A few years ago the federal government initiated a plan to weed out the bad mortgage brokers. All mortgage loan originators who work for mortgage brokers and bankers now need to be licensed through a program called the Nationwide Mortgage Licensing System (NMLS). Those that work at banks and credit unions only need to be registered. This license is renewed annually on December 31^st.

In order to become licensed the person must initially go through an education program, get tested, go through a criminal check, be bonded and pay some fees. If they pass all this then they become licensed and can take mortgage loan applications. This was a great process to weed out the bad seeds.

Each year the mortgage loan officer must have their criminal background checked again, take some continuing education courses, get a new credit check, renew the bond and pay more fees. The process is a bit of a pain and of course most wait until the end to take the continuing education. Needless to say, it begins November 1st and must be completed by December 31^st.

The bottom line is if the person is not licensed they cannot work in the industry. If a mortgage loan originators license is not current, they will be in inactive status and the lenders cannot close their loans. If you have a mortgage in process, the bank will not close the loan until the license is renewed and in active status. The regulations also say that they cannot close the loan through another mortgage loan originator. This means that your loan cannot be switched over to a pal whose license is current. It will sit there until the license is renewed and the lender can close the loan.

I know this sounds silly, but we are all affected by the crash and continued slump. Red tape is sometimes good tape even if it gets sticky. If your mortgage will not close until after the New Year, ask your loan officer if they are working on their license renewal. If they are not, perhaps a friendly reminder from you will prod them along. If you don’t want to appear pushy, you can go always go to this site to see if their status is current. It is a new world out there!