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Texas Department of Savings and Mortgage Lending

Frequently Asked Questions (FAQ):
Real Estate Broker and Salesperson Questions

The Texas SAFE Act provides that a licensed real estate broker or salesperson may perform “real estate brokerage activity” in connection to a transaction without having a residential mortgage loan originator license.  The Texas SAFE Act defines real estate brokerage activity as:

  • Acting as a real estate broker or salesperson for a buyer, seller, lessor, or lessee of real property;

  • Bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;

  • Negotiating, on a party ’s behalf, any provision of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than a negotiation conducted in connection with providing financing with respect to such a transaction

 

The following questions and answers are intended to provide guidance to licensed real estate brokers and salespersons in determining whether or not certain activities require licensure as a residential mortgage loan originator under the Texas SAFE Act.

 

Does the Texas SAFE Act prohibit a real estate broker or salesperson from contacting the existing lender in a short sale to facilitate the transaction?  No, contacting the existing lender to determine whether or not they will approve a short sale transaction is considered a real estate brokerage activity and is not in connection with providing financing to the prospective buyer.

 

In a short sale transaction, can a real estate broker or salesperson provide information about the subject property to the existing lender?  Yes, this action does not require a residential mortgage loan originator license.

 

I represent a seller who is delinquent on his mortgage loan payments.  I’m concerned that his lender may proceed with foreclosure actions before we can sell the house.  May I contact the seller’s existing lender to work out a loan modification?  No.  Engaging in loan modification activities requires a license under Texas law.  The Texas SAFE Act requires an individual to be licensed prior to taking a residential mortgage loan application or offering or negotiating the terms of a residential mortgage loan.  Additionally, the Mortgage Broker License Act clarifies that residential mortgage loans include, “new loans and renewals, extensions, modifications, and rearrangements”.

 

I represent a potential buyer in a transaction.  Can I provide the buyer with general information about the benefits and features of different loan types such as FHA, VA, Conventional, etc?  You may provide general information about loan programs to the buyer.  However, if you either take a residential mortgage loan application or attempt to negotiate a residential mortgage loan on your client’s behalf, you must be licensed as a residential mortgage loan originator.

 

I am a licensed real estate broker.  My client is selling a home that she owns as investment property. The person she is selling to intends to use the home as a residence.  She will be offering seller financing.  Do I need to be licensed under the SAFE Act?  Generally, an individual who acts in the capacity of a residential mortgage loan originator (takes an application or offers or negotiates terms) must be licensed.

Chapter 156.202 of the Texas Finance Code contained an exemption for an owner of real property who, in any 12-consecutive-month period makes no more than 5 mortgage loans to purchasers of the property for all or part of the purchase price of the real estate against which the mortgage is secured. This de minimis seller financer exemption was not carried over to the Texas SAFE Act in Chapter 180. However, in August 2010, the Texas SML Commissioner issued a written notice relating to this exemption.

We recommend you review the notice for the latest information on this subject.

 

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