Licensing Exemptions

The following are not required to be licensed as a mortgage broker or mortgage lender: (1) Bona fide nonprofit affordable homeownership organizations determined by the Commissioner to be exempt from licensure pursuant to G. L. c. 255E, § 2; (2) Instrumentalities created by the United States or any state; (3) Mortgage lenders making fewer than five mortgage loans within any period of twelve consecutive months shall not be required to obtain a mortgage lender license; provided, however, that in computing the number of mortgage loans, there shall be counted in the loans of more than one partnership, association, trust or corporation, the majority interest of which are owned or controlled directly or indirectly by the same person or persons, partnerships, associations, trusts or corporations and including in the loans of a partnership or company not incorporated the loans of the several members thereof. (4) Persons who act as a mortgage broker fewer than five times within any period of twelve consecutive months shall not be required to obtain a mortgage broker license; (5) Banks as defined in G. L. c. 167, § 1, national banking associations, federally chartered credit unions, federal savings banks, or any subsidiary or affiliate of the above; (6) Insurance companies; (7) Banks, trust companies, savings banks and credit unions organized under the laws of any other state; provided, however, that such provisions shall apply to any subsidiary or affiliate, as described in 209 CMR 42.07; (8) any nonprofit, public or independent post-secondary educational institution within the Commonwealth authorized by law to grant degrees by the Commonwealth, or by any agency or instrumentality thereof, for mortgage loans made by any such educational institution to its faculty or staff; (9) any charitable organization originally created by a last will and testament before January first, nineteen hundred and fifty which makes no more than twelve mortgage loans during a twelve month period; (10) a real estate broker or real estate salesman as defined in G.L. c. 112, § 87PP who, in connection with services performed in a prospective real estate transaction, provides mortgage information or assistance to a buyer if such real estate broker or real estate salesman is not compensated for the same in addition to the compensation received from the seller for such real estate services; and (11) Persons whose activities are exclusively limited to collecting and transmitting one or more of the following types of information regarding a prospective mortgage loan borrower to a third party: (a) Contact information; (b) Property street address; (c) Type of property; (d) Property use; (e) Property zip code; (f) Estimated credit score; (g) Foreclosure and/or bankruptcy history; (h) Veteran or military status; (i) Estimated existing home value; (j) Existing home mortgage loan payoff amount; (k) Estimated cash out from refinance; or (l) Status as current FHA loan borrower. Notwithstanding the foregoing, a person who collects and transmits any information regarding a prospective mortgage loan borrower to a third party and who receives compensation or gain, or expects to receive compensation or gain, that is contingent upon whether the prospective mortgage loan borrower in fact obtains a mortgage loan from the third party or any subsequent transferee of such information, is required to be licensed as a mortgage broker. 42.03 Application Procedure – Mortgage Lenders (1) Application. Each Applicant for a license as a mortgage lender shall submit an application for licensure through the NMLS, containing such information as the Commissioner may from time to time require. (2) License Requirements. An Applicant shall be required to submit detailed information supporting the following general requirements: (a) Financial responsibility. An Applicant shall demonstrate financial responsibility and shall maintain: 1. a net worth of not less than $ 200,000; 2. a bond in such form and with such sureties as may be approved by the Commissioner 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 Commissioner shall automatically suspend the license on the date the cancellation takes effect, unless the surety bond has been replaced or renewed; and (b) Financial statements. An Applicant shall submit financial statements prepared in accordance with generally accepted accounting principles meeting the following minimum requirements: 1. Contents. The financial statements required by this subparagraph shall include, but are not limited to, a Balance Sheet, Income Statement, Statement of Cash Flows, and Statement of Changes in Stockholders’ Equity and all relevant notes thereto. If an Applicant’s audited or reviewed financial statements are consolidated, the Applicant shall include supplemental statements for each of the consolidated entities. 2. Initial Application. An Applicant under this subpart shall submit audited financial statements for the preceding fiscal year and such other financial information as the Commissioner may require. 3. Renewal Applications. Within 90 days of the close of its fiscal year, an Applicant for license renewal shall submit financial statements for the preceding fiscal year that have been audited by an independent certified public accountant and such other financial information as the Commissioner may require. 4. Audit Scope. All financial statements shall be audited in accordance with generally accepted auditing standards. (c) Character and Fitness. An Applicant shall submit information demonstrating that the Applicant possesses the character, reputation, integrity and fitness to engage in the business of a mortgage lender in an honest, fair, sound and efficient manner. (d) Business Experience. An 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. (e) Other information. An Applicant shall submit such other information as the Commissioner may deem necessary to properly evaluate an application. In evaluating an application and requesting information from an Applicant, the Commissioner may be guided by or rely upon the standards set forth in the CSBS/American Association of Residential Mortgage Regulators NMLS Policy Guidebook, as published by the SRR.