Connecticut Requires Licensure of Lead Generators

On June 9, 2017, the Governor of Connecticut signed into law amendments to its residential mortgage loan licensing provisions requiring licensure of lead generators.  The amendments become effective October 1, 2017, and lead generators must be licensed by January 1, 2018.

The amendments define “lead generator” to mean a person who, for, or with the expectation of compensation or gain: (A) sells, assigns or otherwise transfers one or more leads for a residential mortgage loan; (B) generates or augments one or more leads for another person; or (C) directs a consumer to another person for a residential mortgage loan by performing marketing services, including, but not limited to, online marketing, direct response advertising or telemarketing. A “lead” is defined as any information identifying a potential consumer of a residential mortgage loan.

The amendments make clear that the lead generator license will not give a person the power to act as a mortgage loan originator, mortgage broker, mortgage correspondent lender or mortgage lender, and all advertisements must alert the public to such.  Further, the amendments state that a lead generation must not: (a) accept payment of any advance fee in connection with a residential mortgage loan, or (b) use, sell, lease, exchange or otherwise transfer or release information received from a consumer in connection with a residential mortgage loan inquiry for purposes other than as necessary to facilitate a residential mortgage loan transaction.

The following persons are exempt from licensure as a lead generator: (1) a bank, credit union or either’s wholly owned subsidiaries; (2) any person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker; (3) consumer reporting agencies; and (4) an employee of a person licensed or as a lead generator or exempt from licensure.