Current through all regulations passed and filed through December 16, 2024
(A) A registrant shall register every office
where any of the following activities occur or conditions exist:
(1) Leads are solicited or received, directly
or indirectly, from residents of this state, for property in this state, or
from a location physically in this state;
(2) Records pertaining to business conducted
pursuant to Chapter 1322. of the Revised Code are maintained in paper
form;
(3) A registrant's licensees
originate residential mortgage loans for residents of this state, property in
this state, or from a location physically in this state regardless of the
location of the borrower or property.
(B) A qualified exempt entity shall seek and
obtain an approved letter of exemption for every office where any of the
following activities occur or conditions exist:
(1) Records pertaining to business conducted
pursuant to Chapter 1322. of the Revised Code are maintained in paper
form;
(2) A qualified exempt
entity's licensees originate residential mortgage loans for residents of this
state or property in this state.
(C) A registrant or qualified exempt entity
may share office space with another person if:
(1) The physical arrangement does not confuse
or mislead borrowers;
(2) Access to
borrower files, financial and mortgage information of borrowers or potential
borrowers, and all records required to be maintained by Chapter 1322. of the
Revised Code, whether in electronic or paper form, is restricted to only the
registrant's or qualified exempt entity's employees or licensees, and is
maintained in compliance with applicable state and federal privacy
laws.
(3) Notwithstanding paragraph
(C)(2) of this rule, a registrant or qualified exempt entity may allow an
independent contractor licensed pursuant to Chapter 1322. of the Revised Code
or employees of a loan processing or underwriting company holding a valid
letter of exemption issued pursuant to rule
1301:8-7-32 to access borrower
files, financial and mortgage information of borrowers or potential borrowers,
and all records required to be maintained by Chapter 1322. of the Revised Code,
whether in electronic or paper form, for the purpose of conducting the clerical
or support duties of loan processing or underwriting for the same registrant or
qualified exempt entity.
(D) The following
restrictions and requirements apply to each additional office location
maintained by the registrant, also referred to herein as branch offices:
(1) A branch office shall not be a separate
business entity;
(2) A branch
office shall not pay its own operating expenses for the transaction of business
as a mortgage broker in this state. Operating expenses include compensation of branch
office employees, and payments for equipment, furniture, office rent,
utilities, advertising and other similar expenses incurred in operating a
mortgage broker business. All assets and liabilities of the branch are assets
and liabilities of the registrant and all income and expenses of the branch are
income and expenses of the registrant and shall be properly accounted for in
the financial records and state and federal tax returns of the registrant.
Compensation of a branch manager may be based on the income of the branch minus
the operating expenses of the branch as long as the ultimate responsibility and
payment of those operating expenses remains the responsibility of the
registrant;
(3) A branch office
shall not indemnify, hold harmless, or defend a registrant against damages,
losses, injury, or liability arising out of acts or omissions of the branch or
employees or licensees working from the branch.
(4) A branch office shall not maintain a bank
account for the payment of expenses that is separate from the bank accounts of
the registrant. All operating expenses shall be paid from an account of the
registrant, and may not be paid through or from any employee's personal account
or any non-registrant account;
(5)
A branch office shall not maintain its own lines of credit, warehouse
agreements, or other investor agreements that are independent from those of the
registrant;
(6) All practices,
policies, and procedures, including those relating to employment and operations, shall be established
by the registrant and shall be applied consistently to the main office and all
branch offices.
(E) Any arrangement
where a registrant allows another person to transact business as a mortgage
broker in this state under the registrant's certificate of registration at a
location that does not comply with paragraph (D) of this rule,
sometimes referred to as "net branching," is not permissible.
(F) A residential
mortgage loan is primarily for personal, family, or household use if more than
one half of the total loan amount is used for consumer purposes and not for
business purposes. In assessing the purpose (or purposes, if the loan is a
hybrid used for both consumer and business purposes), the superintendent
may
consider the totality of the circumstances surrounding the loan and not merely
the purpose of cash- out proceeds. If more than one half of the total loan
amount is for business purposes, then the requirements of Chapter 1322. of the
Revised Code do not apply.
(G) Notwithstanding
paragraph (F) of this rule, a residential mortgage loan made to a borrower for
purposes of investing in a dwelling to either lease, rent, or resell for profit
is considered a business purpose loan and is not subject to the requirements of
Chapter 1322. of the Revised Code unless the dwelling, or at least one unit of
the dwelling in the case of a two to four family housing unit, will be occupied
by the borrower or any immediate family member of the borrower.
For the purposes of this paragraph, "immediate
family"
has the same meaning as set forth in
division (R) of section
1322.01 of the Revised
Code.
(H) Nothing in division
(AA)(2)(b) of section
1322.01 of the Revised Code
prevents a person licensed under Chapter 4735. of the Revised Code or similar
law of another state from receiving compensation for real estate brokerage
activities performed for a mortgage lender or agent thereof who is also the
owner of the property provided that the person does not act as a
mortgage loan originator in the transaction.
(I) A
registrant or qualified exempt entity shall not hold a certificate of
registration issued pursuant to Chapter 4712. of the Revised Code.
