Georgia Banking Law Lets Nonprofits Offer Mortgages Without a License

October 28, 2014 | Charles Bowen


Georgia banking allows employees of nonprofit corporations to originate mortgages even without a mortgage originator license. Recent legislation clarifies what constitutes a nonprofit corporation for purposes of this law.  

On April 21, 2014, Governor Nathan Deal signed into law HB 750, a bill sponsored by Representatives Frye of the 118th District, Williams of the 119th District, Abrams of the 89th District, Cheokas of the 138th District, England of the 116th District and Douglas of the 78th District.  The bill was sponsored in the Senate by Senator Hill of District 6.

The bill made the following clarifications about what exactly constitutes a nonprofit corporation such that its employees would be allowed to originate mortgages without a mortgage originator license:

  • Must have the status of a tax-exempt organization under 501(c)(3) of the Internal Revenue Code of 1986 
  • Must promote affordable housing
  • Must conduct its activities in a manner that serves public or charitable purposes (i.e. not for any commercial purpose)
  • Must not receive funding, revenue or fees that in any way incentivize the corporation or its employees to act in any interest other than the best interest of its clients
  • Must provide or identify mortgage loans with terms favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs (i.e. consistent with the terms of loan origination in a public or charitable context and not a commercial context)
  • Must make mortgage loans in order to promote home ownership or home improvements for the disadvantaged

More Information …

Full text of the legislation as passed by Governor Deal is underlined in the PDF available here.

The full text of the law in context can be viewed on Lexis/Nexis here.

Bottom Line / Quick Info You Can Use

Georgia banking law specifies what kind of nonprofit corporations are allowed to originate mortgages through employees who are not licensed mortgage originators.  The law specifies that such nonprofit corporations must be  tax exempt under 501(c)(3) of the IRS Code, promote affordable housing and offer mortgages which are exclusively in the interest of the borrower amongst other qualifications.  

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Topics: Georgia Banking Law