Mortgage and Loan Education

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Mortgage Broker License

Written by Dana Hinders
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Mortgage bankers are subject to federal regulation because of their status as money-lending institutions. Not all states require mortgage brokers to be licensed, since they are directing consumers to loan products and not actually lending the money. Each state is allowed to set their own requirements for granting mortgage broker licenses.

Texas has the most stringent education requirements, with mortgage brokers needing a bachelor's degree in banking, finance, or business administration plus 18 months of experience before they can be granted a license. However, Texas will also grant licenses to applicants without a college degree if they can show proof of at least three years of lending experience. Many other states have no specific educational requirements or only require that applicants be able to pass a written exam.

Proof of financial stability is a common requirement for receiving a mortgage broker license. Many states require that licensed mortgage brokers have a surety bond of anywhere between $5,000 and $100,000. A surety bond is an agreement in which a third party agrees to assume responsibility for a contract in the event of a default; it protects consumers against unscrupulous mortgage brokers. Some states also require that mortgage brokers maintain a certain net worth, ranging between $10,000 and $50,000.

Who Is Responsible for Granting Mortgage Broker Licenses?

The agency responsible for regulating the activities of mortgage brokers also varies on a state-by-state basis. The State Banking Department, Securities Department, Department of Real Estate, Office of the State Bank Commissioners, Department of Banking and Finance, and Department of Commerce and Consumer Affairs are some of the various agencies responsible for regulation. Some states grant licenses to specific individuals, while other license mortgage brokerage offices.

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