Florida, Illinois add remote work legislation for originators

Florida, Illinois and Nevada recently enacted legislation that will clarify and open up work-from-home opportunities for mortgage loan officers, fueling momentum for a growing movement within the industry. 

The additions of Florida and Illinois means five out of the six largest states now have statutes permanently allowing originators to work remotely under certain conditions. The two states previously permitted remote work through pandemic-related guidelines, but codifying laws through legislative statute, rather than just guidance, has been a goal of mortgage banking associations across the country, said Bob Niemi, director of government affairs at Weiner, Brodsky, Kider. 

Nevada's new law represented an important update, as it had previously enforced rules requiring lenders to only perform acts of origination inside a licensed mortgage office.

"It's a remote world now," said Niemi, who works with bankers and regulators. "People can input information into the system or an app and you can review it and when you're doing that, it has to follow…the rules of the road for remote work."

The new legislation followed a model statute Niemi helped put together alongside mortgage industry regulators and officials across the country. 

"Acts of origination basically occur all the time," he said. "We always want to take the opportunity to make it as concise and clear as possible." 

Florida's bill, which was initially introduced in February, passed unanimously in the state's House and Senate chambers in May and was signed into law by Gov. Ron DeSantis later that month. Provisions of the bill began taking effect last week. 

Similarly, both the Illinois' Senate and House voiced their support last month to its bill in an amendment to previous legislation. Gov. J.B. Pritzker signed the bill at the end of June, with new rules set to become law in January. 

Also, in mid June, Nevada Gov. Joe Lombardo signed his name to legislation that also allows loan officers to work outside its branches. The bill received bipartisan support, with several provisions becoming effective immediately, Niemi noted. 

The latest moves add further momentum to the push toward establishing remote work rules for mortgage lending officers. In early 2023, Virginia and Montana passed into law rules to allow origination-related business to be conducted outside of licensed branches and offices. 

Several leading trade groups, including the Mortgage Bankers Association and the Community Home Lenders of America have long advocated for new regulations, citing opportunities to increase lending in underserved areas. 

Meanwhile, California's Department of Financial Protection and Innovation also provided updated guidelines at the end of February coinciding with the end of the COVID-19 state of emergency in the Golden State. The guidance clarified language within California's residential mortgage lending act, which did not prohibit work from remote locations, thereby allowing it to continue going forward. 

Most current regulations allowing lending officers to do their work remotely have several similar requirements, including adequate cybersecurity protocols and written procedures and policies for any work conducted off-site. But client interactions are often prohibited at a loan officer's residence when not licensed as a branch or principal office, and the maintenance of physical records within a remote workplace is also barred. 

Over half of all states and the District of Columbia have laws or state-issued guidelines permitting remote work for mortgage originators, while another nine are still currently operating under temporary COVID-19 guidance allowing for it, according to the Mortgage Bankers Association. A few states, including Michigan, Minnesota and Colorado, had already allowed originators to work remotely prior to the pandemic.

New York and New Jersey are among current holdouts, although further guidance might be coming later this year, Niemi said.