What is the difference between a state-licensed mortgage loan originator (MLO) and a federally registered NMLS? How does a Department of Business Oversight (DBO) MLO license differ from a Department of Real Estate (DRE) 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 Department of Real Estate (DRE), which issues MLO endorsementsto real estate licensees operating under a DRE broker license [Calif. Business and Professions Code §10166.02(b)]; and
  • the Department of Business Oversight (DBO), which issues MLO licensesunder the California Financing Law (CFL) and the California Residential Mortgage Lending Act (CRMLA) for mortgage bankers [Calif. Finance Code §§22100(a), 50120]

All individual MLOs register nationally with the public federal database for MLOs, the Nationwide Mortgage Licensing System (NMLS).

To become a California-licensed MLO you need to meet minimum federal standards for MLOs, complete NMLS pre-licensing education, pass an NMLS exam and be federally registered with a permanent NMLS ID number. Once registered, you annually complete NMLS continuing education to maintain your federal registration and renew through NMLS your California MLO licensing/endorsement status.

Those individual MLOs who are solely federally registered MLOs also must 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 are bank employees

To become 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, you register with the NMLS as a federally registered MLO.

Prior to registering, bank MLOs first become employed by a federally regulated banking institution in a consumer mortgage position. When the MLO employee is not already registered with 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 NMLS registration each year during an annual two-month window period of November and December. The MLO’s employer, 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: DRE licensees get endorsed

To become a California DRE MLO you need to hold a valid DRE real estate license with an MLO endorsement. [Bus & P C §10130]

Activities a DRE-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 DRE salesperson licensee may only make and arrange mortgages on behalf of their employing broker and only when they and their DRE broker both hold MLO endorsements. [10 Calif. Code of Regulations §2756]

Several DRE MLO endorsement situations exist, varying by type of DRE license held:

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

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

  • complete 20 hours of NMLS-approved 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 DRE MLO endorsement to the NMLS. [Bus & P C §10166.04(a)]

For an employing broker seeking a DRE MLO endorsement their filing with the NMLS depends on the business structure used to operate their brokerage services – individual (unincorporated sole proprietorship), corporation, and the use of branch offices.

The DRE licensee with an MLO endorsement renews their NMLS registration and concurrent endorsement annually. The window period for timely submitting the annual application for NMLS registration is between November 1st and December 31st.

When a timely renewal is not completed, the MLO endorsement expires. The DRE licensee then may no longer perform any MLO services until they complete a late renewal application during a reinstatement grace period ending February 28. Failure to complete a late renewal by February 28 results in termination of the MLO endorsement. To become a DRE MLO endorsee after termination of the MLO endorsement, you submit an application for NMLS registration (under your NMLS ID #), including “late CE” in place of the original 20 hours of pre-registration NMLS approved education.

To renew their DRE MLO endorsement timely or during the reinstatement period for late renewal, the DRE licensee needs to:

State-licensed MLO: DBO

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

The DBO MLO licensing is available for a:

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

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

To set up an MLO company under the DBO scheme a company, such as a mortgage banker, submits an application and pays fees to the NMLS together with information about the company, such as financial records and a business plan.

To obtain the individual MLO license under the DBO scheme, you need to:

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

Similar to the DRE MLO, DBO MLO licensees timely renew their federal NMLS registration and MLO licensing 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 California mortgage law; and
  • pay renewal fees to NMLS;
  • when an untimely renewal is submitted during the reinstatement grace period, include an additional late renewal fee. [Fin C §§22109.5(a), 50145]

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