Tuesday, November 8, 2011
NMLS MLO Authorized to Conduct Business with New Employer
How soon can a Loan Originator start taking applications for a new employer once the LO has changed their sponsoring employer in the NMLS? I am seeing a lot of companies that will request a sponsorship in the NMLS of a new employee and allow the new employee to start taking loan applications that day. The problem is that requesting a sponsorship in the NMLS doesn’t mean the loan originator is actively sponsored under the new employer yet. The LO needs to wait until their sponsorship is approved by the state in the NMLS before they can start taking applications for their new employer. Depending on the state, this can take anywhere from a few hours to a few weeks, but usually takes a day or so in most states. However, sometimes the sponsorship is not accepted by the state for various reasons. For example, the LOs residence is too far from the company’s closest location, or the LO is a CA DRE Salesperson and also needs to have the company appointed as their employing broker in CA DRE’s eLicensing System, or the state requires additional documentation to be mailed to them before they can approve the sponsorship request, or the LO needs to update their employer on their NMLS MU4 filing. These issues can permanently delay a sponsorship request from being approved by the state. And in these situations you can have an unlicensed LO taking applications for your company for quite a while before you realize the problem. Companies will start seeing this come up in audit findings and be fined by the states, if they aren’t doing this right. Or they could even have loans that they can’t close if they are a broker, or even worse, they can have loans that they can’t sell if they are a banker. I just spoke two different companies with this exact problem last week.