Do You Need to be Licensed?

I have been getting a number of telephone calls lately with the question essentially being do I need to get a license? Some of these calls are from companies that do mortgage servicing, some do commercial mortgages and some do a variation of what can be called “lead generation.”

The short answer to every question of whether someone needs a license in a particular state is “what does the statute say?” Every state has a law that creates the requirement that some persons doing certain activities must be licensed. Part of every licensing statute is the definitions section. The definitions section will describe what activities constitute “mortgage lending,” or “mortgage brokering” or “mortgage servicing.” If the activities that your company does fall within the description provided in the statute, you need a license. Sometimes, it’s not so clear whether your activity falls within the definition. If you are not sure whether your activity requires a license, my recommendation is to get the license anyway. It’s more costly to be wrong about your guessing about the need for a license. Yes, you may go about your business for several years without the license with no troubles, but the first complaint that alerts the banking department to your existence may find that you did need a license and your ignorance of that fact is no defense. Unlicensed activity invokes a heavy fine and you will be stopped from continuing your lucrative business.

The other short answer is that most states do not regulate commercial brokering and it varies by state whether mortgage servicers need to be licensed. Again, go back to the licensing statute to be sure.