What license is required to modify mortgages?
Recently, a lot of people have been asking me who can modify loans in this state or that, and what license is required. The answer is that it completely depends on where you live. Each state has different statutes and regulations that define who can modify homeowners’ mortgages and what the process should look like. Honestly, it’s kind of a free-for-all mess at the moment.
Several states require that anyone working as a modification consultant must have an active mortgage broker’s license or be an attorney. Many states have no guidelines at all, though it seems like every month more and more states require a mortgage license and/or be an attorney. I wouldn’t be surprised if the rest of the states do the same within the next year or two, nor would I be surprised if the same lenders start requiring some kind of proof of license.
The best way to find out what your state requires is to call your mortgage broker’s regulatory body and ask. In some states, this is an independent organization, and in others, it is a division of the real estate commission. Either way, the real estate commission will usually know the regulations related to mortgage modifications, or at least be able to tell you who will. You can also try contacting your state’s mortgage broker industry associations, if they exist. A quick Google search should provide you with contact information for all of the above organizations.
If you’re in a state that doesn’t require a mortgage broker license for mods and you’re not already a mortgage broker or attorney, it might be a good idea to get your mortgage broker license anyway. They’re usually not that hard to get, the extra education will help, the license will help with your credibility, and you’ll be fine if your state decides to require a license. The E&O insurance and/or bond that comes with getting the license is also not a bad idea.
If you are in a state that requires a license and you do not have your license, another option is to partner with a broker or attorney interested in modifications as well. You can still get most of the profit if you do this. Simply pay per file (say, $50 to $300) to put all correspondence with the lender on their letterhead and sign it. You will do all the rest of the work and get most of the profit.