209 CMR, § 42.03 - Application Procedure - Mortgage Lenders

(1) Application. Each Applicant for a license as a mortgage lender shall submit an application for licensure through the NMLS, containing such information as the Commissioner may require.

(2) License Requirements. An Applicant shall be required to submit detailed information supporting the following general requirements:

(a) Financial Responsibility. An Applicant shall demonstrate financial responsibility and shall maintain:

1. a net worth of not less than $200,000;

2. a bond in such form and with such sureties as may be approved by the Commissioner in a sum to be based on the amount of the Applicant's aggregate mortgage loans, as determined by the Commissioner, but in no event shall the sum of the bond be less than $100,000, up to a maximum of $500,000; provided that the sum of such bond may be increased by the Commissioner at any time to such amount, up to the $500,000 maximum, as shall be shown to be necessary. The surety bond must contain a clause that the insurance company will notify the Commissioner at least 30 days prior to canceling the surety bond for any reason. The Commissioner shall automatically suspend the license on the date the cancellation takes effect, unless the surety bond has been replaced or renewed; and

(b) Financial Statements. An Applicant shall submit financial statements prepared in accordance with generally accepted accounting principles meeting the following minimum requirements:

1. Contents. The financial statements required by 209 CMR 42.03(2)(b) shall include, but are not limited to, a Balance Sheet, Income Statement, Statement of Cash Flows, and Statement of Changes in Stockholders' Equity and all relevant notes thereto. If an Applicant's audited or reviewed financial statements are consolidated, the Applicant shall include supplemental statements for each of the consolidated entities.

2. Initial Application. An Applicant under 209 CMR 42.03(2)(b) shall submit audited financial statements for the preceding fiscal year and such other financial information as the Commissioner may require.

3. Renewal Applications. Within 90 days of the close of its fiscal year, an Applicant for license renewal shall submit financial statements for the preceding fiscal year that have been audited by an independent certified public accountant and such other financial information as the Commissioner may require.

4. Audit Scope. All financial statements shall be audited in accordance with generally accepted auditing standards.

(c) Character and Fitness. An Applicant shall submit information demonstrating that the Applicant possesses the character, reputation, integrity and fitness to engage in the business of a mortgage lender in an honest, fair, sound and efficient manner.

(d) Business Experience. An Applicant shall demonstrate to the Commissioner's satisfaction that the Applicant, and its applicable officers and employees, possess the necessary educational and business experience to engage in the business of a mortgage lender.

(e) Other Information. An Applicant shall submit such other information as the Commissioner may deem necessary to properly evaluate an application. In evaluating an application and requesting information from an Applicant, the Commissioner may be guided by or rely upon the standards set forth in the CSBS/American Association of Residential Mortgage Regulators NMLS Policy Guidebook, as published by the SRR.

Notes

209 CMR, § 42.03

Amended by Mass Register Issue 1320, eff. 8/26/2016. Amended by Mass Register Issue 1470, eff. 5/27/2022.