How to Get Your Mortgage Broker License [2020 Guide]

Published: Jun 4, 2020
mortage broker license

 

Is launching a mortgage brokerage on your mind? If you want to start such a business in the U.S., you need to obtain a mortgage broker license from your state authorities. 

The purpose of the licensing procedure is to ensure that you meet the state requirements for operating as a broker. The criteria are rigorous and aim to guarantee the high standards of operation in the industry. 

In many states, you need to undergo the process through the website of the Nationwide Multistate Licensing System and Registry (NMLS). Alternatively, the state body that oversees financial activities would handle the licensing. 

In order to launch your mortgage brokering business smoothly, we’ve prepared a step-by-step guide that will take you through the main tasks that you have to complete to get licensed. 

Get to Know Your State’s Mortgage Broker License Requirements

The first step that you have to take is to get acquainted with the mortgage broker qualifications that your state requires from professionals like you. You can find this information via the Nationwide Multistate Licensing System and Registry (NMLS), or through the website of your state licensing body. 

Don’t miss also our extensive guide and infographic on how to become a mortgage broker.

List of Mortgage Broker License Guides by State

Michigan

Florida

Pennsylvania

Maryland

Georgia

New York

South Carolina

Texas

North Carolina

Massachusetts

Ohio

New Jersey

Oregon  

California

Colorado

Meet the Licensing Criteria

mortgage broker licenseBelow you can find the most common steps to become a mortgage broker with a state license. There are differences between licenses for companies and for independent mortgage brokers acting as individuals. 

Business Documents

All applicants have to register a business entity in the state in which they wish to run their business. You may also have to get a trade name in case you want to operate under an assumed name. 

If you are planning to hire employees, you need to obtain an Employer Identification Number (EIN) from the IRS.

The rest of the documents that you’re likely to need for your state licensing include:

  • Information about the owner and applicant
  • Business plan
  • Organizational chart
  • Management chart
  • Resident/Registered Agent information
  • Primary/non-primary contact employees information
  • Disclosure questions
  • Policies and procedures
  • Certificate of Authority/Good Standing Certificate

Post a Mortgage Broker Bond

One of the main requirements that you need to fulfill in order to get a mortgage broker license is to post a surety bond. It is a safety instrument that protects the state in which you operate and you customers against potential illegal actions you may undertake. Thus, it guarantees your compliance with applicable laws.

The amount of the mortgage broker bond that you need to obtain is set by your state authorities. It may be a fixed amount, or may depend on your volume of brokering business. 

In order to get bonded, you have to cover a premium, which is a small percentage of the required amount. It depends on the strength of your personal and business finances. If they are in good shape, the rates you may get are between 0.5% and 5%

Want to see the exact cost of your mortgage broker bond? Fill in the short form below! 

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Criminal Background Check

In most cases, you have to authorize an FBI criminal background check. Some states may also require you to pass a state criminal background check.

Financial Statements and Credit Reports

Typically, you need to showcase your audited financial statements. In some cases, you need to demonstrate with them that you meet the minimum net worth requirements

Persons in a position of control usually have to authorize a credit report check. 

Education and State Exams 

For some license types, you have to pass pre-licensure mortgage broker education courses, which often consist of 20 hours. Then you need to complete a state mortgage broker test

To prepare for the exam, you can use the services of mortgage broker schools. They can also be of help in meeting the mortgage broker continuing education requirements when renewing your license. 

Complete Your State’s Mortgage Broker License Application

Whenever you have collected all the necessary paperwork, you can apply for your mortgage broker license. You need to file your complete application form and full document set to the NMLS or the state authority. 

The mortgage broker license costs

Together with submitting the application form, you need to pay license and registration fees. They vary between states, but the main fee can be anywhere between $100 and $1,500. You may also have to pay additional fees, such as criminal background check and credit report fees. 

The time needed to get a mortgage broker license

The deadlines for reviewing a mortgage broker license application form vary between states. On average, you would need about a month, in case your application package has been complete. 

 

Do you want to learn more about the licensing and bonding process for mortgage brokers in the U.S.? You can contact us at 877.514.5146

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John Williams

John Williams

John Williams is currently the Director of Sales for Lance Surety. Since joining the company in 2011, he has served in various roles throughout the organization, working his way up to now managing our team of licensed agents. As a licensed property & casualty agent, John has become extremely knowledgeable in all facets of the surety industry, including commercial, court and contract bonds. Under his leadership, John’s team has helped thousands of businesses throughout the country meet their license and bonding requirements.