By now, most of you loan officers have the licensing requirements down pat – 20 hours of pre-licensing education, pass the state and national tests, do the criminal background check, get the credit check done – and you’re licensed. There’s always a stray requirement hanging out there that you forget about and Maryland’s newest requirement highlights that fact.
The SAFE Act requires that all loan officers work for only one mortgage company at a time. The company that you work for must “sponsor” you. That means that your employer must show on the NMLS that you work for them. Most states, when they transitioned onto the NMLS, required the company sponsorship as part of the initial licensing application. You couldn’t get your loan originator license until your company sponsored you.
Maryland was different. You transitioned your license onto the NMLS but your company sponsored you on the Department of Labor, Licensing, and Regulation website. Now, Maryland is requiring that all employers create a sponsorship relationship with each of their loan officers on the NMLS. This must be completed by May 15, 2011 or there will be a payment involved.
All Maryland loan officers must first give access to their employer to their MU4 record. This is done by the loan officer getting onto their MU4 record on the NMLS and creating an “active relationship” with their employer. Once that has been completed, your employer must create the sponsorship.
You must keep checking your NMLS record to ensure that your employer has completed his part of the sponsorship request. After May 15, 2011, any loan officer who has not had a sponsorship request submitted via the NMLS will be placed in an "approved-inactive" status. That means that you will not have the authority to originate loans.
Showing posts with label loan officer. Show all posts
Showing posts with label loan officer. Show all posts
Monday, April 25, 2011
Tuesday, February 22, 2011
What Are You Doing Differently To Stay In Business?
The number of licensed mortgage brokers, lenders, and loan officers is a fraction of what it was five (5) years ago. If you are still working in the mortgage industry, you are serious about your business. But, the industry has changed and is still changing. What worked in the past is not a viable business model anymore. You are (hopefully) doing things differently to stay in business. Do you have a strategic plan for surviving and then growing your business? Can you afford not to?
There is a lot more regulation about licensing. Every state requires that mortgage brokers, lenders and loan officers be licensed. The exceptions to licensing that used to exist if you did only a few loans in a state are largely gone. So, what are you doing to ensure that your new loan officers get licensed?
Fraud played a large enough part in the mortgage meltdown to push states to enact new laws and regulations that require licensees to create fraud prevention programs. What have you done to ensure that your employees are complying with your procedures?
The number of new loan applications is down sharply from even the start of the housing bubble. Do you have a plan that you are following to get a steady stream of real estate agent referrals, other referral partners, past and present customers, and internet leads? Do you track from where you are getting your leads so you can do more of those actions? Do you know which marketing strategies are not working enough to justify spending much time on them?
Are you training your staff so that they know what your vision of your business is and how you want them to implement that vision? In addition to the required continuing education, do you offer in-house education on new laws, new products, the best ways to get iffy borrowers approved for their loans? Those loan officers who are still in the business want to work for the best companies.
Borrowers want their loans approved faster and want to close their loans more conveniently. Is your technology able to provide your customers with the best loan application experience? Do your employees also add to the loan application process or are your borrowers ready to complain to their friends, family, and state regulators how much of a hassle working with your company was? Do you even survey your customers to know what they liked about working with you and what they hated about their loan application process?
What the industry will look like in the next five (5) years is only everyone’s guess. To stay in business, you need to adapt your procedures, work with the current regulatory environment, and use it to your advantage, wherever possible. Make a plan to use the best ideas out there and then keep testing to see what works.
There is a lot more regulation about licensing. Every state requires that mortgage brokers, lenders and loan officers be licensed. The exceptions to licensing that used to exist if you did only a few loans in a state are largely gone. So, what are you doing to ensure that your new loan officers get licensed?
Fraud played a large enough part in the mortgage meltdown to push states to enact new laws and regulations that require licensees to create fraud prevention programs. What have you done to ensure that your employees are complying with your procedures?
The number of new loan applications is down sharply from even the start of the housing bubble. Do you have a plan that you are following to get a steady stream of real estate agent referrals, other referral partners, past and present customers, and internet leads? Do you track from where you are getting your leads so you can do more of those actions? Do you know which marketing strategies are not working enough to justify spending much time on them?
Are you training your staff so that they know what your vision of your business is and how you want them to implement that vision? In addition to the required continuing education, do you offer in-house education on new laws, new products, the best ways to get iffy borrowers approved for their loans? Those loan officers who are still in the business want to work for the best companies.
Borrowers want their loans approved faster and want to close their loans more conveniently. Is your technology able to provide your customers with the best loan application experience? Do your employees also add to the loan application process or are your borrowers ready to complain to their friends, family, and state regulators how much of a hassle working with your company was? Do you even survey your customers to know what they liked about working with you and what they hated about their loan application process?
What the industry will look like in the next five (5) years is only everyone’s guess. To stay in business, you need to adapt your procedures, work with the current regulatory environment, and use it to your advantage, wherever possible. Make a plan to use the best ideas out there and then keep testing to see what works.
Monday, May 24, 2010
Why You Should Tell Your Potential Customers About Your Licensing Requirements
Many of the mortgage brokers and lenders that I have been talking to in the past few months have been complaining about the need to get licensed. Most of the griping stems from the costs involved. A few mortgage brokers have pointed why licensing is better for the industry. You should be telling your potential and past customers why the licensing of loan originators is beneficial to them and how it differentiates the mortgage loan originators from bank loan officers.
You should be pointing out in all of your marketing materials that licensing means that your loan originators are more educated about federal and state laws because of the pre-licensing requirements. You should also emphasize how the testing requirement weeds out those loan originators who don’t take the courses very seriously. And don’t forget to tell everyone how your loan originators needed to go through criminal background checks to ensure that you and the state regulators evaluate whether any criminal convictions could impact their ability to act as honest loan originators.
You should call attention to the fact that borrowers have no idea who their bank loan officer is, yet they can find out pertinent information about your loan originators on the NMLS Consumer Access database. All of your marketing channels should be stressing these reasons why they should be using you, a licensed mortgage loan originator, rather than the unknown quantity that is a bank loan officer. Start shouting it from the rooftops right now.
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!
You should be pointing out in all of your marketing materials that licensing means that your loan originators are more educated about federal and state laws because of the pre-licensing requirements. You should also emphasize how the testing requirement weeds out those loan originators who don’t take the courses very seriously. And don’t forget to tell everyone how your loan originators needed to go through criminal background checks to ensure that you and the state regulators evaluate whether any criminal convictions could impact their ability to act as honest loan originators.
You should call attention to the fact that borrowers have no idea who their bank loan officer is, yet they can find out pertinent information about your loan originators on the NMLS Consumer Access database. All of your marketing channels should be stressing these reasons why they should be using you, a licensed mortgage loan originator, rather than the unknown quantity that is a bank loan officer. Start shouting it from the rooftops right now.
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, August 4, 2008
New Federal Law Affects Loan Originators
On July 30, 2008, President Bush signed into law the S.A.F.E. Mortgage Licensing Act of 2008. It was part of the Housing and Economic Recovery Act which is designed to help homeowners caught in the foreclosure mess. The S.A.F.E. Mortgage Licensing Act is designed to regulate loan originators and start a nationwide scheme of loan officer licensing.
Some of the provisions of the new law are:
1. All loan officers will be part of the Nationwide Mortgage License System (NMLS);
2. The NMLS will create a unique identifying number for each loan officer that permanently identifies the loan officer;
3. All loan officers will have to be registered or licensed in their states and maintain their registration or license in order to originate mortgages;
4. All independent contractor loan officers must be registered or licensed;
5. In order to get licensed, loan officers must submit to the NMLS fingerprints, a personal history and experience report;
6. The NMLS will run criminal background and credit history checks on each loan officer;
7. In order to get a state license, a loan officer must:
a. never have had a license revoked in any jurisdiction, have had no convictions, pled guilty or no contest to a felony in any court for the past 7 years or at any time in the past if the felony involved fraud, dishonesty, money laundering or breach of trust;
b. show good character an financial responsibility;
c. completed 20 hours of pre-licensing education;
d. passed a written test;
e. met a net worth requirement, paid into a state fund or obtained a surety bond.
8. In order to renew a license, loan officers will need to complete at least 8 hours of continuing education credits.
All states are going to have to create new procedures to comply with the new federal law. Stay tuned for more information as the states roll out their implementation requirements.
Some of the provisions of the new law are:
1. All loan officers will be part of the Nationwide Mortgage License System (NMLS);
2. The NMLS will create a unique identifying number for each loan officer that permanently identifies the loan officer;
3. All loan officers will have to be registered or licensed in their states and maintain their registration or license in order to originate mortgages;
4. All independent contractor loan officers must be registered or licensed;
5. In order to get licensed, loan officers must submit to the NMLS fingerprints, a personal history and experience report;
6. The NMLS will run criminal background and credit history checks on each loan officer;
7. In order to get a state license, a loan officer must:
a. never have had a license revoked in any jurisdiction, have had no convictions, pled guilty or no contest to a felony in any court for the past 7 years or at any time in the past if the felony involved fraud, dishonesty, money laundering or breach of trust;
b. show good character an financial responsibility;
c. completed 20 hours of pre-licensing education;
d. passed a written test;
e. met a net worth requirement, paid into a state fund or obtained a surety bond.
8. In order to renew a license, loan officers will need to complete at least 8 hours of continuing education credits.
All states are going to have to create new procedures to comply with the new federal law. Stay tuned for more information as the states roll out their implementation requirements.
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 11, 2008
Training Your Loan Officers
A couple of months ago, I blogged about the best practices for hiring new loan officers. Now, it’s time to review the procedures to use to ensure that your loan officers stay compliant with all laws.
If your company is large enough, it should have a manual of company policies and procedures (prepared or reviewed by a lawyer who is very familiar with employment law). When a new loan officer starts his/her job with your company, the new loan officer should be given a copy of the company manual, should read the manual and should be required to sign an acknowledgement that the manual was read. If you don’t have a company manual, you need to meet with each new loan officer and explain what the company’s policies are regarding vacation and sick days, dress codes, email and use of the company computers, confidentiality of company information and client privacy information, all statutes and regulations that apply to your company and its business, etc.
Each job should have a job description so that everyone knows what he/her responsibilities are. Review each job description and make sure that all employees are complying with their job duties.
If your loan officers do not have experience in originating or processing loans of any state in which you are licensed, you must give some training to new loan officers in compliance with state laws and regulations. You can hire a trainer to give this training. If you are outsourcing this function, make sure that your trainer is entirely familiar with the subject matter in which he/she is giving training. You should monitor training sessions so that you know what is being taught to your employees. If anything is said that seems to contradict what you know about your state’s requirements, check with the state banking department to clear up all discrepancies. If there is a contradiction between the trainer and the banking department answers, go with the banking department answers.
Each employee should have training on how to deal with customers and potential borrowers. Loan officers should know what they can and cannot say to customers. You may want to hire a professional to teach sales development techniques and marketing skills. All loan officers should be familiar with investor requirements and the different loan programs that you offer to customers. They should be able to explain each program in detail so that it is easily understandable to borrowers.
Training should be ongoing and refresher courses should be given at least annually. Loan officers who need continuing education to maintain their licenses must keep a schedule of when they completed their required hours and employers should require that they receive a copy of that schedule.
Finally, model the type of behavior and standards that you want others to follow. Loan officers that do not follow state and federal law as well as your company’s procedures will get you into trouble. The loan officer may be long gone by the time the problem comes to light. But you will be left with the consequences.
If your company is large enough, it should have a manual of company policies and procedures (prepared or reviewed by a lawyer who is very familiar with employment law). When a new loan officer starts his/her job with your company, the new loan officer should be given a copy of the company manual, should read the manual and should be required to sign an acknowledgement that the manual was read. If you don’t have a company manual, you need to meet with each new loan officer and explain what the company’s policies are regarding vacation and sick days, dress codes, email and use of the company computers, confidentiality of company information and client privacy information, all statutes and regulations that apply to your company and its business, etc.
Each job should have a job description so that everyone knows what he/her responsibilities are. Review each job description and make sure that all employees are complying with their job duties.
If your loan officers do not have experience in originating or processing loans of any state in which you are licensed, you must give some training to new loan officers in compliance with state laws and regulations. You can hire a trainer to give this training. If you are outsourcing this function, make sure that your trainer is entirely familiar with the subject matter in which he/she is giving training. You should monitor training sessions so that you know what is being taught to your employees. If anything is said that seems to contradict what you know about your state’s requirements, check with the state banking department to clear up all discrepancies. If there is a contradiction between the trainer and the banking department answers, go with the banking department answers.
Each employee should have training on how to deal with customers and potential borrowers. Loan officers should know what they can and cannot say to customers. You may want to hire a professional to teach sales development techniques and marketing skills. All loan officers should be familiar with investor requirements and the different loan programs that you offer to customers. They should be able to explain each program in detail so that it is easily understandable to borrowers.
Training should be ongoing and refresher courses should be given at least annually. Loan officers who need continuing education to maintain their licenses must keep a schedule of when they completed their required hours and employers should require that they receive a copy of that schedule.
Finally, model the type of behavior and standards that you want others to follow. Loan officers that do not follow state and federal law as well as your company’s procedures will get you into trouble. The loan officer may be long gone by the time the problem comes to light. But you will be left with the consequences.
Thursday, January 24, 2008
Colorado clarifies who needs to be licensed as a mortgage broker
Colorado has found it necessary to clarify whom it is requiring to license as a mortgage broker. Although the definition of a mortgage broker seems clear, the Department of Real Estate just issued new regulations specifying who the licensing statute and regulation covers. And one category that does not seem to fit the definition now requires licensing.
All loan officers who “broker a mortgage, offer to broker a mortgage, act as a mortgage broker, or offer to act as a mortgage broker” must be licensed. I think most of the industry already knew that. What seems to be new and different is that supervisors who directly supervise loan officers must also be licensed. The Department of Real Estate also explained that administrative and clerical personnel do not need a mortgage broker license. If your processors only collect and distribute information about applicants, they do not require licensing. If they talk to borrowers about loan terms and rate or offer any kind of advice about loan terms and rates, then they cross the line and fall within the definition of mortgage broker.
When in doubt, either get the license for your employees or make sure their actions and speech do not extend to advice of any kind.
All loan officers who “broker a mortgage, offer to broker a mortgage, act as a mortgage broker, or offer to act as a mortgage broker” must be licensed. I think most of the industry already knew that. What seems to be new and different is that supervisors who directly supervise loan officers must also be licensed. The Department of Real Estate also explained that administrative and clerical personnel do not need a mortgage broker license. If your processors only collect and distribute information about applicants, they do not require licensing. If they talk to borrowers about loan terms and rate or offer any kind of advice about loan terms and rates, then they cross the line and fall within the definition of mortgage broker.
When in doubt, either get the license for your employees or make sure their actions and speech do not extend to advice of any kind.
Friday, January 11, 2008
New York Now Requires Mortgage Loan Originator Registration
New York now requires all loan officers, which they call mortgage loan originators (MLOs), to be registered. This state is one of the first to become part of the Nationwide Mortgage Licensing System (NMLS). In addition to the detailed online application through the NMLS, loan officers are required to submit supplementary documents directly to the New York Banking Department, including fingerprints, credit history, and documentation related to financial and criminal disclosures. Loan officers who work for banks, thrifts and credit unions do not have to register. Loan processors would need to register if they discuss loan products or terms with customers.
Sole proprietors and company officers, directors, members and shareholders who also engage in soliciting customers for New York loans must register as MLOs.
Each loan officer will need to set up his/her own account on the NMLS, creating a personal user name and password. He/she will need to complete the MU4 form and pay a registration fee.
Each loan officer will be required to get his/her fingerprints taken, getting the fingerprint cards either through the Banking Department or through the employer. Even company officers, directors, members and shareholders who were previously fingerprinted for the company license must be fingerprinted again if they are required to register as an MLO.
Additionally, a recent (within 30 days of registration on the NMLS) credit report for each registered MLO must be submitted with the fingerprint cards. If the MLO answered “yes” to any of the questions regarding criminal charges and convictions, bankruptcy filings, civil litigation, regulatory problems with any state or federal agency, and whether he/she was ever fired from a previous job, back-up documentation must be submitted along with the fingerprint cards and credit report. All MLO applications must be approved by the Banking Department or that loan officer cannot solicit any business in New York.
The registrations are good only for one calendar year and expire on December 31st. MLOs can work for only one company. If the MLO switches companies, the Banking Department must be notified of the change.
If your company was licensed in New York before January 1, 2008, your existing MLOs must submit applications through the NMLS for registration before July 1, 2008. If your company is licensed after January 1, 2008, the MLOs should immediately submit their applications as they have only until April 1, 2008 to receive notification from the Banking Department that their application has been received to be allowed to solicit New York business.
Sole proprietors and company officers, directors, members and shareholders who also engage in soliciting customers for New York loans must register as MLOs.
Each loan officer will need to set up his/her own account on the NMLS, creating a personal user name and password. He/she will need to complete the MU4 form and pay a registration fee.
Each loan officer will be required to get his/her fingerprints taken, getting the fingerprint cards either through the Banking Department or through the employer. Even company officers, directors, members and shareholders who were previously fingerprinted for the company license must be fingerprinted again if they are required to register as an MLO.
Additionally, a recent (within 30 days of registration on the NMLS) credit report for each registered MLO must be submitted with the fingerprint cards. If the MLO answered “yes” to any of the questions regarding criminal charges and convictions, bankruptcy filings, civil litigation, regulatory problems with any state or federal agency, and whether he/she was ever fired from a previous job, back-up documentation must be submitted along with the fingerprint cards and credit report. All MLO applications must be approved by the Banking Department or that loan officer cannot solicit any business in New York.
The registrations are good only for one calendar year and expire on December 31st. MLOs can work for only one company. If the MLO switches companies, the Banking Department must be notified of the change.
If your company was licensed in New York before January 1, 2008, your existing MLOs must submit applications through the NMLS for registration before July 1, 2008. If your company is licensed after January 1, 2008, the MLOs should immediately submit their applications as they have only until April 1, 2008 to receive notification from the Banking Department that their application has been received to be allowed to solicit New York business.
Wednesday, September 12, 2007
Rogue loan officers
"Rogue" loan officer is the term for a loan originator who does not behave ethically. The rogue behavior can include copying customer lists and customer information just before leaving to move on to another company. It can include putting customers in loan programs that are not suitable for them. Or they do not follow your company's rules and procedures.
Rogue loan officers are very costly to your company and to the business of mortgage origination in general. Every time a rogue loan officer acts in a way that is detrimental to your company, it may cost you money. You may be sued by an unhappy customer, investigated by your state banking department or "requested" by an investor to buy back a loan. Even if you can placate the banking department or settle the lawsuit, it costs you money and puts your insurance company on notice (you do have errors and omissions insurance, don't you?). The larger the number of complaints about rogue loan officers, the more likely there will be further regulation of loan officers. And regulation always costs money, either licensing the loan officer or paying for continuing education or paying for an increased number of banking department examinations because your company is on their watch list. Moreover, regulation doesn't seem to stem the tide of rogue loan officers.
The only way to ensure that rogue loan officers don't hurt you is to supervise all of your loan officers very closely. Check loan files, watch what your loan officers are doing, especially after normal business hours, make sure your branch managers are supervising closely as well. Most rogue loan officers do not have a criminal background or even a regulatory problem with any state banking department. They skip out before they are found out. The last thing you need in these difficult times is one or two rogue loan officers putting you out of business.
Rogue loan officers are very costly to your company and to the business of mortgage origination in general. Every time a rogue loan officer acts in a way that is detrimental to your company, it may cost you money. You may be sued by an unhappy customer, investigated by your state banking department or "requested" by an investor to buy back a loan. Even if you can placate the banking department or settle the lawsuit, it costs you money and puts your insurance company on notice (you do have errors and omissions insurance, don't you?). The larger the number of complaints about rogue loan officers, the more likely there will be further regulation of loan officers. And regulation always costs money, either licensing the loan officer or paying for continuing education or paying for an increased number of banking department examinations because your company is on their watch list. Moreover, regulation doesn't seem to stem the tide of rogue loan officers.
The only way to ensure that rogue loan officers don't hurt you is to supervise all of your loan officers very closely. Check loan files, watch what your loan officers are doing, especially after normal business hours, make sure your branch managers are supervising closely as well. Most rogue loan officers do not have a criminal background or even a regulatory problem with any state banking department. They skip out before they are found out. The last thing you need in these difficult times is one or two rogue loan officers putting you out of business.
Friday, January 19, 2007
Licensing your loan officers
The trend in licensing is towards more regulation rather than less regulation. As the real estate market stabilizes or declines, foreclosures are starting to increase. This alarms consumer advocates and legislators who clamor that bad mortgage originators are steering borrowers to mortgage loans that they cannot afford. The cure, to them, is registering or licensing loan officers.
Colorado is the latest state to require licensing. It doesn't even license mortgage lender or broker businesses - it only licenses the loan officers.
Registration of loan officers, in the states that require them, such as New Jersey, Connecticut, Arkansas and Wisconsin, merely require the filing of the application and the payment of a fee.
The licensing states, such as Utah, Illinois, North Carolina, and Texas, require passing an exam, background checks, a certain number of years of mortgage industry experience, or continuing education.
By requiring your loan officers to be licensed in the states that require it, you are ensuring that they are knowledgeable about the laws and regulation that govern the industry.
Colorado is the latest state to require licensing. It doesn't even license mortgage lender or broker businesses - it only licenses the loan officers.
Registration of loan officers, in the states that require them, such as New Jersey, Connecticut, Arkansas and Wisconsin, merely require the filing of the application and the payment of a fee.
The licensing states, such as Utah, Illinois, North Carolina, and Texas, require passing an exam, background checks, a certain number of years of mortgage industry experience, or continuing education.
By requiring your loan officers to be licensed in the states that require it, you are ensuring that they are knowledgeable about the laws and regulation that govern the industry.
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