Aug 25, 2011

Bank and Nonbank Loan Officers: 459,000 and Counting?

According to a report in Origination news,

Could there really be 459,000 U.S. loan officers plying their trade in residential finance?

The tally comes from the Nationwide Mortgage Licensing System & Registry, whose job it is to count LOs who work at federally insured banks, thrifts and credit unions. Along with nonbank funders, these depositories have registered their LOs on the system.

According to a new head count, banks and their mortgage affiliates employ 350,000 registered LOs. Nonbanks—also known as “state-licensed companies”—have registered 109,000. (Each LO receives a unique identification number with their licensing status available on the NMLS website.) If the totals are correct, that means bank LOs currently outnumber nonbank professionals 3-to-1.

If you think the LO headcount sounds a bit too high, join the club. Figures compiled by the Bureau of Labor Statistics show that the entire residential finance sector employed 239,100 full-time workers as of June 30, but those figures apparently exclude bank LOs. The BLS survey only counts full-time employees on the payrolls of nonbank mortgage firms including companies that both fund and broker loans.

What's more, the BLS numbers include managers, loan officers, back-office staff and even full-time janitors. In other words, it appears that the NMLS tally provides the first true head count of LOs in the entire residential industry.

Still, there are skeptics who believe the 350,000 number is too high for LOs.

These naysayers suspect that banks have registered LOs with little involvement in mortgage lending, particularly since it takes very little effort for bank employees to register.

LOs at state-licensed companies (nonbanks) have to pass competency tests and comply with continuing education requirements. They also have to be licensed in each state where they make loans.

LOs at national or state banks are exempt from those requirements, but must undergo criminal background checks and get fingerprinted like their state-licensed competitors.

Under the 2008 Secure and Fair Enforcement and Mortgage Licensing Act, banks and other depositories are required to register their LOs on the NMLS, which is operated by a subsidiary of the Conference of State Bank Supervisors. (Banks were required to file their registry information with NMLS no later than July 29.)

The registry is now relatively complete, according to Bill Matthews, president of the State Regulatory Registry, the CSBS subsidiary which operates the NMLS on behalf of the American Association of Residential Mortgage Regulators. AARMR is a trade association for the agencies and professionals who oversee the mortgage business within their respective borders. “All the deadlines have passed and now we can start looking at the data and trends,” Matthews told National Mortgage News.

On Aug. 2 regulators “turned on” the consumer portion of the website, which allows homebuyers and other interested parties to check on companies and individual LOs employed in the industry.

The NMLS site was first launched 18 months ago with information on state-licensed (nonbank) companies, branches and individuals, including whether their license status is active. The site even indicates whether a license was denied, withdrawn or revoked. “If someone was denied a license on the state side, the consumer will be able to see that. If they are now working for a depository, they can see that as well,” Matthews said.

In late 2012, the site will start showing disciplinary actions taken against state-licensed individuals. But each state will determine for itself the exact nature of what is displayed. Some jurisdictions may decide to show C&D orders that have been levied against an originator, while others may rule only fully adjudicated enforcements should be disclosed.

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