Do you need a MLO or (mortgage loan origination) endorsement for non owner loans?

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Problem is no one will be able to clarify this to you easily. You can go round and round and the circles will elude you the real answer. Save yourself some trouble.

So one fine morning, I donned my best cleanest shirt, a tie and I walked into the DRE offices and posed this question to officials. The answer surprised me.

The NMLS registry and Safe Act was created supposedly to protect the consumers from past predatory lending and abuses and supposedly act as a shield for the “Great Recession “ and mortgage financial crisis ever happening again in in the future. That is a noble idea and we commend such efforts.

Except that it did not restrict Mortgage Bankers and Wall Street Titans who were instrumental in our nations economic collapse. The biggest failures occurred in New York and on Wall Street and not in the offices of small brokers and low level food chain factory workers.. We have managed to do nothing about it as they have lobbied hard and kept most of the regulations at bay so far the playing field is just the same as before.

MLO requirements also do not apply to Banks. A loan officer working at the bank does not have to have a MLO tag on desk. The banks have now set up mortgage companies and armed themselves with regular employees.

The consumers are supposed to be protected we all know that and agree. But are they really protected with more than half the loans originated by Non Licensees at this time right in the aftermath of Financial crisis?

But what about the savvy real estate investors? Knowledgeable real estate savvy ones who live in 4500 square feet homes ? Do they need another added layer of bureaucracy? Perhaps not thought the legislators, or at at least Frank -Dodd committee and the creators of the Financial reform Act.

There is no MLO requirements for investor or protection for loans on 1-4 Units as long as these loans are not used to buy property for family members, and indirectly for personal use. Here is the California  DRE ‘s own link and you can read it yourself.

The answer lies buried deep down on page 6 under a Q&A in crystal clear words. At least that is what the officials at DRE pointed out.

The DRE will still enforce any violations or occurrences and you are better off taking that MLO endorsement form DRE just in case, on the practical side at least.

But for strictly INVESTOR loans, non owner occupied properties, there are no requirement. Same goes for 5+ Units and Multi family units and apartments and commercial loans. So what about the Hard Money loans? As long as these loans are not for personal residence or originated indirectly for family members of investors the MLO endorsement is not needed. That is why you will see most of these hard money lenders will ask you to sign an affidavit in your writing before giving you an non owner occupied loan.


4 Comments For This Post

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    Thanks for the link. It really helps understanding all about MLO. Great post!

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