Recently, the Massachusetts Office of Consumer Affairs and Business Regulation, Division of Banks announced final amendments effective May 27 to certain provisions of Regulation 209 CMR 42.00, which establishes procedures and requirements for the licensing and supervision of mortgage lenders under M.G.L. c. 255E. (See also redlined version of the final amendments here.) Specifically, the amendments:
- Add and amend certain definitions. The amendments add new terms such as “Bona Fide Nonprofit Affordable Homeownership Organization” and “Instrumentality Created by the United States or Any State,” and amend “Mortgage Broker” to also include a “person who collects and transmits information regarding a prospective mortgage loan borrower to a third party” that conducts any one or more of the following activities: (i) collects a prospective borrower’s Social Security number; (ii) views a prospective borrower’s credit report; (iii) obtains a prospective borrower’s authorization to access or view the borrower’s credit report or credit score; (iv) accepts an application; or (v) issues a prequalification letter.
- Add licensing exemptions. The amendments provide a list of persons that are not required to be licensed in the state as a mortgage broker or mortgage lender. These include: (i) lenders making less than five mortgage loans and persons acting as mortgage brokers fewer than five times within a 12 consecutive-month period; (ii) banks, national banking associations, federally chartered credit unions, federal savings banks, or any subsidiary or affiliate of the above; (iii) banks, trust companies, savings banks, and credit unions “organized under the laws of any other state; provided, however, that such provisions shall apply to any subsidiary or affiliate, as described in 209 CMR 42.0”; (iv) nonprofit, public, or independent post-secondary institutions; (v) charitable organizations; (vi) certain real estate brokers or salesmen; and (vii) persons whose activities are “exclusively limited to collecting and transmitting” certain quantities of specified information regarding a prospective borrower to a third party.
The amendments also specifically provide that “a person who collects and transmits any information regarding a prospective mortgage loan borrower to a third party and who receives compensation or gain, or expects to receive compensation or gain, that is contingent upon whether the prospective mortgage loan borrower in fact obtains a mortgage loan from the third party or any subsequent transferee of such information, is required to be licensed as a mortgage broker.”
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