dorothy dumnich consulting, inc.
Arizona Mortgage Broker and Mortgage Banker Industry Consultant
Lead Generators; Buying and Selling Leads
DID YOU KNOW...?
How many do you get in a day? E-mails and faxes that offer to sell you leads for mortgage loans? (I get a ton and I don't even "do" mortgages.) Some are really great deals not too costly -- and, after all, gotta be careful about how you spend those marketing dollars.
I'm talking about all of those lead generators who are telling potential borrowers that they can get them a mortgage loan or a mortgage lender. You know, the ones that are telling you, a licensed mortgage company, that they can get you borrowers. DID YOU KNOW that in Arizona these lead sellers all fall smack-dab in the middle of the definition of a Mortgage Broker or Mortgage Banker AND in Arizona that means that they need a Mortgage Broker or Mortgage Banker license to get paid for their services?
The definition of a Mortgage Broker and Mortgage Banker in Arizona law is a person who for compensation or in the expectation of compensation either directly or indirectly makes, negotiates or offers to make or negotiate a mortgage loan or a mortgage banking loan.
"Directly or indirectly making, negotiating or offering to make or negotiate" is clarified by Arizona Administrative Code to mean:
·Providing consulting or advisory services in connection with a mortgage loan
transaction, a mortgage banking loan transaction or a commercial mortgage loan transaction"
-To an investor, concerning the location or identity of potential borrowers, regardless of whether the person providing consulting or advisory services directly contacts any potential borrowers; or
-To a borrower concerning the location or identity of potential investors or lenders; or
·Providing assistance in preparing an application for a mortgage loan transaction, a mortgage
banking loan transaction or commercial mortgage banking loan transaction, regardless of whether the person providing assistance directly contacts any potential investor or lender.
The fact that the potential borrower doesn't pay for the service is immaterial. The fact that the loan closes or doesn't close is immaterial.
So now, what does that mean to you, the Arizona-licensed mortgage company? Well for starters, Arizona law prohibits someone from receiving any value or any benefit (compensation) for acting as a mortgage broker or mortgage banker who isn't appropriately licensed. The same law prohibits an Arizona licensed mortgage company from paying to or contracting with someone who is acting as a mortgage broker or mortgage banker but who isn't appropriately licensed.
Where does that put you?
Let's say you have a Mortgage Broker license in your own name you're a sole proprietor. You don't buy leads well, hey, you're in compliance!
Perhaps you own a company that has a Mortgage Broker license - or maybe you're the designated Responsible Individual on a license and it is established policy that the company does not buy leads. That means that the company is in compliance--Good!
Now let's talk about EMPLOYEES. Do you ask if your loan officers or other employees are paying for leads? Do you even know where your employees get their leads? Do you address buying leads in an employment agreement or an employee policy and procedures manual? Do you address it at all?
Who do you suppose is on the hook for employees' actions "while they are acting in the course of the Mortgage Broker or Mortgage Banker business? DID YOU KNOW both the Mortgage Broker laws and the Mortgage Banker laws include the list of who gets to work under a license and who is liable for the actions of everyone who works under that license. Did you guess that the licensee is liable? If you did, you are right. Whether the licensee is a natural person (sole proprietorship) or other than a natural person (a company), the licensee is liable.
NOW...YOU KNOW.
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