Prohibits an individual who is licensed as both a Rhode Island real estate agent and mortgage loan originator to be compensated for both the sale of the property and the origination or referral of the loan in securing the property.
Summary
H5811 amends Rhode Island’s mortgage licensing law, which adopts the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2009, by adding one more prohibited practice for covered persons. The new prohibition bars an individual who is licensed both as a Rhode Island real estate agent and as a mortgage loan originator from being compensated in the same transaction for both the sale of the property and the origination or referral of the mortgage loan used to finance that purchase. The bill is framed as an ethics and consumer-protection measure within the state’s mortgage lending regulatory scheme.
More broadly, the bill leaves intact the existing list of prohibited acts and practices for mortgage professionals, including fraud, deceptive advertising, undisclosed fees, improper appraiser influence, and other licensing and disclosure violations. Its practical effect is to tighten conflict-of-interest rules for dual-licensed professionals involved in residential real estate transactions, especially where a single person could otherwise receive compensation from both sides of the deal. The act takes effect immediately upon passage.
Impact
The bill amends Chapter 19-14.10 of the Rhode Island General Laws governing mortgage loan originators and related mortgage business activities. It specifically expands the prohibited acts section to prevent dual compensation in a single residential property transaction by someone acting as both a real estate agent and a mortgage loan originator. This affects licensed real estate agents, mortgage loan originators, brokers, and consumers involved in home purchase financing, and it may require affected professionals and firms to adjust compensation arrangements, disclosures, and compliance practices.
Sentiment
The available voting record indicates broad support for the bill. It passed the House Committee on Corporations unanimously, 14-0, and then passed the full House by a wide margin, 65-2. No committee transcript is available, but the strong vote totals suggest the measure was generally viewed as a straightforward consumer-protection and conflict-of-interest reform rather than a controversial policy change.
Contention
The main point of contention, based on the bill’s substance, is the restriction on dual compensation for individuals who hold both real estate agent and mortgage loan originator licenses. Supporters would likely view the change as necessary to reduce conflicts of interest and protect borrowers from divided loyalties or steering, while any opposition would likely come from professionals or industry participants concerned about limiting legitimate compensation structures or adding compliance burdens. The vote totals, however, show little visible resistance in the legislature.