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The question of whether a state mortgage finance licensing obligation arises to acquire and hold mortgage loans or mortgage loan servicing rights has often generated confusion and raised questions among mortgage finance companies buying residential mortgage loans or mortgage servicing rights. Such uncertainty as to whether a state’s mortgage lender or servicer law applies to license such activities is also shared by certain state regulators.
Based on our analysis, few state mortgage finance licensing laws expressly extend the licensing obligation to purchase, acquire, or hold residential mortgage loans. More state mortgage financing licensing laws extend the licensing obligation to those who acquire, purchase, or hold mortgage loan servicing rights than those that extend the licensing obligation to those who acquire, purchase, or hold mortgage loans. From our analysis, the state regulators who apply their state’s mortgage lender or servicer licensing obligation to those who acquire and hold mortgage loan servicing rights do so based on one of four criteria, because the state law expressly provides that it applies to license those who: