Table of Contents. HUD / FHA Branch Requirements

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1 Table of Contents Section Page(s) HUD/Federal Requirements 2-5 Alabama 6 California 7 Colorado 8 Connecticut 9 Delaware 10 District of Columbia 11 Florida 12 Georgia Hawaii 15 Illinois Louisiana 18 Maryland Massachusetts 21 Michigan 22 Minnesota 23 Missouri 24 Nevada New Jersey New Mexico 31 New York North Carolina Ohio Oregon 38 Pennsylvania 39 South Carolina Tennessee 42 Texas Utah 45 Virginia 46 Washington REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 1

2 FHA/HUD Office requirements HUD / FHA Branch Requirements G. Full Time, Part Time and Outside Employment. A mortgagee may employ staff full time or part time (less than the normal 40 hour work week). They may have other employment including self employment. However, such outside employment may not be in mortgage lending, real estate, or a related field. Direct endorsement underwriters are included in this provision. An underwriter may not work on a part time basis for any other mortgagee, even underwriting conventional mortgage loans. An underwriter may not underwrite loans for a parent or subsidiary of the underwriters approved employer. A direct endorsement underwriters authority is through the employer and does not extend under any corporate umbrella Office Facilities. The mortgagee may conduct its loan origination and/or servicing activities from any approved and adequately staffed office. A mortgagee is fully responsible for the actions of its offices. Mortgagees that lease space from a real estate agent must assure compliance with RESPA requirements. A. Home office. Each applicant must identify which location they consider their main or home office for FHA mortgage activities. It doesn t have to be the entity s corporate office. A mortgagees home office facility must: 1. Have adequate office space and equipment; 2. Be in a location conducive to mortgage lending; 3. Be located in a commercial space that is separate and apart from any other entity. A mortgagee may share general reception-type entrances or lobbies with another business; 4. Be clearly identified to the public so that loan applicants and mortgagors will know, at all times, exactly with whom they are doing business. This includes a permanently affixed business sign and other common means of identification used by a business entity; 5. Display a fair housing poster; B. Traditional branch office. A traditional branch office is a separately located unit of the mortgagee in commercial space. A traditional branch office must: 1. Have adequate office space and equipment; 2. Be in a location conducive to mortgage lending; 3. Be separated from any other entity by walls or partitions. (Entrances and reception areas may be shared.); 4. Be identified to the public; 5. Display a fair housing poster; 6. Provide privacy for conducting interviews; and C. Nontraditional branch office. A nontraditional branch office is required to meet branch office staffing requirements and the following requirements concerning office facilities: REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 2

3 1. It may be located in non-commercial space, but it must have adequate office space and equipment and must conform to the local government use requirements. 2. It must display a fair housing poster if the public is ever received. A. Home office. The mortgagee must have a home office staff of at least two full time employees. A shared receptionist, while permitted, may not be used to meet this requirement. B. Branch office. A mortgagee must have at least one full time employee at each branch office. A manager must be assigned to each traditional and nontraditional branch office. A separate manager must be located at each direct lending branch. C. Branch Managers, Loan Officers and Underwriters. Loan officers (also known as loan originators) of FHA-insured mortgages must be employees of the mortgagee. Underwriters of FHA-insured mortgages must be employees of the mortgagee; its authorized agent; or, if the mortgagee is a loan correspondent, its sponsors. Managers, loan originators and underwriters may not be independent contractors or contract employees. D. Centralized Centers. Processing and/or underwriting functions may be centralized in any office(s) of the mortgagee or performed at each office of the mortgagee. E. Certain Employment Agreements. A FHA approved mortgagee must pay all of its operating expenses including the compensation of all employees of its main and branch offices. Other operating expenses that must be paid by the FHA approved mortgagee include, but are not limited to, equipment, furniture, office rent, utilities and other similar expenses incurred in operating a mortgage lending business. A branch compensation plan that includes the payment of operating expenses by the branch manager, any other employee or by a third party is a prohibited arrangement. The following includes some, but not all, examples of unacceptable provisions in employment agreements: * Require all contractual relationships with vendors such as leases, telephones, utilities, and advertising to be in the name of the employee (branch) and not in the name of the FHA approved mortgagee; * Require the employee (branch) to indemnify the FHA approved mortgagee if it incurs damages from any apparent, express, or implied agency representation by or through the employees (branches ) actions; and * Require the employee (branch) to issue a personal check to cover operating expenses if funds are not available from an operating account. F. Fair housing posters. A mortgagee must post and maintain a fair housing poster at each place of business that participates in activities covered by Section 805 of the Fair Housing Act (i.e. making or purchasing of loans or providing other financial assistance: a) for purchasing, constructing, improving, repairing, or maintaining a dwelling; or b) á secured by residential real estate). Fair housing posters must be prominently displayed so as to be readily apparent to all persons seeking residential real estate related transactions or brokerage services. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 3

4 C. Branch Office Operations. 1. Compliance Requirement. A mortgagee may maintain one or more branch offices for the submission of applications for mortgage insurance. A traditional branch office is a separately located unit of the mortgagee in an office in which no business except that of the mortgagee is conducted. It may be located in the mortgagee s home office. In addition, a mortgagee may register a branch office that does not meet the requirements of a traditional branch office (nontraditional branch office). The mortgagee may determine the location and type of its branch office facilities. The nontraditional branch office facility may be located in either commercial or noncommercial space. Each branch office must be registered by HUD. A loan correspondent is also permitted to establish branch offices in accordance with 24 CFR 202.5(k) (HUD Handbook , paragraph 2-11 B and C). *An approved mortgagee is prohibited from engaging an existing, separate mortgage company or broker to function as a branch of the approved mortgagee and allowing that separate entity to originate insured mortgages under the approved mortgagee s FHA mortgagee number. This constitutes a prohibited branch arrangement2. Separate entities may not operate as branches or DBAs of a FHA approved mortgagee (HUD Handbook , paragraph 2-14 A). The direct lending branch office must meet the office facilities and staff requirements of a traditional branch office except that it must have a separate manager and can be collocated with a lender s home office or one of its traditional branches (HUD Handbook , paragraph 2-11 D). * 2. Suggested Audit Procedures. a. Determine whether all branches are registered with HUD by reviewing the appropriate form or screen printout. b. Through inquiry and/or physical observation, determine whether the branch is a true branch and is not a subsidiary, independent contractor, agent of the auditee, or separate entity. A mortgagee with a separate tax ID number is required to have approval as a mortgagee in its own right. A branch must have at least one employee *(a W-2 employee)* including, a branch manager. The branch manager can manage more than one branch except if the branch is a direct lending branch, which must have a separate manager. The branch office must have its own telephone and maintain its own accounting records. c. Review auditee s payroll records for indications of any branch office personnel, except the receptionist, who are not employed exclusively by the auditee at any given time. Inquire of personnel to determine whether branch employees conduct only the business affairs of that entity during normal business hours. d. Determine whether the branch office (1) is located in space which is separated by a partition from any other entity, (2) is clearly identified to the public, (3) operating costs are paid by the approved mortgagee or loan correspondent, (4) display the fair housing poster, (5) provides privacy for conducting interviews and (6) has adequate space and equipment. e. Review company records for evidence that the present branch office manager is a corporate officer or an employee authorized to bind the corporation in matters involving loan origination and servicing and whether the branch office manager of a direct lending branch office only manages that branch. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 4

5 f. *During the period under audit, if a separate entity was purchased and legally merged into the approved mortgagee, determine if a copy of the merger documents and state license (s) were provided to FHA s Lender Approval and Recertification Division.* REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 5

6 Alabama Consumer Credit Code State Branch Office Requirements: Alabama HUD / FHA Branch Requirements The Alabama Consumer Credit Code (ACCA) does not require that lenders maintain an office in Alabama. Ala. Code (a). The license must be posted conspicuously in the place of business of the lender, and may not be moved to another office or location without the Department s permission. Id. at (g). Each licensed location must keep on hand a copy of the ACCA and all current ACCA regulations. Ala. Admin. Code r A lender may not establish or conduct any other business in the same physical location as the licensed place of business without first obtaining approval from the Department. Any other business must be conducted in a manner that does not involve an evasion or violation of the ACCA. The lender must maintain a copy of any written permission or non-objection letter issued by the Department at each licensed location. Ala. Admin. Code r Mortgage Brokers Licensing Act A mortgage broker is not required to maintain an office in Alabama. A mortgage broker may transact business from both a principal place of business and 1 or more branch offices provided each is licensed under the Mortgage Brokers Licensing Act. Ala. Code A principal place of business or branch office must have at least 1 enclosed room or building of stationary construction where negotiations of mortgage loan transactions may be conducted in privacy, and in which all of the books, records, and files pertaining to mortgage loan transactions are maintained. Id. Each principal place of business and branch office must comply with local zoning ordinances and display any occupational licenses required by local government agencies. Id. It is the mortgage broker's responsibility to meet local zoning ordinances and obtain the required occupational licenses; however, zoning for the principal place of business or the branch office may not be residential. Id. Mortgage broker licenses must be posted in a conspicuous place at each location. Ala. Code (b). REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 6

7 California Finance Lenders Law State Branch Office Requirements: California Each branch office must be separately licensed. Cal. Fin. Code HUD / FHA Branch Requirements A licensee may not conduct the business of making loans in any office, room, or place of business where other business is solicited or engaged in except as authorized in writing by the Commissioner. This restriction does not apply to finance lenders making a loan with a principal amount of $10,000 or more. Cal. Fin. Code 22154(a); 22250(a). A finance lender or broker license, along with order approving the use of a different name, must be conspicuously posted in the place of business authorized by the license. Cal. Fin. Code 22151(a). In addition, the license of every mortgage loan originator employed by a finance lender or broker must be conspicuously posted in the place of business authorized by the license. Id. Real Estate Law A licensed real estate broker must maintain an office in California which must serve as the office for the transaction of business. The license must be displayed in the office, and any personal consultations with clients must be held at the in-state office. If the licensee wishes to maintain more than 1 place of business in California, additional licenses for any such branch office must be obtained. Cal. Bus. & Prof. Code The license certificate of any real estate salesperson employed by a real estate broker must be retained at the main business office of the real estate broker, and upon the termination of employment of the salesperson, the broker must return the license certificate to the salesperson within 3 business days after termination. Cal. Code Regs. tit. 10, California Residential Mortgage Lending Act A licensee must post the licensee's license and any currently effective order of the Commissioner approving use of a different name in a conspicuous place in the business location authorized by the license. Cal. Fin. Code 50207(a). REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 7

8 State Branch Office Requirements: Colorado HUD / FHA Branch Requirements Uniform Consumer Credit Code The Uniform Consumer Credit Code does not require that an in-state office be maintained. However, if an in-state office is not maintained, an agent for service of process must be designated and located in Colorado. The agent must be a resident of Colorado or a corporation authorized to do business in Colorado. The designation of the agent must be in writing and filed with the secretary of state. If no designation is made and filed or if process cannot be served in Colorado upon the designated agent, process may be served upon the secretary of state. However, service upon the secretary of state is not effective unless the plaintiff immediately mails a copy of the process and pleading by registered or certified mail to the defendant at his or her last reasonable ascertainable address. Colo. Rev. Stat. Ann (2). If a supervised lender has more than 1 place of business, it must obtain a master license. The Administrator may authorize the addition of branch locations to the master license. A separate license fee and proof of financial responsibility will be required for each authorized branch location. Upon receipt of a completed branch location license application and the required license fee, the branch location is automatically licensed for a temporary period not to exceed 120 days. If the Administrator does not deny the branch location application on or before the end of that period, the temporary branch location license will become permanent. The Administrator's approval of an additional branch location license may be provided by letter; no license certificate need be issued. Colo. Rev. Stat. Ann A licensee may not engage in the business of making supervised loans under any name other than that in the license or at any place of business for which the licensee does not hold a license. Id. at (7). Mortgage Loan Originator Licensing And Mortgage Company Registration Act The Mortgage Loan Originator Licensing And Mortgage Company Registration Act does not require a mortgage broker or loan originator to maintain an in-state office. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 8

9 State Branch Office Requirements: Connecticut HUD / FHA Branch Requirements Nondepository Mortgage Lenders and Brokers Act The Nondepository Mortgage Lenders and Brokers Act does not require that a lenders, correspondent lenders or brokers maintain an office in Connecticut. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 9

10 State Branch Office Requirements: Delaware HUD / FHA Branch Requirements Licensed Lenders Act The Licensed Lenders Act (LLA) does not require that mortgage lenders maintain an office in Delaware. However, a mortgage lender must provide the name and address of a resident agent who can accept legal service-of-process papers on the lender's behalf. See A mortgage lender must prominently post a copy of the license issued under the LLA in each place of business of the mortgage lender. A mortgage lender may not maintain an office at any other location than that designated in the license. Del. Code Ann. tit. 5, 2206(a). Each office licensed under the LLA must possess copies of all applicable regulations of the LLA. The manager and staff of each office must familiarize themselves with such regulations. The mortgage lender must inform the Commissioner if copies of the regulations are lost or misplaced and replacements will be furnished. Code Del. Regs (2.1), (2.2). Mortgage Loan Brokers Act The Mortgage Loan Brokers Act (MLBA) does not require that mortgage loan brokers maintain an office in Delaware. However, a mortgage broker must provide the name and address of a resident agent who can accept legal service-of-process papers on the broker's behalf. See A mortgage broker must obtain a license for each office or other place of business from which its mortgage loan brokerage business is conducted. Such license must be posted in a prominent position in the designated place of business of the mortgage broker. Del. Code Ann. tit. 5, Each office licensed under the MLBA must maintain copies of all applicable regulations of the MLBA. The manager and staff of each office must familiarize themselves with all such regulations. The licensee must inform the Commissioner if copies of the regulations are lost or misplaced and replacements will be furnished. Code Del. Regs (2.1), (2.2). REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 10

11 State Branch Office Requirements: District of Columbia HUD / FHA Branch Requirements Mortgage Lenders and Brokers Act A license may be issued to a business entity whose principal office is located outside the District, provided that the business entity maintains a resident agent within the District at all times during the term of the license. This license is issued regardless of whether the entity maintains an office in the District and the activities of the business constitute doing business or having a tax situs. D.C. Code Ann (g). Only 1 place of business may be maintained under any one license. A licensee may maintain more than 1 license under the Mortgage Lender and Broker Act provided that a separate application for each license is made (see Section I.). D.C. Code Ann. 1104(d)(2). A person may not conduct any mortgage loan business at any location or under any name different from the address and name that appears on the person's license. Id. at (e)(2) REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 11

12 State Branch Office Requirements: Florida HUD / FHA Branch Requirements Mortgage Brokerage and Lending Act There is no requirement that an office be maintained in Florida. Each licensee must maintain and transact business from a principal place of business. Fla. Stat. Ann (1); (1). Each principal place of business and each branch office of a mortgage lender must be operated under the full charge, control, and supervision of the licensee. In addition, a mortgage lender must designate a registered agent in Florida for service of process. Fla. Stat. Ann (1), (7). REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 12

13 State Branch Office Requirements: Georgia HUD / FHA Branch Requirements Georgia Residential Mortgage Act Mortgage lenders are not required to have a physical place of business in Georgia. Mortgage brokers must have a physical place of business in Georgia if the mortgage broker's home state requires one. Each licensee, if it has or is required to have a physical place of business in Georgia, must provide to the Department a complete listing of all such offices or locations. Ga. Comp. R. & Regs. r All licensed mortgage loan originators must maintain an office of record with the Department. If the mortgage loan originator is not domiciled in Georgia, then the main office location of the sponsoring/employing licensee or registrant may serve as the official employment address of the loan originator. Those licensed mortgage loan originators domiciled within Georgia must reflect the office from which the mortgage loan originator is supervised by the mortgage loan originator s employer, either the main office or an approved branch location. Ga. Comp. R. & Regs. r Branch Offices A licensee may not open a new additional office in Georgia without prior approval of the Department. Applications for an additional office must be made in writing on a form prescribed by the Department and be accompanied by a nonrefundable application fee of $350. The application will be approved unless the Department finds that the applicant has not conducted business under the Georgia Residential Mortgage Act (GRMA) efficiently, fairly, in the public interest, and in accordance with law. The application will be deemed approved if notice to the contrary has not been mailed to the applicant within 45 days of the date the application was received by the Department. Ga. Code Ann (f). Additionally, the licensee must have a branch manager for the location that is approved by the Department. Ga. Code Ann (g). Branch manager means a person who supervises daily activities in Georgia of a licensee, whether at a main or branch location, and regardless of job title. An individual may not serve as the branch manager of more than 1 location of a licensee unless the licensee can demonstrate that the proposed branch manager will be able to effectively manage these locations to ensure that they operate in compliance with state and federal law, and that the manager can adequately supervise the daily functions performed by the employees at the locations. The licensee must conduct an initial Georgia Crime Information Center background check on each branch manager and send it to the Department together with a credit report run within 30 days of submission of an application. In the event that the background investigation of the branch manager by REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 13

14 the licensee indicates that the information is incomplete or that the proposed manager has a criminal record in any state other than Georgia, the applicant must submit 2 sets of fingerprints, along with a fee of $30 in order for the Department to administer an expanded background check. Ga. Comp. R. & Regs. r An office location, including a personal residence, is considered a branch if: (1) the location address is printed on or contained in letterheads, business cards, announcements, advertisements, solicitations, brochures, or the like; (2) Georgia consumers are received at the location or are directed to deliver any information by any means to the location; (3) loan files, applications, and any other books and records required by the GRMA or Department rules are located at the location; (4) the location is used to meet the licensing standards in section and rule ; or (5) the licensee directly or indirectly reimburses for rent, utility bills or other expenses incurred for use of a residence as a branch. A location, including a personal residence, will not be deemed a branch and will be required to have its own license if: (1) it is a franchise arrangement; (2) it is separate entity that may be referred to as a net branch, and it is an independent business or mortgage operation which is not under the direct control, management, supervision and responsibility of the licensee; (3) the licensee is not the lessee or owner of the branch and the branch is not under the direct and daily ownership, control, management, and supervision of the licensee; (4) all employees exempt from individual licensing, including the branch manager, do not meet the requirements for exemption and the rules of the Department; (5) all assets and liabilities of the branch are not assets and liabilities of the licensee and all income and expenses of the branch are income and expenses of the licensee and properly accounted for in the financial records and tax returns of the licensee; or (6) all practices, policies, and procedures, including but not limited to those relating to employment and operations, are not originated and established by the licensee and are not applied consistently to the main office and all branches. An unstaffed storage facility does not constitute a branch. Ga. Comp. R. & Regs. r REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 14

15 State Branch Office Requirements: Hawaii HUD / FHA Branch Requirements Nondepository Financial Services Loan Company Act Every financial services loan company must display a copy of its principal office license in a conspicuous place at is principal office and must display copy of a branch office license in a conspicuous place at the branch office designated on the branch office license. Haw. Senate Bill 3008 (2008), 1. Secure and Fair Enforcement for Mortgage Licensing Act Every mortgage loan originator company licensed under the Secure and Fair Enforcement for Mortgage Licensing Act must have and maintain a principal place of business in the state and must designate a manager. Branch offices in Hawaii maintained by licensed mortgage loan companies may not operate without the written approval of the Commissioner. An application to establish a branch office must be submitted with a nonrefundable application fee (Section I.A.1.). A mortgage loan originator company that establishes branch offices must designate a manager located at each branch office to oversee that branch office. A mortgage loan originator company may not relocate any office in Hawaii without the prior written approval of the Commissioner. An application to relocate an office must provide the reasons for the relocation, the street address of the proposed relocated office, and other information that may be required by the Commissioner. An application to relocate an office must be submitted with a nonrefundable fee. (Section I.A.1.). A mortgage loan originator company must give the commissioner notice of its intent to close a branch office at least 30 days prior to the closing. The notice must state the intended date of closing, and specify the reasons for the closing. Haw. Rev. Stat. Ann. 454F-J. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 15

16 State Branch Office Requirements: State Branch Office Requirements: Illinois HUD / FHA Branch Requirements Residential Mortgage License Act of 1987 The Residential Mortgage License Act of 1987 does not require that a licensee maintain an office in Illinois. However, a licensee must maintain a registered agent in Illinois. 205 Ill. Comp. Stat. Ann. 635/3-4(a). A licensee whose principal place of business is located in Illinois must maintain at least 1 full service office within Illinois. In addition, a licensee must provide a person or persons reasonably adequate to handle efficiently communications, questions, and other matters relating to an application for a loan or existing loan and provide a toll-free telephone arrangement for doing so. In determining whether a licensee handles such matters in a reasonably adequate manner, the Director must consider consumer complaints received regarding the licensees and information obtained from examinations conducted and reports filed pursuant to the Act. If the Director determines that a licensee is not in compliance, the Director will notify the licensee, in writing, detailing the requirements for bringing the licensee into compliance. The Director may require a licensee to demonstrate compliance in instances in which personnel are conducting licensable activities in Illinois without adequate facilities and/or licensed offices in Illinois. Ill. Admin. Code tit. 38, Full service office means an office, provided by the licensee and not subleased from the licensee's employees, and staff reasonably adequate to efficiently handle communications, questions, and other matters relating to any application for a home mortgage or an existing home mortgage with respect to which the licensee is performing services, regardless of kind, for any borrower, lender, note owner, note holder, or himself while engaged in the residential mortgage business. 205 Ill. Comp. Stat. Ann. 635/3-4; 635/1-4. An office may not be located in any real estate, retail, or financial business establishment, unless separated from the other business by a separate and distinct area within the establishment. In addition, the location and operation of a full service office must be in compliance with any applicable zoning laws or ordinances and home office or business regulations. The Department may require a licensee operating from home or residentially zoned office to provide another approved location that is suitable to conduct an examination. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 16

17 205 Ill. Comp. Stat. Ann. 635/3-4(a). Each full service office must maintain adequate, organized, and accurate books and records, ample phone lines, hours of business, staff training and supervision, and a mechanism to resolve consumer inquiries, complaints, and problems. 205 Ill. Comp. Stat. Ann. 635/1-4. In lieu of maintaining a full service office in Illinois, a licensee whose principal place of business is located outside of Illinois may: (1) Provide, upon the Department's request and notice, an approved location that is suitable to conduct an examination; and (2) submit a certified audit evidencing a net worth of at least $150,000 (see Section I.A.2.) and a fidelity bond of $100,000 (see Section I.A.3.). 205 Ill. Comp. Stat. Ann. 635/3-4(b). A license or certificate must be conspicuously posted in the licensee's office(s) located in Illinois. Outof-state licensees without an Illinois office must produce the license upon request. Licensees originating loans on the internet must post on their internet web site their license number and the address and telephone number of the Department. 205 Ill. Comp. Stat. Ann. 635/2-9. Branch Offices Each entity conducting activities regulated by the RMLA will be issued 1 license. However, each office, place of business or location at which a residential mortgage license conducts its business must be recorded with the Department. 205 Ill. Comp. Stat. Ann. 635/1-3(f). A licensee may apply for authority to open and maintain additional full-service offices by submitting to the Department a Notice of Intent to Establish Additional Full-Service Office 30 days prior to the proposed operation of the office, along with a $250 fee, in which case the licensee will be provided with a certificate for the additional office(s). 205 Ill. Comp. Stat. Ann. 635/2-8. The $250 non-refundable fee must be paid annually on the license anniversary date. Ill. Admin. Code tit. 38, (e). REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 17

18 State Branch Office Requirements: Louisiana Louisiana S.A.F.E. Residential Mortgage Lending Act (formerly known as the Residential Mortgage Lending Act ) The Louisiana S.A.F.E. Residential Mortgage Lending Act does not require that a mortgage lender, broker or loan originator maintain an office in Louisiana. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 18

19 State Branch Office Requirements: Maryland Maryland Mortgage Lender Law A license under the Maryland Mortgage Lender Law (MMLL) may be issued to a business entity whose principal office is located outside of Maryland as long as the business entity maintains a resident agent in Maryland at all times during the term of the license, regardless of whether the business entity maintains any office in Maryland or whether the activities of the business entity constitute doing business or having a tax situs in Maryland. Md. Code Ann., Fin. Inst (f). Only 1 place of business may be maintained under any 1 license. Id. at (b). A licensee must post its license for each licensed location, on the premises in a conspicuous location accessible to the public.md. Regs. Code tit. 09, (G). A licensee under the MMLL may not conduct mortgage loan business at any location or under any name different from the address and name that appears on the person's license. Md. Code Ann., Fin. Inst (d)(2). A licensee may not allow any note, or loan contract, mortgage, or evidence of indebtedness secured by a secondary mortgage or deed of trust on a dwelling or residential real estate to be signed or executed at any place for which the person does not have a license, except at the office of: (1) the attorney for the borrower or for the licensee; or (2) a title insurance company, a title company, or an attorney for a title insurance company or a title company. Id. at (e)(1). However, if a borrower or the borrower's designee requests (in writing) that the licensee conduct the loan closing at another location because of the borrower's sickness, the lender may comply. Id. at (e)(2). Mortgage Originator Law A license may be issued to an individual who is employed by a mortgage lender that has its principal office located outside Maryland if the mortgage lender maintains: (1) (2) a resident agent within Maryland; and an office within Maryland staffed by at least 1 employee authorized to originate mortgage loans. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 19

20 Md. Code Ann., Fin. Inst (D). A mortgage lender is not required to maintain an office in the state of Maryland if the laws of the state in which its principal office is located authorize a mortgage lender from Maryland to engage in mortgage lending without maintaining an office in that state. Id. at (E). REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 20

21 State Branch Office Requirements: Massachusetts Mortgage Lender and Broker Laws Note that the Mortgage Loan Originator Law also contains provisions regarding office requirements for licensed mortgage lenders and brokers (see below). A licensee does not have to maintain an office in Massachusetts. A licensee who does not maintain an office in Massachusetts must designate a resident agent within Massachusetts. The appointment of a resident agent requires the prior approval of the Commissioner. Mass. Regs. Code tit. 209, 42.09(2). A licensee must prominently post its license, or copies of the license issued by the Commissioner for a branch office, in each place of business of the licensee. Copies of licenses for posting in authorized branch offices may be obtained at a reasonable cost from the Commissioner. Mass. Regs. Code tit. 209, 42.13(3). Any business at a branch office must at all times be conducted in the name of the licensee as it appears on the license. Mass. Gen. Laws Ann. ch. 255E, 5. Mortgage Loan Originator Law Each original license issued to a mortgage loan originator must be provided to and maintained by the employing entity at the entity's main office. Mass. Gen. Laws. Ann. ch. 255F, 7. Collection Agencies Laws The Collection Agencies Laws does not require a third party loan servicer to maintain an office in Massachusetts. A registered third party loan servicer must prominently post its registration, or copies of the registration, in each place of business of the third party loan servicer. Copies of registrations for posting may be obtained at a reasonable cost from the Commissioner. Mass. Regs. Code tit. 209, 18.07(3). REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 21

22 State Branch Office Requirements: Michigan All Lenders Each lender must make available for public distribution at the lender's principal office and each branch office or service center a pamphlet or document explaining in general terms the lender's criteria for the approval or denial of a loan application. The pamphlet or other document must prominently state that a person has the right to make a loan inquiry and to file a written application for a mortgage loan or home improvement loan and to receive a written response to the application. A lender may use a separate pamphlet or document for mortgage loans and home improvement loans, and the pamphlet or document may contain material in addition to that required. A copy of the pamphlet or other document must be filed with the Department. Mich. Comp. Laws Ann (10). The above requirements apply to state or nationally chartered banks, state or federally chartered savings and loan associations, state or federally chartered credit unions, the Michigan state housing development authority, and any business entities making or purchasing mortgage loans, which have a main office, branch office, or service center doing such business within the state of Michigan. Mich. Comp. Laws Ann (c). Mortgage Brokers, Lenders and Servicers Licensing Act A first mortgage lender, broker or servicer is not required to maintain an office in Michigan. However, the application (Form FIS 1140 MI Specific Forms for Mortgage Application) for a license under the Mortgage Brokers, Lenders and Servicers Licensing Act requires the applicant to provide the address of a Michigan resident agent who will accept service of process on the applicant's behalf. see Secondary Mortgage Loan Act A secondary mortgage lender, broker or servicer is not required to maintain an office in Michigan. However, the application (Form FIS 1140 MI Specific Forms for Mortgage Application) for a license under the Secondary Mortgage Loan Act requires the applicant to provide the address of a Michigan resident agent who will accept service of process on the applicant's behalf. see REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 22

23 State Branch Office Requirements: Minnesota Refer to federal guidelines, as they do not have specific language for office requirements. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 23

24 State Branch Office Requirements: Missouri Licensee shall maintain at least one full-service office with staff, duties to handle matters relating to mortgage--waiver, when Each residential mortgage loan broker shall maintain, in the state of Missouri, at least one full-service office with staff reasonably adequate to efficiently handle all matters relating to any proposed or existing home mortgage with respect to which such residential mortgage loan broker is performing services; except that this provision may be waived by the director for persons providing mortgage loan servicing under section (12) "Full-service office", office and staff in Missouri reasonably adequate to handle efficiently communications, questions, and other matters relating to any application for a new or existing home mortgage loan which the residential mortgage loan broker is brokering, funding, originating, purchasing, or servicing. The management and operation of each full-service office shall include observance of good business practices such as adequate, organized, and accurate books and records, ample phone lines, hours of business, staff training and supervision, and provision for a mechanism to resolve consumer inquiries, complaints, and problems. The director shall promulgate rules with regard to the requirements of this subdivision and shall include an evaluation of compliance with this subdivision in the periodic examination of the residential mortgage loan broker; REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 24

25 State Branch Office Requirements: Nevada Mortgage Banker Act As an application for a mortgage banker's license must include the address of the principal place of business and branch office in Nevada, an in-state office is required. See Nev. Rev. Stat. 645E.200. The specific requirements for an office are not set by statute. However, a person may apply for a license for an office or other place of business located outside of Nevada from which the applicant will conduct business in Nevada if the applicant or a subsidiary or affiliate of the applicant has a mortgage banker license issued for an office or other place of business located in Nevada and if the applicant submits with the application for a license a statement signed by the applicant which states that the applicant agrees to: (1) Make available at a location within Nevada the books, accounts, papers, records and files of the office or place of business located outside of Nevada to the Commissioner; or (2) pay the reasonable expenses for travel, meals and lodging of the Commissioner incurred during any investigation or examination made at the office or place of business located outside of Nevada. See id. A mortgage banker must post each license in a conspicuous place in the office for which the license has been issued. See Nev. Rev. Stat. 645E.220. Each branch office must conspicuously display its license at the branch office. Nev. Admin. Code, ch. 645E, 220(5). A licensed mortgage banker must keep and maintain at all times at each location where it conducts business in Nevada complete and suitable records of all mortgage transactions made by it at that location. See Nev. Rev. Stat. 645E.350. See Section VIII, below for a discussion of complete and suitable records. Each mortgage banker must also keep and maintain at all times at each location all original books, papers and data, or copies thereof, clearly reflecting the financial condition of the business of the mortgage banker. See id. A mortgage banker may share office space with any other business is each business has designated space within the office space and each business is separately identifiable by a sign or other method REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 25

26 of identification within the office space. See Adopted Regulation R088-04, Nev. Admin. Code ch. 645E, Sec. 8. A mortgage banker may share office space with a business licensed under chapter 645 (real estate brokers and salespersons) of the Nevada Revised statutes if: (1) Each business has separate and distinct office space and signs such that a reasonable customer would understand which business he is transacting with at all times; (2) each business operates as a separate legal entity; (3) (4) each business maintains separate accounts, books and records; each business maintains separate licenses; and (5) the businesses are subsidiaries of the same parent corporation or are otherwise affiliated businesses. See Adopted Regulations R088-04, Nev. Admin. Code ch. 645E, Sec. 8. A mortgage banker must maintain a permanent sign that includes the name of the mortgage banker at each place of business of the mortgage banker, including, but not limited to, each branch office of the mortgage banker. See Adopted Regulations R088-04, Nev. Admin. Code ch. 645E, Sec. 9. The sign must be: (1) Readable from the nearest public street, sidewalk or highway; (2) if the place of business of a mortgage banker is in an office building, posted on the building directory of the office building or near the entrance to the office building on the exterior of the building. See id. Mortgage Broker Act A licensed mortgage broker must have a place of business in Nevada. See Nev. Rev. Stat. 645B.020. A mortgage broker must post each license in a conspicuous place in the office to which it pertains. See id. at 645B.025. A licensed mortgage broker must keep and maintain at all times at each location where it conducts business in Nevada complete and suitable records of all mortgage transactions made by it at that location. See Nev. Rev. Stat. 645B.080. See Section XIII, below for a discussion of complete and suitable records. Each mortgage broker must also keep and maintain at all times at each location "all original books, papers and data, or copies thereof, clearly reflecting the financial condition of the business of the mortgage broker. See id. No time period is set by statute. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 26

27 A mortgage broker may share office space with any other business is each business has designated space within the office space and each business is separately identifiable by a sign or other method of identification within the office space. See Adopted Regulation R087-04, Nev. Admin. Code ch. 645B, Sec. 10. A mortgage broker may share office space with a business licensed under chapter 645 (real estate brokers and salespersons) of the Nevada Revised statutes if: (1) Each business has separate and distinct office space and signs such that a reasonable customer would understand which business he is transacting with at all times; (2) each business maintains separate accounts, books and records; (3) each business maintains separate licenses; and (4) the businesses are subsidiaries of the same parent corporation or are otherwise affiliated businesses. See Adopted Regulations R087-04, Nev. Admin. Code ch. 645B, Sec. 10. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 27

28 State Branch Office Requirements: New Jersey New Jersey Residential Mortgage Lending Act Mortgage Lenders and Brokers A residential mortgage lender and broker is not required to maintain an office in New Jersey so long as the lender or broker is qualified to do business in New Jersey and has a registered agent for service of process. N.J. Stat. Ann. 17:11C-66. The license of a residential mortgage lender and broker must be posted conspicuously in the places of business of that lender and broker. In addition, the license of any qualified individual must be maintained by the lender and broker and must be available for public inspection at the lender's or broker's places of business. N.J. Stat. Ann. 17:11C-67(a). Loan Originators A mortgage loan originator license must be maintained by the loan originator and must be available for public inspection at the loan originator's places of business. N.J. Stat. Ann. 17:11C-67(b). Branch Offices The Department will consider the following factors in determining whether a location is suitable: (i) (ii) (iii) (iv) (v) (vi) the location must have a space that may only be utilized for the purposes of the licensee's business and by the licensee and its employees, structured in such a way as to ensure the maintenance of a consumer's right to privacy with respect to conversations and documents involving personal and financial information; the location must conform to all local ordinances and zoning requirements; the location must be reasonably accessible to the public; any signage proposed for the location must clearly identify the licensee; the location must be reasonably free of noise and other distractions so as to permit customers to give appropriate consideration to the loan transaction; and in addition, a location in a residence shall not be considered suitable unless the office is separate from the residential area and conveniently accessible to all consumers through a REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 28

29 separate business entrance. The Department will consider the following factors in determining whether an out-of-state location at which there is direct contact with consumers: (i) (ii) the location must ensure the maintenance of a consumer's right to privacy with respect to conversations and documents involving personal and financial information; and the location must comply with all applicable Federal, State and local laws in the state where the office is located. Applicants for a business license must certify the location of their principal office is in compliance with the requirements described above. N.J. Admin. Code tit. 3, In addition to the above office location requirements, branch office arrangements are restricted as follows: (1) a branch office may not be a separate business entity (If an office of another entity is purchased by or merged into a licensee, the licensee must file for a branch office license. The filing must include documentation evidencing the acquisition and/or merger of that entity into the surviving licensee.); (2) a branch office may not pay its own operating expenses (Operating expenses include, but are not limited to, compensation of branch office employees, and payments for equipment, furniture, office rent, and other similar expenses incurred in operating a mortgage lending business.); (3) a branch office may not maintain a banking account or accounts for the payment of expenses of that branch that is separate from the account or accounts of the licensee; (4) a branch office may not maintain contractual relationships with vendors for items such as leases, telephones, utilities, and advertising in the name of the branch office; (5) a branch office may not maintain lines of credit, warehouse agreements, or other investor agreements that are separate from those of the licensee; and (6) a branch office may not indemnify the licensee against damages incurred from any apparent, express, or implied agency representation by or through the branch office's actions. A licensee may maintain more than 1 office but must secure a license for each branch office. A licensee does not need to obtain a branch office license for an attorney's office merely because loans are closed there and fees are received there incident to the loan closing. N.J. Admin. Code tit. 3, If a licensee maintains a branch office or offices, the licensee must identify 1 of the offices as the principal office. The designated principal office must be made as part of the application for licensure. Notice of a change in the location of the principal office must be entered into the Nationwide Mortgage Licensing Registry System within 10 days of the effective date of the change. REV 12/26/12 RO This is an internal EPM document and not meant for public or consumer information. 29