Your Guide to Getting a Mortgage Loan Broker License in California

Are you looking for a dynamic career path where opportunities for growth and earnings are aplenty and you can enjoy a stable work-life balance?

If yes, then working as a mortgage broker in California might just be an ideal career path to help you meet your professional goals.

As per the Bureau of Labor Statistics in the U.S., the employment outlook for mortgage brokers is poised to grow significantly in the coming decade, leading to a rise in the number of job opportunities.

Since the demand for mortgage financing has bounced back to pre pandemic levels, skilled and licensed loan officers and brokers are highly sought-after.

These trends and statistics imply that if you are keen to start a new career from scratch or switch industries, working in the mortgage lending industry could be a rewarding path.

In a popular and rapidly growing real estate market like California, which is home to some of the hottest property locations such as San Diego, Las Vegas, San Francisco and Los Angeles, the demand for mortgage loans is growing at a rapid speed.

With an average home value of around $840K and above, California’s real estate growth is showing no signs of slowing down, and this means, the demand for mortgage financing will continue to rise to support the demand for real estate by homebuyers.

As a mortgage broker, you can get the opportunity to work with clients from different walks of life and build your network by collaborating with industry professionals.

When it comes to earnings, you would be happy to learn that professional mortgage brokers can easily make a six figure annual income while enjoying additional job perks and benefits.

Mortgage brokers are employed by financial institutions such as banks, private lending companies and credit providers who want to lend money to clients.

As a mortgage broker, you can earn a fixed income annually, while getting additional commission opportunities on top of your base pay.

Working as a mortgage broker in CA can help you build a thriving, well-paying career and as you gain experience, you can even choose to start your own firm or brokerage.

All you need to achieve this goal is a mortgage loan broker license in California and after getting licensed, you will be on your way to working with clients and earning commissions.

To become a licensed broker in the mortgage lending industry, you need to understand and fulfil the various state and federal license requirements.

If you are not sure how and where to begin, this post will answer all your questions about how to become a mortgage loan officer in California and kickstart your career.

Understanding the role and duties of a mortgage broker

Before committing to a career and investing time, effort and money into it, it is important to understand what you will be doing and how you will be expected to work in the profession.

New entrants in this field with a lack of knowledge about the mortgage industry, it makes sense to first know about the job profile and duties of mortgage loan officers (MLO) in California.  

MLOs act as a bridge between aspiring buyers of property looking for mortgage loans and lending institutions helping borrowers get the required funds. This is regardless of whether it is commercial, residential, or industrial properties. In return, they earn a commission on the amount of loan sanctioned.   

To engage clients, assist them and earn commissions through brokering deals, you must first obtain a state-issued mortgage loan broker license in California.

However, before you learn about the licensing process, it is important to go through the tasks and duties performed by a mortgage broker:

• Respond to inquiries from prospects and clients seeking mortgage financing and loans for their needs.
• Help prospects and clients understand the terms of a mortgage loan and suggest the most suitable plans.
• Work with clients in getting the best mortgage deals and loans based on their needs, financial health and plans.
• Assist clients in completing paperwork, procuring and submitting the required documents to process their loan application.
• Match borrowers with lenders and liaison between the two parties to get the loan approved and the deal finalized.
• Ensure adherence to standards and guidelines of NMLS.  
• Educate clients about the intricacies of mortgage plans and interest rates so that they can take informed decisions.  

Generally, a mortgage broker can charge between 1 to 2 percent of commission on the loan or principal amount.

The earnings of MLOs are in the form of commission paid by the lenders. As per the Truth in Lending Act, they are not allowed to collect any fee from the borrowers.

The job profile of a mortgage broker will involve dealing with sensitive personal and financial information of clients and prospects.

Since loan officers are employed by banks, credit unions and financial institutions and they work in highly regulated environments, it is mandatory to ensure compliance with the licensing laws and guidelines.

This is why to operate as a mortgage broker, you must apply for a mortgage loan officer license California as mandated by the S.A.F.E (Secure and Fair Enforcement) for mortgage industry professionals and firms.

Since getting a licence is a mandatory regulatory and federal requirement, you must pay extra attention to the step-by-step process.

Basic eligibility requirements for getting your mortgage broker license

What are the types of mortgage licenses issued by NMLS?

• Residential mortgage loan officer licenses are issued to those who deal only with residential properties.
• Combined license for those wanting to practice as a real estate agent as swell as an MLO in California.
• Finance broker: To manage, service or broker consumer specific loans in California, you should apply for a finance broker license. With this license, you can only work with creditors and loan originators with a finance lender license.

To get an MLO license in CA, the following requirements must be met.

Ensure that you are at least 18 years old on the date of application for a license. Make sure that you are a citizen of the country and a resident of California. On the educational front, a high school diploma or its equivalent, a GED, is mandatory.

Once these requirements are met, visit the NMLS portal and create an account. An ID will be issued that will be valid throughout your career as an MLO.

Education requirements for a mortgage broker license

After completing your NMLS registration, applicants must complete 20 hours of NMLS approved course credits to become eligible for a mortgage loan broker license in California.

Remember - to start your career in the CA mortgage lending industry as a broker, you must be well-versed with the processes, policies and practices of the industry.

Most importantly, you should be familiar with the mortgage lending industry standards, regulatory guidelines and laws for working as a licensed professional.

This is where pre license education will come in handy to help you learn about the California mortgage lending laws and the NMLS fair practices, ethics and standards for professionals.

The 20 hours of course credits covers the following topics and subjects: 

• Federal Laws and Regulations (2 hours)
• Lending standards and guidelines (2 hours)
• Fair Practices, Fraud and Ethics in Lending (3 hours)
• Mortgage origination related information (12 hours)

Since completion of the courses is mandatory and a pre-requisite for getting your mortgage loan broker license in California, you must choose a NMLS approved education provider.

Note that if your college or course provider of choice is not approved by the NMLS, then your pre licensing course credits will not be considered as valid.

Once you have successfully completed the courses, you will gain a strong foundation of the industry, its workings, regulations, laws and your duties as a mortgage broker.

The purpose of completing pre license training is to imbibe the values of protection of consumer rights, and meet the highest standards of integrity and ethical practices.

Examination requirements for a mortgage broker license

If you have made it this far and are wondering how to become a MLO in California, then you must be prepared to take the SAFE MLO license test.

As per the SAFE Act, it is mandatory for all applicants to pass the exam for getting your license issued by the NMLS.

The exam ensures that all aspiring mortgage brokers have achieved a minimum level of knowledge, training and proficiency to work with clients in the real-world.

The exam consists of 125  multiple choice questions and you will get 180 minutes to complete them all

To obtain your mortgage loan broker license in California, you must pass the test and to do so, you need to score at least 75 percent or above in your test.

Many first time applicants often find the exam challenging, and some even fear taking the test in the first place.

However, the exam can be easily passed if you are thorough with your knowledge of the industry principles, especially the NMLS guidelines and laws, including the standards, ethical practices and federal laws.

Here’s a practical tip to improve the odds of passing the exam - you should enroll in exam prep resources and training classes.

With the help of dedicated resources, you will feel more confident and familiar with the exam topics and the commonly asked questions.

Taking mock tests and practicing with sample questions is another practical technique to boost your exam readiness.

Completing your mortgage broker license application

As per the NMLS license guidelines and federal laws, all aspiring mortgage industry professionals must have a clean background with no history of felony or unlawful activity.

The state of California requires you to submit an electronic scan of your fingerprints along with a latest credit report for background and criminal history check.

Due to the sensitive and highly regulated working of the mortgage lending industry, you are required to meet the qualifying standards of honesty, integrity and truthfulness.

To obtain your mortgage loan broker license in California, you can submit your license application along with the supporting documents on the NMLS website.

Note that you will have to pay a one-time, non-refundable application processing fee of around $300 to the NMLS.

Additionally, you might be required to secure a surety bond, which works as a legally binding financial protection for clients seeking your services and assistance.

Find employer sponsorship

Congratulations on getting your mortgage loan broker license in California, however, to enter the mortgage lending industry as a professional, you must activate your license.

To activate your license, you must find a sponsoring employer and submit your sponsorship details to the DRE in California.  

Upon submission and post verification of the employer’s license and details, your license will be activated and you can start finding clients on behalf of your employer.