NMLS Reports Individual and Company Licenses Increase from 2011

The number of companies and mortgage loan originators (MLOs) licensed through the National Mortgage Licensing System (NMLS) increased by 6 percent and 5.5 percent respectively between the end of the first quarter of 2011 and the end of the first quarter of 2012 NMLS reported today.  Much of the increase in numbers occurred because several state agencies were still transitioning their licensing function to NMLS during later quarters of 2011, the first year that all state mortgage regulatory agencies utilized NMLS to manage mortgage loan originator (MLO) licenses, rather than new entries into the market. 

NMLS was created by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators in 2008.  It is the legal system for licensing non-depository financial services for 53 participating state agencies and the sole system of licensure for MLOs under the SAFE Act.

At the end of the first quarter of 2012 there were 31,686 licenses issued to 15,883 unique companies and 28,460 licenses given to 17,721 branch offices.  A total of 207,187 individual licenses were held by 105,595 persons.

The number of licenses held by companies increased by 12 percent and the number held by MLOs increased by 13 percent from one year earlier.  Again, some of these increases were the result of the transitioning referenced above, but the greater increase in the number of licenses versus the numbers of people or companies holding licenses is largely the result of an expansion by companies and individuals into additional states.

NMLS says that the best time to view licensing numbers and year-over-year changes is at the end of the first quarter of each year.  The number of licenses drops at the end of December each year because many companies do not renew their licenses.  The number then climbs throughout the year as new parties enter the system and existing licensees expand their footprint.   For these and other reasons the end of the first quarter presents the most stable snapshot of the industry.

The average number of originators per company at the end of the quarter was 5.8 and the median was one.  Seventy-two percent of the companies had fewer than five originators and only about 150 had more than 100.  Eighty-eight percent of licensed companies operated out of a single branch and there were 68 mega-companies with more than 50 branches.

Companies and loan originators typically operate in only one state.  Eighty-three percent of companies and 79 percent of MLOs hold one state license; 12 percent of companies and 10.6 percent of individuals hold two to five.  More than 224 companies and 1,128 individuals are licensed in 21 or more states.

The largest business activity reported by company licensees is first mortgage loan brokering (88 percent) with second mortgage brokering the second most common activity (73 percent) and brokering home equity loans third (46 percent).  Other business activities reported include issuing VA loans (35 percent), reverse mortgage loans (24 percent), and first mortgage lending (22 percent).  Twenty-three percent report they also engage in non-mortgage related businesses.

Corporations hold 61 percent of the company licenses with limited liability companies (LLCs) and sole proprietorship's holding 19 percent and 18 percent respectively.  Less than 2 percent of state licenses companies (334) report being owned by a depository institution.  This is 47 more institutions than reported this a year ago.