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In a seller financing transaction, does the MLOLA provide an exemption for a maximum number of residential mortgage loan transactions that may be originated before an individual is required to be licensed as a mortgage loan originator?
No, such an exemption does not exist. However, the SAFE Act Final Rule states that an individual generally is not “engaged in the business of a loan originator” when an individual acts as a loan originator in providing financing for the sale of a property owned by that individual, provided the individual does not engage in such activity with habitualness.
In considering whether activity is “habitual,” DIFS will generally apply the following standard. Unless other evidence to the contrary indicates that an individual is “engaged in the business” of loan origination, during a 12-month period from January 1 to December 31, an individual will not be considered to be engaged in the business of mortgage loan origination if the individual is not engaged in any activity under the MLOLA except seller financing transactions AND the individual originates three or fewer seller financed mortgage loan transactions. If four or more transactions are originated within such 12-month period, DIFS will presume the individual is “engaged in the business” and licensure as a mortgage loan originator is therefore required. Note that under the MLOLA, a mortgage loan originator must be a natural person.