209 CMR, § 42.05 - Application Procedure - Mortgage Brokers

(1) Application. Each Applicant for a license as a mortgage broker 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 $25,000;

2. a bond of $75,000 in such form and with such sureties as may be approved by the Commissioner. 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 42.05(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 42.05(5)(b)2. shall submit financial statements for the preceding fiscal year that have been audited or reviewed by an independent certified public accountant 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 or reviewed by an independent certified public accountant and such other financial information as the Commissioner may require.

4. Scope. An Applicant's audited financial statements shall be performed in accordance with generally accepted auditing standards and reviewed financial statements shall be performed in accordance with the Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants.

(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 broker 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 broker.

(e) Other Information. An Applicant shall submit such other information 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, § 42.05

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