What is the difference between a state-licensed mortgage loan originator (MLO) and a federally registered MLO? How does a Department of Business Oversight (DBO) MLO license differ from a California Bureau of Real Estate (CalBRE) MLO-endorsed license?


Two categories of MLOs exist nationwide under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act):

  • federally registered MLOs, employed by federally chartered banks, credit unions or other federally regulated financial companies; and
  • state-licensed MLOs, regulated by state agencies. [12 United States Code §5103(a)]

In California, two state agencies separately regulate state-licensed MLOs:

  • the California Bureau of Real Estate (CalBRE),which issues MLO endorsements to real estate licensees [Calif. Business and Professions Code §10166.02(b)]; and
  • the Department of Business Oversight (DBO),which issues MLO licenses under the California Finance Lenders Law (CFLL) and the California Residential Mortgage Lending Act (CRMLA). [Calif. Finance Code §§22100(a), 50120]

All individual MLOs register nationally with the public federal database for MLOs, the Nationwide Mortgage Licensing System (NMLS). However, each type of California MLO is subject to different state licensing and use requirements.

To become a California-licensed MLO you need to meet minimum standards for MLOs, complete pre-licensing education and pass federal and state lending exams. Once you are a California-licensed MLO, you complete continuing education each year to maintain your California MLO licensing status and federal registration.

Those individual MLOs who are sole federally registered MLOs also have to meet minimum standards for MLOs. However, they do not need to complete pre-licensing or continuing education to obtain or renew their federal registration status.

Federally registered MLOs

An MLO who makes or arranges consumer mortgages as an employee of a federally regulated bank or credit union, such as Wells Fargo or Bank of America, is required to register as a federally registered MLO.

Prior to registering, these MLOs first find employment at a federally regulated banking institution working in a consumer mortgage position. If the MLO does not already have an NMLS ID, the banking institution creates an account for them in the NMLS federal registry.

As a federally registered employee, the MLO will renew their registration each year during an annual two-month window period of November and December. The MLO’s employer, as a federally regulated banking institution, maintains policies and procedures to ensure the MLO keeps their registration and information in the NMLS record current. [12 Code of Federal Regulations §1007.104] 

State-licensed MLO: CalBRE licensees

A state-licensed MLO under the CalBRE endorsement scheme allows a broker to collect compensation for arranging consumer mortgages. An MLO can only hold a CalBRE endorsement when they have a valid CalBRE real estate license. [Bus & P C §10130]

Activities a CalBRE-licensed individual may perform with an MLO endorsement include:

  • mortgage brokerage;
  • mortgage servicing;
  • the negotiation of mortgage modifications; and
  • short sale negotiations. [Bus & P C §10131(d)]

A CalBRE sales agent is only able to make and arrange mortgages on behalf of their employing broker when they and their CalBRE broker both hold MLO endorsements. [10 Calif. Code of Regulations §2756]

Several CalBRE MLO endorsements exist, depending on licensing status:

  • individual salesperson endorsement;
  • individual broker endorsement;
  • company (sole proprietorship) broker endorsement;
  • corporate broker endorsement; and
  • branch office endorsement.

To obtain an individual MLO endorsement, the CalBRE licensee is required to:

  • complete 20 hours of pre-endorsement education [Bus & P C §10166.06(a)];
  • successfully pass a written exam administered by the NMLS on federal and state mortgage lending laws [Bus & P C §10166.06(d)]; and
  • submit an application for the MLO endorsement through the NMLS. [Bus & P C §10166.04(a)]

The CalBRE MLO endorsement filing for a broker depends on how the broker structures the business of their brokerage services – individual, sole proprietorship, corporation, and with branch offices.

The CalBRE MLO endorsements are to be renewed every calendar year between November 1st and December 31st. Renewal requires a CalBRE MLO to:

State-licensed MLO: DBO

The DBO issues company and individual MLO licenses under the CFLL and CRMLA. CFLL and CRMLA MLO companies are only able to make or arrange consumer mortgages through licensed individual MLOs. Individual DBO MLOs are required to work for a DBO MLO company in order to make or arrange consumer mortgages. [Fin C §§22100(d), 50002.5(c)]

The MLO endorsements available under the DBO include:

  • CFLL company license;
  • CRMLA company license;
  • individual MLO license; and
  • CFLL or CRMLA branch licenses.

The DBO schemes call for the company to obtain a company MLO license, and its employees to obtain individual MLO licenses.

Starting an MLO company under the DBO scheme requires an applicant to provide the NMLS with information about the company, such as financial records and a business plan, and pay fees to the DBO through the NMLS.

To obtain the individual MLO license under the DBO scheme, an MLO needs to:

  • obtain an NMLS ID;
  • complete 20 hours of pre-endorsement education, including two hours of DBO-specific mortgage law [Fin C §§22109.2(a), 50142(a)];
  • successfully pass an exam administered by the NMLS on federal and state mortgage lending laws [Fin C §§22109.3, 50143];
  • submit an application for the MLO endorsement through the NMLS;
  • submit a statement of citizenship to the DBO [Fin C §§22100 et seq., 50000 et seq.]; and
  • pay fees to the DBO through the NMLS.

Similar to the CalBRE MLO, DBO MLO licensees renew every calendar year between November 1st and December 31st.

Renewal requires the DBO MLO to:

  • complete eight hours of NMLS-approved continuing education, including one hour of DBO-specific mortgage law; and
  • pay renewal fees, plus an additional reinstatement fee for late renewals. [Fin C §§22109.5(a), 50145]

For a more thorough discussion, see “California SAFE Act mortgage loan originator (MLO) license requirements