Nonprofits To Lose Mortgage License Exemption | Must become brokers and lenders to continue providing home loans
Nonprofit agencies from around Worcester say the state Division of Banks has done the right thing by requiring nonprofits that provide home loans to become licensed mortgage lenders or brokers.
The division sent a letter to nonprofit agencies early last month notifying those agencies that the division had done away with an exemption for nonprofits from mortgage broker or lender licensing. The elimination of the exemption is part of the state's Act Protecting and Preserving Home Ownership, which was signed into law in late November.
Now, any nonprofit that acts as a mortgage lender five or more times per year must be licensed as a lender or broker. According to the division, a new mortgage broker's license costs a total of $715. That includes a one-time investigation fee, a $500 license fee and a $100 lead paint surcharge. A new mortgage lender's license costs $1,215 thanks to a license fee of $1,000. The other fees are identical to the broker's license.
Matthew Wally, executive director of Worcester Community Housing Resources, said doing away with the exemption was a fair way to protect potential homebuyers.
WCHR runs a $2 million community loan fund for affordable housing in greater Worcester, and makes loans to help keep homeowners out of foreclosure and to help pay for emergency home improvements.
"We're taking the necessary steps so that we do qualify, and are licensed," Wally said.
A Fair Requirement
Fran Paquette, director of the Home Ownership Center in Worcester, said the center "has a couple of small rehab lending pools," but doesn't lend frequently enough to meet the licensing requirement. Still, "we are going to go through the process and get licenses," he said.
"It's a fair requirement," Paquette said.
Paquette said he can see how the center's rehabilitation loan pools could become more active. Some homeowners' "ratios are maxed, they have no equity. And the roof needs to be replaced, or the heater breaks and it's winter."
"We've been doing loans," Paquette said, "not purchase loans, but it's important to have the license. You can go to a hairdresser, and she has to be licensed by the state, and a (mortgage) broker could give out a $250,000 loan and not be licensed by the state."
David Cotney, the Division of Banks' COO, said taking away the exemption for nonprofits would make all mortgage lenders more accountable.
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