A business closes a Tennessee residential mortgage loan in its own name using funds provided by another person, then assigns the loan to that funding person. Under the mortgage loan broker definition quoted by TDFI, how does using the business’s own name affect classification of this transaction?
Correct Answer
A) It does not exclude the transaction; the definition expressly includes this funding-and-assignment arrangement
A. The quoted Tennessee definition expressly includes this own-name closing funded by another person and followed by assignment to that person. TDFI quotes section 45-13-105(15), which includes a person closing a residential mortgage loan in the broker’s own name with another person’s funds when the loan is subsequently assigned to that funding person. The source therefore does not make closing in the business’s own name an exclusion from mortgage loan brokering under these facts. Scope and exceptions: This question classifies the described transaction under the quoted broker definition; it does not decide every license a business may need or authorize unlicensed activity. Separate exemptions, licensing requirements and other state or federal transaction rules still apply. Source: Mortgage Company, quoted T.C.A. 45-13-105(15), own-name closing funded by another person and subsequent assignment; current official indexed body — https://www.tn.gov/content/tn/tdfi/mortgage-consumer-lending/mortgage.html
Why This Is the Correct Answer
A. The quoted Tennessee definition expressly includes this own-name closing funded by another person and followed by assignment to that person. TDFI quotes section 45-13-105(15), which includes a person closing a residential mortgage loan in the broker’s own name with another person’s funds when the loan is subsequently assigned to that funding person. The source therefore does not make closing in the business’s own name an exclusion from mortgage loan brokering under these facts. Scope and exceptions: This question classifies the described transaction under the quoted broker definition; it does not decide every license a business may need or authorize unlicensed activity. Separate exemptions, licensing requirements and other state or federal transaction rules still apply.
Why the Other Options Are Wrong
Option B: It excludes the transaction because a broker may never close a loan in its own name
Contradicts the definition’s express allowance for the loan to close in the broker’s own name.
Option C: It excludes the transaction because using another person’s funds is outside the broker definition
Another person’s provision of funds is part of the included arrangement, not an exclusion.
Option D: It excludes the transaction once the loan is assigned to the person who supplied the funds
Subsequent assignment to the funding person completes the described arrangement rather than removing it from the definition.
Exam Tip
For this Tennessee definition, examine who supplies the funds and receives the assigned loan, not only whose name appears at closing.
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