There are 3 Primary Strategies in Modern Day Mortgage Licensing [Post-Subprime Meltdown]: [1] Avoid Physical Offices [2] Avoid or Minimize LO Licenses [3] Reduce Surety Bond Aggregate.
In WA, let's examine whether to choose the WA Lender License [to avoid LO Licenses] or choose the WA Broker License [to avoid large Surety Bond]:
The WA Lender License [called Consumer Loan] Surety Bond is $400,000 for the main office and $100,000 of bonding for each the next 4 branch locations. Thereafter, additional locations require an additional $10,000 of bonding for each location. Even WA recognizes the difficulty the industry is having in obtaining surety bonds, so it has proposed to reduce the $100,000 of bonding for each the next 4 branch locations to $10,000 per branch. TOO LITTLE TOO LATE.
The best strategy is to avoid the WA Lender License unless you have outstanding capitalization and can afford to enter into capital retention agreements, standby letters of credit, general indemnity agreements, personal guarantees with Surety Bond companies. HOW? Understand and utilize the broad activities permitted under the WA Mortgage Broker License which only requires a $20,000 Surety Bond. See if any of these 3 activities permitted under the WA Mortgage Broker License are broad enough to meet your needs as a substitute for "lending" and the WA Lender License: [1] when you act as a Broker you are assisting borrowers, or holding yourself out as able to assist borrowers, in obtaining a residential mortgage loan. Loans close in the name of the lender.[2] when you act as a Table Funder you are "Table-funding" which means at closing the mortgage loan is funded by a contemporaneous advance of loan funds by the lender and an assignment of the loan to the lender advancing the funds. The mortgage broker originates the loan and closes the loan in its own name with funds provided contemporaneously by a lender to whom the closed loan is assigned. [3] when you act as a Non-delegated Correspondent you close loans in your name with funds provided by a lender or other loan purchaser through a line of credit. The lender or other loan purchaser provides the underwriting criteria the borrower must meet and that lender or other loan purchaser makes the final underwriting decision. If you choose the WA Broker over the WA Lender License because you cannot afford the large surety bond you must also accept the disadvantage of Loan Officer Licenses & Exams which is also one of my 3 strategies you should avoid. It is "pick your own poison".
