Licensing Requirements For Employees Of Real Estate Association - Q1 1999

By the Division of Banks

A mortgage company, that is a wholly owned subsidiary of a federally chartered thrift institution, seeks guidance relative to a proposed alliance with a realty association wherein employees of the realty association would perform certain functions on behalf of the mortgage company. The employee would pre-qualify the borrower, complete a mini mortgage application, obtain a Residential Mortgage Credit Bureau Report, order an appraisal, and assist in ordering a title. The mortgage company would be responsible for training the employee, completing the mortgage application and any additional disclosures, and processing, underwriting, and funding the loans. The mortgage company would compensate the realty association a specified amount per closed loan.

Mass. Gen. Laws chapter 255E, section 2 provides a lender and broker licensing exemption for certain entities, including a federal savings bank or any subsidiary thereof. Accordingly, the mortgage company is exempt from chapter 255E licensing. It is the opinion of the Division that the employees of the realty association who engage in the proposed activities for the benefit of the mortgage company would be required to obtain a license as a mortgage broker under chapter 255E.