MLO License Endorsement Information

HOW TO OBTAIN A MLO LICENSE ENDORSEMENT

The Department of Real Estate (DRE) uses the Nationwide Multistate Licensing System (NMLS) to manage all Mortgage Loan Originator (MLO) license endorsements. All applications for the MLO license endorsement and any changes to MLO records must be submitted electronically through NMLS. Information submitted through NMLS must match current DRE records.

All applicants requesting a MLO license endorsement from the DRE must hold a current real estate license which is in a "current license status". A DRE license in an expired, revoked, suspended or surrendered status will not be approved for the MLO license endorsement.

After the MLO license endorsement is approved, the real estate license must be maintained in order to retain the approval of the MLO license endorsement.

  • Individual MLO License Endorsement

    • Salespersons, brokers, and broker/officers of corporations who wish to perform residential mortgage loan originator (MLO) activities must file an Individual (MU4) form electronically through NMLS to obtain an Individual MLO license endorsement.

    Steps to apply for an Individual MLO License Endorsement

    1. Create an account in NMLS to obtain a NMLS unique ID number
    2. Successfully complete the National SAFE Test with Uniform State Content
    3. Satisfy the 20 hours of pre-licensure education requirement
    4. Submit the Individual (MU4) form along with the proper fees electronically through NMLS
    5. Submit fingerprints to NMLS during the MLO license endorsement application process
    6. Submit authorization for NMLS to obtain a credit report
    7. Grant access to the affiliating company for an approved (active) MLO license endorsement. The company will also need to request sponsorship before the MLO license endorsement will be issued in an "Approved" status. If no sponsorship is submitted, the Individual MLO license endorsement will be issued in an "Approved-Inactive" status.

  • Company MLO License Endorsement

    • A broker working as a sole proprietor who performs residential mortgage loan originator (MLO) activities must file a Company (MU1) form and an Individual (MU4) form electronically through NMLS to obtain a Company MLO license endorsement.

    A corporation performing residential mortgage loan originator (MLO) activities must file a Company (MU1) form for the corporation and an Individual (MU4) form for the designated broker/officer electronically through NMLS to obtain a Company MLO license endorsement.

    Steps to apply for a Company MLO License Endorsement

    1. Create an account in NMLS to obtain a NMLS unique ID number
    2. Submit the Company (MU1) form and fees electronically through NMLS
    3. Create Sponsorship request for licensee's Individual (MU4) form. This also includes the designated broker/officer Individual (MU4) form (for corporations) and broker's Individual (MU4) form (for brokers working as sole proprietors).

     

  • Branch Office MLO License Endorsement

    • Branch (MU3) form must filed electronically through NMLS to perform MLO activities at an address other than the main office address listed on the Company (MU1) filing. The branch office must first have a properly issued branch office license on file with DRE. The branch office must be a California physical address.

    Steps to apply for a Branch MLO License Endorsement

    1. Log in to the Company (MU1) filing to create a Branch (MU3) form
    2. Submit the Branch MU3 form and fees electronically through NMLS for each branch location

Engaging in the business of a mortgage loan originator without the required MLO license endorsement can result in the assessment of penalty fees of fifty dollars ($50) per day for the first 30 days the MLO license endorsement is not issued, and one hundred dollars ($100) per day for every day thereafter, not to exceed a maximum of $10,000.

Last Updated - 1/1/16

Background

Title V of Public Law 110-289, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ("SAFE Act"), was passed on July 30, 2008. The Safe Act gave states one year to pass legislation requiring the licensure of mortgage loan originators according to national standards and the participation of state agencies on the Nationwide Multistate Licensing System (NMLS). The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing of state-licensed mortgage loan originators.

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) created, and maintain NMLS as the basis for state licensing. NMLS contains a single license record for each mortgage loan lender, broker, branch and mortgage loan originator (MLO) that can be used to apply for, amend, and renew a license in any state or territorial agency.

The SAFE Act requires state-licensed Mortgage Loan Originators (MLOs) to pass a written qualified test which covers federal and state law, to complete pre-licensure education courses, and to take annual continuing education courses. The SAFE Act also requires all MLOs to submit fingerprints to NMLS for submission to the FBI for a criminal background check, and authorization for NMLS to obtain an independent credit report.

Senate Bill 36 (SB 36), which was signed into law in October 2009, was enacted in order to bring California into compliance with the SAFE Act. SB 36 requires all DRE real estate licensees who conduct residential MLO activities, as outlined in the SAFE Act, to meet specific requirements to qualify for a MLO real estate license endorsement by January 1, 2011.

Last Updated - 11/1/15

Mortgage Loan Originator (MLO) Definition

For individuals licensed by the Department of Real Estate, a mortgage loan originator means:

    An individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan for compensation or gain. An individual real estate licensee acting within the meaning of Section 10131 (d) of the Business and Professions Code (B&P) is a mortgage loan originator with respect to activities involving residential mortgage loans.

The definition of a mortgage loan originator does not include any of the following:

  1. An individual who performs purely administrative or clerical tasks on behalf of a person meeting the definition of a mortgage loan originator, except as otherwise provided in Business and Professions Code section 10166.03. The term "administrative or clerical tasks" means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan.


  2. An individual that only performs real estate brokerage services, as defined in Business and Professions Code section 10131(a) or (b), unless that person is compensated by a lender, other mortgage loan originator, or by any agent of any lender or other mortgage loan originator.


  3. An individual who solely renegotiates terms for existing mortgage loans held or serviced by his or her employer and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines that the SAFE Act requires such an employee to be licensed as a mortgage loan originator under state laws implementing the SAFE Act.


  4. An individual that is solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101 (53D) of Title 11 of the United States Code.


  5. An individual licensed or registered as a mortgage loan originator pursuant to the provisions of the Financial Code and the SAFE Act.

Additional Information Regarding Loan Processing-Business and Professions Code section 10166.03:

  1. A loan processor or underwriter who does not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator shall not be required to obtain a license endorsement as a mortgage loan originator.


  2. An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator.


  3. An independent contractor who is affiliated with a mortgage loan originator may not engage in the activities of a loan processor or underwriter for a residential mortgage loan unless the independent contractor loan processor or underwriter obtains and maintains an endorsement as a mortgage loan originator under this article. Each independent contractor loan processor or underwriter who obtains and maintains an endorsement as a mortgage loan originator under this article shall have and maintain a valid unique identifier issued by the NMLS.


Last Updated - 11/1/15

Mortgage Loan Activity Reporting Requirement

All licensees must report to the Department of Real Estate if they make, arrange, or service loans secured by residential property, consisting of one to four units.  The report must be made within 30 days of commencing residential loan activities and must be completed on the Department of Real Estate Web site using Form RE 866 - Mortgage Loan Activity Notification.

Licensees who have filed the RE 866, but who no longer perform loan origination for residential mortgage loans, should either "cancel" the report or "amend" the report if they are still servicing, funding, buying/selling notes, etc. related to residential mortgage loans.

The RE 866 notification must accurately reflect the mortgage-related activities being performed.

Penalty fees can apply for failure to submit this required notification. Penalties are fifty dollars ($50) per day for the first 30 days the report is not filed and one hundred dollars ($100) per day for every day thereafter not to exceed a maximum of $10,000.

Last Updated - 11/1/15

Pre-Licensure Education Requirement

The SAFE Act requires state-licensed mortgage loan originators (MLOs) to complete 20 hours of NMLS approved pre-licensure education courses which include the following:

  • 3 hours of Federal law and regulations
  • 3 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues
  • 2 hours of training related to lending standards for the nontraditional mortgage product market
  • 12 hours of undefined instruction on mortgage origination

The pre-licensure education does not need to be completed prior to taking the National SAFE Test with Uniform State Content, but must be completed before an endorsement application is submitted.

More pre-licensure education information, including a list of NMLS approved course providers, is available at: NMLS Education

Last Updated - 1/1/16

NMLS Examination Requirement

The SAFE Act requires all MLOs seeking state-licensure to pass a qualified written test developed by NMLS and administered by Prometric testing centers, not by DRE. Examinations can be scheduled through NMLS or Prometric’s Web Site or by calling Prometric directly after the testing fees have been paid through NMLS.

As required by the SAFE Act, the test is designed to adequately measure an individual's knowledge and comprehension in appropriate areas, including:

  • Ethics;
  • Federal law and regulation pertaining to mortgage origination;
  • State law and regulation pertaining to mortgage origination; and
  • Federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.

Effective January 1, 2016, DRE adopted the National SAFE Test with Uniform State Content. See Uniform State Test Implementation to learn more.

Applicants must pass the National SAFE Test with Uniform State Content with a 75 percent or higher.

Applicants are encouraged to start this process as soon as possible in order to successfully complete the National SAFE Test with Uniform State Content. If an applicant does not successfully pass the National SAFE Test with Uniform State Content they are subject to a waiting period of thirty (30) calendar days from the previous test date prior to retaking the test. After every third failed test, the applicant is subject to a waiting period of one hundred eighty (180) calendar days before he or she is able to retake the test.

More testing information, including examination scheduling, MLO Testing Handbook, content outlines, fees, and procedures, is available at: NMLS Testing.

Last Updated - 1/1/16

NMLS Application and Fee Requirement

Listed below are application filing procedures based on the Department of Real Estate (DRE) real estate license types. These filing procedures include pertinent DRE requirements for submitting filings electronically through NMLS.

Corporations and real estate brokers, working as sole proprietors, are referred to as a "Company" by NMLS.

Brokers, broker-associates, broker/officers, and salespersons are referred to as "Individuals" by NMLS.

It is strongly recommended that you read these procedures prior to submitting filings through NMLS. It may helpful to print these instructions and have them readily available as you go through the process of applying for a MLO license endorsement.

Last Updated - 11/1/15

Fingerprint / Criminal Background CHECK Requirement

The SAFE Act requires that each MLO Individual (MU4) license endorsement applicant submit a set of fingerprints through NMLS.  Fingerprints submitted to obtain a CA real estate license are not acceptable.  A new set of fingerprints must be submitted through NMLS in order to obtain a MLO license endorsement based on the provisions of the SAFE Act and SB 36.

Important Reminder - The SAFE Act prohibits the licensing of a MLO under any of the following conditions:

  • The applicant has ever been convicted of a felony involving an act of fraud, dishonesty, breach of trust, or money laundering, or convicted of any felony in the seven year period before filing an application for an endorsement.
  • An applicant has ever had a loan originator license revoked in any governmental jurisdiction
  • An applicant has not demonstrated such financial responsibility, character, and general fitness so as to command the confidence of the community and warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently.

Fingerprinting Procedures:

  • When completing the Individual (MU4) MLO license endorsement application, you will pay the Criminal Background Check (CBC) fee electronically through NMLS. For more information: Getting Started: CBC.
  • Once the fee has been paid for the CBC, you will be able to schedule an appointment to have your fingerprints taken using a live scan process.  This process can only be completed at specific locations established by NMLS.   To schedule an appointment: Schedule a Fingerprint.
  • Fingerprints must be taken within 180 days after authorizing a Criminal Background Check and selecting to submit new fingerprints. If fingerprints are not submitted within 180 days, the background check window will expire and a new Criminal Background Check will need to be authorized and a new fee will be required.
  • Fingerprints are automatically processed with results reported back to NMLS and will be available for review by DRE.
  • If the FBI determines that the prints are illegible, you will receive a NMLS system generated email requiring you to request and pay for a new criminal background check.

Last Updated - 11/1/15

Financial Responsibility/Credit Report Requirement

The SAFE Act requires that mortgage loan originator applicants have demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purpose of the article.

The SAFE Act also requires that applicants authorize NMLS to obtain a credit report from a credit reporting agency. This step must be completed as part of the online application process through NMLS.

  • When the credit report is obtained, it will be done through a "soft pull" process which has no effect on the applicants credit score.

DRE has adopted Regulations in order to define the requirements of the SAFE Act and SB 36. Regulation 2758.3 - Evidence of Financial Responsibility, specifically addresses how DRE will evaluate the financial responsibility requirement for mortgage loan originator applicants.

Last Updated - 11/1/15

Mortgage Call Report Requirement

The submission of Mortgage Call Reports (MCRs) is a SAFE Act requirement for all approved Company MLO license endorsements and is also required pursuant to California Business & Professions Code section 10166.8.

Corporations and sole proprietor brokers, who have an approved Company MLO license endorsement, are required to complete all MCRs. If there has not been any MLO activity to report, the Companies are still required to complete and submit MCRs.

MCRs are completed and filed electronically through NMLS and include:

  • Residential Mortgage Loan Activity (RMLA) - application, closed loan, individual MLO, Line of Credit, servicing, and repurchase information.
  • Financial Condition (FC) – company financial information.

To review further information concerning MCRs go to Mortgage Call Report

Last Updated - 11/1/15

MLO License Endorsement Renewal Requirements

MLO license endorsements are issued annually and expire December 31st of each year.  The NMLS renewal period begins November 1st and ends December 31st of each year.  MLO license endorsements issued prior to November 1st are required to be renewed through NMLS in order to be valid the following year.  If a renewal request is not submitted through NMLS, the MLO license endorsement will expire on December 31st.  MLO license endorsements issued on or after November 1st will not be required to be renewed and will expire at the end of the following year.

Review Your License Records Prior to Requesting a MLO License Endorsement Renewal
Review your Department of Real Estate (DRE) real estate license information to make sure that the underlying DRE license is in a “Licensed” or “Licensed NBA” status.  If a real estate license is in an expired, revoked, suspended, or surrendered status the MLO renewal request will not be approved.

Log into your NMLS record(s) to ensure you know your User Name(s) and Password(s) that your MLO license endorsement is in a renewable status (Approved, Approved-Inactive, or Approved-Conditional).  Check for any license items on your MLO record(s).  Any unresolved license items will delay and may prevent the approval of your renewal request.

Individual (MU4) License Endorsement Renewal Requirements - Broker and Salesperson
Complete eight (8) hours of NMLS approved continuing education (CE).  You may submit a renewal request and renewal fee electronically through NMLS when the CE is viewable on your NMLS record.  Since it may take as long as seven (7) days for a CE course provider to report a course completion to NMLS, MLOs are strongly encouraged not to wait until the final days of the renewal period to try to complete CE or they may be prevented from submitting an on-time renewal through NMLS.

Company (MU1) License Endorsement Renewal Requirements – Corporation
Submit a company renewal request and renewal fee electronically through NMLS.  The DRE licensed designated broker/officer must request and attest to the company renewal.  The designated broker/officer must also complete 8 hours of NMLS approved continuing education and submit an Individual MLO renewal request electronically through NMLS.  The Individual MLO renewal request should be submitted prior to the filing of the corporation Company renewal request.

Company (MU1) License Endorsement Renewal Requirements – Sole Proprietor Broker
Submit a company renewal request and renewal fee electronically through NMLS. The broker must request and attest to the company renewal. The broker must complete 8 hours of NMLS approved continuing education and submit an Individual MLO renewal request through NMLS. The Individual MLO renewal request should be submitted prior to the filing of the Company renewal request.

Branch (MU3) License Endorsement Renewal Requirements - Corporation and Sole Proprietor
Branch renewals should be submitted after the Company (MU1) license endorsement renewal has been submitted.

Mortgage Call Reports – Required for all Company MLO License Endorsements
The submission of Mortgage Call Reports (MCRs) is a SAFE Act requirement for all Company filings and is also required pursuant to California Business & Professions Code section 10166.08.  Failure to submit required MCRs to NMLS will delay and may prevent the approval of the renewal request. It may also result in the denial of the renewal for the company MLO license endorsement.  Renewal fees are nonrefundable per Business and Professions Code section 10207.

Failure to Renew a MLO License Endorsement on or before December 31st
Individuals and companies who fail to request the MLO license endorsement renewal between November 1st and December 31st will result in the MLO license endorsement expiring as of January 1st.  The individual/corporation will be required to cease performing all activities that require a MLO license endorsement.

NMLS does allow for a renewal to be requested during a "Reinstatement Period" which begins January 1st and continues through the end of February. Late fees are not assessed for filings submitted during the NMLS reinstatement period.  Failure to request a renewal by the end of February will result in a MLO license endorsement status being changed to "Terminated-Expired" and will no longer be eligible for renewal.  To obtain a MLO license endorsement, a new application and appropriate fees must be filed again.  An applicant for an Individual MLO license endorsement must also authorize a new credit report, submit new fingerprints for a criminal background check, and complete the appropriate NMLS continuing education.

Additional information regarding the MLO renewal process can be found on the NMLS Web site.

Last Updated - 11/1/15

Maintenance of DRE license / MLO License Endorsement

The term and license identification number of the underlying real estate license will not change. Real estate licensees will continue to be responsible for filing the necessary renewal, continuing education, and record update requirements to maintain their four-year real estate license separately from the mortgage loan originator (MLO) license endorsement(s).

A real estate licensee or corporation who has been issued a MLO license endorsement is required to maintain the same current license information on file with the Department of Real Estate (DRE) and with the Nationwide Multistate Licensing System and Registry (NMLS), including licensee name, licensee main office, and/or mailing address.

To change licensing information on an existing mortgage loan originator license endorsement the filing must be amended on NMLS.

A licensed real estate salesperson who acts as a mortgage loan originator and holds a MLO license endorsement must notify the DRE of any affiliation changes and must provide affiliation sponsorship information electronically on NMLS within five (5) days of the commencement or termination of affiliation.

A licensed real estate broker who affiliates broker associates to conduct mortgage loan originator activities must provide affiliation sponsorship information to NMLS within five (5) days of the commencement of affiliation. Termination of a broker/broker associate affiliation must be reported to NMLS within five (5) days of the termination.

The designated broker/officer of a corporation who applies for or has been issued a MLO license endorsement on behalf of the corporation is responsible for maintaining and updating the corporation information on NMLS.

Last Updated - 11/1/15

Out of State Applicants

All applicants requesting a Mortgage Loan Originator (MLO) license endorsement from the Department of Real Estate (DRE) must hold a current DRE real estate license.  The real estate license must be issued by DRE prior to submitting a MLO license endorsement request through NMLS.

Out of State Residency / Out of State Licensure

  • Residency in California is not a requirement to become licensed.
  • California does not have reciprocity with any other state to allow a waiver of any requirements to obtain a real estate license.

Individual (MU4) MLO License Endorsement

  • Individuals must hold either a current Salesperson or Broker real estate license
  • For a guide to qualifying for either a Salesperson or Broker examination and obtaining a real estate license, you may review: Examinees

Company (MU1) MLO License Endorsement

  • Sole Proprietor: To conduct mortgage loan origination activities as a Sole Proprietor, the applicant must first hold a current Broker real estate license. To qualify for the Broker examination and obtain a Broker real estate license, you may review: Brokers Examination
  • Corporation: A Corporation must first hold a current Corporation real estate license. To apply for a Corporation real estate license, you may review: Corporations
  • Note: DRE does not license Limited Liability Companies (LLC) or Limited Partnerships (LP).

Last Updated - 11/1/15

Frequently Asked Questions

Last Updated - 1/1/16

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