As used in this chapter, unless the context or subject matter otherwise requires: 1. "Allowable assets for liquidity" means those assets that may be used to satisfy the liquidity requirements in this chapter, including unrestricted cash and cash equivalents and unencumbered investment-grade assets held for sale or trade, which include mortgage-backed securities, obligations of government-sponsored enterprises, and United States treasury obligations. 2. "Board of directors" means the formal body established by an applicant or licensee that is responsible for corporate governance and compliance with this chapter. 3. "Commissioner" means the commissioner of the department of financial institutions. 4. "Corporate governance" means the structure of the institution and how it is managed, including the corporate rules, policies, processes, and practices used to oversee and manage the institution. 5. "Government-sponsored enterprises" means the federal national mortgage association (fannie mae), the government national mortgage association (ginnie mae), and the federal home loan mortgage corporation (freddie mac). 6. "Interim mortgage servicing" means the activity of collecting a limited number of contractual mortgage payments immediately after origination on loans held for sale but prior to the loans being sold into the secondary market. 7. "Internal audit" means the internal activity of performing independent, objective assurance and consulting to evaluate and improve the effectiveness of company operations, risk management, internal controls, and governance processes. 8. "Large servicer" means a residential mortgage servicer with servicing portfolios of two thousand or more one -to-four unit residential mortgage loans serviced or subserviced for others, excluding whole loans owned, and loans being "interim" serviced prior to sale as of the most recent calendar year end, reported in the nationwide multistate licensing system and registry mortgage call report, and that operates in two or more states, districts, or territories of the United States either currently or as of the prior calendar year end. For entities within a holding company or affiliated group of companies' applicability must be at the large servicer level. This definition excludes servicers solely owning or conducting reverse mortgage servicing, or both, or the reverse mortgage portfolio administered by the large servicer. 9. "Lender" means any person that extends money to a borrower with the expectation of being repaid. 10. "Liquidity risk" means the potential that the servicer will be unable to meet its obligations as they come due because of an inability to liquidate assets or obtain adequate funding or that it cannot easily unwind or offset specific exposures. 11. "Mortgage call report" means the quarterly or annual report of residential real estate loan origination, servicing, and financial information completed by companies licensed in the nationwide multistate licensing system and registry. 12. "Mortgage servicing rights" refers to the contractual right to service residential mortgage loans on behalf of the owner of the associated mortgage in exchange for specified compensation in accordance with the servicing contract. 13. "Mortgage servicing rights investor" means entities that invest in and own mortgage servicing rights and rely on subservicers to administer the loans on their behalf. Mortgage servicing rights investors are often referred to as master servicers. 14. "Nationwide multistate licensing system and registry" means the registry developed by the conference of state bank supervisors and the American association of residential mortgage regulators and owned and operated by the state regulatory registry, LLC, or any successor or affiliated entity, for the licensing and registration of persons in financial services industries. 15. "Operating liquidity" means the funds necessary to perform normal business operations, such as payment of rent, salaries, interest expense, and other typical expenses associated with operating the entity. 16. "Records" means books, accounts, papers, records, and files, no matter in what format they are kept, which are used in conducting business under this chapter. 17. "Residential mortgage loan servicing" means receiving any scheduled periodic payments from a borrower pursuant to the terms of any federally related mortgage loan, including amounts for escrow accounts under section 10 of the Real Estate Settlement Procedures Act [12 U.S.C. 2609], and making the payments to the owner of the loan or other third parties of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the mortgage servicing loan documents or servicing contract. In the case of a home equity conversion mortgage or reverse mortgage as referenced in this section, servicing includes making payments to the borrower. 18. "Reverse mortgage" means a loan collateralized by real estate, typically made to borrowers over fifty -five years of age, which does not require contractual monthly payments and is typically repaid upon the death of the borrower through the sale of the home or refinance by the heirs. 19. "Risk management assessment" means the functional evaluations performed under the risk management program and reports provided to the board of directors under the relevant governance protocol. 20. "Risk management program" means the policies and procedures designed to identify, measure, monitor, and mitigate risk sufficient for the level of sophistication of the residential mortgage loan servicer. 21. "Service or servicing a loan" means: a. Collecting or receiving payments on existing obligations due and owing to the lender or investor, including payments of principal, interest, escrow amounts, and other amounts due; b. Collecting fees due to the servicer; c. Working with the borrower and the licensed lender or servicer to collect data and make decisions necessary to modify certain terms of those obligations either temporarily or permanently; d. Otherwise finalizing collection through the foreclosure process; or e. Servicing a reverse mortgage loan. 22. "Servicer" means the entity performing the routine administration of residential mortgage. 23. "Servicing liquidity or liquidity" means the financial resources necessary to manage liquidity risk arising from servicing functions required in acquiring and financing mortgage servicing rights, hedging costs, including margin calls, associated with the mortgage servicing rights asset and financing facilities, and advances or costs of advance financing for principal, interest, taxes, insurance, and any other servicing- related advances. 24. "Subservicer" means the entity performing the routine administration of residential mortgage loans as agent of a servicer or mortgage servicing rights investor under the terms of a subservicing contract. 25. "Tangible net worth" means total equity less receivables due from related entities, less goodwill, and other intangibles less pledged assets. 26. "Whole loans" means loans where a mortgage and the underlying credit risk is owned and held on the balance sheet of the entity with all ownership rights.
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