Monday, March 29, 2010

Keeping Up With the Your State’s Transition to the NMLS

Most of the states have fully transitioned their licensing to the Nationwide Mortgage Licensing System (NMLS). But other states have transitioned only parts of their licensing – either they use the NMLS for the mortgage loan originator (MLO) licensing and company licenses are still done through the state banking department (or whatever the state calls the agency who is responsible for mortgage industry licensing) or the company and branch licenses are done through the NMLS and the MLO licensing will transition at a later date.

You must keep up with the NMLS transition requirements for each state in which you are licensed. If you don’t and you miss the transition deadline, you are treated as a new applicant and you will undergo a full application process and pay the higher fees that a new application requires. The NMLS website (http://mortgage.nationwidelicensingsystem.org/Pages/default.aspx) has a “State Licensing News” section which updates all state transitioning information. You can also check with the websites of each state agency that licenses mortgage bankers, mortgages brokers and loan originators. If the state which licenses you has a mailing list, sign up for it. You will get newsletters or emails that keep you up-to-date with the latest information from that state, with little effort on your part (as long as you read the newsletters and emails).

On March 31, 2010, Oregon (company and branch licenses), Illinois (company and branch licenses), and Wisconsin (all licenses) finish their transitions for the licenses listed. If you are licensed in any one of these 3 states, get your transition for these licenses completed by the end of this month. Again, you need to keep aware of when the other licenses start their transitions in Oregon and Illinois and how to deal with new applications.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at Robin@Mortgagelicensesolutions.com. Thank you!

Monday, March 22, 2010

How Do You Find Out If Someone Has a Mortgage Broker License?

I was surfing the web and I came across a website where this question was raised: how do you find out if someone has a mortgage broker license. I was curious to see what the answer would be. I should mention that the question was asked last week.

I hope none of the persons who replied is a mortgage broker because I was stunned to read the answers. One was that very few states license mortgage brokers. Another response was that some states have a database (that is correct but other states who used to have a database have stopped updating them). A third response was checking with the county courthouse. Not one of the responses mentioned the Nationwide Mortgage License System (NMLS).

Every state has passed a form of the SAFE Act which requires that all individual loan officers (called mortgage loan originators in the SAFE Act) must be licensed. If you want to be a mortgage loan originator and you do not want to go through the licensing process, your career path will now include working for a federally-insured depository bank or credit union.

For the past several years, all of the states have implemented some form of mortgage banker and mortgage broker licensing, even if they did not require that individual loan officers be licensed. After the SAFE Act was passed, each state overhauled its licensing laws to comply with the SAFE Act and many states added licensing requirements in addition to what the SAFE Act requires.

Currently, all of the states except Nevada, Maine, Florida and Minnesota have transitioned to the NMLS. All states have a regulatory agency that licenses mortgage bankers, mortgages brokers and loan originators. They are called different names in different states – department of banking, department of financial institutions, commissioner of banks, office of financial regulation. Each agency has a website which describes the licensing requirements and contact information. If you want to know if a particular mortgage banker, broker or loan originator is licensed and the state is not on the NMLS, call the state agency in charge of licensing the mortgage industry and they will tell you if that company or person is licensed.

Additionally, some states used to issue paper licenses which needed to be posted in the mortgage company’s offices. A number of these states have stopped issuing paper licenses and simply refer all questions to the NMLS database. If a mortgage banker wants to see your license, and your state doesn’t print paper licenses anymore, you can print out your record from the NMLS.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at Robin@Mortgagelicensesolutions.com. Thank you!

Monday, March 15, 2010

What Does It Cost To Get a Mortgage Broker/Banker License?

If you are thinking of starting your own mortgage broker or banker company or expanding your existing business into a new state, you need to put together your budget. One of your start-up or expansion costs is the cost of licensing. How do you calculate that? The costs vary by state but there are similar requirements in most states.

The calculation starts with whether you are creating a new corporation or limited liability corporation (LLC). There are fees to incorporate or register your LLC in your home state. If you are expanding into a new state, you must file a document that authorizes your to conduct business outside of your home state (usually called a Certificate of Authority to Transact Business). Once you are incorporated or have authority to do business, you apply for the mortgage broker or banker license. In just about every state that means starting with the Nationwide Mortgage Licensing System (NMLS). You complete an application called an MU1 about the company, an MU2 about the owners, and an MU4 for each mortgage loan originator. There is an administrative fee just to get your company onto the NMLS plus the license fee that each state charges. Each state has its own additional requirements that may require you to spend more to get your license. Those requirements may be a surety bond (so you pay an insurance premium), a financial statement prepared by an accountant (add in an accountant’s fee), credit reports for the owners and officers of the company, background checks and fingerprint cards, and required licensing of one of the owners who is responsible for day-to-day operations. There are also still some states that require a physical presence in their state so you need to rent an office.

When you add up all the fees, you could be looking at anything from $2,000 to
$4,000. That does not include the costs for getting your loan officers licensed (and you must have at least one person licensed as a loan originator, even in a one-man shop). If you are getting a new license as part of an expansion, you must do a cost benefit analysis to evaluate whether the costs of getting the license are less than the revenues that you expect to earn in that state.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at Robin@Mortgagelicensesolutions.com. Thank you!

Tuesday, March 9, 2010

Should You Attend a Mortgage Banker or Mortgage Broker Trade Show?

A mortgage banker or broker trade show is usually held over 3-4 days. That’s a lot of time to be away from your business. You may want to attend a show if you thought you could get something valuable for your business. What can you get from a trade show?

My office is located in New Jersey and next week is the 2010 Regional Conference of MBAs (I believe it’s sponsored by the mortgage bankers associations of New Jersey, New York, Pennsylvania, Connecticut, Washington D.C., Maryland, New Hampshire, Massachusetts, and Rhode Island). I’m debating whether to attend this show. Will it provide me with any benefits that I can translate into new business? What would I like to see at a trade show for mortgage bankers or brokers? Obviously, what I would like to get out of a trade show, as a lawyer who works a great deal with the mortgage industry, is different from what you, a mortgage banker or mortgage broker, would want to get out of such a conference.

I’d look at the programming details first to see if there were any sessions that I would want to attend. Lately, there are a lot of regulatory changes that are raising many questions for mortgage brokers and bankers and there should be sessions addressing these questions. Many of you want to know how to survive in this new business climate and there are hopefully sessions that will speak about these issues. If the speakers are listed, are they regulators that you would like to meet or other successful business owners that you’d like to network with? That would be a good reason to attend.

Check the list of exhibitors. Can you find new vendors for your business? Can you find out if they have a solution for your problem or can they save you money over your existing vendors? Can you form a strategic alliance with any of the exhibitors?

Lastly, a trade show can be a great opportunity to meet other mortgage bankers and mortgage brokers. Meeting and talking to some of these people can help you find out what your competition is doing, how they are dealing with the problems that you are facing, and how you can be better than they are. If you are not in competition with them, you can find mortgage bankers and brokers who are licensed in states that you are not, so you can take advantage of leads that you cannot use and vice versa. When you talk with mortgage bankers and brokers who are not in competition with you, they are more likely to open up with their strategies for solving the same problems you are having.

It may be useful to attend a local trade show or conference so that you can limit your costs, both in travel and hotel expenses and the number of days you are away from your business.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at Robin@Mortgagelicensesolutions.com. Thank you!

Tuesday, March 2, 2010

Changing Your Address, Name, Owners, Control Person

There are a thousand things to do when you move your offices, change your company’s name, add new owners or when your control person (the person who has the day-to-day operations responsibilities or have the necessary number of years in the mortgage industry for your company to keep its license) leaves. Don’t forget to notify the state agency who regulates your license.

Nowadays, before you have any type of change to your company, you must start with notifying your state regulator in advance of the change by making changes through the Nationwide Mortgage License System (NMLS). You need to update your MU1 company record. Most states require a change of address fee to be paid when you notify them of your move. If your company has moved, all of your loan originators need to change their MU4 records to show their current employment address. If you have FHA approval, you need to change your address in the FHA Connection. Many states require that, in addition to making changes to your NMLS record, you submit a copy of your new lease.

When you change owners and control, most states treat you almost as a new applicant for a license. You are allowed to close all of the loans in your pipeline, but you are not allowed to solicit new business until the state regulators have approved the change of control. The change of control application process is fairly similar to the new application process – the new controlling shareholder or member must submit all of the information that the original owner initially submitted on the NMLS (MU1 and MU2) and also submit fingerprints, legal documents evidencing the change of control, personal financials and credit reports, resume, and must answer disclosure questions regarding criminal convictions, bankruptcies, regulatory problems, and litigation.

Of course, there are fees to be paid to the state regulators for each change that you notify them of, which vary by state.

Make sure you plan to notify your state regulators on a timely basis. Most states have laws or regulation on how much notice you must provide to the state. Failure to notify the regulators of these changes can leave you open to penalties, fines, and regulatory action.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at Robin@Mortgagelicensesolutions.com. Thank you!