For those of you located in states that have already transitioned onto the Nationwide Mortgage Licensing System (NMLS), you are probably already intimately familiar with the new NMLS. However, if you are not licensed in one of the 23 states that have transitioned or are in the process of transitioning on to the NMLS, you may be asking yourself, “What exactly is the Nationwide Mortgage Licensing System?”
There are many different rumors going around. Some people are saying that the Nationwide Mortgage Licensing System (NMLS) will replace licensing with each individual states. Others are saying that the NMLS will allow you to get one Loan Originator License to be able to originate in all states. Although some of the rumors out there have partial truths to them, we prefer to know the actual truth. So what is the NMLS?
The NMLS is a database. That’s it. It does not change any state mortgage licensing requirements. It does not reduce what states require to obtain a license. It also does not eliminate the requirement to be licensed separately in each state. The NMLS only acts as a central repository for the gathering of information for the procurement of a state mortgage license. The only current benefit to the NMLS is that when you apply for a license in a new state, you don’t have to fill out a new form for each new state listing the information that the NMLS collects in it’s database. This is the only benefit at this time. Since each state has access to the NMLS database, you only have to edit your record to show that you want to apply for a license in a new state, and the state then has access to your information. Although the NMLS gathers a lot of information, it doesn’t gather all of it. Each state still requires numerous documents to be sent by paper outside of the NMLS to the states themselves. The only way that the licensing process will become easier is if the states actually change their laws to make the process more streamlined, less expensive, and more similar to other states.
The NMLS does have some other proposed benefits that have not been put in place yet. In the next 2 to 3 years, the NMLS proposes to make the initial and continuing education requirements for each state more reciprocal. Basically, the NMLS plans to start tracking completion of education courses, and plans to work with states so that if you take an education course for one state, it will cross-certify or count for the other states that you need education in. However, this again must be approved by the state legislatures before the states can allow reciprocity between courses.
To make it as simple a possible, the NMLS is a way to reduce the amount of paperwork required to be duplicated for each state, but it does not change any laws with each state. For the NMLS to work the way it was intended, each state needs to begin working together better to eliminate the duplication and overwhelming time consuming process of licensing in each state.