I read an article in a Buffalo newspaper that quoted a spokesman from the New York Banking Department who revealed that 315 mortgage brokers gave up their licenses last year. The number of licensed mortgage broker companies and loan originators is down in every state. There are a number of reasons for this situation. I’m sure you’ve experienced many of them.
The requirements of the SAFE Act have caused many loan originators who cannot meet its qualifications. There were loan originators who had criminal pasts, bankruptcies, bad credit, or no knowledge of federal and state laws who were working as loan originators. Many of these people have left or will be leaving the business as all of the loan originator licensing requirements become effective (no later than December 31, 2010). There are many loan originators who don’t deserve to be in the mortgage business, with their backgrounds, but I have spoken to many, who may not be able to stay in the business because of stupid decisions made when they were young or bad luck with their finances.
Others in the industry have spoken to me about their frustration with the requirements that the lenders are placing on them. Many lenders only wish to take applications from the highest volume brokers. But, volume is down all over the country. Most consumers are too nervous about their job situation to go out and buy a new house. Other consumers want to buy but cannot sell their existing home. Many brokers cannot bring the kinds of volume that the lenders insist on.
The new regulations are also causing mortgage companies to close up shop. Licenses cost more, surety bond requirements have gone up so the premiums cost more and the annual assessments have gone up as the need for banking department income is spread among a smaller number of licensees.
So, do you close up your business and work for a lender? Become a net branch? Leave the business? If you became a mortgage broker to make a lot of money, then the opportunities of being a net branch or working for a branch may make sense to you. After all, loan officers working for banks don’t need to be licensed as mortgage brokers or loan originators. You make the money without the headaches. Or you affiliate with another mortgage broker or lender and you are one of their branches. They worry about surety bonds and license fees. You just bring them loan applications and they pay you for them. There are many ways to stay in the business without necessarily maintaining your own mortgage broker business. There are companies out there that are looking for good brokers. You may want to explore every possibility out there and make a change to your employment situation.
But, if you feel that you provide a valuable service to consumers and you want to retain your independence, you need to hang on and educate your past and future customers about why an independent mortgage broker is better for them than their going to a bank. Mortgage brokers have not done the job they need to do to convince consumers that they are worth the fee that they are charging. The comments that were posted after that article that I read largely charged mortgage brokers with allowing fraud (if they didn’t cause it themselves) and with putting borrowers into loans that made the most money for the broker, not the loans that made sense for the borrowers. Are you doing anything to counteract these types of opinions? Can you give a borrower any reason why they should use a mortgage broker rather than going to a lender or a bank?
Some of you will hang in there because this is what you have been doing for the last 10-15 years. You feel that you are helping people, you like being your own boss and you believe that the shakeout in the industry will leave the strongest surviving and that will include you. If that is your reason for staying in business, go out and make your customers want your services. Show them how you help them when they are dealing with one of the biggest financial transactions of their lives.
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!
Showing posts with label licensing. Show all posts
Showing posts with label licensing. Show all posts
Tuesday, April 13, 2010
Thursday, August 20, 2009
Vermont Sole Proprietor License
Vermont has created a separate broker license for sole proprietors. This means that you don’t have any employees working for you. If you do have employees, then you must obtain a Mortgage Broker Company License. The requirements are that you must be licensed in your home state, you must be in good standing with your home state regulators, you must register a resident agent with the Vermont Secretary of State, and you must purchase a $25,000 surety bond.
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!
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, June 3, 2008
NMLS Participating States
This is just an update of which states are now using the Nationwide Mortgage Licensing System (NMLS), the national database of mortgage lenders, brokers and loan originators.
Currently using the system are Idaho, Iowa, Kentucky, Massachusetts, Mississippi, Nebraska, New Hampshire, New York, North Carolina, Rhode Island, Vermont, and Washington. Some of these states are fully using the NMLS for all licensee information and others are just transitioning to the NMLS, with a date in the future, up to September 1, 2008, to be fully transitioned. If you are licensed in one of the states listed here, you should have been notified by your regulatory agency that you need to input all company and loan originator information into the NMLS database during the transition period. If you have not received such a notice, I suggest that you check with your banking department to get the latest information to keep you in compliance.
Forty-two states have signed up for the NMLS so expect that you will be on the system within the next couple of years.
Currently using the system are Idaho, Iowa, Kentucky, Massachusetts, Mississippi, Nebraska, New Hampshire, New York, North Carolina, Rhode Island, Vermont, and Washington. Some of these states are fully using the NMLS for all licensee information and others are just transitioning to the NMLS, with a date in the future, up to September 1, 2008, to be fully transitioned. If you are licensed in one of the states listed here, you should have been notified by your regulatory agency that you need to input all company and loan originator information into the NMLS database during the transition period. If you have not received such a notice, I suggest that you check with your banking department to get the latest information to keep you in compliance.
Forty-two states have signed up for the NMLS so expect that you will be on the system within the next couple of years.
Monday, February 25, 2008
Working with the Nationwide Mortgage Liensing System
I represent a number of clients on an ongoing basis, keeping them in compliance with the states in which they are licensed. Because the Nationwide Mortgage Licensing System (NMLS) has been up since January 2, 2008, I’ve been on the system quite a bit.
My experience is that it is somewhat time-consuming to work with the NMLS. I actually have that same opinion about all computer-based systems (i.e. annual reports and renewals that must be done online). If the entry isn’t done in the exact format that they require, the computer kicks it back. If I don’t have the answer to a question for a client, I need to go back to the client and get the answer; otherwise the system will not let me get further through the questions. This is true even with questions that seem to be irrelevant as to whether a mortgage originator or owner is honest and experienced in the industry. Questions about 10 years of residential history, providing month and year for each residence, do not make sense to me. Ten years of employment history, even if it is not mortgage related, seems excessive. When you have a paper-based system, the reviewer seems to have the leeway to allow a small piece of information to be omitted. And the format of the response does not stop you from moving from question to question.
I have not yet had the pleasure of adding a new state to be licensed for a client already in the system. I hope that it will just require a few minutes of input for the new state (each state still has its own requirements for what it requires for licensure) and the application will be submitted. I still need to know each state’s requirements, but the added work of re-typing each state’s application form will eventually disappear. That will make the NMLS a pleasure.
My experience is that it is somewhat time-consuming to work with the NMLS. I actually have that same opinion about all computer-based systems (i.e. annual reports and renewals that must be done online). If the entry isn’t done in the exact format that they require, the computer kicks it back. If I don’t have the answer to a question for a client, I need to go back to the client and get the answer; otherwise the system will not let me get further through the questions. This is true even with questions that seem to be irrelevant as to whether a mortgage originator or owner is honest and experienced in the industry. Questions about 10 years of residential history, providing month and year for each residence, do not make sense to me. Ten years of employment history, even if it is not mortgage related, seems excessive. When you have a paper-based system, the reviewer seems to have the leeway to allow a small piece of information to be omitted. And the format of the response does not stop you from moving from question to question.
I have not yet had the pleasure of adding a new state to be licensed for a client already in the system. I hope that it will just require a few minutes of input for the new state (each state still has its own requirements for what it requires for licensure) and the application will be submitted. I still need to know each state’s requirements, but the added work of re-typing each state’s application form will eventually disappear. That will make the NMLS a pleasure.
Monday, November 26, 2007
Hiring Real Estate Agents
The refinance boom is long over. Mortgage brokers are looking for every piece of business they can find. Many are contacting customers with whom they have already done business. Others are looking at different relationships with real estate agents as a source of referrals. After all, in many purchase transactions, the buyers’ real estate agents help their clients find a mortgage by recommending a lender or a mortgage broker that they have worked successfully with. Can a mortgage broker hire a real estate agent to act as a loan officer?
It depends. In many states, this relationship is not prohibited by the banking department or the real estate commission (or whatever the agency that regulates real estate agents is called in your state). No matter what relationship you have with a real estate agent, you must make sure the arrangement is compliant with the U.S. Department of Housing and Urban Development's RESPA (Real Estate Settlement Procedures Act) in regard to fee splitting. What’s key to staying in compliance is that the real estate agents do more than just make a referral to the mortgage company. Among other things, they must be made an employee of the mortgage broker (even if only a part-time employee). Indeed, even if the real estate agent performs actual loan officer functions so that there is no question of whether all fees are properly earned, the customer must sign a disclosure statement so that your company is protected against RESPA violations and the customer understands that the real estate agent is wearing two hats. Texas even has a form on its website for mortgage brokers who are also acting as real estate agents or as an attorney in the transaction.
An important RESPA guideline is that all parties involved with the transaction must actually earn the fees that will be charged to the buyer/borrower. Many real estate agents do some of the work involved in the mortgage transaction to ensure that their transactions close, including tracking the loan. By hiring a real estate agent as a loan officer, you can offer them the loan origination commission on top of the real estate agency fee they have contracted for with their customers and clients. But you will now be assured of getting the referral that might have gone to another mortgage broker with whom they also had some sort of relationship.
In some states, you will have to license the office where the real estate agent is originating loans as a branch location of your company. Additionally, if the real estate agent is not an employee of your company, he or she must have a mortgage broker license or be exempt from the licensing requirements. Finally, because there are potential confidentiality and conflict of interest issues, it is best to address how you will handle those situations before they come up.
It depends. In many states, this relationship is not prohibited by the banking department or the real estate commission (or whatever the agency that regulates real estate agents is called in your state). No matter what relationship you have with a real estate agent, you must make sure the arrangement is compliant with the U.S. Department of Housing and Urban Development's RESPA (Real Estate Settlement Procedures Act) in regard to fee splitting. What’s key to staying in compliance is that the real estate agents do more than just make a referral to the mortgage company. Among other things, they must be made an employee of the mortgage broker (even if only a part-time employee). Indeed, even if the real estate agent performs actual loan officer functions so that there is no question of whether all fees are properly earned, the customer must sign a disclosure statement so that your company is protected against RESPA violations and the customer understands that the real estate agent is wearing two hats. Texas even has a form on its website for mortgage brokers who are also acting as real estate agents or as an attorney in the transaction.
An important RESPA guideline is that all parties involved with the transaction must actually earn the fees that will be charged to the buyer/borrower. Many real estate agents do some of the work involved in the mortgage transaction to ensure that their transactions close, including tracking the loan. By hiring a real estate agent as a loan officer, you can offer them the loan origination commission on top of the real estate agency fee they have contracted for with their customers and clients. But you will now be assured of getting the referral that might have gone to another mortgage broker with whom they also had some sort of relationship.
In some states, you will have to license the office where the real estate agent is originating loans as a branch location of your company. Additionally, if the real estate agent is not an employee of your company, he or she must have a mortgage broker license or be exempt from the licensing requirements. Finally, because there are potential confidentiality and conflict of interest issues, it is best to address how you will handle those situations before they come up.
Friday, December 29, 2006
Pre-licensing education and exams
Some of the states, such as Florida, require a certain number of hours of classroom education before you can take a required exam. Other states, such as New Jersey, require you to pass the exam but do not require any licensing education. Should you take a course even if it is not required? Should you take an online course or a classroom course? What are they testing about anyway?
Prelicensing education and passing a test has been required in some states to ensure that a licensed mortgage broker can't just open up an office and start working with borrowers when they have no idea what they are required to do or know. There are state laws and federal laws that apply to each mortgage transaction and a mortgage broker must know all of the laws that pertain to each transaction. Does your state require certain disclosure forms that must be given to each borrower at the beginning of the process? Do you know how long to keep information in the borrrower files? Do you know what documents must be retained in the borrower file? Does RESPA, 1003, GFE mean anything to you? If you are intending to be a mortgage broker or mortgage lender, you are expected to know the answers to these questions for each state in which you are licensed.
If the state requires classroom education, there is no choice about the matter. The only question is from whom you should take the coursework. If the state schedules all test takers for a particular location, then you should take the coursework right before the exam, in the city in which the exam will be given. An example is Florida. Florida reqires 24 hours of classroom education. The exam is given monthly, generally on the 4th Tuesday of the month (but that schedules changes in November and December). If you are an out-of-state applicant, you will be scheduled to take the exam in Fort Lauderdale. I advise my clients to take the classes in Fort Lauderdale on the weekend before they are scheduled to take the exam. This way they are already where they need to be for the exam and by taking the courses right before the test, they will have the best chance to remember what they were taught. My clients have all passed the Florida test.
Other states, like Georgia, require either a certain number of years of full-time mortgage industry experience or a required number of hours of hours of education which must be given by an approved provider. For example, Georgia requires either 2 years of full-time mortgage industry experience or 40 hours of education from a n approved provider (who are listed on the Georgia Department of Banking website). If you live or vacation in Georgia, you can either take classroom education or online courses. You have to know whether you will have the discipline to really learn the material if you use an online course package or whether you need to have a teacher in front of you to answer questions in order to master the laws and regulations that you will be expected to know once you get your license.
Finally, there are states that don't require prelicensing education but do require that you pass a test. Examples of these states are New Jersey and Illinois. Should you take any courses if they are not required? If you have been a loan officer for a number of years in the state in which you will be taking the test, you may already know the material that will be tested. For those license applicants, a course is not necessary. But if you are a new loan officer in that state, or have never closed a loan in that state, take a preparation course. The time and effort it takes to learn the material in the course will help you to pass the exam. Better to be safe than sorry. If you don't pass the test, you will never get your license.
Prelicensing education and passing a test has been required in some states to ensure that a licensed mortgage broker can't just open up an office and start working with borrowers when they have no idea what they are required to do or know. There are state laws and federal laws that apply to each mortgage transaction and a mortgage broker must know all of the laws that pertain to each transaction. Does your state require certain disclosure forms that must be given to each borrower at the beginning of the process? Do you know how long to keep information in the borrrower files? Do you know what documents must be retained in the borrower file? Does RESPA, 1003, GFE mean anything to you? If you are intending to be a mortgage broker or mortgage lender, you are expected to know the answers to these questions for each state in which you are licensed.
If the state requires classroom education, there is no choice about the matter. The only question is from whom you should take the coursework. If the state schedules all test takers for a particular location, then you should take the coursework right before the exam, in the city in which the exam will be given. An example is Florida. Florida reqires 24 hours of classroom education. The exam is given monthly, generally on the 4th Tuesday of the month (but that schedules changes in November and December). If you are an out-of-state applicant, you will be scheduled to take the exam in Fort Lauderdale. I advise my clients to take the classes in Fort Lauderdale on the weekend before they are scheduled to take the exam. This way they are already where they need to be for the exam and by taking the courses right before the test, they will have the best chance to remember what they were taught. My clients have all passed the Florida test.
Other states, like Georgia, require either a certain number of years of full-time mortgage industry experience or a required number of hours of hours of education which must be given by an approved provider. For example, Georgia requires either 2 years of full-time mortgage industry experience or 40 hours of education from a n approved provider (who are listed on the Georgia Department of Banking website). If you live or vacation in Georgia, you can either take classroom education or online courses. You have to know whether you will have the discipline to really learn the material if you use an online course package or whether you need to have a teacher in front of you to answer questions in order to master the laws and regulations that you will be expected to know once you get your license.
Finally, there are states that don't require prelicensing education but do require that you pass a test. Examples of these states are New Jersey and Illinois. Should you take any courses if they are not required? If you have been a loan officer for a number of years in the state in which you will be taking the test, you may already know the material that will be tested. For those license applicants, a course is not necessary. But if you are a new loan officer in that state, or have never closed a loan in that state, take a preparation course. The time and effort it takes to learn the material in the course will help you to pass the exam. Better to be safe than sorry. If you don't pass the test, you will never get your license.
Subscribe to:
Posts (Atom)
