What Is NMLS?
Kevin Graham3 minute read
November 09, 2021
When you get a mortgage, it’s a complicated financial transaction. You want to make sure that the loan officer giving you advice and walking you through the transaction has had the proper training to give you appropriate guidance based on your situation. One way you can be sure of this is by looking up their NMLS number. But what is the NMLS and what is it used for?
The Nationwide Mortgage Licensing System (NMLS) is a centralized online database that’s used by mortgage and finance regulatory agencies to maintain national licensing requirements.
OK, fair enough, you say. But what is in an NMLS license? An NMLS license is a certification that says a mortgage loan officer (MLO) or lender is licensed to originate mortgages and provide home loan advice in at least one state. Lenders, also known as mortgage loan originators, have to stay in regulatory compliance and loan officers have to periodically renew state licensing as well.
The NMLS began operating in January 2008 as a centralized repository for state licensing. It took on the role we know today in July of that year when Congress passed the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”).
The SAFE Act required states to pass legislation requiring licensing that was at least up to national standards within 1 year. In addition, it required state agencies to participate in and share licensing information with the NMLS database.
Among the other requirements, mortgage loan officers complete 20 hours of educational courses prior to licensing, pass a national mortgage test, give permission for the NMLS to obtain a credit report and provide fingerprints for an FBI criminal background check. In addition, they have to participate in 8 hours of continuing education annually and keep state licenses updated in the system.
What Is The Purpose Of The NMLS?
The NMLS serves as a centralized database where anyone can look up the licensing information for any licensed MLO to check their credentials. You can see the licenses they hold and where they are authorized to do business. It also helps standardize the form of some of the information you see so that you’re not looking in different areas for the same information across states.
Mortgage originators use the system to upload and maintain their licensing documentation. The lenders who employ them also must maintain their own licenses which are tracked in the same system. In addition, lenders can use this to check the credentials of applicants who already have their licenses as well as to check up on existing loan officers to make sure licenses are maintained.
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How Does The NMLS Work?
Any applications for state licenses as well as documentation or other required forms for licensing are filed through the NMLS system, whether you’re an MLO or a lender. Each loan officer or lender receives a unique identification number so that the records are associated with that individual or company. As an example, Rocket Mortgage® has NMLS #3030.
All new applications, changes or renewals to licensing are processed through the NMLS. This allows for quick lookup of licensing for individuals and allows the license to persist even if they switch company affiliations. The database makes maintaining licensing regulation possible within the mortgage industry.
How Does The NMLS Protect Clients?
From the perspective of a home buyer or someone looking to refinance, the database allows you to vet the person you’re working with and check licensing requirements no matter which lender or mortgage broker they work with.
You can start by searching the NMLS number for your lender or MLO. The information that comes up can help you make an informed decision about who you work with.
The type of information that’s going to come up in an NMLS search is going to vary a bit based on where the banker is licensed to do business. States often have slightly different requirements. However, at a minimum, you’ll be able to see their licensing information in one or more states. Additionally, you have the option of filing a complaint to the relevant regulatory agencies. You can see if they have dealt with regulatory action in the past.
The Bottom Line: Take Advantage Of The NMLS
The NMLS is a one-stop database for state licensing information for both mortgage lenders and the mortgage loan officers who are part of their team. The system is used to maintain licensing information as well as to allow lenders and consumers to check that information for loan officers they work with. Home buyers and refinancers can use this system to evaluate the lenders and loan officers they work with.
Now that you’ve been given the tools to go into the mortgage process with confidence in the professionals you work with, feel free to apply online or give us a call at (833) 326-6018. If you would rather work with someone in your community, feel free to search for mortgage brokers through our database.
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