First and Second Mortgage Guidelines for Transferring a License or Registration

A transfer of a license requires the approval of the Office of Financial and Insurance Regulation (OFIR) Commissioner.  Follow procedures according to the situation and authorizing statute.

When to Request a Transfer:  Transfer is required when more than 25% ownership of a licensed or registered entity is conveyed.  Ownership here refers to both direct ownership, and indirect ownership.  More than 25% of the outstanding voting stock of a company includes a cummulation of all changes that have been made to ownership since the license or registration was issued, based upon the information provided in the original application, or since the last transfer.  For example, separate changes of 10%, then 15%, then 5% would require consent when the cumulative total is expected to total more than 25%.  In this example, approval must be obtained before the last 5% change is transacted.  When change in ownership is expected to occur, persons in the company can determine appropriate actions by reviewing the law under which the license or registration is authorized.

First Mortgage License:  Section 9 of the Mortgage Brokers, Lenders, and Servicers Licensing Act, Public Act 173 of 1987 requires prior approval by the Commissioner for transfer of a license.  A registration is not transferable.  That section states:

“A license shall not be transferred or assigned without the consent of the commissioner.  The sale, transfer, assignment, or conveyance of more than 25% of the outstanding voting stock of a licensee which is a corporation, or more than 25% of the interest in a licensee which is a partnership or other unincorporated association, shall be considered to a transfer of the license.  A registration shall not be transferred or assigned.”

First Mortgage Registration:  A new registration must be obtained when more than 25% of the ownership is conveyed for any reason by providing a registration application with appropriate fees, FIS 1140 and FIS 2053.  A registration issued under the authority of this act is not transferable.  (Refer to the statute quoted above.)

Second Mortgage License and Registration:  Section 13 of the Secondary Mortgage Loan Act, Public Act 125 of 1981 requires the Commissioner’s approval prior to transfer of a license or registration. Both license and registrations under this act are transferable.  The pertinent portion of Section 13 states:

“…. (2) A license or registration shall not be transferred or assigned without the consent of the commissioner.  (3) The sale, transfer, assignment, or conveyance of more than 25% of the outstanding voting stock of a licensee or registrant which is a corporation, or more than 25% of the interest in a licensee or registrant which is a partnership or other unincorporated legal entity, shall be considered to be a transfer of the license or registration.”

Transfer Instructions

Notification must be made to the Office Financial and Insurance Regulation (OFIR) to request the commissioner’s approval of a proposed change in ownership.  Notification will consist of appropriate documents, according to the situation: 1) page 4, MU1 Form; 2) completed Schedule C, MU1 Form; 3) completed MU2 Forms if any of the new owners are persons not previously investigated as owners, officers, directors, members, etc; 4) additional MU1 Form pages relevant to changes occurring for the company; 5) if the entity is a registrant, new MU1 and MU2 Forms with all pages completed; and 6) appropriate money to cover the cost of transfer or reapplication.  This information will be sent directly to OFIR for processing.

When is an Investigation Required?

• If licensee proposes to transfer voting stock (or other types of ownership) to new persons or companies, an investigation of those persons is required.

• If licensee proposes an internal change of persons presently holding ownership, which do not include new persons, that transfer requires no investigation.

• An investigation is not made with ownership change in a registration.  A new application is submitted.

Requirement of Proposed New Owners
For the transfer of a license to new shareholders, each proposed new owner(s) must provide MU2 Form biographical statement & consent.  The cost of an investigation associated with an investigation is $450.00.  (Obtain the documents in the application located in the OFIR website at www.michigan.gov/ofis under the Licensing tab.)

Resignation of Shareholders
If a transfer is the result of a resigning shareholder, and there are no other changes to the licensee, copies of the resignation and cancelled stock certificates will accompany the instructions to transfer according to information provided in MU1 Form, Schedule C.

Consent from the Licensee/Registrant
The Board of Directors, Membership Committee, or Partners will provide authority of the entity to transfer by completing the certification at the bottom of page 4, MU1 Form.  A license held by an individual or sole proprietor will not be transferred.

Cost to Transfer
Licensee must pay a $50.00 fee for each certificate that is transferred, unless an investigation is made.  In the case of investigation, the investigation fee is $450.00, which covers the transfer of the license certificate.

Return License/Registration Certificate
The original license certificate must be received by OFIR before a new certificate is issued.  The original registration certificate must be returned before the new registration certificate is issued.

Officers and Directors
A list of officials will be included with the instructions to transfer, stating all officers, directors, and other persons serving in official capacities, for the company, who will serve after the ownership has changed.  This information is stated in page 11 (Schedule C) MU1 Form.

TRANSFER CHECKLIST
Submit applicable documents and information:

A licensee…

• A written request to transfer the license/registration certificate.  This request must be made by the current ownership on record with the state of Michigan; detail the proposed changes in the outstanding voting shares of the licensee or registrant.  Provide a complete description of the hierarchy of companies along with the transfer request.  Schedule C (page 11, MU1 Form) may be used for this purpose, along with necessary attachments.
• Page 4 of the MU 1 Form, completing the name of licensee, check the amendment designation, and complete the Execution.

• Schedule C of the MU 1 Form which is used to amend the direct owners, indirect owners, executive officers, company officers, and official company managers of a licensee.

A registrant…

• A 1st mortgage registrant completes new MU1 and MU2 Forms, FIS 1140, FIS 2053 and application fees, since a 1st mortgage registration is not transferable.

Second mortgage licensee or registrant…

• Transfer documents will be supplied for 2nd mortgage registrants, since a 2nd mortgage registration is transferable.

All transferees…

• Return the license and/or registration certificate that contains the commissioner’s signature, and the gold seal or watermark.
• Pay a $450.00 investigation fee when there are new owners of first or second mortgage licensee.  Pay a $50.00 transfer fee for each certificate when there are no new owners for a first or second mortgage licensee.  Pay a $50.00 second mortgage registration transfer fee. New first mortgage registration applicants supply full fees.
• Authority to change ownership is included in the certification at the bottom of page 4, MU1 Form.  This Execution is signed by the existing corporate board of directors, company members, or partnership members.
• Submit the MU2 Form biographical statement & consent form for each proposed new owner(s) of a licensee.  If there are more than 20 owners, only persons who will own more than 20% of the company must submit this form.
• Provide a list of the company’s current officers, directors, and other executive or official positions, plus information about whether these positions will change after the transfer. This information is supplied in Schedule C.
• Publicly held companies must provide information that will assist in the investigation, such as, a statement describing the nature of the business, financial information such as an audited financial statement, and a 10-K or an annual report, plus a listing of persons holding 20% or more total ownership.

Send the transfer request and documentation to:

OFIR - Consumer Finance Unit
P. O. Box 30220
Lansing, MI 48909

Or for overnight delivery:

OFIR - Consumer Finance Unit
611 W. Ottawa Street, 3rd Floor
Lansing, MI 48933

Questions pertaining to the completion of a transfer request may be directed to the Consumer Finance Unit at (877) 999-6442.