Michigan Laws 445.1655 – Minimum net worth
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A licensee who acts as a mortgage broker and who receives funds from a prospective borrower before the closing of the mortgage loan shall maintain a net worth of not less than $25,000.00. A licensee who acts as a mortgage lender shall maintain a net worth of not less than $25,000.00. A licensee who acts as a mortgage servicer shall maintain a net worth in an amount determined by the commissioner not exceeding $100,000.00. Net worth shall be determined at the conclusion of the fiscal year of the licensee immediately preceding the date an application for a license, or renewal of a license, is submitted to the commissioner. Net worth shall be disclosed on a form prescribed by the commissioner or on a form prepared or reviewed by a certified public accountant and shall be computed in accordance with generally accepted accounting principles. The following assets shall be excluded in the computation of net worth:
(a) That portion of an applicant’s assets pledged to secure obligations of any person other than that of the applicant.
Terms Used In Michigan Laws 445.1655
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Commissioner: means the commissioner of the office of financial and insurance regulation of the department of licensing and regulatory affairs or his or her authorized agent. See Michigan Laws 445.1651a
- Contract: A legal written agreement that becomes binding when signed.
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- License: means a license issued under this act. See Michigan Laws 445.1651a
- Licensee: means a person licensed or required to be licensed under this act. See Michigan Laws 445.1651a
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgage lender: means a person that, directly or indirectly, makes or offers to make mortgage loans. See Michigan Laws 445.1651a
- Mortgage servicer: means a person that, directly or indirectly, services or offers to service mortgage loans. See Michigan Laws 445.1651a
- Person: means an individual, corporation, limited liability company, partnership, association, governmental entity, or any other legal entity. See Michigan Laws 445.1651a
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
(b) Any asset except construction loans receivable, secured by first mortgages from related companies, due from officers or stockholders of the applicant or persons in which the applicant’s officers or stockholders have an interest.
(c) An amount in excess of the lower of the cost or market value of mortgage loans in foreclosure, or real property acquired through foreclosure.
(d) An investment shown on the balance sheet in joint ventures, subsidiaries, or affiliates, which is greater than the market value of the assets.
(e) Good will or value placed on insurance renewals or property management contract renewals or other similar intangible value.
(f) Organization costs.