Many of us would like to work from home for many reasons - to save on rent, you like the short commute, or maybe you need to take care of your children. But are you allowed to work from home?
As with most of the questions that come up, the answer is it depends on the state in which you wish to originate or broker loans. Some states absolutely prohibit home offices. Other states permit home offices, so long as certain requirements are met. The usual requirement is that zoning laws permit home offices. Some states allow a home office if it has a separate entrance and you maintain an office separate from the rest of your house.
If your state does allow home offices, remember that regardless of whether the office is either the main office or just one person working from his house, that office location must be licensed. Also remember that anyone working from his home who is originating or brokering loans must be licensed as a loan originator.
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Showing posts with label branch office. Show all posts
Showing posts with label branch office. Show all posts
Monday, February 1, 2010
Wednesday, September 10, 2008
New Law in North Carolina
There is a new law set to go into effect on October 1, 2008. This new law affects all mortgage companies currently licensed in North Carolina as well as those companies thinking of getting licensed in that state.
The most cutting edge provision of the law is the ban on yield spread premiums on loans that are defined in North Carolina as “rate spread” loans. Basically, yield spread premiums on subprime loans are not permitted in North Carolina as a result of this new law. North Carolina is the first state to eliminate yield spread premiums on any type of loans.
In addition, the new law provides that all branch offices must be located in commercial office space. Home offices are now prohibited. I am aware that many loan officers operate out of their own houses, and no one even thinks of this arrangement as a branch office. But in North Carolina, this pattern on cutting down on office space will not be allowed. And remember that North Carolina is a brick-and-mortar state so that if you are an out-of-state mortgage company thinking of getting licensed in North Carolina, your in-state office cannot be a home office.
If you are a loan officer who is now employed by a North Carolina licensee, you are classified as an employee and must receive a W-2 at the end of each year, showing your wages. There are no loan officer independent contractors in North Carolina.
If you want to apply for a license as a loan officer, you must now take 24 hours of approved pre-licensing education and pass an exam. When you have passed the exam, and are submitting your application, your background check must show a FICO score of at least 600. Moreover, your credit report cannot show any outstanding tax liens or judgments in the past 7 years.
The new law also affects minimum net worth requirements. If you are a mortgage broker, you must maintain a minimum net worth of at least $25,000. Your statement of net worth does not need to be from an accountant but must be certified by an authorized officer or member of the company. Additionally, the mortgage broker must provide the Commissioner of Bank’s office with bank statements or other proof that they have liquid funds of at least $10,000. For mortgage bankers, the net worth requirement is a minimum of $100,000 and that amount must be proven by an audited financial statement. In addition, the mortgage banker must show evidence of a line of credit or other available funds of $1,000,000.
Other provisions of the new law:
1. Reporting about closed loans will now be on a quarterly basis.
2. Renewals will be done at the end of the year as all licenses expire on December
31st.
3. Requires licensing for servicers as of January 1, 2009, however, you do not need an additional license if you are a mortgage banker who will be servicing (you will need to provide notice to the Commissioner of Banks).
If you need further information about the new law, you should look at the Commissioner of Bank’s website at www.nccob.org, place your cursor on Mortgage and then on Legal Compliance References.
The most cutting edge provision of the law is the ban on yield spread premiums on loans that are defined in North Carolina as “rate spread” loans. Basically, yield spread premiums on subprime loans are not permitted in North Carolina as a result of this new law. North Carolina is the first state to eliminate yield spread premiums on any type of loans.
In addition, the new law provides that all branch offices must be located in commercial office space. Home offices are now prohibited. I am aware that many loan officers operate out of their own houses, and no one even thinks of this arrangement as a branch office. But in North Carolina, this pattern on cutting down on office space will not be allowed. And remember that North Carolina is a brick-and-mortar state so that if you are an out-of-state mortgage company thinking of getting licensed in North Carolina, your in-state office cannot be a home office.
If you are a loan officer who is now employed by a North Carolina licensee, you are classified as an employee and must receive a W-2 at the end of each year, showing your wages. There are no loan officer independent contractors in North Carolina.
If you want to apply for a license as a loan officer, you must now take 24 hours of approved pre-licensing education and pass an exam. When you have passed the exam, and are submitting your application, your background check must show a FICO score of at least 600. Moreover, your credit report cannot show any outstanding tax liens or judgments in the past 7 years.
The new law also affects minimum net worth requirements. If you are a mortgage broker, you must maintain a minimum net worth of at least $25,000. Your statement of net worth does not need to be from an accountant but must be certified by an authorized officer or member of the company. Additionally, the mortgage broker must provide the Commissioner of Bank’s office with bank statements or other proof that they have liquid funds of at least $10,000. For mortgage bankers, the net worth requirement is a minimum of $100,000 and that amount must be proven by an audited financial statement. In addition, the mortgage banker must show evidence of a line of credit or other available funds of $1,000,000.
Other provisions of the new law:
1. Reporting about closed loans will now be on a quarterly basis.
2. Renewals will be done at the end of the year as all licenses expire on December
31st.
3. Requires licensing for servicers as of January 1, 2009, however, you do not need an additional license if you are a mortgage banker who will be servicing (you will need to provide notice to the Commissioner of Banks).
If you need further information about the new law, you should look at the Commissioner of Bank’s website at www.nccob.org, place your cursor on Mortgage and then on Legal Compliance References.
Tuesday, July 8, 2008
Licensing of Branch Offices
All states require licensing of branch offices. But, again, each state has its own procedures for licensing branch offices. You should look on the website of each state in which you need to obtain a license to see what the requirements are for that state. For example, Nevada does not permit a branch office until after the main office has been examined by the Mortgage Lending Division and received a satisfactory rating in the preceding 12 months.
Many states have adopted the Uniform Application. In those jurisdictions, you will be filling out the Form MU3 as a starter. But each state can customize the additional information and documentation that it requires for a license approval. Some states require branch manager fingerprints, other states require that the branch manager have a certain number of years of mortgage industry experience, other states permit the branch to use a different assumed business name from the principal office, others require that all offices use the same business name.
Some of the states that have adopted the Uniform Application have moved to the Nationwide Mortgage License System (NMLS), the computerized national licensing database. If the state from which you want a license is on the NMLS, you must use the NMLS to get your branch licenses.
If the state has not adopted the Uniform Application, you must obtain its branch office license application from its website and review its requirements before submitting the application.
Usually, a branch office license application has fewer requirements than the initial license application. The license fee is lower, the minimum net worth does not change, or credit reports are not required. But some states, such as Maryland and Connecticut, do not have a separate branch office license application or different requirements. Each branch office is licensed with the same requirements and documentation as the initial office. In some cases, this makes it difficult to license additional offices if the company cannot find branch managers with the requisite number of years of industry experience or cannot obtain additional surety bonds.
You are not permitted to begin operations in the branch office until it has been licensed. The regulatory agencies treat this as unlicensed activity, the same as if you had never licensed the main office and you will be subjected to disciplinary action if caught. In many states, it is expressly prohibited to license a net branch. What is a net branch? It is a branch where a different company will be paying the employees of that location, where someone other than the main licensee is paying the expenses of the branch office, where the branch manager is totally responsible for hiring and firing employees in that office, or where someone other than the licensee has signed the lease, contracted with the utilities or the vendors that supply services or goods to the office.
In states where the branch office applications are not as extensive as the original application, the review time is also streamlined. In some states, it can take as little as 2-3 weeks for an approval.
Many states have adopted the Uniform Application. In those jurisdictions, you will be filling out the Form MU3 as a starter. But each state can customize the additional information and documentation that it requires for a license approval. Some states require branch manager fingerprints, other states require that the branch manager have a certain number of years of mortgage industry experience, other states permit the branch to use a different assumed business name from the principal office, others require that all offices use the same business name.
Some of the states that have adopted the Uniform Application have moved to the Nationwide Mortgage License System (NMLS), the computerized national licensing database. If the state from which you want a license is on the NMLS, you must use the NMLS to get your branch licenses.
If the state has not adopted the Uniform Application, you must obtain its branch office license application from its website and review its requirements before submitting the application.
Usually, a branch office license application has fewer requirements than the initial license application. The license fee is lower, the minimum net worth does not change, or credit reports are not required. But some states, such as Maryland and Connecticut, do not have a separate branch office license application or different requirements. Each branch office is licensed with the same requirements and documentation as the initial office. In some cases, this makes it difficult to license additional offices if the company cannot find branch managers with the requisite number of years of industry experience or cannot obtain additional surety bonds.
You are not permitted to begin operations in the branch office until it has been licensed. The regulatory agencies treat this as unlicensed activity, the same as if you had never licensed the main office and you will be subjected to disciplinary action if caught. In many states, it is expressly prohibited to license a net branch. What is a net branch? It is a branch where a different company will be paying the employees of that location, where someone other than the main licensee is paying the expenses of the branch office, where the branch manager is totally responsible for hiring and firing employees in that office, or where someone other than the licensee has signed the lease, contracted with the utilities or the vendors that supply services or goods to the office.
In states where the branch office applications are not as extensive as the original application, the review time is also streamlined. In some states, it can take as little as 2-3 weeks for an approval.
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