(A) An application to become licensed as a mortgage broker or loan originator must be in writing, under oath, and in a form prescribed by the administrator. The application must contain any information the administrator deems necessary including the name and complete business and residential address or addresses, and social security number or if applicable Employer Identification Number (EIN) of the applicant. If the applicant for a mortgage broker license is a partnership, association, limited liability company, corporation, or other form of business organization, the names and complete business and residential addresses of each member, director, and principal officer and a list of all employees who engage in direct brokerage activity including, but not limited to, loan originators.

(B)(1) The application for a mortgage broker license must include an affirmation of financial solvency noting bonding requirements required by the administrator and the descriptions of the business activities, credit history, financial responsibility, educational background, and general character and fitness of the applicant and any partner, officer, or director, a person occupying a similar status or performing similar functions, or a person directly or indirectly controlling the applicant as required by this chapter, including consent to national criminal history record checks and a set of the applicant's fingerprints in a form acceptable to the administrator. The application must be accompanied by a nonrefundable fee, payable to the department, of five hundred fifty dollars, in addition to the actual cost of obtaining credit reports and national criminal history record checks by the Federal Bureau of Investigation (FBI). Using the information supplied by the administrator, the applicant must undergo national criminal record checks, supported by fingerprints, by the FBI. The results of these criminal record checks must be reported to the administrator. The Nationwide Mortgage Licensing System and Registry is authorized to retain the fingerprints for certification purposes and for notification of the administrator regarding criminal charges. The administrator shall keep all information pursuant to this section privileged, in accordance with applicable state and federal guidelines.

(2) An applicant for a mortgage broker's license must have at least three years' experience in financial services or financial services related business or other experience or competency requirements the administrator may impose before an initial license is issued.

(a) Instead of a showing of three years' experience, an applicant may show proof of three years' employment with a federally insured depository institution, or a VA-, FHA-, or HUD-approved mortgagee.

(b) Instead of one of the required year's experience, an applicant may show proof of the equivalent of six or more semester hours of satisfactorily completed course work in real estate finance, real estate law, or similar course work counting toward the successful completion of a degree that is baccalaureate level or more advanced with a major or minor in finance, accounting, business administration, real estate finance, economics, or similar baccalaureate or more advanced degree, approved by the administrator or the administrator's designee, from an accredited college or university.

(3) If the applicant is a partnership, limited liability company (LLC), or corporation, at least one partner, member-manager, or principal officer shall have the experience required for the applicant. Each applicant shall identify the person meeting the experience requirement to serve as the applicant's managing principal. The managing principal shall operate the business under his full charge, control, and supervision. The managing principal also may serve as the branch manager of a licensee branch office. Each main and branch office of a mortgage broker licensed pursuant to this chapter must have a branch manager who meets the experience requirements of subsection (B)(2). The mortgage broker licensee must designate a managing principal in writing and notify the administrator of any changes in managing principal. The managing principal and each branch manager must meet the requirements in subsection (C) of this section.

(C) The application for a loan originator license must designate the employing mortgage broker and must include descriptions of the business activities, credit history, financial responsibility, educational background, and general character and fitness of the applicant as required by this chapter, including consent to national criminal history record checks and a set of the applicant's fingerprints in a form acceptable to the administrator. The application must be accompanied by a nonrefundable fee, payable to the department, of fifty dollars, in addition to the actual cost of obtaining credit reports and national criminal history record checks by the FBI. Using the information supplied by the administrator, the applicant must undergo national criminal record checks, supported by fingerprints, by the FBI. The results of these criminal record checks must be reported to the administrator. The Nationwide Mortgage Licensing System and Registry is authorized to retain the fingerprints for certification purposes and for notification of the administrator regarding criminal charges. The administrator shall keep all information pursuant to this section privileged, in accordance with applicable state and federal guidelines. Additionally, the applicant must:

(1) complete satisfactorily a prelicensing educational course of at least twenty hours, which shall include at least three hours on South Carolina laws and regulations, and the National Test Component with Uniform State Content approved pursuant to 12 U.S.C. 5101, et seq.;

(2) have never had a loan originator license revoked in any governmental jurisdiction;

(3) have not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court: (i) during the ten-year period preceding the date of application for licensing, or (ii) at any time if the felony involved an act of fraud, dishonesty, breach of trust, or money laundering; and

(4) be at least eighteen years of age and otherwise comply with this chapter.

(D) Any sole proprietor, general partner, member or manager of a limited liability company, or officer of a corporation who meets individually the requirements of subsection (C) of this section, upon payment of the applicable fee, meets the qualifications for licensure as a loan originator subject to the provisions of Section 40-58-60 of this chapter.

(E)(1) A person may not act as a qualified loan originator in this State without first being licensed with the administrator. It is unlawful for a person to employ, to compensate, or to appoint as its agent a qualified loan originator unless the qualified loan originator is licensed pursuant to this chapter. The license of a qualified loan originator is not effective during any period when that person is not supervised pursuant to an exclusive written contract by a mortgage broker licensed pursuant to this chapter. When a qualified loan originator ceases to be supervised by a licensed mortgage broker, the qualified loan originator and the mortgage broker shall notify promptly the administrator in writing. The mortgage broker's notice must include a statement of the specific reason or reasons for the termination of the qualified loan originator's exclusive written contract. The reason for termination is confidential information and may not be released to the public.

(2) An application to become licensed as a qualified loan originator must be in writing, under oath, and in a form prescribed by the administrator. The application must contain any and all information in Sections 40-58-50(A) and (C) and be accompanied by a nonrefundable annual licensing fee of one hundred dollars. Additionally, the applicant must:

(a) meet the requirements of Section 40-58-50(C);

(b) meet the surety bond requirement of a mortgage broker pursuant to Section 40-58-40. Principal on the surety is the qualified loan originator;

(c) act as an agent for a single mortgage broker licensee, who:

(i) is responsible for supervising the qualified loan originator as required by this chapter and in accordance with a plan of supervision approved by the administrator in the administrator's sole discretion;

(ii) signs the license application of the applicant; and

(iii) is jointly and severally liable with the qualified loan originator for any claims arising from the qualified loan originator's mortgage origination activities.

(3) Pursuant to Section 40-58-110, a qualified loan originator license expires on December thirty-first and must be renewed pursuant to that section and accompanied by a nonrefundable annual licensing fee of one hundred dollars.

(4) Each office location of a qualified loan originator is a branch office of the supervising mortgage broker licensee, and must be operated as any other branch office pursuant to this chapter.

(5) In addition to the activities prohibited by other provisions of state or federal law, it is unlawful for a qualified loan originator to:

(a) be compensated on a basis that is dependent upon the interest rate, fees, or other terms of the loan originated, provided that this section does not prohibit compensation based on the principal balance of the loan;

(b) offer loans other than fixed-term, fixed-rate, fully amortizing mortgage loans originated for a single mortgage lender with substantially equal monthly mortgage payments and without a prepayment penalty;

(c) handle borrower or other third-party funds in connection with the origination of mortgage loans.

(6) Unless otherwise indicated, a qualified loan originator is subject to the requirements of a loan originator under this chapter.

HISTORY: 2009 Act No. 67, Section 5; 2010 Act No. 287, Section 2, eff June 29, 2010; 2017 Act No. 93 (S.366), Section 11, eff September 16, 2017.

Editor's Note

Prior Laws:1988 Act No. 544; 1993 Act No. 172, Section 1; 1998 Act No. 336, Section 5; 2005 Act No. 7, Section 1.

2010 Act No. 287, Section 3, provides as follows:

"Any provision of this act deemed by HUD to conflict with its interpretation of the SAFE Act, provided for in Section 1508 of Title V of The Housing and Economic Recovery Act of 2008, Public Law 110-289, must be interpreted, applied, or amended in such a way so as to comply with HUD's interpretation of the SAFE Act. If any provision of this act cannot be interpreted, applied, or amended in such a way so as to comply with the SAFE Act, that provision must be severed from the act and shall not affect the remainder of the act's compliance with the SAFE Act. The regulating authority shall adopt emergency regulations or take other actions necessary to ensure compliance with the SAFE Act and the regulating authority's continued jurisdiction over and supervision of the mortgage business in this State."

Effect of Amendment

The 2010 amendment added subsection (E) relating to the license requirement.

2017 Act No. 93, Section 11, amended (B)(1) and (C), removing the state criminal background check requirement, authorizing the Nationwide Mortgage Licensing System and Registry to retain fingerprints for certain purposes, and requiring at least three hours of prelicensing education on South Carolina laws and regulations.