Becoming A Mortgage Originator: Steps To Success

If you're considering a career as a mortgage loan originator (MLO), you'll need to be prepared to meet certain educational and licensing requirements. While there is no specific degree requirement, most MLOs have at least a high school diploma, and many hold bachelor's degrees in fields like accounting, finance, economics, or real estate. In addition, you'll need to register with the Nationwide Mortgage Licensing System (NMLS) and pass a licensing exam, which may include a background check and state-specific testing. The good news is that the mortgage industry offers economic opportunities and the chance to make a real difference in the lives of borrowers seeking home loans.

Education requirements

While there are no specific educational requirements to become a mortgage loan originator, most professionals in this field have a high school diploma, and many have a bachelor's degree. A background in finance, business, sales, or banking is also common and can be helpful when applying.

Mortgage loan originators must be licensed in the state where they work, and each state has specific guidelines for MLO licensure. Licensing requirements vary by state but typically include pre-licensing education, passing a licensing exam, and undergoing a background check. The National Mortgage Licensing System (NMLS) is the main regulatory body for MLOs and provides a wealth of valuable resources, including state-specific licensure requirements.

To obtain a license, you must register with the Nationwide Mortgage Licensing System & Registry (NMLS) and receive your unique NMLS ID, which is used to track your licensing progress and activity throughout your career. All state-licensed loan originators must pass a national exam – the SAFE MLO Test – which is required under the SAFE Act. This is a rigorous exam that covers a broad array of topics related to mortgage activities. In some states, an MLO must also satisfy state-specific testing requirements to obtain an NMLS license.

In addition to the national exam, most states will require at least 20 hours of mortgage pre-licensing education. Certain states also require state-specific loan officer training. To maintain your mortgage license, you will need to undertake continuing education courses.

Licensing

To become a mortgage loan originator, you must obtain a license in the state where you intend to work. Licensing requirements vary by state, but here is a general overview of the licensing process:

Register with the NMLS:

Create an account with the Nationwide Multistate Licensing System & Registry (NMLS). This is a national database where all MLOs must register. You will receive a personal NMLS number that will be maintained throughout your career as an MLO.

Complete Pre-licensing Education:

Most states require you to complete pre-licensing education, which may include a certain number of hours of coursework. For example, in Virginia, you need to complete 20 hours of coursework to meet the education requirements.

Pass a Licensing Exam:

You will need to pass a licensing exam, such as the MLO exam, to demonstrate your knowledge and understanding of the mortgage industry and the role of an MLO.

Background Check:

As part of the licensing process, you will likely undergo a background check, including a criminal background check and fingerprinting. In New York, for example, applicants are required to pay non-refundable fees for the New York State Criminal Background Check Fingerprint.

Sponsorship:

In some states, your license application may be pending until your employing sponsorship is verified. For example, in Virginia, users must add their employer sponsorship details, and upon approval by the sponsoring employer, applicants are officially licensed.

It is important to note that licensing requirements may vary slightly from state to state, so be sure to check the specific requirements for the state in which you plan to work.

Exams

To become a mortgage loan originator, you must pass a national exam, as required by the Secure and Fair Enforcement Act for Mortgage Licensing (SAFE Act). This is a federal bill passed in 2008 in response to the mortgage lending crisis. The SAFE Act mandates a minimum of 20 hours of pre-license education.

The National Test with Uniform State Content is a rigorous exam that covers a broad range of topics related to mortgage activities. It aims to ensure that you have the minimum competency to practice in the field. The exam is administered by Prometric, and you can contact them to schedule your exam.

In addition to the national exam, some states also require MLOs to satisfy state-specific testing requirements to obtain an NMLS license. These state-specific requirements may include additional hours of pre-licensure education courses, which must be approved by the NMLS. For example, in Michigan, the MLO pre-license education must include 18 hours of general NMLS-approved education and a 2-hour Michigan state-specific elective.

Once you have completed your pre-licensure education and passed the required exams, you can apply for your mortgage loan originator license on the NMLS website. As part of the application process, you will need to provide 10 years of residential and employment history, agree to a Federal Background Check and Credit Report, and pay all processing fees.

Employment

Once you have passed your federal and state tests and obtained your mortgage loan originator license on the NMLS website, you can start looking for employment. Most new mortgage loan originators start their careers at established companies, such as banks, credit unions, or mortgage lending institutions. However, you can also work independently.

To obtain clients, it is important to prospect and develop relationships with commercial and residential real estate agencies to get client referrals. Recommendations from real estate agents to homebuyers will be an integral part of launching a successful career as a mortgage loan originator.

The job market for mortgage loan originators is expected to stay robust, with potential for growth and opportunity in various sectors of the industry. Being adaptable and open to new technologies and processes will be crucial to your success.

Career development

To become a mortgage loan originator, commonly known as a Mortgage Loan Officer (MLO), you must meet specific financial and character requirements. While a bachelor's degree is not required, some experience in finance and sales is beneficial. Additionally, you must be at least 18 years old and have a high school diploma or GED.

The process of becoming an MLO typically involves completing pre-licensure education courses, passing an exam, and submitting your information for approval by the Nationwide Mortgage Licensing System (NMLS). The NMLS is the main regulatory body for MLOs and provides valuable resources, including state-specific licensure requirements. It is important to note that each state has its own guidelines for MLO licensure, and state agencies are responsible for issuing these licenses.

The pre-licensure education courses required by the NMLS cover various topics related to mortgage activities and usually take around 20 hours to complete. These courses ensure that aspiring MLOs have a thorough understanding of the role and the mortgage industry. After completing the required education, individuals must pass a rigorous national exam, such as the SAFE MLO test, to demonstrate their competency in the field.

Once licensed, MLOs should focus on building relationships with commercial and residential real estate agencies to obtain client referrals. Developing a strong network within the real estate industry is crucial for a successful career as an MLO. Additionally, MLOs must maintain their licenses by completing continuing education courses and keeping their information up-to-date with the NMLS.

While some MLOs choose to work independently, most newcomers to the field start their careers with established companies, such as banks, credit unions, or mortgage lending institutions. Gaining experience in a structured environment can provide a solid foundation for a long-term career as a mortgage loan originator.

Frequently asked questions