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Banking Interpretations

Memorandum

To: Kenneth Bielemeier  
Mortgage Banking Division  

From: Alvin A. Narin
Legal Division  

Date: January 23, 2002  

Subject:    [                                  ] -- Application for a mortgage broker registration.  

In the cover letter submitted with the executed application by [                    ] ("Applicant") for registration as a mortgage broker, counsel for Applicant requested an opinion as to whether the activities which Applicant intended to engage required registration as a mortgage broker.

According to the letter, Applicant intends to enter into a marketing agreement ("Agreement") with a licensed mortgage banker ("Lender") with respect to first and second mortgage loans and home equity loans originated, funded and serviced by the Lender.  Applicant intends to engage in the following activities pursuant to the Agreement:

  1. Jointly develop marketing materials with the Lender for the Lender's mortgage products to be offered under the name, "                          "

  2. Distribute said marketing materials to its customers and employees through its financial advisers; and

  3. Instruct interested parties to contact the Lender directly through a toll-free telephone number or apply for the Lender's mortgage products at a co-branded website operated by the Lender that is accessible through the Applicant's main website.

Applicant will engage in these marketing service activities exclusively for the Lender and will receive an annual flat fee of [                 ] payment of which shall not be based upon the number of loans originated by the Lender through this arrangement.  Further, Applicant will not receive a fee from any borrower, Applicant's financial advisers will not be awarded commissions or fees based on the success of the loan program and Applicant and its financial advisers will not be involved in the negotiation and/or underwriting of the loan.

Pursuant to Section 590(1)(g) of the New York Banking Law, a person or entity must be registered as a mortgage broker when it engages, "[i]n the business of soliciting, processing, placing or negotiating mortgage loans for others, or offering to solicit, process, place or negotiate mortgage loans for others."  Although the activities in which Applicant proposes to engage do not constitute processing or negotiating mortgage loans for the Lender, distribution of the above described marketing materials and instruction as to how to contact the Lender to apply for a mortgage product does constitute "the business of soliciting a mortgage loan," thereby requiring Applicant to obtain a mortgage broker registration.

Noted:________
S.A.K.

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