43,400 mortgage loan originators (MLOs) were registered at the federal level in the fourth quarter (Q4) of 2016 in California. This is up 4% from a year earlier. These MLOs are employees of banks.

State-licensed MLOs in California totaled 52,400 in Q4 2016, up 14% from a year earlier. These MLOs are licensed by the California Department of Business Oversight (DBO) or the California Bureau of Real Estate (CalBRE).

California accounts for a whopping 36% of the nation’s state-licensed MLO population (we are 12% of the nation’s population). This indicates mortgage bankers are relying on broker-packaged originations for business. Declining mortgage originations hampered by rising mortgage rates in 2017, coupled with a continued lackluster sales volume, will dampen the growth in state-licensed MLOs in the coming year.

Updated March 16, 2017. Original copy released February 2013.

MLOLicensees

Chart update 03/16/17

Q4 2016 Q3 2016 Q4 2015
Federally registered MLOs 43,409 42,302 41,818
State-licensed MLOs 52,361 49,672 46,027

MLOs on the rise

Federally registered mortgage loan originators (MLOs) are employed by federally regulated entities. In other words, these MLOs work for Big Banks like Wells Fargo or Bank of America, etc.

State-licensed MLOs are mortgage brokers and mortgage bankers. In California, state-licensed MLOs are regulated by either the California Bureau of Real Estate (CalBRE) or the Department of Business Oversight (DBO). The DBO had the lion’s share of California’s MLO applications and MLO licenses issued in Q4 2016, as:

  • CalBRE received 519 new applications for individual licenses and approved 342 individuals (including pending applications from the prior quarter); while
  • the DBO received 2,523 new applications and approved 2,327 individuals (including pending applications).

The general trend for both federally registered and state-licensed MLOs is up in Q4 over the prior quarter. Further, California accounts for one-third of the nation’s state-licensed MLO population, though other states are catching up.

Loan originations going forward

The year-over-year rise in state-licensed MLOs indicates those in the mortgage origination business hold a positive outlook for California’s housing market. However, some headwinds include:

  • rising mortgages rates;
  • a lackluster home sales volume through 2017; and
  • ability-to-repay rules.

Getting licensed – and keeping it

The number of state-licensed MLOs increases throughout the year, and takes a dip in the first quarter of every year. All MLO licenses expire at the end of the calendar year. The January drop-off is due to licensees choosing not to renew at the end of the prior year.

Thus, the dip in state-licensed MLOs experienced in Q1 corrects itself throughout the rest of the year.

Are you interested in obtaining your MLO license or endorsement? Any individual who, for financial gain, takes a loan application, negotiates or offers a consumer purpose loan secured by one-to-four unit residential property is required to be licensed and endorsed as an MLO. In California, MLOs are required to have:

  • a valid CalBRE license with an MLO endorsement;
  • an MLO license issued by the DBO; or
  • a federal MLO registration.

Federally registered MLOs are employed by a federally regulated entity, such as a federally chartered bank. No education requirements exist.

State registered MLOs have additional hurdles to jump through to get and maintain their license. Not only are they required to maintain their respective CalBRE licenses or DBO endorsements, they also need to take eight hours of continuing education (CE) each year to meet their renewal requirements.

Related article:

Painless renewals for mortgage loan originators