AB 471

Under current law, a person may not act as a mortgage broker unless the person

is registered with the Division of Banking in the Department of Financial

Institutions (division). In

2009 Wisconsin Act 2

(Act 2), provisions of the federal

Secure and Fair Enforcement for Mortgage Licensing Act of 2008 were adopted into

state law, including provisions relating to mortgage bankers, mortgage loan

originators, and mortgage brokers. These provisions become effective on January 1,

2010, and this discussion of current law includes changes made in Act 2.

Under current law, a mortgage broker is, with certain exceptions, a person who,

on behalf of a residential mortgage loan (loan) applicant or an investor and for

commission or other compensation, finds a loan or negotiates a loan or loan

commitment. However, state and federally chartered financial institutions are not

mortgage brokers. A contract for mortgage brokerage services between a mortgage

broker and an individual must be in writing and contain all information required by

division rules. Before entering into a contract with an individual to provide mortgage

brokerage services, a mortgage broker must give the individual a copy of a disclosure

statement in a form and content specified by the division and explain the content of

the statement. The disclosure statement must contain a brief explanation of the

relationship between the individual and the mortgage broker under the proposed

contract, a brief explanation of the manner in which the mortgage broker may be

compensated under the proposed contract, and any additional information required

by division rules.

Current law imposes various requirements on, and specifies numerous acts and

practices prohibited by, mortgage brokers and their principals and agents. For

example, no mortgage broker or principal or agent of a mortgage broker may do any

of the following: 1) make materially false or deceptive statements or representations,

including engaging in bait and switch advertising or falsely representing loan rates,

points, or other financing terms or conditions; 2) make false, deceptive, or misleading

promises relating to the services being offered or that influence, persuade, or induce

a client to act to his or her detriment; 3) act for more than one party in a transaction

without the knowledge and consent of all parties on whose behalf the mortgage

broker is acting; 4) demonstrate a lack of competency to act as a mortgage broker in

a way that safeguards the interests of the public; 5) fail to account for or remit any

moneys coming into the mortgage broker's possession that belong to another person;

6) engage in conduct that violates a standard of professional behavior that has

become established for mortgage brokers; 7) engage in conduct that constitutes

improper, fraudulent, or dishonest dealing; 8) solicit or enter into a contract with a

borrower that provides in substance that the mortgage broker may earn a fee or

commission through "best efforts" to obtain a loan even though no loan is actually