Purchase of Mortgages on the Secondary Market: Licenses Required? |
If you purchase and hold Residential Mortgage Loans, are required to obtain a Mortgage Lender License?
Answer:
GA [and 18 other States] says that you must obtain a Mortgage Lender License.
GA has recently issued Cease and Desist Orders against Companies as a result of actively searching its County Records for Title Holders of Residential Mortgage Owners. GA has required such Companies or Investment Pools to divest ownership in the loans and prohibited application for a Mortgage Lender License for 5 years.
Typical Mortgage Lender License Statutes where the definition of “mortgage lender” or “mortgage loan activities” includes one of the following terms: “purchase, acquire, buy, take assignment or holder/owner”, “right to collect”, “selling or sells”, thereby requiring a Mortgage Lender License for the mortgage pool.
A. Georgia Statute: GA Residential Mortgage Act Article 13, Licensing of Mortgage Lenders and Mortgage Brokers Revised 7-1-2008 (12) "Mortgage lender" means any person who directly or indirectly makes, originates, or purchases mortgage loans or who services mortgage loans. Which has been recently Amended by the GA S.A.F.E. Act revisions effective 7-1-2009: (12) 'Georgia Residential Mortgage Act' means this article., which also includes certain provisions in order to implement the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008. (20) 'Mortgage lender' means any person who directly or indirectly makes, originates, underwrites, or purchases mortgage loans or who services mortgage loans.
Mortgage Lender is very broad to include purchases of mortgage loans. GA is very aggressive about enforcing this license requirement. Pursuant to Georgia law, it is prohibited for any person knowingly to purchase, sell, or transfer a mortgage loan or loan application from or to an entity that is not licensed or exempt from licensing or registration provisions to engage in mortgage broker/lender activities.
B. Illinois Statute: The IL Residential Mortgage License Act of 1987 is amended by changing Sections consistent with the purposes of this Section and for the purpose of complying with the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008. (205 ILCS 635/1-3) (from Ch. 17, par. 2321-3)
Sec. 1-3. Necessity for License; Scope of Act.
(a) No person, partnership, association, corporation or other entity shall engage in the business of brokering, funding, originating, servicing or purchasing of residential mortgage loans without first obtaining a license s) "Purchasing" shall mean the purchase of conventional or government-insured mortgage loans secured by residential real estate situated in Illinois from either the lender or from the secondary market.
Immediate Action Recommended:
Actions:
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