On June 15, 2017, the Massachusetts Division of Banks (Division) issued an industry letter to clarify when an employee of a nonprofit agency is required to obtain a mortgage loan originator (MLO) license. The Division realized that some nonprofit entities exempt from the mortgage lender and mortgage broker license requirements may not have licensed their employees who were acting as MLOs.

In the July 2008 Opinion 08-018, the Division indicated that an employee of a nonprofit agency exempt from licensure was not required to obtain an individual MLO license. However, amendments were made in July 2009 that altered the regulatory scheme, and thus required that any person that meets the definition of an MLO must be licensed, even if the person is employed by a nonprofit entity that is exempt from licensure as a mortgage lender or mortgage broker.

MLO is defined as "a person who for compensation or gain or in the expectation of compensation or gain: (i) takes a residential mortgage loan application; or (ii) offers or negotiates terms of a residential mortgage loan." The Division considers receiving a salary as "compensation or gain." The industry letter indicates that "if an employee assists a borrower to refinance a mortgage loan, thus originating a new mortgage loan secured by the residential property, a mortgage loan originator license would be required." In contrast, if an employee assists a borrower with a loan modification that does not result in a new mortgage loan, an MLO license would not be required.

The Division recognizes that the July 2009 amendments may have caused some confusion. Therefore, enforcement action will not be taken against any nonexempt individuals engaging in unlicensed MLO activity or any nonprofit employing such unlicensed individuals until after December 31, 2017.

The industry letter can be found here.