6-991.09. Mortgage recovery fund; liability limits

341 words·~2 min read·/az/title-6/6-991-09

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

A. The deputy director shall establish and maintain a mortgage recovery fund consisting of the monies received by the deputy director pursuant to this article for the benefit of any person aggrieved by any act, representation, transaction or conduct of a licensed loan originator that violates this title or the rules adopted pursuant to this title.

B. On notice from the deputy director, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.

C. Notwithstanding any other law, the deputy director may spend interest monies from the fund that are necessary to increase public awareness of the fund, but that do not exceed $50,000 in any fiscal year.

D. The fund shall only pay for a loss that is an actual and direct out-of-pocket loss to an aggrieved person directly arising out of a mortgage transaction, including reasonable attorney fees and court costs.

E. The mortgage recovery fund's liability shall not exceed:

1. $200,000 for each transaction, regardless of the number of persons aggrieved or the number of licensees or parcels of real estate involved.

2. $500,000 for each licensee.

F. The liability of the fund for the acts of a licensed loan originator is terminated on the issuance of orders authorizing payments from the fund in an aggregate amount as prescribed by subsection E of this section.

G. The fund is liable to pay only against the license of a natural person, not on that of a corporation, a partnership or any other fictitious entity.

H. The fund is liable to pay only for damages arising out of a transaction in which the defendant licensee performed acts for which a loan originator license was required or when the defendant licensee engaged in fraud or misrepresentation and the aggrieved person was harmed due to reliance on the defendant's licensed status.

I. The fund shall not pay any claim until the penal sums of the bonds required under section 6-903 or 6-943 have been exhausted.