TITLE 5

Banking

Other Businesses Under Jurisdiction of State Banking Department

CHAPTER 21. MORTGAGE LOAN BROKERS


In this chapter, unless the context otherwise requires:

(1) "Borrower" means a person obtaining or desiring to obtain a mortgage loan.

(2) "Commissioner" means the State Bank Commissioner.

(3) "Licensee," "licensed mortgage loan broker," or "person licensed" means any person duly licensed or regulated by the Commissioner pursuant to this chapter.

(4) "Mortgage loan" means an extension of credit secured by a first or secondary mortgage on any 1-to-4 family residential owner-occupied property intended for personal, family or household purposes, which is:

a. Negotiated, offered or otherwise transacted within this State, in whole or in part;

b. Made or extended within this State; or

c. Secured by real property located in this State.

(5) "Mortgage loan broker" means a person who (i) in the ordinary course of business, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, negotiates or offers to negotiate, or arranges or solicits, or offers to arrange or solicit, a mortgage loan on behalf of a borrower, or (ii) holds himself out as being able to serve as an agent for any person in an attempt to obtain a mortgage loan; or (iii) holds himself or herself out as being able to serve as an agent or independent contractor to negotiate the terms or conditions of a mortgage loan on behalf of a lender (but who is not a person employed as an employee or agent of the lender).

(6) "Person" means an individual, corporation, partnership or any other group of individuals however organized.

68 Del. Laws, c. 326, § 1; 70 Del. Laws, c. 186, § 1.;

(a) Subject to the provisions of subsection (b) of this section, every person desiring to transact the business of a mortgage loan broker shall be required to obtain a license under this chapter; provided however, that a person who acts as a mortgage loan broker with respect to 5 or fewer mortgage loans within any 12-month period shall be deemed not to be transacting the business of a mortgage loan broker. The licensing requirements of this chapter shall not apply to:

(1) Any banking organization, out-of-state state or national bank, state or federal savings bank or savings and loan association, credit union, licensed lender or insurance company; provided, that such person is licensed (or exempt from licensing) by, and is subject to regulation or supervision of, any agency of the United States or this State;

(2) Any person licensed to practice law in this State, not actively and principally engaged in the mortgage loan brokerage business, when such person renders services in the course of such person's practice as an attorney at law;

(3) Any person licensed in this State as a real estate broker or a real estate salesperson, not actively and principally engaged in the mortgage loan brokerage business, when such person renders services in the course of the person's business as a real estate broker or salesperson; or

(4) Any person employed as an employee or agent for a single licensed or exempt mortgage loan broker; provided, that any fees paid by borrowers are paid to the licensed or exempt mortgage loan broker and not to the employee or agent.

Any person conducting a mortgage loan brokerage business but exempted from the licensing requirements of this section shall nevertheless be subject to the provisions of § 2114 of this title in the conduct of such business.

(b) The Commissioner shall be authorized to exempt such persons or classes of persons, or such activities, from the licensing or other provisions of this chapter as the Commissioner shall find inappropriate to include within the coverage of this chapter in order to effectuate its purposes.

68 Del. Laws, c. 326, § 1; 71 Del. Laws, c. 254, § 28.;

(a) Every application for a license shall be in writing, in the form prescribed by the Commissioner and shall contain the name and complete address or addresses where the business of the applicant is to be conducted and, if the applicant is a partnership, association, corporation or other form of business organization, the names and complete addresses of each member, director and principal officer thereof. Such application shall also include a description of the activities of the applicant, in such detail and for such periods as the Commissioner may require, as well as such other further information as the Commissioner may require. Such applicant, at the time of making such application, shall pay to the Commissioner, as an investigation fee, the sum of $250 which shall not be refundable.

(b) Upon approval, the applicant shall pay an annual license fee of $500, which shall be payable annually thereafter. Two hundred and fifty dollars of the aforementioned license fee shall be allocated to and for the assistance of the Delaware Emergency Mortgage Assistance Program. No abatement in the amount of said license fee shall be made if the license is issued for less than 1 year or if the license is surrendered, canceled or revoked prior to the expiration of the period for which such license was issued. Every license issued hereunder shall expire on December 31 of each year.

68 Del. Laws, c. 326, § 1; 76 Del. Laws, c. 420, §§ 1, 2.;

Upon the filing of an application for a license, if the Commissioner shall find that the financial responsibility, experience, character and general fitness of the applicant and of the members thereof (if the applicant is a partnership or association) and of the officers and directors thereof (if the applicant is a corporation) are such as to warrant belief that its business will be operated honestly, fairly and efficiently within the purpose of this chapter, he shall thereupon issue a license to transact business in accordance with this chapter. If the Commissioner shall not so find, he shall not issue such license and he shall notify the applicant of its denial, give notice of the grounds for refusal and notify the applicant of the right to request a hearing. If the applicant requests a hearing, the Commissioner shall hold such hearing under Chapter 101 of Title 29. The Commissioner shall approve or deny every application for license hereunder within 90 days from the date the Commissioner determines that the application as filed with him is complete.

68 Del. Laws, c. 326, § 1.;

In the event that there shall be any change among the officers, partners or directors of any licensee, the licensee shall forthwith notify the Commissioner of the name, address and occupation of each new officer, partner or director and provide such other information as the Commissioner may require.

68 Del. Laws, c. 326, § 1.;

A licensee shall obtain a license for each office or other place of business from which its mortgage loan brokerage business is conducted upon payment of the required fees for each office and compliance with all applicable provisions of law. Each license issued under this chapter shall state the address at which the business is to be conducted and shall state fully the name of the licensee. Such license shall be posted in a prominent position in the therein-designated place of business of the licensee. In the event such location is changed, the Commissioner shall issue without charge an amended license showing the new location. If there is a change of name but no change in corporate or other business structure, the Commissioner shall issue without charge an amended license showing the new name. Such license shall not otherwise be transferrable or assignable. The Commissioner may issue more than 1 license to the same applicant upon payment of the required fees and compliance with all applicable provisions of law.

68 Del. Laws, c. 326, § 1; 69 Del. Laws, c. 165, § 25; 72 Del. Laws, c. 15, § 28.;

Every holder of a license or a renewal thereof, as provided for in this section, desiring to continue the transaction of business as provided for in this chapter, shall, at least 30 days prior to the expiration of such license or renewal thereof, make application to the Commissioner, on forms to be provided by the Commissioner, for a license renewal. The Commissioner may mandate that applications for renewal shall be treated as new applications if said renewal applications are not on file with the office of the State Bank Commissioner at least 30 days prior to the expiration of such license or renewal thereof. Licensees who have not complied with supervisory letters or who have not paid any supervisory assessment or examination fees when due may be refused license renewal.

68 Del. Laws, c. 326, § 1; 70 Del. Laws, c. 327, § 42.;

(a) Surety bonds.

(1) Every licensee shall file with the Commissioner, in a form satisfactory to the Commissioner, an original corporate surety bond, with surety provided by a corporation authorized to transact business in this State, in the principal sum of $25,000.

(2) No bond shall be accepted unless the following requirements are satisfied:

a. The term of the bond shall be commensurate with the license period or continuous;

b. The expiration date of the bond shall not be earlier than midnight of the date on which the license expires; and

c. The bond shall run to the State for the benefit of the office of the State Bank Commissioner and for the benefit of all consumers injured by any wrongful act, omission, default, fraud or misrepresentation by a licensee in the course of its activity as a licensee. Compensation under the bond shall be for amounts which represent actual losses and shall not be payable for claims made by business creditors, third-party service providers, agents or persons otherwise in the employ of the licensee. Surety claims shall be paid to the office of the State Bank Commissioner by the insurer not later than 90 days after receipt of a claim. Claims paid after 90 days shall be subject to daily interest at the legal rate. The aggregate liability of the surety on the bond, exclusive of any interest which accrues for payments made after 90 days, shall in no event exceed the amount of such bond.

(3) If the licensee changes its surety company or the bond is otherwise amended, the licensee shall immediately provide the Commissioner with the amended original copy of the surety bond. No cancellation of an existing bond by a surety shall be effective unless written notice of its intention to cancel is filed with the Commissioner at least 30 days before the date upon which cancellation shall take effect.

(4) The Commissioner may require potential claimants to provide such documentation and affirmations as the Commissioner shall determine to be necessary and appropriate. In the event the Commissioner determines that multiple consumers have been injured by a licensee, the Commissioner shall cause a notice to be published for the purpose of identifying all relevant claims.

(5) When a surety company receives a claim against the bond of a licensee, it shall immediately notify the Commissioner and shall not pay any claim unless and until it receives notice to do so from the Commissioner.

(6) The Commissioner shall have a period of 2 calendar years after the effective date of cancellation or termination of the surety bond by the insurer to submit claims to the insurer.

(b) Irrevocable letters of credit. — In lieu of requiring the filing of a surety bond, the Commissioner may, at the Commissioner's discretion, accept from a licensee an irrevocable letter of credit.

(1) Such irrevocable letters of credit shall be provided by an insured depository institution (as defined in the Federal Deposit Insurance Act at 12 U.S.C. § 1813(c)) acceptable to the Commissioner, in a form satisfactory to the Commissioner in the principal sum of $25,000.

(2) No irrevocable letter of credit shall be accepted unless the following requirements are satisfied:

a. The irrevocable letter of credit shall run to the State for the benefit of the office of the State Bank Commissioner and for the benefit of all consumers injured by the wrongful act, omission, default, fraud or misrepresentation by a licensee in the course of its activity as a licensee. Compensation under the irrevocable letter of credit shall be for amounts which represent actual losses and shall not be payable for claims made by business creditors, third-party service providers, agents or persons otherwise in the employ of the licensee. The aggregate liability of the insured depository institution issuing the irrevocable letter of credit shall in no event exceed the amount of such irrevocable letter of credit; and

b. Draws upon such irrevocable letters of credit shall be available by sight drafts thereunder, in amounts determined by the Commissioner, up to the aggregate amount of the irrevocable letter of credit. Such drafts shall be paid in accordance with § 5-112(1) of Title 6.

(3) The Commissioner may require potential claimants to provide such documentation and affirmations as the Commissioner shall determine to be necessary and appropriate. In the event the Commissioner determines that multiple consumers have been injured by a licensee, the Commissioner shall cause a notice to be published for the purpose of identifying all relevant claims.

(4) The Commissioner may refuse release of an irrevocable letter of credit, following the surrender of a license, up to 2 years after the effective date of such termination of licensure.

68 Del. Laws, c. 326, § 1; 69 Del. Laws, c. 165, § 26; 70 Del. Laws, c. 356, § 1.;

(a) The Commissioner may revoke any license issued hereunder if the Commissioner shall find that:

(1) The licensee has violated any provision of this chapter or any rule, regulation or order made by the Commissioner under and within the authority of this chapter or of any other law, rule or regulation of this State or the United States;

(2) Any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted a refusal to originally issue such license on the part of the Commissioner; or

(3) The licensee has engaged in business activities or practices inconsistent with its responsibilities as set forth in § 2114 of this title.

(b) The Commissioner may temporarily suspend any license pending the issuance of a final order as provided in Chapter 101 of Title 29.

(c) Except as provided in subsection (b) of this section, no license shall be revoked or suspended except after notice and an opportunity for the licensee to request a hearing in accordance with Chapter 101 of Title 29.

(d) Any licensee may surrender any license by delivering to the Commissioner such license together with written notice that it thereby surrenders such license, but such surrender shall not affect such licensee's civil or criminal liability for acts committed prior to such surrender.

(e) No revocation, suspension or surrender of any license shall impair or affect the obligation of any preexisting lawful contract between the licensee and any person.

(f) Every license issued hereunder shall remain in force and effect until the same shall have expired or shall have been surrendered, revoked or suspended in accordance with this chapter, but the Commissioner shall have the authority to reinstate a suspended license or to issue a new license to a licensee whose license shall have been revoked if no fact or condition then exists which would have warranted the Commissioner in refusing originally to issue such license under this chapter.

(g) Whenever the Commissioner shall revoke or suspend a license issued pursuant to this chapter, the Commissioner shall forthwith execute a written order to that effect. The Commissioner shall forthwith serve the written order upon the licensee. Any such order may be reviewed in the manner provided by Chapter 101 of Title 29.

68 Del. Laws, c. 326, § 1; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 24, §§ 4, 5, 6; 77 Del. Laws, c. 126, § 2.;

(a) Each licensee shall be subject to the supervision of the Commissioner, and the Commissioner shall visit and examine each licensee as frequently as the Commissioner deems it necessary or expedient. On the occasion of each such visit and examination, the Commissioner shall (in the company of one or more of the officers of such licensee, if requested by such licensee) be given free access to every part of the office or place or places of business and to the assets, securities, books, papers and records of such licensee.

(b) If, in the Commissioner's opinion, it is necessary or convenient for a proper examination of a licensee, the Commissioner may retain 1 or more accountants, attorneys, appraisers or other 3rd parties to assist the Commissioner in such examination. Within 10 days after receipt of a statement from the Commissioner, such licensee shall pay or reimburse the fees, costs and expenses of any 3rd parties retained by the Commissioner under this subsection.

(c) Any examination under this section may be made by any person or persons designated by the Commissioner, and in such case all the powers vested in the Commissioner by this section shall be possessed by such person or persons so designated. When any such examination is made without the presence of the Commissioner, the Commissioner shall give written authority to the person or persons conducting such examination, which shall be exhibited, on request, to any person contacted in the course of the investigation.

68 Del. Laws, c. 326, § 1.;

(a) Every licensee shall maintain such books, accounts and records relating to its business as will enable the Commissioner to enforce full compliance with this chapter, which books, accounts and records shall be in such form, shall contain such information and shall be kept in such manner as the Commissioner may require. Such records shall be kept at such place and shall be preserved for such length of time as the Commissioner may specify.

(b) A licensee shall file with the Commissioner such reports at such times as the Commissioner may require, which reports shall be in such form and shall contain such information as the Commissioner may specify.

(c) Each licensee shall submit to the Nationwide Mortgage Licensing System and Registry developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators reports of condition, which shall be in such form and shall contain such information as the Nationwide Mortgage Licensing System and Registry may require.

68 Del. Laws, c. 326, § 1; 77 Del. Laws, c. 96, § 3.;

The Commissioner may adopt such regulations, not inconsistent herewith, as the Commissioner may deem necessary or appropriate in the administration, interpretation and enforcement of this chapter.

68 Del. Laws, c. 326, § 1.;

A licensee may not receive a fee for acting as a mortgage loan broker except pursuant to a written agreement between the mortgage loan broker and the borrower. Such written agreement shall be entered into prior to the time that the mortgage loan broker undertakes to perform mortgage loan brokerage services on behalf of a borrower. A copy of the fully completed written agreement shall be provided to the borrower at the time the borrower signs the agreement. The agreement:

(1) Must describe the services to be provided by the mortgage loan broker and the time period within which such services are to be provided;

(2) Must specify the amount and terms of the fees that the mortgage loan broker is to receive; and

(3) Shall otherwise contain such information and disclosures, in such format, as the Commissioner by regulation may provide.

68 Del. Laws, c. 326, § 1; 70 Del. Laws, c. 186, § 1.;

A mortgage loan broker shall diligently and in good faith attempt to obtain a mortgage loan for the account of a borrower in accordance with the terms of the agreement for mortgage loan brokerage services. No mortgage loan broker shall make or use any false or misleading representations or omit any material fact in the offer, sale or performance of the services of a mortgage loan broker or engage directly or indirectly in any act that operates as fraud or deception upon any person in connection with the offer, sale or performance of the services of a mortgage loan broker, notwithstanding the absence of reliance by a borrower.

68 Del. Laws, c. 326, § 1.;

A licensee may not accept any fee in connection with a mortgage loan, other than an application fee or any credit report fee, property appraisal fee, title examination fee or other bona fide 3rd-party fee actually and reasonably paid or incurred by the licensee on behalf of the borrower, prior to obtaining a written commitment from a qualified lender (setting forth the terms and conditions upon which the lender is willing to make a mortgage loan to the borrower). The amount of fees that may be collected or received by a mortgage loan broker, whether constituting an application fee, a fee payable to a 3rd party, fee payable at the time of written commitment or upon consummation of a mortgage loan or otherwise, shall be subject to such limitations as may be provided by regulation of the Commissioner. A licensee shall be obligated to refund all fees collected by it from a borrower, other than those fees paid by the licensee to a 3rd party, if a written commitment for a mortgage loan from a qualified mortgage lender is not produced within the time specified by the mortgage loan broker and otherwise at the rate, terms and overall costs agreed upon by the borrower or the mortgage loan does not close; provided however, that a licensee shall not be required to refund fees when the failure to obtain a written commitment for a mortgage loan or the failure of a closing thereunder to occur is due to the substantial fault of the borrower. For purposes of this section, substantial fault of the borrower means that the borrower has:

(1) Failed to provide information or documentation required by the lender or mortgage loan broker in a timely manner;

(2) Provided information, in the application or subsequently, which upon verification proves to be significantly inaccurate, causing the need for review or further investigation by the lender or mortgage loan broker;

(3) Failed to produce, no later than the date specified by the lender, all documentation specified in its mortgage loan commitment or closing instructions as being required for closing; or

(4) Failed to be ready, willing or able to close the mortgage loan no later than the date specified by the lender.

The Commissioner, by regulation, may provide further definition of the circumstances constituting substantial fault of a borrower, including, without limitation, reasonable time periods for the provision by a borrower of information or documentation or when information will be considered significantly inaccurate.

68 Del. Laws, c. 326, § 1.;

Any person who violates any provision of this chapter shall be fined not less than $50 nor more than $200 or imprisoned for not more than 3 months or both for each such offense.

73 Del. Laws, c. 247, § 7.;

(a) The Commissioner is authorized to participate in any automated system involving 1 or more other states that will facilitate any aspect of the application and licensing processes of this chapter.

(b) Upon joining any such system, the Commissioner may by regulation establish:

(1) Any additional requirements for a license under this chapter that the Commissioner determines are necessary for participation in the system;

(2) Prelicensing education and testing, and postlicensing continuing education of individuals employed by the applicants or licensees subject to the system; and

(3) Any additional investigation fees, any fees paid directly to the administrator of the system, or any other fee required by the system to process an application or maintain a license, in such amount as the Commissioner determines is necessary to participate in the system.

(c) The administrator of any such system in which the Commissioner participates is authorized to act on behalf of the Commissioner to collect from the applicants and licensees subject to the system any payments due the Commissioner under this chapter, to collect information and maintain records in electronic or other format relating to those applicants and licensees, and to submit fingerprints and any other information required for a criminal history background check to the Federal Bureau of Investigation or other law-enforcement agency.

(d) Information maintained on any such system in which the Commissioner participates regarding the applicants and licensees subject to the system may be shared with any other state participating in that system for the purpose of licensing, regulating, or supervising that same applicant or licensee under a statute similar to this chapter, if that state could have obtained that same information directly from the applicant or licensee under its own law. The Commissioner shall ensure that the system maintains appropriate confidentiality, privacy, data security, and security breach notification policies that are in full compliance with Delaware law.

76 Del. Laws, c. 264, § 1.;

(a) For purposes of this section, unless the context requires otherwise:

(1) "Independent housing counselor" means a housing counseling agency approved by the United States Department of Housing and Urban Development, or any government agency or nonprofit organization that is not affiliated with either the reverse mortgage lender or any other person receiving a fee from the transaction and provides mortgage loan counseling to the public of this State regarding the advisability of entering into a reverse mortgage transaction.

(2) "Reverse mortgage loan" means a mortgage loan the proceeds of which are disbursed to the mortgagor in 1 or more lump sums, or in equal or unequal installments, either directly by the lender or the lender's agent, and which requires no repayment until a future time, upon the earliest occurrence of 1 or more events specified in the reverse mortgage loan contract.

(b) A licensee may not accept any fee in connection with a reverse mortgage loan, other than an application fee or a credit report fee, property appraisal fee, title examination fee or other bona fide third-party fee actually and reasonably paid or incurred by the licensee on behalf of the borrower, prior to receiving a written certification from an independent housing counselor attesting that the prospective borrower has received counseling on reverse mortgage loans that includes the information specified in 12 U.S.C. § 1715z-20(f) and such other information as the Commissioner may designate by regulation.

76 Del. Laws, c. 335, § 1.;

(a) As used in this section, unless the context requires otherwise, "mortgage loan modification services" means services as an intermediary between an individual and 1 or more mortgage loan creditors for the purpose of obtaining:

(1) Assent to the repayment of a mortgage loan on terms more favorable to the individual than the terms of the original mortgage loan; or

(2) An arrangement to delay, prevent, remedy, eliminate or discharge any default on the terms of a mortgage loan, or the sale of any property incident to a foreclosure or other judicial proceeding based on a mortgage loan.

(b) A licensee may not receive any compensation for mortgage loan modification services prior to the execution of a written contract that describes in detail all such services that the licensee will perform and all compensation that the licensee will receive for those services. Any compensation received by a licensee in advance of the completion of all such services may not exceed $250.

(c) The total compensation that a licensee receives for mortgage loan modification services must be limited to an amount that is customary and reasonable for those services in this State.

77 Del. Laws, c. 138, § 1.;