Arkansas Code of 1987 (2023) › Title 23 - PUBLIC UTILITIES AND REGULATED INDUSTRIES (§§ 23-1-101 — 23-119-105) › Subtitle 2 - FINANCIAL INSTITUTIONS AND SECURITIES (§§ 23-30-101 — 23-55-1007) › Chapter 39 - MORTGAGE LOAN COMPANIES AND LOAN BROKERS (§§ 23-39-101 — 23-39-518) › Subchapter 5 - FAIR MORTGAGE LENDING ACT (§§ 23-39-501 — 23-39-518) › Section 23-39-502 - Definitions

As used in this subchapter:
(1)
"Applicant" means a person that has applied to become licensed under this subchapter as a loan officer, transitional loan officer, mortgage broker, mortgage banker, or mortgage servicer;
(2)
"Branch manager" means the individual who is in charge of the business operations of one (1) or more branch offices of a mortgage broker, mortgage banker, or mortgage servicer;
(3)
"Branch office" means a location that is separate and distinct from the licensee's principal place of business and includes any location from which business is conducted under the license or in the name of the mortgage broker, mortgage banker, or mortgage servicer:
(A)
The address of which appears on business cards, stationery, or advertising used by the licensee in connection with business conducted under this subchapter at the branch office;
(B)
At which the licensee's name, advertising, promotional materials, or signage suggests that mortgage loans are originated, solicited, accepted, negotiated, funded, or serviced or from which mortgage loan commitments or interest rate guarantee agreements are issued; or
(C)
Which, due to the actions of any employee, associate, loan officer, or transitional loan officer of the licensee, may be construed by the public as a branch office of the licensee where mortgage loans are originated, solicited, accepted, negotiated, funded, or serviced or from which mortgage loan commitments or interest rate guarantee agreements are issued;
(4)
"Commissioner" means the Securities Commissioner and includes the commissioner's designees;
(5)
(A)
"Control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise.
(B)
A person is presumed to control a company if the person:
(i)
Is a director, general partner, or executive officer of the company;
(ii)
Directly or indirectly has the right to vote twenty-five percent (25%) or more of a class of a voting security of the company or has the power to sell or direct the sale of twenty-five percent (25%) or more of a class of voting securities of the company;
(iii)
In the case of a limited liability company, is a managing member of the limited liability company; or
(iv)
In the case of a partnership, has the right to receive upon dissolution or has contributed ten percent (10%) or more of the capital of the partnership;
(6)
"Control affiliate" means a partnership, corporation, trust, limited liability company, or other organization that directly or indirectly controls or is controlled by the applicant;
(7)
"Control person" means an individual who directly or indirectly exercises control over the applicant;
(8)
"Employee" means an individual who is licensed with or employed by a mortgage broker, mortgage banker, or mortgage servicer, whether by employment contract, agency, or other arrangement and regardless of whether the individual is treated as an employee for purposes of compliance with the federal income tax laws;
(9)
(A)
"Exempt person" means a person not required to be licensed as a mortgage broker, mortgage banker, mortgage servicer, loan officer, or transitional loan officer under this subchapter.
(B)
"Exempt person" includes any of the following:
(i)
An employee of a licensee whose responsibilities are limited to clerical and administrative tasks for his or her employer and who does not solicit borrowers, accept applications, or negotiate the terms of loans on behalf of the employer;
(ii)
An agency or corporate instrumentality of the federal government or any state, county, or municipal government granting mortgage loans under specific authority of the laws of any state or of the United States;
(iii)
A trust company or industrial loan company chartered under the laws of Arkansas;
(iv)
A small-business investment corporation licensed under the Small Business Investment Act of 1958,
15 U.S.C. § 661
et seq., as it existed on January 1, 2011;
(v)
A real estate investment trust as defined in
26 U.S.C. § 856
, as it existed on January 1, 2011;
(vi)
A state or federally chartered bank, an operating subsidiary of a state-chartered bank regulated by the State Bank Department, a savings bank, a savings and loan association, or a credit union, the accounts of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration;
(vii)
An agricultural loan organization that is subject to licensing, supervision, or auditing by the United States Farm Service Agency, Commodity Credit Corporation, Rural Development Housing and Community Facilities Programs, United States Farm Credit Administration, or the United States Department of Agriculture;
(viii)
A nonprofit corporation that:
(a)
Qualifies as a nonprofit entity under § 501(c)(3) of the Internal Revenue Code;
(b)
Is not primarily in the business of soliciting or brokering mortgage loans; and
(c)
Makes or services mortgage loans to promote home ownership or home improvements for the disadvantaged;
(ix)
(a)
A licensed real estate agent or broker who is performing those activities subject to the regulation of the Arkansas Real Estate Commission.
(b)
Notwithstanding subdivision (9)(B)(ix)
(a)
of this section, "exempt person" does not include a real estate agent or broker who receives compensation of any kind in connection with the referral, placement, or origination of a mortgage loan;
(x)
A person who engages in seller-financed transactions or who as a seller of real property receives mortgages, deeds of trust, or other security instruments on real estate as security for a purchase money obligation if:
(a)
The person does not receive from or hold on behalf of the borrower any funds for the payment of insurance or taxes on the real property; and
(b)
The seller does not sell the liens or mortgages in the secondary market other than to affiliated or subsidiary persons;
(xi)
An individual or husband and wife who provide funds for investment in loans secured by a lien on real property on his or her or their own account and who do not:
(a)
Charge a fee or cause a fee to be paid for any service other than the normal and scheduled rates for escrow, title insurance, and recording services; and
(b)
Collect funds to be used for the payment of any taxes or insurance premiums on the property securing the loans;
(xii)
An attorney licensed in Arkansas rendering legal services to his or her client, when the conduct that would subject the attorney to the jurisdiction of this subchapter is ancillary to the provision of the legal services offered;
(xiii)
A person performing any act under order of any court;
(xiv)
A person acting as a mortgage broker, mortgage banker, or mortgage servicer for any person located in Arkansas, if the mortgage broker, mortgage banker, or mortgage servicer has no office or employee in Arkansas and the real property that is the subject of the mortgage is located outside of Arkansas;
(xv)
An officer or employee of an exempt person described in subdivisions (9)(B)(ii)-(xiv) of this section if acting in the scope of employment for the exempt person; and
(xvi)
A manufactured or modular home retailer and its employees if:
(a)
The manufactured or modular home retailer or its employees perform only administrative or clerical tasks on behalf of a person required to be licensed under this subchapter; or
(b)
The manufactured or modular home retailer and its employees:
(1)
Do not receive compensation or financial gain for engaging in loan officer activities that exceeds the amount of compensation or financial gain that could be received in a comparable cash transaction for a manufactured home;
(2)
Disclose to the consumer in writing any corporate affiliation with a mortgage banker;
(3)
Provide referral information for at least one (1) unaffiliated creditor if the manufactured or modular home retailer has a corporate affiliation with a mortgage banker and the mortgage banker offers a recommendation; and
(4)
(A)
Do not directly negotiate loan terms with the consumer or lender.
(B)
As used in subdivision (9)(B)(xvi)
(b)(4)(A)
of this section, "loan terms" includes rates, fees, and other costs;
(10)
"Licensee" means a loan officer, transitional loan officer, mortgage broker, mortgage banker, or mortgage servicer that is licensed under this subchapter;
(11)
(A)
"Loan officer" means an individual other than an exempt person described in subdivision (9) of this section who in exchange for compensation as an employee of or who otherwise receives compensation or remuneration from a mortgage broker or a mortgage banker:
(i)
Solicits or offers to solicit an application for a mortgage loan;
(ii)
Accepts or offers to accept an application for a mortgage loan;
(iii)
Negotiates or offers to negotiate the terms or conditions of a mortgage loan;
(iv)
Issues or offers to issue a mortgage loan commitment or interest rate guarantee agreement; or
(v)
Provides or offers to provide modification of a mortgage loan.
(B)
"Loan officer" does not include:
(i)
An individual who performs clerical or administrative tasks in the processing of a mortgage loan at the direction of and subject to the supervision and instruction of a licensed loan officer;
(ii)
An underwriter if the individual performs no activities under subdivision (11)(A) of this section; or
(iii)
An individual who is solely involved in extensions of credit relating to timeshare plans, as that term is defined in
11 U.S.C. § 101(53D)
, as it existed on January 1, 2011;
(12)
"Make a mortgage loan" means to close a mortgage loan, to advance funds, to offer to advance funds, or to make a commitment to advance funds to a borrower under a mortgage loan;
(13)
(A)
"Managing principal" means a person who meets the requirements of §
23-39-508
and who agrees to be primarily responsible for the operations of a licensed mortgage broker, mortgage banker, or mortgage servicer.
(B)
"Managing principal" includes a qualifying individual;
(14)
"Mortgage banker" means a person who engages in the business of making mortgage loans for compensation or other gain;
(15)
"Mortgage broker" means a person who for compensation or other gain or in the expectation of compensation or other gain and, regardless of whether the acts are done directly or indirectly, through contact by telephone, by electronic means, by mail, or in person with the borrowers or potential borrowers:
(A)
Accepts or offers to accept an application for a mortgage loan;
(B)
Solicits or offers to solicit an application for a mortgage loan;
(C)
Negotiates or offers to negotiate the terms or conditions of a mortgage loan; or
(D)
Issues or offers to issue mortgage loan commitments or interest rate guarantee agreements to borrowers;
(16)
"Mortgage loan" means a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, reverse mortgage, or other equivalent consensual security interest encumbering:
(A)
A dwelling as defined in section 1602(w) of the Truth in Lending Act,
15 U.S.C. § 1601
et seq., as it existed on January 1, 2011; or
(B)
Residential real estate upon which is constructed or intended to be constructed a dwelling;
(17)
(A)
"Mortgage servicer" means a person that receives or has the right to receive from or on behalf of a borrower:
(i)
Funds or credits in payment for a mortgage loan; or
(ii)
The taxes or insurance associated with a mortgage loan.
(B)
In the case of a home equity conversion mortgage or a reverse mortgage, "mortgage servicer" includes a person that makes a payment to the borrower;
(18)
"Operating subsidiary" means a separate corporation, limited liability company, or similar entity in which a national or state bank, savings and loan association, or credit union, the accounts of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration, maintains more than fifty percent (50%) voting rights, a controlling interest, or otherwise controls the subsidiary and no other party controls more than fifty percent (50%) of the voting rights or a controlling interest in the subsidiary;
(19)
"Person" means an individual, partnership, limited liability company, limited partnership, corporation, association, or other group engaged in joint business activities, however organized;
(20)
"Principal place of business" means a stationary construction consisting of at least one (1) enclosed room or building in which negotiations of mortgage loan transactions of others may be conducted in private or in which the primary business functions of the licensee are conducted;
(21)
"Reverse mortgage" means a nonrecourse loan that pays a homeowner loan proceeds drawn from accumulated home equity;
(22)
"Sponsor" means a mortgage broker or mortgage banker licensed under this subchapter that has assumed the responsibility for and agrees to supervise the actions of a loan officer or transitional loan officer;
(23)
"Transitional loan officer" means an individual who, in exchange for compensation as an employee of, or who otherwise receives compensation or remuneration from, a mortgage broker or a mortgage banker, is authorized to act as a loan officer subject to a transitional loan officer license;
(24)
"Transitional loan officer license" means a license that:
(A)
Is issued to an individual who is employed and sponsored by a mortgage banker or mortgage broker licensed under this subchapter;
(B)
Is limited to a term of no more than one hundred twenty (120) days; and
(C)
Is not subject to reapplication, renewal, or extension by the commissioner; and
(25)
"Unique identifier" means a number or other identifier assigned by protocols established by the automated licensing system approved by the commissioner.
Amended by Act 2023, No. 325,§ 2, eff. 8/1/2023.
Amended by Act 2023, No. 325,§ 1, eff. 8/1/2023.
Amended by Act 2021, No. 531,§ 3, eff. 7/28/2021.
Amended by Act 2021, No. 531,§ 2, eff. 7/28/2021.
Amended by Act 2021, No. 531,§ 1, eff. 7/28/2021.
Amended by Act 2019, No. 200,§ 8, eff. 7/24/2019.
Amended by Act 2019, No. 200,§ 7, eff. 7/24/2019.
Amended by Act 2019, No. 200,§ 6, eff. 7/24/2019.
Amended by Act 2019, No. 200,§ 5, eff. 7/24/2019.
Amended by Act 2019, No. 200,§ 4, eff. 7/24/2019.
Amended by Act 2019, No. 200,§ 3, eff. 7/24/2019.
Amended by Act 2019, No. 200,§ 2, eff. 7/24/2019.
Amended by Act 2019, No. 200,§ 1, eff. 7/24/2019.
Amended by Act 2013, No. 1167,§ 4, eff. 8/16/2013.
Amended by Act 2013, No. 1167,§ 3, eff. 8/16/2013.
Amended by Act 2013, No. 1167,§ 2, eff. 8/16/2013.
Amended by Act 2013, No. 1167,§ 1, eff. 8/16/2013.
Acts 2003, No. 554, § 1; 2005, No. 1679, § 1; 2007, No. 748, § 1; 2009, No. 731, §§ 1-5; 2011, No. 894, §§ 1-4.