The Cost of Surrendering Licenses
Let’s look at what may happen if you surrender state licenses. As a company, having a diverse book of licensing could give you a leg up on other lenders in onboarding and recruitment. Once you surrender licenses, they are officially terminated; you would need to reapply for new ones. Often, company license applications, due to their complexity, can cost you an exorbitant amount of money and time as you wait on approvals.
A company would need to consider initial licensing costs with the state regulatory agency, registering with the Secretary of State, registered agent fees, branch and LO licensing. In addition, some states still require state-specific fingerprinting. If you reapply, your qualified individual and officers will need to have fingerprinting redone. That is time plus money, which, as you know, are highly treasured resources when trying to bring in new business.
Marketing costs are another area you will want to review. Once you receive or surrender a company, branch or LO license, you need to update your licensing information on all platforms, including your website and social media. If you engage a third-party marketing company, you are going to have to pay them to make these changes. Having your licensing up-to-date online is a requirement by most states, and you may be fined if it’s inaccurate.
If you are a loan officer, I encourage you, at the bare minimum, to keep your continuing education (CE) current. That way, if you need to reapply for a state license, you won’t have to spend time on late CE. Another trend in state-regulatory licensing requirements is the renewal of your 20 hours of education. This is an interpretation of the SAFE Act, which mandates 20 hours of education must be completed before a LO is initially licensed. However, some states believe that your education expires after three years. This is a growing trend and something to consider as that education can often cost more than the actual license renewal.
Post-Surrender Next Steps
At the end of the day, if you decide to surrender your licenses, your job doesn’t end with initiating the surrender in NMLS. Please be aware that before you surrender your license, you will need to run a pipeline report in your loan management system to make sure you don’t have any loans in process in the state you’re surrendering.
Your first step will be to review the surrender checklist for those states in NMLS. Some states want to know where your records are kept, if there are any loans in your pipeline, and who to contact if the state were to have questions.
You will want to remove access to lending in the states you surrender in your loan management system. This is important as unlicensed activity will not only put you at risk of hefty fines, but also bring harm to your borrowers.
In the states that you surrender, take the time to review record retention requirements. States require that you keep your records, including marketing, available for a certain amount of time. This requirement varies by state.