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How can I learn more about what a career in mortgage lending really offers?
Visit the career information section of our Web site for a helpful overview of the exciting world of mortgage lending. Talking to successful professionals is another great way to learn more about being a mortgage broker on a daily basis. Check out our free articles to help you decide if a career in mortgage lending is right for you!
What are the requirements to be licensed as a residential mortgage originator?
Any mortgage originator licensee must be a business entity and must have and maintain at all times one of the following:
Natural persons can no longer be licensed as mortgage originators and exemptions from licensure for certain real estate and insurance agents is no longer available.
What are the education requirements?
Residential mortgage originators are required by Minnesota law to demonstrate successful completion of 15 hours of approved education, including 4 hours of Minnesota law.
I am a loan officer working for a licensed mortgage originator. Do I need a license?
No, but your employer must do a background check on you, maintain your name on a perpetual roster of loan officers, and affirm successful completion of 15 hours of approved education, including 4 hours of Minnesota law.
Do I need a license if I am an independent contractor to a licensed residential mortgage originator?
No. However, the licensee you are associated with must do a background check on you, maintain your name on a perpetual roster of loan officers, and affirm successful completion of 15 hours of approved education, including 4 hours of Minnesota law.
What if I want to be a mortgage originator and not work for someone else?
You would have to form a business entity and meet the net worth or surety bond requirements.
Can I work as a mortgage originator if I have been convicted of a crime?
Effective January 1, 2006, any individual who has been convicted of a crime involving dishonesty, breach of trust, or money laundering, may not serve as a mortgage originator without the prior written consent of the commissioner. Convictions for other crimes, all felonies, gross misdemeanors and misdemeanors (except traffic violations) must be disclosed on the application. Applications which disclose criminal violations are reviewed and decided based on individual circumstances.
If I am FHA, VA or HUD approved, do I need a license or am I exempt?
You still need a residential mortgage originator license. Being FHA, VA or HUD approved does not exempt you from the licensing requirement.
How long is a license good for?
All residential mortgage originator licenses are valid through July 31 of each odd-numbered year.
When must a licensee renew its license?
The residential mortgage originator licenses expire July 31, 2007, and each odd-numbered year after that. Renewal materials will be mailed to all licensees 1 to 2 months prior to the expiration date. An application for a renewal license is due July 15 of the renewal year.
What are the renewal fees?
The residential mortgage originator license renewal fee is $1,125.
How can I get answers to any other questions I may have?
You may contact Minnesota Department of Commerce by telephone at 651-282-9855 or by e-mail at mortgage.commerce@state.mn.us.
What is the SAFE Mortgage Licensing Act?
SAFE stands for Secure and Fair Enforcement for Mortgage Licensing Act of 2008. The law went into effect July 2008. It is Title V of a 700-page piece of legislation entitled the Housing and Economic Recovery act of 2008. The Act is designed to protect consumers by requiring states to use uniform standards for licensing individuals wanting to serve as loan originators. Uniform standards include registry in a national database of loan originators, education and testing requirements, and screening individuals with background checks for past felonies and demonstrated financial responsibility.
Who does the SAFE Mortgage Act impact?
The SAFE Mortgage Licensing Act applies to all loan originators. A loan originator is anyone who is compensated to take a residential mortgage loan application and offer or negotiate terms of a residential mortgage loan.
What is the NMLS or NMLSR?
NMLS is the Nationwide Mortgage Licensing System and Registry. Each applicant is required to submit applicant information, including fingerprints, personal history and experience. This information is stored in a national database of mortgage originators, developed and maintained by the Conference of State Bank Supervisors.
What information will be in the NMLS database?
The database will contain licensing information, enforcement actions and background data for every state-licensed mortgage broker, loan originator and lender. Those individuals operating in states without licensing requirements will have the opportunity to submit information voluntarily.
What type of application form is used to get a mortgage originator's license?
The NMLS has four application forms: MU1, MU2, MU3, and MU4.
Mortgage originators use the Form MU4, which is the Uniform Individual Mortgage License/Registration and Consent form. It is submitted to the jurisdiction where the applicant is filing. A mortgage originator must be affiliated with an employer for the form to be submitted. Certain employing brokers submit this form in behalf of their loan originators.
Form MU1 is the Uniform Mortgage Lender/Mortgage Broker form that is required to be completed and submitted by companies and sole proprietorships. Each MU1 form must be accompanied by at least MU2 form that identifies the firm's key persons in control. Finally, the MU2 form is used to sign up a branch office with the NMLS.
What exactly is an NLMS "unique identifier"?
Each loan originator registered in the NMLS, National Registry, will be permanently assigned a number that will help electronically track them. A loan originator's unique identifier will not change as her or she moves from state to state. In fact, the process of being licensed in additional states is streamlined by just adding the new state's license to the current record.
What is the difference between being a "State-licensed loan originator" and a "registered loan originator"?
Both types of loan originators take applications and negotiate residential mortgage loan terms. However, "registered" loan originators are employed by a bank (depository institution) or credit union, while "State-licensed" loan originators are not.
What are the prelicense education requirements for State-licensed mortgage originators as a result of the SAFE Act?
20 hours of prelicensing education are required; 3 hours of which must be related to Federal laws and regulations, 3 hours of ethics, and 2 hours of training on nontraditional mortgage products (i.e., any product that is not a 30-year fixed rate mortgage). All courses must be approved by the Nationwide Mortgage Licensing System; however the approval system isn't expected to be developed until the latter part of 2009.
What are the testing and exam requirements for mortgage originators?
Applicants must take and pass with of score of not less than 75% a written test. The test measures the applicant's knowledge of mortgage lending ethics, federal and state laws and rules, including consumer protection, nontraditional mortgage products and fair lending issues.
What is the purpose of the SAFE Mortgage Licensing test?
As required by the SAFE Act, the test is designed to adequately measure an individual’s knowledge and comprehension in appropriate areas, to include:
- Ethics;
- Federal law and regulation pertaining to mortgage origination;
- State law and regulation pertaining to mortgage origination;
- Federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.
The SAFE Act test will include two components: a National component and a Unique state component.
When will the SAFE Mortgage Licensing test be available?
The National Component and twelve Unique State Components is scheduled to be made available on July 30, 2009. The following states have developed the state component for testing beginning July 30, 2009:
Other Unique State Components are scheduled to be made available in accordance with each state’s SAFE Act implementation schedule.
What will the fees be for taking the SAFE Mortgage Licensing test?
It is expected that the National Component will be $92 and each Unique State Component will be $69.
Will Mortgage Loan Originators have to take a test for each state or jurisdiction they conduct loan origination activities?
Mortgage Loan Originators will have to pass the Unique State Component for each state or jurisdiction they conduct loan origination activities. The National Component will only have to be passed once. Mortgage loan originators who have successfully passed a state required test previously may not have to take the Unique State Component for that state. The state regulatory agency will be able to verify if the Unique State Component is required.
Is prelicense education required prior to taking the SAFE Mortgage Licensing test?
No. It is recommended to take prelicense education prior to taking the SAFE Mortgage licensing exam but not required.
Will state-approved courses taken previously be counted towards the 20-hour prelicense requirements?
Yes. States that have existing education requirements in place should continue administering those requirements through at least 2009 and beyond depending on each state’s SAFE Act transition dates. However, the NMLS will not accept “partial hours” from existing licensees so a state-licensed loan originator that currently has less than 20 hour should complete their education as soon as possible or they will be required to take the full 20 hours.
What if I have completed less than 20 hours of state-approved education?
The NMLS will only approve the full 20 hours of education so if you completed less than 20 hours you will want to take the remaining hours.
For example, if you took 16 hours of state-approved continuing education you must take an additional 4 hours of state-approved education. Otherwise the NMLS will not recognize any of your hours and you will have to do the full 20 hours of prelicense education.
What are the SAFE Act continuing education requirements?
On an annual calendar-year basis, licensees must complete 8 hours of continuing education to renew a license. The hours must include at least 3 hours of federal laws and rules; 3 hours of ethics, including fraud, consumer protection, and fair lending issues; and 2 hours of training relating to lending standards for nontraditional mortgage products, i.e., any product that is not a 30-year fixed rate mortgage.
Licenses do not need to take continuing education in the same year they take their 20 hours of prelicense education.
What are the minimum state license standards as a result of the SAFE Act?
SAFE Act requires that any system developed by a state to license individuals to serve in a mortgage lending capacity must have at least the following 8 features:
- Screen individuals for no felonies in the last 7 years (certain felonies, like fraud, dishonesty, breach of trust, or money laundering NEVER)
- Screen individuals for no previous license revocations
- Require proof of financial responsibility using a credit report
- Require prelicense testing and education
- Require continuing education
- Provide for license renewals on an annual basis
- Include a bond, net worth or recovery fund
What this means is that states will require background checks, including fingerprinting, and credit checks of individuals seeking licensure. In addition, prelicense education and testing systems and continuing education requirements will be developed and monitored.
Does this mean that current state requirements go away?
No. In fact, the federal law is considered to be the minimum. States may mandate additional licensing or education requirements beyond those required by the SAFE Act.
What authority does the state agency retain with this new federal NMLS system?
Each state agency retains authority to approve, deny, suspend, or revoke mortgage originator licenses. The NMLS is only an electronic repository of applications and renewals.
Who will create the education and testing requirements?
The Board of Managers of the state Regulatory Registry announced it has selected the Financial Industry Regulatory Authority, Inc. (FINRA) and its sub-contractor Pearson VUE to implement the testing and education requirements. The first SAFE tests are expected to be developed and delivered by July 30, 2009.
What are the overall timelines associated with mortgage originator education, testing, and licensing?
There are two different categories of individuals with two different compliance timeframes:
- Licensed mortgage loan originators- those who were licensed before July 31, 2009 must take the education, exam and be licensed on the NMLS system between July 31, 2009 and January 1, 2010 in order to be compliant. However, if they already have taken 20 hours of prelicense education under an existing requirement, they do not need to repeat that training.
- Non-licensed mortgage loan originators- those who did not hold a license as of July 31, 2009 must take the education, and exam and be licensed on the NMLS system between July 31, 2009 and July 31, 2010.
For more details on becoming a licensed mortgage originator, click here.
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