42,200 mortgage loan originators (MLOs) were registered at the federal level in the fourth quarter (Q4) of 2018 in California. This is down very slightly from a year earlier. These MLOs are employees of banks.

State-licensed MLOs in California totaled 59,200 in Q4 2018, up 3% from a year earlier. These MLOs are licensed by the California Department of Business Oversight (DBO) or the California Department of Real Estate (DRE).

California accounts for 14% of the nation’s state-licensed MLO population (we are 12% of the nation’s population). This indicates mortgage bankers are leaning slightly on broker-packaged originations for business. Declining mortgage originations hampered by rising mortgage rates in 2018 and declining sales volume have slowed the growth in state-licensed MLOs. But there is some promising news for MLOs, as interest rates have already fallen back significantly in Q1 2019, likely to continue down in the coming months.

Updated March 22, 2019. Original copy released February 2013.

 

Chart update 03/22/19

Q4 2018 Q4 2017 Annual change
Federally registered MLOs 42,200 42,400 -0.4%
State-licensed MLOs 59,200 57,300 +3.3%

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 Department of Real Estate (DRE) 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 2018, as:

  • the DRE received 586 new applications for individual licenses and approved 355 individuals (including pending applications from the prior quarter); while
  • the DBO received 1,661 new applications and approved 1,535 individuals (including pending applications).

The general trend for state-licensed MLOs was up in Q4 2018 over the prior year, while federally-registered MLOs decreased very slightly.

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; and
  • high home prices.

Getting licensed – and keeping it

The number of state-licensed MLOs tends to increase 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 DRE 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 DRE 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