Permissibility Of Mortgage Brokers Providing Disclosures To Borrowers On Behalf Of Mortgage Lenders - Q2 1999

By the Division of Banks

Mortgage brokers may not provide disclosures to borrowers on behalf of mortgage lenders, as set forth in Op. 97-121. Mass. Gen. Laws chapter 184, section 17D and 209 CMR 38.03 provide that a mortgage lender must provide a prospective first mortgage borrower with a copy of a Uniform Mortgage Loan Cost Worksheet and the Uniform Mortgage Information Disclosure Statement at the time of the application, or before application if requested by the borrower. In addition, Mass. Gen. Laws chapter 140D and 209 CMR 32.00 et seq. governing Truth-in-Lending require that creditors provide certain disclosures. Based on a strict construction of the statutes and regulations adopted in part to protect consumers from being confused as to the roles of lenders and brokers, it has been the position of the Division that mortgage lenders are expressly responsible for making such disclosures. The Division determined in Op. 97-121 that mortgage brokers cannot make such required disclosures to first mortgage applicants on behalf of lenders. In Op. 98-094, the Division found that under Mass. Gen. Laws chapter 93, section 62, a lender may delegate the delivery of notification to consumers against whom an adverse action has been taken to a third party, such as a broker, provided that the notice is prepared by the creditor and the broker's role is limited to delivery only. This delegation cannot be extended to mortgage brokers on behalf of mortgage lenders under said chapter 184, section 17D, given the existing statutory construction.