior to entry would be impracticable or contrary to the public interest. A temporary order shall become effective upon service upon the respondent and, unless set aside, limited, or suspended by the Secretary or a court of competent jurisdiction, shall remain effective and enforceable pending the completion of the proceedings. (4)
Review of temporary orders
(A)
Review by secretary
At any time after the respondent has been served with a temporary cease-and-desist order pursuant to paragraph (3), the respondent may apply to the Secretary to have the order set aside, limited, or suspended. If the respondent has been served with a temporary cease-and-desist order entered without a prior hearing before the Secretary, the respondent may, within 10 days after the date on which the order was served, request a hearing on such application and the Secretary shall hold a hearing and render a decision on such application at the earliest possible time. (B)
Judicial review
Within— (i)10 days after the date the respondent was served with a temporary cease-and-desist order entered with a prior hearing before the Secretary; or (ii)10 days after the Secretary renders a decision on an application and hearing under paragraph (1), with respect to any temporary cease-and-desist order entered without a prior hearing before the Secretary, the respondent may apply to the United States district court for the district in which the respondent resides or has its principal place of business, or for the District of Columbia, for an order setting aside, limiting, or suspending the effectiveness or enforcement of the order, and the court shall have jurisdiction to enter such an order. A respondent served with a temporary cease-and-desist order entered without a prior hearing before the Secretary may not apply to the court except after hearing and decision by the Secretary on the respondent's application under subparagraph (A).(C)
No automatic stay of temporary order
The commencement of proceedings under subparagraph (B) shall not, unless specifically ordered by the court, operate as a stay of the Secretary's order. (5)
Authority of the Secretary to prohibit persons from serving as loan originators
In any cease-and-desist proceeding under paragraph (1), the Secretary may issue an order to prohibit, conditionally or unconditionally, and permanently or for such period of time as the Secretary shall determine, any person who has violated this Act or regulations thereunder, from acting as a loan originator if the conduct of that person demonstrates unfitness to serve as a loan originator. (d)
Authority of the Secretary To assess money penalties
(1)
In general
The Secretary may impose a civil penalty on a loan originator operating in any State which is subject to licensing system established by the Secretary under section 8, if the Secretary finds, on the record after notice and opportunity for hearing, that such loan originator has violated or failed to comply with any requirement of this Act or any regulation prescribed by the Secretary under this Act or order issued under subsection (c). (2)
Maximum amount of penalty
The maximum amount of penalty for each act or omission described in paragraph (1) shall be $5,000 for each day the violation continues.
15.
Preemption of State law
Nothing in this Act may be construed to preempt the law of any State, to the extent that such State law provides greater protection to consumers than is provided under this Act.
16.
Reports and recommendations to Congress
(a)
Annual reports
Not later than 1 year after the date of enactment of this Act, and annually thereafter, the Secretary shall submit a report to Congress on the effectiveness of the provisions of this Act, including legislative recommendations, if any, for strengthening consumer protections, enhancing examination standards, and streamlining communication between all stakeholders involved in residential mortgage loan origination and processing. (b)
Legislative recommendations
Not later than 6 months after the date of enactment of this Act, the Secretary shall make recommendations to Congress on legislative reforms to the Real Estate Settlement Procedures Act of 1974, that the Secretary deems appropriate to promote more transparent disclosures, allowing consumers to better shop and compare mortgage loan terms and settlement costs.
17.
Study and reports on defaults and foreclosures
(a)
Study required
The Secretary shall conduct an extensive study of the root causes of default and foreclosure of home loans, using as much empirical data as is available. (b)
Preliminary Report to Congress
Not later than 6 months after the date of enactment of this Act, the Secretary shall submit to Congress a preliminary report regarding the study required by this section. (c)
Final report to Congress
Not later than 12 months after the date of enactment of this Act, the Secretary shall submit to Congress a final report regarding the results of the study required by this section, which shall include any recommended legislation relating to the study, and recommendations for best practices and for a process to provide targeted assistance to populations with the highest risk of potential default or foreclosure.