What are the mortgage lender and mortgage broker license fee(s)?
Annual license fees are $1,100.00 for mortgage lenders and $600.00 for mortgage brokers. These license fees include the $100.00 lead paint surcharge which is due at licensure in accordance with Chapter 482, §22, of the Acts of 1993. The annual license fee for each additional branch license is $50.00 for each license type. The lead paint surcharge does not apply to branch licenses.
What are the experience requirements?
To obtain a license to conduct business as a mortgage broker or mortgage lender in the Commonwealth of Massachusetts, an applicant must satisfy the requirements of 209 CMR 42.06(2) or 209 CMR 42.03(2), as applicable. Both these sections contain a Business Experience requirement whereby "[a]n applicant shall demonstrate to the Commissioner's satisfaction that the Applicant, and its applicable officers and employees, possess the necessary educational and business experience to engage in the business of a mortgage lender [, or mortgage broker]." The DOB's Regulatory Bulletin 5.1-102 sets forth the Business Experience requirement in greater detail.
What are the net worth requirements for mortgage lenders and mortgage brokers? Are audited statements required?
Mortgage Lenders: The DOB's regulation 209 CMR 42.03(2)(a) requires mortgage lenders to maintain a net worth of not less than $200,000. The DOB's regulation 209 CMR 42.03(2)(b) requires mortgage lender applicants to submit entity only financial statements, at the time of initial application and on an annual basis, which have been audited in accordance with generally accepted accounting principals (GAAP) by an independent certified public accountant (CPA), prior to approval.
Mortgage Brokers: The DOB's regulation 209 CMR 42.06(2)(a) requires mortgage brokers to maintain a net worth of not less than $25,000. The DOB's regulation 209 CMR 42.06(2)(b) requires mortgage broker applicants to submit entity only financial statements, at the time of initial application and on an annual basis, which have been audited or reviewed by an independent certified public accountant (CPA). Audited or reviewed financial statements prepared by an independent Certified Public Accountant (CPA) in accordance with: (a) Generally Accepted Accounting Principles, and (b) in accordance with either Generally Accepted Auditing Standards (GAAS), or with the Statement on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants (AICPA), prior to approval.
Are mortgage brokers and mortgage lenders required to maintain surety bonds in Massachusetts?
Mortgage Lenders: The DOB's regulation 209 CMR 42.03(2)(a) requires mortgage lenders to maintain a bond in a sum to be based on the amount of the Applicant's aggregate mortgage loans, as determined by the Commissioner, but in no event shall the sum of the bond be less than $100,000, up to a maximum of $500,000; provided that the sum of such bond may be increased by the Commissioner at any time to such amount up to the $500,000 maximum, as shall be shown to be necessary. The surety bond must contain a clause that the insurance company will notify the Commissioner at least 30 days prior to canceling the surety bond for any reason. The bond is required to be filed with the Treasurer and Receiver-General of the Commonwealth of Massachusetts. New mortgage lender license applicants are required to establish and maintain a bond of $100,000 at the time of initial application.
Mortgage Brokers: The DOB's regulation 209 CMR 42.06(2)(a) requires mortgage brokers to maintain a bond of $75,000 in such form and with such sureties as may be approved by the Commissioner. The surety bond must contain a clause that the insurance company will notify the Commissioner at least 30 days prior to canceling the surety bond for any reason. The bond is required to be filed with the Treasurer and Receiver-General of the Commonwealth of Massachusetts.
Is an office in Massachusetts required?
Massachusetts is not a brick and mortar state. Mortgage lender and mortgage broker licensees are not required to have an office location in Massachusetts.
Are registered agents required?
Pursuant to the DOB's regulation 209 CMR 42.09(2), a licensee that does not operate an office in Massachusetts is required to designate a registered agent or attorney located in Massachusetts on whom lawful process may be served. Licensees who maintain an office in Massachusetts are not required to designate a registered agent.
Are fingerprint cards required to apply for a license?
The DOB does not require fingerprint cards, however criminal background investigations are run during the license application process. The DOB has been authorized to access Criminal Offender Record Information.
May a licensee use multiple trade names?
It has been the DOB's consistent position that a company may operate in Massachusetts using a corporate name or a fictitious name (d/b/a). However, it may not operate alternately using only its corporate name and its registered fictitious name. Licensees are also prohibited from using multiple d/b/a's. The use of multiple names for one legal entity tends to be misleading to consumers. For example, ABC Company intends to file using the d/b/a XYZ Mortgage in Massachusetts. If ABC intends to conduct all of its business in Massachusetts using that d/b/a, this is acceptable. In this case, the license application should be filed for ABC Mortgage, Inc. d/b/a XYZ Mortgage. Upon approval, that name would appear on all the certificates for branches licensed to conduct business in the Commonwealth. Since the d/b/a would be used for all Massachusetts business, it would not be misleading to Massachusetts consumers.
Are there any licensing exemptions in Massachusetts? May I make or originate a loan in Massachusetts without being licensed?
Licensure is not required for a mortgage lender or mortgage broker making and/or originating fewer than five mortgage loans in any period of twelve consecutive months. Please see Massachusetts General Laws chapter 255E, Section 2 and prior published opinions issued by the DOB for further details and additional exemptions. Notwithstanding the exemption from the Massachusetts license requirement, exempt entities may still be subject to other provisions of law governing the mortgage industry in Massachusetts, including limitations on permissible loan terms and other consumer protection statutes and regulations.
Are credit union service organizations (CUSOs) exempt from licensure in Massachusetts?
No. Since federally-chartered and state-chartered credit unions do not have the authority to establish operating subsidiaries, a CUSO is not considered a subsidiary of a credit union. Therefore, a CUSO is not a subsidiary of a credit union under chapter 255E and is not exempt from licensure as a mortgage broker and /or lender. Accordingly, any CUSO that is engaging in residential mortgage broker or lender activity in the Commonwealth must obtain the appropriate license and all mortgage loan originators operating on behalf of the CUSO must be properly licensed as mortgage loan originators. See the DOB's Opinion 11-012 for further details.
What are Massachusetts' requirements for record retention?
Pursuant to the DOB's regulation 209 CMR 42.09(3), a licensee must maintain its books and records for inspection for a minimum of three years. Please refer to Massachusetts General Laws chapter 255E, Section 8, and the DOB's regulations 209 CMR 48.00 and 209 CMR 42.09 for more information. Licensees seeking to maintain books and records outside Massachusetts must obtain approval from the Commissioner of a Record Keeping Plan.
How does a licensee change its record retention location and/or notify the DOB that records will be maintained in any other form than hardcopy?
To change your record retention location, submit an amended Record Keeping Plan to the Division at the address below. To notify the DOB that records will be maintained in any other form than hardcopy, submit an amended Record Keeping Plan and attach a detailed description of how records will be maintained electronically. Licensees that maintain records in Massachusetts in hardcopy are not required to file a Record Keeping Plan with the DOB.
Pursuant to the DOB's regulation 209 CMR 48.06(1), a Licensee's amended Record Keeping Plan shall not be effective until approved by the Commissioner.
Where may I obtain copies of relevant statutes and regulations?
These documents are available electronically on the Division's web site at www.mass.gov/dob by clicking on "Apply for or Amend a License" and following the link(s). Official copies of regulations are available at the State House Bookstore, State House, Room 116, Boston, MA 02133, or call (617) 727-2834.