Is your Loan Officer State Licensed, or simply Registered?

Is your Loan Officer State Licensed, or simply Registered, and how can you tell?

You are about to do the largest financial transaction of your life, a home mortgage loan. What do you know about the person handling it, the Loan Officer?  For most people, the answer is basically nothing, and that should scare you. Many people assume the person answering the phone is a  licensed Loan officers, but this simply isn’t true the vast majority of the time.

While all companies offering mortgage loans must have a license, until the passage of the SAFE ACT in 2008 in response to the housing industry collapse, few Loan Officers had a personal license.  This wasn’t generally a huge problem until the real estate boom began in earnest around 2000, when it seems like everyone was a home builder, a Real Estate Agent, or a Loan Officer with zero schooling, training or experience. As we all know, lots of these people ended up creating a a huge mess in their wake.

With the passage of the SAFE ACT, Congress took steps to tighten licensing and training requirements for Loan Officers. All can agree, this was a great step in the right direction.  Unfortunately, Congress blew it by only requiring a small portion of Loan Officers needing to meet the strict new law requirements.

Differences in Loan Officers

Under current rules, Loan Officers at banks, credit unions, or mortgage companies owned by these entities are NOT REQUIRED to have a personal license. Rather, they simply have to register in the Nationwide Mortgage Licensing and Registry System.

Loan Officers at non-depository lenders, like brokers and non-bank mortgage companies are REQUIRED to have a personal license.

Loan Officer License

 

How To Check Out Your Loan Officer

Doing a little research on your Loan Officer is rather simple, with these two steps:

  1. Go to NMLSConsumerAccess.org
  2. Do an Internet Name Search
  3. Your gut feeling

On the Nationwide Mortgage Licensing System and Registry web site, you are able to enter the Loan Officers name.  The system will tell you how long they’ve been a Loan Officer, what company they are OK’d to work for, any disciplinary action, and if they are personally licensed, or simply registered.

Here is a screenshot of my personal NMLS record, which shows I am a Licensed Loan Officer in Minnesota, Wisconsin, and South Dakota.

Here is the bottom part screenshot of a Loan Officer who is simply registered. You’ll notice it says Federal National Loan Officer instead of listing states they are licensed in.

Next, Do an Internet name search in your favorite search engine.

Do you get any hits? What are they? What do you see?  Nothing? One link to a company web site?  Multiple hits on multiple sites?

Does the Loan Officer appear to be highly respected and quoted with lots of links? A great blog with great informational posts? Probably a good sign of a professional. Can’t find anything, or maybe just a listing on the company web site?  Probably not a comforting sign.

Finally, trust your gut feeling.

While being simply Registered doesn’t make someone bad, and being Licensed doesn’t make someone good, it does help you understand more about who you are working with.

If you see they are simply registered, and have been a Loan Officer for six months, that probably wouldn’t be who I would pick to handle my largest financial transaction. Especially as I think back over 20-years ago when I started as a Loan Officer.  I didn’t know anything, and it took years to gain the needed experience.

If they’ve been a Loan Officer for 10-years, but have been at 10 different companies, you should ask why? Keep getting fired?

On the other hand, regardless if they are registered or licensed, do they seem knowledgeable. Do they seem to have your best interest in mind?  Do they return e-mails and phone calls in a timely manner?

Personally I think the choice is clear.

Who would you rather have working on your largest financial transaction. A Loan Officer with a licensed they must maintain or risk losing it, with years of experience, or someone who is simply registered or new?

While true Loan Officers at banks, credit unions, and mortgage companies owned by banks and credit unions are NOT required to have a personal license, and many will tell you if you ask about their background how they are not required to have a license. Understand there is nothing preventing them from obtaining one. My opinion is if they really are professionals, prove their dedication to the industry by obtaining a personal license and giving the client a level of comfort.

If you are buying a home or refinancing a home in Minnesota, Wisconsin, or South Dakota, and you’d like me to handle your home loan, call me at (651) 552-3681 or just click on this link to Apply Online.

 

 


Is a Bank Better than other Mortgage Companies?

Is a Bank Better than other Mortgage Companies?

Need a Mortgage Loan?  Where do you get the best deals? Banks?  Brokers?  Direct lenders?

Minneapolis, MN:  Getting a mortgage loan feels complicated and overwhelming for many people, as they worry about getting the best mortgage deal.

ScreenShot12345Generally speaking, there are three ways to get a mortgage loan:  From a Bank or Credit Union, a Mortgage Broker, or a non-bank direct lender (also known as a correspondent lender). All three will get you a mortgage loan, but which one gives you the best deal?

Almost without fail, your best bet is with mortgage brokers and non-bank direct lenders, and your most expensive is with banks.

Why are banks usually more expensive?

It is actually really simple. All lenders get their money from the same bond market on the same day at the same time.  All lenders closing costs are virtually the same.  All lenders have the exact same base fees, and third party expenses to pass along (appraisal, credit report, state deed taxes, title company expenses, origination, processing, etc).

So if all lenders get their money from the same source, have the same basic costs, and underwrite to the same guidelines, why are they more expensive? Profit margin. Profit margin is where it is really at when comparing lenders. The bigger they are, the more they advertise, the faster you should run away. This also included big internet lenders – like the so called “Quick” one.

You see, if my wholesale cost of the loan is the same as everyone else, but I don’t have all the overhead of bank branches on every corner, and I don’t have the overhead of all the advertising they do – I can offer better deals.  It is no more complicated than that.

The other big items is that there are shopping advantages as well to not use a bank. When a customer uses a bank, they only get the bank’s loan products, that one banks rates, and generally a Loan Officer who is more than likely an unlicensed application clerk versus a fully licensed professional Loan Officer.  Non bank lenders generally have multiple wholesale lender contacts so they can shop between them for a better rates, and more product choices.

Why Brokers and direct lenders are better 

The whole concept of mortgage brokers is they are usually smaller, they can do it faster, and with less overhead.  They get a wholesale price for the money from the big banks for delivering a loan to them dramatically cheaper than the bank can do it for themselves, and that better deal is pass on to YOU!

Correspondent direct lenders are even better, as they are sort of really like a broker on steroids. These companies, unlike brokers, actually shop various lenders nationwide for final placement of your loan, but underwrite and close the loans themselves before sending it to the big banks after closing.  Because correspondent lenders do even more of the process than brokers, , many of their relationships often produce significantly better deals for the consumer.

The Bottom Line

The bottom line is that there is no one source that is always the best or cheapest for every situation. If one lender was always the cheapest, eventually, everyone would know about it, right?  The only other way most lenders can compete with one another is to somehow convince the public that they have some “secret way” of providing lower than market rates.  The market is the market and you pay for it one way or another.

Only work with a professional mortgage company where the loan officers are skilled at the mathematics and can explain it in plain English.  Don’t feel pressured, and stop looking at just rate, or just cost!  Don’t gamble with something as important as your mortgage.  LET US “DO THE MATH” by giving you our Total Cost Analysis report. 

Let us show you how you can free up a LOT of money for investments… We provide visual calculations that show how “paying off” the home, versus “financing” the home isn’t always a great idea.