(1) For purposes of this rule:

(a) "Loan officer employed by the licensee" means every individual operating under the authority of the licensee's license, regardless of whether the individual is an employee of the licensee or purports to act as an agent or independent contractor for the licensee.

(b) "Supervisor" means a partner, officer, branch manager, or other experienced person with management or supervisory responsibilities who is an employee of the licensee.

(2) Each principal office and branch office shall be supervised by the licensee to ensure compliance with the Montana Residential Mortgage Lender Licensing Act. The licensee must diligently supervise and control every loan officer of the licensee who is or should be licensed in Montana.

(3) To diligently supervise and control a loan officer employed by the licensee, the licensee shall:

(a) establish, maintain, and enforce written procedures to supervise the activities of loan officers employed by the licensee and other associated persons that are subject to its supervision and to supervise the operation of each office of the licensee transacting loans with Montana consumers. The procedures shall be reasonably designed to achieve compliance with applicable Montana and federal lending laws and rules, including the Montana Residential Mortgage Lender Licensing Act;

(b) review the activities of each office transacting loans with Montana consumers, which shall include the examination of open and closed customer loan files. The reviews shall be reasonably designed to assist in detecting violations of, preventing violations of, and achieving compliance with applicable mortgage lending laws and rules, as well as detecting and preventing irregularities or abuses. Each mortgage lender shall retain a record of the dates and findings of each review. The duties of this rule may be delegated to a qualified supervisor;

(c) provide a copy of the procedures required by this rule to every loan officer employed by the licensee in printed or electronic format;

(d) ensure that loan officers obtain training to address deficiencies identified by the licensee in loan file and operations reviews; and

(e) establish procedures for handling consumer complaints and develop procedures to identify the types of consumer complaints that must be forwarded to a supervisor for review. Complaints that must be forwarded to a supervisor include complaints about material changes in loan terms, fees, or expenses, or material omissions about loan terms, fees, or expenses. The licensee shall also develop procedures for investigating, responding to, and keeping a record of complaints forwarded to a supervisor.

(4) In establishing the procedures in (2) and in determining the frequency of office reviews, the licensee shall consider the following:

(a) the number of loan transactions made by the licensee;

(b) the number of office locations transacting loans with Montana consumers;

(c) the number of affiliated persons assigned to each location;

(d) the nature and complexity of the loan transactions that the licensee predominantly makes;

(e) the number of loan officers assigned to a location;

(f) the number of loan officers assigned to the supervision of an individual supervisor; and

(g) the results of previous office reviews.

(5) In establishing the procedures in (2) and in determining the number of files from each loan officer to be reviewed, the licensee shall consider the following:

(a) the knowledge and years of lending experience of a loan officer;

(b) the disciplinary history of and the number of complaints received about a loan officer;

(c) the experience and level of sophistication of the borrowers of a loan officer, if specific segments of society are targeted as customers by the loan officer or licensee;

(d) the nature and complexity of the loan transactions that the licensee predominantly makes; and

(e) the results of previous file reviews for a particular loan officer.

(6) The licensee is subject to disciplinary action for any violation of the Montana Residential Mortgage Lender Licensing Act or corresponding rules committed by a loan officer employed by the licensee, whether or not that accountability is documented in any written agreement.