Mo. Ann. Stat. § 443.867 requires a residential mortgage loan broker to provide a loan brokerage disclosure statement and fee agreement with each borrower, which contains certain disclosures. We are currently providing Cx3328 for this requirement and it is configured to print when “Lender is a Broker?” equals “Yes.”
A “residential mortgage loan broker” is officially defined as “any person, other than an exempt person, engaged in the business of brokering, funding, servicing, or purchasing residential mortgage loans” (Ibid. § 443.703[32]). The use of the term “funding” in this definition is a bit ambiguous, which can lead to a conclusion that a “residential mortgage loan broker” can include a mortgage lender, or it could refer to an entity which provides funds for a loan, but does not actually extend a loan to the borrower.
Until now, our conclusion on this matter has been that “residential mortgage loan broker” does not include mortgage lenders, since Chapter 443 provides a separate definition of “lender” (see Ibid. § 443.703[16]), the administrative regulations which formerly required this document specifically exempted lenders from providing it, unless they were acting as brokers (see Mo. Code Regs. Ann. tit. 20, § 1140-30.080 [2006]), and other states, when they refer to mortgage lenders, use terms such as “making” or “extending,” rather than “funding” loans to describe them.
However, from discussions we have had with the Missouri Department of Insurance, Financial Institutions, and Professional Registration, it has been concluded that “residential mortgage loan broker” includes all retail mortgage lenders (most wholesale lenders and depository institutions regulated by the Federal government are exempt; see Supra 443.703[10]).
As a result of this, we will be modifying Cx3328 to print when “Lender is a Broker?” equals “Allow Any.” We will also be modifying the content of the document in the following ways:
- The first paragraph in the “Loan Brokerage Agreement” section will be modified so that Clauses (I) and (II) will print as separate paragraphs, with indications disclosing whether the broker does or does not make mortgage loans and whether the actual funds for such loans are provided by another entity or not. It will also continue to contain the cautionary warning that if the funds are provided by another entity, the availability of funds will be affected by this.
- Following these first three paragraphs, an additional one will be included to indicate whether the residential mortgage loan broker will be acting as a mortgage broker or as a mortgage lender (in the colloquial sense) in connection with the specific loan for which this document is printed for.
- References to a third-party lender in the document (notably in Clauses 2 & 8) shall contain caveats which indicate that a third-party lender will only by present in connection with the loan if the mortgage broker is acting as a broker for the loan.
- References to the “Good Faith Estimate” will be replaced with references to the “Itemization of Amount Financed.”
- Other minor edits to make the language more compatible for both brokers and lenders, as well as to fix some punctuation errors.
These changes will take effect immediately. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.
October 13, 2014
DR 158247
Update:
Upon further review of Cx3328, we have decided to create two new fields to facilitate marking the checkboxes in the first few paragraphs of the document. The two new Yes/No fields are:
- Does Broker Make Mortgage Loans (Field Index 96956)
- Loan Funds Provided By Broker (Field Index 96957)
If these fields are not used, field “Lender Is A Broker” (Field Index 18205) will be used by default to mark the appropriate checkboxes. A minor text change was also made for item II; instead of saying that the funds “are” or “are not” provided by another entity, the text now reads that the funds “may” or “may not” be provided by another entity.
These changes will be made available immediately.
May 1, 2015
DR 169316