(1) Any institution

which has, as its function, the servicing of mortgage loans

secured by residential real estate, and maintains an office in

the state, may apply in writing to be designated as a qualified and approved servicer for board of housing mortgage loans ("applicant") . All applications shall include the following:

(a) designation of office(s) in the state of Montana for loan servicing;

(b) evidence of current corporate and ownership structure demonstrating more than one year of existence;

(c) a list of the applicant's principal officers, and officers authorized to execute legal contracts, agreements or other documents;

(d) a listing of personnel principally involved with servicing mortgage loans, their office location and their qualifications;

(e) a certificate of errors and omissions insurance coverage and/or fidelity insurance coverage in a minimum amount as is required by the program documents for each bond issue in which the loan servicer participates;

(f) an applicant which is governed by one of the regulatory agencies defined herein, must submit its most recent regulatory agency report which must indicate a positive return on average assets, and (based on generally-accepted accounting principles (GAAP) ) must indicate a total capital as a percentage of average assets of at least 6%, or meet all applicable capital requirements of their regulatory agency and must have and maintain a minimum net worth according to generally-accepted accounting principles (GAAP) of $1 million. An applicant not governed by a regulatory agency defined herein, must submit its most recent audited financial statements and current financial statements which have been prepared within 60 days of submission. Current financial statements shall be comprised of a balance sheet, year-to-date income statement, and a statement of change covering at least a six-month period. Current financial statements must indicate a positive return on average assets based on generally-accepted accounting principles (GAAP) , and current financial statements and must indicate total capital as a percentage of average assets of at least 6% and must have and maintain a minimum net worth according to generally-accepted accounting principles (GAAP) of $1 million.

(g) evidence that applicant is an FHA/VA approved servicer.

(2) A qualified and approved servicing institution restructured by the institution's regulatory agency, or corporate reorganization or ownership restructure shall reapply for designation as an approved and qualified servicer. The restructured institution shall be exempt from the one year corporate ownership requirement set forth in (1) (b) , above, and the requirement for a financial statement covering a six-month period as set forth in (1) (f) , above. The financial statements required shall cover the period from the date restructured through the date of application.

(3) The application will be reviewed by the board's staff, and the institution will be notified in writing of the status of the application.

(4) The approved and qualified servicer for mortgage loans shall continue to meet the following requirements to retain the status of approved and qualified servicer:

(a) maintain an office in the state of Montana for loan servicing;

(b) provide the board with a certificate of errors and omissions insurance coverage in a minimum amount as is required by the program documents for each bond issue in which the loan servicer participates;

(c) each year or as requested by the board, file audited financial statements or equivalent regulatory agency reports. The financial reports shall exhibit total capital as a percentage of average assets of at least 6%. If the institution's capital to average assets ratio is below 6%, the institution must meet the capital requirements of its regulatory agency or demonstrate, with current financial statements, an increasing ratio of capital to average assets.

(5) Any applicant which fails to meet the requirements set forth in this regulation, will not be allowed to submit a new application to qualify as a loan servicer for a minimum period of 180 days from the date of its previous application.