The Home-Buying Boom
Now is a better time than ever to become a mortgage professional. According to The Wall Street Journal, U.S. home sales have increased to their highest level in 14 years, thanks to ultra-low interest rates and a global pandemic. With many people working and attending school from home, there is high demand for homes to buy. The Washington Post notes that home sales and prices should continue their uphill trend through much of 2021.
This home-buying boom has led to more housing-focused economy activity overall. According to The Wall Street Journal, there has been a boost in the sales of furniture and home goods, as well as an increase in home construction. CNBC reports that home refinancing demand was up 105% in 2020 in light of these low interest rates.
Because economic activity within home sales has been increasing for months and is anticipated to stay at a high level throughout the year, this creates a great opportunity for those who are looking to enter the mortgage industry. The real estate market is expected to continue to expand during the pandemic and beyond, and those entering it need to be prepared, particularly with the high volume of work many are experiencing today.
Migration from Big Cities to Suburbs and Small Towns
Increasing home sales and sale prices aren’t the only real estate trends economists have taken note of. During the pandemic, many residents from big cities have moved to smaller towns. According to Forbes, the pandemic has driven an abnormally high percentage of emigration out of major urban centers and into cities like Columbus, Durham, and Scottsdale. They have also seen increased outbound migration in smaller cities like Sacramento, Stockton, Santa Ana, San Bernardino, and Riverside.
Why does this matter? While there has been an increase in home sales across many areas of the United States, that has not happened in places like New York City, Los Angeles, or Washington, D.C. This presents big growth opportunities for both the communities absorbing that newfound migration and for individuals shifting to a career within the mortgage industry.
4 Critical Types of Mortgage Professionals
Not all mortgage professionals are cut from the same cloth. The home-buying process is a wide-ranging endeavor that requires skills from a variety of experts:
- Mortgage Broker: Mortgage brokers connect borrowers and lenders, but they do not originate mortgages. These experts educate borrowers on their options, collect the necessary paperwork for borrowers, and submit the package to a lender for review.
- Mortgage Lender: Lenders provide the funds a borrower needs for a mortgage, with the expectation that the money borrowed will be repaid.
- Mortgage Originator: Mortgage originators are the initiators of a mortgage or, in other words, the original mortgage lenders. These professionals work with borrowers to establish a loan.
- Mortgage Servicer: Mortgage servicers are responsible for managing loans after they’ve been established, including processing payments on loans and handling escrow.
For more information about the different types of mortgage professionals, visit our Guide to Surety Bonds for Mortgage Professionals.
Requirements for Mortgage Professionals
Mortgage professionals need to uphold a number of requirements. One of the primary is that mortgage brokers or lenders should always be looking for the best rates based on their customers’ qualifications and credit history. If a mortgage professional offers unfair rates, he or she is not only harming the purchase process, but is also impacting the amount of money a buyer can spend or is required to pay back.
Mortgage professionals also must avoid participating in fraud for profit or fraud for housing. Using insider information, colluding with other home-buying experts, misrepresenting assets or income, or mishandling appraisals all fall under these umbrellas.
The National Association of Mortgage Brokers has a code of ethics that its members follow. Brokers shall:
- Conduct business in a manner reflecting honesty, honor, and integrity
- Display professional conduct
- Provide accurate information in advertisements
- Keep all unauthorized information confidential
- Be in compliance with the law
- Not disclose any financial interests
NMLS Licensing Considerations
NMLS, or The Nationwide Multistate Licensing System, is a service for companies and/or individuals who are looking to renew, apply, or amend licenses for various industries. The goal of NMLS is to establish an online licensing system and database. NMLS is the sole system of licensure for mortgage companies within 58 state agencies.
NMLS Requirements Applicable to All States
Because NMLS serves a wide variety of professionals from different states, few of its requirements apply to every applicant. Some steps of its process apply across state lines, however.
- File financial statements as a single PDF file through NMLS; do not send paper financial statements. For more information about where to submit and how, click here.
- Understand the policies that are listed in the guidebook.
- Meet all the professional standards:
- Submit fingerprints.
- Every mortgage loaner is required to submit a criminal background check.
- An electronic fingerprint scan costs $36.25.
- Click here to schedule an appointment.
- Pre-licensure education is required (annual continuing education is required once professionals are licensed).
- This education includes three hours of federal law and regulations, three hours of ethics, two hours of training related to lending standards, and 12 hours of instruction on mortgage origination.
- Take the SAFE MLO test.
- Authorize your credit report through NMLS.
- The credit report fee is $15.00.
- Submit fingerprints.
- Complete a Mortgage Call Report:
- Submit your Residential Mortgage Loan Activity; this is due quarterly, within 45 days of the end of the calendar quarter.
- Submit your Financial Condition, which collects financial information at the company level; this only needs to be submitted in specific states.
Each state might have additional requirements; however, the ones listed above are required for all states. To find more information about your state’s particular requirements, click here.
The Right Bond for Your State’s Licensing
To determine whether you need to purchase a surety bond, contact the government agency regulating mortgage professional licensing in your state. The costs and requirements of bonds for mortgage brokers, lenders, servicers, and originators vary because the bond and licensing amounts are established at the state level.
Click your state on the map below to get your free quote today, or call 1 (800) 308-4358 to speak with a surety expert. We’ll get you a free, no-obligation mortgage bond price quote within one business day — guaranteed.
The mortgage industry is experiencing higher-than-usual activity, and many professionals in different states are benefiting from this growth. Getting bonded is one of the first steps to helping mortgage professionals — and homebuyers — get where they want to go.