How Do I Become A Loan Officer In California – An Update

Before answering your question how do I become a loan officer in California and highlighting details of the process involved, let us understand what your duties are once you step into this profession. 

However, it is necessary first to clarify the subtle distinction between a mortgage loan officer and a mortgage in California.

The key difference between the two is their employment status and the range of loan options that each of them is empowered to offer. Mortgage loan officers are employed by a credit union, bank, or mortgage lender and offer loan products to clients only from that institution.

Mortgage brokers, on the other hand, work independently and liaise with several lenders to get the best matching loans for their clients.

The path to either of the titles is the same in California and hence the title will be used interchangeably in this post. Hence, how do I become a loan officer in California will have the same answer as how do I become a mortgage broker in California.     

Who Is A Mortgage Loan Broker In California

When you are an aspiring homeowner in California, a mortgage broker will help you get a home loan. A mortgage broker is licensed either by the California Department of Business Oversight or the California Department of Real Estate (DRE). They are responsible for creating primary mortgages or junior (second) mortgages.

It must be noted here that if you are seeking a license issued by the DRE, you must also be a licensed real estate agent in California. 

In short, a mortgage broker is a finance professional acting as a bridge between potential homeowners seeking a mortgage loan and lenders who will sanction the loan. They are responsible for collecting all the related financial documents from clients, processing them, and presenting them to the lenders for loan sanction.

Mortgage brokers guide clients from the early stages of a property transaction till the deal is closed on all matters related to the sanction and disbursement of a mortgage loan. They also advise clients on the different types of loans available and which one will suit them the best.

Let us now go through the various steps and learn more about how do you become a mortgage broker in California.

Basic Requirements For How To Become a Mortgage Broker In California

The answer to how do I become a loan officer in California consists of two sections – the basic requirements and the steps to complete before being awarded a California mortgage license.

Let us now dive into all the details of how to become a mortgage broker in CA.

Basic Mandatory Requirements

The journey to a mortgage broker license in California can start only when you are 18 years old. This is the age at which you can apply for a mortgage license. You can, though, complete all other formalities like going through the pre-licensing coursework and passing the licensing exam before you turn 18. applying for a license.

Next, you must be a citizen of the USA and have a Social Security number to get a mortgage broker license in the Golden State. Migrants or legally-admitted aliens can also apply for a license if they have working rights in the country.

On the educational front, you should have a high school diploma or equivalent such as a GED.

Once you meet all these requirements, visit the portal of the Nationwide Mortgage Licensing System (NMLS) and create an account. You will be issued a Customer ID number that will be your unique identification throughout your career as a mortgage broker in California. It must be quoted in all correspondence with clients and NMLS.

Before going further, a quick word on NMLS is in order. The Nationwide Mortgage Licensing System is the body that controls the mortgage industry in the USA. It issues and renews mortgage licenses and fixes all guidelines that you have to meet on your way to how do I become a loan officer in California.  

Steps On How Do I Become A Mortgage Broker In California

Go Through the Pre-Licensing Coursework

All aspiring mortgage brokers must go through the pre-licensing coursework as required by the NMLS. The step in how do I become a loan officer in California is very critical as it helps you know about the various intricacies of the mortgage industry.

Several rules and regulations govern this sector and any slip-up later as a mortgage loan officer might lead to serious legal implications. The knowledge provided in the pre-licensing coursework helps you to provide quality and error-free services to your clients in the future.

The coursework is divided into two parts.

The first is the 20-hour general course that covers several topics common to the mortgage sector in the country. These are as follows:

• 3 hours of federal law
• 3 hours of ethics
• 2 hours of non-traditional mortgage lending training
• 12 hours of electives that include instructions on mortgage origination. 

The second is the 2-hour section that deals exclusively with the mortgage laws and regulations specific to California only. Among the subjects covered here are the California Finance Lenders Law, the California Residential Mortgage Lending Act, and the California Homeowner Bill of Rights. 

This education is required by both the California Department of Financial Protection and Innovation (DFPI) and the Department of Real Estate (DRE). 

The pre-licensing coursework is a critical stepping stone to how do I become a mortgage broker in California as it prepares you for a successful career ahead.

Hence, it is essential that you select a reputable course provider for quality courses that will enable you to pass the licensing exam on the first try. In this regard too, you should keep a few points in mind before investing in one.

Most important is that the pre-licensing course selected by you must be approved by NMLS. There are several courses in the market but going through only an NMLS-approved course will make you eligible to appear for the SAFE licensing test.

Completing any other course will be a waste of time and money. To be sure, visit the NMLS portal and check the list of approved course providers before reaching for your checkbook.

You must also decide whether to choose an online course or a physical classroom-based one. Your choice will entirely depend on your preferred learning style and your comfort zone. However, it is relevant to point out certain benefits of online courses so that you might arrive at a considered decision.

In physical courses, you are tied down to fixed timings and have to adjust your routine to attend classes. This will be inconvenient if you are employed and want to branch out into the mortgage sector. Commuting to classes especially if it is far from your house will be a drain on your time and money.

Online classes, on the other hand, are more flexible and convenient. All study materials are downloadable onto any Internet-enabled device to be studied whenever you want and from anywhere. You do not need to follow the hectic pace of classroom studies and disrupt your normal lifestyle.

Further, in some online courses, you can proactively interact with your instructors and get your doubts clarified whenever they arise. Financially too, you are better off with online courses. They are cheaper than classroom-based courses while maintaining the same high quality of the study materials.

For assurance on how do I become a loan officer in California, check out the NMLS-approved online courses from RealEstateU. This course provider is among the best in the state and going through their course materials considerably increases your chances of passing the licensing exam on the first try.

What sets their courses apart from the rest in this niche is the affordability, being the lowest-priced course without giving up on the quality.

In their high-end packages, you get study guides and mock tests. These tests have practice questions that replicate the form and structure of those in the actual SAFE licensing exam. The benefit here is two-fold.

First, you know the type of questions in the licensing exam and this will give your confidence a boost for test day. Next, you can evaluate how well you are prepared in each section of the pre-licensing coursework.

Submit Fingerprints For Background Verification

The SAFE Act requires that every aspiring MLO submit fingerprint scans for verification of past criminal records. A mortgage broker must maintain high ethics and standards due to the nature of the mortgage profession where financial integrity is essential.

To continue with how do I become a mortgage broker in California, an applicant should not have ever been convicted of a felony or an act of fraud, dishonesty, breach of trust, or money laundering. This is within seven years of the date of applying for a California mortgage license.   

The process for the criminal background check is as follows:

• Pay the fee OF $36.25 for a Criminal Background Check through NMLS and seek authorization for an FBI background verification.
• Schedule an appointment for submission of a live fingerprint scan at a center designated by NMLS.
• Submit your fingerprints within 180 days of receiving authorization for a Criminal Background Check from NMLS.
• The fingerprints are processed automatically and the results are reported to NMLS and available for review by the DRE. 

The licensing issuing authority in California reserves the right to reject your application for a California mortgage license in the case of an adverse background check report.

Schedule The SAFE Licensing Test

On the portal of NMLS, schedule a SAFE licensing test by paying a $110 fee. Though the test is held online, you must physically visit a designated center to appear for the exam.

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) sets the required benchmarks for the licensing exam. This is to ensure that loan officers who pass the exam have adequate industry knowledge before launching a career and interacting with clients. It also protects consumers from any fraudulent activities.

Passing The SAFE Licensing Test

Passing the SAFE MLO licensing exam is the most critical part of how do I become a loan officer in California. It is an online exam in a multiple-choice format. There are 120 questions with 110 scored and 10 unscored questions. The exam must be completed in 190 minutes and the pass score is 75%.

The test covers both the national and the state-specific sections in the following order:

Federal Mortgage-Related Laws (24%)

Uniform State Content (11%)

General Mortgage Knowledge (20%)

Mortgage Loan Origination Activities (27%)

Ethics (18%)

Since the exam is held online, the results in pass/fail format are announced soon after the test is completed and official confirmation is sent by email in about two weeks.

Find A Licensed Broker For Sponsorship

Find a licensed mortgage broker or lending institution to sponsor you. This will help you to pick up the ropes and learn first-hand about the intricacies of the mortgage industry. Not only will you get the infrastructure to set up a working place but you will also get referrals for your first clients to kickstart your career.

Once a sponsorship has been finalized, provide the details to NMLS.

Apply For A Mortgage License

This is the final step in how to become a loan officer in California. Visit the NMLS portal and apply for a California mortgage license paying $300. Complete the Individual form (MU4) and upload documents of completing the pre-licensing course, fingerprint clearance, and sponsorship. You will now be issued a mortgage broker license to practice in California.

Summing Up

Now that you know the steps to how to become a mortgage broker in CA, you are on your way to a highly satisfying and lucrative career. Mortgage loan brokers in the state can earn six figures with a few years of experience and can explore various career opportunities. These include but are not limited to a Senior Loan Officer, a Mortgage Loan Processor, a Loan Officer Assistant, and more.