Mortgage Banking License

Welcome to the Mortgage Banking License Website

So you want to obtain a mortgage banking license? The requirements vary from state to state. Some basic aspects of mortgage banking licensing include state fees, net worth, line of credit, surety bond, audited financial statement, physical office, tests and exams, loan officer license, experience, branch licensing and renewal periods. Some states require education and exams and some don't, but all states require a minimum experience of loan origination.

 

So what exactly is a mortgage banker? A mortgage banker is either company or individual that originates mortgages using their own funds, or funds borrowed from another lender, to fund mortgages. After a mortgage is originated, a mortgage banker has the option to retain the mortgage in portfolio, or sell the mortgage to an investor. Additionally, after a mortgage is originated, a mortgage banker might service the mortgage, or they might sell the servicing rights to another financial institution. A mortgage banker's main business is to earn the fees related to loan origination. Many mortgage bankers do not retain the mortgage in portfolio. Usually, a mortgage banker sells mortgages into the secondary mortgage market, which consists of securities or bonds collateralized by the value of mortgage loans. In the secondary mortgage market mortgage packets are typically sold as mortgage-backed security (MBS), asset-backed security (ABS) or collateralized debt obligation (CDO).

 

The Nationwide Mortgage Licensing System will simplify the licensing process for both regulatory agencies and the mortgage industry by providing a universal and standardized system for mortgage licensing. The NMLS program was begun by state mortgage regulators in 2004 in response to the increased number and variety of residential mortgage originators and the need to deal with these changes with modern tools and regulation.

 

NMLS was created by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR).  It is owned and operated by the State Regulatory Registry LLC (SRR), a wholly owned subsidiary of CSBS. The system has been built and maintained by the Financial Industry Regulatory Authority (FINRA), who operates similar systems in the securities industry.

 

State Licensed mortgage brokers use NMLS to apply for, amend, update and renew mortgage licenses. The NLMS is a modern and safe internet based license system specifically designed for the residential mortgage industry.

 

State Regulators have been cooperating with NLMS to develop a nationwide licensing system for residential mortgages. Currently, there are over a dozen states using the NLMS, and by the end of 2009 most states are expected to join as they have already signed statements of intent.

 

The NMLS only process mortgage license applications or renewals, while each individual state has the right to approve, deny, suspend and revoke licenses.

 

Each state in the United States has its own specific laws regulating mortgage banker and broker licenses so it's important to check with the local department or agency.

 

Let's take New York State for example. A mortgage banker license is required by any company or sole proprietorship who for compensation or direct and indirect gain advances funds or issues commitments to make mortgage loans. The pre-requisites for license applications include a minimum $250,000 net worth, minimum $50,000 bond amount, $1,000,000 line of credit, criminal background check, credit check, and five years of verifiable experience making residential mortgage loans or similar lending or credit experience. In should be pointed out that employees of mortgage brokers and mortgage bankers licensed or registered in New York State pursuant to Article 12-D DO NOT need to get a mortgage broker registration or mortgage banker license as long as engage in mortgage loan origination on behalf of their employer. However, such employees of mortgage brokers and bankers are required to file for certain applications such as MU4 application.

 

The State of New York Banking Department regulates all mortgage brokers and bankers within the state. In New York State, at least two years of experience is necessary for mortgage brokers, but there are no education or exam requirements. Total out of pocket costs including New York state filing fees, finger print cards, surety bond premiums, and licensing services are roughly a few thousand dollars through private mortgage licensing companies. These companies get mortgage brokers and bankers approved with the Department of Banking on a daily basis. Mortgage licensing companies open the door for greater opportunities by managing entire licensing project and setting up all of the necessary paperwork and documentation that's required to get approved as a New York Mortgage Broker or Banker.

 

A New York Mortgage Banker Branch License is required for mortgage bankers that solicit or process loans from locations other than its main place of business regardless of whether the only method of contact with applicants.

 

Now, let's look at different mortgage broker license requirements of Texas, for the sake of comparison. The Texas Savings and Loan Department, http://www.tsld.state.tx.us, an agency of the Finance Commission of Texas, regulates the Mortgage Brokers and loan officers doing business within the state.

 

The Texas Mortgage Broker License has two parts; an individual (broker) license and a company license. The new state requirements call for 30 hours of education if the broker has been licensed in the past as a Texas Loan Originator. If an applicant has not been licensed in Texas as a Loan Originator, then they must take 90 hours of approved classroom hours. We help set up these courses on your behalf with the state's best education providers. The Texas Mortgage Broker License covers all 1st mortgages in Texas and any 2nd mortgage with an interest rate of less than 10%. If a broker will be offering 2nd mortgages that are greater than 10%, they must also obtain the Texas Regulatory Lender License through the Office of Consumer Credit Commission (OCCC). AM Licensing can assist in obtaining this license as well. Texas Mortgage Brokers must show a personal adjusted net worth of $25,000 or more. If an applicant does not meet the net worth requirement, they must obtain a Surety Bond with coverage of $50,000.

 

Exams for Texas mortgage licenses are required and are given through Promissor, Inc. So it is a responsibility to schedule an exam with Promissor and locate the nearest test location. Each individual within a company who wants to originate Texas loans must take and pass this exam and file an application, however only one person must take the "Broker" test. Everyone else can just take the "Loan officer" test. However, if someone wants to take the broker test instead of the loan officer test (possibly for later use), that is fine as well.