The Montana Department of Administration (“Department”) recently revised rules related to annual reporting for consumer loan licensees, mortgage definitions, mortgage renewal fees, and escrow funds held by mortgage companies, effective April 28, 2018.  The New Jersey Department of Banking and Insurance (“Department”) issued Bulletin 18-04, on April 10, 2018, warning consumers about the prevalence of fraudulent schemes to divert funds transferred by wire.

Montana Rules 2.59.310, 318, 705, 1701, 1738 and 1748

The following standardized Nationwide Multistate Licensing System (“NMLS”) forms relating to consumer loan licensing are approved and adopted by reference:

• NMLS company form dated September 12, 2015; and
• NMLS individual form dated September 12, 2016;

The following state-specific forms on the NMLS are approved and adopted by reference:

• Montana consumer loan license new application checklist dated October 7, 2016; and
• Montana consumer loan license surrender checklist dated September 8, 2016.

For renewal, companies, branches, and individuals must go to the NMLS home page (mortgage.nationwidelicensingsystem.org) and select the “Annual Renewal” link under the State Licensing tab and follow the instructions.

An entity holding a consumer loan license for any period during a calendar year reporting period must complete and file with the Department by February 15th (previously April 15th) of the following calendar year a Consumer Loan Annual Report of Licensee (“Annual Report”).  The Annual Report must be filed whether any loans were originated during the reporting period and whether the licensee renewed its license at the end of the reporting period or held a license when the report came due the following February 15th.  A completed Annual Report must be e-mailed to mortgagelicensing@mt.gov.  The Annual Report form dated January 25, 2018 is adopted and incorporated by reference and available on the Division of Banking and Financial Institutions website at banking.mt.gov.

For purposes of the Montana Mortgage Act, the following definitions apply:

“Breach of Trust” means:

• A wrongful act, use, misappropriation, or omission with respect to any property or fund that has been committed to a person in a fiduciary or official capacity; or
• The misuse of a person’s official or fiduciary position to engage in a wrongful act, use, misappropriation, or omission.

“Dishonesty” means:

• To cheat or defraud directly or indirectly;
• To cheat or defraud for monetary gain or its equivalent; or
• To wrongfully take property belonging to another in violation of any criminal statute.
• Dishonesty includes acts involving want of integrity, lack of probity, or a disposition to distort, cheat, or act deceitfully or fraudulently, and may include crimes which federal, state, or local laws define as dishonest.

The license renewal fee for a mortgage broker entity is $100 for a mortgage broker entity owned by a Montana-licensed mortgage loan originator or $500 in all other cases.

A mortgage servicer or lender must:

• Establish an escrow fund specifically for Montana residential mortgage loans being serviced. The escrow fund must contain only money related to Montana residential mortgage loans; or
• Elect to provide to the Department loan account histories of the residential mortgage loans located in Montana along with the escrow account statements or reports showing how, when, and where those payments were held, applied, and distributed for the period the servicer has serviced the loan.

New Jersey Department of Banking and Insurance Bulletin on Wire Transfer Fraud

The Bulletin states that these scams generally involve several types of business email compromise techniques that alter normal wiring instructions to divert funds from the intended recipient to a stranger.  The diverted funds are very difficult, if not impossible, to recover.

To avoid becoming a victim of wire transfer fraud, the Department recommends taking the following precautions:

• Closely verify email addresses before using them.  Scammers mimic legitimate addresses and subject lines, but they are not 100% identical.
• Avoid web-based email.
• Strictly follow your specific business procedures for confirming the validity of changes made to wire transfer instructions.
• Use a confirmation process, which may include verbal communication via a mutually agreed telephone number between the known parties, as well as mutually agreed code words designed to combat phone “porting.”
• Get to know the fraud resistance capacity of your third-party service providers, especially closing agents; become sufficiently aware of the relevant parties’ normal wire transfer activity to recognize suspicious variations.

More information and guidance on these scams can be found on the FBI’s website www.fbi.gov.  If you believe your business is the victim of a business email compromise scam, you can file a complaint with the FBI’s Internet Crime Complaint Center (“IC3”) at www.IC3.gov.

In New Jersey, you may also file an incident report with the New Jersey Cybersecurity & Communications Integration Cell (“NJCCIC”) at www.cyber.nj.gov or with the Department of Banking and Insurance at http://www.state.nj.us/dobi/consumer.htm#banking.  NJCCIC also offers a free membership to receive alerts, advisories, bulletins and training notifications.