32-9-201. Definitions. As used in this part, unless the context clearly indicates otherwise, the following definitions apply:

(1) "Allowable assets for liquidity" means those assets that may be used to satisfy the liquidity requirements in this part, including unrestricted cash and cash equivalents and unencumbered investment grade assets held for sale or trade.

(2) "Corporate governance" means the structure of an institution and how it is managed, including the corporate rules, policies, processes, and practices used to oversee and manage the institution.

(3) "Covered institution" means a nonbank servicer:

(a) with servicing portfolios of 2,000 or more 1- to 4-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 NMLS mortgage call report; and

(b) that operates in two or more states, districts, or territories of the United States either currently or as of the prior calendar year end.

(4) "Department" means the department of administration provided for in 2-15-1001, acting through its division of banking and financial institutions.

(5) "External audit" means the formal report prepared by an independent certified public accountant expressing an opinion on whether the financial statements are presented fairly in all material aspects in accordance with the applicable financial reporting framework, and is inclusive of an evaluation of the adequacy of a company's internal control structure.

(6) "GSE" means government-sponsored enterprises, the federal national mortgage association, or the federal home loan mortgage corporation.

(7) "Interim serviced prior to sale" 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.

(8) "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.

(9) "Licensee" has the same meaning as provided in 32-9-103.

(10) "Mortgage" has the same meaning as provided in 32-9-103.

(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 NMLS.

(12) "Mortgage servicing rights" means 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.

(14) "Mortgage-backed security" means financial instruments, often debt securities, collateralized by residential mortgages.

(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) "Residential mortgage loan" means a loan primarily for personal, family, or household use secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or on residential real estate located in Montana.

(17) "Residential mortgage loans serviced" means the specific portfolio or portfolios of residential mortgage loans for which a licensee is contractually responsible to the owner or owners of the mortgage loans for the defined servicing activities.

(18) "Reverse mortgage" means a loan collateralized by real estate, typically made to borrowers over 55 years of age, that 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" means the policies and procedures designed to identify, measure, monitor, and mitigate risk sufficient for the level of sophistication of the servicer.

(20) "Servicer" means the entity performing the routine administration of residential mortgage loans on behalf of the owner or owners of the related mortgages under the terms of a servicing contract.

(21) "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.

(22) "Subservicer" means the entity performing the routine administration of residential mortgage loans as agent of a servicer or under the terms of a subservicing contract.

(23) "Subservicing for others" means the contractual activities performed by subservicers on behalf of a servicer or mortgage servicing rights investor.

(24) "Unencumbered investment grade assets held for sale or trade" means agency mortgage-backed securities, obligations of GSEs, and U.S. treasury obligations.

(25) "Whole loans" mean those loans for which a mortgage and the underlying credit risk is owned and held on balance sheet of the entity with all ownership rights.