Section 224.77. Prohibited acts and practices, and discipline, of mortgage bankers, mortgage loan originators, mortgage brokers, and registered entities.

 

(1)   Prohibited acts and practices. No mortgage banker, mortgage loan originator, mortgage broker, or, with respect to pars. (f) , (fg) , (g) , (gd) , and (gh) , registered entity, and no member, officer, director, principal, partner, trustee, or other agent of a mortgage banker, mortgage broker, or registered entity may do any of the following:

(a) Make a material misstatement, or knowingly omit a material fact, in a license application or in other information or reports furnished to the division, to the nationwide mortgage licensing system and registry, or to any other governmental agency, including failing to disclose a criminal conviction or any disciplinary action taken by a state or federal regulatory agency.

(b) Make, in any manner, any materially false or deceptive statement or representation, including engaging in bait and switch advertising or falsely representing residential mortgage loan rates, points, or other financing terms or conditions.

(c) Make a false, deceptive, or misleading promise relating to the services being offered or that influences, persuades, or induces a client to act to his or her detriment.

(d) Pursue a continued and flagrant course of misrepresentation, or make false promises, whether directly or through agents or advertising.

(e) Act for more than one party in a transaction without the knowledge and consent of all parties on whose behalf the mortgage banker, mortgage loan originator, or mortgage broker is acting.

(f) Accept a commission, money, or other thing of value for performing an act as a mortgage loan originator unless the payment is from the mortgage banker, mortgage broker, or registered entity with whom the mortgage loan originator's license is associated, as identified in the records of the division at the time the act is performed.

(fg) As a mortgage banker, mortgage broker, or registered entity, pay a commission, money, or other thing of value to any person for performing an act as a mortgage loan originator unless the mortgage loan originator's license is associated with the mortgage banker, mortgage broker, or registered entity in the records of the division at the time the act is performed.

(g) As a mortgage loan originator, represent or attempt to represent a mortgage banker, mortgage broker, or registered entity other than the mortgage banker, mortgage broker, or registered entity with whom the mortgage loan originator's license was associated, as identified in the records of the division at the time the representation or attempted representation occurs.

(gd) As a mortgage banker, mortgage broker, or registered entity, permit a person who is not licensed under this subchapter to act as a mortgage loan originator on behalf of the mortgage banker, mortgage broker, or registered entity.

(gh) As a mortgage banker, mortgage broker, or registered entity, permit a person whose mortgage loan originator license is not associated in the records of the division with the mortgage banker, mortgage broker, or registered entity to act as a mortgage loan originator on behalf of the mortgage banker, mortgage broker, or registered entity.

(gp) As a mortgage banker or mortgage broker, conduct business at or from a principal office or branch office that is not licensed under this subchapter.

(h) Fail, within a reasonable time, to account for or remit any moneys coming into the mortgage banker's, mortgage loan originator's, or mortgage broker's possession that belong to another person.

(i) Demonstrate a lack of competency to act as a mortgage banker, mortgage loan originator, or mortgage broker in a way that safeguards the interests of the public.

(j) Pay or offer to pay a commission, money, or other thing of value to any person for acts or services in violation of this subchapter.

(jm) Pay a person who is not licensed under this subchapter a commission, money, or other thing of value for performing an act as a mortgage banker, mortgage loan originator, or mortgage broker.

(k) Violate any provision of this subchapter, ch. 138 , or any federal or state statute, rule, or regulation that relates to practice as a mortgage banker, mortgage loan originator, or mortgage broker.

(L) Engage in conduct that violates a standard of professional behavior which, through professional experience, has become established for mortgage bankers, mortgage loan originators, or mortgage brokers.

(m) Engage in conduct, whether of the same or a different character than specified elsewhere in this section, that constitutes improper, fraudulent, or dishonest dealing.

(o) In the course of practice as a mortgage banker, mortgage loan originator, or mortgage broker, except in relation to housing designed to meet the needs of elderly individuals, treat a person unequally solely because of sex, race, color, handicap, sexual orientation, as defined in s. 111.32 (13m) , religion, national origin, age, or ancestry, the person's lawful source of income, or the sex, marital status, or status as a victim of domestic abuse, sexual assault, or stalking, as defined in s. 106.50 (1m) (u) , of the person maintaining a household.

(p) Intentionally encourage or discourage any person from purchasing or renting real estate on the basis of race.

(q) Because of the age or location of the property or the race of the residential mortgage loan applicant, rather than because of the credit worthiness of the applicant and the condition of the property securing the loan:

1. Refuse to negotiate, to offer, or to attempt to negotiate a residential mortgage loan or commitment for a residential mortgage loan, or refuse to find a residential mortgage loan.

2. Find a residential mortgage loan or negotiate a residential mortgage loan on terms less favorable than are usually offered.

(s) Violate, or fail to comply with, any lawful order of the division.

(sm) As a mortgage loan originator, fail to identify his or her name and sign the mortgage loan application for a loan originated by him or her.

(sn) As a mortgage banker, mortgage broker, or mortgage loan originator, fail to clearly place his, her, or its unique identifier on all residential mortgage loan application forms, solicitations, and advertisements, including business cards, Internet sites, email signature blocks, and on all other documents specified by rule of the division.

(sq) As a mortgage banker, mortgage broker, or mortgage loan originator, use any solicitation or advertisement to which any of the following applies:

1. The solicitation or advertisement misrepresents that the provider is, or is affiliated with, any governmental entity or other organization.

2. The solicitation or advertisement misrepresents that the product is or relates to a government benefit, or is endorsed, sponsored by, or affiliated with any government or government-related program, including through the use of formats, symbols, or logos that resemble those of such entity, organization, or program.

3. The solicitation or advertisement does not clearly and conspicuously identify the name of the mortgage broker or mortgage banker or, if a mortgage loan originator is sponsored by a registered entity, the registered entity.

(t) Impede an investigation or examination of the division or deny the division access to any books, records, or other information which the division is authorized to obtain under s. 224.74 (2) , 224.75 (6) , or any other provision of this subchapter.

(tm) Make a material misstatement, or knowingly omit a material fact, or knowingly mutilate, destroy, or secrete any books, records, or other information requested by the division, in connection with any investigation or examination conducted by the division or another governmental agency.

(u) Solicit or enter into a contract with a borrower that provides in substance that the mortgage banker, mortgage broker, or mortgage loan originator may earn a fee or commission through “best efforts" to obtain a residential mortgage loan even though no residential mortgage loan is actually obtained for the borrower.

(um) Solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting.

(v) Assist, aid, or abet any person in unlawfully conducting business under this subchapter without a valid license.

(w) Fail to make disclosures required under this subchapter or required under any other applicable state or federal law, rule, or regulation.

(x) Withhold any payment or make any payment, threat, or promise, directly or indirectly, to any person for the purpose of influencing the independent judgment of the person in connection with a residential mortgage loan, or withhold any payment or make any payment, threat, or promise, directly or indirectly, to any appraiser of a property for the purpose of influencing the independent judgment of the appraiser with respect to the value of the property.

(y) Cause or require a borrower to obtain property insurance coverage in an amount exceeding the replacement cost of improvements on the property, as determined by the property insurer.

(1m)   Administrative forfeiture and hearing rights.

(a) The division may assess against any person who violates this subchapter a forfeiture of not more than $25,000 for each violation and may further order restitution to any person suffering loss as a result of the violation.

(b) A person may contest an assessment of forfeiture, or a restitution order, under par. (a) by sending, within 10 days after receipt of notice of the assessment or order under par. (a) , a written request for hearing under s. 227.44 to the division of hearings and appeals created under s. 15.103 (1) . The administrator of the division of hearings and appeals may designate a hearing examiner to preside over the case and recommend a decision to the administrator under s. 227.46 . The decision of the administrator of the division of hearings and appeals shall be the final administrative decision. The division of hearings and appeals shall commence the hearing within 30 days after receipt of the request for hearing and shall issue a final decision within 15 days after the close of the hearing. Proceedings before the division of hearings and appeals are governed by ch. 227 . In any petition for judicial review of a decision by the division of hearings and appeals, the party, other than the petitioner, who was in the proceeding before the division of hearings and appeals shall be the named respondent.

(c)

1. All forfeitures shall be paid to the division of banking within 10 days after receipt of notice of assessment or, if the forfeiture is contested under par. (b) , within 10 days after receipt of the final decision after exhaustion of administrative review. The division of banking shall remit all forfeitures paid to the secretary of administration for deposit in the school fund.

2. All amounts ordered as restitution shall be paid to the person suffering loss within 10 days after receipt of notice of the order or, if the restitution order is contested under par. (b) , within 10 days after receipt of the final decision after exhaustion of administrative review.

(d) The attorney general may bring an action in the name of the state to collect any forfeiture imposed, or amount ordered as restitution, under this subsection if the forfeiture or restitution amount has not been paid following the exhaustion of all administrative and judicial reviews. The only issue to be contested in any such action shall be whether the forfeiture or restitution amount has been paid.

(2m)   Division action on license.

(a)

1. In addition to any other authority provided to the division under this subchapter, if the division finds that a mortgage banker, mortgage loan originator, or mortgage broker has violated any provision of this subchapter or any rule promulgated by the division under this subchapter, or a registered entity has violated any applicable provision of this subchapter, the division may do any of the following:

a. Deny any application for initial issuance or renewal of a license or registration.

b. Revoke, suspend, limit, or condition any license of the mortgage banker, mortgage loan originator, or mortgage broker or registration of the registered entity.

c. Reprimand the mortgage banker, mortgage loan originator, or mortgage broker.

2. The division may take any action specified in subd. 1. against a mortgage banker or mortgage broker based upon any act or omission described in subd. 1. of a director, officer, trustee, partner, or member of the mortgage banker or mortgage broker or a person who has a financial interest in or is in any way connected with the operation of the mortgage banker's or mortgage broker's business.

(b) In addition to any other authority provided to the division under this subchapter, if the division finds that an applicant for initial issuance or renewal of a license under this subchapter made any material misstatement in the application or withheld material information, or that the applicant no longer satisfies the requirements under s. 224.72 or 224.725 for issuance or renewal of the license, the division may deny the application or, if the license has already been issued, suspend or revoke the license.

(c) The division shall restrict or suspend the license of a mortgage banker, mortgage loan originator, or mortgage broker if the licensee is an individual who fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families or a county child support agency under s. 59.53 (5) and related to paternity or child support proceedings or who is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses, or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under s. 49.857 . An individual whose license is restricted or suspended under this subsection is entitled to a notice and hearing only as provided in a memorandum of understanding entered into under s. 49.857 and is not entitled to any other notice or hearing under this section.

(d) The division shall revoke the license of a mortgage banker, mortgage loan originator, or mortgage broker if the department of revenue certifies under s. 73.0301 that the licensee is liable for delinquent taxes. A licensee whose license is revoked under this subsection for delinquent taxes is entitled to a notice under s. 73.0301 (2) (b) 1. b. and a hearing under s. 73.0301 (5) (a) but is not entitled to any other notice, hearing or review under this section.

(e) The division shall revoke the license of a mortgage banker, mortgage loan originator, or mortgage broker if the department of workforce development certifies under s. 108.227 that the licensee is liable for delinquent unemployment insurance contributions. A licensee whose license is revoked under this subsection for delinquent unemployment insurance contributions is entitled to a notice under s. 108.227 (2) (b) 1. b. and a hearing under s. 108.227 (5) (a) but is not entitled to any other notice, hearing or review under this section.

(3)   Orders of the division.

(a) Orders to prevent or correct actions. The division may issue general and special orders, including temporary orders that become immediately effective, to prevent or correct actions by a mortgage banker, mortgage loan originator, or mortgage broker that constitute a violation of any provision of this subchapter or of any rule promulgated under this subchapter, including special orders that do any of the following:

1. Direct a mortgage banker, mortgage loan originator, or mortgage broker to cease and desist from engaging in a particular activity, from conducting business, or from otherwise violating any provision of this subchapter or any rule promulgated under this subchapter.

2. Direct a mortgage banker, mortgage loan originator, or mortgage broker to refund or remit to a residential mortgage loan applicant or borrower amounts that the mortgage banker, mortgage loan originator, or mortgage broker got from actions that constitute a violation of any provision of this subchapter or of any rule promulgated under this subchapter.

3. Direct a mortgage banker, mortgage loan originator, or mortgage broker to cease business under a license issued under this subchapter if the division determines that the license was erroneously issued or the licensee is currently in violation of any provision of this subchapter or of any rule promulgated under this subchapter.

4. Direct a mortgage banker, mortgage loan originator, or mortgage broker to undertake any affirmative action, consistent with the provisions of this subchapter, that the division deems necessary.

(c) Judicial review. Orders of the division are subject to review as provided in ch. 227 .

(3m)   Hearing rights for license denial, revocation, or suspension. A person whose license has been denied, revoked, suspended, limited, or conditioned under this section may request a hearing under s. 227.44 within 30 days after the date of denial, revocation, suspension, limitation, or conditioning of the license. The division may appoint a hearing examiner under s. 227.46 to conduct the hearing.

(4)   Period of disciplinary action; license ineligibility.

(a) Period. Except as provided in par. (b) , the division shall determine in each case the period that a revocation, suspension, limitation, or condition of a license is effective.

(b) Ineligibility.

1. Except as provided in subd. 2. , if the division denies or revokes a license under sub. (2m) (a) , the person is not eligible for a license until the expiration of a period determined in each case by the division.

2. If the division revokes a license under sub. (1) (p) or (q) , the person is not eligible for a license until 5 years after the effective date of the revocation.

(5)   Penalties for certain discriminatory conduct.

(a) Mandatory revocation or suspension. Notwithstanding subs. (2m) (a) and (4) , if the division finds that a mortgage banker, mortgage loan originator, or mortgage broker has violated sub. (1) (p) or (q) , the division shall:

1. For the first offense, suspend the license of the mortgage banker, mortgage loan originator, or mortgage broker for not less than 90 days.

2. For the 2nd offense, revoke the license of the mortgage banker, mortgage loan originator, or mortgage broker.

(b) Other penalties. The penalty under par. (a) may be imposed in addition to any penalty imposed under s. 66.1011 , 106.50 or 224.80 .

(8)   Voluntary surrender. A mortgage banker, mortgage loan originator, or mortgage broker may voluntarily surrender a license to the division, but the division may refuse to accept the surrender if the division has an open investigation or examination or received allegations of unprofessional conduct against the mortgage banker, mortgage loan originator, or mortgage broker. The division may negotiate stipulations in consideration for accepting the surrender of the license.

(9)   Reporting violations. The division shall report regularly violations of this subchapter or of rules promulgated under this subchapter, as well as enforcement actions and other relevant information, to the nationwide mortgage licensing system and registry. Except as provided in s. 224.728 (4) (b) and (c) , these reports shall be confidential.

1987 a. 359 ; 1987 a. 403 ss. 182 , 256 ; Stats. 1987 s. 440.77; 1993 a. 112 ; 1995 a. 27 ss. 6598 to 6600 ; Stats. 1995 s. 224.77; 1997 a. 145 , 191 , 237 ; 1999 a. 32 , 82 ; 1999 a. 150 s. 672 ; 2003 a. 33 , 260 ; 2007 a. 20 ; 2009 a. 2 ss. 673 to 707 , 709 ; 2009 a. 95 ; 2011 a. 258 ; 2013 a. 36 ; 2013 a. 360 ss. 50 , 60 to 68 . Cross-reference: See also ch. DFI-Bkg 43 , Wis. adm. code. Failure to comply with an administrative rule requiring agreements by loan solicitors to be in writing did not cause an otherwise valid agreement to be unenforceable under this section. Felland v. Sauey, 2001 WI App 257 , 248 Wis. 2d 963 , 637 N.W.2d 403 , 00-2102 . The elements of various claims under this section are discussed. SJ Properties Suites v. Specialty Finance Group, LLC, 864 F. Supp. 2d 776 (2012).