Bank Loan Officers FINALLY REQUIRED To Register

Mortgage and Lending with Mortgages Unlimited, Inc NMLS 274132


Mortgage LicenseLoan officers at banks will now be required to register, and provide their names and fingerprints to a national loan officer database as part of an effort to crack down on shady operators who were part of the mortgage meltdown.

The new requirements were actually mandated by a bill passed in congress over two years ago, but Federal regulators just approved them yesterday (Wed July 28th). The rules apply to employees of banks regulated on both the state and federal level. Mortgage brokers and non-bank lenders are already required to be licensed by the system.

The new bank registration requirement stills leaves a major gap in loan officer licensing. While banks, brokers, and non-bank lenders will all now be registered in the system, only brokers and non-bank lenders (typically called "Direct Lenders") are also required to also have mandatory education, including pre-license education and yearly continuing education.

Mortgage brokers and non-bank lenders are also currently required to take mandatory federal and state tests to obtain their individual license, have criminal background checks, and their personal credit reports reviewed, while bank loan officers do not.

The banking industry fought hard to avoid having their loan officers meet the education and testing requirements, while the broker industry has applauded the requirements, pointing out how brokers will clearly be the lender of choice for smart shoppers wanted good information from educated loan officers.

The gap in knowledge and education between banks, brokers, and non-bank loan officers is expected to grow even greater, as non-bank and brokers who are unable to pass the stringent new testing requirement flee to positions at banks that do not require education and testing.  While all have the same "Loan Officer" title, not all loan officers do the same job. Many just take an application, while others manage a file from beginning to end.

The registry is expected to start accepting bank loan officer applications by the end of January 2011.


We lend in MN and WI ONLY

(c) 2010 - Joe Metzler - Mortgages Unlimited, St Paul, MN: National Loan Officer Lic#274132


Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Rich Conley - MLO 07/29/2010 06:09 AM
  2. Joe Metzler 07/30/2010 03:33 AM
Lending / Financial
All About Mortgages/Mortgage Networking
The FHA Mortgage Group
Minnesota Real Estate
loan officers

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Elizabeth Baklaich
Virtual Assistant to Steve Baklaich RE/MAX Realty Source MN - Saint Cloud, MN

Hi Joe, Do you think this will help? What do you think the long term effect will be?

Jul 29, 2010 04:32 AM #1
Zachary Kraus
Success Mortgage Partners - Lisle, IL

Joe - I've been on both sides of the fence and trust me when I say that non-bank loan originators, brokers, etc... are not vastly smater than their bank counterparts.  I've taken the broker exam and watched as a few LOs found their way out after failing 3 + times.  Although we don't have the regulations that you have to endure we are hired for our credentials - knowledge certainly being an aspect.  I too was in your shoes and thought of bankers as order takers but I was 6 months into the biz and enjoyed the ignorance.  Thanks for the enlighting blog!

Jul 29, 2010 05:50 AM #2
Joseph Metzler
Mortgages Unlimited, Inc - Saint Paul, MN
Sr Loan Officer

While I agree there are good loan officers on both sides of the fence, that will be dramatically changing with the advent of the educational rules, and should become very lopsided.

Sadly, the industry did not REQUIRE any education or testing to be a Loan Officers. Now only non-bank lenders are required to have education and take a test? That is assine. We both do the exact same job.

Yes, some good loan officers are hired on both sides of the fence because of their background, but I greatly disagree that most bank Loan Officers are hired for their credentials. Just the opposite. Most are hired for their lack of credentials, and willingness to be just an application taker.

I guess one could say that only time will tell, but the educational, testing, and background check mandate will clearly seperate a large portion of the two types of loan officers in the near future.

Your Realtor, Appraiser, Title Closer, all have licensed - but you are going to use an unlicenced Loan Officer? **

It's admirable that you stand up for the banks. But as a homeowner, knowing the differences, and given the two options, I would want to work with the educated, tested, and background checked person versus someone who simply claims he knows what he is doing.


CASE IN POINT: Multiple loan officers we've let go for being incompetent are now working at the local big banks.


** the Companies (Banks) all are licensed - we are referring to an INDIVIDUAL license


Jul 29, 2010 06:50 AM #3
Mark Robinson
Geneva Financial, LLC - Beachwood, NJ
Honesty, Integrity, Service

I must agree with Joseph.

I've been in the business 20 years and worked on both sides of the fence. I had no problem passing all of the NMLS required testing.

I know multiple loan officers who could not or did not pass the testing phase.

They are now working for banks. Making banks adhere to less stringent requirements is a dis-service to the industry.


Jul 31, 2010 12:49 AM #4
John Severino
Nuline Funding, Inc. - Westlake Village, CA

We actually do not do the same job.  As a broker and originator I handle my customer's transaction, as I am sure you do, all the way through the process.  At big bank with horses and name of country a loan officer is a teller that had nothing to do.  Can I please have your name and address?  Would you like our prefered rate? Do you want fries with that?  Oh well the computer says that you qualify for blah, blah.  Oh a question, I'm sorry the computer does not tell me that.  Please they absolutely should be put to the same rigors that we are in order to do the job.

Aug 02, 2010 08:48 AM #5
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