"Do It Yourself" Mortgage Licensing - Our Tongue-In-Cheek Guide
We’ve designed this to be helpful, informative, and a little bit sarcastic. We find that dry humor and laughter make the licensing process just a little bit easier to handle. We hope that you do too.
Starting Your Company: Great, you’re doing this thing! First, you’ll need a corporation or limited liability company and authority to do business in each state that you plan to lend in. Be ready for lots of forms, name searches, payments, and paper cuts. Be careful and pay attention to the small things - mistakes will lead to rejected filings and even extra payments! Don’t expect to be able to file all documents online and know that some states will take weeks to process your filings, even if you pay extra to expedite them. So, make sure everything is perfect the first time around! Read instructions carefully and completely.
Learning A Whole New World In NMLS: You’ll need to become an NMLS expert, fast! Expect to file MU1 (Company), MU2 (Qualifying Individual/Owner/Control Person), MU3 (Branch), MU4 (Individual), Financial Statements, Surety Bonds, MCR (Mortgage Call Report), Testing/Education, and renewal filings throughout your company’s lifespan. They all tie together, and things aren’t always intuitive. Make sure to ask for a lot of help and leave yourself extra time! Don’t worry, with any luck you’ll eventually memorize the NMLS call center number.
Getting Insurance, Surety Bonds and Financial Statements: Chances are high that you will need surety bonds, errors and omissions insurance, a fidelity bond, other types of insurance, and company financial statements. There are many types of financial statements such as unaudited, compiled, reviewed, certified, and audited financial statements. There are also different types of surety bonds in widely different amounts. Find an insurance and surety bond broker that you can trust! You’re also going to need a great CPA. We know, it’s a lot.
Applying for the Right License Type: Mortgage brokers need a mortgage broker license. Simple, right? Not so fast! Every state defines things differently. You might need a mortgage banker license in one state, a mortgage broker license in another, and a dual authority license in yet another state. Be prepared to study NMLS checklists (you know where to find those, right?), call and email state regulators, and probably even research state laws and regulations. Why do you need to do all of this? Believe it or not, some state regulators will not help you because they will only send you copies of their state’s laws without answering your actual questions. So, you need to do your research to make sure you apply for the right license. This is really important because NMLS fees are not refundable and you won’t get wasted time back.
So Many Fingerprints! If you’re lucky, you’ll be able to use existing fingerprints in NMLS for your FBI background check. Less lucky? Perhaps you or other owners and executives will need to submit manual fingerprint cards and get additional state live scans. There are several states out there that require you to perform state background checks using fingerprint cards that they must mail to you. You’ll need to request those, and perhaps even fill out and sign a form before you’ll be allowed to even make the request. When you do request cards, make sure to request the right ones for the right license type! Fingerprint cards must be filled out in black ball point ink, and then fingerprints must be rolled at a police department or other government agency, and then they must be sent them to the right place with the right fees. Sometimes, you need to pay online and print a form to mail them. Some states want one check for all of the applicants. Other states want an individual check for each applicant. Some states will return your check because they want a money order. Sometimes, even we have trouble keeping it straight!
Personal Financial Statements, References and Good Credit: Ready to be a successful business owner? This is where the regulatory version of a colonoscopy comes in. Some states are going to require you to provide detailed personal financial statements on the forms that they provide. Many states are going to run a credit check. Every state is going to ask detailed disclosure questions. Have a less than stellar record? Be prepared to provide solid explanations and supporting documents. Even with a great background, you may also be required to provide bank and business references. We’ll skip talking about the personal financial guarantees that you might have to sign to obtain credit and surety bonds…
Sign here, and here, and here, and here… so many documents, so little time! Think your borrowers have it bad? Get ready to sign, notarize, upload and mail any number of different state-required documents. You may just start dreaming of affidavits, certifications, and forms. You need to complete the right forms, sign in the right places, and then send them off to the right places. There’s no rocket license. We jest. Please make sure to choose a speedy shipping option with tracking – deliveries are known to sit and linger in certain offices across the country. Hey, we can’t license you because we never got that surety bond you sent us!
Those dreaded license items: If you are doing this on your own for the first time, chances are that you didn’t submit perfect license applications. Sometimes, even perfect applications aren’t perfect once the regulator reviews them. In a few days, weeks, or even months, your state regulators are going to come calling with license items. License item is a fancy way of saying that you did something wrong or are missing something that’s required. You’ll need to correct the license item, typically by a short deadline, and then wait days, weeks or even months for the regulator to re-review your application. Don’t even think about missing your deadline, or your state regulator may consider your application abandoned and force you to start over from scratch and pay again. Did you make your deadline? Excellent. Now, hurry up and wait because the state regulators work hard but don’t have deadlines. This is how it works.
Could someone please call me back? Like we mentioned, state regulators are hardworking folks, but they’re busy and are not always responsive. Once you track down the right person at the right regulator you might need a little luck (or better yet, friendly persistence) to hear back from them. Sometimes, luck and persistence may fail you when your email bounces back or their voicemail box is full. Yet, Keep calm and license on – we’ve actually found that the most curt and stressed out people can end up being the most helpful while the friendliest regulator may look at your company’s entire NMLS profile with a microscope and issue more license items than you knew existed. At the end of the day, we’re all people and you’ll catch more flies with honey than vinegar.
But, I have a company to run! In case you haven’t noticed, the licensing process is going to take up a lot of your time. You might want to make a game plan and estimate how much time you think this will take. All done? Great! Now, take that time estimate you just came up with and multiply it by at least four. Or ten. We’re serious. The process from start to finish is intensive and time consuming, even for the experts on the best of days. You can do this on your own, but just know that it will definitely come at a cost both financially and in terms of your time and resources. Only you can decide if it’s worth it. We offer flat rates to make that decision easier for you.
Overwhelmed? At Lynx Licensing, this is what we do. Let us help you to avoid a lot of the pain, frustration and wasted time that even the smartest and most dedicated mortgage professionals experience when they try to obtain mortgage licenses themselves. We do what we do so that you can do what you do – run your company and help your borrowers to realize the American dream of home ownership. Call us today at (312) 588-6800 or email our President, Ryan at ryan at lynxlicensing dot com. We’re always here to help.