23 Rule 605 of the Code of Ethics generally requires NRMLA Members to comply with all applicable regulatory requirements include provisions of the Federal Real Estate Settlement Procedures Act barring among other things referral fees and kickbacks, state mortgage regulatory provisions requiring licensing, and, with respect to FHA-insured HECM reverse mortgage loans, FHA requirements regarding licensing and employees and restricting arrangements with third parties. Applicable State Law. It is the Committee’s understanding that many states require that Lead Generation Providers engaged in soliciting and collecting such Lead Information from residents of their states be licensed to do so (or exempt from such licensing requirements), generally as “mortgage brokers,” and that they comply with applicable state requirements as they engage in that business. It is the Committee’s understanding, for example, that Arizona generally is of the view that a company is engaged in such licensable activity if it directly or indirectly provides consulting or advisory services to a borrower concerning the identity of potential lenders,1 and that the Arizona Department of Financial Institutions has cited a number of mortgage lenders for purchasing leads from unlicensed lead generators. Similarly, the Committee understands that the Virginia Bureau of Financial Institutions generally takes the position that any person who refers an individual seeking a loan to a lender or lenders is engaged in the business of a mortgage broker.2 Other states in which licensing appears to be required to provide such lead generation services include or may include, among others, California (under its Real Estate Law), Connecticut, Georgia, Idaho, Indiana, Maryland, Missouri, Ohio, Utah, and Washington. In describing and listing these states, or in listing some states and not others, the Committee is not intending to and is not providing legal advice to Lead Generation Providers about their actual or potential licensing obligations in the states in which they do business, or the NRMLA Lender Members. Determinations in that regard need be made by such Lead Generation Providers, in consultation with their own counsel. Given the prevalence of such state licensing requirements, however, and provisions of the NRMLA Code of Ethics requiring that NRMLA Members comply with applicable law, the Committee respectfully recommends that all NRMLA Member Lead Generation Providers consider with care their obligations in this regard. Through this Ethics Advisory Opinion, the Committee also provides express notice of its intent to inquire, under the Policies and Procedures applicable to its NRMLA Code of Ethics enforcement work, as to the duly licensed status of Lead Generation Providers brought to its attention. 1 See Ariz. Admin. Code R20-4-102. 2 Administrative Letter BFI-AL-1603.
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