Role of the National Mortgage Licensing System

The National Mortgage Licensing System (NMLS) is a nationwide system for the regulation and licensing of mortgage companies and professionals. It was established by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators to enhance supervision, increase transparency, reduce fraud, and improve consumer protection in the mortgage industry.

Registration with NMLS provides a unique identifier that helps consumers verify that they are dealing with legitimate mortgage brokers or lenders. It also helps regulators monitor compliance with laws and regulations. Furthermore, being registered enhances credibility within the industry.

NMLS collects information such as personal identification details, previous employment history, criminal records if any, civil judicial actions related to financial services activities, regulatory actions or sanctions from other financial regulatory agencies, customer complaints or lawsuits filed against them etc. This ensures that only qualified and reputable individuals serve as licensed professionals in the housing finance industry.

The system allows state regulators to share information and coordinate their supervision efforts more effectively. By tracking disciplinary action taken by one state against a broker or lender, it prevents them from simply moving to another state without facing consequences for their actions.

A license obtained through NMLS applies only in the state where it has been issued. If a broker wants to operate in multiple states, he/she must obtain licenses for each individual state. However, NMLS makes this process easier by providing a centralized platform where applications can be submitted for multiple states simultaneously.