For most people, the biggest purchase they will ever make is buying a home. This significant investment involves many pieces and key people to ensure things proceed correctly. Often, an individual will seek a mortgage loan to buy the home and get the financial help they need to pay for it over time. Homebuyers need professionals they can trust and rely on during the loan process. Mortgage loan originators will assist homebuyers and work to ensure everything goes smoothly. If you are interested in becoming a mortgage loan originator, it’s helpful to understand what the career entails.
Mortgage loan originators, or MLOs, must be licensed in order to practice. In California, MLOs must renew their license. Doing so requires certain requirements. Help is available for California MLO license renewal and other crucial steps in the career field.
What Does an MLO Do?
From the time a customer begins the loan process all the way to closing, an MLO is vital. An MLO is a team member for a bank or other financial institution lending money to a person who intends to purchase a home. An MLO assists the lender in moving the customer’s loan application forward until closing. This person can be involved in the preapproval and application processes.
Chiefly, an MLO acts in an administrative role. The person reviews documents and paperwork, ensuring that every piece of the mortgage loan process is advancing. The MLO may also explain the loan’s terms and other parts of the paperwork to the homebuyers. The MLO may ask for and organize your income and credit information as well as any other necessary documents. The MLO can review your personalized needs and recommend what types of loans might be right for your situation. The MLO negotiates rates and is often the person who submits the final application for underwriting. This person may also order the appraisal. As part of their license, the MLO must act in the customer’s best interests.
What an MLO Doesn’t Do
Some customers confuse an MLO’s role with others at the financial institution. The MLO is not the person who will approve or deny the loan or make any other decisions about it. The MLO cannot offer loan programs or other options not supported or honored by the financial institution they work for.
Types of MLOs
There are two main types of mortgage loan originators that prospective homeowners would work with throughout the loan process. First, a mortgage banker is a person who works for a lending institution, such as a bank or credit union, that provides loan funds with its own money. Secondly, there are mortgage brokers. This professional is a type of middle-ground employee who works with the customer and different mortgage lending institutions. The customer submits the mortgage application to the mortgage broker, who then verifies income and credit. Mortgage brokers may also handle much of the underwriting themselves. However, this person will send the necessary documents to a lender to fund the loan.
How Does a Person Become an MLO?
To become an MLO, a person must obtain a license issued by the state where they intend to practice. An MLO can also be federally registered and licensed. In addition, the individual must be an employee of a depository institution. Other requirements can include undergoing a background check (including providing fingerprints), having a credit check, taking education courses, and passing an exam.
In California, people interested in becoming an MLO must request a Nationwide Multi-State Licensing System and Registry (NMLS) account. Next, the candidate must take 20 hours of pre-license education courses. There is also an exam called the National Test Component with Uniform State Content. The exam covers topics such as general mortgage knowledge, ethics, and mortgage loan originator activities. There are 120 questions on the exam, and the person has 190 minutes to finish it.
License Renewals
In California, MLOs must renew their licenses every year. To do this, the MLO must complete eight hours of continuing education each year. The renewal must take place between November 1 and December 31 every year. The MLO may renew their license themselves or have the mortgage company do it for them.
Mortgage loan originators are integral in the loan process and helping customers secure their dream of qualifying for a loan and buying a home. MLOs fulfill many duties at every stage and must be diligent in qualifying for and renewing their license. People who want to become an MLO or renew their license in California have resources at their disposal.
