Will An In-House Underwriter for Mortgage Loans in Florida Need a License?

By: Larry R. Rothenberg, Esq. and Lisa M. Rogers, Esq.

On August 17, 2010, an Assistant General Counsel for the Florida Office of Financial Regulation (OFR) issued an informal opinion clarifying whether underwriters employed by Florida-licensed mortgage lenders will be required to be licensed as “mortgage loan originators” beginning October 1, 2010.

Florida’s Senate Bill 2226, which substantially amended Chapter 494, Florida Statutes, was enacted in 2009, to bring Florida into compliance with the Federal S.A.F.E. Act requiring “loan originators” to be licensed.   “Loan originators” is defined fairly broadly in the Act to include employees who deal directly or indirectly with the public, by soliciting or offering to solicit a mortgage loan, accepting offers to accept mortgage loan applications, negotiating the terms, processing the application, or negotiating or offering to negotiate the sale of an existing mortgage loan to a non-institutional investor.

The statute expressly excluded persons who perform only administrative or clerical tasks, including quoting available interest rates, physically handling a completed application, or transmitting a completed form to the lender on behalf of a prospective borrower.

Will a loan underwriter be deemed a “loan originator,” who needs a license, or one who performs only administrative or clerical tasks, who does not need a license?   The opinion clarifies that underwriters who are W-2 employees of licensed mortgage lenders are not required to obtain loan originator licenses with the OFR.  However, in-house underwriters who work for a licensed lender must be supervised by a licensed loan originator in order to comply with the S.A.F.E. Act and Chapter 494, Florida Statutes.

The opinion emphasized that it is only an informal opinion of the Assistant General Counsel, and is not binding on the OFR.   Florida State Law and the Florida Administrative Code provide procedures to request a declaratory statement, which would be legally binding on the OFR.

Weltman, Weinberg & Reis (WWR) is scheduled to open its Ft. Lauderdale office in September, which will be managed by Junior Partner Lisa Rogers, and will provide real estate foreclosure and bankruptcy representation throughout the state.  Florida makes the Firm’s seventh state in which it will provide direct state-wide representation with regard to these matters and the tenth office for WWR.

For a complete copy of the opinion letter issued by the OFR Assistant General Counsel, go here.

For more information about the issues discussed in this advisory, or for representation in Florida, please contact Lisa Rogers, Junior Partner in the Real Estate Default Group at WWR. Lisa can be reached at (954) 459-0209 or via e-mail at lrogers@weltman.com. You may also contact Larry Rothenberg, a partner-in-charge of the Cleveland real estate and foreclosure department of WWR. Larry can be reached at (216) 685-1135 or via e-mail at lrothenberg@weltman.com. He is the author of the Ohio Jurisdictional Section contained within the treatise, “The Law of Distressed Real Estate”, published by The West Group. The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan, with Florida opening soon.