Permissibility To Offer Incentive Program Of Frequent Flyer Mileage To Borrowers And Mortgage Brokers In Connection With Loans Originated Or Purchased By Lender - Q3 1999

By the Division of Banks

A licensed mortgage lender in the Commonwealth wishes to offer incentives to consumer borrowers and mortgage brokers in connection with loans originated and purchased by the mortgage lender. The Division reviewed Mass Gen. Laws chapter 140D and determined that since frequent flyer miles would not be a cost or a charge to the borrower relative to the mortgage loan, there is no disclosure requirement under said chapter 140D and no prohibition against such incentive program. However, such a program triggers issues relative to mortgage brokers. Mass. Gen. Laws chapter 255E governs the licensing of mortgage lenders and mortgage brokers in the Commonwealth. Said statute defines mortgage broker as any person "who for compensation or gain", or in the expectation of compensation or gain negotiates, places, assists in placement, or finds mortgage loans or residential property for others. The position of the Division is that the payment of frequent flyer miles is compensation and would require the mortgage broker to be licensed by the Division.