On the heels of large bank exits from the reverse mortgage business, some lenders are becoming more attentive to the process by which they bring on originators who are not yet licensed. Many are eager to gain the new talent and while some will front the costs associated with obtaining licensing, others are more cautious.
The costs are not inconsequential. A recent report from the National Financial Services Association estimated that on a per-state basis, the costs of licensing through the Nationwide Mortgage Licensing System & Registry can amount to roughly $660 on average, not including the cost of travel, lost work time, and in-house training.
“Now we have an attrition of people coming from Wells Fargo, Bank of America, MetLife. Now they face the daunting task of getting licensed through NMLS,” says Glenn Wallace, president of Nationwide Equities.
Who will pay for the licensing? It depends largely on the company. New positions with some companies come with the promise that new licenses will be company-paid. For others, a bonus system is in place. For others, still, it is up to the originator to come with license in hand.
While Nationwide Equities does not offer any more compensation to those who apply with licensing versus those without, it is making some adjustments to meet the influx of originators in the marketplace who may not have state licensing.
“We are looking to create a process where we help get individuals licensed through training classes internally,” says Wallace, “as a way to attract people.”
The tests are not easy, Wallace says, but at least some states are conducting the process more quickly than they have in the past.
Because the license follows the licensee, paying the costs upfront for new originators can subject companies to losses, one reason companies are hesitant.
“The big challenge is: ‘Am I paying someone $600 per state for licensing and they can leave and take this license with them?'” says Alex Farber, senior vice president of Residential Home Funding Corp. “It’s portable, and they own it, not the company. Many companies have to make this business decision.”
To make up for that risk, Nottingham, Md.-based Net Equity Financial has a system in place where it pays the tab upfront, but then protects its investment by charging the originator and them subsequently rewarding him or her through the form of bonuses.
“Some companies pay for all the licensing upfront,” says Amanda Clinton, operations manager for Net Equity Financial. “We don’t do that because the license follows the loan officer, so it would be easy to pay for the person to get licensed and then they leave and take their license with them.”
Net Equity Financial pays for the licensing, but the money comes out of the loan officer’s paycheck in the future, the cost of which is later covered by employee bonuses. Clinton notes that this can be helpful for those who may not have been working and can’t afford the licensing fees upfront. On a quarterly basis, each loan officer is given a bonus per state license. After a year, the loan officer is close to paying off or has made up for the initial costs.
“I like this because it protects the company by paying the loan officer slowly to ensure they are still working here to receive the bonus and it helps the MLO with the costs of licensing,” Clinton says.
Others do not help with the costs at all.
“We won’t pay for your licensing,” says Dave Bancroft, reverse division manager for Irvine, Calif.-based Greenlight Financial. “For all loan officers here, the general consensus is they all need to be licensed.”
Written by Elizabeth Ecker