Mortgage Licensing for Brokers – Part One
Over half of all home buyers choose a mortgage broker to help them select a loan and assist them through the loan application and home buying process. Mortgage brokers are professionals who have completed rigorous examinations and work experience in order to become licensed to advise homebuyers and transact mortgage arrangement. They are paid by a combination of fees charged to the applicant and by commissions paid by the lenders with who the loan is placed; how much they earn and how they are paid is negotiated by the consumer with the mortgage broker.
Becoming licensed as a mortgage broker will require certain conditions to be met; there are numerous federal laws that govern mortgage broker regulation and qualification, however each individual state also has its own requirements for licensing. Of necessity, this can only be a general guide to mortgage broker licensing and you need to check for the requirements in your state.
In addition to individual state and federal regulations for certification and licensing, many mortgage brokers become members of a professional body to help them maintain their educational and professional status. The leading mortgage broker association is the National Association of Mortgage Brokers (NAMB) and they also hold their own examinations and qualifications to demonstrate professional standards and advanced expertise.
Many states require a physical presence in that state to be able to transact mortgage brokerage business, however with the increasing use of the internet, such a requirement has become more relaxed. Indeed, in some states, there is no requirement to be licensed at all and where there are laws, they differ widely in the level of consumer protection and licensing requirements that they provide.
In the next part of this guide, we shall take a look at getting licensed in Florida to provide a taste of what is required to become professionally licensed to conduct mortgage brokerage.
To be licensed, the mortgage broker candidate must be over 18 years of age and pass a written examination which will require a strong working knowledge of various pieces of mortgage legislation. Legislation that a candidate must be familiar with and understand will include the Florida Mortgage Brokerage and Lending Act, Florida Fair Lending Act, the entire range of federal lending and housing law, a complete knowledge of FHA/VA and conventional mortgages. In addition the candidate will also be required to understand Fannie Mae underwriting guidelines as well as closing procedures, real estate knowledge including the use of surveys and title deeds and in addition, have sufficient mathematical ability to handle the financial calculations that are frequently involved in home financing.
State rules mandate that before being eligible to sit the examination, the candidate must have completed 24 hours of classroom instruction at a recognized and accredited mortgage business school. Passing the examination also requires considerable self-study in order to pass the examination. Upon successfully gaining a license the mortgage broker must complete 14 hours of continuing education again in a classroom environment within the next two years.
In addition to the educational testing, all candidates must provide fingerprints for use by federal and state law enforcement. If a candidate or licensed mortgage broker has a history of dishonest dealing, fraud or acts of moral turpitude the license can be denied or revoked.
Applications for licensing carry a fee of $200 which also covers the cost of sitting the examination for the first time. An additional fee is payable if the examination needs to be taken again. In addition the license must be renewed every year and this costs an additional $150. None of the fees are refundable.
