Summary of NMLS Requirements for California Mortgage Loan Originators

Due to the devastation caused by the financial losses stemming from bad residential mortgage loans and in an effort to have more control over who can originate mortgages in the future the Federal Government has come up with a new set of requirements for people that want to originate Residential Mortgage Loans.   Anybody that wants to earn money from originating loans in 2011 and beyond must be licensed with the new federal oversight agency, the Nationwide Mortgage Licensing System(NMLS).

There is alot you need to know to prepare yourself to be in compliance with these new regulations, here are some links that will point you in the right direction

NMLS Resource Center – Main Home Page

NMLS Resource Center – California

Info on Senate Bill 36 “The Safe Act”

Steps for Safe Act Compliance for Mortgage Loan Originators

Summary of Important recent regulations affecting licensees under the jurisdiction of the California Department of  Real Estate

A couple training options for Mortgage Loan Originators in the state of California:

There is a $300/year fee for this license.

For existing California licensees if you take care of all licensing requirements by September 1st 2010 (9/1/2010) you get to forgo the 20 hours of classroom education requirement.

If you fail the NMLS test you have to wait 30 days to re-take it.
As part of obtaining this license they are going to pull your credit.  I’ve attached a document that describes what they are looking for on your credit report.

Is this good or bad news for Mortgage brokers?

I say good for the following reasons:

  1. Less competition: These regulations will eliminate many unlicensed operators and add an increased level of oversight for Originators that allow unlicensed individuals to originate under their license.
  2. Increased accountability: The NMLS registration requirements in addition to the 2010 RESPA guidelines make it much more difficult for unlicensed, unscrupulous operators to do bad things under the radar and never be held accountable. It also means that Loan Officers at large financial institutions have to go through the same scrubbing process.
  3. Quicker Return of the Secondary Market: If investors of fixed income securities have a higher level of confidence that there is a more systematic, responsible origination process in place for residential mortgage underwriting and origination they will be more likely to purchase non-agency pools of loans which will allow new and exciting loan products to be re-introduced to the marketplace.

.pdf Attachments


CA SAFE Compliant Requirements

12 thoughts on “Summary of NMLS Requirements for California Mortgage Loan Originators

  1. I have a question. The brokers I work for recently transitioned from broker to mortgage banker. I have fulfilled my NMLS requirements for the new bank under the DOC and everything has been signed off. I work specifically with several investor that flip properties and the bank they joined with does not fund on these transactions and will charge me some hefty fees to broker out. If I went to work for another broker, will my NMLS approval transfer over if I apply for a DRE NMLS, or will I have to do another background check and application?

    Thanks in advance,

    • Thats an interesting question, honestly I don’t know the answer to that since I’ve never been licensed under the DOC. I’d call the NMLS hotline at (240) 386-4444. I’m sure they could help.

  2. Can you please tell me what exactly they are looking for in the credit reports? I have a bad credit because I did my loan modification and I had to default. Not only that I am derog in my credit card payments. Thanks

    • They are looking to see what your history of repaying debts is like. They are trying to figure out the answer to a very simple question: if I lend this person money, what are the chances he or she is going to pay me back.

    • Hi Danielle,

      (sorry for late response your comment went to my spam)

      Not neccesarily, I know some people with some pretty shaky credit profiles that got their NMLS license, you can call them at: Nationwide Mortgage Licensing System (240) 386-4444 or call the DRE NMLS department at DRE Licensing NMLS – 877 373-4542

      What exactly do you have on your credit that you are concerned about?

  3. I have a recent bankruptcy in my credit. March 2010. This was a result of the current economy and not being able to sustain a living and pay bills from 2008 forward. I have not applied for an NMLS endorsement thinking that it will not be approved. Is there any other way to find out if I am eligible (to be NMLS approved) other than by spending the time, money and resources of submitting an application with all its fees and documentation?

    • I would call the NMLS directly and explain your scenario and see if they can give you some guidance. They also have some NMLS quickguides that may help you.

      (240) 386-4444
      9am-7pm EST M-F
      6am-4pm PST M-F

    • Hi Julie,

      I’m just completing my first renewal now and they did not make me pay for an additional credit check (yet at least…)

  4. Hi Julie,

    What if I have a misdemeanor for identity theft and a misdemeanor for burglary which happened 3 years ago can I still get a nmls license?

  5. I used to work for a bank that hired an LO and she brought with her a processor that only works for her. The processor does every thing from taking the application doing disclosures everything. The borrowers never meets the LO until the day of closing. The bank that employes her is very much aware that the processor is doing everything. I thought the only people allowed to take applications pull credit and give the borrowers loan rates, payments etc was illegal.

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