Over the last 15 years, the mortgage industry has seen many ups and downs. While the 2008 housing market crash significantly impacted mortgage brokers and servicers, it also created lasting opportunities for intrepid business owners to start their own Texas mortgage companies. In 2022, opening a mortgage brokerage or servicing firm is an exciting opportunity for Texas entrepreneurs. A qualified Texas business lawyer can help you get started in this highly regulated field.
At the Curley Law Firm, we help business owners achieve their dreams every day. If you want to know how to start a mortgage company in Texas, read on, or contact us today. Our team has summarized some key things you need to know about how to start a mortgage brokerage company in Texas.
Do I Need to Form a Business Entity?
Forming a Texas business entity is the first step you need to take in how to start a mortgage brokerage company. You can choose to operate as a sole proprietorship, partnership, limited liability company (LLC), or even as a corporation. When you decide on the type of business entity you want to form, be sure to conduct a Texas business entity name search on the Texas Secretary of State’s website. Once you have picked an entity type and name, you can proceed to create your Texas mortgage company.
A business lawyer can make the entity formation process go smoothly and easily. A member of our Curley Law team can help you understand which entity type could be right for your business and what the ongoing costs and compliance obligations may be.
What Business Licenses Will I Need When Starting a Mortgage Company?
When thinking about how to start a mortgage servicing company in Texas, you will want to consider what licenses and registrations your company will need. Two of the main considerations for entrepreneurs considering starting a Texas mortgage company include registering with the National Mortgage Licensing System (NMLS) and obtaining a license under the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act.
The NMLS is the organization that registers and licenses individuals and companies to provide mortgage services at the state level. Although this is a federal requirement, it is monitored at the state level. Texas’s state NMLS is administered through the Texas Department of Savings and Mortgage Lending.
Because the NMLS registers both companies and individuals, you may need to complete additional paperwork and licensing requirements if you are an individually licensed mortgage broker now asking how to start a mortgage company in Texas.
Registration can be tricky, especially if you are an individually licensed mortgage broker or servicer now forming your own mortgage company. An experienced business lawyer can help you handle regulatory or licensing quirks that come your way during the process.
The SAFE Act was passed in 2008 in response to the housing and mortgage crisis during the financial crash. The Act mandates that all brokers need to meet certain minimum standards to be licensed. SAFE Act licensing requirements include 20 hours of instruction provided by NMLS, as well as passing a national exam, known as the SAFE Mortgage Loan Originator Test. The exam is administered through NMLS. If you are a new licensee, either as an individual or a company, you will also need to undergo fingerprinting, a credit check, and a criminal background check.
How Much Does It Cost to Start a Mortgage Company in Texas?
The costs of setting up a mortgage company in Texas can vary widely depending on your current experience in and knowledge of the mortgage industry. Some costs you may want to consider in your budget include:
- Your NMLS-required state surety bond,
- Business insurance,
- Office space (or the costs of using a designated portion of your home for work),
- Hiring qualified employees,
- License renewals,
- Marketing costs, and
- State and local licensing requirements and fees.
This is not an exhaustive list of potential costs, and a business lawyer can help you understand more about the cost of local registration requirements. Speaking with a lawyer can also help clarify the types of services you will need, the exact licenses and registrations that are right for your business, and how to file your paperwork right the first time.
How the Curley Law Firm Can Help
The Curley Law Firm helps companies of all sizes get started and keep growing. Attorney Adam Curley helps businesses ensure they begin on a solid foundation. For over a decade, Adam has been helping business owners achieve their dreams and open new ventures.The Curley Law Firm has dedicated much of its focus to business law and understands what it takes to form the right organization for your needs. Contact our Houston business lawyers at the Curley Law Firm today with your business formation questions and find out how we can help you and your business.