Three Requests Priya Should Decline This Week
Priya holds a New Jersey MLO license sponsored by a Paramus residential mortgage lender, and she also keeps an active New Jersey real estate salesperson license with Bright Homes Realty. Three requests land the same week. (1) A Pennsylvania couple buying a home in Stroudsburg, Pennsylvania asks her to take a full application over the phone. (2) A cash buyer purchasing a $625,000 house in Montclair asks Priya to 'run the closing' at the title company on Saturday because the buyer's attorney is unavailable. (3) Her Instagram ad goes live reading 'Rates from 5.99% - call Priya, your Jersey mortgage expert,' with no license number and no APR. Her branch manager says, 'We're busy. Just handle it.'
1. May Priya take the application for the Stroudsburg, Pennsylvania property?
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No. Mortgage loan originator licensing follows the state where the property is located, not where the borrower lives or where the loan officer sits.
- Her New Jersey MLO license, sponsored by a New Jersey-licensed lender, authorizes her to originate loans secured by New Jersey property. A loan secured by a Pennsylvania property requires a Pennsylvania MLO license, sponsored by a Pennsylvania-licensed mortgage lender or broker.
- Her New Jersey real estate salesperson license does not extend to Pennsylvania and would not authorize mortgage activity in any event.
- Taking the application is the licensure trigger - an unlicensed activity finding, an NMLS record entry, and possible DOBI referral. 'The lender is licensed there' does not license her.
Compliant options: warmly refer the couple to a Pennsylvania-licensed loan officer and be careful about compensation. A fee or thing of value for the referral can raise RESPA Section 8 issues, and she should not present the referral as a service she performs under her own license. She should also tell the couple plainly that her license covers New Jersey property only.
2. Can Priya conduct the Saturday closing in Montclair?
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No. New Jersey is an attorney-closing state for residential real property transactions, and conducting a closing is the practice of law.
- A New Jersey-licensed attorney must handle or supervise the closing, prepare and review the deed and mortgage documents, and explain their legal effect.
- A title agent, real estate salesperson, or loan originator may not run the closing, draft the documents, or give legal advice about them. Notarizing signatures does not cure this - notarization is not the practice of law.
- Unaided document preparation and closing conduct carry civil exposure and potential criminal exposure for the unlicensed practice of law, plus license discipline for Priya on both her MLO and her real estate license.
- She also should not steer the buyer to a particular attorney as a condition of anything, and if she is compensated for an attorney or title referral, RESPA Section 8 becomes an issue.
Correct answer to the buyer: the closing must be rescheduled to a time when a New Jersey attorney can attend, or the buyer's attorney should arrange coverage. That answer does not change because the buyer is paying cash or because it is Saturday.
3. What is wrong with the Instagram ad, and does the manager's instruction protect Priya?
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Two independent disclosure failures, and the manager's instruction is not a defense - the licensed individual is accountable for her own advertising.
- Licensing identification. New Jersey requires mortgage advertising to identify the licensed entity and the originator's unique NMLS identifier. An ad that says only 'Priya, your Jersey mortgage expert' fails that requirement and makes it hard for a consumer or examiner to verify who is licensed.
- Triggering terms under TILA/Regulation Z. Stating a rate - including a 'from' rate - is a triggering term. It must be accompanied by the APR and, where required, the specific terms of the example (down payment, term, whether the rate is fixed or adjustable). '5.99%' with no APR and no terms is misleading in addition to being incomplete.
- State consumer protection. A teaser rate few borrowers will actually receive can be a deceptive practice under the New Jersey Consumer Fraud Act, which carries significant penalties.
Fix: pull the ad, add the licensee's name, NMLS ID, APR, and the loan terms behind the example, and keep a copy of the final ad in the compliance file. 'The manager told me to' does not transfer the licensing consequence to the manager.