Who Needs To Be Licensed In The Mortgage Industry
Anyone who engages in the business of a loan originator will need to be licensed.
Engaging in the business of loan origination means you:
- Take residential mortgage loan applications,
- Offer or negotiate terms of a residential mortgage loan for compensation or gain,
- Hold yourself out to be or advertise that you can or will take a mortgage application or negotiate mortgage terms for compensation, or
- Are an independent contractor who acts as a loan processor or underwriter for residential real estate.
What does it mean to “take a residential mortgage loan application”?
A person “takes an application” if you receive a residential mortgage loan application for the purpose of facilitating a decision whether to extend an offer of residential mortgage loan terms to a borrower or prospective borrower.
What does it mean to “offer or negotiate terms of a residential mortgage loan for compensation or gain”?
If you do any of the following, it means youre offering or negotiating terms:
- Show residential mortgage loan terms to borrowers or potential borrowers for their consideration,
- Communicate with borrowers and prospective borrowers regarding residential mortgage loan terms with the goal of gaining the borrower’s business,
- Guide borrowers and potential borrowers toward specific lenders or residential mortgage loan terms with someone other than the borrower offering you incentives to do so, or
- Receive any payment as a result of a borrower entering into residential mortgage loan terms.
What Is The Nmls Number For Mortgage Lenders & What It Means
Keep in mind, not all lenders are the same. Thats why its important to verify something called an NMLS identification number. Doing so not only provides peace of mind, but can also prevent you from making a terrible mistake.
Lets take a closer look at the NMLS number and what it means for you, the consumer.
Cost To Get Your Mortgage License In California
When you’re ready to get your NMLS mortgage license in California, be prepared to pay the following fees:
$30 – NMLS Initial Processing Fee
$300 – License/Registration Fee
$36.25 – FBI Criminal Background Check
What is PE Expiration Policy?
PE Expiration is a policy that was created by the NMLS Policy Committee that addresses situations in which an individual is required to retake 20 hours of pre-licensure education if they fail to acquire a valid mortgage license within three years from the last date of licensure as a mortgage loan originator. California is currently in pending enactment for the PE Expiration policy which means the policy is currently not enforced, but it will be rolled out soon.
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California Continuing Education Requirements
After you obtain your CA-DFPI license, you will be required to complete 8 hours of Continuing Education each year, which includes:
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2 hours of non-traditional mortgage lending
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1 hour of undefined electives
Youll need to take into account the successive years rule, which prohibits you from taking the same courses for two years in a row. Mortgage Educators changes its continuing education to ensure that you wont have any issues with this rule.
**The deadline to complete CE in California is December 31. MLOs with the CA-DRE & CA-DFPI are actually prevented from applying for license renewal until they have completed their CE.
How Does The Nmls Protect Clients
From the perspective of a home buyer or someone looking to refinance, NMLS Consumer Access allows you to vet the person youre working with and check licensing requirements no matter which lender or mortgage broker they work with.
You can start by searching the NMLS number for your lender or MLO. The information that comes up can help you make an informed decision about who you work with.
The type of information thats going to come up in an NMLS search is going to vary a bit based on where the banker is licensed to do business. States often have slightly different requirements. However, at a minimum, youll be able to see their licensing information in one or more states. Additionally, you have the option of filing a complaint to the relevant regulatory agencies. You can see if they have dealt with regulatory action in the past.
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How Difficult Is The Mortgage Licensing Exam
The first-time pass rate for the licensing exam is 55%. The NMLS updates these numbers regularly. Persons that pass the exam take their study seriously and make sure to review all of the topic outlines that the NMLS provides for free. We strongly recommend that you get a test-prep or test-review product along with your pre-license education to reinforce concepts you will be tested over.
Notice Of Receipt Of Application
After all required components of the application, including the hard-copy and jurisdiction-specific documents, are received by the Department, a notification confirming receipt will be mailed to the applicant.
Please note that the notice of receipt is based on an initial review and additional materials may be requested during the processing of the application.
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Top 5 Things To Know About Becoming A Mortgage Loan Officer
Becoming a mortgage loan officer, or MLO, specifically with an independent mortgage broker in the wholesale channel, is a promising career path that offers flexibility, unlimited earning potential, and growth. Mortgage loan officers or mortgage loan originators are representatives of independent mortgage brokerages that evaluate and originate residential home loan approvals for borrowers and often facilitate the process through approval and closing.
Once you know what a mortgage loan officer does, you may have more detailed questions about the path to becoming one. If youre interested in joining the wholesale mortgage industry, read on for answers to some frequently asked questions on becoming and excelling as a mortgage loan officer.
How Does An Nmls Search Benefit Home Buyers
When searching for a mortgage loan officer, its important to do a search of the NMLS to make sure the officers you are considering are licensed to do business in your state.
A quick search of the NMLS can protect you from getting scammed by someone who claims to be a mortgage loan officer but is not actually qualified to originate loans in your state.
Fortunately, finding out if a loan officer is licensed is a simple task. First, visit the NMLS Consumer Access website. Once there, you can enter a loan officers NMLS ID, license number or name. By clicking SEARCH after entering this information, youll get a list of the states in which the loan officer is licensed to do business. You can also find information on when the loan officer must renew his or her license and whether any agencies have filed regulatory actions against the loan officer.
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How To Protect Yourself Against Predatory Lending
Its worth mentioning that predatory lending still exists even with the increased effort of consumer protection in recent years. Here are a few things you can do to avoid being another victim of loan fraud:
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Attend a homeownership education course
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Never make a false statement on a loan application, as such a mistake may result in criminal penalties
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Walk away if you are pressured into what seems like an unfavorable loan program
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Never sign a blank document, as a dishonest lender may go back and add information once they have your signature
How Does The Nmls Work
Any applications for state licenses as well as documentation or other required forms for licensing are filed through the NMLS, whether youre an MLO or a lender. Each loan officer or lender receives a unique identification number so that the records are associated with that individual or company. As an example, Rocket Mortgage® has NMLS #3030.
All new applications, changes or renewals to licensing are processed through the NMLS. This allows for quick lookup of licensing for individuals and allows the license to persist even if they switch company affiliations. NMLS makes maintaining licensing possible within the mortgage industry.
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Defining An Nmls Number For Loan Officers
Were willing to bet youve heard and seen at least a handful of ads for mortgage lenders. Look back at the last email you received from a loan officer. In addition to their primary message and contact information, youll also find their NMLS number.
The same holds true when you hear an ad for a mortgage company on the radio. Once the speaker finishes up with their talking points, they quickly run through the legalese, which includes NMLS consumer access. So what exactly does this number mean and why should borrowers care about it?
According to the NMLS Resource Center, The NMLS Unique Identifier is the number permanently assigned by the Nationwide Mortgage Licensing System & Registry for each company, branch, and individual that maintains a single account on NMLS. In simpler terms, a mortgage officer must go through the process of obtaining an NMLS number in order to offer a loan. The number then follows them throughout their career once they have one.
NMLS, which stands for Nationwide Mortgage Licensing System, originated in 2008 when the Secure and Fair Enforcement for Mortgage Licensing Act was passed. The SAFE Act, as its known today, requires loan officers to be licensed according to national standards. Consumers now have the ability to compare background, credentials, and other relevant information regardless of where their mortgage officer conducts business.
What Does Nmls Stand For
NMLS stands for the Nationwide Mortgage Licensing System. It registers license information for mortgage loan originators including both mortgage or lending companies and their loan officers and advisors. MLOs work with underwriters to qualify borrowers for their home loans. The NMLS allows you to search for loan officers and lenders to confirm their licenses are registered and meet industry requirements.
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What Are The Requirements For A Mortgage Lending License
The SAFE Act requires that state-licensed mortgage loan lenders and originators pass a written qualified test and undertake pre-licensure and continuing education courses. The Act also requires them to submit fingerprints to the NMLS for an FBI background check and authorize an independent credit report.
States may have their own supplemental requirements to the standard NMLS application. The system provides a checklist by state and license type. For example, Montana Mortgage Broker Company applicants are required to obtain a surety bond of up to $100,000. Pennsylvania Money Transmitter Company applicants must submit fingerprint cards for a Criminal Background Check for each control person. And a Massachusetts collection agency license applicant must submit various documents in hard copy via mail to the Division of Banks, including financial statements, notarized documents with original signatures, and a bond.
Note: While the SAFE Act requires NMLS to fulfill certain responsibilities associated with education services or background checks, individual state law determines if a state-licensed mortgage loan lender or originator must pass the SAFE Mortgage Test, complete education training, and complete their background checks.
What Else Should You Know About Mlo Licensing
To obtain an MLO license, you need to have a sponsor thats an NMLS-licensed entity. Your sponsor will have access to your profile and bears the responsibility for your actions.
Updating your information with the NMLS is mandatory. If the information on your MU4 form is no longer accurate, you have 30 days to update the information. You must submit your new information via the NMLS.
Your sponsoring entity is not allowed to change your information unless you provide consent. So if they revise your MU4 form, you have to provide an attestation before the info is sent to NMLS.
You shouldn’t ignore the disclosure questions on MU4 forms. In fact, many people have had licenses revoked because they provided inaccurate responses to these questions. As we mentioned earlier, revocation in one state means you wont be allowed to apply for a license in any other state, which means game over!
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What Is The Nmls Successive Years Rule
What Do You Need to Know About the “Successive Years” Rule?
As a licensed Mortgage Loan Officer youre required to take courses each year to renew your license. Aside from , the required the NMLS to put into place the successive years rule.
Lets take a look at the “successive years” rule and how it affects you as a Mortgage Loan Officer looking to renew your license.
Cost Of Getting Your Mortgage License In California
In addition, there are financial costs you will have to meet to get your license:
NMLS Initial Processing Fee: $30.00
FBI Criminal Background Check: $36.25
CA-DFPI Application Fee: $300.00
Total: $381.25
Keep in mind that this does not include fees for reporting course hours to the NMLS. Mortgage Educators includes all course reporting fees in its prices to help make that process easier. You will, however, be responsible for paying the NMLS testing fee .
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Can I Be A Real Estate Agent And Mortgage Loan Officer At The Same Time
Both real estate agents and mortgage loan officers play an essential role in the home buying process. From start to finish, homebuyers should work with both professionals to find and finance a home.
Because their services go hand in hand, it is often recommended that independent mortgage professionals build strong relationships with real estate agents to offer a fast and easy experience for their clients and build a referral network. As such, however, it’s also a common misconception that working as both a real estate agent and a mortgage loan officer at the same time is a conflict of interest and not allowed. You can certainly do both, given your state and lender programs allow it along with providing the required disclosures to ensure you are in compliance with regulations.
In states like California and Florida, for example, many real estate agents are also licensed mortgage loan officers. They often choose to extend their services and expertise to streamline the home buying and financing process, ultimately, positioning themselves to also be more competitive in their market and ensure their clients’ overall experiences are the best they can be.
If you are interested in becoming a dual-licensed professional, check with your state to find out more about their specific approach and requirements before moving forward.
Whats Included In The Successive Years Rule
According to NMLS: The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 requires that state-licensed Mortgage Loan Originators complete 8 hours of NMLS approved Continuing Education annually. The SAFE Act also stipulates that a state-licensed MLO may not take the same approved course in the same or successive years to meet the annual requirements for continuing education. NMLS has interpreted the term ‘successive years’ to mean two years in a row.
“To ensure compliance with this provision of the SAFE Act, courses that contain the same course content are considered the same course and cannot be taken two years in a row by an MLO.
Reminder: Taking the same course two years in a row will result in your CE not being counted for license renewal, which could result in your license being suspended!
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What Is An Nmls Number
The NMLS unique identifier is a number permanently assigned by the NMLS for each company, branch, and individual that maintains an account in the system.
This identifier was mandated by the SAFE act and most state mortgage licensing laws require mortgage loan originators to include it on various documents, including business cards.
Note: The NMLS unique identifier is automatically assigned to a company or individual when they create an account in NMLS. However, the identifier is not valid until a state license or federal registration has been issued.
Licensed Mortgage Loan Originator And Lending Manager Renewal
How do I renew my loan originator or lending manager license?
In addition to the continuing education that is required on a national level that includes 8 hours of continuing education , there is now an additional requirement of state-specific law and regulation. This course is only approved through the NMLS, but the content and length of the course is updated on an annual basis by the Division of Real Estate and the Mortgage Commission.
This course will consist of 2 hours of Utah law and regulation. This course must be completed Prior to requesting your renewal. Note: This course will show on your NMLS record and will be tracked through NMLS. Click on PROVIDERS to obtain a list of courses available.
Newly licensed Mortgage Loan Originators will have a one-time requirement to complete the additional 5 hour Utah Post licensing course before their first renewal. The course must be completed Prior to requesting your renewal. Loan Originators that have not completed the course will be prevent from renewing until the course is compele and banked on the NMLS. for a list of Utah MLO 5 hour course providers. Newly license Lending Managers do not have to complete this course.
Individual Renewal Checklist
Prior to the November 1st renewal period:
**REFER TO YOUR INDIVIDUAL NMLS DASHBOARD TO REVIEW ANY OUSTANDING REQUIREMENTS AND/OR DEFICIENCIES**
On or After November 1st of the renewal period:
Entity License Renewal :
Prior to the start of the rewal period, before November 1st:
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What Does It Take To Get A Mortgage License
Mortgage licensing is overseen by the Nationwide Multistate Licensing System, generally referred to as the NMLS. The NMLS issues licenses to prospective MLOs who meet the requirements.
MLOs are required to do the following before obtaining a license:
- Show financial responsibility, character, and general fitness. It is expected that MLOs will demonstrate financial health at a level that the community can have confidence in them and that they will operate in an honest and fair manner, according to the standards of their respective states.
- Complete, at a minimum, 20 hours of pre-licensing education. These courses must be approved by the NMLS. Many states also have additional state-specific pre- and post-licensing education requirements.
- Get a score of at least 75 percent correct answers on the NMLS’ written test. This is part of 12 U.S.C. 5105. States also require a test specific to their laws or give the Uniform State Test .
- Receive coverage through either a net worth or surety bond. Alternatively, you can pay into a state fund as required by state regulators.
- Submit fingerprints to the NMLS for an FBI state and national criminal history background check.
- Submit an accurate and thorough personal history and experience document to the NMLS that includes:
- An independent credit report
- Any information regarding administrative, civil, or criminal findings in any jurisdiction
