How to Form a Mortgage Company in North Dakota | Essential Steps

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North Dakota Mortgage Company

The mortgage industry plays a crucial role in the economy as it facilitates the dream of homeownership of North Dakota people. Forming a mortgage company can be a rewarding and profitable LLC in North Dakota. However, it requires a deep understanding of the industry, regulatory requirements, and the necessary steps to establish and run a successful mortgage company. This comprehensive guide will walk you through Forming a Mortgage Company in North Dakota and provide valuable insights to help you succeed in this competitive industry.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before forming your North Dakota mortgage company, all the steps in this article must guide you.

What is a Mortgage Company?

In North Dakota, a mortgage company is a business, often structured as a Limited Liability Company (LLC), that specializes in originating, funding, and servicing mortgage loans for homebuyers and property owners. These companies play a crucial role in the local housing market as they facilitate obtaining a mortgage loan for individuals looking to purchase, refinance, or invest in residential properties.

The North Dakota Department of Financial Institutions regulates mortgage companies in North Dakota and must obtain the appropriate licenses to operate legally. There are different types of mortgage companies, such as mortgage brokers, lenders, and loan originators, each with specific roles and responsibilities within the mortgage industry.

  • Mortgage brokers act as intermediaries between borrowers and mortgage lenders, assisting homebuyers in finding the Best North Dakota Small Business Loan product and terms to suit their needs.
  • Mortgage lenders are financial institutions that provide the funds for mortgage loans directly or through a network of mortgage brokers.
  • Mortgage loan originators are individuals employed by mortgage companies who work with borrowers to process and submit loan applications, negotiate loan terms, and complete the mortgage transaction.

Operating a mortgage company in North Dakota requires a deep understanding of the local housing market, industry regulations, and the various mortgage products available to borrowers. By providing valuable services and expertise to homebuyers and property owners, mortgage companies in North Dakota play a vital role in helping individuals achieve their homeownership dreams and supporting the state’s overall economy.

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How to Form a Mortgage Company in North Dakota

Forming a mortgage company in North Dakota can be complex, but the following step-by-step guide will help you navigate the requirements and regulations.

Step 1: Understanding the Mortgage Industry

The mortgage industry in North Dakota is governed by various state and federal laws and regulations designed to protect consumers and ensure a fair and stable market—the primary regulatory authority for mortgage companies in North Dakota Department of Financial Institutions. The North Dakota Department of Financial Institutions is responsible for licensing and regulating mortgage companies and their activities within the state.

Before starting a mortgage company in North Dakota, it is essential to understand the different types of mortgage licenses and activities regulated by the North Dakota Department of Financial Institutions. These include:

Mortgage BrokerA person or entity that, for compensation or gain, assists borrowers in obtaining mortgage loans from third-party lenders.
Mortgage LenderA person or entity that originates, funds, or services mortgage loans.
Mortgage Loan Originator (MLO)An individual who, for compensation or gain, takes mortgage loan applications or offers or negotiates terms of mortgage loans.

It is suggested that you speak with a legal professional before you begin setting up a mortgage company. They’ll understand what’s best for you and your future company. To safeguard your personal assets from business debts, you can always start an LLC in North Dakota.

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Step 2: Forming a Legal Entity

Once you clearly understand the mortgage industry and the specific license type you want to pursue in North Dakota, the next step is to form a legal entity for your mortgage company. The most common types of legal entities for forming a mortgage company in North Dakota include:

Sole Proprietorship

This is the simplest form of business entity, where an individual operates the North Dakota mortgage company under their name or a trading name. There are no formal registration requirements, but the owner is responsible for all business debts and liabilities.

Partnership

A partnership is a business entity where two or more individuals come together to form a mortgage company. All partners are personally liable for the business’s debts and liabilities in a General Partnership. Limited Partnerships and Limited Liability Partnerships offer some protection for partners from personal liability.

Limited Liability Company (LLC)

An LLC is popular for forming a mortgage company, combining a corporation’s liability protection with a partnership’s tax flexibility. LLC owners, known as members, are not personally liable for the business’s debts and liabilities. 

Corporation 

A corporation is a legal entity separate from its owners, known as shareholders. Starting a corporation in North Dakota provides liability protection for its owners and is subject to corporate taxation. Forming a corporation involves more administrative requirements and fees than other business structures. There are different types of corporations, such as S and C corporations, each with tax implications and requirements.

To form a mortgage company in North Dakota, consult a Business Attorney in North Dakota to understand the state’s requirements for forming a legal entity and obtaining necessary licenses and permits.

Step 3: Developing a Business Plan

A well-crafted business plan is essential for the success of your North Dakota mortgage company. The business plan should outline your company’s mission, vision, objectives, target market, competitive analysis, marketing strategy, financial projections, and management structure.

Your business plan will serve as a roadmap for your company’s growth and help you secure financing or investment to start and grow your business.

Step 4: Register Your Mortgage Company

You must register your North Dakota mortgage company. Here are the guidelines you must accomplish before obtaining the licenses and permits.

Choose a Business Name

Choosing a business name for your North Dakota mortgage company involves several steps. Here are some guidelines to help you choose an effective name:

  • Your business name should reflect the brand identity you want to convey to your potential clients. Consider your target audience, your company’s values, and the services you offer when choosing a name.
  • Including words related to the mortgage industry in your business name can help potential clients understand the nature of your business. Some keywords to consider are “mortgage,” “loan,” “home,” “finance,” or “lending.”
  • Including the name of North Dakota in your business name can help establish a sense of familiarity and trust with potential clients from the same state. For example, “North Dakota Mortgage Solutions” or “North Dakota Home Loan Experts.”
  • A shorter, easy-to-remember name can make it easier for potential clients to recall your business when they need mortgage services.

Remember to check the availability of your chosen business name with the North Dakota Secretary of State Business Records Search to ensure that no one else has trademarked the name. There is a complete guide on North Dakota Business Name Search for you to have a mortgage company name. You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for North Dakota DBA (doing business as)

Once you’ve settled on a unique name, you can proceed with choosing a Registered Agent down to obtaining any required licenses and permits.

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Choose a Registered Agent

A Registered Agent is a person or entity designated to receive important legal documents and correspondence for your business. In North Dakota, every business entity, such as an LLC or a corporation, must have a Registered Agent with a physical address within North Dakota. The Registered Agent’s primary role is to ensure that your business complies with state regulations and be available to receive any legal notices or official government correspondence.

In North Dakota, the cost of having a Registered Agent ranges from $50 – $150. However, suppose you are still wondering how to hire a Registered Agent. You can also serve as your Registered Agent, appoint a friend or family member, or hire a professional North Dakota Registered Agent Services.

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File for Articles of Organization or Articles of Incorporation

If you form an LLC for your North Dakota mortgage company, you must file the North Dakota Articles of Organization, which costs $135. However, you must file the Articles of Incorporation if you form a Corporation for your North Dakota mortgage company. 

Including accurate and comprehensive information on this page is essential since mistakes or inconsistencies may delay or dismiss your filing.

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Obtain an Employer Identification Number

You must first obtain an Employer identification number (EIN) in North Dakota if you will open a bank account or hire an employee for your North Dakota mortgage company. 

The application of an EIN in North Dakota can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone (International Applicants) – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

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Step 5: Obtaining Licenses and Registrations

You must obtain a license from the North Dakota Department of Financial Institutions to operate a mortgage company in North Dakota. The licensing requirements vary depending on the mortgage activity you plan to engage in (e.g., mortgage broker, mortgage lender, or mortgage loan originator).

Here are the general steps to obtain a mortgage license in North Dakota:

nmls

  1. Complete a license application through the Nationwide Mortgage Licensing System (NMLS). The NMLS is a web-based system that allows mortgage companies and MLOs to apply for, update, and renew their licenses online.
  2. Complete pre-licensing education and pass the NMLS national and state-specific mortgage exams.
  3. Submit fingerprints for a criminal background check and authorize a credit report through the NMLS.
  4. Obtain a surety bond in an amount specified by the North Dakota Department of Financial Institutions. The bond amount will depend on the type of mortgage license you are applying for and the volume of your mortgage loan activity.
  5. Provide proof of financial responsibility, such as a minimum net worth or a fidelity bond, as required by the North Dakota Department of Financial Institutions.
  6. Pay the applicable licensing and application fee of $500.

In addition to the mortgage license, you may also need to obtain other licenses, permits, or registrations, depending on your business activities and local requirements. The business license fee in North Dakota ranges from $50 – $300.

Step 6: Setting Up Your Office and Infrastructure

A professional and well-equipped office is essential for the smooth operation of your North Dakota mortgage company. Choose a suitable location for your office, considering accessibility, visibility, and proximity to your target market. Ensure your office complies with the Americans with Disabilities Act (ADA) and other local building codes and regulations.

Step 7: Hiring and Training Staff

Your North Dakota mortgage company’s success will largely depend on your team’s quality and expertise. Hire qualified and experienced professionals, such as mortgage loan originators, processors, underwriters, and administrative staff. However, ensure that your team members meet the necessary licensing and education requirements before hiring an employee for your North Dakota mortgage company.

Step 8: Marketing and Growing The Company

A well-thought-out marketing strategy is crucial for attracting clients and growing your mortgage company. Some effective marketing tactics for your mortgage company include:

  • Build a professional website showcasing your services, expertise, and testimonials from satisfied clients.
  • Leverage social media platforms to create brand awareness and engage your target audience.
  • Networking with real estate agents, builders, and other industry professionals to build referral partnerships.
  • Participating in local community events and sponsoring charitable causes to create a positive brand image.
  • Offering educational content, such as blog articles, webinars, and seminars, to provide value to your clients and establish yourself as an expert in the mortgage industry.

FAQs

What licenses do I need to form a mortgage company in North Dakota?
You need to obtain a North Dakota Mortgage Broker License.
How do I apply for a mortgage broker license in North Dakota?
You need to file your application online through the Nationwide Multistate Licensing System (NMLS).
Can I form a mortgage company in North Dakota with no experience?
No, North Dakota requires you to have at least two years of experience in the mortgage industry before you can form a mortgage company.
What are the fees to obtain a North Dakota Mortgage Broker license?
The licensing fees include $40 for the NMLS processing fee and $395 for the license fee.
How long does it take to obtain a North Dakota Mortgage Broker License?
It takes around 3-6 months to process your Mortgage Broker License application in North Dakota.
Is a physical office necessary in North Dakota to operate as a Mortgage Broker company?
Yes, North Dakota requires mortgage brokers to have a physical office in the state.
Can I work remotely for my North Dakota mortgage company?
Yes, you can work remotely, but you need to have a physical office in North Dakota too.
Is there any educational requirement to obtain a North Dakota Mortgage Broker License?
No, North Dakota does not require you to have a specific academic degree or courses, but two years of mortgage industry work experience will be considered as a part of qualification.
Can I apply for a Mortgage Company license in North Dakota if I have a criminal record?
North Dakota generally does not prohibit applicants with a criminal record, but it will depend on the severity of the record; contact the North Dakota Department of Financial Institutions for more information.
What is the recruitment process for loan officers in North Dakota?
You can hire loan officers as your regular employees or as independent contractors in North Dakota.
Do I need to carry a surety bond for my Mortgage Company in North Dakota?
Yes, you are required to have a surety bond of at least $25,000 to operate as a Mortgage Company in North Dakota.
Can I make money by referring clients to other companies in North Dakota?
No, mortgage brokers in North Dakota cannot earn money by referring clients to other companies, due to anti-kickback laws.
What is the difference between working as a Mortgage Broker or Mortgage Lender in North Dakota?
A mortgage broker helps bring borrowers and lenders together while a mortgage lender originates residential mortgages themselves while retaining possession of the loan after closing.
How long is the license valid for in North Dakota, after approval?
Mortgage Broker licenses in North Dakota Valid for one-year renewable from 30 December to 31 December.
Is the North Dakota Department of Financial Institutions available for any queries related to Mortgage Companies?
Yes, you can contact the NDDFI for any queries related to Mortgage companies in the State.
When is an NMLS license incomplete/no longer valid in North Dakota?
Your NMLS license is no longer valid if you don’t renew it every year.
How long must I retain employee records in North Dakota?
You must retain employee records and mortgage loan records in North Dakota for seven years.
What are the major expenses for a mortgage company in North Dakota?
Some significant expenses in North Dakota are NMLS license renewal fees, Educational Training, Surety Bond fees, Employee salaries, equipment expenses and marketing expenses
Can I conduct a mortgage business in North Dakota in a partnership instead of an individual?
Yes, you can conduct a mortgage business in North Dakota in a partnership.
What information and data do I need to submit to operate my license is approved?
After your North Dakota Mortgage Broker turn out to be licensed, you will want to upload the Fictitious Business Name filing listing
How can I license my business to originate loans in North Dakota?
You will get your Mortgage lender License from the North Dakota Division of Banking & finance.
Can I work as a mortgage originator in North Dakota without my actual mortgage company in the state?
No, to work as a mortgage originator in North Dakota, you must affiliate with a licensed mortgage company in North Dakota.
Can an individual work for multiple mortgage companies in North Dakota at the same time?
ND Mortgage Company license law is credentialled to a person only at the company’s request, so you can be a part-time agent with another mortgage company at the same time.
Can I act as a retail mortgage originator in North Dakota?
Yes, you can work as a retail mortgage originator in North Dakota.
What are the statutory bond requirements for a Mortgage Broker in North Dakota in case of fiscal default/toppling?
The minimum bond requirement for North Dakota Mortgage Broker must at least be of $25000 in the event of contractor default.
Apart from North Dakota, do I have to register my mortgage corporation in other states additionally?
Multi-State Mortgage Licensing System & Registries provides an excellent option over chasing licensing requests from numerous states.
After obtaining a license for Mortgage Business from NDDFI in North Dakota, should I file my company as a C-Corp, a corporation, an LLC, or sole ownership to comply with State Law?
Enterprise formation is a separate and additional step from licensure that does not necessarily comply with the State law.
How soon after starting my Mortgage Broker business should I register for a license with the NDDFI?
Once you decide to start the process for a North Dakota Mortgage Broker License, you can complete your application at any time.
Who can oversee or govern the Mortgage affairs or expansions in North Dakota other than the NDDFI?
The governing body in North Dakota for all-specific, non-depository industries includes the division of Professional and Occupational Licensees or Boards.
What are the legal requirements for forming a mortgage company in North Dakota?
To form a mortgage company in North Dakota, you need to be licensed and bonded by the North Dakota Department of Financial Institutions.
What kind of license do I need to start a mortgage company in North Dakota?
You will need a mortgage broker license in North Dakota.
How much does it cost to get a mortgage broker license in North Dakota?
The cost to get a mortgage broker license in North Dakota is $1,026.
Is there a minimum net worth requirement to form a mortgage company in North Dakota?
Yes, you must have a minimum net worth of $25,000 to form a mortgage company in North Dakota.
What kind of bonding do I need to form a mortgage company in North Dakota?
You will need a surety bond in the amount of $25,000 to form a mortgage company in North Dakota.
How do I get a surety bond for my North Dakota mortgage company?
You can get a surety bond for your North Dakota mortgage company through a surety bond provider.
What kind of educational requirements do I need to form a mortgage company in North Dakota?
You must complete at least 20 hours of prelicensure education and pass a test to form a mortgage company in North Dakota.
Do I need to be a resident of North Dakota to form a mortgage company in the state?
No, you do not need to be a resident of North Dakota to form a mortgage company in the state.
How do I find office space for my North Dakota mortgage company?
You can search for office space for your North Dakota mortgage company through a real estate agent or online listings.
Can I operate a North Dakota mortgage company from a home office?
Yes, you can operate a North Dakota mortgage company from a home office, as long as it meets certain requirements.
How much does it cost to start a mortgage company in North Dakota?
The cost to start a mortgage company in North Dakota can vary widely, but it can be several thousand dollars.
How long does it take to start a mortgage company in North Dakota?
It can take several weeks or months to start a mortgage company in North Dakota, depending on how quickly you can complete the necessary requirements.
What kind of insurance do I need for my North Dakota mortgage company?
You will need general liability insurance for your North Dakota mortgage company.
How do I get general liability insurance for my North Dakota mortgage company?
You can get general liability insurance for your North Dakota mortgage company through an insurance provider.
Are there any restrictions on advertising for North Dakota mortgage companies?
Yes, there are specific advertising requirements and restrictions for North Dakota mortgage companies.
What kind of records do I need to keep for my North Dakota mortgage company?
You need to keep detailed records for your North Dakota mortgage company, including financial records, employee records, and licensing records.
Do I need to file any documents with the North Dakota Secretary of State to form a mortgage company?
No, you do not need to file any documents with the North Dakota Secretary of State to form a mortgage company.
What kind of disclosures do I need to provide to North Dakota mortgage customers?
You need to provide certain disclosures to North Dakota mortgage customers, including the annual percentage rate, closing costs, and loan terms.
What kind of penalties can I face for non-compliance with North Dakota mortgage laws?
You can face significant penalties for non-compliance with North Dakota mortgage laws, including fines, license revocation, and even criminal charges.
Are there any special tax obligations for North Dakota mortgage companies?
Yes, North Dakota mortgage companies may have certain tax-related obligations, such as obtaining a seller’s permit and collecting sales tax.
How much does it cost to renew a mortgage broker license in North Dakota?
The cost to renew a mortgage broker license in North Dakota is $419.
How often do I need to renew my mortgage broker license in North Dakota?
Mortgage broker licenses in North Dakota must be renewed every two years.
Are there any continuing education requirements for North Dakota mortgage brokers?
Yes, North Dakota mortgage brokers must complete at least eight hours of continuing education each year.
Can I use any legal business structure to form a mortgage company in North Dakota?
No, there are specific legal business structures that can be used to form a mortgage company in North Dakota.
How can I stay current with changes to North Dakota mortgage laws?
You can stay current with changes to North Dakota mortgage laws by regularly checking with the North Dakota Department of Financial Institutions and consulting with legal and financial experts.
What resources are available for North Dakota entrepreneurs looking to start a mortgage company?
There are several resources available for North Dakota entrepreneurs looking to start a mortgage company, including the North Dakota Small Business Development Center, SCORE, and various business networking groups.

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Conclusion

Forming a mortgage company in North Dakota can be fulfilling and profitable. By understanding the industry, forming a solid business foundation, obtaining the necessary licenses, and implementing effective marketing strategies, you can build a successful mortgage company that helps make the dream of homeownership a reality for countless individuals and families in North Dakota.

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