- SAFE Act and state licensing laws – it’s illegal to quote rates and fees and take an application (including the qualifying piece) unless you are a licensed loan originator. The licensing rules also prohibit anyone that is not licensed as a mortgage broker or lender from “advertising” mortgage loans. This might also apply to the “advice” given by real estate agents.
- Federal Mortgage Advertising Practices (MAP) Rule (Regulation N) prohibits any misleading communication. This includes ALL communication via face to face, over the phone, email, online and otherwise. CFPB regulators can impose hefty fines on the agent if the agent gives mortgage advice without being a licensed loan originator… especially if it’s wrong advice.
- Depending on the advice given, the real estate agent may be engaging in “origination activities” as defined in the loan originator compensation rule, 12 CFR 1026.36(d), e.g., referring a consumer to a particular loan product. The rule might require the licensed broker to perform background checks and train the agents, provided that the agents are deemed to be employees for purposes of the rule.
- There may be state real estate laws that preclude or restrict unauthorized real estate agent activities. Also, the NAR Code of Ethics prohibits illegal and unlicensed activities.
- Depending on the advice given, the real estate agent could be prosecuted for the unauthorized practice of law.
It’s more important than ever to work with a licensed and qualified mortgage professional. Contact me for more details!