The Unlicensed Assistant, the Unregistered Fargo Office, and the Guaranteed-Rate Ad
Marcus is a loan originator at Lakeshore Mortgage Group, an NDFI-licensed mortgage broker with its main office in Bismarck. Forty-five days ago Lakeshore opened a Fargo office; it is staffed by Marcus and two assistants but has not been added to the company's license. Priya, one of the assistants, is not licensed. She answers the main line, pulls credit with the caller's verbal authorization, tells callers 'you would qualify up to $340,000 at 6.25%,' and then transfers the call to Marcus, who takes the application. Lakeshore's Instagram ad reads: '6.25% 30-year fixed - guaranteed lowest rate in North Dakota! Ask for Marcus, your North Dakota mortgage banker. NMLS #123456.' The ad shows no company name. On a call, Marcus tells a first-time buyer that Lakeshore is 'basically a bank, so we underwrite our own loans,' although Lakeshore brokers to three wholesale lenders and funds nothing itself.
1. Which of Priya's activities fall outside the clerical or administrative exception and require licensure, and what is Marcus's exposure?
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The clerical exception covers administrative support: greeting callers, collecting basic contact information, assembling files, scheduling, and distributing marketing material. It does not cover activity performed in connection with a residential mortgage loan application where the person takes an application or offers or negotiates terms.
Pulling credit and then telling a caller a qualifying loan amount and rate is quoting terms and advising on a loan - that is origination, and Priya is not licensed. Her script has to be rewritten so she identifies the caller, collects non-sensitive information, and transfers without discussing eligibility, credit, or pricing. Marcus's exposure is real and separate: he supervises Priya, he benefits from the screened calls, and every application that came through her screening carries an aiding-and-abetting and supervision problem for him and for Lakeshore. The entity also faces discipline because the arrangement was a business practice, not one isolated mistake.
2. Identify each defect in the Instagram ad and explain the standard it violates.
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Four defects. First, 'guaranteed lowest rate in North Dakota' is an unsubstantiated superlative - it cannot be proven, it is deceptive on its face, and it invites a UDAP and licensing complaint. Second, a specific rate is quoted without an APR, without loan terms or assumptions, and without a statement that rates change; a rate in advertising has to be a real, currently available product with the required accompanying disclosures. Third, calling Lakeshore a 'mortgage banker' when it brokers to wholesale lenders and funds nothing misrepresents the company's role and its capacity to underwrite. Fourth, the ad omits the licensed company name as it appears on the license, and it displays only an individual identifier rather than identifying the licensed entity.
The ad must be pulled, corrected, and re-run only after compliance sign-off, and a copy of the original retained for the record retention period. The company should also be able to show the file supporting any rate it advertises.
3. What must Lakeshore do about the Fargo office, and what happens to business conducted there before it is licensed?
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Each office location must be licensed or registered before business is conducted from it, so the Fargo office has been operating without authority for 45 days. Lakeshore should add the office in NMLS, pay the required fee, identify a licensed branch manager, and wait for approval before originating there again. It should also confirm signage, record storage, and the branch address match the filing.
For the unlicensed period, Lakeshore should inventory every application taken at Fargo, self-report to NDFI, and expect the regulator to look at how many loans were originated and whether consumers were harmed. Those files are exposed to examination findings and, potentially, to repurchase demands if investor agreements contain licensure representations. The remediation is a written office-opening procedure that requires NDFI/NMLS approval before anyone takes a call or application from a new location.