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It is important for companies involved in the mortgage lead generation and consumer loan lead generation businesses to be aware that their solicitation activities may trigger licensing requirements under state mortgage licensing or consumer loan licensing laws. Lead generation companies should take precautions to ensure that they are in compliance with licensing laws before conducting lead generation activities in any state.


In order to determine whether or not a state license is required for lead generators, a two-step analysis is required. First, it is necessary to carefully read state licensing statutes and regulations. Most states define the activities of a mortgage broker, mortgage banker, or consumer loan company very broadly, using action verbs such as “soliciting, processing, placing, negotiating, assisting, etc.”. “Soliciting” or “assisting” borrowers are the most common licensing triggers.

Second, it is then necessary to contact each state regulator and request a written opinion as to licensing requirements based upon the specific business model of the lead generator. Every lead generator conducts its business differently, requiring that a new analysis be undertaken for each company. In the alternate, the advice and opinion of a regulatory compliance attorney should be obtained.

Should a mortgage license or consumer loan license be required, lead generators will be subject to the same laws, requirements, and restrictions as companies that originate such loans.


Notwithstanding the above, it is interesting to note that, recently, the mortgage industry has been regulating lead generators even more intensely than the mortgage regulators themselves. What is happening is that mortgage companies are requiring that lead generators be licensed in all states where the lead generators obtain leads.  As a result, mortgage licensing has become a prerequisite for lead generators to do business with mortgage companies. This is true regardless of whether the lead generator actually needs a state license or not (based upon a legal analysis of its business model).

Finally, in recent years we have also seen licensed lead generators actively informing state regulators of unlicensed lead generator competitors.  Lead generators which have spent hundreds of thousands of dollars on nationwide state licensing want a level playing field where all lead generators are licensed.

When a state regulator is alerted to the fact that a lead generator is unlicensed, the consequences for that lead generator can be substantial – state attorney general lawsuits, massive fines, cease and desist orders, etc.

Because of the large downside risks associated with conducting an unlicensed lead generation business, and with not being in compliance with licensing laws, it is critical that each mortgage lead generator seek the advice of finance industry counsel before engaging in mortgage lead generation or consumer finance lead generation activity in any state.

The Finance Industry’s Licensing Authority Since 1996