February 23rd, 2011 11:00 AM by Scott Bray
You may be surprised to find out that the loan officer that you call on the phone or see sitting behind a desk at the local bank or credit union may not be licensed to do mortgage lending. There has been extensive changes that have been in place over the last year to protect consumers.
Currently, only the mortgage loan officers and mortgage brokers that work for a Non-Depository Lender needs to be licensed in the state they take a Loan Application and put a loan in process in. An FDIC or Credit Union Bank or Lender simply has to have their loan officers registered under their Lending Institutions License.
With the new licensing change in effect requiring National Standards under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, (part of the FHA reform bill) it is mandatory for Mortgage Loan Officers with Non-Depository Lenders to be registered through the Nationwide Mortgage Licensing System (NMLS).
This is a HUGE step in the right direction and though lobbyists have been able to prevent Mortgage Loan Officers with Depository Lenders from falling under the same standards it is hoped that they too will soon be forced to comply.
This new licensing structure maintains a live record of every Mortgage Loan Officer with Non-Depository Lenders and tracks their every move, including monitoring their individual credit reports as a factor of maintaining their NMLS license.
Non Bank (Non FDIC & Credit Union) Loan officers who work for small lenders or mortgage brokers have to obtain their National Mortgage License by completing 20 hours of educational classes, pass a State (that they plan to do loans in) exam with a score of 75% or better and also pass a National test with a score of 75% or better. Also each loan officer has to have a their background screened & their credit checked to make sure no unacceptable problems are found. Each year thereafter, 8 hours of continuing education must be completed to keep the license current in each State.
Requiring more out of this profession has lead to more Loan Officers leaving the business, moving over to Depository employers (FDIC or Credit Unions). This all becomes final on April 1st 2011 so some loan officers may be operating illegally until then because of delay in the final start date in Florida of April 1st, 2011.
To protect yourself, it is important to make sure that your Mortgage Loan Officer is licensed.
Your Mortgage Loan Officer should have their NMLS # (mine is #230075) printed on all identifying pieces such as their business cards, website, email, flyers, etc. This will all be done this year in 2011. The NMLS has also provided a consumer site to look up your Loan Officer to check on whether they are indeed licensed. Again this look-up doesn't start until April 1st, 2011 in Florida.
It's worth working with a licensed loan officer who is more educated & has your best intersts in mind. Don’t settle for less, if your Mortgage Loan Officer is not licensed, find one who is!