A federal licensing system for mortgage loan originators is not quite popular and hurts the industry and its consumers. The Secure and Fair Enforcement for Mortgage Licensing Act aka as SAFE Act was enacted last 2008 by the Congress. The act aims to "create a national vetting, tracking, testing, registration and licensing system in the hopes of better protecting and serving those consumers who seek residential mortgages."
According to ocregister.com [The Orange County Register], National Mortgage Licensing System or NMLS is the testing and licensing system under the act and it is owned by a non- profit corporation named, Conference of State Bank Supervisors.
Under this licensing system, there are two levels of license: mortgage brokers and non- depository mortgage bankers. The test- takers should complete 20 hours of lecture, a 4- hour federal exam, 2- hour state exam and criminal background check with personal history statement for the last 10 years.
In addition to their requirements and according to NMLS Resource center, "every state-licensed mortgage loan originator is required to complete the credit report authorization process through NMLS, even if credit information was previously received by their state regulator. Control Persons (MU2) for state-licensed companies may be required to complete a credit report through NMLS to satisfy state specific requirements."
However, institutional loan officers only need to pass the criminal check, then they can proceed with registering and paying up as oppose to others who need to pay more than $900 for their licensing education and requirements which is almost double of the $500 fee of California's Bureau of Real Estate (BRE) for their all- in licensing program.
In a report by State Regulatory Registry's audited financial statement last year, NMLS has a revenue of more than $62 million annually and more than $87 million worth of assets. The report showed that more than $10.5 million is being allotted to salary and benefits.
Jodi Ristrom, partner and audit expert at Tustin-based HMWC CPAs & Business Advisors, said "I would question why they need a reserve of $62.8 million. The annual revenue more than covers the program and administrative costs."
NMLS has confidential data, enabling them not to disclose any information that can expose the loan officers to extortion and identity theft. Bill Matthews, executive vice president of the Conference of State Bank Supervisors and president and CEO of the NMLS, said "[We] do a pre-employment standard background check but [we] would not provide details."