Division of Banks and Definition of a Mortgage Broker
Understanding Division of Banks and definition of a Mortgage Broker is a vital step when planning to commence your business activities as a mortgage broker. Keep in mind that legal action may be taken against your business if you dont follow the laid down rules that mortgage brokers are supposed to observe according to the Department of Financial Institutions, Division of Banks. In simple terms the definition of a mortgage broker as given by Division of Banks is any person or company that gets into negotiating a mortgage on behalf of a mortgagor or mortgagee. So when planning to become a mortgage broker, the following will be expected of you.
The basic requirement that you will need to have to operate your mortgage broking business without problems will be a license given to you by the Division of Banks themselves. Normally there will be some sort of evaluation of the qualifications, skills and experience that you possess to make you a suitable person to conduct this sort of business. Most mortgagors however confuse being a mortgage broker and a loan originator. These are two different things because a mortgage broker is only required to negotiate for common grounds between a mortgagor and a mortgagee but does not physically get involved in the process of giving out the mortgage or loan. When you get into giving out the loan you stop being a mortgage broker and now become a loan originator. Do remember that you will need a different license when you are a loan originator from that of a mortgage broker.
You will need to pay starting fees when getting into the business as you are sending your application to Division of Banks. Normally its $750 for a Mortgage Broker. The same amount will be paid when renewing your license upon expiry. In addition you will need to pay for a surety bond which normally goes for $10000.
All mortgage brokers are expected to have a valid license during their operations at all times. The license must be renewed immediately it expires for a $750 fee. It is essential that you should also realize that you must always use the business name you recorded with Division of Banks when handling business activities to prevent any misrepresentations. If you will at any time want to use a different business name from what is recognized by Division of Banks get it clear that you will need to apply for a different license otherwise you can be sued in court if you are found using a name that is different from what you are supposed to be using according to the Department of Financial Institutions.
The good thing is that you can use the same license for your mortgage broking business even if you have opened many other branches in different states. But if your employees will be giving out the loans themselves it is mandatory that you get for them a loan originator license despite already having a license for the company. However there are more details to starting a mortgage broking business so consider arming yourself well with the necessary information to be on the safe side.