Denial of mortgage lender’s license is within state’s authority, COA rules

September 8, 2014

The Indiana Court of Appeals found the Indiana Department of Financial Institutions had the authority to deny a mortgage lender originator’s license to an applicant who has a criminal record.  

Michael Massey sought a judicial review after the Department of Financial Institutions turned him down for a license on the grounds that he did not meet the character and fitness requirements. Massey served a total of 10 years in prison for convictions of armed robbery, possession of marijuana with intent to deliver, and possession of a firearm by a felon.

The trial court concluded that the state department exceeded its statutory authority when it denied Massey a state license. The court found the National Mortgage Licensing System and Registry has the sole authority to issue MLO licenses, and it had already issued Massey a federal license.  

In Department of Financial Institutions, State of Indiana v. Michael Massey, 49A02-1401-MI-16, the Court of Appeals reversed the trial court’s ruling.

The COA held the express language of the federal Secure and Fair Enforcement for Mortgage Licensing Act gives states the power to issue mortgage licenses. Further, the court found the Department of Financial Institutions acted within its discretion when it determined Massey’s criminal convictions prevented him from meeting the mortgage license’s character and fitness requirements.    



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