So, the National Mortgage Licensing Law finally went into effect in July of 2010. This is the law that our federal government put into place to register mortgage originators. The problem with the law is this…
Mortgage originators who work for Federally chartered lending institutions are not required to be licensed, only Third Party Originators!
What does this mean? It means that a mortgage loan officer who works for a bank is not required to be educated, fingerprinted, credit checked, background checked, tested, licensed, and registered. Mortgage loan originators who work for a mortgage broker ARE required to go through all of those steps above. Despite the fact that this difference in treatment seems a bit unfair, slightly irresponsible of our political leaders, and completely idiotic, I believe it has created an additional benefit for consumers to use mortgage brokers for their mortgage loans than banks, credit unions, or mortgage lenders. This registry and licensing system has separated the wheat from the chaff because the originators who can’t pass the background checks, credit checks, and National and State tests with a score of a 75 are simply going to work for banks and mortgage lenders.
So, consumers have two choices when searching for someone to satisfy their mortgage needs. One, go to your local bank and work with an uneducated, unlicensed mortgage originator. Or, two, go to your local mortgage broker and work with an educated, licensed, reputable, honest, and knowledgeable mortgage loan officer.
The NMLS has helped the very sector of the industry it was intended to hurt, and to this I say, “Thank You, Uncle Sam!”