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

In July, the Legislature passed an Economic Development Bill that included language to provide an 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.

On September 19, the Massachusetts Division of Banks (DOB) released an Industry Letter, which details who is exempt from the mortgage licensing provisions under the new law.

The letter states that tax-exempt nonprofits for which mortgage activities are exclusively limited to government programs, such as the Home Modification Loan Program, and the use of public funds are considered government instrumentalities. Further, the letter says that Government Instrumentalities are not required to submit an application of exemption.  Finally, the letter states that mortgage loan originators who work for government instrumentalities are not required to be licensed. 

This is the exemption for nonprofits and their employees that existed before the DOB changed its guidance in 2017 Industry Letter.

The legislation also created an exemption for “Bona fide nonprofit affordable homeownership organizations,” which was drafted to include Habitat for Humanity and its affiliates. Organizations who think they meet the requirements for this exemption must file an application for exemption with the DOB.

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. 

For further questions on the MLO exemptions, please contact Kevin Cuff at DOB. His contact information is listed at the bottom of the Industry Letter.