2023 Connecticut General Statutes › Title 36a - The Banking Law of Connecticut › Chapter 668 - Nondepository Financial Institutions › Section 36a-486. (Formerly Sec. 36-440a). - Licenses required. Exemptions. Prohibited advertisements. Violations. Temporary authority to act as mortgage loan originator.

(a) No person shall engage in the business of making residential mortgage loans or act as a mortgage broker in this state unless such person has first obtained a license for its main office and for each branch office where such business is conducted in accordance with the provisions of sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b. Any activity subject to licensure pursuant to sections 36a-485 to 36a-498e, inclusive, 36a-534a or 36a-534b shall be conducted from an office located in a state, as defined in section 36a-2. Any such person who is an individual shall also obtain a mortgage loan originator license prior to conducting such business unless such individual does not engage directly in the activities of a mortgage loan originator or conducts such business pursuant to the temporary authority provided in subsection (e) of this section. A person, other than a licensed mortgage loan originator acting on behalf of a mortgage lender or mortgage correspondent lender, shall be deemed to be engaged in the business of making residential mortgage loans if such person advertises, causes to be advertised, solicits or offers to make residential mortgage loans, either directly or indirectly. A person, other than a licensed mortgage loan originator acting on behalf of a mortgage broker, shall be deemed to be acting as a mortgage broker if such person advertises or causes to be advertised that such person will negotiate, solicit, place or find a residential mortgage loan, either directly or indirectly. A mortgage correspondent lender shall not be deemed to be acting as a mortgage lender if such mortgage correspondent lender makes a loan utilizing its own funds in a situation where another person does not honor such person's commitment to fund the loan. A licensed lead generator shall not be deemed to be acting as a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator when engaged in the activities of a lead generator, as described in section 36a-485 if such person does not: (1) Obtain compensation or gain contingent upon the consummation of a residential mortgage loan or the receipt of a residential mortgage loan application, or (2) utilize financial criteria particular to the consumer or the residential mortgage loan transaction to selectively place a lead or to steer a consumer to a specific person for a residential mortgage loan.
(b) (1) No person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker shall engage the services of a mortgage loan originator or of a loan processor or underwriter required to be licensed under this section unless such mortgage loan originator or loan processor or underwriter is licensed under section 36a-489 or acting pursuant to the temporary authority provided in subsection (e) of this section. An individual, unless specifically exempted under subdivision (2) of this subsection or acting pursuant to the temporary authority provided in subsection (e) of this section, shall not engage in the business of a mortgage loan originator on behalf of a licensee or a person exempt under section 36a-487 with respect to any residential mortgage loan without first obtaining and maintaining annually a license as a mortgage loan originator under section 36a-489. An individual, unless specifically exempted under subdivision (2) of this subsection, shall be deemed to be engaged in the business of a mortgage loan originator if such individual: (A) Acts as a mortgage loan originator in connection with any residential mortgage loan on behalf of a licensee or person exempt under section 36a-487; or (B) makes any representation to the public through advertising or other means of communication that such individual can or will act as a mortgage loan originator on behalf of a licensee or person exempt under section 36a-487. Each licensed mortgage loan originator and each licensed loan processor or underwriter shall register with and maintain a valid unique identifier issued by the system. No individual may act as a mortgage loan originator for more than one person at the same time. No loan processor or underwriter licensee may be sponsored by more than one person at a time. The license of a mortgage loan originator or a loan processor or underwriter is not effective during any period when such mortgage loan originator or a loan processor or underwriter is not sponsored by a licensed mortgage lender, mortgage correspondent lender or mortgage broker, or by a person registered as an exempt registrant under subsection (d) of section 36a-487, or during any period in which the license of the mortgage lender, mortgage correspondent lender or mortgage broker with whom such originator or loan processor or underwriter is associated has been suspended. Either the mortgage loan originator, the loan processor or underwriter or the sponsor may file a notification of the termination of sponsorship with the system.
(2) The following are exempt from this section: (A) A registered mortgage loan originator or an employee of an institution or subsidiary described in section 36a-485, who is not required to be registered under Section 1507 of the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., when acting for such institution or subsidiary; (B) an individual who offers or negotiates the terms of a residential mortgage loan with or on behalf of an immediate family member of such individual; (C) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that served as the individual's residence, unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition; (D) a Connecticut licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator or by any agent of such mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator; (E) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of a federal, state or local government agency or housing finance agency exempt from licensure pursuant to section 36a-487, and who does so only pursuant to such individual's official duties as an employee of such agency; (F) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of an organization that has obtained bona fide nonprofit status from the commissioner and is exempt from licensure pursuant to section 36a-487, and who does so only pursuant to such individual's official duties as an employee of such organization; and (G) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that is not the individual's residence but is owned by such individual, unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition.
(3) No individual shall engage in the activities of a loan processor or underwriter unless such individual obtains and maintains a license as a loan processor or underwriter under section 36a-489. The following individuals are exempt from the foregoing license requirement:
(A) An employee of a licensed mortgage lender, mortgage correspondent lender or mortgage broker who engages in loan processor or underwriter activities (i) in connection with residential mortgage loans either originated or made by such licensee, and (ii) at the direction of and subject to the supervision of a licensed mortgage loan originator of such licensee;
(B) An employee of a person exempt from licensure under subdivision (1), (2) or (3) of subsection (a) of section 36a-487 who engages in loan processor or underwriter activities at the direction of and subject to the supervision of either a licensed mortgage loan originator or a registered mortgage loan originator of such exempt person; or
(C) Any individual engaged, in any capacity, in loan processor or underwriter activities in connection with a residential mortgage loan originated by an individual not required to be licensed or registered as a mortgage loan originator under this part.
(4) An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.
(5) On and after January 1, 2018, no person shall, directly or indirectly, act as a lead generator without first obtaining a license under section 36a-489, unless such person is exempt from licensure. The following persons shall be exempt from licensure as a lead generator:
(A) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured;
(B) Any wholly owned subsidiary of any such bank or credit union;
(C) Any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same such bank or credit union;
(D) Any person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker in this state, provided such exemption shall not be effective during any period in which the license of such person is suspended;
(E) A consumer reporting agency, as defined in Section 603 (f) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time;
(F) An employee of a person licensed as a lead generator or exempt from licensure as a lead generator, while engaged in lead generator activities on behalf of such person; and
(G) An individual employed by an affiliate of a bank or credit union exempt from licensure pursuant to subparagraph (A) of this subdivision, who is registered or licensed with a state or federal regulator to engage in securities brokerage, investment advisory or insurance sales activities and who, incidental to the performance of such regulated activities, performs lead generation activities by referring one or more leads to such bank or credit union. For purposes of this subparagraph, “affiliate” means an entity that is controlled by or is under common control with the bank or credit union, such that the bank or credit union (i) directly or indirectly acting through one or more other persons owns, controls or has the power to vote more than fifty per cent of any class of voting securities of the affiliate, (ii) controls in any manner the election of a majority of directors or trustees of the affiliate, or (iii) directly or indirectly exercises a controlling influence over the management or policies of the affiliate.
(c) If the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction determines that the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., requires an individual described in subparagraph (B) (iv) of subdivision (20) of section 36a-485 to be licensed as a mortgage loan originator under state laws implementing said S.A.F.E. Mortgage Licensing Act, such individual may continue to act in such individual's current capacity, provided such individual files an application for a mortgage loan originator license not later than the date sixty days from the date of such determination by the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction.
(d) Each residential mortgage loan taken, offered, negotiated, solicited, arranged, placed, found, made, processed or underwritten without a license shall constitute a separate violation for purposes of section 36a-50.
(e) (1) An individual who is employed by a person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker in this state shall have temporary authority to act as a mortgage loan originator in this state for the period of time described in subdivision (3) of this subsection, provided the individual (A) has not had (i) an application for a loan originator license denied in any governmental jurisdiction, or (ii) a loan originator license revoked or suspended in any governmental jurisdiction; (B) has not been subject to, or served with, a cease and desist order in any governmental jurisdiction or by the Bureau of Consumer Financial Protection pursuant to 12 USC 5113(c); (C) has not been convicted of a misdemeanor or felony that would preclude licensure in this state under subdivision (1) of subsection (b) of section 36a-489; (D) has submitted an application for licensure as a mortgage loan originator in this state pursuant to subsection (c) of section 36a-488; and (E) was registered in the system as a registered loan originator, as defined in 12 USC 5102, during the one-year period immediately preceding the date on which the individual submits in connection with such application for licensure in this state the individual's personal history and experience, including authorization to obtain an independent credit report, criminal background check and information relating to administrative, civil or criminal findings by any governmental jurisdiction.
(2) An out-of-state mortgage loan originator employed by a person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker in this state shall have temporary authority to act as a mortgage loan originator in this state for the period described in subdivision (3) of this subsection, provided the individual (A) meets the requirements of subparagraphs (A) to (D), inclusive, of subdivision (1) of this subsection; and (B) was an out-of-state mortgage loan originator during the thirty-day period immediately preceding the date on which the individual submits in connection with the application for licensure as a mortgage loan originator in this state the individual's personal history and experience, including authorization to obtain an independent credit report, criminal background check and information relating to administrative, civil or criminal findings by any governmental jurisdiction.
(3) The period of temporary authority described in subdivisions (1) and (2) of this subsection shall commence on the date the registered loan originator or out-of-state mortgage loan originator submits the information required by subsection (c) of section 36a-488 and shall end on the earliest of (A) the date the individual withdraws the application to be a licensed mortgage loan originator in this state; (B) the date the commissioner denies the application; (C) the date the commissioner issues the mortgage loan originator license; or (D) one hundred twenty days after the date the individual submits the application, provided such application is identified as incomplete on the system.
(4) Any person employing an individual who has temporary authority to act as a mortgage loan originator in this state pursuant to this subsection shall be subject to the laws of this state to the same extent as if the employed individual is licensed as a mortgage loan originator in this state. Any individual who has temporary authority to act as a mortgage loan originator in this state pursuant to this subsection and who engages in residential mortgage loan origination activities shall be subject to the laws of this state to the same extent as if the individual is licensed as a mortgage loan originator in this state.
(P.A. 85-399, S. 2; P.A. 89-347, S. 10; P.A. 93-32; P.A. 94-122, S. 230, 340; P.A. 96-71, S. 1, 8; 96-109, S. 10; 96-180, S. 117, 166; P.A. 02-111, S. 3; P.A. 04-69, S. 2; P.A. 07-156, S. 5; P.A. 08-176, S. 31, 40; P.A. 09-208, S. 2; 09-209, S. 5; P.A. 11-110, S. 4; 11-216, S. 10; P.A. 12-96, S. 8; P.A. 14-7, S. 11; 14-89, S. 34, 48; P.A. 15-14, S. 7; P.A. 17-38, S. 2; P.A. 18-173, S. 8; P.A. 21-138, S. 6.)
History: P.A. 89-347 added requirements re mortgage brokers; P.A. 93-32 made previous provision Subsec. (a) and added new Subsec. (b) imposing civil penalty for those who do not obtain the license required; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440a transferred to Sec. 36a-486 in 1995; P.A. 96-71, 96-109 and 96-180 all amended Subsec. (a) to delete “loan” before “mortgage loan business in this state”, effective July 1, 1996; P.A. 02-111 amended Subsec. (a) by rewriting provisions applicable to lenders and brokers and adding provisions re first mortgage correspondent lenders, added new Subsec. (b) re registration of originators, and redesignated existing Subsec. (b) as Subsec. (c), adding “or registration” therein; P.A. 04-69 amended Subsecs. (a) and (b) to substitute “36a-498a” for “36a-498”; P.A. 07-156 amended Subsecs. (b) and (c) to replace registration requirement for originators with licensing requirement and to make conforming changes, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 5, from September 30, 2008, to July 1, 2008, amended Subsec. (a) to add reference to main office and each branch office, to provide that a person, other than a mortgage loan originator, “shall be deemed to be engaged in the business of making mortgage loans if such person advertises, causes to be advertised, solicits, offers to make or makes mortgage loans, either directly or indirectly”, and to make conforming changes, amended Subsec. (b) to add mortgage correspondent lender, to change notification provision from “shall promptly notify the commissioner, in writing” to “may file” with Nationwide Mortgage Licensing System and to make conforming changes, and amended Subsec. (c) to add “arranged” and to make a conforming change, effective July 1, 2008; P.A. 09-208 amended Subsec. (b) by providing that license of mortgage loan originator is not effective during any period in which license of lender, correspondent lender or broker with whom originator is associated has been suspended, effective July 7, 2009; P.A. 09-209 amended Subsec. (a) to apply to persons engaged in business of making residential mortgage loans and by requiring certain individuals to obtain a mortgage loan originator license, adding provision re when a person is considered to be acting as a mortgage broker, making technical changes and inserting reference to other licensing provisions, amended Subsec. (b) by designating existing provisions as Subdiv. (1) and amending same by requiring individuals engaged in business of mortgage loan originator with respect to a dwelling to obtain and maintain a license, and by adding Subdiv. (2) re exemptions, Subdiv. (3) re loan processors or underwriters who are independent contractors and Subdiv. (4) re advertising, added new Subsec. (c) re determinations made by U.S. Department of Housing and Urban Development or court, redesignated existing Subsec. (c) as Subsec. (d) and amended same by adding “residential” re mortgage loan, effective July 31, 2009; P.A. 11-110 amended Subsec. (c) to add references to Bureau of Consumer Financial Protection, effective July 21, 2011; P.A. 11-216 amended Subsec. (b)(1) and (b)(3) to add references to loan processors or underwriters, to prohibit the engagement in business without a license of a mortgage loan originator “on behalf of a licensee or a person exempt under section 36a-487 with respect to any residential mortgage loan”, to permit alternative sponsorship “by a person registered as an exempt registrant under subsection (c) of section 36a-487”, to prohibit a loan processor or underwriter who is employed by any person other than a licensed mortgage lender, mortgage correspondent lender or mortgage broker or any person exempt from licensure under Sec. 36a-487(a)(1) from engaging in activities of a loan processor or underwriter without a license, to eliminate requirement of maintaining valid unique identifier issued by the system, and to make conforming and technical changes; P.A. 12-96 amended Subsec. (b) to add provisions re when individual shall be deemed engaged in the business of a mortgage loan originator and re loan processor or underwriter licensee not to be sponsored by more than one person at a time in Subdiv. (1), to add provision in Subpara. (C) re context demonstrating individual is engaged in activities with a degree of habitualness or repetition and add new Subparas. (E), (F) and (G) re residential mortgage loans in Subdiv. (2), and to replace former Subdiv. (3) with new Subdiv. (3) re loan processor or underwriter activities, amended Subsec. (d) to add “taken, offered” and “processed or underwritten”, and made technical changes; P.A. 14-7 amended Subsec. (b)(1) to replace reference to Sec. 36a-487(c) with reference to Sec. 36a-487(d), effective May 8, 2014; P.A. 14-89 amended Subsec. (b) to replace “licensed attorney” with “Connecticut licensed attorney” in Subdiv. (2)(D) and add reference to Sec. 36a-487(a)(2) or (3) in Subdiv. (3)(B); P.A. 15-14 made a technical change in Subsec. (b)(3)(C); P.A. 17-38 amended Subsec. (a) by deleting reference to April 1, 2010, adding provision re licensed lead generator not deemed to be acting as mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator, amended Subsec. (b) by replacing reference to Sec. 36a-485(23) with reference to Sec. 36a-485(25) in Subdiv. (2)(A), and adding Subdiv. (5) re lead generator licensure and exemptions, amended Subsec. (c) by replacing reference to Sec. 36a-485(18) with reference to Sec. 36a-485(20), and made a technical change; P.A. 18-173 amended Subsec. (a) by replacing reference to Sec. 36a-498f with reference to Sec. 36a-498e and adding provision re activity subject to licensure to be conducted from office located in the state; P.A. 21-138 amended Subsec. (a) by adding provision re conducting business pursuant to temporary authority provided in subsection (e), amended Subsec. (b)(1) by adding provisions re acting pursuant to temporary authority provided in subsection (e), amended Subsec. (b)(2) by deleting “subdivision (25) of”, amended Subsec. (b)(3) by adding Subpara. (G) re incidental performance of lead generation activities and by making a technical change, and added Subsec.(e) re temporary authority to act as mortgage loan originator.