The Mortgage License Blog

TX Broker License Information

2008-01-17T07:40:00.000-08:00

Recently, we've had a number of questions regarding TX Broker and Loan Officer License information, so here is some information about the license that we hope you will find helpful

1. Net Worth

The broker must show personal net worth of at least $25,000 or provide a surety bond in the amount of $50,000. If a bond is needed, we would recommend contacting Surety Solutions at www.suretysolutionsllc.com No net worth requirement for loan officers.

2. Surety bond

$50,000 only if you don’t meet the $25,000 personal financial requirement

3. Physical office required

Yes, but current understanding is that the office does not have to have an employee present, just a phone number and a place where you could meet borrowers if they wanted. Can’t simply be a PO Box.

4. Experience required for broker (Experience evidenced by 2 original reference letters)

Effective 9/1/07, as a broker, you must meet ONE of the following (FYI, the best place for your education is http://www.allianceacademy.org) :

36 months of loan origination experience and 90 hours of Core classroom training, including 6 hours of ethics provided by an approved education provider if you have not been previously licensed as a broker or loan officer in TX
36 months of loan origination experience and 30 hours of Core classroom training, including 6 hours of ethics provided by an approved education provider if you have not been previously licensed as a broker, but have been licensed as a loan officer in TX
36 months of loan origination experience and no additional hours if you have been previously license as a broker under the MBLAct in TX
18 months of loan origination experience, a bachelors degree in finance, banking, or business administration and 90 hours of Core classroom training, including 6 hours of ethics provided by an approved education provider if you have not been previously licensed as a broker or loan officer in TX
18 months of loan origination experience, a bachelors degree in finance, banking, or business administration 30 hours of Core classroom training, including 6 hours of ethics provided by an approved education provider if you have not been previously licensed as a broker, but have been licensed as a loan officer in TX
18 months of loan origination experience, a bachelors degree in finance, banking, or business administration and no additional hours if you have been previously license as a broker under the MBLAct in TX
Holds an active TX Real Estate Broker, TX Attorney, TX Insurance Agent license (see website for details) and takes the courses listed above

6. Experience required for loan officers

Effective 9/1/07, as a loan officer, you must meet ONE of the following and be sponsored by a broker (FYI, the best place for your education requirements is http://www.allianceacademy.org):

60 hours of Core classroom training, including 4 hours of Ethics, offered by an SML- approved provider, taken within the last two years
18 months of loan origination experience and 30 hours of Core classroom training, including 2 hours of Ethics offered by a TX approved provider taken within the last 2 years
Holds an active TX Real Estate Broker, TX Attorney, TX Insurance Agent license (see website for details) and takes the courses listed above

7. Exam Requirement

Yes and it is given through Promissor, Inc. It is your responsibility to schedule your exam with Promissor and locate the test location nearest you. Each individual within your company who wants to originate TX loans must take and pass this exam and file an application, however only one person must take the “Broker” test. Everyone else can just take the “Loan officer” test. However, if someone wants to take the broker test instead of the loan officer test (possibly for later use), that is fine as well.

8. Do L/O’s have to be licensed

Yes, absolutely. TX is a very strange state when it comes to how they do their licensing. Typically, a state licenses the company as the “broker” but in TX the broker is actually an individual. Then, that one individual, can sponsor other loan officer to work underneath him/her. In many ways, it is more structured like the real estate industry, if that helps you to visualize it at all. So, when you are applying for a brokers license, you are applying for a personal license in your personal name (you will also get your entity approved, but that comes later as TX just started doing this and it will go into effect starting 1/1/08, but people should go ahead and start filing the paperwork now) and then each of your loan officers are getting personal licenses as well, but it is tied to you as their sponsor.

9. Typical Time frame of approval

Once test is passed and application is filed, 60-90 days

Mortgage License Costs

2007-03-06T12:46:00.000-08:00

Well, needless to say, I have failed to post a new message in a while, so I offer my apologies. We've been staying rather busy over at American Mortgage Licensing, offering our licensing services to brokers around the country. In light of that, we've had a question that has come up very frequently lately pertaining to total costs to obtain your license. We've created a simple visual tool that we think will work well that is getting ready to roll out on our website, but I'll provide the written version here.

When you are looking to get licensed as a mortgage broker in additional states, there are 4 main categories of fees, each to be paid to different vendors or entities. Some of these fees will vary based on who you hire or your credit history, so we will address that as we go.

Category 1: State Filing Fees
These are the fees you will pay to the state agency that oversees mortgage licensing in the state where you are applying. These fees will normally be paid in the form of a check that you will write directly to the state agency and include with your completed mortgage license application when you file it. There are a few exceptions: You can write in a credit card number on the mortgage license application for OR and MD sends you an invoice for the filing fee after the application has been filed online.

One sub-category within state filing fees is what some states call "Licensing fees." Basically, this is where the state charges you a fee on the front end when you file your mortgage license application (normally called an "investigation fee") and then hits you again once they approve your application. Off the top of my head, I know that IL & MA do this, but I think there are a few more as well.

As a whole, state filing fees can range on the high end of the $4000-$5000 range (NJ) all the way down to the low hundreds.

Category 2: Bond premiums
For more information on what a Surety bond is, you can either view earlier posts or check out a great site at www.suretysolutionsllc.com.

Surety bonds for mortgage license applications can vary from state to state (from not being required to the $120,000 bond level) but the standard bond for a broker license application is somewhere around $25,000. Since that is the standard, that is the amount we will use for our example. If you have decent credit and strong financial statements, you can expect to pay somewhere in the range of 1% of the bond amount ($250) as a yearly premium. This amount will be required from you before the bond is issued and will be paid directly to a surety bond company.

Now, if you have shaky credit or if you have a recent bankruptcy, you are more than likely going to have to pay a much higher percentage, possibly up to 10% of the bond amount (or $2500).

These are all estimates based on huge generalizations, so in order to get an accurate assessment for your situation, you would want to contact a surety bond provider.

Category 3: Foreign Qualifications
We dealt with the specific definition of this in an earlier post, so please review that if needed.

This expense will normally run you somewhere in the range of $500-$550 per state where you want to be qualified. Now, there are definitely situations where that can go up. For example, if you wish to register a d/b/a in a state, that will make this estimate go up. If you are a partnership, your cost will go up, etc.

But, for the average situation, an estimation of $550 per state is pretty accurate.

Category 4: Mortgage license service fees
These are the fees you would pay to a company like ours if you chose to hire us to run your mortgage license project. These fees range across the industry and typically range based on the number of states you choose to get licensed in. For example, the fees you would pay to AM Licensing would range from $1000 down to $400 depending on how many states you hired us for.

Total
So, when you take all 4 categories into account, you will normally have to expect an average of $2200 or so per state. This is just an average as some states are higher (for example, NJ & IL) and some states are lower (NM, CA, etc). As I said before, these fees will be paid to the different vendors at different times during the process.

I hope all of you are having success in the industry and please let me know if I can be of any service at all.

Thanks,
Eric

Mortgage License Requirements

2006-12-14T11:45:00.000-08:00

In our business, we get a ton of questions basically asking about the requirements to become a mortgage broker across the country. I thought I would write an entry about some of the general requirements we explain to our potential customers in a FAQ format.

A small disclaimer: Each state has its own specific requirements and qualifications, so please just use this as a guideline. If you would like to discuss specific state requirements, check out our website at www.amlicensing.com or give us a call at 866.588.6600.

Q: What is my first step to get my brokers license?
A: Generally speaking the mortgage broker license in each state is a company license, not a personal license. Therefore, the first step is to setup your company. Most people we work with end up establishing a Corporation or LLC.

Q: How much experience do I need in the industry before getting my own license?
A: This varies from state to state from 0-5 years. Our typical answer is that you should be in the industry as a loan officer or other capacity for at least 1-2 years before you start to pursue licensing on your own.

Q: If I don't have any experience, where can I start?
A: While there are a few states that will permit you to get licensed without any experience, it would seem that a better route is to work for a mortgage broker shop as a loan officer in order to gain experience. Because it is a commission based job, most shops are pretty willing to bring on new loan officers. You may also look into training classes that are available either in a classroom setting or over the internet.

Q: Do I have to have an office in the state in order to be licensed?
A: Each state has its own requirements when it comes to whether or not you must open an office within its borders. When I started in licensing, there were maybe 5-7 states that had this requirement and the number has only gone up. Generally, if the state requires an office, then it will also require you to maintain an employee of your company who works in the office.

Q: Do I really have to have a license in each state where I do business or are their reciprocal licenses available from state to state?
A: As of today, the only states that do not require licensing for mortgage brokers are Alaska and Colorado (CO will begin licensing mortgage brokers on 1/1/07, so that exemption is basically gone), so yes, you must be licensed in each state. Also, the mortgage industry does not seem to have any reciprocal licensing from state to state.

Q: How much is getting licensed going to cost me?
A: Our ballpark estimate is that you should budget somewhere between $2200-$2500 per application where you plan to expand to. This number is just an average, as many states will exceed this and many states will be far less.

Q: How much time will it take:
A: Again, this varies state to state, but you should expect that it will take at least 60-90 days to get your license approval from the state agency.

Hope this is helpful and let me know if there are any general questions I didn't cover.
Eric

Georgia Mortgage License

2006-12-12T14:16:00.000-08:00

Well, it has been a bit since I have posted any new information, so I figured we would hit one of the more popular states we do licensing for; Georgia.

The state of Georgia has a single application form (governed by the Georgia Department of Banking and Finance) that can be used to apply for either a brokers license, lenders license, or dual authority. The requirements are higher for lenders, so be sure to pay attention to that should you decide to apply.

One of the first things you will want to do if applying in GA will be to order blank fingerprint cards through the GA website. This is critical as you will want to get your completed fingerprints filed as quickly as possible because the timeframe for those to be investigated can be rather long.

To be licensed as a broker, you have to meet a number of requirements. First, you will have to prove at least 2 years of experience in the mortgage industry through either letters of reference or W2's. You will also have to take a 4 hour GA course which is available at most online providers such as schoolofmortgagelending.com. GA also requires a $50,000 surety bond, but doesn't necessarily have a net worth requirement. However, we have found that your best chance for a speedy approval is to show at least $20-$25k in company net worth.

To be licensed as a lender, the net worth and bond requirements go up substantially. You have the option of either providing audited company financials in the amount of $250,000 or providing a $150,000 surety bond. The experience requirement is still the same as the broker.

One unique requirement that Georgia has involves the need for a physical office. Essentially, GA says that if your home state requires a physical office for out-of-state brokers/lenders then you will have to maintain a physical office in the state of Georgia in order to do business there. Currently, GA recognizes Alabama, Idaho, Kentucky, Missouri, Nevada, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, & Texas as states that require physical offices in their states. If you are located in one of these states, then you will be required to open an office in GA in order to get licensed there.

As always, I hope you have found this information helpful and easy to read. If you have any questions, please post them in the comments section or give us a call at 866.588.6600. Feel free to check out our website at www.amlicensing.com.

Thanks, Eric

CO Mortgage License

2006-11-27T13:14:00.000-08:00

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

2006-11-20T08:23:00.000-08:00

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

2006-11-17T11:46:00.000-08:00

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

2006-11-14T07:08:00.000-08:00

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

2006-11-13T09:45:00.000-08:00

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!

2006-11-13T09:19:00.000-08:00

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.