The Ohio Department of Commerce, Division of Financial Institutions is amending the rules that implement the state’s Residential Mortgage Lending Act. The Division is seeking preliminary feedback on the administrative rules, which are codified in the Ohio Administrative Code Chapter 1301:8-7, as they undergo a five-year rule review. Proposed updates will ensure the rules reflect amendments that were made to the Act in 2021.

The Division proposes to amend some key definitions of the rules, to reflect that the rules apply to mortgage lenders, mortgage loan originators, and mortgage brokers, while removing all references to mortgage bankers. A mortgage loan originator would continue to include someone who takes or offers to take residential mortgage loan applications or performs clerical or support duties of a loan processor or underwriter. However, the proposed amendment to the definition of mortgage loan originator would exclude assisting borrowers in obtaining mortgage loans, offering or negotiating terms, and issuing commitments. The rules would continue to apply to mortgage lenders and brokers, as those terms are defined in the Ohio Revised Code § 1322.01. However, the definition and all references to mortgage bankers would be removed from the rules.

Among other updates, the draft includes the following noteworthy proposed amendments:

• Amending the definition of “advertisement” to include web pages and social media posts, and excluding de minimis promotional items such as pens and mugs;
• Removing the requirements for registrants to maintain a physical office in the state and to maintain office hours;
• Removing the requirement for an applicant to be a licensee to have a sponsorship request submitted via the NMLS on his or her behalf;
• Removing the prohibition for registered MLO’s to complete transactions for second mortgages;
• Removing the requirement for a registrant or exempt entity to keep a complete signed copy of every final settlement statements for every residential mortgage loan;
• Removing the mortgage loan originator disclosure, and simplifying the requirements for the affiliated business disclosure;
• Amending the prohibited practices rule to include evading the limits on points and fees for qualified mortgages by conducting business in conjunction with a person registered or who should be registered as a Credit Services Organization;
• Amending the rule for nonprofit organizations to include the requirement for such organizations to be registered with the Charitable Law Section of the Ohio Attorney General’s Office and possess a valid letter of exemption;
• Amending the rule for loan processor and underwriting companies regarding the standards for requesting an exemption.

In addition to the proposed amendments, the Division intends to repeal the following rules in their entirety:

• Rule 1301:8-7-05. Special account requirements – Requires registrants to establish and maintain a non-interest-bearing, depository special account in the name of the registrant as it appears on its certificate of registration.
• Rule 1301:8-7-27. Expedited hearing upon automatic suspension – Requires an order of suspension to set a date, not more than 30 days later than the date of the order of suspension, for a hearing on the continuation or termination of such suspension.
• Rule 1301:8-7-30. Temporary loan originator license application – Outlines the standards for receiving and maintaining a temporary loan originator license.

The Division requests that stakeholders offer commentary or feedback on the proposed amendments by September 22, 2023, by emailing WebDFI-CFRules@com.ohio.gov.

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