OAR 441-065-0260: Optional Registration Procedures for Securities Involving Real Estate Paper

(1) Creation of Classification. A classification of “mortgage broker offering” is created. (2) Optional Mechanisms for Registration. An applicant for registration of a mortgage broker offering may elect to register the offering under this rule in lieu of following the full registration procedure by: (a) The filing of a generic registration covering a series of offerings; and (b) The filing of a specific offering for a specified security which incorporates by reference documents filed under subsection (a) of this section. (3) Registration Procedure: (a) All registrations shall be filed on forms provided by the Director; (b) The registrant shall file, along with the registration form, two copies of the proposed offering documents; (c) The registration, when granted, will be effective for one year from the date of registration; (d) If any material changes are made or occur concerning the offering, these changes must be filed with the Director, and an amendment of the registration order must be obtained before further sales are made; and (e) The registrant must file with the Director all advertising materials before they are used. (4) Retention of Documents. Documents, including specific offering materials and records, concerning purchasers and investors must be kept by the registrant for whichever of the following periods is longest: (a) Four years from the date of sale; (b) As long as the registrant, or principals of the registrant remain obligated to make payments or deliver documents on loan transactions; or (c) As long as the registrant is obligated to provide servicing in connection with the transaction. (5) Use of Legend. The offering document used in connection with a registered mortgage broker offering shall contain the following legend set out in a prominent place in the document: “This offering has been registered with the Director of the Department of Consumer and Business Services of the State of Oregon as a mortgage broker offering under the provision of OAR 441-065-0260. Registration does not constitute an endorsement or recommendation by the Director. It is not a representation that the Director has passed upon or reviewed the accuracy or values claimed. Any representation to the contrary is a criminal offense.” (6) Limitations on the Use of the Generic Registration Procedure: (a) The following types of securities cannot be offered or sold under a generic registration of securities unless written permission is obtained from the Director based upon a showing that the investors are adequately protected: (A) Construction loans and loans exceeding 90 percent of the property and improvements that are in place. Offerings involving construction loans and loans exceeding 90 percent of the value of the property including existing improvements may not be sold as part of a generic registration. These have to be registered separately. An offering exceeds 90 percent of the value of the property and existing improvements if the principal amount of the note secured by a mortgage or trust deed or land sale contract together with the unpaid principal amount of any encumbrances on the property, plus unpaid interest to date of the transaction, exceeds 90 percent of the reasonable market value of the real property including improvements; (B) Principal Transaction. Offerings involving the broker, its officers, agents, affiliates, and persons controlling the broker or affiliates may not be sold as part of a generic registration unless the registration with the Director includes a full description of these transactions. An offering “involves” the persons listed where the person is the owner, the borrower, or has an interest in the proceeds other than fees, commissions, or mark-ups; (C) Offerings involving documents reserving the right to subordinate the investor’s position. Offerings involving real estate paper which reserve the right to subordinate the position of any investor to any mortgage, trust deed or lien created at or after the sale may not be sold under a generic registration; (D) Offerings to more than ten persons. Offerings involving pooling or participations involving more than ten investors may not be sold under a generic registration. However, where only first liens are involved, the registrant may apply for a modification to allow sales up to 25. (b) A registrant requesting a modification under this section must request it in writing and must provide satisfactory evidence that the interest of the public will be adequately protected.