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How Do You Become a Mortgage Loan Originator (MLO)?

Updated on April 19, 2012

If you are considering switching to a new career and lack resources in time and money, your quickest way is in mortgage home origination (MLO) or loan officer. The MLO usually works for either a mortgage bank or other financial institution selling loans to those who buy homes or refi existing homes. Unlike many careers, this is a niche because only home loans are dealt with and once established (which can take up to 6-8 mos.) people needing home loans come to you via referrals or direct advertising. Because home loans easily average $200-300,000, the MLO will earn anywhere between $2-3000+ per loan they originate (sell), the higher the loan, the more they make. Just doing two loans a month is decent income. Compare this to selling insurance (auto, life, home) where you must sell 30-40 policies a month.

The MLO basically takes the loan application, makes sure it is complete, does all of the verification checks for income, taxes, employment, debt. They shop for the best loan for their client needs based on their abilities and lock it. The lender underwriter then gets the loan package and reviews it for completeness and approves or not. Once approved, the loan closes with down payment and signatures.

Not a hard job. Pays well. Just know your income will fluctuate from month to month and new MLOs should have at least six months reserves in living expenses (like anything in real estate, it takes time to get your new career profitable). The "work" is first finding clients in this down RE market, yet, even lower to mid income homes sell and there are WAY more Realtors than MLOs.

To become a MLO, one needs to take a mortgage loan origination course of 20 hrs. There are many online for $250-350. Most will do. The course contains a myriad of information regarding the vocabulary, type of loans, tons of Federal law (Respa, TILA, HUD etc.), loan origination math, lots of ethics as to what is considered legal but unethical, illegal yet ethical and do on. The 20 hours mandated seems like much more! There are so many nuances to being a MLO, so many places where a misstep could prove either legally or financially damaging to a MLO it is akin to a minefield. A large part of a MLO's job is verification of their clients assets, debts, employment, credit. This and looking for the best loan to fit your needs is where they earn their 1% of the loan commission.

Once you pass the course, you need to register and take the NMLS (National Mortgage Licensing) exam of 100 questions and pass with 75%. Each state also has its own, smaller exam dealing with nuances of state law, which you must also pass. After passing both exams, you must find a company to sponsor you to get your license. Most newbie MLOs will be doing a lot of marketing to get clients by introducing their services to as many real estate agents as possible over and over again. That is your main source when you start and as you have clients, hopefully they will recommend you or learn of you. New MLOs may get new clients walking in the door or when they call in. As a new MLO, you could get lucky and get a loan sold your first month and then go three months with nothing, just depends.

Costs

The basic costs are: MLO course ($300) + $330 (license fees-Calif) + $161 in exam fees, assuming no retakes. About retakes: If you take the national exam and fail, you must wait 30 days and repay the $92. You can do this four times, after failing the 4th time, you must wait six months to retake. Once you pass the MLO course, you are done. You only need to do continuing education requirements of 8 hrs, every two years.

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