On April 23, 2021, the Arizona Department of Insurance and Financial Institutions issued Substantive Policy Statement 2021-02 to address issues concerning loan originator employment and compensation, and branch licensing requirements. In the Statement, the Department determines that Arizona mortgage laws do not prohibit Mortgage Lenders from employing and compensating licensed mortgage loan originators (MLOs) as independent contractors. The Department states that, after review of the relevant Arizona and federal mortgage laws and regulations, it found no express requirement that prohibits such practice.
The Department also provides guidance on branch licensing requirements in light of the developing remote working environment. In the Statement, the Department concludes that the physical location of a MLO does not require a sponsoring Mortgage Lender to obtain a branch license for such location unless the Mortgage Lender maintains that physical location in a similar manner to how it maintains its Arizona location to satisfy the physical presence requirement in the Arizona mortgage laws. However, the Department clarifies that all Arizona-licensed MLOs must continue to have a licensing nexus to an Arizona-licensed location, within or outside of Arizona, of the employing Mortgage Lender.
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