By the Division of Banks

Licensing Requirements For Referring Debtors to Mortgage Companies

Under Mass. Gen. Laws chapter 255E, § 2 any person who, "for compensation or gain", finds, places, or assists in the placement of individual mortgage loans for others must be licensed as a mortgage broker in the Commonwealth. If a collection agency provides a list of mortgage lenders to debtors for the purpose of refinancing debts, but does not receive any type of fee or gratuity from the arrangement, the entity does not meet the definition of mortgage broker and no license is required. If at any time the mortgage lenders pay a referral or finder's fee to the collection agency, or if the collection agency is the recipient of any type of compensation or gain from this arrangement, a mortgage broker license will be required under the statute. The same requirements would apply to any employee of the collection agency who receives such compensation or gain for providing the list of mortgage lenders.