Indiana Amends MLO Licensing and Sponsorship Requirements

Indiana recently amended its MLO-related regulations, expanding the MLO licensing exemption to include certain non-employee (independent-contractor) loan processors and underwriters performing supervised clerical or support duties, and allowing certain companies to sponsor MLOs that are not employees, under specific conditions, among other changes. 

Prior to this amendment, loan processors or underwriters who were not employees of a licensee or exempt entity were required to maintain an MLO license.  Under this amendment, these loan processors or underwriters, if performing only clerical or support duties and directed and supervised by a licensed or registered MLO, no longer require an MLO license.

The amendments also allow entities that are licensed or exempt from licensing under the mortgage law and the UCCC to sponsor non-employee MLOs if the entity:

• By agreement, allows the MLO to perform these activities exclusively for it;
• Assumes responsibility and reasonably supervises the MLO;
• Maintains the required bond coverage for the MLO; and
• Ensures that the MLO holds a valid insurance producer license.

Neither of these amendments apply to non-employees of entities that voluntarily register under Indiana Code 24-4.4-1-202(b)(8), which includes persons that engage in first lien transactions not as a creditor.  However, employee loan processors or underwriters may be sponsored by entities that voluntarily register. 

These amended regulations are effective now.