Texas Mortgage Loan Originator License

An employee of any corporation, company, partnership, association, or sole proprietorship licensed or registered under Texas Finance Code Chapter 156 or Chapter 157 who takes a residential mortgage loan application, or offers or negotiates terms of a residential mortgage.

Who Is Required to Have This License? Any individual, unless exempt from licensing, 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 Texas Finance Code §180.002(19). All Independent Contractor Processors and Independent Contractor Underwriters must also obtain this license to engage in the activities of a loan processor or underwriter. Unless exemption, a loan processor or underwriter who is an independent contractor may not engage in the activites of a loan processor or underwriter unless the independent loan processor or underwriter obtains and maintains the appropriate residential mortgage loan orginator license and complies with Chapter 180 of the Texas Finance Code. See Texas Finance Code §180.051(b). A “loan processor or underwriter” means “an individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of an individual licensed as a residential mortgage loan originator or exempt from licensure under Section 180.003.” See Texas Finance Code §180.002(11). “Clerical or support duties” are defined by Texas Finance Code §180.002(1), as: “following the receipt of an application from a consumer, includes: (A) the receipt, collection, distribution, and analysis of information related to the processing or underwriting of a residential mortgage loan; and (B) communication with a consumer to obtain information necessary to process or underwrite a loan, to the extent that the communication does not include offering or negotiating loan rates or terms or counseling the consumer about residential mortgage loan rates or terms.” If a processor or underwriter is paid as a W2 employee of the residential mortgage loan company or mortgage banker and is sponsored by a residential mortgage loan company or mortgage banker, then no residential mortgage loan originator license is required. If a processor or underwriter is paid as a 1099 employee, then a residential mortgage loan originator license is required. All individuals working for an independent loan processor or underwriter company, regardless of how their income is documented (including W-2 employees), who act as a loan processor or underwriter or otherwise perform work in connection with the provision of loan processing or underwriting servicers by the company, are deemed to be independent contractors for purposes of Finance Code §180.51(b) and must be licensed as an originator. See 7 Texas Administrative Code §55.100(6). Employees of a Credit Union Service Organizations (CUSOs) that engage in mortgage loan origination activities must submit an application for this license. “Takes a residential mortgage loan application," means “when an individual receives a residential mortgage loan application for the purpose of facilitating a decision on whether to extend an offer of residential mortgage loan terms to a mortgage applicant or prospective mortgage applicant, whether the application is received directly or indirectly from the mortgage applicant or prospective mortgage applicant, and regardless of whether or not a particular lender has been identified or selected.” 7 Texas Administrative Code § 55.2(18), 56.2(22) and § 57.2(20). An application means “a request, in any form, for an offer (or a response to a solicitation for an offer) of residential mortgage loan terms, and the information about the mortgage applicant that is customary or necessary in a decision on whether to make such an offer, including, but not limited to, a mortgage applicant's name, income, social security number to obtain a credit report, property address, an estimate of the value of the real estate, or the mortgage loan amount.” See 7 Texas Administrative Code § 55.2(1), 56.2(1) and § 57.2(1). "Offers or negotiates the terms of a residential mortgage loan," means, among other things, “when an individual: (1) arranges or assists a mortgage applicant or prospective mortgage applicant in obtaining or applying to obtain, or otherwise secures an extension of consumer credit for another person, in connection with obtaining or applying to obtain a residential mortgage loan; (2) presents for consideration by a mortgage applicant or prospective mortgage applicant particular residential mortgage loan terms (including rates, fees and other costs); or (3) communicates directly or indirectly with a mortgage applicant or prospective mortgage applicant for the purpose of reaching a mutual understanding about particular residential mortgage loan terms.” See 7 Texas Administrative Code § 55.2(11), 56.2(13) and § 57.2(12). Active Duty Military Service Member, Veteran, and Spouse of an Active Duty Military Member[i] An individual that is an active duty military service member, veteran, or spouse of an active duty military member is eligible for an expedited application review. See Request for Military Licensing Review for Military Service Members, Military Veterans, and Military Spouses instructions for required documents. Pre-Requisites for License Applications Under Texas Finance Code §180.055, the Department of Savings and Mortgage Lending (SML) may not issue a residential mortgage loan originator license unless it determines, at a minimum, that the applicant: (1) has not had a residential mortgage loan originator license revoked in any governmental jurisdiction; (2) has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court: (A) during the seven-year period preceding the date of application; or (B) at any time preceding the date of application, if the felony involved an act of fraud, dishonesty, breach of trust, or money laundering; (3) demonstrates financial responsibility, character, and general fitness so as to command the confidence of the community and to warrant a determination that the individual will operate honestly, fairly, and efficiently as a residential mortgage loan originator within the purposes of this chapter and any other appropriate regulatory law of this state; (4) provides satisfactory evidence that the applicant has completed pre-licensing education courses described by Section 180.056; (5) provides satisfactory evidence of having passed a written test that meets the requirements of Section 180.057; and (6) has paid a recovery fund fee or obtained a surety bond as required under the appropriate state regulatory law. For purposes of Texas Finance Code §180.055, the determination of whether a criminal proceeding is considered to have resulted in a conviction will be made in accordance with Texas Finance Code §157.0131, which states that an individual is considered to have been convicted of a criminal offense 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 individual’s case. In addition, pursuant to Texas Finance Code, §157.012, the individual must: (1) satisfy the commissioner as to the individual's honesty, trustworthiness, and integrity; (2) not be in violation of this chapter, Chapter 180, or any rules adopted under this chapter or Chapter 180; (3) provide the commissioner with satisfactory evidence that the individual meets the qualifications provided by Chapter 180; and (4) be a citizen of the United States or a lawfully admitted alien. Pre-licensure Education: Prior to submission of the application, complete 23 hours of NMLS-approved pre-licensure education (PE) courses which must include 3 hours of Texas-specific content. For PE courses taken in another jurisdiction, the SML will not recognize hours dedicated to education specific to that jurisdiction. See 7 Texas Administrative Code §55.108. Note: The Pre-licensure Education must be completed within 3 years preceding the date of the application. Testing: Must have a passing result on the National Test Component with Uniform State Content