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Senate approves bill to register mortgage brokers, citing consumer fraud concerns
Summary
The Senate passed a substitute to House Bill 107 establishing registration and oversight for mortgage brokers and bankers after lawmakers described widespread loan fraud and overvaluation of appraisals. An amendment to exempt federally supervised servicers failed; the substitute passed overwhelmingly.
The Senate approved substitute House Bill 107, the Utah Residential Mortgage Practices Act, which would register mortgage brokers and mortgage bankers and provide the Department of Commerce with tools to address loan fraud, including fingerprinting and background checks.
Senator Mansell said the bill responds to an increase in loan fraud and abusive practices that harm buyers and neighborhoods by inflating appraisals. "When these loans are overvalued … the net result is that all the home values in the neighborhood goes up and your assessments go up," he told the floor, urging regulatory authority to enforce ethics and address bad actors.
An amendment that would have exempted loan sellers/servicers that are licensed, supervised or audited by Fannie Mae, FNMA, or HUD was proposed but defeated on the floor; senators warned such an exemption would hollow out the bill’s consumer protections. Opponents of the amendment said federally supervised status is not a substitute for the on‑the‑ground enforcement the state bill would provide.
Under suspension of the rules the Senate took a roll call; the substitute passed with 27 yeas, 0 nays and 2 absent and will be returned to the House for enrollment and final signature.
What this means: The state would have registration authority and an industry overseer to investigate complaints, restrict registrations and provide an enforcement pathway intended to reduce mortgage fraud and protect homebuyers.
