Frequently Asked Questions: Revised Loan Broker Act – Effective July 1, 2007
What are the requirements for an initial license as a loan broker?
What are requirements to renew a license as a loan broker?
- Same as for an initial application.
- Renewal applications are due December 1 of the year in which the license expires.
Where can I get a bond?
- The Secretary of State, Securities Division, cannot advise you to use a specific bond company
- A good starting point is a provider of homeowners insurance, renters insurance, or automobile insurance.
How do I apply for registration as a principal manager or an originator?
- Complete the initial academic instruction requirements;
- Successfully pass the principal manager or originator comprehensive examination;
- Properly complete an Application for Registration as a Principal Manager or an Originator (State Form 49718/Form LB 4);
- Submit with a properly completed application a $200.00 application fee for registration as a principal manager or a $100.00 application fee for registration as an originator; and
- Undergo state criminal background check in each state in which you have resided or worked in the previous ten (10) years.
- A registration is not effective during any period in which the registrant is not employed by a license loan broker.
- A registration is valid until January 1 of the second year after issuance, at which time the registrant must apply for renewal.
What is the education requirement?
- The requirement for an initial applicant is twenty-four (24) hours of live academic instruction, acceptable to the Commissioner, in the previous twenty-four (24) months. The initial twenty-four (24) hours of academic instruction must include at least one (1) hour of academic instruction on Indiana loan broker law and at least two (2) hours of academic instruction on federal loan broker law.
- The requirement for a renewing applicant is six (6) hours of approved academic instruction each calendar year following the year in which the registration was initially issued.
- A List of approved courses is on our website at www.in.gov/sos/securities/public.html and is updated monthly
Who has to undergo a criminal background check?
- Each of the loan broker's ultimate equitable owners must submit a criminal background report.
- Every applicant for registration as a principal manager or an originator must submit a criminal background report.
- A criminal background report must be submitted from each state where the individual has resided or worked in the previous ten (10) years.
- NOTE: A loan broker license or certificate of registration will not be issued until all required criminal background report(s) have been received and reviewed by the Indiana Secretary of State, Securities Division.
Must the compensation of an originator be reported on a W2 or IRS Form 1099?
- This is a tax issue that should be addressed to the loan broker's tax preparer or accountant.
- The Loan Broker Act and Regulations require that all originators and principal managers be employees of the loan broker.
How long does a loan broker have to register an originator or a principal manager?
- Under the Revised Loan Broker Act, effective July 1, 2007 it is the responsibility of both the applicant for registration as a principal manager or an originator and the loan broker to become registered with the Division.
- A loan broker may not employ an individual for the purpose of conducting origination activities or serving as a principal manger unless the individual is properly registered with the Division.
- An individual may not serve as a principal manager or conduct origination activities on behalf of a licensed loan broker unless they are registered with the Division
- Conducting origination activities or serving as a principal manager in Indiana without being properly registered is a violation of the Loan Broker Act, and under the Revised Loan Broker Act, the loan broker, and unregistered individual may be in the violation of the Act.
- An individual's registration is not in effect during times in which the principal manager or originator is not employed by a licensed loan broker
If a principal manager or an originator leaves a loan broker, must the loan broker notify the Division?
- Yes, the loan broker must notify the Division within five (5) business days of the termination and the reasons for the termination, whether voluntary or involuntary.
May an originator work for multiple loan brokers?
- No, an originator may not be employed by more than one loan broker at a time.
May a loan broker operate branch offices?
- Yes, but the loan broker must notify the Division of all branch offices that are located or engaging in origination activites in Indiana by submitting a Branch Office Notification Form (State Form 53264/Form LB 3) for each branch office.
- Before a loan broker conducts origination activities out of a branch office, the loan broker must first employ a properly registered principal manager for each office location.
What are the exemptions for the licensing requirement?
- The exemption are found in Indiana Code § 23-2-5-19(a).
- There is no reciprocity exemption with other states.
- There is no de minimus exemption.
What do I need to submit to claim an exemption?
- The requirements depend on the exemption that you are claiming.
- If you are claiming an exemption under Indiana Code § 23-2-5-19(a)(8) you must:
- Claiming an exemption under Indiana Code § 23-2-5-19(a), excluding Ind. Code § 23-2-5-19(a)(8):
- Letter claiming exemption
- Required evidence supporting claim of exemption
What is the scope of the exemption?
- The exemption does not extend to a subsidiary of the exempt loan broker or an unaffiliated third party.
- A claim of exemption under Indiana Code § 23-2-5-19(a)(8)(D) does not extend to a registered United States Department of Veterans Affairs Agent
- Branch offices of an Exempt Loan Broker do not automatically fall under the scope of exempt status of the main office. Evidence must be submitted to the Division demonstrating that the branch office qualifies for the exemption.
