"Lenders License" requirement for NPN mods?

[Bob Malecki]

I'm working with a company who may raise some capital for my llc and they said that I may need a "lenders license" if I (my llc) modifies a preexisting loan. I've never heard of this, but thought I'd post here to get a reality check. Anyone ever heard of this and if so would it apply in our arena?

Thanks

[Dion DePaoli]

Can a Mortgage Servicer conduct a modification?  
Yes.  Employees working that area in the Servicer have their RMLO license.

Does Mortgagee need a license to negotiate new terms on a loan they own with that loan's Borrower?  No.  The Mortgagee is an interested party already.  

In general, any time a 3rd party takes application or negotiates terms between a consumer/borrower and a Lender with the expectation of a fee or gain, a license is required.  To some degree, under that same idea is why the employee of a licensed Mortgage Servicer company needs to be licensed in order to do that work inside their four walls.  The Mortgage Servicer is not an interested party being neither the Borrower or Mortgagee.  

A Mortgagee, along with the Borrower, are interested parties.  In Bob's case he is not "Lending" the loan is already originated and he invested into it.  A Mortgagee is allowed to talk to their Borrower and the Borrower to their Mortgagee about matters of repayment, since that is really the fundamental of their relationship.  

In terms of references - any state or the particular state of the subject property you will find the rules around mortgage license which will include that state's version of SAFE Act.  The answers you seek are there.

This idea that floats around that somehow you (anyone) is covered by someone else's license simply is not true.  It's not true anywhere licenses are involved for anything.  In general, a license is issued to a Mortgage Servicer to service loans in a third party capacity.  If the Mortgage Service directly invested in the loans and was the Mortgagee, their license is not required, its for the loans they do not own that a license is required.  

Until SAFE Act, employees (W-2) were presumed to be under that license.  SAFE Act said now the employees need licenses too.  Just like with bank RMLOs.  As an Investor who boards a loan with a Mortgage Servicer you are neither the Mortgage Servicer nor an employee under their direct supervision.  So there is no "coverage" from the Mortgage Servicer license to you.  You are simply hiring an agent (Mortgage Servicer) to do the work (Service the loan) and as such that party needs to have a license to do that for you.  An employee of the Mortgagee would not need a license either.  (Employee = W-2 not 1099)  An example would be akin to your neighbor having a real estate broker license and you doing "some" deals under the license.  You "covered" by his license, you need your own.   

I think the notion of being "under" their license has come up from general conversations of investor using some limited service Mortgage Servicers and talking to others about investing in the asset class.  I think is an exaggeration due to the casual conversation and the listener walks away thinking the wrong thing.  

Hope that helps.