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Connecticut Issues No Action Position Relating to Certain Licenses and the U.S. Location Requirement

On August 22, 2018, Commissioner Perez issued a Memorandum setting forth a no action position relating to the U.S. Office location requirement that went into effect on October 1, 2018. As it relates to mortgage activity, the referenced requirement can be found in Sections 8 and 79 of Public Act 18-173.

As enacted, Public Act 18-173 requires mortgage activity subject to licensure to be conducted from an office located in a “state” as defined by Section 36a-2 of the Connecticut General Statutes. Section 36a-2(64) defines “state” to mean: “any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the trust territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands.”

The Department indicates in its Memorandum that it received several inquiries concerning the effect of this requirement on licenses presently held and otherwise valid through December 31, 2018, for offices in locations that do not meet the definition of “state.” The Memorandum provides that Connecticut is taking a “no action” position with respect to the conduct of activity by licensees from locations that do not meet the definition of “state” through December 31, 2018, provided that the person engaged in such activity is otherwise in compliance with the licensure requirements in effect prior to Public Act 18-173.

The Memorandum provides: “[t]he entity or individual engaging in business is deemed to have an otherwise valid license for such activity, effective through December 31, 2018, to conduct said business under the controlling statutes prior to the requirement that the licensed activities be conducted from an office located in a ‘state’, as defined in Section 36a-2(64) of the Connecticut General Statutes.”

The Memorandum can be located here

Presumably, the licenses for non-“state” offices will not be eligible for renewal. The provisions of the Public Act restricting activity subject to licensure to the U.S. and its territories are emblematic of state regulators’ concerns about how to appropriately vet foreign entities, foreign control persons, and foreign MLOs consistent with post-SAFE Act licensure requirements, as implemented by the states, coupled with available NMLS processes surrounding credit reports and criminal background checks.

Copyright © by Ballard Spahr LLP


About this Author

Stacey Valerio, Of counsel
Of Counsel

Stacey L. Valerio focuses her practice on the mortgage banking industry. Stacey has more than 20 years' experience, including nearly a decade at the State of Connecticut Department of Banking's Consumer Credit Division, where she handled licensing and enforcement matters, with primary focus on the mortgage industry. In that role, she counseled the Consumer Credit Division, served as an administrative hearing officer, and drafted legislation, legal opinions, and rulings. The position also involved working with various other state and federal agencies, including the state...