QUESTION
Could
you provide clarification on what titles are allowed for Licensed Residential
Mortgage Loan Originators? Can such titles as “Advisor,” “Specialist,”
“Consultant,” “Loan Officer,” be used in representing themselves on marketing
collateral and websites? It seems there are many titles being used in the
industry even though the license is under the title Residential Mortgage Loan
Originator.
ANSWER
The
SAFE Act (“Act”) defines "loan originator" as "an individual who
(I) takes a residential mortgage loan application; and (II) offers or
negotiates terms of a residential mortgage loan for compensation or gain."
[Section 1503(3)(A)(i)]
Acronyms
used for this definition are “MLO” and “RMLO.”
The
Act also provides a section, entitled "Other Definitions Relating to Loan
Originator," which further elaborates that the RMLO is an individual who
“assists a consumer in obtaining or applying to obtain a residential mortgage
loan” by, among other things, advising on loan terms (including rates, fees,
other costs), preparing loan packages, or collecting information on behalf of
the consumer with regard to a residential mortgage loan. [Section 1503(3)(B)]
The
definition of “loan originator” encompasses any individual who, for
compensation or gain, offers or negotiates pursuant to a request from and based
on the information provided by the borrower. Such an individual would be
included in the definition of “loan originator,” regardless of whether the
individual takes the request from the borrower for an offer (or positive
response to an offer) of residential mortgage loan terms directly or indirectly
from the borrower.
Ultimately,
in order to determine the accuracy and acceptability of a title, the title
itself really is not as important as the actual activity conducted by an
individual, with respect to the definition in the Act of a “loan originator.”
Other
titles suggested, such as “Advisor,” “Specialist,” and even “Consultant” are
freighted with inferences that may impact the use of these titles in the context
of the Act’s specificity. It is obviously the case that the Act has clearly
defined the title “loan originator” and, to that extent, using this term or a
modest variation of this term, such as “loan officer,” would be most conducive
to clarity.
Jonathan
Foxx
President
& Managing Director
Lenders Compliance Group
