Ariz. Admin. Code § 20-4-1907

Current through Register Vol. 30, No. 24, June 14, 2024

Section R20-4-1907 - Recordkeeping Requirements

A. The Superintendent shall approve a licensee's use of a computer or mechanical recordkeeping system if the licensee gives the Superintendent advanced written notice that it intends to do so. The Department shall not require a licensee to keep a written copy of the records if the licensee can generate all information required by this Section in a timely manner for examination or other purposes. A licensee may add, delete, modify, or customize an approved computer or mechanical recordkeeping system's hardware or software components. When requested, or in response to a written notice of an examination, a licensee shall report to the Superintendent any material alteration in the approved system's fundamental character, medium, or function if the alteration changes:

1. Any approved computer or mechanical system back to a paper-based system; or

2. An approved mechanical system to a computer system; or

3. An approved computer system to a mechanical system.

B. In addition to any statutory requirement regarding records, a record maintained by a commercial mortgage banker shall include the following:

1. A list of all executed loan applications or executed fee agreements that includes the following information:

a. Applicant's name;

b. Application date;

c. Amount of initial loan request;

d. Final disposition date;

e. Disposition (funded, denied); and

f. Name of loan officer;

2. A record, such as a cash receipts journal, of all money received in connection with commercial mortgage loans including:

a. Payor's name;

b. Date received;

c. Amount; and

d. Receipt's purpose including identification of a related loan, if any;

3. A sequential listing of checks written for each bank account relating to the commercial mortgage banker business, such as a cash disbursement journal, including:

a. Payee's name;

b. Amount;

c. Date; and

d. Payment's purpose including identification of a related loan, if any;

4. Bank account activity source documents for the commercial mortgage banker business including receipted deposit tickets, numbered receipts for cash, bank account statements, paid checks, and bank advices.

5. A trust subsidiary ledger for each borrower that deposits trust funds showing:

a. Borrower's name or co-borrowers' names;

b. Loan number, if any;

c. Amount received;

d. Purpose for the amount received;

e. Date received;

f. Date deposited into trust account;

g. Amount disbursed;

h. Date disbursed;

i. Disbursement's payee and purpose, and

j. Balance.

6. A file for each application for a commercial mortgage loan containing:

a. The agreement with the customer concerning the commercial mortgage banker's services, whether as a loan application, fee agreement, or both;

b. The documents showing the application's final disposition, such as a settlement statements, a denial or withdrawal letter, or internal memorandum;

c. Correspondence sent, received, or both by the licensee;

d. Contract, agreement, and escrow instructions to or with any depository;

e. If the loan is closed in the licensee's name, a copy of all closing documents including: closing instructions, copy of the executed note, executed deed of trust or mortgage, and each assignment of beneficial interest by the licensee, if any. If any of the documents listed in this subsection have been recorded, the file shall also contain legible copies of the recorded documents, and

f. Itemized list of all fees taken in advance including appraisal fee, credit report fee, and application fee.

7. Samples of every piece of advertising relating to the commercial mortgage banker's business in Arizona;

8. Copies of governmental or regulatory reviews;

9. If the licensee is a not a natural person, a file containing:

a. Organizational documents for the entity;

b. Minutes;

c. A record, such as a stock or ownership transfer ledger, showing ownership of all proportional equity interests in the licensee, ascertainable as of any given record date; and

d. Annual report, if required by law;

10. If the licensee or anyone directly or indirectly owning more than 20% of the licensee has a felony conviction, a copy of the judgment or other record of conviction.

11. If the licensee or anyone directly or indirectly owning more than 20% of the licensee has, in the previous seven years, been named a defendant in any civil suit, a copy of the complaint, any answer filed by the licensee, and any judgment, dismissal or other final order disposing of the action.

12. If the Superintendent has granted approval to maintain records outside this state, the specific address where the records are kept, and a person's name to contact for them.

13. If a licensee does business in other states, it must be able to separate Arizona loan information from information relating to other states to enable the Superintendent to conduct an examination.

14. A licensee shall produce a trial balance of the general ledger monthly to evidence the commercial mortgage banker's net worth.

C. If 10 or fewer transactions have occurred during the prior calendar quarter, a licensee shall reconcile and update all records specified in subsection (B) at least once each calendar quarter. A licensee shall reconcile and update all records specified in subsection (B) monthly if more than 10 transactions occurred during the prior calendar quarter. In addition to reconciling each trust bank account, a licensee shall verify each trust balance to each trust subsidiary ledger at each reconciliation.

D. A licensee shall retain the documents described in subsections (B)(1) and (6) for the length of time provided in A.R.S. § 6-983. For the purposes of A.R.S. § 6-983, the commercial mortgage loan's closing date, on a loan application that did not result in the making of a loan, is either:

1. The date a licensee receives a written cancellation notice from the applicant; or

2. The date a licensee mails written notice to an applicant that an application has been denied; or

3. The date of a licensee's internal memorandum closing a loan file.

E. A licensee shall maintain all other records described in this Section, and not included in subsection (D), for at least two years.

Ariz. Admin. Code § R20-4-1907

New Section adopted by final rulemaking at 5 A.A.R. 2094, effective June 10, 1999 (Supp. 99-2).