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F R e d e r a l e s e r v e B a n k OF DALLAS D allas, T e x a s, A p r il 13, 1951 R E G U L A T IO N X ST A T U S OF R E A L E S T A T E A N D M O R T G A G E B R O K E R S To Certain Registrants Engaged in the Business of Extending Real Estate Credit in the Eleventh Federal Reserve District: T h is letter is issued f o r th e in fo rm a tio n o f real estate b ro k e rs and m o rtg a g e b ro k e rs w h o m ay be u n certain as to th eir resp o n sib ilitie s u n der R e g u la tio n X . A co p y o f the R egu la tion , as rep rin ted F e b ru a ry 15, 1951, is enclosed, to g e th e r w ith A m en dm en ts 1, 2, and 3. T h e R eg u la tion con trols cr e d it term s o f loan s m ade to finance ce rta in k in ds o f newr con stru ction , but, f o r th e p u rp oses o f re g istra tio n , e v e ry b ro k e r w h o is en ga ged in the b u sin ess o f ex ten d in g real estate cred it, even th ou gh h e exten d s no such cr e d it w ith resp ect to n ew con stru ction , is deem ed to be a “ R e g istra n t” u n der th e R egu la tion . A p erson is deem ed to be en ga ged in th e b u siness o f ex ten d in g real estate cre d it if, d u rin g th e cu rren t or p reced in g calendar year, in h is ow n r ig h t o r as a gen t o r fiduciary, h e exten d s o r has extended such cred it m ore than th ree d ifferen t tim es, o r in an am ount or am ou n ts a g g r e g a tin g m ore than $50,000. C ertain kinds o f non residen tial p rop erties (as w ell as residen tial p rop erties) are n ow cov ered b y R egu la tion X . I f a b rok er reg u la rly m akes real estate loans in his ow n r ig h t o r as a fidu ciary, or as an official rep resen ta tiv e o f som e lending organ iza tion , o r if he a ccep ts fe e s fr o m lenders f o r h is serv ices in a rra n g in g real estate loans, each such tra n sa ction is deem ed to be an exten sion o f real estate credit. Th e R egu la tion does n ot app ly to a b rok er, h ow ever, w ho, in con n ection w ith a n y such tra n sa ction , acts solely as a gen t f o r a b orro w e r, even th ou gh h e receiv es a fe e fr o m th e b orrow er. In a ty p ica l sale o f real estate, w h ere the real estate b rok er a cts as sales a g e n t f o r the ven d or, th e b ro k e r m a y also a rra n ge th e financing f o r the sale. In su ch cases, i f th e b ro k e r receiv es a fe e fr o m a lender f o r his services in a rra n g in g th e financing, w h eth er th e lender is th e ven d or or a th ird p a rty , th e b ro k e r ord in a rily w ould be con sidered an a gen t f o r th e lender. H ow ever, if th e b rok er does n ot receiv e such a fe e , b u t m e re ly con ta cts or o th e r w ise n eg otia tes w ith th e lender on b e h a lf o f th e ven d or o r vendee, h e o rd in a rily w ould n ot be con sidered an agen t f o r th e lender. A ll b rok ers and oth ers w h o are s u b je c t to the R egu la tion are a u to m a tica lly re g iste re d until su ch tim e as th e B oard o f G overn ors o f th e F ederal R e se rv e S ystem , b y public ann ou n cem ent, m a y requ ire fo rm a l reg istra tion . It is n ot n ecessary, th e re fo re , to re g iste r w ith th e F ed era l R eserve B an k at th is tim e. It is n ecessa ry, h ow ever, th a t certa in re co rd s be m a in tain ed w h ich , u pon in spection , will indicate com plian ce w ith R egu la tion X . In m a n y cases th is m eans th a t a S tatem ent o f th e B o rro w e r should be taken w hen a rra n gem en ts f o r a loan are m ade. Sam ple fo rm s f o r th ese statem en ts are enclosed. W h en a m o rtg a g e is tra n sfe rre d o r assign ed to a nother This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) lender, th e b rok er m a y tr a n s fe r b rok er sh ould keep in his office a and th is re co rd should sh ow th e tra n s fe rre d it and th e d ate o f th e th e pap ers and record s p erta in in g to it. H ow ever, th e re co rd o f th e f a c t th a t h e a rra n ged th e loan o r ig in a lly ; id e n tity o f th e p erson or in stitu tion to w h om h e has tra n sfe r. F o r h is ow n p ro te ctio n and to fa c ilita te com plia n ce exa m in a tion s, it m ig h t be well fo r th e b rok er to m a in ta in a record o f all loans placed, w h ich cou ld inclu de th e fo llo w in g in fo r m a tio n : 1. D a te o f application. 2. A m o u n t o f loan. 3. L o ca tio n o f p rop erty . 4. Sale p rice o f p ro p e rty (o r valu ation i f th e re is no s a le ). 5. In d ication o f w h eth er or n ot loan is s u b je c t to R egu la tion X (F H A and V A loan s are n o t s u b je c t ). 6. N a m e and a dd ress o f b orrow e r. 7. N a m e and a dd ress o f lender. 8. D a te o f tr a n s fe r o f m o r tg a g e papers. T h e d iscu ssion p resen ted in th is letter is intended f o r y o u r gen eral gu idan ce. It is h oped th a t it w ill be h elp fu l as such. A ll person s en ga ged in th e real estate business should re fe r to R eg u la tion X its e lf f o r in fo rm a tio n on specific p roblem s. T h is bank and its branch es a t E l Paso, H ou ston , and San A n to n io w ill be glad to fu rn ish a n y fu r th e r in fo r m ation w h ich m a y be desired con ce rn in g th e R egu lation . Y o u rs v e ry tru ly, R . R. G IL B E R T P resid en t
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