Section R20-4-917. Recordkeeping Requirements

A.      The Superintendent shall approve a licensee’s use of a com- puter or mechanical recordkeeping system if the licensee gives the Superintendent advanced written notice that it intends to do so. The Department shall not require a licensee to keep a written copy of the records if the licensee can generate all information required by this Section in a timely manner for examination or other purposes. A licensee may add, delete, modify, or customize an approved computer or mechanical recordkeeping system’s hardware or software components. When requested, or in response to a written notice of an exam- ination, a licensee shall report to the Superintendent any alter- ation in the approved system’s fundamental character, medium, or function if the alteration changes:

1.        Any approved computer or mechanical system back to a paper-based system;

2.        An approved mechanical system to a computer system; or

3.        An approved computer system to a mechanical system.

B.       In addition to any statutory requirement regarding records, a record maintained by a mortgage broker shall include the fol- lowing:

1.        A list of all executed loan applications or executed fee agreements that includes the following information:

a.         Applicant’s name;

b.        Application date;

c.         Amount of initial loan request;

d.        Final disposition date;

e.         Disposition (funded, denied, etc.); and

f.         Name of loan officer;

2.        A record, such as a cash receipts journal, of all money received in connection with a mortgage loan including:

a.         Payor’s name;

b.        Date received;

c.         Amount; and

3.        A  sequential   listing  of  checks  written  for  each  bank

account relating to the mortgage broker business, such as a cash disbursement journal, including:

a.         Payee’s name;

b.        Amount;

c.         Date; and

d.        Payment’s  purpose,  including  identification   of  a related loan, if any;

4.        Bank account activity source documents for the mortgage broker business including receipted deposit tickets, num- bered receipts for cash, bank account statements, paid checks, and bank advices.

5.        A trust subsidiary ledger for each borrower that deposits trust funds showing:

a.         Borrower’s name or co-borrowers’ names;

b.        Loan number, if any;

c.         Amount received;

d.        Purpose for the amount received;

e.         Date received;

f.         Date deposited into trust account;

g.        Amount disbursed;

h.        Date disbursed;

i.         Disbursement’s payee and purpose; and

j.         Balance;

6.        A file for each application for a mortgage loan contain- ing:

a.         The agreement with the customer concerning the broker’s services, whether as a loan application, fee agreement, or both;

b.        Document showing the application’s final disposi- tion, such as a settlement statement, or a denial or withdrawal letter;

c.         Correspondence  sent,  received,  or  both  by  the licensee;

d.        Contract, agreement, and escrow instructions to or with any depository;

e.         Documents showing compliance with the Consumer Credit Protection Act’s (15 U.S.C. §§ 1601 through 1666j) and the Real Estate Settlement Procedures Act’s (12 U.S.C. §§ 2601 through 2617) disclosure requirements, to the extent applicable;

f.         If the loan is funded by an investor that is not a financial institution, an enterprise, a licensed real estate broker or salesman, a profit sharing or pension trust or, an insurance company, the documents pro- vided to the investor under A.R.S. § 6-907, a copy of the executed note  and executed  deed of  trust or mortgage, and any assignment by the broker to the investor;

g.        If the loan is closed in the mortgage broker’s name, a copy of all closing documents including: closing instructions, any applicable rescission notice, HUD- 1 settlement statement, final truth-in-lending disclo- sure, executed note, executed deed of trust or mort- gage, and each assignment of beneficial interest by the licensee; and

h.        Itemized list of all fees taken in advance including appraisal fee, credit report fee, and application fee;

7.        Samples of every piece of advertising relating  to the mortgage broker’s business in Arizona;

8.        Copies of governmental or regulatory compliance reviews;

9.        If the licensee is not a natural person, a file containing:

a.         Organizational documents for the entity;

b.        Minutes;

c.         A record, such as a stock or ownership transfer led- ger, showing ownership of all proportional equity interests in the licensee, ascertainable as of any given record date; and

d.        Annual report, if required by law;

10.     If the licensee or anyone directly or indirectly owning more than 20% of the licensee has a felony conviction, a copy of the judgment or other record of conviction;

11.     If the licensee or anyone directly or indirectly owning more than 20% of the licensee has, in the previous seven years, been named a defendant in any civil suit, a copy of the complaint, any answer filed by the licensee, and any judgment, dismissal, or other final order disposing of the action; and

12.     If the Superintendent has granted approval to maintain records outside this state, the specific address where the records are kept, and a person’s name to contact for them.

C.      If 10 or fewer transactions have occurred during the prior cal- endar quarter, a licensee shall reconcile and update all records specified in subsection (B) at least once each calendar quarter. A licensee shall reconcile and update all records specified in subsection (B) monthly if more than 10 transactions occurred during the prior calendar quarter. In addition to reconciling each trust bank account, a licensee shall verify each trust bal- ance to each trust subsidiary ledger at each reconciliation.

D.      A licensee shall retain the documents described in subsections (B)(1) and (B)(6) for the length of time provided in A.R.S. § 6- 906. For the purposes of A.R.S. § 6-906, a mortgage loan’s closing date, on a loan application that did not result in the making of a loan, is either:

1.        The date a licensee receives a written cancellation notice from an applicant; or

2.        The date a licensee mails written notice to an applicant that the application has been denied, as required by fed- eral law.

E.       A licensee shall maintain all records described in this Section, and not included in subsection (D), for at least two years.

Historical Note

Adopted effective August 14, 1991 (Supp. 91-3). R20-4- 917 recodified from R4-4-917 (Supp. 95-1). Amended by final rulemaking at 5 A.A.R. 2094, effective June 10,

1999 (Supp. 99-2).