Arizona Alters Financial Institution and Loan Originator Licensing Provisions

Mortgage Origination

On March 16, Arizona enacted Senate Bill 1014, which make changes to fees and definitions affecting financial institutions.  The new law sets a maximum fee of $250 that the Department of Financial Institutions (DFI) can charge to change the licensee name on a financial institution or enterprise license. The law tightens an exception to the definition of “loan originator” such that loan originators that originate five or fewer mortgage loans per calendar year are exempt only if the source of the prospective financing also makes five or fewer mortgage loans per calendar year. The new law now requires the Superintendent of the DFI to deny a license from an individual who (i) has been convicted of, pled guilty to, or pled no lo contere to a felony seven years prior to the application, (ii) has been convicted of, pled guilty to, or pled no lo contere to a felony involving fraud, dishonesty, a breach of trust, or money laundering at any time, or (iii) lacks the responsibility, experience, or competency to adequately serve the public. These changes take effect 90 days after the state legislature adjourns this year, which it is expected to do on or around April 17, 2012.