Mortgage brokers looking to expand their reach should understand licensing requirements
Steven Sheasby, owner and president, Integrity Mortgage Licensing
As published in Scotsman Guide's Residential Edition, January 2009.
When searching for ways to grow their businesses, mortgage brokers often look to work in more than one state. Many may not realize, however, that there are numerous factors involved in this decision to expand. The key detail of which brokers should be aware is licensing.
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How to Find State-License Info ___________________________
Information about each state's licensing requirements can be found at the following Web sites.
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Although licensing requirements still often vary by state, being cognizant of primary, common elements could help you expedite the licensing process.
When deciding to get licensed in multiple states, the first thing brokers should keep in mind is that every state is different. Even with the new Nationwide Mortgage Licensing System, each state still has different requirements (for regulatory information, see sidebar.) In the past 10 years, almost every state has developed its own licensing scheme that requires mortgage companies, branches or loan officers — or some combination thereof — to obtain a license.
Generally speaking, these bills designate a regulatory agency such as the state’s department of financial institutions or department of real estate to develop a plan to license all required individuals according to the law. This is why each state’s details are different. Although state legislators and regulators often help each other develop licensing schemes, they often add their own twist.
Whichever states you’re looking at, a few standards generally exist. For example, most states require mortgage companies, branch locations and loan originators all to be licensed. There are exceptions, however. Colorado, for example, only requires loan originators to be licensed but not the company for which they work.
There are also some common threads among the application elements and documentation types required to receive a state license. Almost every state requires the following:
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A filing for certificate of authority as a foreign entity and a registered agent
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A surety bond
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A record of fingerprints, a criminal background check or both
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A minimum education level, proof of specific exam scores and work experience
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A detailed accounting of business ownership and officer information
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A detailed financial statement
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A complete and accurate application packet
To achieve a mortgage-broker license, you must understand the details of each state in which you hope to work. Let’s take a look at each of the aforementioned common licensing items.
Certificate of authority
Applications for certificates of authority typically are filed with the state’s secretary of state. Application fees can range from $25 to $700, but they usually run about $100.
These filings include basic information about the company and about its owners, officers and directors. In almost every state, the certificate of authority must be filed before applying for a mortgage broker’s license — unless you are a sole proprietor or are already incorporated or organized in that state.
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