CO Mortgage License

I hope each of you had a Happy and restful Thanksgiving holiday with your family. Now that we are back, let's take a look at the new licensing requirements for CO.

In June of this year, the legislature in CO passed a bill to begin to require licensing for Mortgage Brokers beginning in January of 2007. This is a brand new requirement, as mortgage brokers have been able to operate until this time in CO without a license. The complete requirements of this license, I'm sure, will continue to be modified over the next year, but we'll discuss what is currently needed.

Mortgage Brokers in CO will be required to register with the CO Division of Real Estate and must also file a background check form with the CO Bureau of Investigation. Early indications are that the background checks will be the items that will most likely make the licensing process lengthy (currently, there is a 12 week backlog). Applicants will be required to submit a completed fingerprint card in order to have the background check completed. It is recommended that you send in a completed card as soon as possible due to the backlog mentioned previously if you are looking to get licensed and do business in Colorado.

In addition, applicants must supply a $25,000 surety bond and file their application via an online service on CO's website.

It is our understanding that the introduction of this new Mortgage Broker license does not change the need to obtain a CO Supervised Lender license if you intend to work with 2nd mortgages. The Supervised Lender license has been around for some time and many of you may already have this license.

One last thing; there does appear to be an exemption to the Mortgage Broker license available if your company is HUD approved and pays its employees via W2 (which, as of August, 2006, this is required by HUD). The CO website offers you the opportunity to register and receive a letter confirming this exemption. But, other than that, beginning Jan 1, 2007, if you want to operate as a mortgage broker in the state of CO you must get registered and licensed.

If you'd like help in obtaining this license or just have further questions, please check us out at www.amlicensing.com or 866.588.6600.

Thanks,
Eric

Happy Thanksgiving

I'm not exactly sure how many readers we have at this point, but I just wanted to let you know that you shouldn't expect any new posts until after Thanksgiving. If you have any questions during this time, or just need some information, we will be in the office through Wednesday around noon. You can call at 866.588.6600 or check us out at www.amlicensing.com

I hope this blog can continue to provide you with pertinent and useful information about the mortgage licensing industry. If there is a particular subject you would like for us to address, feel free to post your suggestion and I'll do my best.

May the holiday be a time of thanks for you and your family. After Thanksgiving, we'll take a look at the new licensing requirements in the state of Colorado.

Happy Thanksgiving!
Eric

North Carolina Mortgage License

I'm glad to see that some folks have been logging on and beginning to use this blog as a source for info. Today, we'll be looking at licensing in the state of North Carolina.

North Carolina has 3 license options: Mortgage Broker, Mortgage Lender, or Hud Qualified Lender. There are some differences in the requirements for these licenses which we will cover below. It is our understanding that if you qualify as a lender or qualified lender, then you are permitted to broker, but if you qualify as a broker, you are not permitted to lend.

NC also requires that all loan officers who will work with NC borrowers must be licensed as a NC Loan Officer. Each l/o must take an approved NC education course and must pass the NC loan officer exam. We typically recommend to our customers that they fly to NC and take the course and exam in the same trip in either Charlotte or Raleigh. You must license at least 1 loan officer per office in order to apply for the company license.

Mortgage Broker
North Carolina requires that in order to be licensed as a mortgage broker, you must have a physical office located within the state. This means that if you aren't currently located in NC, you will have to open an office there. This office must be staffed by an employee of your company who is a licensed loan officer and who has at least 3 years of experience. Also, you must have at least one licensed loan officer in your corporate office who also meets the 3 year experience requirement. These individuals will be designated as your Branch Managers.

Other requirements include a $50,000 surety bond, company financial statements, and completed fingerprint cards for all principals and loan officers of the company.

Mortgage Lender
The mortgage lender license for NC does not require that you maintain a physical office in the state, and therefore, offers a significant advantage if you can meet the financial requirements ($100,000 in company net worth and a $150,000 surety bond). As stated in the paragraphs above, if you can qualify as a lender, you can still broker loans, so many of our companies will do all they can to obtain the lender license so they don't have to open an office in NC.

Under this license, your l/o's still have to take the course and exam, and you still have to have a branch manager with 3 years of experience. But, the good news is that you only have to do this for 1 office (your corporate office) versus having to do it for 2 (your corporate office and your NC Branch) under the broker license.

Qualified Mortgage Lender
NC defines a "Qualified Lender" as a company who operates as a lender in NC and who is approved as either a supervised or non-supervised entity with the United States Department of Housing and Urban Development (HUD) and who also can show audited company financials in excess of $250,000. If you can meet these requirements, you are exempted from the $150,000 lender surety bond requirement, but otherwise all other requirements are the same as the Lender license.


From a distance, NC licensing can be rather intimidating as the application is lengthy and the requirements are rather strict. I hope this entry has been helpful and please let me know if you have any questions or comments. For more information, feel free to check out our company, American Mortgage Licensing at www.amlicensing.com

FL Mortgage License

The state of Florida has three different company licenses under which you can be licensed to do mortgage loans in the state. I'll try to cover the differences in those licenses thoroughly, yet also try to keep it brief. I'll start by saying that if you wish to be a broker in FL, you have 2 options; FL Broker Business and the FL Correspondent Lender. If you wish to be a lender, you also have 2 options; FL Correspondent Lender and FL Lender. These are just the titles of the licenses, so don't get too caught up with how you, personally, would define the terms broker, correspondent lender, and lender.

A few items that are needed for all of the license types:

1. If you are a company located out of state, then you must register your company with the Secretary of State in FL and obtain a Certificate of Authority
2. 24 hours of education and an exam must be taken and passed prior to being licensed. The exam is offered on the 4th Tuesday of every month (except for November and December, where it is offered earlier in the month due to holidays). The class is typically taken for the Fri-Sun prior to the exam.

FL Broker Business
This license is for the company who only brokers loans and who doesn't have audited company financial statements showing at least $25,000 in company net worth. The downside to this license is that each of the loan officers in your company who wants to originate loans in FL will be required to travel to FL to take the class and exam. The upside is that you do not have to have audited financial statements. There is also no surety bond required.

FL Correspondent Lender
This is by far the most popular license available in FL because you are able to be either a broker or a lender. Plus, under this license, only 1 person from your company has to pass the exam. All employees are then covered under the company license and can originate in the state. The main requirement that separates this from the Broker Business license is that you must have audited company financials showing $25,000 in company net worth. You are also required to maintain a $10,000 surety bond.

FL Lender
The only real advantage to acquiring this license as a lender versus the correspondent lender license is that you can service your loans. Other than that, it is very similar. Again, only 1 person needs to pass the exam in order for employees to be able to originate in FL. The net worth required for this license is $250,000 and must be shown in an audited company financial statement.


Honestly, most of the companies we work with are in the broker category and are trying to decide between the Broker Business and the Correspondent lender. If they have audited company financials, then the decision is a no-brainer because most companies don't want to be sending all their L/O's down to FL to take a test. But, if the company doesn't have an audited statement and has no interest in getting one, then the Broker Business offers a great way to get into FL quickly. Plus, they can always upgrade later to the Correspondent lender license once they get audited financials (don't have to take the test again).

I hope this was a helpful explanation and let me know if you have any questions about this or any other state.

Mortgage License Glossary

In my last posting, I mentioned that I would be writing about FL first, but I realized that I'd like to do something else before we start talking about individual state licenses. I think it would be helpful to define a number of the words/terms that are going to be coming up over and over throughout all the states. Many of you may already be familiar with these terms, but in case you aren't, I'll try to define as many as possible in this entry. Then, the next post will jump right into licensing in Florida, I promise.

Articles of Incorporation: If your company is an LLC or partnership, this may be called your Articles of Organization or Partnership agreement. Basically, these are the documents you will file and receive back from the Secretary of State where you have formed your company.

Brick & Mortar: This means that a state requires you to have a physical office in their state before getting licensed. Now, the requirements for that office vary widely, but generally, it must be an actual office with an employee who works in the office. Some states do allow home offices, but they typically still need an employee who works in that office.

By-laws: If you are a LLC, this might also be called your operating agreement. This document should have been drafted when you formed your company, but often it isn't. This, basically, is a detailed description of how your company will run (who is on the board, who owns shares, etc). If you don't currently have these, your best bet is to contact a local attorney to discuss, but you might also try running a Google search for "By-laws" to find a template.

Certificate of Authority: The full name for this item is a "Certificate of Authority to do business as a foreign corporation (or llc)." This document must be obtained from the Secretary of State in the state where you are wanting to obtain your mortgage license. The process differs from state to state, but the basic requirements are that you must have a registered agent in the state, your name must be available, and you must pay a fee to the Secretary of State. The reason for this document is threefold: 1) You must register so that state can tax you 2) You must register so that you can make sure your company name isn't already being used by another company and 3) You must register so that, if necessary, the state can serve papers on you without having to extradite you to that state. We typically recommend you use a third party company to obtain this document, but you can do it on your own.

D/B/A: This is an abbreviation for "doing business as." If the name of your company is fairly common and you are looking to start doing business in another state, you may find that there is already a company of the same name in that state. If that is the case, then you will be required to register a DBA in that state that you will do business under. This is to make sure that borrowers of that state aren't confused with 2 companies having the same name.

Financial Statements: With the exception of a few states, you aren't going to need to have your company financials audited by a CPA in order to get licensed. You will, however, generally need to show at least $25k in company net worth via a company balance sheet and income statement. This statement will need to be signed by an officer of your company and dated within 90 days of the date of application. (This requirement varies state-to-state which will be discussed in later posts)

Surety Bond: A surety bond is essentially a line of credit issued to you by an insurance company that the state retains on file should something every go wrong with your company or your loans. It is not an insurance policy, but rather an extension of credit. Surety bonds are state specific, so it isn't possible to obtain one large bond to cover each states requirements. The cost of the Surety bond will depend on your credit history, but generally runs in the range of 1%-15% of the bond amount. The average bond for a mortgage broker is $25,000. So, if you have decent credit, you can expect to pay $250-$500 in yearly bond premiums per $25,000 surety bond.

Ok, I believe that will do it for now. I'm sure there are more terms, but they aren't coming to mind right now. Stay tuned for information regarding FL licensing.

Feel free to post your questions or check us out at www.amlicensing.com
Thanks.

The Mortgage License Blog Begins!

Hi, my name is Eric Smith, and I've been in the mortgage license industry for about 5 years now. During that time, I've heard countless stories of frustration from brokers, lenders, and loan officers about the pains they go through in trying to get licensed in states across the country. The trouble is that the mortgage license requirements differ greatly from state to state and there are very few central locations that offer helpful information to guide you through the process.

Over my time in the industry, I've assisted upwards of 200 companies in getting licensed in anywhere from 1 to all 50 states. These companies have varied in size and experience, but it has been exciting to watch them grow and share in their excitement as their business expands. So, whether you are an owner of a mortgage company who wants to grow, a loan officer who would like to start her own company, or just an entrepreneur looking for more information, please use this blog as a resource.

I plan to discuss and explain specific state mortgage license applications and the requirements of each. My hope is that this can turn into a conversation as more of you begin to read and post your questions. I'll do all I can to provide quick and thorough answers to the best of my ability. I'll also be honest with you when I don't know the answer and try to guide you to the resources that might.

I also need to let you know that I currently own and operate a mortgage license company which, for a fee, assists people and companies in acquiring the mortgage licenses they wish to obtain. If you'd like to know more information about us, you can check out at www.amlicensing.com.

Lastly, I must be clear that this blog should in no way be viewed as legal advice, but rather as valuable information that assists you in pursuing your mortgage licenses.

With that said, we might as well start off with information about a very popular state that almost every caller we get asks about; FLORIDA.