Or. Admin. R. 137-020-0250
137-020-0250 Loan Brokers and Misleading Activities
(1)
Definitions:
As used in this rule:
(a)
The definitions of
terms set forth in ORS 646.605 are applicable;
(b)
"Advance Fee"
means any consideration which is assessed or collected, prior to the closing
of a loan, by a loan broker and includes, but is not limited to, payments to
information providers as defined under ORS 759.700 et seq.;
(c)
"Advertise"
means any form of solicitation including but not limited to newspaper, radio
and television advertisements;
(d)
"Borrower"
means a person obtaining or attempting to obtain a loan of money or a line of
credit for personal use;
(e)
"Loan Broker"
means any person who:
(A)
For or in expectation
of consideration arranges or attempts to arrange or offers to find a loan of
money or a line of credit;
(B)
For or in expectation
of consideration assists or advises a borrower in obtaining or attempting to
obtain a loan of money, a line of credit, or related guarantee, enhancement,
or collateral of any kind or nature; or
(C)
Acts for or on behalf
of a loan broker for the purpose of soliciting borrowers;
(D)
"Loan broker"
does not include:
(i)
Any person making
a direct loan to a consumer;
(ii)
Any bank or savings
and loan association, trust company, building and loan association, credit union,
mutual bank and savings bank, consumer finance company, securities broker-dealer,
real estate broker or salesperson, attorney, Federal Housing Administration
or Veterans' Administration approved lender, mortgage broker or lender, or insurance
company, provided that the person excepted is licensed by or approved by and
subject to regulation or supervision of any agency of the United States or this
state and is acting within the scope of the license or approval; and also excepting
subsidiaries of licensed or chartered consumer finance companies, banks, credit
unions, savings and loan associations;
(iii)
Mortgage brokers
exempt from licensing under ORS Chapter 59 or as defined in ORS 59.015(10);
(iv)
Mortgage bankers
as defined in ORS 59.015(9);
(v)
A person making a
retail installment sales;
(vi)
Any person who has
a contractual correspondent agreement with any qualified lender to deliver first
or second mortgages secured by real estate; and
(vii)
Any employee of
the above exempted persons.
(f)
"Principal"
means any officer, director, partner, joint venturer, branch manager, or other
person with similar managerial or supervisory responsibilities for a loan broker;
(g)
"Qualified Lender"
means any bank or savings and loan association, trust company, building and
loan association, credit union, consumer finance company, retail installment
sales company, Federal Housing Administration or Veterans' Administration approved
lender or person who has available through a state or federally regulated financial
institution $ 250,000 which the person has agreed to use to finance loans and
who has executed a written contract with a loan broker according to this rule.
(2)
It is unfair or deceptive
in trade or commerce for a loan broker to charge an advance fee unless the loan
broker:
(a)
Prior to accepting
any advance fees, provides to the prospective borrower a written contract which
includes:
(A)
The names of the loan
broker and any parent organizations under which the parent organization is doing
business;
(B)
The length of time
the loan broker has been in business;
(C)
A full and detailed
description of the actual services that the loan broker will perform for the
prospective borrower;
(D)
The number of contracts
that the loan broker has entered into in the past 12 months;
(E)
The number of loans
that have been made to consumers through contracts with the loan broker in the
past 12 months and the dollar amount of those loans;
(F)
The name of the bank
into which the borrower's advance fees will be deposited;
(G)
Information concerning
who the advance fees are paid to and for what service;
(H)
The names of the qualified
lenders that are providing loans to the loan broker's customers and the criteria
that the qualified lenders are using to determine whether to make a loan to
prospective borrowers referred to them by the broker; and
(I)
A provision outlining
the refund requirement set forth in subsection (3)(a) of this rule.
(b)
Has a written contract
from a qualified lender agreeing to accept or reject a loan within the time
specified in this rule and agreeing to make a loan if an individual meets specified
criteria set forth in the contract;
(c)
Notifies the borrower
within 14 days of receipt of the application whether the loan has been accepted
or rejected and provides the loan within seven days of acceptance;
(d)
Provides to the borrower,
upon request, all correspondence and written materials with the qualified lender
concerning the loan application;
(e)
Submits the borrower's
application within five days of receiving the application to a qualified lender
with whom the loan broker has a written contract;
(f)
Place any advance
fees in an escrow account; and
(g)
Complies with the
provisions of section (3) of this rule.
(3)
It is unfair and deceptive
in trade or commerce for a loan broker to:
(a)
Fail to refund within
48 hours of rejecting a loan the advance fees paid;
(b)
Advertise or represents
that all or most borrowers will qualify for a loan or that persons with bad
credit histories or no credit histories will qualify for a loan;
(c)
Fail to substantiate
to the Oregon Department of Justice, within 14 days of a request, representations
made regarding any offer to obtain a loan;
(d)
Spend any advance
fees until the loan has been granted; and
(e)
Advertise loan brokering
services without disclosing as a part of that advertisement:
(A)
Any material restrictions
regarding obtaining a loan;
(B)
The qualified lenders
who will provide the loans;
(C)
The dollar amount
of loans which the loan broker has obtained for borrowers;
(D)
The cost of the service;
and
(E)
The maximum period
of time the loan broker will take to obtain a written commitment from a qualified
lender to loan money.
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