In order for a mortgage business to obtain a license in Arizona, it must first retain a “Responsible Individual.”  The Responsible Individual or RI must be an Arizona resident and have certain experience in the mortgage industry and an appropriate background.

The phrase “Responsible Individual” comes from an Arizona law.  The Responsible Individual must be a person and not an entity such as a corporation or limited liability company.

The Responsible Individual must be vetted and approval by the Arizona state agency which issues mortgage licenses, the Arizona Department of Financial Institutions or AZDFI.  The proposed RI must be designated in the initial licensing application submitted to the AZDFI.

By law, the Responsible Individual must advise the mortgage company as to the Arizona statutes and regulations which are applicable to its operations.  The law requires that the Responsible Individual must be knowledgeable about these Arizona laws and rules as well as the Truth in Lending laws, Regulation Z, the Real Estate Settlement Procedures Act or RESPA and Regulation X and therefore also the TRID/Know Before You Owe Rule.  It is important to make sure the Responsible Individual you are considering hiring is knowledgeable about these laws.  Otherwise, the AZDFI can impose penalties upon the mortgage company.

The Responsible Individual must handle examinations for the mortgage company.  The Responsible Individual must be the mortgage company’s representative and liaison with the AZDFI during the examination process.  The mortgage company must transmit the documents and information to the Responsible Individual and then the Responsible Individual transmits the documents and information to the examiner.  Therefore, the Responsible Individual must be trustworthy and the mortgage company must be willing to provide this person confidential information including payroll records, financial statements, tax returns, bank records, the general ledger, personnel files and loan files.

The mortgage company must continue to employ a Responsible Individual during the entire period of time it maintains the Arizona mortgage license.  The mortgage company must notify the AZDFI within 10 days of learning that it will no longer have an RI and must designate a qualified replacment within 90 days or its mortgage license will expire.