Conforming with Licensing Laws and Requirements

Who is Required to be Licensed and Where.

Documentation and regulations are the new norm and an important part of note buying and the mortgage business on the whole. Nowadays, certain things can’t be done without the proper licensing, which came about as a result of the economic climate, foreclosures, and other elements. The new licensing requirements are stricter as the government is currently making it their focus and goal to scrutinize and regulate more things. The questions to ask oneself are, “who is required to have licensing?,” “Who isn’t?,” and “How does one get it done?”

Previously licensing wasn’t really an issue. However, after the recent economic crisis, states started to seriously issue and enforce licenses. After the Dodd Frank was passed in 2008 a nationwide mortgage licensing system was established. NMLS is the system of record for non-depository, financial services licensing or registration in participating state agencies. In addition, it is the sole system of licensure for Mortgage Loan Originators. This is where one can find out specific requirements that might apply to them based on each state, whether lender, broker or loan originator. The NMLS can also tell you if you even need a license to service. If there is no license listed for servicing it could be that you are exempt for licensing. However, keep in mind that licensing is often an issue in foreclose actions.

Certain states such as Georgia, North Carolina, and New York are strict on license requirements. In some of the other states, you can own up to a small number of loans under your name and are not required to be licensed. This is why you must do individual research to make sure you are compliant and conforming to established rules and regulations. There isn’t just one type of license out there but rather a couple, such as collection license, origination license, mortgage broker license, and service license. The state you are working in will determine what licenses are needed. Visit the NMLS Resource Center for more information.