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MLO FAQ

Updated 08/15/2023

Frequently Asked Questions:

Mortgage Loan Originators

For Indiana law concerning MLO licensing by the Department of Financial Institutions (DFI), see 750 IAC 9.

A license is required for an MLO to engage in mortgage loan origination business activities in Indiana, as defined by Indiana statute.  MLOs may obtain a license through the Indiana Department of Financial Institutions (DFI) or the Indiana Secretary of State (SOS), depending on the license held by their sponsoring employer.  The application process for either license is completed in NMLS.  A sponsoring employer for an MLO licensed by DFI must be a mortgage lender licensed by DFI, or exempt from DFI licensure.

Qualifications include:

  • U.S. residence.  MLOs must reside in a U.S. State or Territory.
  • An FBI criminal background check completed through NMLS.  The following findings will prevent issuance of the MLO license (except that a pardon or expungement of these convictions would make the individual eligible for licensing, once the applicant provides court documentation of the pardon or expungement):
    • Any felony conviction in the 7 years immediately preceding the application.
    • A conviction at any time of a felony involving fraud, dishonesty, breach of trust, or money laundering.
  • Foreign background check.  If the applicant has lived outside of the United States for more than 12 consecutive months during the last 10 years, a background check is required for the country where they lived.  That background check must be equivalent to the FBI background check, and include at least the last ten years (or the period of time the applicant lived in the foreign country, if less than ten years).  The report must identify the years searched and the sources that were canvassed to arrive at the results.
    • Ask your employer to help find a reputable third-party company that performs foreign background checks.
    • Exception:  If all of the applicant’s time living outside the U.S. was for the purpose of U.S. military service, the DFI may consider proof of service in lieu of the foreign background check.  Such applicants should provide documentation of their military orders, such as form DD214, showing the inclusive dates they were stationed in the subject country.
  • Credit report completed through NMLS.
    • In the licensing decision, the DFI may consider:  bankruptcies in the last 10 years; current outstanding judgments or tax liens; foreclosures in the last 3 years; and/or a pattern of seriously delinquent accounts in the last 3 years.
  • Pre-licensing education (PE).
    • Complete at least 20 hours of NMLS-approved PE.
    • The courses may be online or in person.
    • Courses are not required to be specific to Indiana.
    • If 3 years have passed since completion of the 20 hours, and the applicant has not held a federal MLO registration or state MLO license during that period, the PE is considered expired and the applicant must complete an additional 20 hours of approved PE.
    • If the applicant held a DFI MLO license in the past but is currently unlicensed, they must complete CE requirements for the last year in which their DFI license was held in order to qualify for a new (or renewed) license.
  • Pre-licensing written test.
    • Pass one of the following test options:
      • Both the National and Indiana State components of the SAFE Test
      • Both the National and Stand-alone UST components of the SAFE Test
      • The National Test Component with Uniform State Content test
    • The test(s) must be administered by a test provider approved by NMLS.  See the NMLS Resource Center website for information concerning test preparation and test scheduling.
    • The Passing score is 75%.  An applicant may retake a test 30 days after the preceding test.  After failing 3 consecutive tests, an individual must wait at least 6 months to retake the test again.
    • An MLO who fails to maintain a valid state MLO license or federal MLO registration for a period of 5 years must retake the pre-licensing written test to obtain a new license.
  • Sponsorship.  An MLO must be sponsored by their employer.
    • The MLO must be a W-2 employee of the sponsor.  Independent contractors and other persons compensated through a 1099 are not currently eligible for sponsorship.
    • The sponsor must hold a current DFI mortgage lending license, or an exempt company registration.  (If the sponsor is licensed by the Indiana SOS rather than the DFI, the MLO should seek licensure with the Indiana SOS.)
    • The sponsor’s surety bond must provide coverage for its sponsored MLOs.
  • Disclosures.  The applicant must answer the disclosure questions in NMLS, and provide documentation as requested by the DFI.
  • An applicant is entitled to a hearing on the question of qualifications for the license; the request for a hearing must be submitted in writing.

Temporary Authority to Operate (TA). MLOs who are federally registered and seeking the state license, or are licensed in another state, may qualify for TA status.  See the NMLS article, Temporary Authority to Operate.

Persons who will not be approved for the DFI MLO license include, but are not limited to, the following:

  • Persons with a felony conviction in the 7 years immediately preceding the application (unless the conviction has been pardoned or expunged).
  • Persons with a conviction at any time of a felony involving fraud, dishonesty, breach of trust, or money laundering (unless the conviction has been pardoned or expunged).
  • Persons who have had an MLO license revoked in any state, unless the revocation is formally vacated.

Suspension or revocation.  The DFI may suspend or revoke the MLO license when:

  • The MLO repeatedly and willfully violates any order, policy or guidance of the DFI, or any other state or federal law, regulation or rule regarding mortgage transactions;
  • The MLO no longer meets licensing qualifications;
  • The MLO obtained the license for the benefit of, or on behalf of, a person who does not qualify for the license;
  • The MLO knowingly or intentionally made material misrepresentations to, or concealed information from, the DFI;
  • The DFI discovers facts or conditions which would have prevented the issuance of the license had they been known prior to the license being issued; or
  • The MLO participates in a scheme to defraud or mislead borrowers or lenders, or to defraud any person.
  • The MLO violates 750 IAC 9 in any way.

Miscellaneous.

Distance Requirement:  The DFI does not have a distance requirement as to an MLO’s physical work location in relation to their Sponsor’s physical location.

Annual Renewal.  The DFI MLO license must be renewed between November 1 and December 31 of each year.  Renewal requirements include:

  • Renewal fees.
  • Completion of annual CE requirements (8 hours of NMLS-approved CE per year).
  • Timely renewal.
    • The renewal should be submitted by December 31.  If the license renewal is requested by December 31, the license status will stay in an Approved status while the DFI reviews the renewal submission.
    • DFI has a license reinstatement period from January 1 to the end of February.  If license renewal is not requested by the last day of February, the license will automatically expire.  The individual must then file a new application in order to obtain a new license.
  • Resolution of License Items (deficiencies) in NMLS.  If a licensee submits a renewal request with outstanding License Items, approval of the renewal may be delayed.  If a License Item is outstanding on December 31, DFI may prevent future license renewals.
  • See also, the NMLS Individual Renewal Quick Guide.

Information for formerly-licensed MLOs applying for the MLO license after being unlicensed for a period of time.

  • An MLO who fails to maintain a valid state MLO license and/or federal MLO registration for a period of 5 years must retake the pre-licensing written test to obtain a new license.
  • If 3 years have passed since completion of the 20 hours of PE, and the applicant has not held a federal MLO registration or state MLO license during that period, the PE is considered expired, and the applicant must complete an additional 20 hours of approved PE.
  • If the applicant held a DFI MLO license in the past but is currently unlicensed, they must complete CE requirements for the last year in which their DFI license was held in order to qualify for a new (or renewed) license.  The current requirement is 8 hours of CE per year.

Still have questions?  Email dfimloapplications@dfi.in.gov with your NMLS number in the subject line.