Mortgage brokers across the United States must obtain a license to operate in the territory of a certain state. Requirements vary, but the requirement to have an active state license at all times is valid nationwide.
Thus, one of the most important elements in successfully managing a mortgage brokerage firm is to maintain your license by fulfilling all the necessary requirements and complying with the applicable laws that govern your business. This is the only way to run your business in legal compliance.
States impose heavy penalties on entities that fail to maintain their license or provide unlicensed mortgage brokerage services. If your license is suspended or revoked, you may have to go through a difficult process to reinstate it, or in some cases you could even face legal consequences.
In the guide below, you can find out the main reasons why your mortgage broker license may be suspended by state authorities. Most importantly, you can familiarize yourself with ways to prevent possible license revocation, so that you can stay in business and in compliance with the law.
# 1. Violation of mortgage laws
First, the mortgage broker‘s license that you get at the state level ensures that you meet any requirements that licensing authorities deem necessary to practice the mortgage profession. Meeting these criteria ensures that you will be able to operate your business while meeting high standards and all relevant laws.
►Violations of any provision of the mortgage laws of the respective state (modeled according to federal law SAFE Mortgage License Act 2008)
► Failure to pay the required fees to the State
►Failure to meet the applicable requirements for continuing education courses
►Failure to file due reports on mortgage activity with the public body concerned
► Failure to execute written agreements with customers and partners
►Lack of disbursement of funds acquired
► Conviction for felony or misdemeanor or entry of a judgment for fraud, false declaration or deception
# 2. Failure to obtain or renew mortgage broker’s bond
In addition to direct violations of the legal framework, there are other risks that can lead to license suspension. One of the main ones is not keeping your mortgage broker surety bond, which is one of the main licensing requirements that you must meet at the time of licensing.
The surety bond is a security mechanism that protects the government and your clients against possible illegal actions that you may commit as a mortgage broker. In such cases, the aggrieved parties may seek fair reimbursement of the damage suffered through a demand for a bond.
In most states, mortgage brokers must obtain a surety bond when obtaining their initial license. He must remain active for the duration of their licensed brokerage activities. So every time you renew your license, you will likely need to renew or obtain a Certificate of Continuation for your mortgage broker obligation. Without this, your license would be suspended, so it is important to check the active period of your deposit in order to avoid possible problems with it.
# 3. Non-payment of owed child support and judgments
In a number of states, one of the main grounds for license suspension is non-payment of amounts owed to third parties. Typically these include:
►Payment of child support
►Payments on judgments collected in court by a plaintiff or a creditor in connection with your activities as a mortgage broker in the State
It is important to cover any unpaid payments on time, as state authorities would require proof that you paid them regularly or as part of your license renewal.