How to Succeed as a Mortgage Loan Officer in California
The allure of working in California real estate is unparalleled and the Golden Gate State continues to be amongst the most sought-after real estate markets in the world.
Home to world-leading companies, a pleasant climate, scenic natural views, and a myriad of employment opportunities, California’s popularity has been soaring in the last few years.
Real estate demand in California is showing no signs of slowing down and the median home value of $800K is a testament to the record-high demand for residential real estate.
Despite record-high prices, California still attracts the interest and investment of homebuyers and real estate investors.
Due to the growth in housing demand, the need for mortgage financing is also rising steadily and the market is ripe for aspiring loan brokers and officers.
For aspiring mortgage loan originators (MLOs), California offers a fertile, exciting landscape where you can build a successful long-term profession.
Mortgage loan officers and brokers are responsible for helping clients obtain financing for a new home and refinancing an existing one.
As per job listings and employment data, mortgage loan offices can make as much as $150K annually while enjoying additional job perks such as paid time off and healthcare.
Are you wondering how to become a mortgage broker in California and embark on a rewarding and fulfilling career path where you can earn a six-figure income?
The key to working in the mortgage lending industry is to obtain your California MLO license first and prove your knowledge and competency to work with consumers.
As per the law, only licensed professionals are allowed to provide services, assistance, and advice to prospects and clients.
To work as a licensed professional, you need to complete a set of steps and fulfill the state-specific guidelines for loan originators and mortgage brokers.
In this article, we will outline all the key steps you must complete to become a licensed loan officer in California and start a new career from scratch.
Who is a mortgage loan officer
For most people, getting a mortgage is the easiest and most practical way to break down a big-ticket purchase like a home into smaller, more affordable installments.
Since buying a home in California can be a huge financial commitment, most consumers prefer opting for mortgage financing, especially if they are buying a property for the first time.
Getting a mortgage is a complex process - it requires completing paperwork, submitting documents, and understanding various financial terms and jargon.
As a mortgage loan officer, you will be responsible for working with your clients through the various stages of getting a mortgage.
Mortgage loan officers are employed by financial institutions such as banks, credit companies, and private lenders.
Mortgage loan originators or officers are licensed professionals who work with clients and consumers to help them obtain a mortgage.
By working with mortgage brokers and relying on the knowledge and expertise of loan originators, consumers can complete the mortgage application process accurately and make informed financial decisions.
What does a mortgage loan officer do
Before diving deep into the California mortgage originator license requirements and steps, it is important to understand the job profile of a loan originator or a mortgage broker.
This will give you an understanding of what you will be expected to do - including your day-to-day tasks, duties, and responsibilities.
Although the term mortgage loan originators and loan officers are separate, they often have common duties and responsibilities as part of their job profile.
Meet and interview prospective clients:
Mortgage loan officers are expected to respond to texts, emails, and inquiries from prospects and clients in California. As a loan officer, you will meet clients and interview them to understand their needs, requirements, and objectives. Based on your conversations, you should be better prepared to assist them and help them achieve their goals.
Evaluate clients’ creditworthiness.
You will be responsible for collecting all the personal and financial documentation required to submit a loan application properly. Plus, you will have to analyze and assess financial records such as income statements, tax receipts, and other assets to get an accurate evaluation of a prospect’s creditworthiness.
Advise the best mortgage plans:
As a loan originator, your core job responsibility is to act as a financial advisor for your clients. You will be working as a client advocate representing their needs and helping them choose the most suitable mortgage plan. Based on your research and knowledge, you must educate your clients and provide clear explanations to help them make an informed choice.
Prepare the loan application:
You will be working on behalf of your clients and help them prepare a mortgage loan application. You will also guide clients regarding the documentation and fill out the different sections of a loan application. As a loan officer, you must ensure that every information submitted in the loan application is accurate, up-to-date and relevant.
Negotiate the best interest rates:
A skilled mortgage broker must assist clients in negotiating the terms of a mortgage plan and help them secure the best interest rates and closing costs. You will be responsible for helping your clients get the best value for their money and make sound decisions related to the mortgage terms and repayment conditions.
Submit the mortgage paperwork:
Getting a mortgage loan requires the submission of a number of financial and personal documents such as income stubs, bank statements, credit reports, and tax receipts. As an MLO, you will be guiding clients on how to procure and submit the required documents and prepare the loan application for fast and seamless approval.
Providing timely application updates:
A mortgage loan officer’s job does not end after submitting the loan application, as they are also involved in the tracking of the application status. A loan officer provides timely updates for important milestones to keep their clients on track for repayment and to avoid missing any payment or renewal dates.
Maintaining paperwork and documentation:
Loan officers deal with a myriad of critical financial documents, loan paperwork, and important records. Your employer will expect you to keep a consolidated and updated repository of all client-related transactions and information in a secure and safe way.
While your exact day-to-day tasks might vary depending on your employer’s discretion, you can expect to perform a mix of administrative, accounting, and finance, pre and post-sales, and customer service-related responsibilities.
In the coming sections, we will walk you through the exact requirements for getting a mortgage loan officer license in California so you can prepare for it better.
California MLO license requirements
Like other states, California also follows the NMLS (Nationwide Multistate Licensing System) guidelines for mortgage industry professionals and firms.
NMLS is the official authority for issuing and renewing licenses and it is also a centralized database for maintaining the records of professionals, firms, and institutions in the mortgage lending and financial services industries.
As per the NMLS, every applicant must meet a set of pre-established license guidelines and fulfill state-specific licensing requirements to prove their eligibility.
Step 1: Register with the NMLS
In California, aspiring loan officers and mortgage brokers must register with the NMLS to become eligible to work in the industry.
NMLS assigns a unique identification number to everyone who wants to apply for a new license or renew an existing one.
The first step is to visit the NMLS website and register to obtain your unique NMLS identification number.
To register with the NMLS, you must meet the minimum eligibility requirements which are:
- You must be at least 18 years of age or older
- You must be a legal resident of the state of California
- You must have a high school diploma or GED equivalent in education
Note that some employers prefer candidates who hold a bachelor’s degree in finance, accounting, risk management. or business administration.
Step 2: Fulfill the basic education requirements
To work as a mortgage loan officer in California and assist clients, you must equip yourself with the required knowledge, education, and training.
The NMLS requires aspiring MLOs to obtain minimum qualifying education to prove their eligibility for getting a license.
In California, you must complete 20 hours of an MLO license course. Listed below are some of the course topics you will cover during your pre-license training:
- Federal Law (3 hours)
- Non-Traditional Mortgage Lending (2 hours)
- Ethics, Fair Trade, and Consumer Protection (3 hours)
- General electives (12 hours)
These courses will give you a fundamental understanding of the mortgage lending industry, its laws, rules and guidelines for professionals and firms.
Another important thing to keep a note of is that you must choose a NMLS approved education provider for your education.
You are free to choose between joining a physical, classroom-based college or enrolling in an online pre-license MLO course.
Step 3: Pass the NMLS MLO licensing exam
Once your mortgage licensing course is completed, the next step is to take the California MLO licensing exam and prove your knowledge and training.
As per the NMLS licensing guidelines, it is mandatory to pass the SAFE MLO license exam by scoring at least 75 percent or above.
The SAFE (Secure and Fair Reinforcement) test is formulated to evaluate your preparedness and knowledge of industry laws, regulations, consumer rights, and various state-specific topics and subjects.
The test consists of 125 multiple-choice questions and you will get a total of 190 minutes to attempt all the questions.
Step 4: Clear the background check and verification
After completing your education and passing the MLO license exam in CA, the next step is to clear the SAFE MLO background verification requirements.
In California, aspiring loan originators and mortgage officers are required to meet the minimum standards for honesty, integrity, and trustworthiness to work with consumers.
As per the SAFE Act, it is mandatory to complete federal background verification to obtain your license.
To complete this step, you need to submit a copy of your fingerprints taken at a live scan vendor. Additionally, you must submit an updated credit report.
You can submit these documents along with your license application on the NMLS website.
Once the NMLS reviews and approves your records and processes your MLO license application, you will receive your license within a few weeks.
Step 5: Find employer sponsorship
After getting your CA MLO license, you need to activate it to work with clients.
In California, newly licensed loan officers must work under the supervision of a state-licensed firm or financial institution.
To activate your MLO license, you must submit your employer sponsorship details to the NMLS for approval.