Mortgage Licensing overview
Mortgage License Requirements and Key Terms
Prior to applying for a mortgage license, it is important that licensees understand the various licensing requirements. Below is a list of the common requirements for licensing.
Doing Business in Other States - Certificates of Authority
Prior to applying for a mortgage license in a foreign state (any state other than your home/domestic state), your company must be approved to do business in that state. As part of our services, we complete and file your state business registrations with every Secretary of State (Name Approval and Foreign Certificates of Authority). We also obtain your Certificate of Good Standing from the Secretary of State.
A Resident/Registered Agent is an entity or person physically in the state that receives service of legal process from a regulatory agency, attorney or court on behalf your company. A Registered Agent must be identified in every state in which a license/registration is held and is paid per state on an annual basis. As part of our services, we provide a discounted service in every state with a national registered agent company, however, you do not have to use our preferred Registered Agent provider.
Almost every state requires companies to obtain a surety bond prior to applying for a license. These bonds guarantee licensees will follow all state and federal rules and regulations. To obtain a bond, you sign an indemnity agreement and purchase a surety bond from a surety bond company. By doing this, you enter into a 3-party contract with the surety bond company and the regulatory agency who requires the bond. The surety bond company is called the Surety and the state agency who requires the bond is called the Obligee. You are called the Principal. Someone can make a claim against your surety bond if you fail to fulfill your obligations in the bond or act unethically or against the law. If the claim is determined to be valid, the surety bond company will pay the claimant up to the amount of the bond and you are responsible to pay the entire amount back to the surety bond company.
We prepare the surety bond application and manage the bond application process with our preferred surety provider. Surety bond premiums are paid on an annual basis and range from 1%-3% of the bond amount, based on factors including the credit score of the Principal(s).
Pre-Licensing Education and Exams
Click here for detailed information on Pre-Licensing Education requirements by state. We provide discounted education savings through our education provider, OnCourse Learning. We will consult with you on what education and/or testing requirements you have and will assist you in enrolling for the correct NMLS-approved pre-licensing courses. If you are getting licensed for the first time as an MLO, per the SAFE Act of 2008, you are required to complete 20 hours of NMLS-approved education. In addition to the 20 hours of education, some states require that you take a course on state-specific laws and procedures (click here for information by state) prior to getting licensed.
Fingerprinting and Criminal Background Checks
As determined by each state agency, certain Control Persons, Direct/Indirect Owners, Executive Officers, Qualifying Individuals and Mortgage Loan Originators are required to submit a Criminal Background Check (CBC) through NMLS. By reviewing background checks, state agencies determine if any person’s criminal history would exclude the company from getting licensed. Also required is the submission of electronic fingerprints through an NMLS-approved livescan facility. We will assist you with the fingerprint appointment scheduling process. Some states still require hard copy ink-and-rolled fingerprints of the control persons to be mailed to their regulatory agency. We will let you know if the state requires hard-copy fingerprint cards and will assist you with this process as well.
Qualifying Individual and Experience
Whether or not a state requires a Qualifying Individual is state-specific. To see which states require Qualifying Individuals, click here. Typically, this individual represents the company and may be required to meet specific requirements. The most common requirement of a Qualifying Individual is an experience requirement that varies by state. For example, some states require that the Qualifying Individual must have 3+ years of verifiable experience in the mortgage industry. Qualifying Individuals are identified in the Qualifying Individuals section in NMLS and are subject to criminal background checks as well as fingerprinting.
Licensees are required to submit a recent financial statement and meet the minimum net worth requirement of the state where they are applying for a license. Not every state requires a minimum net worth, but most do. To review the minimum net worth requirements for broker licenses for all states, click here. Also included on that page are details regarding whether or not the financial statements have to be reviewed or audited by a licensed CPA.
Management Chart and Business Plan
In order to submit any application via the Nationwide Multistate Licensing System (NMLS), all Direct Owners, officers, Directors and Indirect Owners must be disclosed. NMLS will require detailed information on all Direct or Indirect Owners owning 10% or more, officers and Directors including social security numbers, employment and residential history for the last 10 years, a criminal background check and fingerprinting. In addition, an organizational chart detailing ownership percentages, a management chart and business plan must be uploaded in the system prior to submission of any application.