Licensing Requirement For Loan Processing Center - Q4 1999

By the Division of Banks

Massachusetts General Laws chapter 255E governs the licensing requirements in the Commonwealth for mortgage lenders and brokers. Section 2 requires that anyone acting as a mortgage lender or broker must first obtain a license from the Division. Section 1 of said chapter 255E defines a "mortgage broker" 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 for others." A "mortgage lender" is defined in said section 1 as "any person engaged in the business of making mortgage loans, or issuing commitments for mortgage loans." Section 2 of said chapter 255E provides an exemption from licensing for mortgage lenders and mortgage brokers for certain entities, including, " a bank as defined in section one of chapter 167...a federally chartered credit union...or any subsidiary or affiliate of the above..."

Where the functions at a loan center are ministerial in nature ( i.e. Only include: computer entry of application information; review of application information; completion of FNMA 1003 or other abbreviated mortgage application form as directed by the credit union, mortgage broker, or mortgage lender; ordering of consumer credit reports; and transmitting of credit card reports together with the applications to credit unions, mortgage broker, or mortgage lenders), the activities would not rise to the statutory definition of mortgage broker/lender; and, even if the Division determined that the activities are subject to licensure under said section 2, express statutory provisions exempt both state and federally-chartered credit unions from mortgage broker/lender licenses.