By the Division of Banks

Permissibility Of Credit Union To Receive Fees For Referring Members To A Licensed Mortgage Broker

Mass. Gen. laws chapter 255E governs the licensing of mortgage lenders and brokers in the Commonwealth. Section 2 of said chapter contains a licensing exemption for certain financial institutions, including both state- and federally-chartered credit unions. Neither state-chartered nor federally-chartered credit unions, that receive compensation for referring potential mortgage business, would be required to obtain a license as a mortgage broker under M.G.L. c. 255E. The Attorney General's regulations governing mortgage brokers and lenders, can be found at 940 CMR 8.00 et. seq. Regulations 940 CMR 8.01 and 8.02 specifically exclude from the definition of "mortgage broker" any entity exempt from the licensing requirements of M.G.L. c. 255E §2. These regulations define unfair or deceptive acts and practices and should be reviewed. Such a fee arrangement also may be subject to provisions of federal laws and regulations, including, but not limited to, the Real Estate Settlement Procedures Act of 1974 ("RESPA") relative to referral fees.