Buying a home is a big financial commitment. If you’re like most buyers, you’ll finance the purchase of your home with a mortgage loan. Before choosing and applying for a mortgage, it’s essential to verify that the mortgage officer you decide to work with is licensed and has received proper training so they can properly guide you in choosing the best home loan for your needs.
How can you confirm that you’re working with a qualified professional? You can search for the loan officer’s name or NMLS number in the NMLS database to verify that they have completed all the mandatory education requirements and have passed all licensing exams required to originate loans in your state.
Let’s explore what you need to know about the NMLS and how you can use this database to help you find a qualified mortgage professional to refinance or originate a home loan.
Key Takeaways:
- The Nationwide Mortgage Licensing System (NMLS) is a centralized online database of licensed mortgage loan originators.
- Mortgage loan originators found in the NMLS are licensed to originate loans in at least one state and have met the minimum licensing and continuing education requirements.
- Before choosing an individual or company to work with, it’s a good idea to verify that they have proper NMLS licensing by searching for their name, NMLS ID or license number in the NMLS database.
What Does NMLS Stand For?
NMLS is the abbreviation for the Nationwide Mortgage Licensing System. The NMLS is a national online database that lists mortgage loan originators who are licensed to originate loans in at least one state.
The database is used to manage licensing for various financial service industries, including mortgage lenders and loan originators. Each individual or lender listed in the database has a unique NMLS number.
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What Is An NMLS License?
What does it mean for a mortgage loan originator to have an NMLS license?
- Having an NMLS license means that a mortgage originator has completed 20 hours of the required educational courses and passed the necessary exam to be eligible to originate mortgage loans in at least one state.
- NMLS licensing proves that the originator meets all state and national requirements to maintain a professional license, including undergoing a credit report review and completing an FBI criminal background check.
- To maintain NMLS licensing, loan officers must take at least 8 hours of continuing education each year. Additionally, loan originators are required to renew their NMLS license annually and ensure they have fulfilled all continuing education requirements.
- Some states have more stringent requirements that mortgage loan originators must meet. You can review specific licensing requirements for your state when searching for a mortgage loan officer.
Related: Qualifying For a Mortgage: What To Know
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What Is The Purpose Of The NMLS?
The NMLS was created to address predatory lending practices and set nationwide regulatory standards. Its existence helps to promote transparency and accountability.
In 2008, Congress passed the Secure and Fair Enforcement for Mortgage Licensing Act, also known as the SAFE Act. This legislation required mortgage loan originators to be licensed, leading to the creation of the NMLS.
Before the NMLS was developed, there was no nationwide central database listing licensed mortgage originators. Instead, states regulated mortgage loan originators and maintained state-specific databases. Now that the NMLS exists, consumers can make lending decisions with greater confidence.
How Does The National Mortgage Licensing System Work?
Now that you know what NMLS stands for, you may be wondering how the NMLS functions.
Each mortgage loan originator or mortgage lender receives an identification number after the NMLS approves their application.
As a consumer, you can look up these numbers to make sure that the loan officers you’re considering working with are licensed and up to date on their education requirements.
Any new licensing information for a loan officer or mortgage company is filed through the NMLS. For example, when a mortgage loan officer renews their license, a notation is made in the NMLS. If they move to a new mortgage brokerage, the change is recorded in the NMLS.
The NMLS displays the following information for mortgage loan officers:
- NMLS number
- Phone number
- Other names used
- Prior legal names
- Regulatory actions
- Self-reported disciplinary actions
- Employment history
- Office locations
- Federal registration details (if applicable)
- Active state licenses
More than 600,000 companies and individuals use the NMLS each year to manage their business licensing requirements and registrations. Consumers access the NMLS database through the portal’s consumer website, while industry professionals and regulators can access the database through a separate portal.
Companies and professionals who work in these industries can apply for NMLS licensing through the NMLS. They can also make changes to their application or renew their licenses.
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How Does An NMLS Search Benefit Home Buyers?
The NMLS is a powerful resource for home buyers and homeowners.
Information found within the NMLS can give you greater confidence in choosing a reputable mortgage loan officer to work with, whether you want to refinance an existing mortgage or need help choosing your ideal mortgage during the home buying process.
Before choosing a mortgage loan officer, it’s essential to search the NMLS to verify that the officers you’re considering are licensed to do business in your state.
A quick search of the NMLS can protect you from getting scammed by someone who claims to be a mortgage loan officer but is not licensed to originate loans in your state. If you can’t find a specific loan officer in the NMLS, you should seek out another professional.
Here’s how to search the NMLS to verify that a loan officer meets NMLS licensing requirements:
- Visit the NMLS Consumer Access website. Once there, you can perform a search using a loan officer’s NMLS ID, license number or name.
- Click “SEARCH.” The database will display a list of states in which the loan officer is licensed to do business. You can also find information on when the loan officer’s license is up for renewal and whether any agencies have filed regulatory actions against them.
By working with a mortgage professional with NMLS licensing, you can feel more confident that you’re dealing with a qualified individual who meets industry standards. Verifying that a mortgage loan officer has an active license to originate loans in your state is an excellent way to protect yourself against fraud.
Related: How to Shop for a Mortgage
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FAQ
Here are answers to common questions about the Nationwide Mortgage Licensing System:
Some qualifications to obtain NMLS certification include completing 20 hours of pre-licensing educational training, passing a national mortgage test, undergoing a credit report review and an FBI criminal background check, and completing 8 hours of continuing education each year to maintain licensing.
The Bottom Line: Searching The NMLS Can Give Future Homeowners Peace Of Mind
Choosing your ideal home loan is a big step. Working with a reputable, experienced loan officer can ease much of the stress that may arise throughout the mortgage application process.
Searching the NMLS is a recommended step to take before starting the loan application process. You want to ensure you’re working with a mortgage loan officer who is licensed to do business in your state and is updated on the continuing education requirements of closing a loan.
Ben Shapiro
Ben Shapiro is an award-winning financial analyst with nearly a decade of experience working in corporate finance in big banks, small-to-medium-size businesses, and mortgage finance. His expertise includes strategic application of macroeconomic analysis, financial data analysis, financial forecasting and strategic scenario planning. For the past four years, he has focused on the mortgage industry, applying economics to forecasting and strategic decision-making at Quicken Loans. Ben earned a bachelor’s degree in business with a minor in economics from California State University, Northridge, graduating cum laude and with honors. He also served as an officer in an allied military for five years, responsible for the welfare of 300 soldiers and eight direct reports before age 25.
