Financial institutions: mortgage brokers and lenders; residential mortgage licensing and supervision act; establish. Creates new act.

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HOUSE BILL NO. 6177

A bill to license and regulate mortgage brokers, mortgage
lenders, mortgage servicers, and mortgage loan originators; to
prohibit certain conduct related to residential mortgage loans; to
prescribe remedies, penalties, and civil sanctions; to provide for
the powers and duties of certain state and local governmental
officers and entities; to provide for the promulgation of rules; to
provide for the appointment of a conservator under certain
circumstances; to create the residential mortgage industry advisory
board and prescribe its powers and duties; to create funds; and to
repeal acts and parts of acts.
July 03, 2026, Introduced by Rep. Tisdel and referred to Committee on Finance.
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THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
ARTICLE 1 1
GENERAL PROVISIONS 2
Sec. 1. This act may be cited as the "residential mortgage 3
licensing and supervision act". 4
Sec. 2. For purposes of this act, the words and phrases 5
defined in sections 3 to 6 have the meanings ascribed to them in 6
those sections. These definitions, unless the context requires 7
otherwise, apply to use of the defined terms in this act. Other 8
definitions applicable to specific sections of this act are found 9
in those sections. 10
Sec. 3. (1) "Affiliate" means a person or group of persons 11
that directly or indirectly, through 1 or more intermediaries, 12
controls, is controlled by, or is under common control with another 13
person and engaged in a business or transaction regulated under 14
this act. 15
(2) "Construction loan" means a residential mortgage loan to 16
construct a 1- to 4-family dwelling that is approved and closed 17
before completion of the improvement on the real property. 18
(3) "Control person" means a shareholder, director, or 19
executive officer of a mortgage broker, mortgage lender, or 20
mortgage servicer applicant or licensee, or individual who has the 21
authority to participate in the direction, directly or indirectly 22
through 1 or more other persons, of the management or policies of a 23
mortgage broker, mortgage lender, or mortgage servicer applicant or 24
licensee. 25
(4) "Department" means the department of insurance and 26
financial services. 27
(5) "Depository institution" means a bank, savings and loan 28
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association, savings bank, or credit union that is chartered under 1
state or federal law, an entity of the federally chartered farm 2
credit system, or any other institution whose deposits are insured 3
by an agency of the federal government. 4
(6) "Director" means the director of the department or the 5
authorized agent of the director. 6
(7) "Dwelling" means that term as defined in section 103 of 7
the truth in lending act, 15 USC 1602. 8
(8) "Employee" means an individual who has an employment 9
relationship acknowledged by the individual and the mortgage 10
broker, mortgage lender, or mortgage servicer licensee that engages 11
the individual to originate, process, or underwrite residential 12
mortgage loans in compliance with federal income tax laws. 13
(9) "Executive officer" means an officer, member, or partner 14
of a mortgage broker, mortgage lender, or mortgage servicer 15
licensee. Executive officer includes the chief executive officer, 16
president, vice president, chief financial officer, controller, 17
trustee, compliance officer, or any other individual who holds any 18
other similar position. 19
(10) "Exempt person" means a person that meets all of the 20
following: 21
(a) Is not required to obtain a mortgage loan originator 22
license or is exempt from licensing under this act or the consumer 23
financial services act, 1988 PA 161, MCL 487.2051 to 487.2072. 24
(b) Has a unique identifier. 25
(c) Is approved by the director in the nationwide multistate 26
licensing system and registry as an exempt person. 27
Sec. 4. (1) "Federal banking agency" means the Board of 28
Governors of the Federal Reserve System, the Office of the 29
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Comptroller of the Currency, the National Credit Union 1
Administration, or the Federal Deposit Insurance Corporation. 2
(2) "Financial licensing act" means any of the financial 3
licensing acts as that term is defined in section 2 of the consumer 4
financial services act, 1988 PA 161, MCL 487.2052. 5
(3) "Firm commitment" means an underwriting in which a broker-6
dealer commits to buy a residential mortgage loan or an entire 7
issue of securities based on or backed by 1 or more residential 8
mortgage loans and assumes all financial responsibility for any 9
unsold securities. 10
(4) "First mortgage loan" means a residential mortgage loan in 11
first lien position. 12
(5) "Immediate family member" means a spouse, child, sibling, 13
parent, grandparent, or grandchild. Immediate family member 14
includes a stepparent, stepchild, stepsibling, and any adoptive 15
relationship. 16
(6) "Investor" means a person that resides in this state or 17
has its principal place of business in this state. Investor does 18
not include any of the following: 19
(a) A bank. 20
(b) A savings bank. 21
(c) A savings and loan association. 22
(d) A credit union. 23
(e) A trust company. 24
(f) An insurance company. 25
(g) An investment company as that term is defined in section 3 26
of the investment company act of 1940, 15 USC 80a-3. 27
(h) A pension or profit-sharing plan if the assets of the plan 28
are managed by a bank or trust company or other institutional 29
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manager. 1
(i) A financial institution. 2
(j) An institutional manager. 3
(k) A broker-dealer that is a member of the New York Stock 4
Exchange or registered under the uniform securities act (2002), 5
2008 PA 551, MCL 451.2101 to 451.2703. 6
(l) The Federal National Mortgage Association. 7
(m) The Government National Mortgage Association. 8
(n) The Federal Home Loan Mortgage Corporation. 9
(o) A mortgage lender. 10
(p) A mortgage servicer. 11
(7) "License" means a license or other authority granted under 12
this act. 13
(8) "Licensee" means a person licensed or required to be 14
licensed under this act. 15
(9) "Loan processor or underwriter" means an individual who 16
performs clerical or support duties as an employee at the direction 17
of and subject to the supervision and instruction of a person 18
licensed or designated as exempt from licensing as a mortgage 19
broker, mortgage lender, or mortgage servicer under this act or 20
licensed or exempt from licensing under the consumer financial 21
services act, 1988 PA 161, MCL 487.2051 to 487.2072. For purposes 22
of this subsection, "clerical or support duties" may include any of 23
the following after a residential mortgage loan application is 24
received: 25
(a) Receiving, collecting, distributing, and analyzing 26
information common for the processing or underwriting of a 27
residential mortgage loan. 28
(b) Communicating with a consumer to obtain the information 29
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that is necessary for the processing or underwriting of a loan, to 1
the extent that the communication does not include offering or 2
negotiating loan rates or terms or counseling consumers about 3
residential mortgage loan rates or terms. 4
(10) "Loan servicing customer" means a mortgagor whose 5
residential mortgage loan is being serviced by a mortgage servicer. 6
Sec. 5. (1) "Mortgage broker" means a person that, directly or 7
indirectly, does any of the following: 8
(a) Serves or offers to serve as an agent for a person in an 9
attempt to obtain a residential mortgage loan. 10
(b) Serves or offers to serve as an agent for a person that 11
makes or offers to make a residential mortgage loan. 12
(c) Serves or offers to serve as an independent contractor 13
loan processor or underwriter for either of the following: 14
(i) A person that engages, or offers to engage, in activities 15
under subdivision (a) or (b). 16
(ii) A person acting as a mortgage lender. 17
(2) "Mortgage lender" means a person that, directly or 18
indirectly, makes or offers to make a residential mortgage loan. 19
(3) "Mortgage loan originator" means an individual who meets 20
all of the following requirements: 21
(a) Is an employee of a mortgage broker, mortgage lender, or 22
mortgage servicer and who originates residential mortgage loans for 23
the employing mortgage broker, mortgage lender, or mortgage 24
servicer. 25
(b) Is not an individual engaged solely as an employee loan 26
processor or underwriter, unless the individual is engaged in 27
behavior under section 49(2). 28
(c) Is not a person that performs only real estate brokerage 29
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activities and is licensed or registered under the laws of this 1
state, unless the person is directly or indirectly compensated by a 2
mortgage broker, a mortgage lender, or any other mortgage loan 3
originator. 4
(d) Is not a person solely involved in extensions of credit 5
relating to timeshare plans as that term is defined in 11 USC 101. 6
(e) Has a unique identifier. 7
(4) "Mortgage servicer" means a person that, directly or 8
indirectly, services or offers to service a residential mortgage 9
loan. 10
(5) "Nationwide multistate licensing system and registry" 11
means a licensing system that is developed and maintained by the 12
Conference of State Bank Supervisors and the American Association 13
of Residential Mortgage Regulators for the licensing and 14
registration of the residential mortgage and nondepository 15
financial services industry. 16
(6) "Nontraditional mortgage product" means a mortgage product 17
other than a 30-year fixed-rate mortgage. 18
(7) "Open-end credit" means any credit extended under a plan 19
in which both of the following apply: 20
(a) The licensee reasonably contemplates repeated 21
transactions. 22
(b) The amount of credit that may be extended to the borrower 23
during the term of the plan is generally made available to the 24
extent that any part of the outstanding balance is repaid. 25
(8) "Originate" means to directly or indirectly do any of the 26
following for compensation or gain, or in the expectation of 27
compensation or gain, in connection with a residential mortgage 28
loan: 29
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(a) Take a residential mortgage loan application. 1
(b) Offer or negotiate terms of a residential mortgage loan. 2
(9) "Person" means an individual, corporation, limited 3
liability company, partnership, association, governmental entity, 4
or any other legal entity. 5
Sec. 6. (1) "Real estate broker" means a real estate broker or 6
associate real estate broker licensed under article 25 of the 7
occupational code, 1980 PA 299, MCL 339.2501 to 339.2518. 8
(2) "Real estate brokerage activity" means an activity that 9
involves offering or providing real estate brokerage services to 10
the public, including, but not limited to, any of the following: 11
(a) Acting as a real estate agent or real estate broker for a 12
buyer, seller, lessor, or lessee of real property. 13
(b) Bringing together parties interested in the sale, 14
purchase, lease, rental, or exchange of real property. 15
(c) On behalf of a party, negotiating any portion of a 16
contract relating to the sale, purchase, lease, rental, or exchange 17
of real property, other than in connection with providing financing 18
with respect to that contract. 19
(d) Engaging in an activity for which a person engaged in the 20
activity is required to be registered or licensed as a real estate 21
agent or real estate broker under any applicable law. 22
(e) Offering to engage in an activity, or act in any capacity, 23
described in subdivisions (a) to (d). 24
(3) "Real estate salesperson" means a real estate salesperson 25
licensed under article 25 of the occupational code, 1980 PA 299, 26
MCL 339.2501 to 339.2518. 27
(4) "Registered mortgage loan originator" means an individual 28
who is both of the following: 29
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(a) A mortgage loan originator employed by any of the 1
following: 2
(i) A depository institution. 3
(ii) A subsidiary of a depository institution that is owned and 4
controlled by that depository institution and is regulated by a 5
federal banking agency. 6
(iii) An institution regulated by the Farm Credit 7
Administration. 8
(b) Registered with, and maintains a unique identifier 9
through, the nationwide multistate licensing system and registry. 10
(5) "Remote location" means a location other than the company 11
address. 12
(6) "Residential mortgage loan" means a loan or land contract 13
that is made to a person for primarily personal, family, or 14
household use that is secured by a mortgage, deed of trust, or 15
other equivalent consensual security interest on a dwelling or 16
residential real estate. Residential mortgage loan does not include 17
a home improvement installment contract under the home improvement 18
finance act, 1965 PA 332, MCL 445.1101 to 445.1431. 19
(7) "Residential real estate" means any real property located 20
in this state on which a person has constructed or intends to 21
construct a dwelling. 22
(8) "Secondary mortgage loan" means a residential mortgage 23
loan that has a term of 90 days or more and that is subject to a 24
lien of 1 or more outstanding residential mortgage loans. 25
(9) "Service" means the collection or remittance, or the right 26
or obligation to collect or remit, for a lender, noteowner, 27
noteholder, or mortgage servicer, or for a licensee's own account, 28
of 4 or more installment payments of principal, interest, or an 29
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amount placed in escrow under a residential mortgage loan, a 1
residential mortgage servicing agreement, or an agreement with the 2
mortgagor. 3
(10) "Shareholder" means either of the following: 4
(a) A person that owns, or is authorized to vote, directly or 5
indirectly, any percentage of a class of voting interests of a 6
mortgage broker, mortgage lender, or mortgage servicer applicant or 7
licensee, if the applicant or licensee has less than 20 8
shareholders or owners. 9
(b) A person that owns, or is authorized to vote, directly or 10
indirectly, 10% or more of a class of voting securities or voting 11
interests of a mortgage broker, mortgage lender, or mortgage 12
servicer applicant or licensee if the applicant or licensee has 20 13
or more shareholders or owners. 14
(11) "Sponsor" means a person that meets all of the following: 15
(a) Has a unique identifier. 16
(b) Is approved by the director in the nationwide multistate 17
licensing system and registry as an exempt person or as a person 18
licensed under this act as a mortgage broker, mortgage lender, or 19
mortgage servicer or the consumer financial services act, 1988 PA 20
161, MCL 487.2051 to 487.2072. 21
(c) Has indicated in the nationwide multistate licensing 22
system and registry that an individual will act as a mortgage loan 23
originator for the person under the person's specific license, or 24
status as an exempt person. 25
(12) "Unique identifier" means a number or other identifier 26
assigned by the protocols established by the nationwide multistate 27
licensing system and registry. 28
ARTICLE 2 29
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LICENSING 1
PART 1 2
GENERAL REQUIREMENTS FOR MORTGAGE BROKER, MORTGAGE LENDER, MORTGAGE 3
SERVICER, AND MORTGAGE LOAN ORIGINATOR LICENSING 4
Sec. 7. (1) Unless a person is exempt from licensing or 5
authorized to temporarily act without a license under this act, a 6
person shall not act as a mortgage broker, mortgage lender, 7
mortgage servicer, or mortgage loan originator licensee, or in any 8
way hold out as being able to provide the services of a mortgage 9
broker, mortgage lender, mortgage servicer, or mortgage loan 10
originator licensee, without first obtaining and maintaining a 11
mortgage broker, mortgage lender, mortgage servicer, or mortgage 12
loan originator license. 13
(2) A person claiming an exemption from licensing as a 14
mortgage broker, mortgage lender, mortgage servicer, or mortgage 15
loan originator bears the burden of establishing to the 16
satisfaction of the director that the person qualifies for the 17
exemption. 18
(3) The director is authorized to establish a relationship or 19
contract with the nationwide multistate licensing system and 20
registry, or any other entity designated by the nationwide 21
multistate licensing system and registry, to collect and maintain 22
records and process fees under this act. 23
Sec. 9. (1) Not later than 6 months after the effective date 24
of this act, a person that is licensed or registered under the 25
mortgage brokers, lenders, and servicers licensing act, 1987 PA 26
173, MCL 445.1651 to 445.1684, the secondary mortgage loan act, 27
1981 PA 125, MCL 493.51 to 493.81, or the mortgage loan originator 28
licensing act, 2009 PA 75, MCL 493.131 to 493.171, and that 29
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qualifies as a mortgage broker, mortgage lender, mortgage servicer, 1
or mortgage loan originator under this act, must apply to be 2
licensed as a mortgage broker, mortgage lender, mortgage servicer, 3
or mortgage loan originator, as applicable, under this act. 4
(2) Both of the following apply to a person that applies for a 5
mortgage broker, mortgage lender, mortgage servicer, or mortgage 6
loan originator license in accordance with subsection (1): 7
(a) The person may operate without a license as a mortgage 8
broker, mortgage lender, mortgage servicer, or mortgage loan 9
originator, as applicable, between the date that is 6 months after 10
the effective date of this act and the date that the director takes 11
action on the application. 12
(b) The person while engaged in activities regulated under 13
this act is subject to the requirements of this act to the same 14
extent as if the person was a mortgage broker, mortgage lender, 15
mortgage servicer, or mortgage loan originator licensee. 16
Sec. 11. (1) Except for a state or nationally chartered bank, 17
savings bank, or an affiliate of a bank or savings bank, a mortgage 18
broker, mortgage lender, or mortgage servicer licensee shall not 19
include in its name or assumed name the words "bank", "banker", 20
"banking", "banc", "bankcorp", or "bancorp", or any other words or 21
phrases that would imply that the licensee is a bank, is engaged in 22
the business of banking, or is affiliated with a bank or savings 23
bank. 24
(2) It is not a violation of subsection (1) for a mortgage 25
broker, mortgage lender, or mortgage servicer licensee to use the 26
term "mortgage banker" or "mortgage banking" in its name or assumed 27
name. 28
(3) A person licensed as a mortgage broker, mortgage lender, 29
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or mortgage servicer under the mortgage brokers, lenders, and 1
servicers licensing act, 1987 PA 173, MCL 445.1651 to 445.1684, 2
whose name or assumed name complied with that act on the effective 3
date of this act may use that same name or assumed name in its 4
application for a mortgage broker, mortgage lender, or mortgage 5
servicer license under this act. 6
(4) A mortgage broker, mortgage lender, mortgage servicer, or 7
mortgage loan originator licensee may operate only under a name 8
that is approved and licensed by the director. 9
(5) A mortgage broker, mortgage lender, mortgage servicer, or 10
mortgage loan originator license does not approve the use of or 11
indemnify the licensee against claims for the improper use of the 12
business name stated in the license. 13
Sec. 13. (1) An application for a mortgage broker, mortgage 14
lender, mortgage servicer, or mortgage loan originator license, or 15
a renewal thereof, must be made in the form and manner prescribed 16
by the director and must be submitted with any fee required under 17
section 15. 18
(2) In addition to any requirement under subsection (1), an 19
applicant for a mortgage loan originator license, and each control 20
person of an applicant for a mortgage broker, mortgage lender, or 21
mortgage servicer license, shall at a minimum furnish the 22
nationwide multistate licensing system and registry with 23
information and documentation concerning the mortgage loan 24
originator applicant's or control person's identity, including, but 25
not limited to, all of the following: 26
(a) Subject to subsection (3), fingerprints for submission to 27
both of the following: 28
(i) The Federal Bureau of Investigation for performance of a 29
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criminal history check. 1
(ii) Any other governmental agency or entity authorized to 2
receive the fingerprints for a state, national, or international 3
criminal history check. 4
(b) Information relating to the personal history and 5
experience of the individual, which must be furnished on a form 6
prescribed by the nationwide multistate license system and 7
registry. 8
(c) Authorization for the nationwide multistate licensing 9
system and registry and the director to obtain all of the 10
following: 11
(i) An independent credit report obtained from a consumer 12
reporting agency as that term is defined in section 603 of the fair 13
credit reporting act, 15 USC 1681a. 14
(ii) Information related to any administrative, civil, or 15
criminal findings by any governmental jurisdiction. 16
(3) An individual who is subject to a criminal history check 17
under subsection (2) shall do all of the following: 18
(a) Have the individual's fingerprints taken by a law 19
enforcement agency or other person that the director determines is 20
qualified to take fingerprints. 21
(b) Pay the agency or person taking the fingerprints any fee 22
required by the Federal Bureau of Investigation for processing 23
fingerprints and completing the criminal history check. 24
(c) Request that the agency or person taking the fingerprints 25
forward the fingerprints and fees through the nationwide multistate 26
licensing system and registry to the Federal Bureau of 27
Investigation for a criminal history check. 28
(4) After receiving a proper request and the required fees 29
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under subsection (3), the Federal Bureau of Investigation shall 1
conduct a criminal history check and provide the director and the 2
mortgage broker, mortgage lender, mortgage servicer, or mortgage 3
loan originator applicant with the results of the criminal history 4
check. The results must include any criminal history record 5
information concerning the individual subject to the criminal 6
history check maintained by the Federal Bureau of Investigation's 7
criminal history check. 8
(5) The form described in subsection (1) must include the 9
content established by rule, instruction, or procedure of the 10
director, and the director may change or update the form and its 11
contents as necessary in order to carry out the purpose of this 12
act. 13
(6) For purposes of this section, the director may use the 14
nationwide multistate licensing system and registry for any of the 15
following: 16
(a) Requesting information from and distributing information 17
to the Department of Justice or any other governmental agency. 18
(b) Requesting and distributing information to and from any 19
source as directed by the director. 20
Sec. 15. (1) At the time of making an application for a 21
mortgage broker, mortgage lender, or mortgage servicer license, and 22
at the time of making the first application for a mortgage broker, 23
mortgage lender, or mortgage servicer license after a nonrenewal, 24
suspension, or revocation of the license, an applicant shall pay to 25
the director both of the following: 26
(a) A fee for investigating the applicant. 27
(b) The annual operating fee established by the director under 28
this section. 29
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(2) At the time of making an initial application for a 1
mortgage loan originator license, at the time of making the first 2
application for a mortgage loan originator license after 3
nonrenewal, suspension, or revocation of the license, and at the 4
time of making an application for the renewal of a mortgage loan 5
originator license, an applicant shall pay to the director an 6
annual fee. 7
(3) At the time that a mortgage broker, mortgage lender, 8
mortgage servicer, or mortgage loan originator licensee requests 9
the amending or reissuing of the license, the licensee shall pay to 10
the director a fee prescribed by the director. 11
(4) A mortgage broker, mortgage lender, mortgage servicer, or 12
mortgage loan originator licensee shall pay the actual travel, 13
lodging, and meal expenses incurred by staff of the department who 14
travel out of state to examine the records of the licensee or 15
investigate the licensee and the cost of independent investigators 16
employed under this act. 17
(5) The director shall annually establish fees under this 18
section that are sufficient to pay, but must not exceed, the 19
department's reasonably anticipated costs of administering and 20
enforcing this act. In establishing fees under this subsection, the 21
director shall comply with the following: 22
(a) For the investigation of an applicant for a mortgage 23
broker, mortgage lender, or mortgage servicer license under 24
subsection (1), a fee of not less than $400.00 and not more than 25
$1,000.00. 26
(b) Subject to subsection (6), for the annual operating fee 27
for a mortgage broker, mortgage lender, or mortgage servicer 28
applicant under subsection (1), the total of both of the following: 29
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(i) A base fee of not less than $250.00 and not more than 1
$2,500.00. 2
(ii) An operating fee based on all of the following: 3
(A) The number of closed residential mortgage loans subject to 4
this act that the mortgage broker, mortgage lender, or mortgage 5
servicer licensee brokered to other parties. 6
(B) The number of residential mortgage loans subject to this 7
act closed by the licensee during the previous calendar year. 8
(C) The dollar volume of residential mortgage loans subject to 9
this act serviced by the licensee as of December 31 of the previous 10
calendar year. 11
(c) For amending or reissuing a mortgage broker, mortgage 12
lender, mortgage servicer license, a fee of not less than $15.00 13
and not more than $200.00, plus the cost of an investigation under 14
subdivision (a), as applicable. 15
(6) The annual operating fee set by the director under 16
subsection (5) must be based on information in a report required 17
under section 61. 18
(7) A fee received under this act is nonrefundable. 19
(8) If any fees or penalties provided for in this act are not 20
paid when required, the attorney general may maintain an action 21
against the delinquent mortgage broker, mortgage lender, mortgage 22
servicer, or mortgage loan originator licensee for the recovery of 23
the fees or penalties together with interest and costs. 24
(9) A mortgage broker, mortgage lender, mortgage servicer, or 25
mortgage loan originator licensee that does not submit to the 26
director a report required under section 23 or 61 is subject to a 27
late filing fee of $25.00 for each day that the report is 28
delinquent or $1,000.00, whichever is less. 29
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(10) A mortgage loan originator, mortgage broker, mortgage 1
lender, or mortgage servicer licensee whose license renewal fee is 2
not received on or before December 31 is subject to a late renewal 3
fee of $25.00 for each day the fee is delinquent or $1,000.00, 4
whichever is less. 5
(11) A mortgage broker, mortgage lender, mortgage servicer, or 6
mortgage loan originator applicant or licensee shall pay any fee 7
required by the nationwide multistate licensing system and 8
registry, or similar related system, to maintain the applicant or 9
licensee records. 10
PART 2 11
LICENSING REQUIREMENTS SPECIFIC TO MORTGAGE BROKERS, MORTGAGE 12
LENDERS, AND MORTGAGE SERVICERS 13
Sec. 17. (1) On receipt of an application for a mortgage 14
broker, mortgage lender, or mortgage servicer license, or a renewal 15
thereof, payment of the fees required under section 15, and proof 16
of financial responsibility required under section 19, the director 17
shall conduct an investigation of the applicant and its control 18
persons and affiliates. 19
(2) If the director determines after investigating an 20
applicant under subsection (1) that the applicant meets the 21
qualifications under this act and that the experience, character, 22
business reputation, and general fitness of the applicant, and its 23
control persons and affiliates, command the confidence of the 24
public and warrant the belief that the applicant, and its control 25
persons and affiliates, will comply with the law, the director must 26
grant or renew the license. 27
Sec. 19. (1) Except as otherwise provided in this section, at 28
the time of filing an application for a mortgage broker, mortgage 29
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lender, or mortgage servicer license, or a renewal thereof, the 1
applicant shall provide proof of financial responsibility in the 2
form of a corporate surety bond in 1 of the following amounts, as 3
applicable: 4
(a) For a mortgage broker or mortgage lender applicant that in 5
the aggregate had an annual residential mortgage loan brokering or 6
lending volume of $12,000,000.00 or less during the previous 7
calendar year, $50,000.00. 8
(b) For a mortgage broker or mortgage lender applicant that in 9
the aggregate had an annual residential mortgage loan brokering or 10
lending volume of not less than $12,000,000.01 and not more than 11
$24,000,000.00 during the previous calendar year, $150,000.00. 12
(c) For a mortgage broker or mortgage lender applicant that in 13
the aggregate had an annual residential mortgage loan brokering or 14
lending volume of $24,000,000.01 or more during the previous 15
calendar year, $250,000.00. 16
(d) For a mortgage servicer applicant, $500,000.00. 17
(2) All of the following apply to the corporate surety bond 18
required under subsection (1): 19
(a) It must be on a form prescribed by the director. 20
(b) It must be payable to the director. 21
(c) It must be executed by a corporate surety approved by the 22
director. 23
(d) It must have a continuous term. 24
(e) It must cover the employees, agents, and sponsored 25
mortgage loan originators of the applicant described in subsection 26
(1). 27
(f) It must be conditioned on the applicant described in 28
subsection (1), its employees, agents, and sponsored mortgage loan 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
originators conducting business in accordance with this act and any 1
rules promulgated under this act and the payment of any applicable 2
fee or money that becomes due. 3
(3) The director may promulgate rules under the administrative 4
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, to 5
implement requirements related to corporate surety bonds that the 6
director determines are necessary to accomplish the purpose of this 7
act. 8
(4) If an action is commenced by the director on a corporate 9
surety bond described in this section, the director may require the 10
filing of a new corporate surety bond. If there is recovery in the 11
action, the applicant described in subsection (1) must immediately 12
provide to the director a new corporate surety bond that meets the 13
requirements of this section. 14
Sec. 21. (1) A mortgage broker licensee that does not receive 15
funds from prospective borrowers before closing residential 16
mortgage loans shall maintain a net worth of not less than 17
$25,000.00. 18
(2) A mortgage broker licensee that receives funds from 19
prospective borrowers before closing residential mortgage loans 20
shall maintain a net worth of not less than $50,000.00. 21
(3) A mortgage lender licensee shall maintain a net worth of 22
not less than $100,000.00. 23
(4) A mortgage servicer licensee shall maintain a net worth of 24
not less than $250,000.00. 25
(5) An applicant for a mortgage broker, mortgage lender, or 26
mortgage servicer license, or a renewal thereof, shall do both of 27
the following: 28
(a) Disclose its net worth on a form prescribed by the 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
director or on a form prepared and reviewed by an independent 1
certified public accountant. 2
(b) Subject to subsection (6), compute its net worth in 3
accordance with generally accepted accounting principles. 4
(6) The following assets are excluded in the computation of 5
net worth: 6
(a) The portion of an applicant's assets pledged to secure 7
obligations of any person other than that of the applicant. 8
(b) Any asset except construction loans receivables, secured 9
by first mortgages from related companies, due from officers or 10
stockholders of the applicant or persons in which the applicant's 11
officers or stockholders have interest. 12
(c) An amount in excess of the lower of the cost or market 13
value of residential mortgage loans in foreclosure, or real 14
property acquired through foreclosure. 15
(d) An investment shown on the balance sheet in joint 16
ventures, subsidiaries, or affiliates that is greater than the 17
market values of the assets. 18
(e) Goodwill or other intangible assets. 19
(f) Organization costs. 20
Sec. 23. (1) The term of an initial mortgage broker, mortgage 21
lender, or mortgage servicer license begins on the date that the 22
application for the initial license is granted by the director and 23
expires on December 31 of that year, unless the initial license was 24
granted by the director between November 1 and December 31, in 25
which case, the initial license expires on December 31 of the year 26
following the year in which the initial license was granted by the 27
director. 28
(2) Except as otherwise provided in subsection (1) and subject 29
22

JJB H05171'25_HB6177_INTR_1 hio5fd
to section 53, a mortgage broker, mortgage lender, and mortgage 1
servicer license expires on December 31 of each year unless it is 2
renewed. 3
(3) A mortgage broker, mortgage lender, or mortgage servicer 4
licensee may renew its license by filing an application for a 5
license renewal and paying the fees described in section 15 for the 6
succeeding year. 7
(4) The application for renewal and payment of fees described 8
in subsection (3) must be received by the director on or before a 9
date prescribed by the director. 10
(5) Not later than 90 days after the close of each fiscal year 11
of a mortgage broker, mortgage lender, or mortgage servicer 12
licensee, the licensee shall deliver to the director a financial 13
statement for that fiscal year that is prepared from the licensee's 14
books or records. 15
(6) Subject to subsection (7), the financial statement 16
described in subsection (5) may be any of the following: 17
(a) On a form prescribed by the director. 18
(b) A report substantially similar to the form prescribed by 19
the director, which the licensee must represent to the director as 20
true and complete. 21
(c) In a format prepared and certified by an independent 22
certified public accountant licensed by a regulatory authority of 23
any state or political subdivision of the United States. 24
(7) The financial statement described in subsection (5) must 25
include the net worth information required under section 21. 26
Sec. 25. (1) A person shall not transfer or assign a mortgage 27
broker, mortgage lender, or mortgage servicer license without 28
applying for and receiving the approval of the director for the 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
transfer or assignment. 1
(2) The cumulative sale, transfer, assignment, or conveyance 2
of more than 25% of the outstanding voting stock of a mortgage 3
broker, mortgage lender, or mortgage servicer licensee that is a 4
corporation, or more than 25% of the ownership interest in a 5
mortgage broker, mortgage lender, or mortgage servicer licensee 6
that is a partnership, limited liability company, or other 7
unincorporated legal entity, or the change in an executive officer, 8
is a transfer of the license. 9
(3) The calculation of the cumulative amount of a transfer or 10
assignment includes all sales, transfers, assignments, and 11
conveyances that occur after the date of licensure or after the 12
date that a subsequent transfer or assignment is approved by the 13
director. 14
(4) A transfer or assignment of a mortgage broker, mortgage 15
lender, or mortgage servicer license is subject to the background 16
investigation of a control person required under section 53. 17
(5) If the department receives an application for the transfer 18
or assignment of a mortgage broker, mortgage lender, or mortgage 19
servicer license on a form prescribed by the director and payment 20
of all required fees, the director shall approve or deny the 21
application within a reasonable time. 22
PART 3 23
LICENSING REQUIREMENTS SPECIFIC TO MORTGAGE LOAN ORIGINATORS 24
Sec. 27. (1) On receipt of an application for a mortgage loan 25
originator license, or a renewal thereof, and payment of any fee 26
required under section 15, the director shall conduct an 27
investigation of the applicant. 28
(2) If the director determines after investigating an 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
applicant under subsection (1) that the applicant meets the 1
qualifications under section 29, the director must grant or renew 2
the mortgage loan originator license. 3
Sec. 29. (1) The director shall not grant a mortgage loan 4
originator license unless the director makes at a minimum all of 5
the following findings: 6
(a) The applicant is not subject to a prohibition order issued 7
by the director under section 127 or under a financial licensing 8
act. 9
(b) The applicant has never had a mortgage loan originator 10
license revoked in any governmental jurisdiction, except that the 11
director shall not consider a revocation that is formally vacated 12
as a revocation for purposes of this subdivision. 13
(c) Subject to subsection (2), the applicant has not been 14
convicted of, or pled guilty or no contest to, any of the following 15
in a state, federal, foreign, or military court: 16
(i) Except as otherwise provided in subparagraph (ii), within 17
the 10-year period preceding the date of the license application, a 18
felony. 19
(ii) At any time preceding the date of the license application, 20
a felony or misdemeanor involving fraud, dishonesty, breach of 21
trust, money laundering, embezzlement, forgery, a financial 22
transaction, or securities. 23
(d) The applicant has demonstrated financial responsibility, 24
character, and general fitness that commands the confidence of the 25
community and warrants a determination that the applicant will 26
operate honestly, fairly, and efficiently under this act. 27
(e) The applicant has completed the prelicensing education 28
described in section 31. 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
(f) The applicant has passed a written test that meets the 1
requirements described in section 33. 2
(g) The applicant is covered by a corporate surety bond that 3
meets the requirements of section 19. 4
(h) The applicant has a sponsor in the nationwide multistate 5
licensing system and registry that is approved by the director. 6
(2) The director shall not consider a conviction for which a 7
pardon was granted for the purpose of subsection (1)(c). 8
Sec. 31. (1) To meet the prelicensing education requirement 9
under section 29, the mortgage loan originator applicant must 10
complete at least 20 hours of education approved under subsection 11
(2), including, but not limited to, all of the following: 12
(a) Three hours of federal law and regulation. 13
(b) Three hours of ethics, including instruction on fraud, 14
consumer protection, and fair lending issues. 15
(c) Two hours of training related to lending standards for the 16
nontraditional mortgage product marketplace. 17
(2) Only prelicensing education courses reviewed and approved 18
by the nationwide multistate licensing system and registry may be 19
used to satisfy the requirements of subsection (1), and the review 20
and approval of a prelicensing education course must include review 21
and approval of the course provider. 22
(3) If approved by the nationwide multistate licensing system 23
and registry, a prelicensing education course may be provided by 24
the employer of the applicant, an entity that is affiliated with 25
the applicant by an agency contract, or a subsidiary or affiliate 26
of that employer or entity. 27
(4) The prelicensing education may be offered in a classroom, 28
online, or by any other means approved by the nationwide multistate 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
licensing system and registry. 1
(5) If a person completes any prelicensing education 2
requirements described in subsection (1) that are approved by the 3
nationwide multistate licensing system and registry for any state, 4
the director must accept those hours of education as credit toward 5
completion of the prelicensing education requirements. 6
(6) If an unlicensed individual who formerly held a mortgage 7
loan originator license under this act applies for a new mortgage 8
loan originator license, the individual must prove that the 9
individual completed all of the continuing education requirements 10
under section 37 for the year in which the previous license was 11
last held to be eligible for a new license. 12
Sec. 33. (1) To meet the written test requirements under 13
section 29, the mortgage loan originator applicant shall pass a 14
qualified written test developed by the nationwide multistate 15
licensing system and registry and administered by a test provider 16
approved by the nationwide multistate licensing system and registry 17
based on reasonable standards. 18
(2) A written test is not considered a qualified written test 19
for purposes of subsection (1) unless the test adequately measures 20
the applicant's knowledge and comprehension in appropriate subject 21
areas, including all of the following: 22
(a) Ethics. 23
(b) Federal law and regulation pertaining to mortgage 24
origination and to mortgage lending, including, but not limited to, 25
fraud, consumer protection, and fair lending issues and the 26
nontraditional mortgage product marketplace. 27
(c) State law and regulation pertaining to mortgage 28
origination and to mortgage lending, including, but not limited to, 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
fraud, consumer protection, and fair lending issues and the 1
nontraditional mortgage product marketplace. 2
(3) If the written test provided is approved by the nationwide 3
multistate licensing system and registry, the test provider may 4
provide a test at the location of the employer of the mortgage loan 5
originator applicant, the location of any subsidiary or affiliate 6
of the employer of the mortgage loan originator applicant, or the 7
location of any entity with which the mortgage loan originator 8
applicant holds an exclusive arrangement to conduct the business of 9
a mortgage loan originator. 10
(4) All of the following apply to a written test under this 11
section: 12
(a) A mortgage loan originator applicant is not considered to 13
have passed a qualified written test unless the individual achieves 14
a test score of 75% or more correct answers to questions. 15
(b) A mortgage loan originator applicant may retake a test 3 16
consecutive times if each consecutive retaking occurs at least 30 17
days after the preceding test. 18
(c) If a mortgage loan originator applicant fails 3 19
consecutive tests, the applicant must wait at least 6 months before 20
taking the test again. 21
(d) If an unlicensed individual who formerly held a mortgage 22
loan originator license under this act applies for a new mortgage 23
loan originator license, the individual must retake the test if at 24
least 5 years have elapsed since the individual last held a valid 25
mortgage loan originator license. 26
Sec. 35. (1) The term of an initial mortgage loan originator 27
license begins on the date that the application for the initial 28
license is granted by the director and expires on December 31 of 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
that year, unless the initial license was granted by the director 1
between November 1 and December 31, in which case, the initial 2
license expires on December 31 of the year following the year in 3
which the initial license was granted by the director. 4
(2) Except as otherwise provided in subsection (1), the 5
director shall annually renew the license of a mortgage loan 6
originator licensee if all of the following are met before the 7
license expires: 8
(a) The licensee continues to meet the requirements for 9
licensure under section 29(1)(a) to (f). 10
(b) The licensee has satisfied the annual continuing education 11
requirements described in section 37. 12
(c) The licensee has paid any fee required under section 15. 13
(3) If a mortgage loan originator licensee does not satisfy 14
the requirements of subsection (2) for the renewal of the license, 15
the license expires. 16
(4) The director may adopt procedures for the reinstatement of 17
an expired mortgage loan originator license consistent with the 18
standards established by the nationwide multistate licensing system 19
and registry. 20
Sec. 37. (1) To meet the annual continuing education 21
requirement under section 35, a mortgage loan originator licensee 22
must complete at least 8 hours of education approved under 23
subsection (2), including, but not limited to, all of the 24
following: 25
(a) Three hours of federal law and regulation. 26
(b) Two hours of ethics, including instruction on fraud, 27
consumer protection, and fair lending practices. 28
(c) Two hours of training related to lending standards for the 29
29

JJB H05171'25_HB6177_INTR_1 hio5fd
nontraditional mortgage product marketplace. 1
(2) Only continuing education courses reviewed and approved by 2
the nationwide multistate licensing system and registry, based on 3
reasonable standards, may be used to satisfy the requirement under 4
subsection (1), and the review and approval of a continuing 5
education course must include the review and approval of the course 6
provider. 7
(3) If approved by the nationwide multistate licensing system 8
and registry, a continuing education course may be provided by the 9
employer of the mortgage loan originator licensee, an entity that 10
is affiliated with the mortgage loan originator licensee by an 11
agency contract, or a subsidiary or affiliate of that employer or 12
entity. 13
(4) The continuing education may be offered in a classroom, 14
online, or by any other means approved by the nationwide multistate 15
licensing system and registry. 16
(5) Both of the following apply to the continuing education 17
requirements under this section: 18
(a) Except as otherwise provided in subsection (9) and section 19
35, a mortgage loan originator licensee may receive credit for a 20
continuing education course only in the year in which the course is 21
taken. 22
(b) A mortgage loan originator licensee may not take the same 23
approved course in the same or successive years to meet the annual 24
requirements for continuing education. 25
(6) A mortgage loan originator licensee who is an approved 26
instructor of an approved continuing education course may receive 27
credit for the licensee's own annual continuing education 28
requirement at the rate of 2 hours credit for every 1 hour taught. 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
(7) If a person successfully completes any continuing 1
education requirements described in subsection (1) that are 2
approved by the nationwide multistate licensing system and registry 3
for any state, the director must accept those hours of education as 4
credit toward completion of the continuing education requirements. 5
(8) If an unlicensed individual who formerly held a mortgage 6
loan originator license applies for a new mortgage loan originator 7
license, the individual must complete the continuing education 8
requirements for the last year in which the license was held to be 9
eligible for a new license. 10
(9) The director may promulgate rules under the administrative 11
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, to 12
establish a procedure by which an individual who meets the 13
requirements of section 35(2)(a) and (c) may make up any deficiency 14
in continuing education. 15
Sec. 39. (1) A mortgage loan originator licensee shall be 16
sponsored by a mortgage broker, mortgage lender, or mortgage 17
servicer licensee and covered by a corporate surety bond that meets 18
the requirements of section 19. 19
(2) A mortgage loan originator licensee who does not meet the 20
requirements of subsection (1) is automatically subject to a 21
condition that the licensee may not originate a residential 22
mortgage loan under this act and the licensee shall immediately 23
cease originating residential mortgage loans and may not originate 24
residential mortgage loans until the condition is removed by the 25
director in accordance with section 19. 26
Sec. 41. (1) An individual who is a registered mortgage loan 27
originator at the time of becoming employed by a person that is not 28
a depository institution, a subsidiary of a depository institution 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
that is owned and controlled by that depository institution and is 1
regulated by a federal banking agency, or an institution regulated 2
by the Farm Credit Administration has temporary authority to act as 3
a mortgage loan originator for the period described in subsection 4
(2) without first obtaining a mortgage loan originator license if 5
all of the following apply: 6
(a) The mortgage loan originator is employed by a person that 7
is licensed under this act or the consumer financial services act, 8
1988 PA 161, MCL 487.2051 to 487.2072. 9
(b) The individual has not had an application for a mortgage 10
loan originator license denied or a mortgage loan originator 11
license revoked or suspended in this state or any other state. 12
(c) The individual has not been subject to, or served with, a 13
cease and desist order in this state or any other state, or under 14
section 1514 of the secure and fair enforcement for mortgage 15
licensing act of 2008, 12 USC 5113. 16
(d) The individual has not been convicted of, or pled guilty 17
or no contest to, a misdemeanor or felony that would preclude 18
licensure under this act. 19
(e) The individual has submitted an application for a mortgage 20
loan originator license, has paid any fees required under section 21
15, and is covered by a corporate surety bond that meets the 22
requirements of section 19. 23
(f) The individual was registered in the nationwide multistate 24
licensing system and registry as a mortgage loan originator during 25
the year immediately preceding the date on which the individual 26
submitted the application for a mortgage loan originator license. 27
(g) The individual is not subject to a prohibition order 28
issued by the director under section 127 or under a financial 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
licensing act. 1
(2) The period of temporary authority described in subsection 2
(1) begins on the date that the individual submits the application 3
for a mortgage loan originator license, pays any fee required under 4
section 15, and is covered by a corporate surety bond that meets 5
the requirements of section 19, and ends on the earliest of the 6
following dates: 7
(a) The date that the individual withdraws the application. 8
(b) The date that the director denies, or issues a notice of 9
intent to deny, the application. 10
(c) The date that the director approves the application. 11
(d) The date that is 120 days after the date that the 12
individual submitted the application, if the application is listed 13
in the nationwide multistate licensing system and registry as 14
incomplete. 15
(3) As used in this section, "state" means any state of the 16
United States, the District of Columbia, any territory of the 17
United States, Puerto Rico, Guam, American Samoa, the Trust 18
Territory of the Pacific Islands, the Virgin Islands, and the 19
Northern Mariana Islands. 20
Sec. 43. (1) An individual who is a mortgage loan originator 21
licensed in another state has temporary authority to act as a 22
mortgage loan originator in this state for the period described in 23
subsection (2) without first obtaining a mortgage loan originator 24
license under this act if all of the following apply: 25
(a) The individual meets the requirements described in section 26
41(1)(a) to (g), as determined by the department. 27
(b) The individual was licensed in another state during the 28
30-day period immediately preceding the date on which the 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
individual submitted an application for a mortgage loan originator 1
license under this act. 2
(2) The period of temporary authority described in subsection 3
(1) begins on the date that the individual submits an application 4
for a mortgage loan originator license, pays any fee required under 5
section 15, and is covered by a corporate surety bond that meets 6
the requirements of section 19, and ends on the earliest of the 7
following dates: 8
(a) The date that the individual withdraws the application. 9
(b) The date that the director denies, or issues a notice of 10
intent to deny, the application. 11
(c) The date that the director approves the application. 12
(d) The date that is 120 days after the date that the 13
individual submitted the application, if the application is listed 14
in the nationwide multistate licensing system and registry as 15
incomplete. 16
(3) As used in this section, "state" means any state of the 17
United States, the District of Columbia, any territory of the 18
United States, Puerto Rico, Guam, American Samoa, the Trust 19
Territory of the Pacific Islands, the Virgin Islands, and the 20
Northern Mariana Islands. 21
Sec. 45. (1) A person that employs an individual who has the 22
temporary authority to act under section 41 or 43 is subject to the 23
applicable law of this state to the same extent as if the 24
individual is a mortgage loan originator licensee. 25
(2) An individual who has the temporary authority to act under 26
section 41 or 43 and who engages in residential mortgage loan 27
origination activities is subject to the applicable law of this 28
state to the same extent as if the individual is a mortgage loan 29
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originator licensee. 1
PART 4 2
LICENSING APPLICABILITY AND EXEMPTIONS 3
Sec. 47. Each of the following is exempt from the mortgage 4
broker, mortgage lender, and mortgage servicer licensing 5
requirements under this article: 6
(a) A depository institution, regardless of whether the 7
depository institution is acting as a trustee or fiduciary. 8
(b) A salesperson who is acting as an agent for a residential 9
builder or residential maintenance and alteration contractor 10
licensed under article 24 of the occupational code, 1980 PA 299, 11
MCL 339.2401 to 339.2412, if a residential mortgage loan is made or 12
negotiated in connection with the sale or financing of a 13
residential structure or improvement constructed or improved by the 14
residential builder or residential maintenance and alteration 15
contractor. 16
(c) A real estate broker or real estate salesperson who is not 17
a mortgage broker, mortgage lender, or mortgage servicer, or who 18
only acts as a mortgage broker in connection with a real estate 19
sale or lease and acts without additional compensation beyond the 20
customary commission on sales or leases. 21
(d) A real estate salesperson who acts for a real estate 22
broker as a mortgage broker, mortgage lender, or mortgage servicer 23
and who receives for the services compensation only from the real 24
estate broker for which the real estate salesperson is employed or 25
acts as an agent. 26
(e) An agency or corporate instrumentality of the United 27
States and of this state and its political subdivisions, including 28
the public employees' retirement system. 29
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(f) A mortgage lender that in the aggregate with any 1
affiliates makes 3 or fewer residential mortgage loans in a 12-2
month period between January 1 and December 31. 3
(g) Subject to subdivision (h), a mortgage servicer that in 4
the aggregate with any affiliates services 3 or fewer residential 5
mortgage loans in a 12-month period between January 1 and December 6
31. 7
(h) A mortgage servicer that in the aggregate with any 8
affiliates services 10 or fewer land contracts, of which 3 or fewer 9
require the collection of money for the payment of taxes or 10
insurance. This subdivision and subdivision (g) do not exempt a 11
mortgage servicer that collects money for the payment of taxes or 12
insurance under 1966 PA 125, MCL 565.161 to 565.164. 13
(i) An individual who is licensed to practice law in this 14
state and is not engaged in the business of negotiating loans 15
secured by real property, if the individual renders services in the 16
course of the individual's practice as an attorney. 17
(j) A person that makes a residential mortgage loan 18
exclusively for the benefit of an employee of the person, if the 19
proceeds of the loan are used to assist the employee in meeting the 20
employee's household needs. 21
(k) A person that acts as a fiduciary with respect to any 22
employee pension benefit plan qualified under the internal revenue 23
code of 1986, 26 USC 1 to 9834, and that makes residential mortgage 24
loans solely to plan participants from plan assets. 25
(l) A nonprofit corporation that makes, brokers, or services 26
residential mortgage loans in connection with a neighborhood 27
housing program assisted under the neighborhood reinvestment 28
corporation act, 42 USC 8101 to 8107. 29
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(m) A person determined by the director to meet the 1
qualifications for exemption under section 51. 2
(n) Subject to section 9 of the consumer financial services 3
act, 1988 PA 161, MCL 487.2059, a person licensed under that act. 4
Sec. 49. (1) Each of the following are exempt from the 5
mortgage loan originator licensing requirements under this article: 6
(a) A registered mortgage loan originator. 7
(b) An individual who offers or negotiates terms of a 8
residential mortgage loan with or on behalf of an immediate family 9
member of the individual. 10
(c) An individual who offers or negotiates terms of a 11
residential mortgage loan secured by a dwelling that served as the 12
individual's residence. 13
(d) A licensed attorney who negotiates the terms of a 14
residential mortgage loan on behalf of a client as an ancillary 15
matter to the attorney's representation of the client, unless the 16
attorney is compensated by a mortgage broker, mortgage lender, or 17
mortgage loan originator or by any agent of a mortgage broker, 18
mortgage lender, or mortgage loan originator. 19
(e) An individual who acts as a mortgage servicer, or who is 20
an employee of a mortgage servicer, and who offers or negotiates 21
the terms of residential mortgage loans for the purpose of 22
renegotiating, modifying, replacing, or subordinating the principal 23
of existing residential mortgage loans of which the borrowers are 24
behind in making their payments, are in default, or have a 25
reasonable likelihood of falling behind in making payments or 26
defaulting. The exemption described in this subdivision does not 27
apply to an individual who acts as a mortgage servicer, or is an 28
employee of a mortgage servicer, and who offers or negotiates the 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
terms of a residential mortgage loan transaction that constitutes a 1
refinancing under 12 CFR 1026.20(a) or that obligates a different 2
consumer to pay the existing residential mortgage loan. 3
(2) A loan processor or underwriter who is an independent 4
contractor shall not engage in the activities of a loan processor 5
or underwriter unless that independent contractor loan processor or 6
underwriter obtains and maintains a license as a mortgage loan 7
originator and as a mortgage broker. Each independent contractor 8
loan processor or underwriter licensed as a mortgage loan 9
originator and as a mortgage broker shall maintain a valid unique 10
identifier. 11
Sec. 51. (1) Except as otherwise provided in subsection (2), 12
the director may exempt from the mortgage broker, mortgage lender, 13
or mortgage servicer licensing requirements of this act a person 14
that the director believes merits the confidence of the community 15
and demonstrates all of the following: 16
(a) The person is exempt from federal income taxes under 17
section 501(c) of the internal revenue code of 1986, 26 USC 501. 18
(b) The person administers a residential mortgage loan program 19
that is funded or sponsored by 1 or more depository institutions, 20
state or federal governmental entities, or charitable, religious, 21
or other nonprofit organizations. 22
(c) The person's residential mortgage loan program is targeted 23
exclusively to persons that would not otherwise have access to 24
affordable residential mortgage loans from traditional residential 25
mortgage lending sources. 26
(d) The person's housing development efforts have the support 27
of the agency of its local government jurisdiction responsible for 28
community development. 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
(e) The person's residential mortgage lending activity is 1
limited to a defined geographic area in this state, not larger than 2
a county in the case of a metropolitan statistical area. 3
(f) The person has the capacity to accomplish its business 4
plan. 5
(g) The person does not directly or indirectly share with 6
another person any portion of fees paid to the person in connection 7
with a residential mortgage loan. 8
(h) The person will comply with state and federal law and with 9
section 63 as though the person is a licensee. 10
(i) The person does not service residential mortgage loans. 11
(2) The director may grant an exemption to a person that 12
services residential mortgage loans under this section if the 13
person has complied with subsection (1)(a) to (h) and the director 14
determines the exemption is in the public interest. 15
(3) By not later than February 1 of every second year 16
following the director's determination that a person meets the 17
qualifications under subsection (1) or (2), the person shall file 18
an affidavit that the person continues to meet the qualifications. 19
(4) A person that the director has determined to meet the 20
qualifications under subsection (1) or (2) and subsequently fails 21
to meet 1 or more of those qualifications shall, not later than 90 22
days after the failure to meet the qualifications, file an 23
application for a mortgage broker, mortgage lender, or mortgage 24
servicer license or discontinue activities that would require the 25
license. 26
ARTICLE 3 27
AUTHORITY OF THE DIRECTOR 28
Sec. 53. (1) The director shall exercise general supervision 29
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and control over mortgage brokers, mortgage lenders, mortgage 1
servicers, and mortgage loan originators doing business in this 2
state. 3
(2) In addition to any other power granted to the director 4
under this act, the director may: 5
(a) Promulgate reasonable rules to implement this act under 6
the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 7
to 24.328, including, but not limited to, establishing procedures 8
to do any of the following: 9
(i) Conduct a background check of a mortgage broker, mortgage 10
lender, mortgage servicer, or mortgage loan originator applicant or 11
licensee, or a control person, for the purpose of obtaining any of 12
the following, as applicable: 13
(A) The criminal history of the person. 14
(B) Any information included in civil or administrative 15
records about the person. 16
(C) The credit history of the person. 17
(D) Any information that is determined to be necessary by the 18
nationwide multistate licensing system and registry. 19
(ii) Verify that a mortgage broker, mortgage lender, mortgage 20
servicer, or mortgage loan originator licensee has paid an 21
application or renewal fee under section 15 through the nationwide 22
multistate licensing system and registry. 23
(iii) Modify the renewal date for a mortgage broker, mortgage 24
lender, mortgage servicer, or mortgage loan originator license. 25
(iv) Modify the date for submission of the report required 26
under section 61. 27
(v) Modify the requirements for amending a mortgage broker, 28
mortgage lender, mortgage servicer, or mortgage loan originator 29
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license under section 15. 1
(vi) Modify the requirements for surrendering a mortgage 2
broker, mortgage lender, mortgage servicer, or mortgage loan 3
originator license under section 113. 4
(b) Deny an application for a mortgage broker, mortgage 5
lender, mortgage servicer, or mortgage loan originator license or 6
place a condition on those licenses. 7
(c) Conduct an examination and investigation of any person as 8
necessary for the efficient enforcement of this act and the rules 9
promulgated under this act. 10
(d) For the purpose of efficiently and effectively 11
administering and enforcing this act and minimizing regulatory 12
burden, do all of the following: 13
(i) Cooperate, coordinate, and share information, resources, 14
and standardized or uniform methods or procedures with other states 15
and federal regulators. 16
(ii) Cooperate, coordinate, and share information with 17
organizations whose membership consists of state or federal 18
governmental agencies, if the organizations agree in writing to 19
maintain the confidentiality and security of the shared 20
information. 21
(iii) Use, hire, contract, or employ publicly or privately 22
available analytical systems, methods, or software to examine or 23
investigate a mortgage broker, mortgage lender, mortgage servicer, 24
or mortgage loan originator licensee or other person subject to 25
this act. 26
(iv) Retain attorneys, accountants, or other professionals and 27
specialists as examiners, auditors, or investigators to conduct or 28
assist in the conduct of examinations or investigations. 29
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(v) Accept and rely on examination or investigation reports 1
made by other state or federal governmental officials. 2
(vi) Accept audit reports prepared by an independent certified 3
public accountant for a mortgage broker, mortgage lender, mortgage 4
servicer, or mortgage loan originator licensee under this act or 5
other person subject to this act in the course of that part of the 6
examination covering the same general subject matter as the audit 7
and incorporate the audit report in the report of an examination, 8
report of an investigation, or other writing of the director. 9
(e) Advise the attorney general or the prosecuting attorney of 10
a county in which a mortgage broker, mortgage lender, mortgage 11
servicer, or mortgage loan originator licensee is conducting 12
business that the director believes that the licensee or other 13
person is violating this act. The attorney general or the 14
prosecuting attorney may take appropriate legal action to enjoin 15
the operation of the business of the licensee or prosecute 16
violations of this act. 17
(f) Bring an action in the Ingham County circuit court in the 18
name and on behalf of this state against a mortgage broker, 19
mortgage lender, mortgage servicer, or mortgage loan originator 20
licensee or other person that is participating in, or about to 21
participate in, any unsafe or injurious practice or conduct in 22
violation of this act or a rule promulgated under this act to 23
enjoin the person from participating in or continuing the practice 24
or engaging in act. 25
(g) Order a person to cease and desist from a violation of 26
this act or a rule promulgated under this act in accordance with 27
section 123. 28
(h) Suspend, revoke, condition, or refuse to grant or renew a 29
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mortgage broker, mortgage lender, mortgage servicer, or mortgage 1
loan originator license. 2
(i) Require the payment of restitution under section 111. 3
(j) Assess a civil fine under section 111. 4
(k) Censure a mortgage broker, mortgage lender, mortgage 5
servicer, or mortgage loan originator licensee. 6
(l) Issue an order to prohibit a person from being employed by, 7
an agent of, or a control person of a mortgage broker, mortgage 8
lender, or mortgage servicer licensee under section 127. 9
(m) Appoint a conservator under section 133. 10
(n) Enter an immediate temporary order to cease business under 11
a mortgage broker, mortgage lender, mortgage servicer, or mortgage 12
loan originator license, if the director determines that the 13
license was erroneously granted or the licensee is currently in 14
violation of this act. 15
(o) Participate in the nationwide multistate licensing system 16
and registry. 17
(p) Regularly report violations of this act and enforcement 18
actions under this act to the nationwide multistate licensing 19
system and registry. 20
(q) Order or direct any other affirmative action that the 21
director considers necessary. 22
(3) The director shall establish a process through which 23
licensees and other persons subject to this act may challenge 24
information entered into the nationwide multistate licensing system 25
and registry. 26
Sec. 55. (1) Unless circumstances warrant additional 27
examinations, the director may conduct 1 examination of each 28
mortgage broker, mortgage lender, mortgage servicer, and mortgage 29
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loan originator licensee during the calendar year, and the director 1
may conduct an investigation of any such licensee, regardless of 2
whether a complaint has been filed against the licensee. 3
(2) In conducting an examination or investigation under this 4
act, the director may do any of the following: 5
(a) Issue a subpoena to compel the attendance of or the 6
production of documents or records by a person. 7
(b) Administer oaths. 8
(c) Interrogate a person under oath concerning the business 9
and conduct of affairs of a person subject to this act and require 10
the production of books, records, or papers relative to the 11
inquiry. 12
(d) Have free access during regular business hours to both of 13
the following: 14
(i) The offices, places of business, or other location where a 15
mortgage broker, mortgage lender, mortgage servicer, or mortgage 16
loan originator licensee, or an affiliate of the licensee, 17
maintains business-related documents. 18
(ii) The books, accounts, papers, records, files, documents, 19
safes, and vaults of the licensee. 20
(e) Subject to subsection (3), control access to any document 21
or record of a mortgage broker, mortgage lender, mortgage servicer, 22
or mortgage loan originator licensee or other person under 23
examination or investigation, and may take possession of the 24
document or record, or place a person in exclusive charge of the 25
document or record, in a place where the document or record is 26
usually kept, except that the licensee or person, or owner of the 27
document or record, must have access to the document or record 28
during the normal course of business and during regular business 29
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hours. 1
(3) The director shall not control access to a document or 2
record under subsection (2) unless the director has reasonable 3
grounds to believe that the document or record has been or is at 4
risk of being altered or destroyed for the purpose of concealing a 5
violation of this act. 6
(4) If the director controls access to a document or record 7
under subsection (2), a person shall not remove or attempt to 8
remove the document or record except in accordance with a court 9
order or with the consent of the director. 10
(5) A person subpoenaed under this section that fails to 11
appear at the time and place named in the subpoena, fails to 12
produce documents and records required by the subpoena, refuses to 13
be sworn, or, unless authorized by law, refuses to answer as a 14
witness, is guilty of a misdemeanor punishable by imprisonment for 15
not more than 1 year, a fine of not more than $1,000.00, or both. 16
(6) If a person does not comply with a subpoena issued under 17
this section, the director may seek enforcement of the subpoena in 18
the Ingham County circuit court. The court may hold the person in 19
contempt under chapter 17 of the revised judicature act of 1961, 20
1961 PA 236, MCL 600.1701 to 600.1745. 21
(7) The director's authority under this section remains in 22
effect regardless of whether a mortgage broker, mortgage lender, 23
mortgage servicer, or mortgage loan originator licensee or other 24
person subject to this act claims to act under the authority of any 25
licensing or registration law of this state. 26
(8) A mortgage broker, mortgage lender, mortgage servicer, or 27
mortgage loan originator licensee or other person subject to 28
investigation or examination under this section shall not knowingly 29
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withhold, abstract, remove, mutilate, destroy, or secrete any book, 1
record, computer record, or other information from the director. 2
Sec. 57. (1) The contents of a report of an examination or a 3
report of an investigation of a mortgage broker, mortgage lender, 4
mortgage servicer, or mortgage loan originator licensee and any 5
examination- or investigation-related documents prepared or 6
obtained under this act remain the property of the director. 7
(2) A document, material, or information related to an 8
examination or investigation under this act is confidential and 9
privileged, is not subject to disclosure under the freedom of 10
information act, 1976 PA 442, MCL 15.231 to 15.246, is not subject 11
to subpoena, and is not subject to discovery or admissible in 12
evidence in any private civil action. However, the director is 13
authorized to use the documents, materials, or information in 14
furtherance of any supervisory activity or legal action brought as 15
part of the director's duties. 16
(3) The director, or any person that received a document, 17
material, or information while acting under the director's 18
authority, is not permitted and must not be required to testify in 19
any private civil action concerning any confidential document, 20
material, or information described in subsection (2). 21
(4) The disclosure of a document, material, or information to 22
the director, or the sharing of a document, material, or 23
information under section 53(2)(d) is not a waiver of, or construed 24
as a waiver of, any privilege applicable to or claim of 25
confidentiality in that document, material, or information. 26
(5) A person to which a confidential and privileged document, 27
material, or information is disclosed shall not further disseminate 28
the document, material, or information. 29
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(6) A person on which a demand for production of a 1
confidential and privileged document, material, or information is 2
made, whether by subpoena, order, or other judicial or 3
administrative process, must withhold production of the document, 4
material, or information and must notify the director of the 5
demand. 6
(7) If the director is notified of a demand under subsection 7
(6), the director may intervene for the purpose of enforcing the 8
limitations of this section or seeking the withdrawal or 9
termination of the attempt to compel production of the document, 10
material, or information. 11
(8) A request for discovery or disclosure of a confidential 12
and privileged document, material, or information, whether by 13
subpoena, order, or other judicial or administrative process, must 14
be made to the director, and the director shall determine whether 15
to disclose the document, material, or information not more than 21 16
days after the director receives a request under this subsection. 17
(9) If the director determines under subsection (8) that the 18
document, material, or information will not be disclosed, the 19
director's decision is subject to judicial review. 20
(10) The judicial review described in subsection (9) may 21
include in camera judicial review of the confidential and 22
privileged document, material, or information. 23
(11) After the judicial review described in this section, the 24
court may disclose only the portions of the confidential and 25
privileged document, material, or information that are relevant and 26
otherwise unobtainable by the requesting party. 27
(12) The director may immediately appeal any court order 28
described in subsection (11) that compels disclosure of a 29
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confidential and privileged document, material, or information, and 1
the order is automatically stayed pending the outcome of the 2
appeal. 3
(13) Notwithstanding the provisions of this section, a 4
mortgage broker, mortgage lender, mortgage servicer, or mortgage 5
loan originator licensee may share a report of an examination with 6
its control persons, its counsel, or a person approved by the 7
director. 8
Sec. 59. (1) Except as otherwise provided in section 1512 of 9
the secure and fair enforcement for mortgage licensing act of 2008, 10
12 USC 5111, the freedom of information act, 1976 PA 442, MCL 11
15.231 to 15.246, or any federal law concerning the privacy or 12
confidentiality of information or material provided to the 13
nationwide multistate licensing system and registry, any privilege 14
arising under federal or state law or the rules of any federal or 15
state court concerning information or material that is disclosed to 16
the nationwide multistate licensing system and registry continues 17
to apply to the information or material after the information or 18
material is disclosed to the nationwide multistate licensing system 19
and registry. 20
(2) Any information or material described in this section may 21
be shared with any state or federal regulatory official with 22
mortgage industry oversight authority without the loss of privilege 23
or the loss of confidentiality protections provided by federal law 24
or the freedom of information act, 1976 PA 442, MCL 15.231 to 25
15.246. 26
(3) For the purposes of this section, the director may enter 27
into agreements or sharing arrangements with other governmental 28
agencies or the Conference of State Bank Supervisors, the American 29
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Association of Residential Mortgage Regulators, or other 1
associations representing governmental agencies, as established by 2
rule or order of the director. 3
(4) Any information or material that is subject to a privilege 4
or confidentiality under subsection (1) is not subject to any of 5
the following: 6
(a) Disclosure under any federal or state law governing the 7
disclosure to the public of information held by an officer or 8
agency of the federal government or the respective state. 9
(b) Subpoena or discovery, or admission into evidence, in any 10
private civil action or administrative process, unless with respect 11
to a privilege held by the nationwide multistate licensing system 12
and registry concerning the information or material, the person to 13
which the information or material pertains waives, in whole or in 14
part and in the person's discretion, that privilege. 15
(5) This section does not apply to any information or material 16
relating to the employment history of, and publicly adjudicated 17
disciplinary and enforcement action against, a mortgage loan 18
originator that is included in the nationwide multistate licensing 19
system and registry for access by the public. 20
ARTICLE 4 21
STANDARDS OF CONDUCT 22
PART 1 23
GENERAL CONDUCT REQUIREMENTS RELATED TO LICENSEES AND CERTAIN OTHER 24
PERSONS 25
Sec. 61. (1) A mortgage broker, mortgage lender, or mortgage 26
servicer licensee shall maintain books, accounts, records, and 27
documents of the business, as prescribed by the director, conducted 28
under the license to enable the director to determine whether the 29
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business of the licensee is conducted in accordance with this act 1
and the rules promulgated under this act. The preservation of 2
records by reproduction in accordance with the records reproduction 3
act, 1992 PA 116, MCL 24.401 to 24.406, complies with this section. 4
(2) A mortgage broker, mortgage lender, or mortgage servicer 5
licensee shall preserve and keep available for examination by the 6
director each residential mortgage loan document in the licensee's 7
possession or control, including, but not limited to, the 8
application, credit report, employment verification, loan 9
disclosure statement, settlement statement, promissory note, 10
mortgage, land contract, and truth-in-lending disclosure statement, 11
until the residential mortgage loan is transferred or assigned, or 12
the expiration of 3 years after the date that the residential 13
mortgage loan is closed, whichever occurs first. If the residential 14
mortgage loan is transferred or assigned, the mortgage broker, 15
mortgage lender, or mortgage servicer licensee shall preserve and 16
keep available for examination by the director, copies of the 17
promissory note, mortgage, land contract, truth-in-lending 18
disclosure statements, and settlement statements in its possession 19
or control for at least 3 years after the date the residential 20
mortgage loan is transferred or assigned. Notwithstanding any other 21
provision of this act, each mortgage broker, mortgage lender, or 22
mortgage servicer licensee shall preserve and keep available for 23
examination by the director all documents pertaining to a rejected 24
application for a residential mortgage loan for the period of time 25
required by state or federal law. A mortgage broker, mortgage 26
lender, or mortgage servicer licensee shall preserve all other 27
books, accounts, records, and documents pertaining to the 28
licensee's business and keep them available for examination by the 29
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director for not less than 3 years after the conclusion of the 1
fiscal year of the licensee in which the book, account, record, or 2
document was created. 3
(3) On or before a date determined by the director, a mortgage 4
broker, mortgage lender, or mortgage servicer licensee shall 5
annually file with the director a report giving information, as 6
required by the director, concerning the business and operations of 7
the licensee during the immediately preceding calendar year. In 8
addition, the director may require a mortgage broker, mortgage 9
lender, mortgage servicer, or mortgage loan originator licensee to 10
file special reports, including, but not limited to, reports 11
required to be filed by the nationwide multistate licensing system 12
and registry, as the director considers reasonably necessary for 13
the proper supervision of the licensee. 14
(4) A report required under this section must be filed on a 15
form prescribed by the director, signed, and affirmed. 16
(5) Beginning on the effective date of this act, a person that 17
willfully and knowingly subscribes and affirms a false statement in 18
a report required under this section is guilty of a felony 19
punishable by imprisonment for not more than 15 years. 20
Sec. 63. (1) A mortgage broker, mortgage lender, mortgage 21
servicer, or mortgage loan originator licensee shall include its 22
unique identifier on any solicitation or advertisement, including 23
its business cards, flyers, websites, social media, and any other 24
advertising material, as established by rule or order of the 25
director. 26
(2) A mortgage broker, mortgage lender, mortgage servicer, or 27
mortgage loan originator licensee shall not do any of the 28
following: 29
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(a) Directly or indirectly, make a false, misleading, or 1
deceptive advertisement regarding a residential mortgage loan or 2
the availability of a residential mortgage loan. 3
(b) Advertise any size of loan, security required for a loan, 4
rate of charge, or other condition of lending except with the full 5
intent of making a loan at those rates, or lower rates, and under 6
those conditions, to a residential mortgage loan applicant who 7
meets the standards and qualifications prescribed by the licensee. 8
(c) Make or offer to make a secondary mortgage loan except on 9
the terms and conditions authorized by this act. 10
Sec. 65. (1) Except as otherwise provided in subsection (2), 11
and as applicable, a mortgage broker, mortgage lender, mortgage 12
servicer, or mortgage loan originator licensee may require a 13
borrower to pay reasonable and necessary charges that are the 14
actual expenses incurred by the licensee in connection with the 15
making, closing, disbursing, extending, readjusting, servicing, or 16
renewing of a first mortgage loan and a loan processing fee. 17
(2) A mortgage broker, mortgage lender, mortgage servicer, or 18
mortgage loan originator licensee shall not charge a nonrefundable 19
application fee. 20
(3) Both of the following apply to the charges described in 21
subsection (1): 22
(a) The charges are in addition to interest authorized by law 23
and are not part of the interest collected or agreed to be paid on 24
the first mortgage loan within the meaning of the law of this state 25
that limits the rate of interest that may be extended in a 26
transaction. 27
(b) The charges are to be paid only once by the borrower. 28
(4) This section is not intended to override the federal 29
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preemption of state usury laws in the depository institutions 1
deregulation and monetary control act of 1980, Public Law 96-221. 2
(5) A mortgage broker, mortgage lender, mortgage servicer, or 3
mortgage loan originator licensee that assesses or accepts a fee to 4
guarantee a specified rate of interest on a first mortgage loan 5
shall specify the terms and conditions of the guarantee in writing. 6
The terms and conditions of the guarantee must not extend beyond 7
the expiration of the guarantee unless extended in writing by all 8
the parties. 9
Sec. 67. (1) A mortgage broker, mortgage lender, mortgage 10
servicer, or mortgage loan originator licensee may charge, contract 11
for, receive, or collect on a secondary mortgage loan, an interest 12
rate not exceeding the interest rate permitted by the credit reform 13
act, 1995 PA 162, MCL 445.1851 to 445.1864. 14
(2) Any interest on a secondary mortgage loan under this act 15
must not be added or deducted in advance and must be computed on 16
the basis of the actual unpaid balance of the principal of the loan 17
on a daily or monthly basis for the time actually outstanding until 18
the loan is paid in full. 19
(3) This section does not prohibit a mortgage lender from 20
offering the borrower, in connection with a secondary mortgage loan 21
that involves credit other than open-end credit, an option to pay a 22
prepaid finance charge in exchange for a lower contract interest 23
rate or to charge a prepayment fee in the amount authorized under 24
section 1c of 1966 PA 326, MCL 438.31c. 25
Sec. 69. (1) A mortgage broker, mortgage lender, mortgage 26
servicer, or mortgage loan originator licensee shall not directly 27
or indirectly assess any charges or fees in connection with making 28
a secondary mortgage loan, except for any of the following, which 29
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may be included in the principal of the loan: 1
(a) Charges for credit life insurance or credit accident and 2
health insurance as those terms are defined in section 3 of the 3
credit insurance act, 1958 PA 173, MCL 550.603, or for insurance 4
under the insurance code of 1956, 1956 PA 218, MCL 500.100 to 5
500.8302, that is offered by the licensee and that the borrower has 6
the option to purchase. 7
(b) If reasonable and necessary, the actual expenses incurred 8
in connection with making, closing, disbursing, extending, 9
readjusting, or renewing a secondary mortgage loan by the licensee. 10
(c) A nonrefundable processing fee that is not more than 5% of 11
the gross amount of the loan. 12
(d) Other charges authorized under the credit reform act, 1995 13
PA 162, MCL 445.1851 to 445.1864. 14
(e) If the loan involves open-end credit, a reasonable annual 15
fee for the privilege of receiving open-end credit from the 16
licensee. 17
(2) All of the following apply to the charges described in 18
subsection (1): 19
(a) The charges are in addition to the interest authorized by 20
law. 21
(b) The charges are not a part of the interest collected or 22
agreed to be paid on the secondary mortgage loan within the meaning 23
of the law of this state that limits the rate of interest that may 24
be extended in a transaction. 25
(c) The charges must be paid only once by the borrower. 26
(3) Any insurance sold by a mortgage broker, mortgage lender, 27
mortgage servicer, or mortgage loan originator licensee in 28
connection with a secondary mortgage loan must comply with the 29
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insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302, or 1
the credit insurance act, 1958 PA 173, MCL 550.601 to 550.624, as 2
applicable. 3
(4) If a mortgage broker, mortgage lender, mortgage servicer, 4
or mortgage loan originator licensee requires a borrower to 5
purchase hazard insurance, the licensee shall not require the 6
borrower to purchase the insurance through a particular agency or 7
agent or from a particular insurer. 8
(5) This section does not prohibit a mortgage broker, mortgage 9
lender, mortgage servicer, or mortgage loan originator licensee 10
from imposing the charges that are authorized by any federal 11
lending program designed to promote the making of secondary 12
mortgage loans. 13
Sec. 71. (1) A mortgage broker, mortgage lender, mortgage 14
servicer, or mortgage loan originator licensee, a control person, 15
or any other person that is subject to this act shall not do any of 16
the following, as applicable: 17
(a) Fail to conduct business in accordance with law, this act, 18
a rule promulgated under this act, or an order issued under this 19
act. 20
(b) Engage in fraud, deceit, or material misrepresentation in 21
connection with an activity governed by this act. 22
(c) Intentionally or due to gross or wanton negligence, 23
repeatedly fail to provide material disclosures of information to 24
borrowers as required by law. 25
(d) Suppress or withhold from the director any information 26
that the licensee possesses and that, if submitted, would have made 27
the licensee ineligible for the license or would have warranted the 28
director's denial of a license application. 29
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(e) Fail to comply with 1966 PA 125, MCL 565.161 to 565.164, 1
regulating the handling of mortgage escrow accounts by mortgagees. 2
(f) Until proper disbursement is made, fail to place in a 3
trust or escrow account held by a depository institution in a 4
manner approved by the director any money, funds, deposits, checks, 5
drafts, or other negotiable instruments received by the licensee 6
that the borrower is obligated to pay to a third party, including, 7
but not limited to, amounts paid to the holder of a residential 8
mortgage loan, amounts for property taxes and insurance premiums, 9
and amounts paid under an agreement that requires, if the 10
residential mortgage loan is not closed, the amounts paid be 11
refunded to the prospective borrower or, if the residential 12
mortgage loan is closed, the amounts paid be applied to fees and 13
costs incurred at the time the residential mortgage loan is closed. 14
As used in this subdivision, "fees and costs" includes, but is not 15
limited to, title insurance premiums and recording fees. Fees and 16
costs do not include amounts paid to cover costs incurred to 17
process the residential mortgage loan application, to obtain an 18
appraisal, or to receive a credit report. 19
(g) Refuse to permit an examination or investigation by the 20
director of the books and affairs of the licensee, or refuse or 21
fail to furnish any information or make any report required by the 22
director within a reasonable time. 23
(h) Be convicted of either of the following: 24
(i) A felony. 25
(ii) A misdemeanor involving fraud, dishonesty, breach of 26
trust, money laundering, embezzlement, forgery, a financial 27
transaction, or securities. 28
(i) Refuse or fail to pay expenses assessed to the licensee 29
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within a reasonable time. 1
(j) Fail to make restitution after having been ordered to do 2
so by the director or an administrative agency, or fail to make 3
restitution or pay damages to persons injured by the licensee's 4
business transactions after having been ordered to do so by a 5
court. 6
(k) Fail to make a residential mortgage loan in accordance 7
with a written commitment to make a residential mortgage loan 8
issued to, and accepted by, a person that timely and completely 9
satisfied all the conditions of the commitment before the 10
expiration of the commitment. 11
(l) Require a prospective borrower to deal exclusively with the 12
licensee in regard to a residential mortgage loan application. 13
(m) Fail to service a residential mortgage loan in accordance 14
with the terms of the note, mortgage, or other contract. 15
(n) Take a security interest in real property before closing 16
the residential mortgage loan to secure payment of fees assessed in 17
connection with a residential mortgage loan application. 18
(o) Knowingly permit a person to violate an order issued under 19
this act or under a financial licensing act that prohibits the 20
person from being employed by, an agent of, or a control person of 21
the licensee. 22
(p) With respect to a secondary mortgage loan that is subject 23
to the credit reform act, 1995 PA 162, MCL 445.1851 to 445.1864, 24
violating that act. 25
(q) Make a material misstatement in a report, application, or 26
document filed with the director. 27
(r) Fail to do any of the following within 10 days after 28
receiving written notice from the director: 29
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(i) Pay an annual operating fee under section 15. 1
(ii) Maintain in effect a corporate surety bond as required by 2
the director under section 19. 3
(iii) Comply with a demand, ruling, or requirement of the 4
director. 5
(s) With respect to a licensee, engage in any conduct that 6
constitutes an unfair, unconscionable, or deceptive method, act, or 7
practice under section 3 of the Michigan consumer protection act, 8
1976 PA 331, MCL 445.903. 9
(t) Directly or indirectly counsel, aid, or abet in a 10
violation of this act or a rule promulgated under this act. 11
(2) If the director finds that a mortgage broker, mortgage 12
lender, mortgage servicer, or mortgage loan originator licensee, a 13
control person, or any other person that is subject to this act 14
committed a violation described in subsection (1), the director may 15
suspend, revoke, or refuse to grant or renew a mortgage broker, 16
mortgage lender, mortgage servicer, or mortgage loan originator 17
license or impose any other disciplinary action or penalty 18
authorized under this act. 19
(3) If the director finds that a fact or condition exists that 20
would have warranted the director to refuse to grant a mortgage 21
broker, mortgage lender, mortgage servicer, or mortgage loan 22
originator license if the fact or condition had existed or been 23
known to the director at the time of the original application for 24
the license, the director may suspend, revoke, or refuse to renew 25
the license or impose any other disciplinary action or penalty 26
authorized under this act. 27
PART 2 28
SPECIFIC CONDUCT REQUIREMENTS RELATED TO MORTGAGE BROKER, MORTGAGE 29
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LENDER, AND MORTGAGE SERVICER LICENSEES 1
Sec. 73. (1) A mortgage broker, mortgage lender, or mortgage 2
servicer licensee may permit its agents to work at remote locations 3
under the supervision and in compliance with the licensee's written 4
policies and procedures. 5
(2) The policies and procedures described in subsection (1) 6
must require all of the following: 7
(a) Any customer interaction and conversation about a consumer 8
be in compliance with federal and state information security 9
requirements, including, but not limited to, applicable provisions 10
under the Gramm-Leach-Bliley act, Public Law 106-102, and under 16 11
CFR part 314. 12
(b) All employees working at a remote location access the 13
company's secure systems, including any cloud-based system, 14
directly from an out-of-office device, such as a laptop, mobile 15
telephone, desktop computer, tablet, using a virtual private 16
network or comparable system that ensures secure connectivity and 17
requires passwords or other forms of authentication to access. 18
(c) The installation and maintenance of appropriate security 19
updates, patches, or other alterations to the security of all 20
devices used at remote locations. 21
(d) An ability for the licensee to remotely lock or erase 22
company-related contents of any device or otherwise remotely limit 23
all access to a company's secured systems. 24
(e) Appropriate risk-based monitoring and oversight processes, 25
including a requirement that any employee who will work from a 26
remote location must agree to comply with the licensee's 27
established processes. 28
(f) Certification by the licensee, at least once annually, 29
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that all employees who engage in remote activity meet the 1
appropriate standards and safeguards to continue the activity. 2
Sec. 75. (1) A mortgage broker, mortgage lender, or mortgage 3
servicer licensee shall have a written information security program 4
that does all of the following: 5
(a) Ensures the security and confidentiality of the company's 6
information. 7
(b) Protects against anticipated threats or hazards to the 8
security or integrity of the company's information. 9
(c) Protects against unauthorized access to or use of the 10
company's information. 11
(2) Both of the following apply to the written information 12
security program described in subsection (1): 13
(a) It must be appropriate to the company's size and 14
complexity, the activity conducted by the company, and the 15
sensitivity of the information of the company. 16
(b) It must be maintained as part of the mortgage broker, 17
mortgage lender, or mortgage servicer licensee's books and records. 18
(3) A mortgage broker, mortgage lender, or mortgage servicer 19
licensee shall notify the director as promptly as possible, but not 20
later than 72 hours, after a qualifying security event has occurred 21
at the company. 22
(4) The notification described in subsection (3) must be in 23
the form prescribed by the director. 24
(5) As used in this section, "qualifying security event" means 25
a security event that involves 1 or more consumers who reside in 26
this state and is either of the following: 27
(a) A security event in which the licensee is required to 28
notify a governmental body, self-regulatory agency, or other 29
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supervisory body under state or federal law. 1
(b) A security event that has a reasonable likelihood of 2
materially harming either of the following: 3
(i) A consumer residing in this state. 4
(ii) Any part of the normal operations of the licensee. 5
Sec. 77. (1) A mortgage broker, mortgage lender, or mortgage 6
servicer licensee shall not directly or indirectly pay any 7
compensation, commission, fee, point, or other remuneration or 8
benefits to any of the following for providing mortgage loan 9
origination services: 10
(a) An unlicensed mortgage loan originator. 11
(b) A mortgage loan originator licensee who is not an employee 12
of the mortgage broker, mortgage lender, or mortgage servicer 13
licensee. 14
(2) A mortgage broker, mortgage lender, or mortgage servicer 15
licensee shall do both of the following: 16
(a) Direct and control the activities of its mortgage loan 17
originator licensees. 18
(b) Be responsible for all activities of the mortgage loan 19
originator licensee conducted under this act and assume 20
responsibility for the mortgage loan originator licensee's actions 21
that are covered by the corporate surety bond required under 22
section 19. 23
PART 3 24
SPECIFIC CONDUCT REQUIREMENTS RELATED TO MORTGAGE SERVICER 25
LICENSEES 26
Subpart 1 27
PRUDENTIAL STANDARDS 28
Sec. 79. As used in this subpart: 29
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(a) "Agency" means Federal National Mortgage Association, 1
Federal Home Loan Mortgage Corporation, or Government National 2
Mortgage Association. 3
(b) "Allowable assets for liquidity" means assets that may be 4
used to satisfy the liquidity requirements under section 87. 5
Allowable assets for liquidity include unrestricted cash, cash 6
equivalents, unencumbered investment-grade assets held for sale or 7
trade such as agency mortgage-backed securities, obligations of 8
government-sponsored enterprises, or United States Treasury 9
obligations. 10
(c) "Board of directors" means the formal body established by 11
a covered institution that is responsible for corporate governance 12
and compliance with this subpart. 13
(d) "Corporate governance" means the structure of a covered 14
institution and how the covered institution is managed, including 15
the corporate rules, policies, processes, and practices used to 16
oversee and manage the covered institution. 17
(e) "Covered institution" means a mortgage servicer licensee 18
to which both of the following apply: 19
(i) It has servicing portfolios of 2,000 or more 1- to 4-unit 20
residential mortgage loans serviced or subserviced for others, 21
excluding whole loans owned and loans being interim serviced before 22
a sale as of the most recent calendar year end, reported to the 23
nationwide multistate licensing system and registry mortgage call 24
report. 25
(ii) It operates in 2 or more states, districts, or territories 26
of the United States either currently or as of the previous 27
calendar year end. 28
(f) "External audit" means a formal report prepared by an 29
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independent certified public accountant that does both of the 1
following: 2
(i) Express an opinion on whether the financial statements are 3
presented fairly, in all material aspects, in accordance with the 4
applicable financing reporting framework. 5
(ii) Include an evaluation of the adequacy of a company's 6
internal control structure. 7
(g) "Government-sponsored enterprise" means the Federal 8
National Mortgage Association or the Federal Home Loan Mortgage 9
Corporation. 10
(h) "Interim serviced before a sale" means the activity of 11
collecting a limited number of contractual mortgage payments 12
immediately after origination on loans held for sale but before the 13
loans are sold into the secondary market. 14
(i) "Internal audit" means the internal activity of performing 15
independent, objective assurance and consulting to evaluate and 16
improve the effectiveness of company operations, risk management, 17
internal controls, and governance processes. 18
(j) "Mortgage call report" means the quarterly or annual 19
report of residential real estate loan origination, servicing, and 20
financial information completed by companies licensed in the 21
nationwide multistate licensing system and registry. 22
(k) "Mortgage servicing rights investor" means an entity that 23
invests in and owns mortgage servicing rights and relies on 24
subservicers to administer the loans on the entity's behalf. 25
Mortgage servicing rights investor includes a master servicer. 26
(l) "Mortgage-backed security" means a financial instrument 27
that is collateralized by residential mortgages, including, but not 28
limited to, debt securities. 29
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(m) "Mortgage servicing rights" means the contractual right to 1
service a residential mortgage loan on behalf of the owner of the 2
related mortgage in exchange for specified compensation in 3
accordance with the servicing contract. 4
(n) "Operating liquidity" means the funds necessary to perform 5
normal business operations, such as payments of rent, salaries, 6
interest expenses, and other typical expenses associated with 7
operating an entity. 8
(o) "Residential mortgage loans serviced" means a specific 9
portfolio of residential mortgage loans for which a mortgage 10
servicer licensee is contractually responsible to an owner of the 11
residential mortgage loans for the defined servicing activities. 12
(p) "Reverse mortgage" means a loan collateralized by 13
residential real estate that is typically made to a borrower who is 14
55 years of age or older that does not require contractual monthly 15
payments and is typically repaid after the death of the borrower 16
through a sale or refinance of the residential real estate by the 17
borrower's heirs. 18
(q) "Risk management assessment" means the functional 19
evaluations performed under the risk management program and reports 20
provided to the board of directors under the relevant governance 21
protocol. 22
(r) "Risk management program" means the policies and 23
procedures designed to identify, measure, monitor, and mitigate 24
risk that are sufficient for the level of sophistication of the 25
servicer. 26
(s) "Servicer" means an entity that performs the routine 27
administration of residential mortgage loans on behalf of an owner 28
of the related mortgages under the terms of a servicing contract. 29
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(t) "Servicing liquidity" or "liquidity" means the financial 1
resources necessary to manage liquidity risk that arises from 2
servicing functions that are required to acquire and finance any of 3
the following: 4
(i) Mortgage servicing rights. 5
(ii) Hedging costs, including margin costs, that are associated 6
with mortgage servicing rights asset and financing facilities. 7
(iii) Advances or costs of advance financing for principal, 8
interest, taxes, insurance, and any other servicing related 9
advances. 10
(u) "Subservicer" means the entity that performs the routine 11
administration of a residential mortgage loan as an agent of a 12
servicer or mortgage servicing rights investor under the terms of 13
the subservicing contract. 14
(v) "Tangible net worth" means total equity less receivables 15
due from related entities less goodwill and other intangibles less 16
pledged assets. 17
(w) "Whole loans" means loans for which a mortgage and the 18
underlying credit risk for the mortgage are owned and held on a 19
balance sheet of the entity with all ownership rights. 20
Sec. 81. (1) This subpart is applicable to covered 21
institutions. 22
(2) The applicability of this subpart to an entity within a 23
holding company or an affiliated group of companies is determined 24
at the covered institutional level. 25
(3) This subpart does not apply to either of the following: 26
(a) A nonprofit mortgage servicer or housing finance agency. 27
(b) A servicer that solely owns or conducts reverse mortgage 28
servicing, or the reverse mortgage portfolio administered by 29
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covered institutions. 1
Sec. 83. (1) A covered institution shall maintain capital and 2
liquidity in compliance with this subpart. 3
(2) For the purpose of complying with the capital and 4
liquidity requirements of this subpart, all financial data must be 5
determined in accordance with generally accepted accounting 6
principles. 7
Sec. 85. (1) A covered institution complies with section 83 if 8
the covered institution meets the Federal Housing Finance Agency's 9
eligibility requirements for enterprise single family 10
seller/servicers for capital, net worth ratio, and liquidity, 11
regardless of whether the servicer is approved to service loans by 12
a government-sponsored enterprise. 13
(2) A covered institution described in subsection (1) shall 14
maintain written policies and procedures implementing the capital 15
and servicing liquidity requirements of this subpart. 16
(3) The policies and procedures described in subsection (2) 17
must include a sustainable written methodology for satisfying the 18
requirements of subsection (1) and must be made available to the 19
director on request. 20
Sec. 87. (1) A covered institution shall maintain sufficient 21
allowable assets for liquidity in addition to the amounts required 22
for servicing liquidity to cover the normal business operations of 23
the covered institution. 24
(2) A covered institution shall have sound cash management and 25
business operating plans that match the size and sophistication of 26
the covered institution to ensure the normal business operations of 27
the covered institution. 28
(3) The management of a covered institution shall develop, 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
establish, and implement the plans, policies, and procedures for 1
maintaining operating liquidity that is sufficient for the ongoing 2
needs of the covered institution. 3
(4) The plans, policies, and procedures described in 4
subsection (3) must include sustainable, written methodologies for 5
maintaining sufficient operating liquidity and must be made 6
available to the director on request. 7
Sec. 89. (1) Except as otherwise provided in subsection (2), a 8
covered institution shall establish and maintain a board of 9
directors that is responsible for oversight of the covered 10
institution. 11
(2) If a covered institution is not approved to service loans 12
by a government-sponsored enterprise or the Government National 13
Mortgage Association, or if a government-sponsored enterprise or 14
the Government National Mortgage Association has granted approval 15
for a board alternative, a covered institution may establish a body 16
similar to a board of directors to exercise oversight over the 17
covered institution and fulfill the board of directors' 18
responsibilities under section 91. 19
Sec. 91. (1) The board of directors of a covered institution 20
shall do all of the following: 21
(a) Establish a written corporate governance framework that 22
includes appropriate internal controls designed to monitor 23
corporate governance and assess compliance with the corporate 24
governance framework. 25
(b) Monitor and ensure the covered institution's compliance 26
with this subpart, including, but not limited to, the corporate 27
governance framework described in subdivision (a). 28
(c) Establish internal audit requirements that are appropriate 29
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for the size, complexity, and risk profile of the servicer, with 1
the appropriate independence to provide a reliable evaluation of 2
the servicer's internal control structure, risk management, and 3
governance. 4
(2) If requested by the director, the board of directors of a 5
covered institution shall make the following available to the 6
director: 7
(a) The corporate governance framework described in subsection 8
(1). 9
(b) The internal audit requirements described in subsection 10
(1). 11
(c) The results of the covered institution's internal audit. 12
Sec. 93. (1) A covered institution shall ensure that it 13
annually receives an external audit, which must include audited 14
financial statements and audit reports conducted by an independent 15
certified public accountant. 16
(2) The external audit described in subsection (1) must 17
include all of the following for the covered institution: 18
(a) A balance sheet, statement of operations or income 19
statement, cash flow, and any other annual financial statement, 20
including any notes and supplemental schedules prepared in 21
accordance with generally accepted accounting principles. 22
(b) An assessment of the internal control structure. 23
(c) A computation of tangible net worth. 24
(d) A validation of mortgage servicer rights valuation and 25
reserve methodology, if applicable. 26
(e) A verification of adequate fidelity and errors and 27
omissions insurance. 28
(f) A testing of controls related to risk management 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
activities, including compliance and stress testing, if applicable. 1
(3) A covered institution shall make the external audit 2
described in subsection (1) available to the director on request. 3
Sec. 95. (1) A covered institution shall establish a risk 4
management program under the oversight of the board of directors 5
that identifies, measures, monitors, and controls risk sufficient 6
for the level of sophistication of the servicer. 7
(2) Both of the following apply to the risk management program 8
described in subsection (1): 9
(a) It must have appropriate processes and models in place to 10
measure, monitor, and mitigate financial risks and changes to the 11
risk profile of the servicer and assets being serviced. 12
(b) It must be scaled to the complexity of the organization, 13
but be sufficiently robust to manage risks in several areas, 14
including, but not limited to, all of the following: 15
(i) The potential that a borrower or counterparty will not 16
perform an obligation. 17
(ii) The potential that the servicer will not meet its 18
obligations as they come due because the servicer is not able to 19
liquidate assets, obtain adequate funding, or easily unwind or 20
offset specific exposures. 21
(iii) The risk resulting from inadequate or failed internal 22
processes, people, and systems, or from external events. 23
(iv) The risk to the servicer's condition resulting from 24
adverse movements in market rates or prices. 25
(v) The risk of regulatory sanctions, fines, penalties, or 26
losses resulting from the servicer's failure to comply with laws, 27
rules, regulations, or other supervisory requirements applicable to 28
the servicer. 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
(vi) The potential that actions against the covered institution 1
result in unenforceable contracts, lawsuits, legal sanctions, or 2
adverse judgments that disrupt or otherwise negatively affect the 3
operations or conditions of the servicer. 4
(vii) The risk to earning and capital arising from negative 5
publicity regarding the servicer's business practices. 6
(3) A covered institution shall provide the risk management 7
program described in subsection (1) to the director on request. 8
Sec. 97. (1) A covered institution shall annually conduct a 9
risk management assessment that concludes with a formal report that 10
is distributed to the board of directors and made available to the 11
director on request. 12
(2) A covered institution shall maintain and include in the 13
formal report described in subsection (1) any evidence of the 14
covered institution's risk management activities during the year, 15
including, but not limited to, findings of issues and the response 16
to address those findings. 17
Sec. 99. The director may do any of the following in enforcing 18
this subpart: 19
(a) If risk is determined by a formal review of a covered 20
institution to be extremely high, order or direct the covered 21
institution to satisfy additional conditions that are necessary to 22
ensure that the covered institution will continue to operate in a 23
safe and sound manner and be able to continue to service loans in 24
compliance with the laws of this state and federal laws and 25
regulations. 26
(b) If risk is determined by a formal review of a covered 27
institution to be extremely low, provide notice that all or part of 28
this subpart is not applicable to the covered institution. 29
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(c) If economic, environmental, or societal events are 1
determined to be of such severity to warrant a temporary suspension 2
of this subpart, provide public notice of the temporary suspension. 3
Subpart 2 4
MISCELLANEOUS REQUIREMENTS 5
Sec. 101. (1) A mortgage servicer licensee shall deliver to 6
the borrower an annual statement of the borrower's account that 7
shows all of the following for the immediately preceding 12-month 8
period: 9
(a) The unpaid principal balance of the residential mortgage 10
loan at the end of the period. 11
(b) The interest paid during the period. 12
(c) The amounts deposited into escrow and disbursed from 13
escrow during the period. 14
(2) In addition to the annual statement required under 15
subsection (1), by not later than 25 days after receipt of a 16
written request from a borrower, a mortgage servicer licensee shall 17
deliver to the borrower a ledger of history of the borrower's 18
account that shows both of the following: 19
(a) The date and amount of all payments made or credited to 20
the account. However, the mortgage servicer licensee is not 21
required to provide this information for any period that exceeds 22
the immediately preceding 12-month period. 23
(b) The total unpaid balance of the account. 24
(3) A mortgage servicer licensee is not obligated to furnish 25
to the borrower more than 1 annual statement under subsection (1) 26
and 1 ledger history under subsection (2) in a 12-month period. 27
(4) A mortgage servicer licensee shall not charge the borrower 28
a fee for an annual statement under subsection (1) or for the first 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
ledger history furnished to a borrower in a 12-month period under 1
subsection (2). 2
PART 4 3
SPECIFIC CONDUCT REQUIREMENTS RELATED TO MORTGAGE LOAN ORIGINATOR 4
LICENSEES 5
Sec. 103. A mortgage loan originator licensee shall clearly 6
display its unique identifier on all residential mortgage loan 7
application forms and any other document that the director requires 8
by rule or order. 9
Sec. 105. An individual acting as a mortgage loan originator 10
shall not directly or indirectly receive any compensation, 11
commission, fee, points, or other remuneration or benefits for 12
originating a residential mortgage loan unless both of the 13
following conditions are met: 14
(a) The individual is licensed as a mortgage loan originator. 15
(b) The compensation, commission, fee, points, or other 16
remuneration or benefits are paid by the mortgage broker, mortgage 17
lender, or mortgage servicer licensee by which the individual as a 18
mortgage loan originator is sponsored and originated the 19
residential mortgage loan. 20
Sec. 107. If a mortgage loan originator licensee works from a 21
remote location, the licensee shall list either of the following as 22
its registered location for the nationwide multistate licensing 23
system and registry record: 24
(a) The corporate headquarters of the licensee's employer. 25
(b) A branch location of the licensee's employer. 26
PART 5 27
MISCELLANEOUS CONDUCT REQUIREMENTS 28
Sec. 109. An instrument that evidences or secures a secondary 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
mortgage loan must not include any of the following: 1
(a) A power of attorney to confess judgment. 2
(b) A provision by which a borrower waives any of its rights 3
under this act, any federal law, or any other law of this state. 4
(c) An assignment of or order for the payment of all or part 5
of salary, wages, commissions, or other compensation for services 6
earned or to be earned. 7
(d) A provision to compel, encourage, or induce a borrower to 8
incorporate to evade the provisions of this act. 9
(e) A provision by which a borrower agrees to pay damages 10
without a judgment by a court. 11
Sec. 111. (1) An owner, partner, member, officer, director, 12
trustee, employee, agent, or broker of a licensee, a control 13
person, or a representative acting on the authority of any of those 14
people, that willfully or intentionally does any of the following 15
is guilty of a misdemeanor punishable by imprisonment for not more 16
than 1 year, a fine of not more than $15,000.00, or both: 17
(a) Engages in the business of a mortgage broker, mortgage 18
lender, or mortgage servicer without a license required under this 19
act, or acts as a mortgage loan originator without a mortgage loan 20
originator license required under this act. 21
(b) Transfers or assigns a residential mortgage loan or a 22
security representing an interest in 1 or more residential mortgage 23
loans before the disbursement of 75% or more of the proceeds of the 24
residential mortgage loan to, or for the benefit of, the borrower. 25
This subdivision does not apply to any of the following: 26
(i) A land contract that is not considered to be an equitable 27
mortgage. 28
(ii) A loan made under a state or federal government program 29
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that allows the lender to escrow more than 25% of the proceeds for 1
a limited period of time. 2
(iii) A construction loan. 3
(iv) A loan that provides in writing that the proceeds must be 4
disbursed to or for the benefit of the borrower in installments or 5
on the request of the borrower, or on the completion of renovations 6
or repairs to the dwelling situated on the real property subject to 7
the residential mortgage loan. 8
(c) Transfers or assigns a residential mortgage loan or a 9
security representing an interest in 1 or more residential mortgage 10
loans to an investor, unless 1 or more of the following apply: 11
(i) The transfer or assignment is made through a broker-dealer 12
that is a member of the New York Stock Exchange. 13
(ii) The transfer or assignment is made through a broker-dealer 14
that meets all of the following criteria: 15
(A) The broker-dealer is registered under the uniform 16
securities act (2002), 2008 PA 551, MCL 451.2101 to 451.2703. 17
(B) The broker-dealer is not an affiliate of the mortgage 18
lender unless the broker-dealer acquired the broker-dealer 19
registration, directly or indirectly, before September 1, 1987 20
under former 1964 PA 265, was affiliated with a mortgage lender 21
before September 1, 1987, and continuously maintained that 22
registration after September 1, 1987. For purposes of this sub-23
subparagraph, if an aggregate of more than 10% of the outstanding 24
voting stock or interest in a corporation, unincorporated 25
organization, partnership, or other legal entity that is a broker-26
dealer or mortgage lender is sold, transferred, assigned, or 27
otherwise conveyed, registration was not continuously maintained. 28
(C) The broker-dealer acquired the residential mortgage loan 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
or security on a firm commitment. 1
(iii) The transfer or assignment is made to a person that the 2
transferor or assignor believes, or has reasonable grounds to 3
believe, is 1 of the following: 4
(A) A business entity that has either net income from 5
operations after taxes in excess of $100,000.00 in its last fiscal 6
year or its latest 12-month period, or a net worth in excess of 7
$1,000,000.00 at the time of purchase. 8
(B) An individual who, after the purchase, has an investment 9
of more than $50,000.00 in residential mortgage loans or securities 10
representing an interest in 1 or more residential mortgage loans, 11
including installment payments to be made not later than 1 year 12
after purchase by the individual, has either personal income before 13
taxes in excess of $100,000.00 for the individual's last fiscal 14
year or latest 12-month period and is capable of bearing the 15
economic risk, or net worth in excess of $1,000,000.00, and has the 16
knowledge and experience in financial and business matters that the 17
individual is capable of evaluating the merits and risks of the 18
prospective investment, or has obtained the advice of an attorney, 19
independent certified public accountant, or investment adviser 20
registered under the investment advisers act of 1940, 15 USC 80b-1 21
to 80b-21, or an investment adviser registered under the uniform 22
securities act (2002), 2008 PA 551, MCL 451.2101 to 451.2703, with 23
respect to the merits and risks of the prospective investment. 24
(iv) The transferor or assignor does not maintain its principal 25
place of business in this state and the transferee or assignee is 26
not a resident of this state and does not maintain its principal 27
place of business in this state. 28
(d) Coerces or induces a real estate appraiser to inflate the 29
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value of real property used as collateral for a residential 1
mortgage loan, including, but not limited to, by doing either of 2
the following: 3
(i) Representing or implying that a real estate appraiser will 4
not be selected to conduct an appraisal of the real property or 5
selected for future appraisal work unless the appraiser agrees in 6
advance to a value, range of values, or minimum value for the real 7
property. 8
(ii) Representing or implying that a real estate appraiser will 9
not be paid for an appraisal unless the appraiser agrees in advance 10
to a value, range of values, or minimum value for the real 11
property. 12
(2) Subject to subsections (4) and (5), if the director finds 13
that a mortgage broker, mortgage lender, mortgage servicer, or 14
mortgage loan originator licensee has violated, or directly or 15
indirectly counseled, aided, or abetted in a violation of this act 16
or a rule promulgated under this act, the director may do any of 17
the following: 18
(a) Assess a civil fine against the licensee, or a control 19
person of the licensee, as applicable, of not more than $3,000.00 20
for each violation, except that the licensee or control person must 21
not be fined more than $30,000.00 for a transaction resulting in 22
more than 1 violation, plus the costs of examination or 23
investigation. 24
(b) Suspend or revoke a license, refuse to grant or renew a 25
license, or take any other disciplinary action provided for under 26
this act. 27
(c) Require a licensee, or a control person of a licensee, as 28
applicable, to make restitution to each injured individual, if the 29
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director finds that the violation of this act or a rule promulgated 1
under this act resulted in an injury to 1 or more individuals. 2
(3) A civil fine assessed under subsection (2) may be sued for 3
and recovered by and in the name of the director and may be 4
collected and enforced by summary proceeding by the attorney 5
general. 6
(4) Each individual injured by a violation of this act or a 7
rule promulgated under this act is a separate violation. 8
(5) In determining the amount of a civil fine under subsection 9
(2)(a), whether to suspend or revoke a license, refuse to grant or 10
renew a license, or take any other disciplinary action under 11
subsection (2)(b), or the amount of restitution under subsection 12
(2)(c), the director shall consider all of the following: 13
(a) The extent to which the violation was a knowing and 14
willful violation. 15
(b) The extent of the injury suffered because of the 16
violation. 17
(c) The corrective action taken by the licensee to ensure that 18
the violation will not be repeated. 19
(d) The record of the licensee in complying with this act. 20
(6) A summary proceeding under this section must be conducted 21
in accordance with the administrative procedures act of 1969, 1969 22
PA 306, MCL 24.201 to 24.328. 23
(7) Subsection (2) does not apply to a violation of this act 24
that results from a bona fide error that occurs notwithstanding the 25
adoption and observance of procedures intended to prevent the 26
occurrence of the error. 27
ARTICLE 5 28
ADMINISTRATIVE ENFORCEMENT AUTHORITY 29
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Sec. 113. (1) A mortgage broker, mortgage lender, mortgage 1
servicer, or mortgage loan originator licensee may surrender a 2
license by delivering written notice of the surrender to the 3
director. 4
(2) The surrender, revocation, suspension, or expiration of a 5
license under this act does not affect a licensee's administrative, 6
civil, or criminal liability for acts committed before the 7
surrender, revocation, suspension, or expiration. 8
(3) The surrender or expiration of a license under this act 9
does not affect the initiation or continuation of any of the 10
following: 11
(a) An investigation or examination. 12
(b) A proceeding to suspend or revoke the license or impose 13
any other disciplinary action under this act. 14
(4) Except as otherwise provided by law, the surrender, 15
revocation, suspension, or expiration of a license under this act 16
does not impair or affect the obligation of a preexisting contract 17
between the licensee and another person. 18
Sec. 115. (1) Subject to subsection (2), the attorney general, 19
the director, or any other person may file a complaint with the 20
director alleging that a person has violated this act, a rule 21
promulgated under this act, or an order issued under this act. 22
(2) If a complaint filed under subsection (1) is made by the 23
director, the director must designate 1 or more employees of the 24
department to act as the person making the complaint. 25
(3) On receipt of a complaint filed under subsection (1), the 26
director may do either or both of the following: 27
(a) Investigate the complaint. 28
(b) Forward the complaint to the mortgage broker, mortgage 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
lender, mortgage servicer, or mortgage loan originator licensee 1
subject to or otherwise implicated in the complaint and require 2
that the licensee respond to the complainant and provide the 3
director with a copy of the response within a period of time 4
designated by the director. 5
(4) If the director requires a response from a licensee under 6
subsection (3) and the licensee does not respond to the complainant 7
within the designated period of time or does not handle the 8
complaint to the satisfaction of the director, the director may 9
conduct an investigation or bring an administrative action against 10
the licensee. 11
Sec. 117. All of the following apply to an investigation of a 12
complaint filed under section 115: 13
(a) The department must complete the investigation within a 14
reasonable period of time. 15
(b) If the investigation does not disclose evidence of a 16
violation of this act, a rule promulgated under this act, or an 17
order issued under this act, the director must not use the 18
complaint in any subsequent decision to grant, renew, suspend, or 19
revoke the license of the person subject to the complaint. 20
(c) In addition to any other action authorized by law, if the 21
investigation discloses evidence of a violation of this act, a rule 22
promulgated under this act, or an order issued under this act, the 23
director or the attorney general may prepare a formal complaint to 24
be served on the person against whom the complaint was filed and 25
provide a copy of the formal complaint to the complainant. 26
Sec. 119. (1) After an investigation is conducted under 27
section 115 and a formal complaint is prepared under section 117, 28
the director shall serve both of the following on the person 29
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against whom the complaint was filed and the person that filed the 1
complaint: 2
(a) A notice of a hearing on the complaint in accordance with 3
section 71 of the administrative procedures act of 1969, 1969 PA 4
306, MCL 24.271. 5
(b) A notice of an opportunity to settle the complaint through 6
an informal conference. 7
(2) A person that was served with notice under subsection (1) 8
may request, not later than 15 days after receipt of the notice, an 9
opportunity to settle a complaint in an informal conference. 10
(3) An informal conference requested under subsection (2) must 11
not be held if the person against whom the complaint was filed does 12
not agree to the informal conference. 13
(4) If an informal conference is held under this section, the 14
hearing on the complaint must be postponed. 15
(5) An informal conference under this section may result in a 16
settlement, consent order, waiver, default, or other method of 17
settlement agreed to by the person against whom the complaint was 18
filed and the director. 19
(6) A settlement described in subsection (5) may include a 20
license revocation or suspension, restitution, or a penalty 21
prescribed by this act. 22
(7) This act does not prevent a person against whom a 23
complaint was filed from showing compliance with this act, a rule 24
promulgated under this act, or an order issued under this act. 25
(8) If an informal conference is not held under this section, 26
or the informal conference does not result in a settlement of a 27
complaint, a hearing on the complaint must be held in accordance 28
with chapter 4 of the administrative procedures act of 1969, 1969 29
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PA 306, MCL 24.271 to 24.288. 1
Sec. 121. (1) The director shall give notice to a mortgage 2
broker, mortgage lender, mortgage servicer, or mortgage loan 3
originator licensee of the director's intention to enter an order 4
suspending or revoking the person's license, or notice to an 5
applicant for a mortgage broker, mortgage lender, mortgage 6
servicer, or mortgage loan originator license of a refusal to grant 7
a license, in writing and served personally on the licensee or 8
applicant, or sent by certified mail to the licensee's or 9
applicant's address on file with the director. 10
(2) Not later than 20 days after notice is provided to a 11
licensee or applicant under subsection (1), the licensee or 12
applicant may request a hearing to contest the order or refusal, 13
and if the hearing is so requested, the hearing must be conducted 14
in accordance with the administrative procedures act of 1969, 1969 15
PA 306, MCL 24.201 to 24.328. 16
(3) If a hearing regarding a license suspension or revocation 17
is not requested under subsection (2), the director must enter a 18
final order concerning the suspension or revocation. 19
(4) The director may reinstate a suspended license or grant a 20
new license to a mortgage broker, mortgage lender, mortgage 21
servicer, or mortgage loan originator whose license was revoked, if 22
the conditions under which the license was revoked have been 23
corrected and the director is satisfied, as a result of an 24
investigation, that the conditions are not likely to reoccur. 25
Sec. 123. (1) After an investigation is conducted under 26
section 115 and before holding a hearing under section 119, the 27
director may order a person to cease and desist from a violation of 28
this act, a rule promulgated under this act, or an order issued 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
under this act. 1
(2) A person subject to a cease and desist order issued under 2
subsection (1) is entitled to a hearing before the director if the 3
person files a written request for a hearing with the director not 4
more than 30 days after the effective date of the order. 5
(3) A hearing described in subsection (2) must be conducted in 6
accordance with the administrative procedures act of 1969, 1969 PA 7
306, MCL 24.201 to 24.328. 8
(4) A violation of a cease and desist order issued under 9
subsection (1) is a violation of this act, and the director or the 10
attorney general may take any action authorized under this act, 11
including applying to the Ingham County circuit court to restrain 12
and enjoin, temporarily or permanently, or both, a person from 13
further violating the cease and desist order. 14
Sec. 125. (1) After an examination or investigation is 15
conducted under this act, the director may issue an order summarily 16
suspending a mortgage broker, mortgage lender, mortgage servicer, 17
or mortgage loan originator license in accordance with section 92 18
of the administrative procedures act of 1969, 1969 PA 306, MCL 19
24.292, based on an affidavit by a person familiar with the facts 20
set forth in the affidavit or, if appropriate, based on an 21
affidavit, on information and belief, that an imminent threat of 22
financial loss or imminent threat to the public welfare exists. 23
(2) The director shall serve notice of the summary suspension 24
order issued under subsection (1) to the mortgage broker, mortgage 25
lender, mortgage servicer, or mortgage loan originator licensee 26
subject to the summary suspension order. Service to a licensee's 27
last known address in the nationwide multistate licensing system 28
and registry is considered service on the licensee for purposes of 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
this subsection. 1
(3) A mortgage broker, mortgage lender, mortgage servicer, or 2
mortgage loan originator licensee subject to a summary suspension 3
order issued under subsection (1) may file a request for a hearing 4
on the summary suspension order with the director not more than 20 5
days after the date that the summary suspension order is served by 6
the director under subsection (2). 7
(4) If a mortgage broker, mortgage lender, mortgage servicer, 8
or mortgage loan originator licensee requests a hearing under 9
subsection (3), a hearing must be promptly held on the summary 10
suspension order. 11
(5) In accordance with a proceeding commenced under section 92 12
of the administrative procedures act of 1969, 1969 PA 306, MCL 13
24.292, an administrative law hearings officer shall grant a 14
request to dissolve a summary suspension order unless the officer 15
finds that an imminent threat of financial loss or imminent threat 16
to the public welfare exists that requires emergency action and 17
continuation of the summary suspension order. 18
(6) The record created at the hearing of the summary 19
suspension becomes part of the record on the complaint at a 20
subsequent hearing in a contested case. 21
Sec. 127. (1) If, in the opinion of the director, a person has 22
engaged in fraud, the director may serve the person with written 23
notice of intention to prohibit the person from being employed by, 24
an agent of, or a control person, as applicable, of a mortgage 25
broker, mortgage lender, or mortgage servicer licensee or a 26
licensee under a financial licensing act. As used in this 27
subsection, "fraud" includes actionable fraud, actual or 28
constructive fraud, criminal fraud, extrinsic or intrinsic fraud, 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
fraud in the execution, in the inducement, in fact, or in law, or 1
any other form of fraud. 2
(2) A notice issued under subsection (1) must include a 3
statement of the facts supporting the prohibition and, except as 4
otherwise provided under subsection (9), set a hearing to be held 5
not more than 60 days after the date of the notice. If the person 6
does not appear at the hearing, the person is considered to have 7
consented to the issuance of an order in accordance with the 8
notice. 9
(3) If, after a hearing held under subsection (2), the 10
director finds that any of the grounds specified in the notice have 11
been established, the director may issue an order of suspension or 12
prohibition from being a mortgage broker, mortgage lender, mortgage 13
servicer, or mortgage loan originator licensee or from being 14
employed by, an agent of, or a control person, as applicable, of a 15
licensee or a licensee under a financial licensing act. 16
(4) An order issued under subsection (2) or (3) is effective 17
on the date that the person subject to the order is served with the 18
order and remains effective until the date that the order is 19
stayed, modified, terminated, or set aside by the director or a 20
reviewing court. 21
(5) The director shall serve a copy of an order issued under 22
subsection (2) or (3) on the mortgage broker, mortgage lender, 23
mortgage servicer, or person licensed under a financial licensing 24
act to whom the person subject to the order is an employee, agent, 25
or control person. Service to a licensee's last known address in 26
the nationwide multistate licensing system and registry is 27
considered service on the licensee for purposes of this subsection. 28
(6) A person subject to an order issued under subsection (2) 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
or (3) may apply to the director to terminate the order not earlier 1
than 5 years after the date of the order. 2
(7) If the director determines that the person served with 3
notice under subsection (1) poses an imminent threat of financial 4
loss to applicants for residential mortgage loans, the director may 5
serve the person with an order of suspension from being employed 6
by, an agent of, or a control person, as applicable, of a mortgage 7
broker, mortgage lender, or mortgage servicer licensee. 8
(8) An order issued under subsection (7) is effective on the 9
date the order is issued and, unless stayed by a court, remains in 10
effect pending the completion of a review as provided under this 11
section and the director has dismissed the charges specified in the 12
order. 13
(9) Unless otherwise agreed to by the director and the person 14
served with an order issued under subsection (7), the hearing 15
required under subsection (2) to review the suspension must be held 16
not earlier than 5 days after the date of the notice and not later 17
than 20 days after the date of the notice. 18
(10) If a person is convicted of, or pleads guilty or no 19
contest to, a felony involving fraud, dishonesty, or breach of 20
trust, the director may issue an order suspending or prohibiting 21
the person from being a mortgage broker, mortgage lender, mortgage 22
servicer, or mortgage loan originator licensee and from being 23
employed by, an agent of, or a control person, as applicable, of a 24
licensee or a licensee under a financial licensing act. 25
(11) A person subject to an order issued under subsection (10) 26
may apply to the director for termination of the order not earlier 27
than 5 years after the date of the order. 28
(12) The director shall mail a copy of a notice or order 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
described in this section to the mortgage broker, mortgage lender, 1
or mortgage servicer licensee for whom the person subject to the 2
notice or order is an employee, agent, or control person. 3
(13) A current or former executive officer, director, agent, 4
or control person who violates a final order issued under this 5
section is guilty of a misdemeanor punishable by imprisonment for 6
not more than 1 year, a fine of not more than $5,000.00, or both. 7
(14) A control person who is subject to an order issued under 8
this section and who meets both of the following requirements is 9
not in violation of the order: 10
(a) The control person does not in any manner, directly or 11
indirectly, participate in the control of a mortgage broker, 12
mortgage lender, or mortgage servicer licensee after the date that 13
the order is issued under this section. 14
(b) The control person, not later than 6 months after the date 15
that the order is final, transfers any interest that the control 16
person owns in a mortgage broker, mortgage lender, or mortgage 17
servicer licensee to an unrelated third party. 18
Sec. 129. (1) A hearing under this act must be conducted in 19
accordance with the administrative procedures act of 1969, 1969 PA 20
306, MCL 24.201 to 24.328. 21
(2) Not later than 30 days after the director notifies the 22
parties that a case has been submitted to the director for a final 23
decision, the director shall render a decision that includes 24
findings of fact supporting the decision and shall serve on each 25
party to the proceeding a copy of the decision and an order 26
consistent with the decision. 27
(3) Except as otherwise provided in subsection (4), a party to 28
a proceeding, or a person affected by an order issued under this 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
act, may obtain judicial review of the order. 1
(4) A consent order may be reviewed as provided under the 2
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 3
24.328. 4
(5) Except for an order under judicial review, the director 5
may terminate or set aside any order issued under this act. 6
(6) The director may terminate or set aside an order under 7
judicial review with the permission of the court. 8
(7) Unless ordered by the court, the commencement of 9
proceedings for judicial review does not stay an order by the 10
director. 11
Sec. 131. The director may apply to the Ingham County circuit 12
court for the enforcement of an outstanding order issued under this 13
act. 14
Sec. 133. (1) Notwithstanding the provisions of section 139, 15
if the director determines that a mortgage servicer licensee is 16
intentionally, or as a result of gross or wanton negligence, not 17
servicing residential mortgage loans in accordance with the terms 18
of this act or the terms of the servicing contracts, the director 19
may appoint a conservator for the mortgage servicer licensee and 20
require of the conservator a bond and security as the director 21
considers proper. 22
(2) The director may appoint as conservator under subsection 23
(1) any competent and disinterested person, including, but not 24
limited to, an examiner of the department. 25
(3) The department must be reimbursed out of the assets of the 26
conservatorship for actual expenses incurred by the department in 27
the connection with the conservatorship under this section. 28
(4) Any amount reimbursed under subsection (3) must be paid 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
into the residential mortgage conservator fund created in section 1
155. 2
(5) On the appointment of a conservator under subsection (1), 3
a conservator shall become a staff member or an agent of the 4
department. 5
(6) All expenses of a conservatorship must be paid out of the 6
assets of the licensee subject to the conservatorship, if approved 7
by the director. 8
(7) The expenses described in subsection (6) must be a first 9
charge on the assets of the licensee subject to the conservatorship 10
and must be fully paid before any final distribution or payment of 11
dividends is made to creditors or shareholders. 12
(8) Except as otherwise provided in subsection (9), a 13
conservator, under the direction of the director, shall do both of 14
the following: 15
(a) Take sole control of the affairs of the licensee subject 16
to the conservatorship under this section and possession of the 17
books and records of the licensee. 18
(b) Take any action that is necessary to assure that the 19
residential mortgage loans of the licensee subject to the 20
conservatorship under this section are serviced in accordance with 21
this act and the servicing contracts. 22
(9) A licensee subject to a conservatorship under this section 23
may cause the licensee's rights to service residential mortgage 24
loans to be transferred or assigned to a person approved by the 25
director. 26
(10) If the director is satisfied that termination of a 27
conservatorship under this section may be done safely and is in the 28
public interest, the director may terminate the conservatorship and 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
permit the licensee to resume the servicing of residential mortgage 1
loans subject to any terms, conditions, and limitations prescribed 2
by the director. 3
Sec. 135. A summary suspension order issued under section 125, 4
cease and desist order issued under section 123, or injunctive 5
relief issued or granted in relation to a mortgage broker, mortgage 6
lender, mortgage servicer, or mortgage loan originator license is 7
in addition to and not in place of an informal conference, a 8
criminal prosecution, a proceeding to deny, revoke, or suspend a 9
license, or any other legal action. 10
Sec. 137. This act does not relieve a person from civil or 11
criminal liability under the laws of this state or any federal law. 12
Sec. 139. This act does not preclude a person whose mortgage 13
lender or mortgage servicer license is suspended or revoked, 14
summarily or otherwise, from doing either of the following, as 15
applicable: 16
(a) Continuing to service residential mortgage loans under 17
servicing contracts that were in existence at the time of the 18
suspension or revocation for not more than 6 months after the date 19
of the entry of the final decision of the presiding officer in the 20
contested case suspending or revoking the license. 21
(b) Making a residential mortgage loan in accordance with a 22
commitment to make a residential mortgage loan issued by the person 23
before the suspension or revocation, except that a person that 24
received a commitment issued by a mortgage lender whose license is 25
suspended or revoked may, before closing the loan, terminate the 26
commitment and receive a refund of all money paid to the person. 27
Sec. 141. (1) The director shall prioritize and pay claims 28
filed with the director under this section against a corporate 29
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surety bond of a mortgage broker, mortgage lender, or mortgage 1
servicer licensee under section 19 in a manner that, in the 2
director's discretion, best protects the public interest. 3
(2) A claim may be filed against a mortgage broker, mortgage 4
lender, or mortgage servicer's corporate surety bond only as 5
provided under this section and only by the director or a borrower, 6
loan applicant, or loan servicing customer of the licensee. 7
(3) A claim filed against a corporate surety bond by a 8
borrower or loan applicant must involve only residential mortgage 9
loans or residential mortgage applications secured or to be secured 10
by residential real property located in this state. 11
(4) The amount of a claim filed under subsection (3) must not 12
exceed actual fees assessed in connection with the loan 13
application, overcharges of principal and interest, improper 14
disbursement of escrow funds, and excess escrow collections charged 15
by the mortgage broker, mortgage lender, or mortgage servicer 16
licensee and paid by the claimant to the licensee. 17
(5) The director may file a claim against a corporate surety 18
bond for any of the following: 19
(a) Payment of fines and fees due and payable to the director 20
or the department. 21
(b) Reimbursement of expenses incurred in an examination, 22
investigation, or conservatorship of the licensee. 23
(c) Reimbursement of expenses incurred in distributing 24
proceeds of the corporate surety bond. 25
(6) A claim filed under subsection (5) must be paid in full 26
before payment of other claims against the corporate surety bond, 27
unless the director, in the director's discretion, waives in whole 28
or in part the right to priority of payment. 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
(7) In the event that valid claims filed under this section 1
exceed the amount of the corporate surety bond, each claimant is 2
entitled only to a pro rata amount of the claimant's valid claim. 3
Sec. 143. The powers and duties of the attorney general 4
provided in this act are in addition to the attorney general's 5
existing powers and duties provided by statute and in common law, 6
and nothing in this act impairs or restricts the jurisdiction of 7
any court in any action or proceeding by the attorney general under 8
any other statute or common law. 9
ARTICLE 6 10
MISCELLANEOUS PROVISIONS 11
Sec. 145. Notwithstanding the place of execution, nominal or 12
real, of a residential mortgage loan, if the real property is 13
located in this state, the residential mortgage loan is subject to 14
this act and all other applicable laws of this state. 15
Sec. 147. A failure to comply with this act does not affect 16
the validity or enforceability of a residential mortgage loan 17
unless the residential mortgage loan is invalid or unenforceable 18
under any other law of this state or federal law. 19
Sec. 149. (1) Regardless of whether a person seeks damages or 20
has an adequate remedy at law, a person, prosecutor, or the 21
attorney general may bring an action, including a class action, to 22
do any of the following: 23
(a) Obtain a declaratory judgment that a method, act, or 24
practice is a violation of this act. 25
(b) Obtain an injunction against a person that is engaging or 26
is about to engage in a method, act, or practice that violates this 27
act. 28
(c) Except as otherwise provided in subsection (2), recover 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
actual damages resulting from a violation of this act, or $250.00, 1
whichever is greater, together with reasonable attorney fees and 2
the costs of bringing the action. 3
(2) If a mortgage broker, mortgage lender, mortgage servicer, 4
or mortgage loan originator licensee establishes by a preponderance 5
of the evidence that the licensee's failure to comply with this act 6
was not willful, intentional, or the result of gross or wanton 7
negligence, the amount recovered under subsection (1)(c) must not 8
exceed actual damages. 9
Sec. 151. (1) The residential mortgage industry advisory board 10
is created in the department. 11
(2) Subject to subsections (6) and (7), the director shall 12
appoint the members of the residential mortgage industry advisory 13
board. Except as otherwise provided in subsections (3) and (4), the 14
residential mortgage industry advisory board must consist of the 15
following members: 16
(a) Four individuals who are employees of, are control persons 17
of, or have at least 25% ownership interest in a mortgage broker, 18
mortgage lender, or mortgage servicer licensee. 19
(b) One individual who is an employee of, is a director of, or 20
has at least 25% ownership interest in a mortgage broker, mortgage 21
lender, or mortgage servicer licensee that is a member of a trade 22
association or consumer advocacy group operating in this state that 23
represents mortgage brokers, mortgage lenders, mortgage servicers, 24
or consumers. 25
(c) Two individuals who are employees of, are control persons 26
of, or have at least 25% ownership interest in business entities 27
that provide services to or purchase services from mortgage broker, 28
mortgage lender, or mortgage servicer licensees. 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
(3) To be eligible for appointment under subsection (2), an 1
individual must have demonstrated knowledge, experience, or 2
interest in any of the following: 3
(a) The residential mortgage industry. 4
(b) Providing services to or obtaining services from mortgage 5
broker, mortgage lender, mortgage servicer, or mortgage loan 6
originator licensees. 7
(c) Consumer protection. 8
(4) The residential mortgage industry advisory board must not 9
include more than 1 member who is employed by, is a director of, or 10
has more than 1% ownership interest in the same mortgage broker, 11
mortgage lender, or mortgage servicer licensee, affiliate, or other 12
person. 13
(5) The director may solicit interest and recommendations for 14
members of the residential mortgage industry advisory board from 15
any source, including, but not limited to, any of the following: 16
(a) A current member on the residential mortgage industry 17
advisory board. 18
(b) The Michigan Mortgage Lenders Association. 19
(c) A trade association representing service providers or 20
clients of a mortgage broker, mortgage lender, or mortgage servicer 21
licensee. 22
(d) The State Bar of Michigan. 23
(e) A consumer advocacy group. 24
(6) Not later than 90 days after the effective date of this 25
act, the director shall appoint the individuals who, on the 26
effective date of this act, are members of the mortgage industry 27
advisory board created in section 33 of the mortgage brokers, 28
lenders, and servicers licensing act, 1987 PA 173, MCL 445.1683, to 29
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JJB H05171'25_HB6177_INTR_1 hio5fd
be the first members of the residential mortgage industry advisory 1
board. 2
(7) The director shall appoint 3 of the first members to 2-3
year terms and 4 of the first members to 4-year terms. After the 4
first appointments, the term of a member of the residential 5
mortgage industry advisory board is 4 years. 6
(8) A writing, including minutes of its meetings, that is 7
prepared, owned, used, possessed, or retained by the residential 8
mortgage industry advisory board in performing an advisory function 9
is subject to the freedom of information act, 1976 PA 442, MCL 10
15.231 to 15.246, and the residential mortgage industry advisory 11
board shall preserve the writing for at least 10 years. 12
(9) A member of the residential mortgage industry advisory 13
board is not entitled to compensation for service on the 14
residential mortgage industry advisory board, but the department 15
may reimburse a member for actual and necessary expenses incurred 16
in serving. 17
(10) The residential mortgage industry advisory board shall 18
communicate to the director issues concerning the residential 19
mortgage industry and shall review and make recommendations to the 20
director concerning all of the following: 21
(a) Proposed legislation that impacts the residential mortgage 22
industry, including proposed legislation to amend this act. 23
(b) Proposed rules that impact the residential mortgage 24
industry. 25
(c) Procedures for maintaining the confidentiality of personal 26
identifying information and other information concerning mortgage 27
broker, mortgage lender, mortgage servicer, or mortgage loan 28
originator licensees and applicants for licensure. 29
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(d) Any other issue referred to the residential mortgage 1
industry advisory board by the director. 2
Sec. 153. (1) The residential mortgage administration fund is 3
created in the state treasury. 4
(2) The state treasurer shall deposit money and other assets 5
received from any fee collected under this act or under the 6
director's authority under this act or from any other source in the 7
fund. 8
(3) The state treasurer shall direct the investment of money 9
in the fund and credit interests and earnings from the investments 10
to the fund. 11
(4) Money in the fund at the close of the fiscal year remains 12
in the fund and does not lapse to the general fund. 13
(5) The department is the administrator of the fund for audits 14
of the fund. 15
(6) The department shall expend money from the fund on 16
appropriation, only for 1 or more of the following purposes: 17
(a) To administer and enforce this act. 18
(b) To pay any cost associated with the director's regulatory 19
obligations. 20
(7) As used in this section, "fund" means the residential 21
mortgage administration fund created in subsection (1). 22
Sec. 155. (1) The residential mortgage conservator fund is 23
created in the state treasury. 24
(2) The state treasurer shall deposit money and other assets 25
received from compensation and expenses required to be reimbursed 26
to the department in connection with a conservatorship and all 27
expenses for state supervision of conservatorships under section 28
133 or from any other source in the fund. 29
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(3) The state treasurer shall direct the investment of money 1
in the fund and credit interests and earnings from the investments 2
to the fund. 3
(4) Money in the fund at the close of the fiscal year remains 4
in the fund and does not lapse to the general fund. 5
(5) The department is the administrator of the fund for audits 6
of the fund. 7
(6) Subject to appropriation, the department shall expend 8
money from the fund on proper vouchers, approved by the director, 9
to reimburse the department for expenses incurred by the department 10
in connection with conservators of mortgage servicer licensees 11
under section 133. 12
(7) As used in this section, "fund" means the residential 13
mortgage conservator fund created in subsection (1). 14
Sec. 157. The repeal of a statute by this act does not 15
relinquish any penalty, forfeiture, or liability, whether criminal 16
or civil in nature, and that statute must be treated as still 17
remaining in force as necessary for the purpose of instituting or 18
sustaining any proper action or prosecution for the enforcement of 19
the penalty, forfeiture, or liability. 20
Enacting section 1. The following acts are repealed on the 21
date that is 6 months after the effective date of this act: 22
(a) The mortgage brokers, lenders, and servicers licensing 23
act, 1987 PA 173, MCL 445.1651 to 445.1684. 24
(b) The secondary mortgage loan act, 1981 PA 125, MCL 493.51 25
to 493.81. 26
(c) The mortgage loan originator licensing act, 2009 PA 75, 27
MCL 493.131 to 493.171. 28
Enacting section 2. This act takes effect 90 days after the 29
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date it is enacted into law. 1