A mortgage loan originator (MLO) at our bank would like to post a flyer on social media advertising a residential mortgage loan program for physicians. The flyer contains both the MLO’s Nationwide Mortgage Licensing System (NMLS) identifier and our bank’s NMLS identifier. Does this information need to be listed directly after the message describing the loan program, or is it sufficient under Illinois law for these items to appear anywhere on the flyer?

We do not believe you are required to include either NMLS identifier on the flyer, but you may include them if you wish to do so.

The federal Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act)’s regulations require an MLO to “provide his or her unique identifier to a consumer: (1) Upon request; (2) Before acting as a mortgage loan originator; and (3) Through the originator’s initial written communication with a consumer, if any, whether on paper or electronically.” Although this provision does not require institutions to include the unique identifier on advertisements and other similar materials, the final rule’s publication states that “institutions are not prohibited from doing so.” As a result, if you choose to provide these identifiers on an advertisement, we believe their location on your flier is in your discretion.

The Illinois Residential Mortgage License Act of 1987 has more specific requirements for advertisements, but banks and MLOs employed by banks are exempt from these requirements. Consequently, neither your bank nor MLOs employed by your bank are required to display their NMLS identifier on your bank’s mortgage loan advertisements.

Additionally, note that any loan program that singles out a group of customers — such as physicians — creates some potential for fair lending concerns. Although customers who are not physicians are not a protected class, the program could result in a disparate impact on a protected class if employment as a physician tends to skew towards specific demographics. However, a policy resulting in a disparate impact can be justified by a “business necessity,” with documentation of any factors that went into setting the bank’s policy.

As such, we recommend documenting your business reasons for providing this loan program only to physicians so that your bank has a defense in the event an examiner finds a measurable disparate impact on a protected class. We also recommend monitoring the program and remaining sensitive to fair lending risks.

For resources related to our guidance, please see:

Regulation G, 12 CFR 1007.105(a) (“The covered financial institution shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution.”)

Regulation G, 12 CFR 1007.105(b) (“A registered mortgage loan originator shall provide his or her unique identifier to a consumer:

(1) Upon request;

(2) Before acting as a mortgage loan originator; and

(3) Through the originator’s initial written communication with a consumer, if any, whether on paper or electronically.”)

Final Rule, Registration of Mortgage Loan Originators, 75 Fed. Reg. 51623, 51642 (August 23, 2010) (“Furthermore, the Agencies intend . . . the rule to cover written communication from the originator specifically for his or her customers, such as a commitment letter, good faith estimate or disclosure statement, and not written materials or promotional items distributed by the Agency-regulated institution for general use by its customers. While, this provision does not require institutions to include the unique identifier on loan program descriptions, advertisements, business cards, stationary, notepads, and other similar materials, institutions are not prohibited from doing so.”)

Residential Mortgage License Act of 1987, 205 ILCS 635/7-14 (“The unique identifier of any person originating a residential mortgage loan shall be clearly shown on all residential mortgage loan application forms, solicitations, and advertisements, including business cards and websites, and any other documents as established by rule, regulation, or order of the Commissioner.”)

Residential Mortgage License Act of 1987, 205 ILCS 635/1-3(a) (“. . . No provision of this Act shall apply to an exempt person or entity as defined in items (1) and (1.5) of subsection (d) of Section 1-4 of this Act.”)

Residential Mortgage License Act of 1987, 205 ILCS 635/1-4(d) (“‘Exempt person or entity’ shall mean the following:

(1) . . . any national bank, federally chartered savings and loan association, federal savings bank, federal credit union; . . . any bank, savings and loan association, savings bank, or credit union organized under the laws of this or any other state; . . .

(1.5) Any employee of a person or entity mentioned in item (1) of this subsection, when acting for such person or entity, or any registered mortgage loan originator when acting for an entity described in subsection (tt) of this Section.”)

Residential Mortgage License Act of 1987, 205 ILCS 635/1-4(tt) (“‘Registered mortgage loan originator’ means any individual that: (1) meets the definition of mortgage loan originator and is an employee of: (A) a depository institution; (B) a subsidiary that is: (i) owned and controlled by a depository institution; and (ii) regulated by a federal banking agency; or (C) an institution regulated by the Farm Credit Administration; and (2) is registered with, and maintains a unique identifier through, the Nationwide Multistate Licensing System and Registry.”)

Illinois Fairness in Lending Act, 815 ILCS 120/3 (“No financial institution, in connection with or in contemplation of any loan to any person, may: . . . (c-5) Deny or vary the terms of a loan on the basis of the borrower’s race, gender, disability, or national origin. (d) Utilize lending standards that have no economic basis and which are discriminatory in effect. . . .”)

Illinois Human Rights Act, 775 ILCS 5/1-103(Q) (“‘Unlawful discrimination’ means discrimination against a person because of his or her race, color, religion, national origin, ancestry, age, sex, marital status, order of protection status, disability, military status, sexual orientation, pregnancy, or unfavorable discharge from military service . . . .”)

Equal Credit Opportunity Act, 15 USC 1691 (“It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant’s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under this chapter.”)

FFIEC Interagency Fair Lending Procedures, page ii (“The courts have recognized three methods of proof of lending discrimination under the ECOA and the FHAct:

Overt evidence of disparate treatment;

Comparative evidence of disparate treatment; and

Evidence of disparate impact.”)

FFIEC Interagency Fair Lending Procedures, page iv (“When a lender applies a racially or otherwise neutral policy or practice equally to all credit applicants, but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis, the policy or practice is described as having a ‘disparate impact.’ . . . The fact that a policy or practice creates a disparity on a prohibited basis is not alone proof of a violation. When an Agency finds that a lender’s policy or practice has a disparate impact, the next step is to seek to determine whether the policy or practice is justified by ‘business necessity.’ The justification must be manifest and may not be hypothetical or speculative. Factors that may be relevant to the justification could include cost and profitability. Even if a policy or practice that has a disparate impact on a prohibited basis can be justified by business necessity, it still may be found to be in violation if an alternative policy or practice could serve the same purpose with less discriminatory effect.”)