Mortgage Broker’s Guide to Understanding the NMLS

 

Independent mortgage brokers make a major impact — both on their local communities and America as a whole. Millions of people across the country trust their mortgage broker with the largest purchase of their lives — their home.

Buyers depend on the expertise of their mortgage broker to help them navigate the home loan process smoothly, and those brokers accept the responsibility of guiding decisions that will undoubtedly affect their clients’ future.

Luckily, mortgage brokers don’t have to shoulder the responsibility alone. You have support, and so do homebuyers through the NMLS. The NMLS platform helps you become a compliant and licensed mortgage broker, while also informing your potential clients on your qualifications.

Here’s how the NMLS provides peace of mind for buyers, sellers, lenders, and brokers:

What is the NMLS?

The Nationwide Multistate Licensing System & Registry (NMLS) was established to help mortgage professionals remain in compliance with rules set by the Consumer Financial Protection Bureau and the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). The SAFE Act — passed in 2008 — requires states to create minimum standards for the registration and licensing of mortgage loan originators.  

As a result, the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR), developed the NMLS —a centralized digital database that houses vital licensing documents for mortgage companies and loan originators.

The NMLS — Accountability for Mortgage Professionals

The SAFE Act ushered in a new level of accountability in the mortgage industry. Starting August 1, 2009, anyone who took a mortgage loan application or negotiated terms on a residential mortgage loan for compensation needed to be licensed or registered as a Mortgage Loan Originator.  

National licensing requirements were also established, stating that each Mortgage Loan originator must:

  • Provide fingerprints for an FBI criminal history background check

  • Provide authorization for NMLS to obtain a credit report

  • Maintain a personal Mortgage Loan Originator record in NMLS for each state they wish to conduct loan origination activity

  • Pass a national mortgage test

  • Take 20 hours of pre-licensure education courses approved by NMLS The education must include:

    • 3 hours of federal law and regulations

    • 3 hours of ethics, which must include fraud, consumer protection, and fair lending

    • 2 hours of standards on non-traditional mortgage lending

In addition to the national requirements, there are state requirements that may account for specific state laws and regulations. After completing the process, each mortgage broker, lender, or loan originator receives an NMLS ID. Loans can’t be offered, brokered, or originated without this unique identification number. It also allows regulators to track mortgage providers from state to state.

For mortgage professionals who plan to do honest work, the NMLS acts as a partner. As a result of the new registration system and process, mortgage brokers and originators can confirm their qualifications and credibility through an unbiased third party.

At its best, the NMLS acts as a shield — it protects the entire wholesale mortgage industry from the negative effects of corner-cutting peers and those with ill-intent.

The NMLS Helps Homebuyers Make Safe Purchases

The NMLS grants homebuyers across the county the tools they need to vet mortgage brokers and lenders. Whether they have buying experience or they’re becoming homeowners for the first time, they can visit the consumer access website and search potential partners by their NMLS number.

The information is updated nightly and presents all the pertinent details — the status of a mortgage broker or loan officer’s license, what company they’re licensed with, location, and employment history dating back 10 years.

NMLS Consumer Access allows buyers to do their due diligence on local mortgage brokers before selecting one to help them find a home loan.

Wrap Up

The NMLS, and its’ consumer-facing counterpart, are truly an asset for all involved in the mortgage industry. It protects good mortgage brokers and companies from “bad apples.” It gives regulators an efficient way to safeguard the industry’s health and sustainability. And it emboldens buyers to partner with a mortgage broker to purchase their homes with confidence.

Are you ready to jump-start your career in the mortgage industry? Our team at BeAMortgageBroker.com is here to help you every step of the way.

 
Mortgage KnowledgeJillian Putnammortgage broker, mortgage broker license, NMLS, mortgage professional, what is the NMLS