Mortgage Broker: How to Break Into the Industry

What is a Mortgage Broker?

Mortgage brokers work with borrower clients to connect them with the best mortgage terms and the best lenders for their financial situation. Brokers are financial intermediaries with access to the products and pricing of multiple lenders, saving time and energy clients would otherwise have to spend shopping around. Using their detailed knowledge about mortgage origination, brokers understand credit eligibility and can help clients navigate the various terms and conditions of what can be seen as a difficult process. By gathering the required paperwork from the clients, they help prepare the loan application for underwriting and timely approval.

Getting Started as a Mortgage Broker

Whether you have been working for another mortgage lender and are looking for the independence of working for yourself, or are looking for a new career and want to be prepared for the inevitable market rebound, you will need to know how to become a mortgage broker.

While there are several important steps, the process is straightforward and can help you begin your career as a mortgage professional in the right way. Each state may have specific requirements, so be sure to check your local rules and regulations. Beyond the basics of establishing a business name, registering the business in your state, and opening business financial accounts, there are several industry-specific requirements.

Pre-Licensing Education

In most states, brokers are required to be licensed before they can begin originating mortgage loans. To become eligible for a broker license, pre-licensing education is required. For most states, this requirement includes up to 20 hours of training. Several training companies provide online and in-person courses. These courses cover topics such as:

• State and federal mortgage laws
• Financial regulations
• Ethics and consumer protection
• Industry overview and specific loan programs
• Loan documentation requirements
• The mortgage process from origination to closing.

Applying for a Mortgage Broker License

The National Multistate Licensing System (NMLS) is a registry for mortgage loan originators (MLO). To navigate the complexities of the application systems, the NMLS resource center provides an invaluable resource. Here’s what an MLO will need to do to apply for an NMLS ID and broker license:

• Complete pre-licensure education
• Pass the National SAFE MLO test
• Submit to a criminal background check
• Submit to a credit check
• Meet state specific requirements

The NMLS website provides state-specific licensing requirements.

Partner with Wholesale Lenders

Working with more than one lender will provide a broker with a variety of solutions and competitive pricing. Establishing relationships with multiple lenders can also help brokers avoid becoming too dependent upon a single funding source.

Choosing the Right Technology and Partners

Choosing the right technology is essential to the success of a mortgage broker. Once the domain of larger lenders and retail banks, advanced mortgage technology is now available for smaller shops and individual brokers. Most of these tools can be customized to reflect an individual broker’s branding.

Here are a few capabilities essential for success:

• Website – you will need a professional-looking website that communicates your services and experience. An easy-to-find contact form, or alternative communication options, will help drive leads. Value-adding landing pages, such as mortgage calculators to help browsing customers determine how much home they can afford, are often effective.
• Point of Sale (POS) – For the true digital application process for your customers, a POS is vital. If the client can apply for a mortgage, eSign documents and upload required documentation in a convenient place, it will provide a high level of efficiency for broker and the client alike
• Loan Origination Software (LOS) – Combined with the POS, the LOS facilitates the borrower application process. Additionally, the LOS facilitates the processing of the loan itself and preparation for delivery to lender partners, and acts as a system of record for the loan lifecycle. A good POS that is well-maintained by a vendor will help meet the many compliance requirements that a broker needs to follow. While the POS and LOS can be integrated using different vendors, several vendors offer a combined approach that helps to reduce the number of integrations required.
• Credit Reporting Company – Sign up with a credit reporting company that is integrated with the POS you select.
• CRM – Customer relationship marketing tools range from paper records and spreadsheets to purpose-built mortgage-specific client contact solutions. Once a broker exceeds a certain manageable number of contacts, automation becomes essential.
• Mortgage Marketing Automation – Successful brokers will find ways to automate their marketing activities to drive their branding and messaging into the market at scale. Brokers have access to platforms that can help at all phases of the process, from prospecting to in-process and then finally in developing a client-for-life program.

Compliance

One of the most important aspects of the business is managing compliance with various local, state, and federal regulations. A comprehensive LOS will help a broker comply with recordkeeping. Other compliance concerns include: maintaining licensure, compensation rules, advertising, marketing and continuing education. There are third-party partners who can help brokers meet these additional needs.

Type of Business and Location

With the right technology, operating a brokerage entirely online, with no physical location, provides a mortgage broker with the freedom to work anywhere on their own schedule. Some states (currently Arizona, Hawaii, Mississippi, Nevada and Texas) require a mortgage broker to have a physical location. Service providers need to be available with employees on site at “brick-and-mortar” locations in these states to meet this requirement.

License Renewal

In most locations, mortgage brokers have requirements to maintain their license. Like pre-licensing, continuing education courses are available to help meet these requirements and can be proof of continuing education for a licensing renewal application. Continuing education is vital to remain up to date on the changing requirements for this industry.

FAQs

Are you ready to get started on your broker career?

A career as a mortgage broker can provide the autonomy, flexibility and freedom that many loan officers are looking for. Following the simple steps outlined above, you can embark on your new career on a solid footing.

Are you going to work for yourself as an independent mortgage broker or are you looking to join an established broker network?

While mortgage brokers can operate alone, some may also choose to join one of the established mortgage broker networks. These networks can provide brokers with shared marketing strategies and resources, as well as access to lenders through their lender network. One of the benefits of joining this exciting industry is that the choice is up to the individual mortgage broker and how they like to operate.

Do you know if you want a fully online business or a brick-and-mortar location?

While some states (currently Arizona, Hawaii, Mississippi, Nevada and Texas) require a mortgage broker to have a physical location, the choice is one that gives the mortgage broker flexibility in how they want to operate. While some want to have a desired business location, others will enjoy the freedom of being truly mobile and able to work from anywhere.

Are you aware of all the educational, licensing and NMLS registration requirements to become a mortgage broker?

By following the steps in this article, taking your pre-licensing course and applying for licensing through NMLS (for additional resources see NMLS resource center), you will be on your journey as a fully licensed mortgage broker.

Have you determined which vendor can help provide you with a comprehensive, convenient technology stack that allows you to focus on your business?

Solutions such as the LoanCatcher® LOS bundle from Black Knight can provide a full technology stack that will allow a broker to be up and running with a single vendor. Look for vendors able to provide a website, POS, LOS, pricing engine integrations, CRM and mortgage marketing automation.