Mortgage Licensing Requirements

On July 30th, 2008, largely as a result of the subprime mortgage crisis of the late 2000’s, Congress enacted the Housing and Economic Recovery Act of 2008 (HERA). Part of HERA is the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE ACT), which, among other things:

  1. Encouraged the creation of a Nationwide Mortgage Licensing System and Registry for the residential mortgage industry, and
  2. Minimum uniform standards for mortgage loan originators.

According to the National Archives and Records Administration (NARA), “When Congress enacts a Federal law, or statute, the law often does not include all the details that explain how people, businesses, or government organizations should follow the law.” The NARA goes on to state “To develop technical, operational, and legal details that make the laws work on a day-to-day level, Congress authorizes certain Federal government agencies – including NARA – to create regulations, or rules.”

In the case of the SAFE Act, the main US Government Agency in charge of creating regulations is the Consumer Financial Protection Bureau (CFPB). The 2 main regulations relevant to the SAFE Act are:

  1. Federal Registration Of Residential Mortgage Loan Originators (Regulation G)
  2. State Compliance and Bureau Registration System (Regulation H)

1. Nationwide Mortgage Licensing System and Registry

Per the requirement of the SAFE Act, the Conference of State Bank Supervisors (CSBS) and American Association of Residential Mortgage Regulators (AARMR) created the Nationwide Mortgage Licensing System (NMLS).

Thus, if somebody wants to originate mortgages, they will usually be registered with the NMLS. You can check to see if they are registered by using NMLS® Consumer AccessSM, which is “a free service for consumers to confirm that the financial-services company or professional with whom they wish to conduct business is authorized to conduct business in their state.”

2. Minimum Uniform Standards for Mortgage Loan Originators

Each state has its own licensing requirements, which can be found from the NMLS State Licensing Requirements Page. However, all states must comply with the minimum standards of the SAFE Act. These include:

In addition, some states have state-specific education requirements, and/or require you to be sponsored by a company. Once you have your license, you will also be required to have annual continuing education. Lastly, remember that almost every step of this process costs money.