By the end of this year, all Mortgage Loan Officers and Mortgage Brokers, that work for a Non-Depository Lender, will need to be licensed in every State in order to take a Loan Application and put a Loan in process, so make sure your Mortgage Loan Officer is licensed. For right now Mortgage Loan Officers for Depository Lenders like Banks, and Credit Unions, are excluded from being required to be licensed, presently all they need to do is be registered under their Lending Institutions License.
Up to now licensing for Mortgage Loan Officers was optional for each State, but under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, which is part of the FHA reform bill, put into place National Standards for Mortgage Loan Officers. With this change all Mortgage Loan Officers that work for a Non-Depository Lender in all States will be part of a mandatory registration system called the Nationwide Mortgage Licensing System (NMLS).
In my opinion this is a MAJOR positive move on the part of Lending Industry, and hopefully Mortgage Loan Officers that work for Depository Lenders will also be required to be licensed in the near future. Right now the Banking Lobbyist have been able to prevent this from happening, but the pressure for their Loan Officers to also be licensed will increase, and they will also have to comply.
This is bound to reduce the number of Mortgage Loan Officers presently doing business in every State. Those that will most likely be impacted most by this new law are Internet Lenders, because Mortgage Loan Officers have to be licensed in EVERY State that they do business in, and cannot use the license of someone else to write Loans. This is because an individual cannot even take information to complete a Loan Application without being licensed in that State.
Cost will also be a major factor in all this. In Connecticut the cost to license a Mortgage Loan Officer is $330. This amount may vary from State to State, but it does not take long for those licensing fees to add up. Furthermore, the Mortgage Loan Office will need to past that States Licensing Test on top of passing a National Licensing Test in order to be licensed. If the State Test for other States is anything like the Connecticut State Test, it will not be easy to pass. Many have taken the Connecticut State Test this year and failed.
The way that you will know that your Mortgage Loan Officer is licensed is by an NMLS Number, mine is NMLS# 65149. This number must appear on everything that identifies someone as a Loan Officer like business cards, flyers, e-mail, websites, etc. If your Mortgage Loan Officer does not have an NMLS# then he or she is not licensed, and you should be looking for someone else to partner with in case they do not obtain their license by the end of the year. In fact in Connecticut Mortgage Loan Officers will need to have taken and past the National and State Tests by October 31.
Once a Mortgage Loan Officer has past their National and State Tests, they will need to take 8 hours of continuing education classes each year in order to maintain their license. 20 hours of educational classes are originally needed to obtain the Mortgage Loan Officer License.
So make sure your Mortgage Loan Officer is licensed, or fine one who is!!!
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308, gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.
George,
I don't think this is going to be to big a problem, localy just be sure your Loan Officer signs the bottom of the application.
I've always been concerned about Internet and telephone lending all the call center has to do is make sure their hustlers use a licensee's name.
Bill
Bill that might of been so before, because only 14 States required licensing, but by the end of this year all States are going to require licensing. If someone is caught doing what you Stated, using someone else's license, they can be fined up to $100,000 and lose their license. Once you have lost your license and it is on record, they can't just move on to another State, it's gone in all States.
And a Lender that allows it's Loan Officers to play the name swapping game will find itself out of business if they are caught.
George,Thanks for sharing this timely news about all states having this requirement for mortgage lenders.
We meet so many people and try to do right by them. I hand out cards for lenders and trust the ones I've know for years..........until recently. Check and double check people!
George, the first thing I did was to look at business cards for LO's that I use...just as you said; the NMLS# was there. I also did some poking around following the link you included in your post. I was surprised at how expensive it can be to be registered in several states...just curious...how many states are you licensed in??
George,
I'm sorry I thought you were talking to consumers. I don't think it's going to be a problem for the consumer.
As far as brokers letting unlicensed people front for them, I'm all for the fine.
Bill
Well this appears to be a step in the right direcction George. But guess this will stop a lot of internet brokers from doing business. Good luck George! BTW Congrats on the feature!! :)
George, I like the idea of some type of conformity, it will be so much better to know you are comparing apples to apples when it comes to your mortgage broker. Then it will be all about service and friendship.
George: I'm all for the national licensing rules and leveling the playing field ... something not entirely in place because of the exclusion of Depository Lenders and Credit Unions. Personally, I think that exclusion is baloney ...
Gene
Sounds like this should have happened a long time ago but, it has really impacted a lot of people as of lately!
Thanks for the great link!
Great article. I have a Real Estate License and have been involved in the additional testing, registering, etc. It is actually a bit more time consuming than I anticipated. I am glad this is being done. I do not think it's right that bank employees only have to be registered (while they are allowed to be identified as Home Loan Specialists! Oh well, it is what it is and we must move on.
You are also correct in that it has significantly reduced the number of loan officers, which is great for us!
By the way, in addition to my RE License, the NMLS registration and testing has cost me almost $600.00....and that's without the required 20 hours of testing which costs approximately $400.00.
Great post!
I also suggest to clients to Google people. You can learn quite a bit from what you find, or don't find!
George this is a positive move. I was always puzzled that real estate agents were regulated and mortgage professional were not, just did not make sense to me.
Checking to make sure the mortgage person is licensed should become the norm.
Hmmmm.....interest post for sure. I guess if we have to be licensed, why shouldn't they be?
Patricia/Seacoast NH
Kathleen, RI was more proactive on this than CT. You guys got on board early, we are just now getting our act together.
Dena, it is important to work with people who know what they are doing. The National Licensing System will not guarantee that, but it is a step in the right direction.
Nick, just one CT. I thought about getting licensed in RI and MA, but I might get a loan every couple of years in those States and that is not enough for me to justify the time and money to get licensed there.
Bill sorry for the confusion. It is about time that we move in this direction, and hopefully they will work out the bugs as we go along.
Al and Peggy, it should cause them to change how they do business, and that is good in my opinion.
Steve this moves us closer to some of the standards that have been put on Realtors, and the continuing education component is long over due.
Hi George,
Thank you for posting this. I heard something similar from a local loan officer Deb Killian who is committed to improving education. Consumers need to know about this change!
Gene sooner or later they will come under the licensing rules, but for now their Lobbyist have been able to throw enough money around to avoid it.
Cody, your right it has impacted many already. There are a number of Loan Officers that are struggling to pass especially the State tests.
Rich, Realtors have greater fee as you correctly pointed out. I would suspect that in time the Loan Officer fees will also increase, as well as the educational requirement, but for now this is a good place to start.
Jennifer I was also puzzled by that as well. Establishing licensing requirements makes perfect sense.
Patricia, good question, and it is one that is worth asking over and over :)
George, That is great news! It's hard to believe only 14 states required Mtg. Loan Officer Licenses. I'll bet more than 14 states require dog licenses. Next should be a national educational standard and licensing for underwriters, afterall underwriters are making the decisions regarding the loan applications.
Dana, if this is the same Deb Killian that I know, she is involved in conducting some of the prep classes for the State test. The Lending Industry needed a change and this is a good one.
John, there are some requirements in place for them, I don't know what they all are, but I know that an Underwriter has to go through additional training in order to be a Direct Endorsement (DE) Underwriter on FHA Loans. I need to ask my Underwriter what other training and education is required of them.
George, I know that the lender that I use has been taking a number of classes lately. I expect to do with this.
I saw some stuff going on a number of years ago where I just had to shake my head. I'm glad to see this happening in your industry.
Marchel, this was needed in the lending industry, and I hope that your Loan Officer is successful in passing his tests if that is the reason why he is taking the classes.
George -- I am so glad you did this post! I had a buyer who wanted to use his sister lender in State X. I asked the lender several times if he was licensed to do the loan in NH. He said yes. We got the pre-approval and began looking for a home. When we found a home the buyer was interested in, I asked the lender to send me his license # so I had it on file. Guess what? Woops... he could not produce it. The good news is that my client worked with one of the loan originators who did an awesome job who was licensed in NH! It is so important to check!
Hi George -- I wonder what the stats are for % already licensed and will this diminish the ranks?
George, I remember another mortgage guy mentioning this here in the Rain some time ago (his name escapes me, but not his face - young, almost looks like Matt LeBlanc from Friends, and I'm thinking he's out in Michigan or Illinois). It's finally happened, hmm? That's a good thing.
I am so glad this is taking place. We needed this to be done a while ago.
Hi George~ I think it is great that they are required to have a license. Should have already been that way.
George,
you are the best when you come with this great info, I won't think it twice when I have someone in your area so you can help !
George, Great post. In CA we have until Sept. 15th to pass both tests and provide all other information. I agree with Gene...the fact that FDIC banks and credit unions are exempt is baloney. And, locally, you can already find the ads on Craigs List to work for a "federally insured" bank with no licensing. Banks I have never heard of...small and obscure...but FDIC insured. Wanna bet that is where the peeps who don't past the tests go. To Chris: Last stats I saw said 69% were passing the test.
Hi George, I agree with Steve Loynd, conformity is great. Much of our problems in our economy came from bad lending practices. Let's hope this solve some of those problems. Nice blog, hope all is well. :)
Hello George;
Great article! I'm glad to see this will be the case. The mortgage loan officer needs to be licensed and trained. When I was in the mortgage business a few years ago, anybody that could fog a mirror could become a loan officer, no training, no license etc.
It reminded me of MLM because all the mortgage broker was looking for was the new loan officers contact list to get deals done.
Thanks,
Jeff Ragan
The Mortgage Doctor
I'm eager to see the loan officers display their license numbers like the RE agents.
Why is that left to us. . to make sure they are licensed?
The one paying the commissions are the ones that should be checking on this. .
The only number I care to check on my loan officer is their telephone number!
George,
I never understood why anyone would ever put their trust in someone who didn't have some sort of license when handling their finances. If a Realtor needs to be licensed then most certainly a mortgage broker. It made no sense at one time that you didn't need one. And I know we have talked about this a long time ago. I know education standards and keeping up licenses might be a bit bogus but so is ours...yet we are still obligated every two years to update it and so should your industry. I'm glad you are putting the word out there again.
George, I can see where this will impact Internet lenders. This should have been done years ago. Thanks for the update.
On a personal level National licensing will benefit me as the costs and testing involved will eliminate much of my non-serious, hack type competition.
As a political conservative though, I feel the Federal government has no business being involved in licensing mortgage originators, this is clearly something that lies within the jusisdiction of the states. More bureaucracy and more government agencies rarely solve any problems, only make more. The size of the Federal government is growing like an out of control monster. Americans need to stop looking to the Feds to solve every problem in their life.
I was about to make a comment and then I read Steve's. I completely agree. It has helped clear out the less than professional loan officers, but when has bureaucracy ever solved anything?
Also, Georgia is one of those states that have already required licensing so I've already taken the course, pass the test(s), and passed the national background check.
Timely and pertinent info, George. Although, I must echo Steve's sentiments about Federal Bureaucracy in #36.
Joan, I think we will see more Realtors do what you did once more Realtors are aware of this. No one wants last minute surprises.
Chris, I don't think there is a way of determining exactly how many Loan Officers there are in the Country presently, but under the licensing system that number will be easy to determine.
William wish I could help you with the name but I don't know. This has been talked about for a long time, but this is the first year that it will be implemented nation wide.
Vickie I agree, but better late then never :)
Ray it would be my pleasure to help anyone you send my way.
Deborah, baloney is a good quick and to the point way of putting it :)
Debbie, it might not solve them all but it is a good place to start.
Jeffrey, you are right if you had a pulse, and could dial a phone you qualified. It is high time we change that.
Thanks for the heads-up, George. (And thanks to Deborah #28 for the California insight.)
Michelle, if they do not display their NMLS#, they they will be in violation of the Act, or they are not licensed.
Fernando, the reason why you should care is that if they are not licensed then you will be waisting your time dialing their number :)
Tonnysin, glad that you found the information useful.
Neal I could have not said it better myself. And by the way, with the change Loan Officers have to have 8 hours of continuing ed every year in order to renew their license.
Michael, it will be interesting to see how they try to get around this.
Steve I am also politically conservative. This makes perfect sense to me for a number of reasons and you mentioned one of them. As far as this expanding government bureaucracy it does not do that. The NMLS has been around for a number of years already, because 14 States already required licensing. Each State still controls who is licensed and who is not, because you have to pass a State Test and they will over see each of their Loan Officer. Where the National System comes in is in providing a national database to try to prevent some of the "non-serious, hack type" as you so well put it, from creating their magic from State to State.
W. Darrell. congratulations on passing both tests. If the Georgia test was anything like the Connecticut the license was well earned. The State test was far more difficult then the National Test. The day I took mine, several others had also take it, and I was only one of two that past it that day.
Fred, I do not like bureaucracy either, but read my response to Steve to see why I feel differently in this case.
Bill you are welcome :)
George: Thanks for the tip and the post. I appreciate it. Licensing should help to continue to weed out those loan officers who aren't committed. That being said, I wish everyone (banks included) had to undergo the same set of rules. It makes me wonder if the banks wrote the new rules to begin with! Take care.
it has already weeded out TONS of people in Colorado....really kind of nice!
George: Just as an added comment ... I personally have heard comments from those that either did not want to take the test ... or feared taking it ... or took it and failed, that they are indeed looking to depository banks for employment. That raises all sorts of questions in my mind. I should think that it should in others, as well ...
Good post to get people talking and more aware of these changing rules and regulations ...
Gene
George,
I didn't read through all of the comments but most of them. It seems everyone is positive about this happening.
Anything that can be done to make sure that mortgage originators are educated in their field and have some required guidelines and expectations is wonderful.
I know this puts a lot of education and testing on you. I hope that business is good to help overcome the cost and hassle of what you're going through.
Thank you for bringing us up to speed on this.
Good awareness post........and I offer a thought.......
The answer to all our problems doesn't lie in regulation all the time. I only deal with people I know and trust. In the end, banks, who were very regulated went belly up. So much for regulations.....
Thank you George....
George - Excellent post. Thank you for sharing avery important blog.
George,
Thanks for getting the word out! I'm still trying to find out how we get this information to the consumers without having to pay for a lot of media coverage.
With regard to Deborah's comment (#28) - California either has smarter loan officers or easier quiz, as the numbers in WA state are about 80% failure. Here anyone licensed before this year has until the end of the year to pass national test, and get their background check run. The rest of us had to be done by July 1.
Additional note -- most mortgage brokers are having tough time making it under new regulations, as any YSP funds have to be used solely for the benefit of the client, and as brokers there are some $2,000 - $2,500 in loan fees that they have to pay and cannot pass on to the client.
Thanks again for the blog.
License #293441
Paul I don't know if they wrote the rules, but I do know they spent a lot of money to influence them.
Tricia, there will be more that will be weeded out by the end of the year.
Gene, those that can't pass the test only have one way to turn, and that is to those that spent a lot of money to make sure they were excluded.
Judi, I was very busy during the time I was studying to take the test, but it was worth it, and I am glad it is behind me. Now I have to figure out what classes I want to do my 8 hours in next year.
Richie, they might have been regulated, but they streached the guidelines to the Max, and all of the ones that went under that I know of were heavy into the sub-prime loans. It does not matter how big you are, when you take the guidelines to the edge over and over, you will not be around for long.
John you are welcome.
Steven the States that developed their test early seem to have a better passing percentage because information on what is on them is out there. The States that developed their tests late, have very little information that is public, and therefore, the Loan Officers in those States are finding it more difficult. Connecticut developed it's test real late, and even though we have easy access to the laws that are on it, the way the questions are asked and the material applied is almost not existent. On another note Brokers are getting hit hard from all directions, many of the Brokers around here are finding it very difficult to keep their doors open.
George, Do you have unlimited choices in your CE hours? We have to choose certain areas that are approved by OREC for our 23 hours.
Judi, we also have to choose our 8 hours of continuing ed in certain areas:
Originally in order to be licensed we had to do 20 hours of class time in the same areas:
Also we can not take the same classes in consecutive years, and as in your case our classes also have to be certified.
George,
This new law will make a positive impact on the mortgage industry, retaining and bringing in more professional loan officers on board. Everyone benefits.
Esko I agree!!!
George,
So do you have to produce the license if someone asks to see it?
Ann Hayden in Wildwood, MO
Hi George - I started seeing the license numbers on email signatures but wasn't aware of all the details. I think it's a great thing because there is nothing better than having a knowledgeable mortgage person every step of the way. Thanks for the information.
Ann they do not issue each Loan Officer an individual certificate, they just issue a NMLS number and that number is then displayed on everything.
Peggy your welcome. That number will also serve as a pre-notice as to who might not be around here in Connecticut after October 31.
George,
Thank you for the clarification.... ;-)
Ann Hayden in Wildwood, MO
George I never even realized you could practice doing mortgages without a license!
MAKE SURE! I have always believed that one who has education, licensing and also monitoring..just may be someone I'd like to work on the other side of. Thanks George..you give some great reasons why...or even why not.
Hey George, just stopped by to say hello and belatedly congratulate you on the feature...well deserved my friend.
George, I love it when you write a post. It's always soooooooooooooooo worth reading. You put a lot of thought and work into one and always have something worthwhile to write. BLOG ON!