How To Obtain A Mortgage Broker License In Multiple States

This Article Is About How To Obtain A Mortgage Broker License In Multiple States

Individuals who want to become mortgage loan officers need to meet certain educational requirements and become licensed in the state they want to originate mortgage loans. Becoming a full-time mortgage loan originator can be very rewarding. One of the great benefits of becoming a loan officer is that you can work remotely. You normally do not have to meet clients face to face like real estate agents. You can also represent clients out of state as long as you are licensed in the state. A loan officer can do business in all 50 states remotely as long as they are licensed in the state they originate from. In order for the loan officer to be able to get licensed in the individual state to do business, the sponsoring mortgage company of the loan officer needs to be licensed as a company as well.

How To Obtain A Mortgage Broker License: Getting Your Individual NMLS MLO License

How To Obtain A Mortgage Broker License

You do not have to be hired and/or sponsored by a mortgage company for you to be able to get your individual NMLS Mortgage Loan Originator (MLO) license. However, there are certain states like Georgia and/or California that you need to be sponsored during your license application and approval process. Other states allow individuals to apply for their NMLS individual license once they have passed the national NMLS Federal MLO examination. The federal NMLS MLO national examination is a three-hour 125 questions national exam. You need a 75% passing grade for you to pass the national NMLS MLO Federal examination.

How To Obtain A Mortgage Broker License In Multiple States: The 20-Hour NMLS Course By An NMLS-Approved Course Provider

Another requirement to be eligible to apply for your NMLS license is for you to take a one-time 20-hour NMLS course administered by an NMLS Approved Course Provider. There are many NMLS Approved Course providers. These course providers can offer the 20-hour NMLS course at a brick and mortar location or it can be administered as an online course. For more information about enrolling at an approved NMLS course provider, please request and address your questions in the comment section below. Once you have completed the 20-hour NMLS MLO approved course, you can sit for the 125 questions national NMLS MLO federal examination. Once you have passed the 125 questions NMLS MLO federal exam, you are now eligible to apply for each state NMLS license. Every state has different licensing requirements. You need to get the state NMLS license if you want to originate a mortgage in the individual state.

Applying For State NMLS License

Each state has different requirements for getting licensed. Many states require additional annual continuing education hours. Every year, loan officers need a minimum of 8 hours of continuing education (CE) hours to renew their NMLS licenses. However, many states require additional hours on top of the minimum 8 hours. To get licensed in a state that requires more hours than the minimum 8 hours of CE, the loan originator needs to meet the state’s additional hour requirement. You can take the additional hours of continuing education hours at any NMLS-approved course provider.

Distance Between Personal Residence And Nearest Branch Office Of The Mortgage Company

Some states have distance to branch office and/or corporate office distance requirement. What this means is if you want to get licensed in a particular state, the state can have a mandatory maximum distance requirement between the nearest branch office of the mortgage company and the residence of the loan officer. The nearest branch near the loan officer residence needs to be licensed in the state the loan officer is seeking to get licensed. If the nearest branch office of your mortgage company is out of state and/or further than the distance requirements, you cannot get licensed in that particular state.

NMLS Licensing Process

What is the NMLS licensing process

Every state has its own licensing process for NMLS MLO applicants seeking to get licensed. However, states have common regulations among NMLS MLO Applicants.

The following are the uniform guidelines for all states on what to expect in order to grant NMLS MLO state licenses to be able to originate residential mortgage loans:

  • All candidates need to have a good reputation and command the trust of the public
  • Be able to pass the federal and state criminal background investigation 
  • Arrests will be evaluated on a case by case scenario
  • Arrests are not ignored just because the loan officer applicant was not convicted
  • No felony convictions in the past 7 years
  • Misdemeanor convictions will be evaluated on a case by case basis
  • Candidates with a felony conviction that pertains to financial crimes, bribery (giving and/or receiving a bribe), securities fraud, insider trading, theft, robbery, fraud are banned from ever getting a mortgage loan originator license
  • Credit report needs to reflect financial responsibility with no disregard for credit

Every state has its own way of conducting the above examinations.

How To Open Your Own Mortgage Broker Company

Many mortgage loan officers want to take the next step in the mortgage industry and open up their own mortgage broker shop. You can do that. However, you need to get your new mortgage broker shop licensed in all states you and your loan officers want to originate loans. Every state has its own individual NMLS licensing requirements for becoming a mortgage broker. If you are a mortgage broker, you can hire loan officers to expand your business and have the mortgage broker be the sponsoring company. In the following paragraphs, we will discuss and cover how to open up your own mortgage broker company and become your own boss. You can hire loan officers and collect an override over their production. However, as the mortgage broker, you will need to be responsible for all expenses including office expenses, payroll and benefits, processors, office expenses, rent, credit reporting fees, and support staff.

Costs Associates With Opening Your Own Mortgage Brokerage Office

Running a mortgage brokerage company is not cheap. One of the major costs is the cost of licensing. Each state has its own rules and regulations on fees and costs in getting licensed. You cannot originate loans in states you are not licensed. If you are a mortgage broker originating loans in just one or two states, the costs may not be too bad. However, if you intend in getting licensed in dozens of states, you can easily spend tens of thousands of dollars in getting licensed and renewals each year. All states require mortgage broker applicants to complete the mortgage broker application process through the Nationwide Mortgage Licensing System (NMLS).

Below is the list of the costs associated with applying for a mortgage broker license:

  • NMLS processing fee
  • Application fee
  • Credit report fee
  • Criminal background check fee
  • Surety bond fee

Fees and costs in getting your mortgage broker license depend on the individual states. Costs can vary from under $1,000 to over $4,000 per state. This is without the cost of hiring a third-party licensing agency to assist with licensing. Some states allow you to have your new mortgage brokerage company at your home. Other states will require a brick a mortar office for the headquarters and others will require a brick-and-mortar branch office for offices license outside the headquarters home office.

Who Is Eligible To Open A Mortgage Brokerage Office

Every state has its own individual requirements to become a mortgage broker office. Many states require the owner and/or principal of the mortgage broker to be licensed and certain amount of years originating loans. Experience requirements may be as little as one year or as many as three years. Professional experience as a producing loan originator, sales manager, branch manager, area manager, or qualified individual is required. Many regulators will want to see that you have been active in a mortgage company and request W-2s and/or income tax returns. Most states will require the principal of the mortgage broker is licensed. To become licensed as a mortgage loan originator, you need to take a one-time 20-hour NMLS course from an NMLS approved course provider. You need to pass the 125 questions NMLS federal exam with a 75%. You need to be licensed in the state you are applying for a mortgage broker license as an individual NMLS loan originator. If you fail the 125 questions NMLS federal MLO exam, you need to wait 30 days before retaking it. If you fail three times, you need to wait 180 days or six months before you can retake it the fourth time.

Qualified Individual Requirement By The NMLS

What are the individual requirements qualified by the NMLS

Most states will require a Qualified Individual requirement from a mortgage broker who is applying for their state. The Qualifed Individual does not have to be a principal. The Qualified Individual needs to be a full-time employee of the mortgage broker with a few years of full time experience being a loan originator and/or manager.

In general, the following are the requirements of a Qualified Individual:

  • Residency requirement where the Qualified Individual may need to live in the state the mortgage broker is applying for an NMLS license
  • Have at least one year to five years of experience as a full-time loan originator and/or branch manager
  • The number of years experience depends on the individual state
  • Have a valid NMLS MLO license and properly updated CE hours
  • Good credit and pass the criminal background investigation
  • Need to be active and full-time status with the mortgage broker for the NMLS license to be valid and the mortgage broker to be able to do business in the state

If the qualified individual quits, the mortgage broker needs a replacement qualified individual.

Surety Bonding Requirements

Most states will require a mortgage broker and/or lender to have a surety bond to protect the interest of the public. The purpose of the surety bond to for protection of public customers from fraudulent activities and/or misrepresentation from the mortgage broker and/or its licensed loan officers. Each state has their own surety bond requirements. Some states may require only a $10,000 to $25,000 minimum bond requirement while other states may surpass requiring over $250,000 in surety bonds from the mortgage brokerage company. Yet other states will base the surety bond amount from the amount of annual production they do. Regulators will also allow to deposit the cash face value amount in lieu of a surety bond.

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