Connecticut Amends Provisions Concerning Residential Mortgage Licensing

• June 23, 2017
• Laura Eckstein

Connecticut amended its provisions relating to licensing under Senate Bill 906, which is an act concerning lead generators of residential mortgage loans. Provisions in this bill range from effective immediately to effective on January 1, 2018.

Definitions

The definition regarding advanced fees was updated. The advance fee now also includes consideration given by a consumer to a person for a residential mortgage loan. Sec. 36a-485(1). New definitions were added for the lead, lead generator, and trigger lead. Under the bill, lead is defined as “any information identifying a potential consumer of a residential mortgage loan.” Sec. 36a-485(13). A lead generator is a person with the expectation of compensation. He or she sells leads for a residential mortgage loan, generates leads for another person, or performs marketing services directing a consumer to another person for a residential mortgage loan. Sec. 36a-485(14)(A)-(C). A trigger lead refers to a situation when a consumer report triggered by an inquiry made with a consumer reporting agency in response to an application for credit is obtained. Sec. 36a-485(32).

License Requirement

Effective January 1, 2018, no person shall directly or indirectly act as a lead generator without obtaining a license under Section 36-a-489, unless he or she is exempt under the statute. Under the amended bill a licensed lead generator will not be deemed to be acting as a mortgage lender if he or she does not obtain compensation contingent upon the consummation of a residential mortgage loan or if the or she uses financial criteria particular to a consumer in order to selectively steer a consumer to a specific person for a loan. Sec. 36a-486(a).

License Issuance

The commissioner may issue a lead generator license. The application for a license as lead generator must contain the identity of the applicant, any control person of the applicant, and any information related to administrative, civil, or criminal findings by any governmental jurisdiction. The commissioner is allowed to conduct a state or national criminal history records check of the applicant and any control person of the applicant. The commissioner may also require the submission of fingerprints to the FBI or other state, national, or international criminal databases as part of the application. Sec. 36a-488(d).

License Denial

The commissioner may not issue a lead generator license to an applicant unless at a minimum it is found that the applicant demonstrates the character, reputation, integrity, and general fitness is such as to command the confidence of the community. Additionally, the applicant must not have made a material misstatement in the application. Sec. 36a-489(d)(1)(A)-(C). If the application is denied, the commissioner must notify the application and provide the reason(s) for denial. An application may be denied based on the history of criminal convictions of the applicant.

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