This is a question that each and every person, be it Realtor, homeowner or new home buyer should be asking when entering the mortgage process.
Whether you are comparing a Loan Officer, A Mortgage Broker, A Mortgage Planner or a Mortgage Consultant you will see one thing that is the same with each and every one. They carry a NMLS ID#. NMLS stand for Nationwide Mortgage licensing system. Simply having this ID# DOES NOT mean that the Mortgage Professional you are dealing with had to pass a background check or test to obtain it. In fact. If they work for a Bank…like Wells Fargo, TCF, Stearns or others. The governing body, the CFPB (Consumer Finance Protection Bureau) does not require each individual to be licensed as long as they are working for a licensed banking institution.
To answer your question, in theory, this means that an individual could fail the licensing exam or background check and still work for a bank in the same profession.
Quick flashback to 2008-2009 when these laws went into place. At the time, Mortgage Brokers were placed in the news stories dealing with Mortgage Fraud fairly often, and for good reason, the stories being told were true and terrible acts by unscrupulous individuals. Because of these individuals as well as many Loan Officers and Bankers, the industry is much more regulated. And it should be!
With this regulation, to be a Mortgage Broker or Mortgage Consultant, there are strict background checks and testing that has to occur to be licensed. What does that mean? Well, it means that if I had ever mismanaged my own finances, I wouldn’t be licensed. If I had ever committed a felony, I wouldn’t be licensed and as far as the testing goes, I’m licensed in MN and WI and have been since the act was put in place in 2009. 5 years later, the NMLS is reporting that over 60% of people who take the exam FAIL. I’ll let you be the judge on the difficulty of the exam when over half fail to pass the test with resource guides from the NMLS and 5 years of study guides and resources available for preparation. I wish this was more transparent to the consumer in many ways.
I am obviously biased as someone who has adhered and exceeded these guidelines but I believe the decision comes down to this: Do you want a licensed and qualified professional handling one of the biggest financial investments of your life or do you want to hope that the Loan Officer you choose to work wasn’t the individual who could meet the requirements?