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Rules of the Department of Financial Institutions

TO: All Residential Lenders, Brokers and Servicers

SUBJECT: Exemptions from Licensing

DATE: January 24, 2002

TCA 45-13-103 (c)(1) provides that the provisions of the Residential Lending Brokerage and Servicing Act do not apply to: “Any person who makes five (5) or fewer mortgage loans within a twelve month period." The purpose of this Bulletin is to clarify the applicability of this provision of law.

This section serves as an exemption from the licensing and registration requirements imposed under TCA § 45-13-103(a). Generally, this exemption only applies to “Mortgage lenders” and does not apply to “Mortgage loan brokers” or to “Mortgage loan servicers” as brokers and servicers do not make loans within the context of this statute.

To determine the identity of the lender we look to the loan documents. Therefore, an exception to this general rule occurs when a loan is “table funded” and the broker is listed on the loan documents as the lender even though the loan may be simultaneously sold to another entity at closing.

We often get inquiries from mortgage loan brokers in other states asking if they must be licensed to broker a single loan secured by residential property in Tennessee. Using the above analysis, a broker may not broker a loan secured by residential property in Tennessee unless the broker either obtains a license prior to the loan being made, or the broker is listed as the lender on the loan documents.

Any questions regarding the applicability of this or other exemptions from licensing may be directed to Director of Licensing Carl Scott at 615-532-1002.