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WBK Industry News - State Regulatory Developments

Massachusetts Amends its Mortgage Loan Originator, Broker and Lender Regulations

The Massachusetts Division of Banks (DOB) recently amended its regulations governing mortgage loan originators, mortgage brokers and mortgage lenders. The changes made to these regulations went into effect on August 26, 2016.

Some of the changes made to mortgage loan originator regulations include the following:

  • Makes minor clarifications to references made to the Nationwide Multi-State Licensing System & Registry (NMLS).
  • Allows the surety bond of the employing entity to be used to satisfy the applicant LO’s surety bond requirement.
  • Makes it a prohibited act or practice for a LO to fail to maintain accurate and up-to-date information in his or her NMLS license record.
  • Allows for notification regarding termination of employment to be made directly to the DOB if it cannot be communicated through NMLS.

Some of the changes made to mortgage broker and mortgage lender regulations include the following:

  • Clarifies the requirements regarding licensee’s financial statements. Specifically, if an applicant’s audited or reviewed financial statements are consolidated, the applicant must include a separate breakdown of all consolidated entities. In addition, consolidated financial statements must include a separate, stand-alone breakdown of the applicant with a separate balance sheet, income statement, and statement of cash flows.
  • Provides clarification regarding trust/escrow account requirements for client funds and specifies how a licensee may take corrective action if it does not have the proper trust account.
  • Prohibits brokers and lenders from making or brokering higher-priced mortgage loans if those loans violate any of the referenced sections of 209 CMR 32.00.
  • Eliminates the Loan Origination and Compensation Agreement as a requirement for mortgage brokers accepting loan applications.

The full text of the revised mortgage loan originator regulations can be found at: http://www.mass.gov/ocabr/docs/dob/209cmr41-00-redlined-amend-08262016.pdf 

The full text of the revised mortgage broker and mortgage lender regulations can be found at: http://www.mass.gov/ocabr/docs/dob/209cmr42-00-redlined-amend-08262016.pdf.