Real Estate and Mortgage Licensing for CDCs

Research is a critical support for practice. It can uncover creative new approaches to old challenges, help us think about our work in a broader context and confirm or disprove our assumptions and beliefs. It can help make the case for funding programs or projects to government officials and foundations or help us fight NIMBYs. It can suggest a framework that lets us strategize more effectively or provides new tools for action.

NHI has long been involved in researching issues in affordable housing and community development. Recently we have expanded our staff and committed to an ongoing research program, dedicated to the investigation and communication of applied research to inform the work of practitioners and policymakers.

In the last issue of Shelterforce, we introduced this column. In that issue we focused on some initial results from a multi-year project on shared-equity housing. This issue’s Update provides an overview of a new project: Real Estate and Mortgage Brokerage Licensure Issues for CDCs.

A small but growing number of CDCs are interested in providing real estate and mortgage broker services in their communities, or want broker licenses to facilitate their own work. They want to provide access to mortgage loans, serve as realtors or expand their property management services beyond their own developments. This is driven by a number of factors – the move to comprehensive neighborhood strategies, the focus on market-driven approaches, the degree to which many neighborhoods are underserved or even victimized by real estate and financial firms and the desire to expand their mission and vertically integrate their operations.

To include real estate services, CDCs must meet state licensure requirements, and states often set high hurdles for new brokers. Requirements for brokers vary from state to state, but generally include experience, education and an examination. Typically, to be eligible for the real estate broker test, the candidate must have been previously licensed as a real estate salesperson or the equivalent, document a certain number of years of experience and take some amount of coursework. Some states require that all the experience be obtained under the direct supervision of a broker, while others may accept comparable real estate experience obtained elsewhere. The amount of coursework varies; Pennsylvania requires 240 hours of instruction, while Texas requires 900. Some states may exempt certain people, such as licensed attorneys, from all or part of the requirements.

Mortgage broker licensure requirements vary even more widely. Some states have experience and education standards, while others address ‘good character’ issues rather than professional qualifications. But in most states licensees must post a surety bond, which can be substantial, or have a minimum net worth. Some states, such as Pennsylvania, provide a limited exception to the licensing requirement for community development activities.

CDCs must fully understand these requirements to proceed. Where they are an unreasonable barrier to access, CDCs and statewide CDC associations should be prepared to work at the state level to modify the requirements, or explore ways to provide comparable services without meeting these rules.

CDCs, intermediaries and statewide CDC associations need what we characterize as a ‘road map’ in order to effectively address this area. The purpose of the study is to provide three levels of information to CDCs and their supporters. First, to document and analyze existing licensure requirements. Second, to look for statutory and regulatory proposals for licensing reform and to identify any successful efforts. Third, to provide a guide for CDCs to meet the requirements or provide comparable services without licensing. We will also identify steps that groups of CDCs, intermediaries and networks can take to facilitate the process.

We hope that you will find our research, like Shelterforce, relevant and useful to you in your work. You can find more information and download or order print copies of reports on our Research and Reports page.


We’d like to hear from our readers. What new challenges or approaches should we research? What issues or questions should be part of our agenda? What would help you in your work? Let us know. Email or call us at 973-509-2888. For more information on NHI research activities, see www.nhi.org/policy.

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Shelterforce is the only independent, non-academic publication covering the worlds of community development, affordable housing, and neighborhood stabilization.

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