Can I Get Approved For An NMLS MLO License If I Was Arrested

by Gustan Cho

This Article On Can I Get Approved For An NMLS MLO License If I Was Arrested

Can I Get Approved For An NMLS MLO License If I Was Arrested?
This is an often asked question by many people wanting to enter a new career as an NMLS licensed loan officer as well as licensed loan officers who want to get licensed in multiple states. Why would you want to go through the trouble of getting your 20-hour pre-licensing NMLS course completed, spending weeks on taking practice exams so you can get at least a 75% and pass the 125 questions difficult national NMLS exam. After licensing is when you start applying for states.

Getting A Straight Answer Prior To Starting The NMLS MLO Licensing Process

How to get a direct answer before starting the NMLS MLO licensing process

Unfortunately, you do not get a straight answer by calling the NMLS and/or state mortgage regulators directly. For example, on the subject of can get approved for an NMLS MLO license with bad credit, regulators are very vague on if they have an issue with candidates with bad credit. The bottom line with getting approved for an MLO NMLS license with bad credit depends on the individual state and the mortgage examiner. Some candidates with outstanding collections, charged-off accounts, judgments can get licensed in certain states but not other states until they have it paid off and/or a written payment agreement with the creditor. The answer to can a loan officer candidate get an NMLS MLO license if he has an arrest record but not a conviction? This is not a conviction BUT an arrest. Can an MLO NMLS license candidate get approved for a license with a misdemeanor criminal arrest and/or conviction? Depending on the type of arrests, it has been known mortgage examiners can and will deny NMLS MLO applicants just for having a prior arrest. Even though the person arrested had the charges dismissed, was found not guilty, or had a plead deal and the charges were dropped. This can be mind-boggling from Americans who have always been taught that you are innocent until you are proven guilty.

Can I Get Approved For An NMLS MLO License If I Was Arrested: The SAFE ACT Versus True Reality

One of the important things future NMLS MLO applicants need to realize is the data and information listed on the SAFE ACT is and can be totally different than how the mortgage regulation real world works in the real world.

Here is what the SAFE ACT states about getting licensed as a mortgage loan originator with an arrest and/or conviction:

The commissioner shall not issue a mortgage loan originator license unless the commissioner makes at a minimum the following findings that the applicant: Has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court. During the 10-year period preceding the date of the application for licensing and registration; or . . .Provided that any pardon of a conviction shall not be a conviction for the purposes of this paragraph; and Has not ever been convicted of, or pled guilty or nolo contendere in a domestic, foreign, or military court to, a misdemeanor involving: financial services or a financial services-related business; any fraud, false statements, or omissions; any theft or wrongful taking of property; bribery; perjury; forgery; counterfeiting; extortion; or a conspiracy to commit any of these offenses except that for such a misdemeanor conviction at a time prior to 10 years preceding the date of such application, the commissioner may allow licensure by rule or order.

The SAFE ACT is not specific with regards to being able to qualify for an NMLS MLO license with a misdemeanor criminal arrest and/or conviction. However, in general, loan officer applicants need to realize every state has its own way of approving loan officers and on how they look at arrests and convictions.  In general, state examiners leave the guidelines up to the individual examiner who is doing the background investigation. Basically, the way it works is one state may approve you for an MLO NMLS license with misdemeanor convictions, arrests without convictions, and felony convictions that are older than seven years but other states will not.

Can I Get Approved For An NMLS MLO License If I Was Arrested: General Rules To Keep In Mind

In general, you can get licensed for a state NMLS MLO license with non-financial crimes related to misdemeanor arrest and/or conviction with no waiting period seasoning to a certain extent. For example, you can get a DUI arrest and conviction and still get approved for an NMLS MLO license. However, let’s take a case scenario and say you got arrested for three DUI arrests but you ended up beating all three of them. A state mortgage licensing background investigator can deny you an NMLS MLO license based on the three DUI arrests. This holds true even though you have not been convicted for a single DUI offense.

Getting Denied For NMLS MLO License Due To Felony Conviction Older Than 7 Years Old

Why the NMLS MLO was denied

In the eyes of the state mortgage regulator, just getting arrested multiple times can be grounds for an NMLS MLO state license due to being of poor character. However, not all state regulators may deny a loan officer licensing candidate an NMLS MLO license for just having multiple misdemeanor arrests. Another real-life case scenario is a licensed loan officer with a felony conviction from twenty years ago for possession with intent to deliver a controlled substance (narcotics). This incident happened when this loan officer was 18 years old. He is now 38 years old. The felony conviction was over 20 years ago. This is over the 7 year waiting period after a felony conviction guidelines to get an NMLS MLO license approved. However, he is having a hard time getting licensed in many states. About a dozen states approved his state NMLS MLO licenses. However, Florida and Georgia will not grant this loan officer an NMLS MLO state license due to a stupid mistake he made over 20 years ago.

Getting NMLS MLO License Denied With An Arrest That Was Dismissed

We are going to go over one final case scenario.

  • A loan officer was arrested for insider trading by the FBI
  • It was an insider stock tip he got from a friend of his
  • He had over $14,000 in savings at the time this incident happened
  • However, he only invested $2,000 on this stock tip
  • Long story short, this loan officer got caught
  • He cooperated with the FBI and U.S. Attorney’s Office
  • In lieu of his cooperation, the FBI and federal prosecutors were going to dismiss the charges against him via a deferred prosecution
  • He had to forfeit his winnings, pay a fine, and cooperate on the trial of several defendants

The case was dismissed. However, this loan officer got denied getting his NMLS MLO license in multiple states including Texas, Florida, New Jersey while other states approved him.

Getting A NMLS MLO License Approved With A Prior Arrests And Conviction Depends On The Individual State

The general black and white rule and regulation for all states in getting an NMLS MLO license with a past criminal record are as follows:

  • Under the SAFE ACT, a state cannot issue an NMLS MLO license to a loan originator candidate if they had any felony conviction in the past 7 years
  • If the mortgage loan originator license candidate ever had a felony conviction that was financial services related, the NMLS MLO licensing candidate is not eligible to ever get an NMLS MLO license in any states
  • Financial crime convictions that disqualify loan officer candidates from ever getting licensed include any type of fraud, bribery, insider trading, theft, forgery, robbery, tax evasion, etc.

If the candidate had the felony pardoned by the President of the United States on federal offenses, and/or state governors on state offenses, the above licensing restrictions do not apply.

Discretion Of The State Mortgage Licensing Background Investigator

What is the Discretion of the State Mortgage Licensing Investigator

The answer to the question Can I Get Approved For An NMLS MLO License If I Was Arrested and/or Convicted is dependent on the state mortgage regulator. If a person has gotten convicted for a misdemeanor and/or felony that is a financial crime, then the answer is NO. Anyone convicted of a misdemeanor and/or felony of a financial-related crime is not eligible for an NMLS MLO license ever. For anyone convicted of a prior felony, the guidelines under the SAFE ACT state there is a seven-year waiting period. However, as we mentioned earlier, state mortgage regulators can deny any MLO license loan applicants a state NMLS license if they have been arrested but not convicted for any crimes. Individual mortgage licensing investigators can use their discretion in determining the character of an MLO applicant in determining whether or not they warrant an NMLS license in their state.

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4 comments

Miguel Mendoza December 7, 2020 - 12:00 am

Veteran with income over $150k annually that had recent VA related illness that caused severe damage to credit during recovery while temporarily unemployed.

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Alaina B. December 7, 2020 - 12:02 am

My husband is sole income producer while I homeschool 6 kids and run a small family hobby farm. We are currently renting family property but want to purchase a 6 bedroom home in 6.3 acres. We had a bankruptcy that was discharged Oct 2014; My husband also lost his job Feb 2017 which hurt his credit. Is there any mortgage you can help us with? We have no down payment. We are not first time home buyers either.

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Bernard Stockton December 7, 2020 - 12:04 am

Looking to purchase a new construction home in the Inland Empire of California: Perris, Lake Elsinore, Menifee, or Murrieta. I have found 5 homes priced at $420-$450k that I would like to put an offer on. The problem I’m having is late payments on a credit card prior to May 2020. I am a veteran with at least a 10% disability rating. I have stable income. I am also in the Army Reserve currently, I served in the Marine Corp previously. I can get my credit score to 640 before closing, I’m looking for a 50% DTI due to student loans my wife has. My parents are prepared to gift me $15-20k to assist with my purchase.

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S. Winters December 7, 2020 - 12:06 am

I am looking to purchase a home for 150-200k in the Moody, AL area. Do you have access to properties there? If so, I’d like to apply. My FICO Score 2 is a 606. I have a 7k deposit saved.

Thank you!
Sarah Winters

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