The Ohio Division of Financial Institutions (“DFI”) recently published Residential Mortgage Lending Letter 2024-01 (ML 2024-01) to announce the repeal of Ohio Revised Code Sections 1322.07(C) and 1321.59(G), which prohibited a licensed mortgage loan originator, mortgage broker or mortgage lender (collectively ,“mortgage professionals”) from also acting as a real estate broker or agent (collectively, “realtor”) in a real estate purchase transaction.
In previous guidance, published in both 2006 and 2010, the DFI advised that mortgage professionals were prohibited from acting in a dual capacity, as it constituted “improper and dishonest conduct” in violation of the Ohio Code. The DFI states that the intent of the prohibition was to prevent conflicts of interest that could arise when the person seeking to complete a sale of property is also the person trying to obtain financing for the sale.
ML 2024-01 states that after a review of federal law, and the laws in other states, the prohibition against dual capacity has been repealed. A licensed mortgage professional may now act in a dual capacity in a real estate purchase transaction if the buyer is provided a “Dual Capacity Disclosure” informing the buyer that there is no obligation to use the mortgage professional’s services. If the Dual Capacity Disclosure Form is not provided to the buyer when applicable, the DFI states that this would constitute improper, fraudulent, or dishonest dealings under Ohio Revised Code §1322.40(C) and Ohio Administrative Code § 1301:8-7-16(A). Mortgage professionals are advised to review their policies and practices to conform to this revised guidance.
The DFI has published a model Dual Capacity Disclosure Form, which includes both mortgage loan originator and real estate broker information. As of July 11, 2024, DocMagic has made the Ohio Dual Capacity Disclosure (Form ID: OHDCD.MSC) available to select from the Forms List. If a loan transaction has more than two borrowers, multiple copies of the form will be provided to accommodate a signature line for each borrower.
For additional questions, please contact DocMagic’s Compliance Department.
