2012 Connecticut General Statutes
Title 36a - The Banking Law of Connecticut
Chapter 668 - Nondepository Financial Institutions
Section 36a-487 - (Formerly Sec. 36-440b). Exemptions from licensure.

(a) The following are exempt from licensing as a mortgage lender, mortgage correspondent lender or mortgage broker under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b: (1) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured, any operating subsidiary of a federal bank or federally-chartered out-of-state bank or any wholly-owned subsidiary of a Connecticut bank or a Connecticut credit union; (2) any person licensed under sections 36a-671 to 36a-671d, inclusive, or exempt from licensure under section 36a-671c, who is negotiating or offering to negotiate terms of a residential mortgage loan as authorized by said sections 36a-671 to 36a-671d, inclusive; and (3) any person engaged solely in providing loan processing or underwriting services to persons (A) licensed as a mortgage lender, mortgage correspondent lender or mortgage broker, or (B) exempt from such licensure under subdivision (1) of this subsection. Each wholly-owned subsidiary of a Connecticut bank or Connecticut credit union that engages in the business of making residential mortgage loans or acts as a mortgage broker in this state shall provide written notification to the commissioner prior to engaging in such activity.

(b) The following are exempt from licensing as a mortgage lender or mortgage correspondent lender under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b:

(1) Persons making five or fewer residential mortgage loans within any period of twelve consecutive months, provided nothing herein shall relieve such persons from complying with all applicable laws;

(2) Bona fide nonprofit organizations making residential mortgage loans that promote home ownership for the economically disadvantaged;

(3) Agencies of the federal government, or any state or municipal government, or any housing finance agency making residential mortgage loans under the specific authority of the laws of any state or the United States. For purposes of this subdivision, a “housing finance agency” means any authority: (A) Chartered by a state to help meet the affordable housing needs of the residents of the state; (B) supervised directly or indirectly by the state government; (C) subject to audit and review by the state in which it operates; and (D) whose activities make it eligible to be a member of the National Council of State Housing Agencies;

(4) Persons licensed under sections 36a-555 to 36a-573, inclusive, when making residential mortgage loans authorized by said sections;

(5) Persons owning real property who take back from the buyer of such property a secondary mortgage loan in lieu of any portion of the purchase price of the property;

(6) Any corporation or its affiliate that makes residential mortgage loans exclusively for the benefit of its employees or agents;

(7) Any corporation, licensed in accordance with section 38a-41, or its affiliate or subsidiary, that makes residential mortgage loans to promote home ownership in urban areas;

(8) Persons acting as fiduciaries with respect to any employee pension benefit plan qualified under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, who make residential mortgage loans solely to plan participants from plan assets; and

(9) Persons making secondary mortgage loans to immediate family members.

(c) A bona fide nonprofit organization shall be exempt from licensing as a mortgage broker under sections 36a-485 to 36a-498f, inclusive, 36a-534a and 36a-534b to the extent that such bona fide nonprofit organization acts as a mortgage broker in connection with residential mortgage loans to be exclusively made by persons covered by the exemption set forth in either subdivision (6) or (7) of subsection (b) of this section.

(d) Any person exempt from licensure under this section may register on the system as an exempt registrant for purposes of sponsoring a mortgage loan originator or a loan processor or underwriter pursuant to subdivision (1) of subsection (b) of section 36a-486. Such registration shall not affect the exempt status of such person.

(e) For purposes of this section, a “bona fide nonprofit organization” means an organization that has filed a written certified submission to the commissioner in a form prescribed by the commissioner and with such documentation as may be required by the commissioner and that demonstrates to the satisfaction of the commissioner that the organization: (A) Has the status of a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended; (B) promotes affordable housing or provides home ownership education or similar services; (C) conducts its activities in a manner that serves public or charitable purposes rather than commercial purposes; (D) receives funding and revenue and charges fees in a manner that does not incentivize it or its employees to act other than in the best interests of its clients; (E) compensates its employees in a manner that does not incentivize employees to act other than in the best interests of its clients; (F) provides or identifies for the borrower residential mortgage loans (i) with terms favorable to the borrower, which means such terms must be consistent with loan origination in a public or charitable context, not a commercial context, and (ii) comparable to mortgage loans and housing assistance provided under government housing assistance programs; and (G) meets such other standards as the commissioner may by regulation require. Any organization that demonstrates to the satisfaction of the commissioner its status as a bona fide nonprofit organization shall, not later than December thirty-first of each year, submit to the commissioner a renewed certification and documentation to update all information last filed in support of such status and timely report any change in any information previously submitted.

(P.A. 85-399, S. 3; P.A. 88-65, S. 37; P.A. 89-211, S. 41; P.A. 92-12, S. 88; P.A. 94-122, S. 231, 340; P.A. 99-36, S. 24; P.A. 02-111, S. 4; P.A. 04-69, S. 3; P.A. 08-176, S. 41; P.A. 09-209, S. 6; P.A. 11-216, S. 11; P.A. 12-96, S. 9.)

History: P.A. 88-65 deleted a reference to industrial bank in Subsec. (a); P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 92-12 redesignated Subdivs.; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440b transferred to Sec. 36a-487 in 1995; P.A. 99-36 made a technical change; P.A. 02-111 amended Subdivs. (2), (3) and (4) by substituting “making” for “granting”, amended Subdiv. (6) by changing “licensed lender” to “licensed mortgage lender” and amended Subdiv. (8) by substituting “makes” for “grants”; P.A. 04-69 substituted “36a-498a” for “36a-498”; P.A. 08-176 amended Subdiv. (1) to add reference to operating subsidiaries of federal banks and federally-chartered out-of-state banks, amended Subdiv. (2) to add “provided nothing herein shall relieve such persons from complying with all applicable laws”, amended Subdiv. (6) to replace former provision with provision re owners who take back a secondary mortgage loan in lieu of any portion of purchase price, added Subdiv. (10) re making of secondary mortgage loans to relatives, and made conforming changes, effective July 1, 2008; P.A. 09-209 designated existing introductory clause and Subdiv. (1) as Subsec. (a), amended same by adding citations to additional licensing provisions and adding exemptions re certain financial institutions, added Subsec. (b) re exemptions from licensing as a lender or correspondent lender, redesignated existing Subdivs. (2) to (10) as Subsecs. (b)(1) to (b)(9) and added “residential” re mortgage loans throughout, effective July 31, 2009; P.A. 11-216 amended Subsec. (a) to add provision re exemption is from licensing as a mortgage lender, mortgage correspondent lender or mortgage broker, designate provision re exemption for banks and credit unions as Subdiv. (1), add Subdiv. (2) re exemption for any person licensed under Secs. 36a-671 to 36a-671d or exempt from licensure and add Subdiv. (3) re exemption for any person engaged solely in providing loan processing or underwriting services to persons licensed as mortgage lender, correspondent lender or broker or exempt from such licensure, and added Subsec. (c) re persons exempt from licensure registering on the system; P.A. 12-96 amended Subsec. (b) to replace “corporations” with “organizations” in Subdiv. (2), to replace “quasi-governmental” with “housing finance” and add definition of “housing finance agency” in Subdiv. (3) and to make technical changes, added new Subsec. (c) re exemption of bona fide nonprofit organization, redesignated existing Subsec. (c) as Subsec. (d) and added Subsec. (e) defining “bona fide nonprofit organization”.