By the Division of Banks

Licensing Requirements For Stockbrokers Acting As Referrals To Mortgage Lender

A "mortgage broker" is defined as "any person who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly negotiates, places, assists in placement, finds or offers to negotiate, place, assist in placement or find mortgage loans on residential property of others" according to Mass. Gen. Laws ch. 255E § 2. The Division of Banks considers the activity of making referrals of prospective mortgage loans customers to a lender to be included within this language, specifically, one who, "assist[s] in placement or find[s]" mortgage loans for others. Additionally, the reference to "compensation or gain, or in the expectation of compensation or gain" has been viewed broadly by the Division and without regard to the source of the compensation or gain. Accordingly, the referral of mortgage loan customers by stockbrokers to a mortgage lender subsidiary of the umbrella corporation for the receipt of "internal compensation credit" would be considered made "in the expectation of compensation or gain".