There is nothing wrong with being a loan officer AND a real estate agent. Or a real estate broker with a mortgage company. Properly disclosed, you can provide valuable insight and enhanced service because you're closer to the business on both sides and understand the machine's workings. You're not just a "clueless" agent or MLO; as an MLO/agent, you understand the problems presented by an incomplete loan application and not just "Why isn't the loan approved yet?" And, as an agent/MLO, you understand why it's essential to write seller contributions correctly and why everyone gets upset when a closing date starts to slip, setting off a cascade of delayed closings and moves...
The problem arises when you try to act in both roles in the same transaction and "double-dip." Now, you have a conflict of interest.
Morty says you can do this in 45 states. I'm not so sure. Some states are silent, some don't disallow the dual/role, and some have disallowed it. Expect more clarity going forward, but specifically disallowed states are:
North Dakota | Not Allowed | Examiner - Ownership is okay, but they cannot be agents and MLOs on the same transaction. |
Illinois | Not Allowed | IDFPR |
Louisiana | Not Allowed | La. Rev. Stat. §6:1090(I) |
Utah | Not Allowed | Prohibited per 61-2c-301 (1)(i) |
RI | Not Allowed | Comment |
MD - Cannot Collect Finders Fee AND Commission
CT - Must calculate mortgage originator earnings as an hourly rate based on time spent when collecting real estate commission
As one commenter pointed out, CA mortgage brokers are real estate agents - so it's okay there!
Just because there isn't a law preventing it, the issue is that you have a fiduciary duty to two parties. There is ample opportunity for legal liability when you want the loan and the transaction to go through, but it may not be in the buyer's or seller's best interests.