LOs Continue to Migrate from Banks to Nonbanks

Mortgage News

Mortgage Daily Staff

                                                 July 19, 2018

As the number of mortgage loan officers expanded, the quarterly trend of originators fleeing financial institutions for non-bank home lenders continued.

As of March 31, there were 558,552 bank and non-bank mortgage loan originators who were registered in the NMLS database.

The total count increased from 553,104 in the first quarter of last year — marking the first drop in NMLS count from the first quarter to the first quarter since the tracking of the data began in 2011.

Those were among multiple metrics presented in the NMLS Mortgage Industry Report 2018 Q1 released by the Conference of State Bank Supervisors.

First-quarter data is telling because it reflects the expiration of registrations and licenses from the prior year.
In the second through the fourth quarters, originators who exited the business that year still show as active.

Included in the latest total were 149,955 loan originators who maintained state licenses, expanding by 10,195 versus the first-quarter 2017. But the 412,371 loan officers reported as federally registered declined by 4,132 from the year-prior period.

The latest report has 27 percent of originators being state licensed and 73 percent working for financial institutions.
In the fourth-quarter 2011 — the oldest data maintained by Mortgage Daily — non-bank share was 24 percent and federally registered share was 76 percent.

A bill introduced in the Senate last year could accelerate the shift from banks to non-banks.
S. 1753, SAFE Transitional Licensing Act, proposes to provide temporary licenses for transitioning originators. That would enable bank originators, who aren’t required to have a license, to originate at a non-bank, where a state license is needed, for up to 120 days after leaving a financial institution.

The NMLS first-quarter 2018 total was reduced by 3,774 to reflect those who maintained both a state license and a federal registration.

Included among federally registered originators were
88,133 who were employed by banks supervised by the Federal Deposit Insurance Corp., 48,668 working for companies regulated by the Federal Reserve Board and 214,114 on the payroll of banks supervised by the Office of the Comptroller of the Currency. Another 62,473 hung their hats at credit unions overseen by the National Credit Union Administration, while 1,868 were employees of banks supervised by the Farm Credit Administration.

NMLS-registered entities totaled 25,542 as of the most-recent period, growing from 25,278 at the end of the first-quarter 2017.

Company count included 16,547 state-licensed entities, rising 4 percent from a year earlier, and 9,079 banks and credit unions, decreasing 3 percent.

The overall total was reduced by 84 to account for companies that maintain both a state license and a federal registration.

Mortgage Daily Staff

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