Will Your Credit Report Prevent You From Getting Your Loan Originator License?

Starting November 1, 2010, the Nationwide Mortgage Licensing System (NMLS) will open up the credit report authorization process. This means that every loan originator must go to their NMLS record and allow the agency that approves your loan originator license to pull your credit report. Remember that approval for your license up until now has been conditional, pending review of a satisfactory credit report.

A regulator in each state in which you are licensed will independently review your credit information. There is no automated standard or minimum score that will be enforced inside NMLS. The SAFE Act leaves it to the discretion of each state regulator to develop its own processes and standards for reviewing credit information and determining the financial responsibility of its licensees. This means that if you are licensed in multiple states, it is possible that one state may approve your license and another state may deny your license, based on the same credit report.

Have you looked at your credit report lately? Is all the information accurate? Do you have any outstanding judgments or collection items? The state regulators are trying to determine how financially responsible you are. I know that some loan originators had money troubles when the real estate bubble burst and income went sharply down. And I’ve had some inquiries as to what the regulators are looking for. Most states have not posted minimum FICO scores and probably will not. The SAFE Act does not require minimum FICO scores so there is some flexibility (unlike the issue of criminal convictions which are hard and fast limitations). If you have any items on your credit report that may require an explanation, start planning on how you will explain any credit issues to the regulators. They are looking for fiscal responsibility so make sure that you look as though you are responsible when handling money.

Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you need help with your licensing (company or MLO).