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The Oregon Administrative Rules contain OARs filed through November 15, 2014
 
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DEPARTMENT OF CONSUMER AND BUSINESS SERVICES,
DIVISION OF FINANCE AND CORPORATE SECURITIES

 

DIVISION 875

CUSTODY AND POSSESSION OF CLIENT FUNDS

441-875-0020

Branch Office Trust Accounts

(1) Branch offices shall maintain a separate trust account if:

(a) The main office of the mortgage banker or mortgage broker does not maintain a trust account or deposit funds into a neutral escrow depository on behalf of the branch offices' clients; or

(b) The main office of the mortgage banker or mortgage broker is not located within the State of Oregon.

(2) If the branch office maintains a trust account separate from the main office, the mortgage banker or mortgage broker shall be responsible for supervision of the branch office trust account to ensure compliance with the provisions of OAR 441-875-0030 and ORS 86A.157 and 86A.160.

(3) If the branch office places funds into a neutral escrow depository, the mortgage banker or mortgage broker shall be responsible for supervision of the branch office activities to ensure compliance with the provisions of OAR 441-875-0030 and ORS 86A.157(1).

(4) Branch offices may maintain a trust account separate from any trust account maintained by the main office provided the branch office complies with all provisions under OAR 441-875-0030 and ORS 86A.157(4).

(5) Examination of the branch office books and records relating to the trust accounts may be made at such time as the director may choose.

(6) Compliance with the provisions of OAR 441-875-0020 through 441-875-0040 does not relieve any person of any other duties and liabilities under ORS Chapter 86A, applicable administrative rules, or any other provisions of law.

Stat. Auth.: ORS 86A.136, 86A.157
Stats. Implemented: ORS 86A.157
Hist.: FCS 3-1993, f. & cert. ef. 11-15-93; FCS 11-1994, f. 11-4-94, cert. ef. 11-15-94; FCS 1-2007, f. & cert. ef. 1-17-07; FCS 14-2009, f. 12-30-09, cert. ef. 1-4-10

441-875-0030

Manner of Deposit

(1) A mortgage banker or mortgage broker shall deposit all trust funds received from a client into the trust account or neutral escrow depository and shall keep such funds in the trust account or neutral escrow depository until:

(a) In the case of a neutral escrow depository, the written escrow instructions prepared pursuant to the provisions of OAR 441-875-0040(3) and agreed to by all parties have been fulfilled; or

(b) In the case of a trust account, the instructions for disbursement of trust funds have been fulfilled as contained in:

(A) The loan application form; or

(B) A separate fee agreement, if any.

(2) A mortgage banker or mortgage broker shall not commingle any monies received from a client for deposit into a trust account with personal funds of the mortgage banker or mortgage broker. For purposes of OAR 441-875-0010 through 441-875-0040, the following shall not constitute commingling of trust funds with personal funds if the funds are removed from the trust account within 30 days:

(a) Earned, but untransferred interest income accruing to the mortgage banker or mortgage broker pursuant to a written agreement with the client;

(b) Earned, but untransferred fees due the mortgage banker or mortgage broker.

(3) Every deposit into a trust account shall be in a form that allows deposit into the trust account including, but not limited to, cash, check, or any electronic transmission of funds or wire transfers, automated clearinghouse authorizations, credit card or debit transactions, or online payments through a website.

(4) All deposits into a trust account must be documented by:

(a) A deposit slip that has been validated by bank imprint, or an attached deposit receipt which bears the signature of an authorized representative of a mortgage banker or mortgage broker indicating that the funds were actually deposited into the proper account(s) for deposits that are not by electronic transmission; or

(b) A record of the deposit including a traceable identifying name or number supplied by the federally insured financial institution or transferring entity for electronic transmissions of funds or wire transfers, automated clearinghouse authorizations, credit card or debit transactions, online payments through a web site.

(c) Compliance with (3) of this rule may be satisfied if a mortgage banker or mortgage broker has attached a copy of the client’s check to the deposit slip or has retained a receipt for the deposit of the funds containing the traceable identifying name or number supplied by the federally insured financial institution or transferring entity for electronic transmissions of funds or wire transfers, automated clearinghouse authorizations, credit card or debit transactions, online payments through a web site along with written documentation that identifies the name of the client, amount of the deposit, and the purpose of the funds for each client whose funds are included in the deposit.

(5) Every deposit into a neutral escrow depository shall be accompanied by a letter of transmittal which shall include a written notation of the file identification assigned to the transaction on whose behalf the deposit is made. Compliance with this rule may be satisfied when a mortgage banker or mortgage broker has attached a copy of the client's check to the letter of transmittal.

(6) All customer securities must be held in trust and kept in a secure depository. The securities must be held in such a manner that they will be free from claims, levy, or attachment by creditors of the mortgage banker or mortgage broker.

(7) All funds, whether in the form of money, checks, drafts, or warrants belonging to others and accepted by any mortgage banker or mortgage broker engaged in professional activity shall be deposited prior to the close of business of the third banking day following the date of the receipt of the funds into a trust account or neutral escrow depository established by the mortgage banker or mortgage broker. The mortgage banker or mortgage broker shall account for all funds received.

(8) Every mortgage banker or mortgage broker which requires a residential loan client to pay an amount for services prior to the time that the services are rendered may maintain a separate trust account in this state for prepayments and shall keep prepayment funds subject to refund in the trust account until the services are performed according to the provisions contained in OAR 441-875-0040(5) and (6), or the loan is rejected.

(9) In the event that the mortgage banker or mortgage broker accepts fees in advance of completing professional services, or accepts fees paid as a retainer to secure the availability of the mortgage banker or mortgage broker, or accepts a consulting fee for professional services, the fees shall be refundable and are trust funds unless the mortgage banker or mortgage broker provides written notice to the client prior to or at the time of receipt of the fees that such fees are not refundable. A record of this written notice to a client shall be maintained in the client file pursuant to the provisions of OAR 441-865-0020 through 441-865-0090.

Stat. Auth.: ORS 86A.136 & 86A.157
Stats. Implemented: ORS 86A.157
Hist.: FCS 3-1993, f. & cert. ef. 11-15-93; FCS 11-1994, f. 11-4-94, cert. ef. 11-15-94; FCS 14-2009, f. 12-30-09, cert. ef. 1-4-10; FCS 5-2014, f. 9-18-14, cert. ef. 1-1-15; FCS 5-2014, f. 9-18-14, cert. ef. 1-1-15

441-875-0040

Financial Practices; Manner of Disbursement

(1) In addition to those books and records required under ORS 86A.095 through 86A.198 and OAR 441-865-0010 through 441-865-0090, a mortgage banker or mortgage broker shall maintain books and records for each trust account in accordance with this rule:

(a) Mortgage bankers and mortgage brokers must reconcile at least monthly all trust accounts:

(A) The reconciled bank balance of the trust account must equal the sum of the balances in the individual owner's ledger accounts and also must equal the balance shown in the check register or the journal of receipts and disbursements for the trust account;

(B) The mortgage banker or mortgage broker must sign and date the reconciliation upon its completion.

(b) Each mortgage banker or mortgage broker shall set up and maintain a subsidiary ledger for each trust account showing the receipts and disbursements and maintaining a running total of every transaction pertaining to the trust account.

(2) The mortgage banker’s or mortgage broker’s offices, places of business, books, records, accounts, files and papers relating to the trust account shall be available for examination by the director under OAR 441-865-0010 through 441-865-0090.

(3) If funds are placed in a neutral escrow depository pursuant to the written agreement required by ORS 86A.157(1), the agreement shall provide authorization for the director to examine the offices, places of business, books, records, accounts, files and papers relating to the client funds.

(4) Funds disbursed from a trust account shall be in a form that allows withdrawal from the account including by check or any electronic transmission of funds or wire transfer, automated clearinghouse authorizations, debit transactions or online payments through a website.

(5) All withdrawals must be documented by:

(a) Checks which are prenumbered and bear the words "Client Trust Account" upon the face of the check. A mortgage banker or mortgage broker shall account for all checks, including voided checks, as part of the books and records maintained by the mortgage banker or mortgage broker.

(b) A record of the withdrawal including a traceable identifying name or number supplied by a federally insured financial institution or transferring entity for electronic transmissions of funds or wire transfers, automated clearinghouse authorizations, debit transactions, or online payments through a website.

(c) Compliance with subsection 4 of this rule may be satisfied if a mortgage banker or mortgage broker has or can produce an image of the check as well as evidence that it has been negotiated or has retained a receipt for the withdrawal of funds containing the traceable identifying name or number supplied by the federally insured financial institution or transferring entity for electronic transmission of funds or wire transfers, automated clearinghouse authorizations, debit transactions, online payments through a website along with written documentation that identifies the name of the client, amount of the withdrawal, and the purpose of the funds for each client whose funds are included in the deposit.

(d) In no case may a mortgage broker or mortgage banker withdraw client trust funds in the form of cash.

(6) In the case of residential loan applications, escrow instructions and instructions for trust fund disbursement of fees shall provide that no trust funds may be disbursed to the mortgage banker or mortgage broker until the mortgage banker or mortgage broker has provided the following minimum services and disclosures:

(a) A good faith estimate required by Regulation X, 12 C.F.R. Part 1024;

(b) A completed loan application;

(c) If prepared, a fee agreement;

(d) HUD guide(s) for home buyers;

(e) The adjustable rate mortgage booklet as prepared by the Federal Reserve Board, if applicable;

(f) Truth in Lending Act disclosures as required by 12 C.F.R. Part 1026.

(g) Notice that homeowners with reverse mortgages are not eligible to defer collection of homestead property taxes as allowed under ORS 311.666 through 311.701.

(7) In the event that the mortgage banker or mortgage broker accepts fees in advance of completing professional services, or accepts fees paid as a retainer to secure the availability of the mortgage banker or mortgage broker, or accepts a consulting fee for professional services, and such fees are subject to refund under the provisions of these rules, such amounts may be withdrawn from the trust account for the benefit of the mortgage banker or mortgage broker only when actually expended for the benefit of the client or five days after notice of the proposed withdrawal has been mailed to the client.

(8) Every mortgage banker or mortgage broker must maintain a record listing all persons employed by that firm who have signatory authority to disburse funds held in the trust account and the date such authority begins and ends.

Stat. Auth.: ORS 86A.136 & 86A.157
Stats. Implemented: ORS 86A.157
Hist.: FCS 3-1993, f. & cert. ef. 11-15-93; FCS 11-1994, f. 11-4-94, cert. ef. 11-15-94; FCS 4-1999, f. & cert. ef. 12-23-99; Administrative correction 4-18-00; FCS 7-2001, f. & cert. ef. 8-1-01; FCS 2-2004, f. & cert. ef. 8-5-04; FCS 14-2009, f. 12-30-09, cert. ef. 1-4-10; FCS 5-2014, f. 9-18-14, cert. ef. 1-1-15

441-875-0075

Filing False Reports of Condition

A dishonest, fraudulent or illegal practice or conduct under ORS 86A.115 includes reporting false or incorrect information on a report of condition filed under OAR 441-865-0025. A mortgage banker or mortgage broker who corrects an incorrect report of condition to the satisfaction of the director within 30 days of notice from the director that the information is incorrect is not subject to this rule.

Stat. Auth: ORS 86A.136
Stat. Implemented: ORS 86A.106, 86A.239
Hist.: FCS 5-2014, f. 9-18-14, cert. ef. 1-1-15

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