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SAFE Act Frequently Asked Questions

Private Lender, Seller Carry, or Manufactured Structure Dealer


When is a mortgage loan originator license required?
A mortgage loan originator license is required to take an application for a residential mortgage loan or for offering or negotiating the terms of a residential mortgage loan. There are few exceptions to the requirement.


Are there a maximum number of transactions I can do before I have to get a mortgage loan originator license?
No. If a mortgage loan originator license is required, even one transaction requires a license.


Can I just get a temporary license?
No, there is no temporary license available.


Does the license requirement apply to a manufactured home?
Yes. The definition of dwelling in the SAFE Act includes manufactured homes, whether or not they are attached to real property. Financing to purchase a manufactured home in a park setting is still subject to the licensing requirements.


If I have a manufactured structures dealer license, do I also need a MLO license to offer financing on homes in my park?
Maybe. The law provides an exemption for an individual licensed as a manufactured structure dealer to originate up to three loans per 12-month period as long as the individual uses a written sale agreement form that complies with the requirements of ORS 646A.050, 646A.052, and 646A.054, along with any rules adopted under those statutes. However, the individual may not hold more than eight mortgage loans at any given time. This means if a person previously has made eight or more loans and still has the right to receive payments under at least eight of these loans, the individual may not make a ninth loan without obtaining a loan originator license or using a licensed loan originator to originate the loan.


If I have a limited manufactured structures dealer license, do I also need a mortgage loan officer license to offer financing on homes in my park?
Maybe. The law provides an exemption for an individual licensed as a limited manufactured structure dealer license with ownership interest in a manufactured home park to originate up to five loans per 12-month period as long as the individual uses a written sale agreement form that complies with the requirements of ORS 646A.050, 646A.052, and 646A.054, along with any rules adopted under those statutes. However, the individual may not hold more than 12 mortgage loans at any given time. This means if a person previously has made 12 or more loans and still has the right to receive payments under at least 12 of those loans, the individual may not make a 13th loan without obtaining a loan originator license or using a licensed loan originator to originate the loan.


Does an employee of a licensed manufactured structure dealer have to have an MLO license when the mobile home park wants to sell abandoned or surrenderd structures and provide financing for the transaction?
Yes. There is no MLO license required to sell the home, but the employee needs to be a licensed MLO to take the application and negotiate financing for the transaction.


If a manufactured home park owner does a rent-to-own transaction, is the owner required to have an MLO license to handle it?
No. Rent-to-own contracts that do not contain financing terms do not fall within the scope of MLO licensing requirements to have a mortgage loan originator negotiate the terms.


I'm selling my residence and the buyer wants me to provide the financing. Do I need a license?
ORS 86A.203(2)(c) provides an exception from the MLO licensing requirements for an individual providing financing as part of the sale of the individual's residence, but the exemption is limited. Most people do not need a license to provide seller-carry financing; however, if you have previously made loans using a licensing exemption and you are still entitled to receive payment on eight loans, then you may not use this exemption.


I am selling my investment property. Do I need a license?
ORS 86A.203(2)(d) provides an exception from the MLO licensing requirements for an individual providing seller-carry financing for non-owner occupied property, such as an investment property. A person can only use this exemption to provide financing for up to three loans in a 12-month period and may not use this exemption if the person is already entitled to receive payments on eight loans made under this exemption.


I am a licensed mortgage loan originator, and I communicated the seller's original terms to the buyer, who declined them. Can the seller and buyer then negotiate from that point on by themselves?
Only a licensed mortgage loan originator can negotiate or discuss the terms with the buyer in a seller-carry transaction in which a mortgage loan originator must be used. This means that the licensed mortgage loan originator would have to negotiate the transaction until the negotiations are complete.


I want to make a private money loan with my own funds for my own investment. In the past I did not need an MLO license; do I need a license now?
There are two different license requirements that must be analyzed: a mortgage broker/banker (company) license and a mortgage loan originator (individual) license. ORS 86A.100(3)(b)(C) and (5)(b)(F) provide a limited exemption from the requirement to obtain a company license. Without obtaining a company license, individuals can make up to 10 loans a year using their own money for their own investment purposes as long as they do not hold themselves to be in the business of making loans. Thus, individuals may not have a commercial business location for making loans, may not advertise that they make loans, and must make the loan in their own name. Although a company license is not required for an individual investor to make a limited number of loans, there is no corresponding exemption for an MLO license. An individual must have a MLO license to make these loans or use a licensed loan originator to facilitate the loan.


As an investor making a private money loan, can I have multiple loan originators originate the loans for me or do I always have to use the same loan originator?
An investor may work with different loan originators and different mortgage companies in making private money loans.


If the loan is secured by the borrower's residence but the loan is for a business purpose, is a mortgage loan originator license required?
An MLO license is required for a business loan secured by the borrower¿s residence because licensing is based on the type of property. The purpose of the funds is irrelevant. Thus, a mortgage loan originator license is required even if the loan is a business loan, unless some other exemption applies.


Is either the company or the MLO license required to lend on any type of property?
A company or MLO license is not required for all types of all types of property; the licensing requirements are tied to residential mortgage loans, which are loans secured by residential one-to-four-family property, or land residential one-to-four-family property is planned to be built. The licensing requirements apply to bare land and construction loans if the property will have a one-to-four-family home built on it. For instance, a loan to a person buying a lot to build his or her home on would be a covered transaction and would require a license. Commercial or multi-family properties in excess of four family units do not require either the company or mortgage loan originator license. If a manufactured home, but not the land underneath it, will secure the loan, a company license is not required but an MLO license is unless some other exemption applies.


How do I apply for an MLO license?
The application must be submitted through the Nationwide Mortgage Licensing System (NMLS). More information is at http://mortgage.nationwidelicensingsystem.org/Pages/default.aspx, and our frequently asked licensing questions at http://www.oregondfcs.org/ml/faq.html.


What is the potential fine for unlicensed activity?
The potential fine for unlicensed loan originator activity would be the same $5,000 per occurrence that applies for all other violations of Chapter 86 of the Oregon Revised Statutes.


When did the licensing requirements go into effect?
The requirements went into effect August 1, 2010.


Does this have to be a full document transaction?
We do not require the file to be a full document file in the conventional sense of that term; however, we require that the file comply with the private money investor requirements of OAR 441-870-0050 and OAR 441-870-0060 as well as OAR 441-865-0060.


Does Oregon law require analysis of the borrower's ability to repay the loan?
Oregon law requires an analysis of a borrower's ability to repay the loan if the loan contains provisions for negative amortization. Oregon also enforces certain federal laws, including the Truth in Lending Act (TILA), which requires the lender to analyze ability to repay. Thus, Oregon will require an analysis of ability to repay for any loan that is subject to TILA and that act's requirements to determine ability to repay.


Can a licensed mortgage originator collect the fee for originating a private money loan, or does the fee need to be paid to the company sponsoring that mortgage loan originator?
The mortgage loan originator can do loans only through the company that sponsors the MLO's license; therefore, the transaction is really done in the company's name. The company must supervise the MLO and is responsible for the transaction. Although Oregon law is silent on the issue of collecting the fee, it is anticipated that the companies will collect the fee due to the supervision requirements.


Are there any limits on the fees that can be charged for facilitating a private money transaction?
There are no specified limits in Oregon law on the fees that can be charged.