43,466 mortgage loan originators (MLOs) were registered at the federal level in the third quarter (Q3) of 2013 in California. This was up 5% from a year earlier when there were roughly 41,000 federally registered MLOs.

State-licensed MLOs in California totaled 40,337 in Q3 2013, up 12% from a year earlier when nearly 36,000 MLOs were registered.

Chart update 2/5/14

MLOs on the rise

Federally-registered mortgage loan originators (MLOs) are employed by federally regulated entities. In other words, these MLOs work for Big Bankslike Wells Fargo or Bank of America, etc.

State-licensed MLOs are mortgage brokers and small private or direct lenders. In California, state-licensed MLOs are regulated by either the California Bureau of Real Estate (CalBRE), or the Department of Business Oversight (DBO). The DBO had the lion’s share of California’s new MLO applications and MLO licenses issued in 2013, as:

• the CalBRE received 481 new applications for individual licenses and approved 399 individuals (83%); while
• the DBO received 1,904 new applications and approved 1,867 individuals (98%).

The general trend for both state-licensed and federally-registered MLOs is up. Further, California accounts for a whopping 31% of the nation’s state-licensed MLO population, though other states are catching up.

Loan originations going forward

The rise in state-licensed MLOs indicates those in the mortgage origination business hold a positive outlook for California’s housing market. However, some roadblocks include:

• rising mortgages rates, expected by 2015;
• a nationwide downward trend in mortgage origination amounts, experienced through 2013 and likely to continue in 2014; and
• new ability-to-repay rules, which began for mortgage applications received on or after January 10, 2014.

Getting licensed – and keeping it

The number of state-licensed MLOs increases throughout the year, and takes a dip in the first quarter of every year. All MLO licenses expire at the end of the calendar year. The January drop-off is due to licensees choosing not to renew at the end of the prior year.

Thus, expect to see a small dip in state-licensed MLOs in Q1 2014, to be regained and exceeded through the rest of the year.

Are you interested in obtaining your MLO license or endorsement? Any individual who, for financial gain, takes a loan application, negotiates or offers a consumer purpose loan secured by one-to-four unit residential property is required to be licensed or endorsed as an MLO. In California, MLOs are required to have:

• a valid California Bureau of Real Estate (Cal-BRE) license, with an MLO license endorsement;
• an MLO license issued by the California Department of Business Oversight (DBO); or
• a federal MLO registration.

Federally registered MLOs are employed by a federally regulated entity, such as a federally-chartered bank.

State registered MLOs have additional hurdles to jump through to get and maintain their license. Not only must they maintain their respective Cal-BRE licenses or DBO endorsements, but they also must take eight hours of continuing education (CE) each year to meet their renewal requirements.

posted by Carrie B. Reyes | February 5, 2014 | In Charts, Feature Articles, Latest Articles, Licensing and Education, Loan Products 

Carrie B. Reyes

is lead writer on Market Charts and the Real Estate Economicsand Economic Trends in California Real Estate books.