Utah Amends Provisions of the Residential Mortgage Practices and Licensing Act Related to Exemptions

Utah H.B. 108, which was signed into law on March 15, 2018, amends the Utah Residential Mortgage Practices and Licensing Act (RMPLA) primarily to define terms and to exempt certain nonprofit corporations from the RMPLA’s provisions.  Other amendments to the RMPLA update reference citations and correct technical items.

The amended version of the RMPLA now includes a definition for “balloon payment,” which is defined as a required payment in a mortgage transaction that (i) results in a greater reduction in the principle of the mortgage than a regular installment payment, and (ii) is made during or at the end of the loan’s term.

Additionally, the amended RMPLA now exempts from its provisions a nonprofit corporation that, in addition to the other criteria already set forth in the RMPLA, (i) is exempt from paying federal income taxes, (ii) has as the nonprofit corporation’s primary purpose serving the public by helping low-income individuals and families build, repair, or purchase housing, (iii) does not require, under the terms of the mortgage, a balloon payment, and (iv) to perform loan originator activities, uses only unpaid volunteers or employees whose compensation is not based on the number or size of the mortgage transactions that the employees originate.  Similarly, an employee or volunteer for a nonprofit corporation is exempt from the RMPLA’s provisions while working within the scope of the nonprofit corporation’s business, provided that such nonprofit corporation either meets the criteria above, or is a community development financial institution.