Apply for a Mortgage Broker License

Although each state has a department of banking or finance that regulates the local mortgage industry, they require you to complete the application process through the Nationwide Mortgage Licensing System (NMLS). When you apply, you will incur the following costs:

• NMLS processing fee
• Application fee
• Credit report fee
• Criminal background check fee

The total costs incurred will range from several hundred dollars to more than $5,000 depending on which state you are applying in. Some states itemize their charges, while others charge a lump sum that includes all costs.

Professional Experience Qualification

To be eligible for a mortgage broker license, in many states you must have some previous experience in the industry. The range for most states is between one and three years. Your experience should be directly related to making loans or as a branch manager for a mortgage broker, and it has to be current.

Education and Testing Requirements

You are also required to take 20 to 40 hours of classes through a state- or NMLS-approved course provider. Upon completion of your education requirements, you will have to pass an exam before you can apply for your license. Although you may opt to take the exam before fulfilling your class hours, the test is difficult and it is advisable to do the education beforehand. If you fail, you have to wait 30 days before you can retake the exam. If you fail your third attempt, you will have to wait 180 days. Tests are only administered periodically, and you have to register to take them in advance. You must score a minimum of 75 percent to pass.

Qualified Individual Requirement

Every mortgage brokerage firm is required to appoint someone who will oversee the legal/regulatory requirements by ensuring that the company operates lawfully and follows all applicable rules and regulations. The title is referred to as a “qualified individual.” The QI is typically an owner/officer of the company that is applying for the mortgage broker license.

To be a QI, you must:

• Live where the corporate office is located
• Have the required industry-related experience
• Fulfill the obligatory educational classes
• Pass the exam
• Execute a credit history report and criminal background check
• Meets all state specific requirements to fulfill this role

Insurance Requirements

Before applying for a license, you will have to post a surety bond with the state that you are applying in to protect your clients from damages resulting from fraud, misrepresentation, and other forms of wrongful injury caused by you or your employees. The amount of the bond will depend on the type of lenders you use to broker your loans. In some states, if you only use institutional investors, such as state or federal banks and lending institutions or governmental agencies, your bond requirement will be lower than if you utilize non-institutional investors, such as individuals who lend private money as a business. Other states base their number on the dollar amount of your loan volume. The surety bond requirement typically ranges between $10,000 and $500,000 depending on your state.

Location Requirements

You may have to secure a commercial location for your company. Arizona is a “brick and mortar” state, which means that you are required to have an in state location. We can help you with this requirement within Arizona. In New Jersey, the State Department of Banking and Insurance has to confirm that your site is suitable for the privacy and security of your clients and that it meets local zoning ordinances.

There are many more requirements that vary by state. Federal and state regulatory agencies continue to adjust their rules and guidelines, so it is essential to do your research thoroughly before applying for your license. For more information or a free consultation, call (866) 576-7726 or email us at info@mymortgagelicense.com.