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Net Branching – Georgia

Georgia Mortgage License Application Warning

NET BRANCHING is not acceptable and net branches will not be approved. Definitions of net branching vary, and only upon receipt of complete branch information will the Department be able to determine if a proposed branch (additional office) complies with Department’s standards.

While other criteria may be added as this issue develops, the Department will consider the following factors in determining whether an office location qualifies as a branch or is actually a separate business/legal entity which must be licensed separately:

  • Who the actual owner or lessee of the property location proposed as a branch is.
  • Whether branch managers and employees are supervised W-2 employees of the applicant/licensee or are unsupervised independent contractors paid on a 1099 basis.
  • Whether all required books and records are maintained at the principal place of business (Rule 80-11-2-.01). Income and expense items must be accounted for on the books of the licensee at the main location. No separate books and records may be maintained for each location (although subsidiary records may be maintained for convenience purposes).
  • If you the licensee are a lender, you must provide funding for the loans generated by any branch. It is not appropriate for a lender’s branch to broker loans to other lenders.
  • The licensee must have consistent policies and procedures and quality control for loan origination and processing that are enforced at all the branches.
  • All operating, financial, and employee records for the branch need to be kept at the main office.
  • If the Department discovers that a licensee is allowing a person or company to operate from an inadvertently unapproved location or via a net branch arrangement, the licensee will be fined for each unapproved location and for each unapproved branch manager [See Department Rule 80-11-3-.01, paragraphs (6) and (17)]. Revocation procedures against that licensee may be initiated as provided for in O.C.G.A. §7-1-1002 (c) and O.C.G.A. §7-1-1017, and the lender may be fined for each loan generated from an unapproved location. Fine amounts are listed in the Department’s Rule 80-11-3-.01

The Finance Industry’s Licensing Authority Since 1996