The Details
Where the two paths overlap and where they split.
Both paths screen the individual. They differ in who does the screening, what training is required and where the originator may work.
Background checks on both paths
Both paths require fingerprints for a state and national criminal history background check and disclosure of certain criminal, civil and regulatory history (12 CFR 1007.103 and 1008.105). For a license, the state must also find financial responsibility, character and general fitness, and the applicant must authorize NMLS to obtain an independent credit report. For a registered employee, the bank obtains a credit report and makes a comparable fitness determination before the employee originates (12 CFR 1026.36(f)).
Bond, net worth or state fund
A state license requires coverage by a net worth or surety bond requirement, or a payment into a state fund, as the state requires (12 CFR 1008.105). The registration rules in 12 CFR Part 1007 contain no comparable individual requirement.
Where each originator can work
A state license authorizes origination in the state that issued it, so an originator working in several states holds several licenses. A registered originator’s authority comes from employment at the covered institution rather than from a state license; the institution’s own lending footprint and product rules still apply.
Moving from a bank to a mortgage company
A registration ends with the employment. A registered originator who joins a state-licensed mortgage company needs a state license. Federal law gives temporary authority to originate in an application state while a license application is pending if the originator meets its conditions, including registration in NMLS during the prior year; it ends when the application is granted, denied or withdrawn, when the state issues a notice of intent to deny, or after 120 days if the application is listed as incomplete (12 U.S.C. 5117).
What this means for a real estate agent
An agent who wants to originate without collecting state mortgage licenses needs bank-type employment and federal registration. At Texana Bank, N.A., a national bank, the REMLO role is W-2 employment, and hiring, registration, training and bank approval come before origination. Minimum consideration requires both at least 6 buyer-side transactions and at least $1,800,000.00 in buyer-side sales volume over the trailing 12 months, independently verified, with no guarantee of an offer.
