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This opinion was issued during the fourth quarter of 1998.
An entity intends to act as a loan broker with banks and other lending institutions in order to provide loans primarily to homeowners who require financing for home improvement loans. The entity would receive prospective customer information through referrals from home improvement contractors, who have entered into agreements with the entity. The entity would assist the lender in the loan process by inspecting the property to be mortgaged, both before and after the completion of the improvements. A U.C.C. filing typically will serve as the security interest for the loans. The lending institution and/or the contractor would pay the entity for its services.
Mass. Gen. Laws chapter 255E governs the licensing of mortgage brokers and requires that, if the above-described home improvement loans were secured by the borrower's owner-occupied, 1-4 family dwelling, the entity must be licensed as a mortgage broker. If the security is a U.C.C. filing only, then a mortgage broker license is unnecessary. If the amount of the home improvement loans are for $6,000.00 or less, then the entity would require a small loan agency license, under M.G.L. c. 140 §§ 96-114A and 209 CMR 12.00 et seq. Additionally, M.G.L. c. 142A governs home improvement contractors and contracts and 940 CMR 8.00 et seq. set forth provisions for home improvement contractors and mortgage brokers and lenders.