Chapter 224

224.77(1)(y) (y) Cause or require a borrower to obtain property insurance coverage in an amount exceeding the replacement cost of improvements on the property, as determined by the property insurer.

224.77(1m) (1m) Administrative forfeiture and hearing rights.

224.77(1m)(a) (a) The division may assess against any person who violates this subchapter a forfeiture of not more than $25,000 for each violation and may further order restitution to any person suffering loss as a result of the violation.

224.77(1m)(b) (b) A person may contest an assessment of forfeiture, or a restitution order, under par. (a) by sending, within 10 days after receipt of notice of the assessment or order under par. (a), a written request for hearing under s. 227.44 to the division of hearings and appeals created under s. 15.103 (1). The administrator of the division of hearings and appeals may designate a hearing examiner to preside over the case and recommend a decision to the administrator under s. 227.46. The decision of the administrator of the division of hearings and appeals shall be the final administrative decision. The division of hearings and appeals shall commence the hearing within 30 days after receipt of the request for hearing and shall issue a final decision within 15 days after the close of the hearing. Proceedings before the division of hearings and appeals are governed by ch. 227. In any petition for judicial review of a decision by the division of hearings and appeals, the party, other than the petitioner, who was in the proceeding before the division of hearings and appeals shall be the named respondent.

224.77(1m)(c) (c)

224.77(1m)(c)1. 1. All forfeitures shall be paid to the division of banking within 10 days after receipt of notice of assessment or, if the forfeiture is contested under par. (b), within 10 days after receipt of the final decision after exhaustion of administrative review. The division of banking shall remit all forfeitures paid to the secretary of administration for deposit in the school fund.

224.77(1m)(c)2. 2. All amounts ordered as restitution shall be paid to the person suffering loss within 10 days after receipt of notice of the order or, if the restitution order is contested under par. (b), within 10 days after receipt of the final decision after exhaustion of administrative review.

224.77(1m)(d) (d) The attorney general may bring an action in the name of the state to collect any forfeiture imposed, or amount ordered as restitution, under this subsection if the forfeiture or restitution amount has not been paid following the exhaustion of all administrative and judicial reviews. The only issue to be contested in any such action shall be whether the forfeiture or restitution amount has been paid.

224.77(2m) (2m) Division action on license.

224.77(2m)(a) (a)

224.77(2m)(a)1. 1. In addition to any other authority provided to the division under this subchapter, if the division finds that a mortgage banker, mortgage loan originator, or mortgage broker has violated any provision of this subchapter or any rule promulgated by the division under this subchapter, or a registered entity has violated any applicable provision of this subchapter, the division may do any of the following:

224.77(2m)(a)1.a. a. Deny any application for initial issuance or renewal of a license or registration.

224.77(2m)(a)1.b. b. Revoke, suspend, limit, or condition any license of the mortgage banker, mortgage loan originator, or mortgage broker or registration of the registered entity.

224.77(2m)(a)1.c. c. Reprimand the mortgage banker, mortgage loan originator, or mortgage broker.

224.77(2m)(a)2. 2. The division may take any action specified in subd. 1. against a mortgage banker or mortgage broker based upon any act or omission described in subd. 1. of a director, officer, trustee, partner, or member of the mortgage banker or mortgage broker or a person who has a financial interest in or is in any way connected with the operation of the mortgage banker’s or mortgage broker’s business.

224.77(2m)(b) (b) In addition to any other authority provided to the division under this subchapter, if the division finds that an applicant for initial issuance or renewal of a license under this subchapter made any material misstatement in the application or withheld material information, or that the applicant no longer satisfies the requirements under s. 224.72 or 224.725 for issuance or renewal of the license, the division may deny the application or, if the license has already been issued, suspend or revoke the license.

224.77(2m)(c) (c) The division shall restrict or suspend the license of a mortgage banker, mortgage loan originator, or mortgage broker if the licensee is an individual who fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families or a county child support agency under s. 59.53 (5) and related to paternity or child support proceedings or who is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses, or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under s. 49.857. An individual whose license is restricted or suspended under this subsection is entitled to a notice and hearing only as provided in a memorandum of understanding entered into under s. 49.857 and is not entitled to any other notice or hearing under this section.

224.77(2m)(d) (d) The division shall revoke the license of a mortgage banker, mortgage loan originator, or mortgage broker if the department of revenue certifies under s. 73.0301 that the licensee is liable for delinquent taxes. A licensee whose license is revoked under this subsection for delinquent taxes is entitled to a notice under s. 73.0301 (2) (b) 1. b. and a hearing under s. 73.0301 (5) (a) but is not entitled to any other notice, hearing or review under this section.

224.77(2m)(e) (e) The division shall revoke the license of a mortgage banker, mortgage loan originator, or mortgage broker if the department of workforce development certifies under s. 108.227 that the licensee is liable for delinquent unemployment insurance contributions. A licensee whose license is revoked under this subsection for delinquent unemployment insurance contributions is entitled to a notice under s. 108.227 (2) (b) 1. b. and a hearing under s. 108.227 (5) (a) but is not entitled to any other notice, hearing or review under this section.

224.77(3) (3) Orders of the division.

224.77(3)(a) (a) Orders to prevent or correct actions. The division may issue general and special orders, including temporary orders that become immediately effective, to prevent or correct actions by a mortgage banker, mortgage loan originator, or mortgage broker that constitute a violation of any provision of this subchapter or of any rule promulgated under this subchapter, including special orders that do any of the following:

224.77(3)(a)1. 1. Direct a mortgage banker, mortgage loan originator, or mortgage broker to cease and desist from engaging in a particular activity, from conducting business, or from otherwise violating any provision of this subchapter or any rule promulgated under this subchapter.

224.77(3)(a)2. 2. Direct a mortgage banker, mortgage loan originator, or mortgage broker to refund or remit to a residential mortgage loan applicant or borrower amounts that the mortgage banker, mortgage loan originator, or mortgage broker got from actions that constitute a violation of any provision of this subchapter or of any rule promulgated under this subchapter.

224.77(3)(a)3. 3. Direct a mortgage banker, mortgage loan originator, or mortgage broker to cease business under a license issued under this subchapter if the division determines that the license was erroneously issued or the licensee is currently in violation of any provision of this subchapter or of any rule promulgated under this subchapter.

224.77(3)(a)4. 4. Direct a mortgage banker, mortgage loan originator, or mortgage broker to undertake any affirmative action, consistent with the provisions of this subchapter, that the division deems necessary.

224.77(3)(c) (c) Judicial review. Orders of the division are subject to review as provided in ch. 227.

224.77(3m) (3m) Hearing rights for license denial, revocation, or suspension. A person whose license has been denied, revoked, suspended, limited, or conditioned under this section may request a hearing under s. 227.44 within 30 days after the date of denial, revocation, suspension, limitation, or conditioning of the license. The division may appoint a hearing examiner under s. 227.46 to conduct the hearing.

224.77(4) (4) Period of disciplinary action; license ineligibility.

224.77(4)(a) (a) Period. Except as provided in par. (b), the division shall determine in each case the period that a revocation, suspension, limitation, or condition of a license is effective.

224.77(4)(b) (b) Ineligibility.

224.77(4)(b)1. 1. Except as provided in subd. 2., if the division denies or revokes a license under sub. (2m) (a), the person is not eligible for a license until the expiration of a period determined in each case by the division.

224.77(4)(b)2. 2. If the division revokes a license under sub. (1) (p) or (q), the person is not eligible for a license until 5 years after the effective date of the revocation.

224.77(5) (5) Penalties for certain discriminatory conduct.

224.77(5)(a) (a) Mandatory revocation or suspension. Notwithstanding subs. (2m) (a) and (4), if the division finds that a mortgage banker, mortgage loan originator, or mortgage broker has violated sub. (1) (p) or (q), the division shall:

224.77(5)(a)1. 1. For the first offense, suspend the license of the mortgage banker, mortgage loan originator, or mortgage broker for not less than 90 days.

224.77(5)(a)2. 2. For the 2nd offense, revoke the license of the mortgage banker, mortgage loan originator, or mortgage broker.

224.77(5)(b) (b) Other penalties. The penalty under par. (a) may be imposed in addition to any penalty imposed under s. 66.1011, 106.50 or 224.80.

224.77(8) (8) Voluntary surrender. A mortgage banker, mortgage loan originator, or mortgage broker may voluntarily surrender a license to the division, but the division may refuse to accept the surrender if the division has an open investigation or examination or received allegations of unprofessional conduct against the mortgage banker, mortgage loan originator, or mortgage broker. The division may negotiate stipulations in consideration for accepting the surrender of the license.

224.77(9) (9) Reporting violations. The division shall report regularly violations of this subchapter or of rules promulgated under this subchapter, as well as enforcement actions and other relevant information, to the nationwide multistate licensing system and registry. Except as provided in s. 224.35 (4) (b) and (c), these reports shall be confidential and are not subject to public copying or inspection under s. 19.35 (1).

224.77 History History: 1987 a. 359; 1987 a. 403 ss. 182, 256; Stats. 1987 s. 440.77; 1993 a. 112; 1995 a. 27 ss. 6598 to 6600; Stats. 1995 s. 224.77; 1997 a. 145, 191, 237; 1999 a. 32, 82; 1999 a. 150 s. 672; 2003 a. 33, 260; 2007 a. 20; 2009 a. 2 ss. 673 to 707, 709; 2009 a. 95; 2011 a. 258; 2013 a. 36; 2013 a. 360 ss. 50, 60 to 68; 2023 a. 267.

224.77 Cross-reference Cross-reference: See also ch. DFI-Bkg 43, Wis. adm. code.

224.77 Annotation Failure to comply with an administrative rule requiring agreements by loan solicitors to be in writing did not cause an otherwise valid agreement to be unenforceable under this section. Felland v. Sauey, 2001 WI App 257, 248 Wis. 2d 963, 637 N.W.2d 403, 00-2102.

224.77 Annotation The elements of various claims under this section are discussed. SJ Properties Suites v. Specialty Finance Group, LLC, 864 F. Supp. 2d 776 (2012).

224.79 224.79 Mortgage brokerage agreements and disclosures; mortgage broker agency relationship and duties.

224.79(1) (1) Form and content of mortgage brokerage agreements. Every contract between a mortgage broker and an individual under which the mortgage broker agrees to provide brokerage services to the individual relating to a residential mortgage loan shall be in writing, in the form prescribed by rule of the division, and shall contain all information required by rule of the division. The division shall promulgate rules to administer this subsection and shall design these rules to facilitate the comparison of similar charges and total charges assessed by different mortgage brokers.

224.79(2) (2) Disclosure statement. Before entering into a contract with an individual to provide brokerage services relating to a residential mortgage loan, a mortgage broker shall give the individual a copy of a disclosure statement, explain the content of the statement, and ensure that the individual initials or signs the statement, acknowledging that the individual has read and understands the statement. The disclosure statement shall contain a brief explanation of the relationship between the individual and the mortgage broker under the proposed contract, a brief explanation of the manner in which the mortgage broker may be compensated under the proposed contract, and any additional information required by rule of the division. The division shall promulgate rules to administer this subsection and, by rule, shall specify the form and content of the disclosure statement required under this subsection.

224.79(3) (3) Mortgage broker agency relationship and duties.

224.79(3)(a) (a) In this subsection, “borrower” means the residential mortgage loan applicant or investor on whose behalf a mortgage broker provides, or contracts to provide, mortgage brokerage services.

224.79(3)(b) (b) A mortgage broker, at all times when acting in the capacity of a mortgage broker, has an agency relationship with the borrower.

224.79(3)(c) (c) A mortgage broker owes all of the following duties to the borrower:

224.79(3)(c)1. 1. The mortgage broker shall act in the borrower’s best interest and in the utmost good faith toward the borrower, and may not compromise the borrower’s rights or interests in favor of another’s rights or interests, including those of the mortgage broker.

224.79(3)(c)2. 2. The mortgage broker may not accept, give, or charge any undisclosed compensation or realize any undisclosed remuneration, through direct or indirect means, that inures to the benefit of the mortgage broker on an expenditure made for the borrower.

224.79(3)(c)3. 3. The mortgage broker shall carry out all lawful instructions given by the borrower.

224.79(3)(c)4. 4. The mortgage broker shall disclose to the borrower all material facts of which the mortgage broker has knowledge that might reasonably affect the borrower’s rights or interests or ability to receive the borrower’s intended benefit from the residential mortgage loan, but not facts that are reasonably susceptible to the knowledge of the borrower.

224.79(3)(c)4m. 4m. The mortgage broker shall present loan options in an objective and unbiased manner and disclose the advantages and disadvantages of each loan option.

224.79(3)(c)5. 5. The mortgage broker shall use reasonable care in performing the mortgage broker’s duties.

224.79(3)(c)6. 6. The mortgage broker shall account to the borrower for all money and property received by the mortgage broker as the borrower’s agent.

224.79(3)(d) (d) Nothing in this subsection prohibits a mortgage broker from contracting or collecting a fee for services provided, if the services were disclosed to the borrower before they were provided.

224.79(3)(e) (e) Nothing in this subsection requires a mortgage broker to obtain a residential mortgage loan containing terms or conditions not available to the mortgage broker in the mortgage broker’s usual course of business or to obtain a residential mortgage loan for the borrower from a mortgage lender with whom the mortgage broker does not have a business relationship.

224.79(3)(f) (f) The duties imposed under par. (c) may not be waived.

224.79(3)(g) (g) Every contract under sub. (1), and every disclosure statement under sub. (2), shall identify the agency relationship described in par. (b) and the mortgage broker’s duties imposed under par. (c).

224.79 History History: 2003 a. 260; 2009 a. 2, 188; 2011 a. 233.

224.79 Cross-reference Cross-reference: See also ch. DFI-Bkg 44, Wis. adm. code.

224.80 224.80 Penalties and private cause of action.

224.80(1) (1) Penalties. A person who violates any provision of this subchapter or any rule promulgated under this subchapter may be fined not more than $25,000 or imprisoned for not more than 9 months or both. The district attorney of the county where the violation occurs shall enforce the penalty under this subsection on behalf of the state.

224.80(2) (2) Private cause of action. A person who is aggrieved by an act which is committed by a mortgage banker, mortgage loan originator, or mortgage broker in violation of any provision of this subchapter or of any rule promulgated under this subchapter may recover all of the following in a private action:

224.80(2)(a) (a) An amount equal to the greater of the following:

224.80(2)(a)1. 1. Twice the amount of the cost of loan origination connected with the transaction, except that the liability under this subdivision may not be less than $100 nor greater than $25,000 for each violation.

224.80(2)(a)2. 2. The actual damages, including any incidental and consequential damages, which the person sustained because of the violation.

224.80(2)(b) (b) The aggregate amount of costs and expenses which the court determines were reasonably incurred by the person in connection with the action, together with reasonable attorney fees, notwithstanding s. 814.04 (1).

224.80 History History: 1987 a. 359; 1987 a. 403 ss. 182, 256; Stats. 1987 s. 440.80; 1989 a. 45; 1995 a. 27 s. 6602; Stats. 1995 s. 224.80; 1997 a. 145; 2003 a. 260; 2009 a. 2.

224.80 Annotation A “person who is aggrieved” under sub. (2) is one who suffered at least some actual injury or damage. Avudria v. McGlone Mortgage Company, Inc. 2011 WI App 95, 334 Wis. 2d 480, 802 N.W.2d 524, 10-2032.

224.81 224.81 Limitation on actions for commissions and other compensation. A person who is engaged in the business or acting in the capacity of a mortgage banker, mortgage loan originator, or mortgage broker in this state may not bring or maintain an action in this state to collect a commission, money, or other thing of value for performing an act as a mortgage banker, mortgage loan originator, or mortgage broker without alleging and proving that the person was licensed under this subchapter as a mortgage banker, mortgage loan originator, or mortgage broker when the alleged cause of action arose.

224.81 History History: 1987 a. 359; 1987 a. 403 s. 182; Stats. 1987 s. 440.81; 1995 a. 27 s. 6603; Stats. 1995 s. 224.81; 1997 a. 145; 2009 a. 2.

224.82 224.82 Compensation presumed. In a prosecution arising from a violation of this subchapter, proof that a person acted as a mortgage banker, mortgage loan originator, or mortgage broker is sufficient, unless rebutted, to establish that compensation was received by, or promised to, that person.

224.82 History History: 1987 a. 359; 1987 a. 403 s. 182; Stats. 1987 s. 440.82; 1995 a. 27 s. 6604; Stats. 1995 s. 224.82; 1997 a. 145; 2009 a. 2.

subch. IV of ch. 224 SUBCHAPTER IV

NONDEPOSITORY SMALL BUSINESS LENDERS

224.90 224.90 Definitions. In this subchapter:

224.90(1) (1) “Division” means the division of banking.

224.90(2) (2) “In control” means any of the following:

224.90(2)(a) (a) Owning 10 percent or more of the outstanding voting stock of a nondepository lender.

224.90(2)(b) (b) Possessing, directly or indirectly, alone or in concert with others, the power to control or vote 10 percent or more of the outstanding voting stock of a nondepository lender or to elect or control the election of a majority of the board of directors of a nondepository lender.

224.90(3) (3) “Licensee” means a lender licensed under this subchapter.

224.90(4) (4) “Nondepository lender” means a commercial small business lender that participates in the loan guarantee program of the U.S. small business administration described in 13 CFR 120.2 (a) and that provides financial assistance to small businesses that qualify for financial assistance pursuant to 15 USC 636 (a). “Nondepository lender” does not include a bank, credit union, savings and loan association or savings bank.

224.90 History History: 1999 a. 9.

224.92 224.92 License required. No person may engage in business as a nondepository lender in this state without a license issued under this subchapter.

224.92 History History: 1999 a. 9.

224.923 224.923 License application. An application for a license under this subchapter shall be made to the division in writing on a form to be prescribed by the division. An application for a license under this subchapter shall state the full name and business address of the applicant and each officer, director and person in control of the applicant. The application also shall contain the applicant’s federal employer identification number. In addition, the application shall contain the applicant’s business plan, 3 years of detailed financial projections and other relevant information, all as prescribed by the division.