Caution The following frequently asked questions and answers (FAQs) are provided as informal guidance. The FAQs should not be construed or relied upon as an official written notice, interpretation, or report of the Department or its commissioner, and does not provide any “safe harbor” to avoid potential disciplinary/enforcement action by the Department or any other regulatory authority. The Department cannot provide you legal advice. If you have specific legal questions, you should consult with a private attorney. × Dismiss this alert.
The Nationwide Multistate Licensing System & Registry (NMLS; a/k/a Nationwide Mortgage Licensing System) is a licensing database system used by regulatory agencies and licensing authorities throughout the United States and is owned and operated by a company that is a subsidiary of the Conference of State Bank Supervisors (CSBS). The Department uses the NMLS system to license individual residential mortgage loan originators (RMLOs), among other license/registration types, but did not design or create it and does not control its underlying functionality. NMLS maintains a Resource Center on its website, designed to guide and assist licensees/registrants and applicants for licensure concerning how to use the NMLS system. Licensees/registrants and applicants for licensure with questions concerning how to use the NMLS system and how to make an application or other filings within NMLS should consult the NMLS Resource Center or contact the NMLS Call Center (1-855-NMLS-123 (1-855-665-7123)) for assistance.
Many login issues happen when the user initially creates their account with NMLS. NMLS will send a system-generated password to the email address designated by the user when creating the account. This system-generated password uses random characters and numbers that are sometimes difficult to transpose. We recommend copying and pasting the password directly from the email from NMLS when you first log into the system. Your NMLS account provides access to sensitive and important information affecting your ability to conduct activities with your license or registration and you should protect your login information from unauthorized use. Your password expires every year and must be between 20 and 64 characters in length. You may wish to consider using a secure password manager to store and update your password which will also allow you to choose a longer and more complex password. If you experience issues logging in to your NMLS account, you should consult the NMLS Resource Center (including this Help Document) or contact the NMLS Call Center (1-855-NMLS-123 (1-855-665-7123)) for assistance.
To check if an individual is licensed, you can visit the NMLS Consumer Access Website.
The Texas SAFE Act and Finance Code Chapter 157, Subchapter D require an individual acting in the capacity of an RMLO to be licensed, unless he or she is exempt from licensing requirements. Limited exemptions to the requirements from licensure may found in Finance Code § 157.0121 and Finance Code § 180.003. An RMLO is defined as an individual who, for compensation or gain, or in the expectation of compensation or gain, 1) takes a residential mortgage loan application or 2) offers or negotiates the terms of a residential mortgage loan. See Finance Code § 180.002(19). A licensed RMLO acts on behalf of (and must be sponsored by) an appropriate entity holding a company license or registration (a licensed mortgage company or registered mortgage banker). An RMLO cannot conduct business “on their own” with the RMLO license but may conduct business in their own name by using a sole proprietorship that is separately licensed or registered. The Texas SAFE Act also requires an individual who provides clerical or support duties other than a W-2 employee for an appropriate entity (an independent contractor loan processor or underwriter) to be licensed. See Finance Code § 180.051(b). The requirements for licensure cover a broad range of loan origination and lending activities. If you are uncertain whether or not you need to be licensed in Texas, consult the RMLO New Application Checklist published on the NMLS SML Licensing Requirements webpage. While these FAQs provide some informal guidance, the Department cannot provide legal advice concerning whether or not you need a license. If you have specific legal questions, you should consult with a private attorney. Unlicensed residential mortgage loan origination activity may subject the unlicensed individual to sanctions, administrative penalties, and even criminal charges.
The requirements for licensure cover a broad range of loan origination and lending activities, including some overlap between the Department and the OCCC. For more information on the regulatory overlap between the Department and OCCC from the Department’s perspective, consult the RMLO New Application Checklist published on the NMLS SML Licensing Requirements The OCCC also maintains, on the OCCC website, information addressing this issue.
The limited exemptions to the requirements for licensure include originating a loan for yourself or on behalf of an immediate family member. See Finance Code § 157.0121(b)(2) and Finance Code § 180.003(a)(2). The term “immediate family member” is defined by Finance Code § 180.002(8) to mean “the spouse, child, sibling, parent, grandparent, or grandchild of an individual,” and also includes “a stepparent, stepchild, and stepsibling and a relationship established by adoption.” Finance Code § 157.0121(b)(4) and Finance Code § 180.003(a)(4) also include an exemption for an individual “who offers or negotiates terms of a residential mortgage loan secured by a dwelling that serves as the individual’s residence.”
Not in this specific fact scenario. Loans made to purchase and rehab properties with the intent to resell and loans to acquire rental properties are loans for a business, commercial, or investment purpose, not for personal, family, or household use, and are therefore not residential mortgage loans that require an RMLO license to originate. If the loan is to an individual to purchase their own residence, the loan would be for personal, family, or household use and a license would be required.
Yes. The Texas SAFE Act and Finance Code Chapter 157 requires an individual to be licensed to act in the capacity of an RMLO which includes offering or negotiating the terms of a residential mortgage loan. Additionally, the Department’s administrative rules (regulations) clarify that the term “residential mortgage loan” include “new loans and renewals, extensions, modifications, and rearrangements of such loans”. See 7 Tex. Admin. Code § 81.2(13).
Generally speaking, yes. Texas law does not allow for an “occasional” or “one-off” loan origination without a license. Limited exemptions to the requirements for licensure may found in Finance Code § 157.0121 and Finance Code § 180.003. See also the FAQ below concerning seller-financed loans for residential real estate owned by the lender.
Finance Code § 180.003(a)(5) exempts from licensing requirements “an owner of residential real estate who in any 12-consecutive-month period makes no more than [3] residential mortgage loans to purchasers.” If you make no more than 3 of these types of loan in any 12-month period, then you may be exempt from licensure as an RMLO. If you are exempt, that section, and Finance Code § 156.202(a-1)(3), would also exempt you from licensing requirements pertaining to holding a company license. However, Finance Code § 180.003(d) (and Finance Code § 156.202(b)) clarifies that “two or more owners of residential real estate are considered a single owner” for purposes of determining the applicability of the exemption, including affiliates of an entity. If there is a preexisting loan affecting the property that will not be paid off when the property is sold, this loan may be a “wrap mortgage loan” subject to additional requirements. See Finance Code Chapter 159 and the FAQ below concerning wrap mortgage loans.
A wrap mortgage loan is a type of residential mortgage loan made to finance the purchase of residential real estate where there is a preexisting loan affecting the property that will not be paid off when the property is sold. See Finance Code 159.001(7). Finance Code § 159.051 requires a person to be licensed by or registered with the Department in order to originate or make a wrap mortgage loan. However, Finance Code § 159.003 exempts from licensing/registration requirements “an owner of residential real estate if the owner does not in any 12-consecutive-month period make, or contract with another person to make, more than [3] wrap mortgage loans.” The licensing or registration requirement applies even if you contract with another company to originate the wrap mortgage loan. If you make no more than 3 wrap mortgage loans in any 12-month period, then you may be exempt from the licensing and registration requirements of Chapter 159. However, even if you are exempted from the licensing or registration requirements of Chapter 159, if you do other seller-financed residential mortgage loans that are not wrap mortgage loans, this may trigger a requirement to be licensed as an RMLO under the Texas SAFE Act and Finance Code Chapter 157, and a simultaneous requirement to be licensed as an entity under Finance Code Chapter 156. See the FAQ above concerning licensing requirements to originate seller-financed loans.
You may provide general information about loan programs to the buyer including explaining the procedural steps that a mortgage applicant would need to take to get a loan offer, and providing guidance about program features (loan-to-value limits) and the minimum qualifications (credit score, debt-to-income ratio) for a loan program that is not tailored to the prospective borrower’s financial circumstances. If you either take a residential mortgage loan application or negotiate or offer terms for a residential mortgage loan on your client’s behalf, you must be licensed by the Department as an RMLO.
Finance Code § 157.0121(b)(3) and Finance Code § 180.003(a)(3) provide an exemption for licensed attorneys who “negotiate the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client.” Some examples where the Department may consider the negotiation of loan terms to be an ancillary matter include where: 1) the attorney represents the borrower in a bankruptcy, divorce, or probate proceeding; or (2) The attorney represents the lender in a foreclosure action or for collections purposes. The exemption does not apply in scenarios where the attorney both takes a residential mortgage loan application and offers or negotiates the terms of a residential mortgage loan. If an attorney takes a loan application and offers or negotiates terms, he or she must be licensed as an RMLO.
You must apply for the license through NMLS. The Department’s fee schedule may be found on the Department’s website. All fees are paid through NMLS and are not refundable or transferable. For more information concerning the license application process and the requirements for licensure, consult the RMLO New Application Checklist published on the NMLS SML Licensing Requirements webpage.
The application cannot be transferred, and all fees are not refundable or transferable.
Temporary authority allows an individual to operate on a temporary basis for up to 120 days while the individual’s RMLO application is pending review. Generally speaking, temporary authority requires that you be licensed as an RMLO in another jurisdiction, or are a registered RMLO for a depository institution. Temporary authority status must be granted and recognized by the Department in NMLS to be valid and requires a pending application for licensure, among other requirements. For more information on temporary authority, consult the Department’s administrative rules (regulations) at 7 Tex. Admin. Code § 81.102. The NMLS Resource Center also has policies, tips, and resources to assist you with understanding the requirements to obtain temporary authority to originate loans in Texas.
In order to be eligible to be licensed as an RMLO in Texas, an individual must be a citizen of the United States or a lawfully admitted alien. See Finance Code § 157.012(c)(4). If you are not a United States citizen, you can still apply for a an RMLO license so long as you provide sufficient supporting documentation to establish your status as a lawfully admitted alien.
The Department conducts a credit history background check of each applicant for an RMLO license. See Finance Code § 157.0132 and Finance Code § 180.054. In order to meet the minimum requirements for licensure, an individual must demonstrate financial responsibility. See Finance Code § 180.055(a)(3). The Department does not determine financial responsibility on credit score alone but, instead, considers evidence of the applicant’s financial responsibility overall. Judgments, back child support, and other factors could lead to a denial of licensure. Tax liens, charge-offs, or collection accounts, and foreclosures or short sales with a deficiency will also negatively affect an applicant’s qualifications for licensure. However, judgments imposed solely as a result of medical expenses, and delinquent accounts related to student loans will not be considered. An applicant may qualify for licensure on a conditional basis if a payment plan is in place and timely payments are being made. A conditional license is offered at the discretion of the Department and depends on the specific circumstances presented. An individual qualifying for a conditional license will need to continue making timely payments in order to maintain the license.
The Department conducts a criminal history background check of each applicant for an RMLO license. See Finance Code § 157.0132 and Finance Code § 180.054. The Texas SAFE Act prohibits the licensure of any individual who has 1) been convicted of, pled guilty or no contest to, a felony offense during the seven-year period preceding the date of the application; or 2) at any time preceding the date of the application, been convicted of, pled guilty or no contest to, a felony offense involving fraud, dishonesty, breach of trust, or money laundering. See Finance Code § 180.055(a)(2). The determination of whether a criminal proceeding is considered to have resulted in a conviction is made in accordance with Finance Code § 157.0131, which states that an individual is considered to have been convicted if 1) a sentence is imposed on the individual; 2) the individual received probation or community supervision, including deferred adjudication or community service; or 3) the court deferred final disposition of the case. For more information concerning the criteria used by the Department in reviewing an individual’s criminal history, please see the Department’s administrative rules (regulations) at 7 Tex. Admin. Code § 81.110, relating to Criminal Conviction Guidelines.
All individuals seeking licensure as an RMLO must authorize a criminal history background check in NMLS. The criminal history background check requires the submission of fingerprints. See Finance Code § 180.054(a)(1). If you are licensed in another jurisdiction, you may not need to submit new fingerprints, unless they have expired or are otherwise no longer valid to perform the background check. If the fingerprints you submitted in another state are expired or invalid, you will be directed to submit new fingerprints.
Applicants seeking licensure are required to complete at least 20 hours of NMLS-approved pre-licensing education, plus an additional 3 hours of education relating to the laws, rules, and practice considerations governing residential mortgage loan origination in Texas. The Department recognizes pre-licensing education coursework taken in another jurisdiction that is subject to the requirements of the federal SAFE Act (12 U.S.C. § 5101 et seq.). However, the Department will not recognize those hours of pre-licensing education taken in another jurisdiction the content of which was dedicated to education specific to that jurisdiction. For more information concerning pre-licensing education requirements, see the Department’s administrative rules (regulations) at 7 Tex. Admin. Code § 81.104. A list of NMLS-approved course providers may be found on the NMLS website.
This license status code is assigned when the Department determines there are pending issues with your license application that you need to address but that the Department has determined are relatively minor in nature and should not prevent your approval in the interim. This license status code allows you to originate loans in Texas. However, you must resolve the pending issues in order to avoid disciplinary action to suspend or revoke the license. Failure to resolve the pending issues will also prevent renewal of the license. For more information concerning license status codes, review the NMLS License Status Definitions.
Amendments must be filed through NMLS. A licensed RMLO must amend his or her NMLS license record (MU4 filing) within 10 days after any material change occurs affecting any aspect of the MU4 filing. See the Department’s administrative rules (regulations) at 7 Tex. Admin. Code § 81.107 and consult the RMLO Amendment Checklist published on the NMLS SML Licensing Requirements webpage.
If sponsorship is removed from your license, your license will automatically revert to an inactive status until the new sponsorship request is submitted on your behalf and accepted by the Department. You are not authorized to originate loans while your license is in an inactive status. See the Department’s administrative rules (regulations) at 7 Tex. Admin. Code § 81.101.
The license status code “Approved-Inactive” allows you to hold the license in an inactive status. You can unilaterally cause your license to revert to an inactive status by severing any sponsorships you have to a licensed or registered entity in NMLS. See the Department’s administrative rules (regulations) at 7 Tex. Admin. Code § 81.101. Your license will be restored to an active status when sponsorship by an appropriate entity is reestablished in NMLS. If your license is in an inactive status, you may continue to renew the license by timely requesting renewal during the annual renewal period (November 1 to December 31) and meeting all requirements to maintain the license (including taking all required continuing education). You are not authorized to originate loans while your license is in an inactive status.
A license holder must complete 8 hours of continuing education annually through a course provider approved by NMLS in order to renew the license. For more information concerning continuing education requirements, see the Department’s administrative rules (regulations) at 7 Tex. Admin. Code § 81.104. A list of NMLS-approved course providers may be found on the NMLS website. Caution : if you are deficient in continuing education (as determined by whether or not there is a record of completed continuing education in NMLS), you will be unable to submit a request to renew the license. For this reason, it is important that you complete your continuing education well in advance of the deadline to renew the license (December 31) in order to allow the course provider time to submit your course completion records. See the FAQ below concerning the time required for a course provider to submit records of course completion.
The system will not allow you to request renewal until a record of your course completion has been submitted by the course provider to NMLS. The Department cannot override this process. Course providers have 7 calendar days to submit the record of course completion to NMLS. For this reason, it is important that you complete your continuing education well in advance of the deadline to renew the license (December 31) in order to allow the course provider time to submit your course completion records.
To the extent you submitted a renewal request during the annual renewal period (November 1 to December 31), your license should continue in the new year, if you meet the requirements to maintain the license and there are no active license items that would prevent your renewal. Ultimately, your license status code in NMLS determines your ability to originate using the license. If your license is properly sponsored and is in an “Approved,” Approved-Deficient,” or “Approved-Conditional” status on and after January 1, you may continue to originate loans. Note: in order for your sponsorship to remain in place, the entity sponsoring your license (mortgage company or mortgage banker) must also renew its license or registration to prevent your license from lapsing into an “Approved-Inactive” status that would preclude you from being authorized to originate loans.
Your license expired on January 1 st and will remain in an expired status until renewal is requested and the renewal request is processed and approved by the Department. Your renewal request will be treated as an application for reinstatement of the license. See the FAQ below concerning reinstatement of the license.
Your license expired on January 1 st and any request to renew your license is treated as an application for reinstatement of the license. If you submitted an application during the reinstatement period, the application must be processed and approved by the Department before the license can be reinstated. It will take time for the Department to process and make a decision on the reinstatement application. For this reason, it is important that you submit a renewal request during the annual renewal period (November 1 through December 31).
Yes, the holder of an RMLO license can act a loan processor or underwriter.
The Department does not issue paper licenses and does not require a physical display of a license record at an office.