Division of Banks Issues Letter Clarifying Mortgage Loan Originator Licensing Exemptions”

As previously reported in The Notebook, MACDC was successful in its advocacy to include in the final version of the State’s Economic Development legislation the nonprofit exemption from the Mortgage Loan Originators (MLO) licensing requirements. It exempts nonprofits who lend exclusively public money from having to get their employees licensed as MLO.

We have been in contact with the MA Division of Banks about communicating the effect of the new law.  Please see Industry Letter dated September 19, 2018, (which spells out, under the new law, who is exempt from the mortgage licensing provisions). The most relevant provision is titled “Government Instrumentality License Exemption.”  It states that tax-exempt nonprofits for which mortgage activities are exclusively limited to government programs and the use of public funds are considered government instrumentalities.  It goes on to say that Government Instrumentalities are not required to submit an application of exemption.  Finally, it states that mortgage loan originators who work for government instrumentalities are not required to be licensed.

The application for exemption for “Bona fide nonprofit affordable homeownership organizations” was drafted to pertain to Habitat and its affiliates.  It could apply to other organizations as well, but the requirements are very specific.  If you do not qualify for the “public instrumentality” exemption but think you might be able to apply for exemption as a “bona fide nonprofit affordable homeownership organization”, please review the application to see if your lending programs meet the criteria.

If you do not meet the definition of a public instrumentality (for example, if you engage in mortgage lending with private funds) and do not meet the criteria for being a bona fide nonprofit affordable homeownership organizations, then your organization and your employees are required to be licensed.  This is exactly the situation that existed before DOB’s 2017 Industry Letter.

If you have further questions, you should contact Kevin Cuff at DOB.  His contact information is listed at the bottom of the Industry Letter.