How to Form a Mortgage Company in Ohio | Essential Steps

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Ohio Mortgage Company

The mortgage industry plays a crucial role in the economy as it facilitates the dream of homeownership of Ohio people. Forming a mortgage company can be a rewarding and profitable LLC in Ohio. 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 Ohio 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 Ohio mortgage company, all the steps in this article must guide you.

What is a Mortgage Company?

In Ohio, 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 Ohio Division of Financial Institutions regulates mortgage companies in Ohio 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 Ohio 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 Ohio 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 Ohio 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 Ohio

Forming a mortgage company in Ohio 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 Ohio 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 Ohio Division of Financial Institutions. The Ohio Division of Financial Institutions is responsible for licensing and regulating mortgage companies and their activities within the state.

Before starting a mortgage company in Ohio, it is essential to understand the different types of mortgage licenses and activities regulated by the Ohio Division 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 Ohio.

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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 Ohio, 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 Ohio include:

Sole Proprietorship

This is the simplest form of business entity, where an individual operates the Ohio 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 Ohio 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 Ohio, consult a Business Attorney in Ohio 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 Ohio 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 Ohio 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 Ohio 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 Ohio in your business name can help establish a sense of familiarity and trust with potential clients from the same state. For example, “Ohio Mortgage Solutions” or “Ohio 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 Ohio Secretary of State Business Search to ensure that no one else has trademarked the name. There is a complete guide on Ohio 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 Ohio DBA (doing business as)

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

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Choose a Statutory Agent

A Statutory Agent is a person or entity designated to receive important legal documents and correspondence for your business. In Ohio, every business entity, such as an LLC or a corporation, must have a Statutory Agent with a physical address within Ohio. The Statutory 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 Ohio, the cost of having a Statutory Agent ranges from $50 – $150. However, suppose you are still wondering how to hire a Statutory Agent. You can also serve as your Statutory Agent, appoint a friend or family member, or hire a professional Ohio Statutory Agent Services.

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File for Articles of Organization or Articles of Incorporation

If you form an LLC for your Ohio mortgage company, you must file the Ohio Articles of Organization, which costs $99. However, you must file the Articles of Incorporation if you form a Corporation for your Ohio 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 Ohio if you will open a bank account or hire an employee for your Ohio mortgage company. 

The application of an EIN in Ohio 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 Ohio Division of Financial Institutions to operate a mortgage company in Ohio. 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 Ohio:

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 Ohio Division 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 Ohio Division of Financial Institutions.
  6. Pay the applicable licensing and application fee of $1,000.

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 Ohio 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 Ohio 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 Ohio 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 Ohio 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

How do I start a mortgage company in Ohio?
You’ll need to acquire proper licensing and registration through the state of Ohio in order to legally operate a mortgage company.
What types of licenses do I need to start a mortgage company in Ohio?
You’ll need to obtain a Company license and a Secondary Mortgage Originator (SMO) license.
Can I operate a mortgage company as an LLC in Ohio?
Yes, you can register as an LLC and obtain the necessary licenses to operate a mortgage company in Ohio.
Are there any education or experience requirements to start a mortgage company in Ohio?
Yes, you’ll need to have at least two years of mortgage industry experience and have completed a state-approved mortgage pre-licensing course.
How do I find an approved mortgage pre-licensing course in Ohio?
Check the website of the Nationwide Mortgage Licensing System and Registry (NMLS) for a list of approved courses in Ohio.
How long does it take to receive a license to start a mortgage company in Ohio?
The timing varies based on your qualifications and how quickly you provide the necessary information. Generally, the process could take several weeks or months.
Can I get a temporary license to start working in Ohio while my application is being processed?
No, Ohio law does not allow for temporary licenses.
Is there a fee to apply for a mortgage company license in Ohio?
Yes, there is a fee for both company and SMO licenses. As of 2021, the fees are $600 and $125 respectively.
Are there any surety bond requirements for starting a mortgage company in Ohio?
Yes, Ohio requires that liability insurance or a surety bond be obtained in order to operate a mortgage company.
How much insurance or surety bond coverage am I required to have for my Ohio mortgage company?
As of 2021, Ohio requires a $50,000 bond for Company licenses and a $25,000 bond for SMO licenses.
Can I apply for both a company and SMO license at the same time in Ohio?
Yes, you can apply for both licenses at the same time.
Do I need to take continuing education courses in Ohio once I’ve obtained my licenses?
Yes, Ohio requires mortgage professionals to complete 8 hours of NMLS-approved annual education coursework.
Can I operate a mortgage company online in Ohio?
Yes, as long as you’ve met all the Ohio requirements for licensing and regulatory compliance.
What is the maximum interest rate allowed for mortgage loans in Ohio?
Ohio does not impose a maximum interest rate on mortgage loans.
Are there any restrictions on fees that mortgage companies can charge to borrowers in Ohio?
Yes, fees charged by mortgage companies in Ohio must be reasonable and customary for that type of service.
Are there any RESPA (Real Estate Settlement Procedures Act) laws or regulations mortgage companies in Ohio need to comply with?
Yes, Ohio’s Department of Commerce regulates at least four of the possible ten RESPA transactions that mortgage companies in Ohio administer – for example Regulation X.
Can a mortgage company in Ohio provide other financial services besides offering mortgage loans?
Yes, but your company will need to obtain other required licenses for that.
Does Ohio require mortgage professionals to undergo criminal background checks?
Yes, Ohio require criminal background checks through FBI records and fingerprinting.
Can I hire unlicensed mortgage professionals to work for my mortgage company in Ohio?
No, Ohio requires all individuals who are acting as loan originators within an Ohio mortgage company must be licensed.
What is the penalty for operating as a mortgage company in Ohio without proper licensing?
Ohio imposes penalties of up to $25,000/day for operating without adequate licensure or committing mortgage-related fraud.
Is there any limit on mortgage servicing that any one mortgagee can own?
Yes, federal rules, and Ohio statutes restrict this, to avoid monopolies forming.
What are the qualifications for writing mortgages directly to Fannie Mae, Freddie Mac, and FHA or VA mortgages?
​Standards vary across each agency, but typically a loan originator must be licensed and have an NMLS Unique Identifier, background checked and well-capitalized with low occurrence of infractions.
Does Ohio have rules surrounding discriminatory lending practices?
Yes, Ohio’s Fair Housing Act of 1965 prohibit any discrimination.
Are there any webpage and advertising regulations to which Ohio mortgage firms must adhere?
Both your webpage and advertising campaigns will have to be accurate and the descriptions therein must be true.
Are there any zoning and certification constraints on who commercially begins a mortgage business?
Explicity no, just be prepared to fulfill registration and paperwork processes with the Ohio Secretary of State.
Is there a waiting duration till I will know whether my Ohio mortgage application has been authorized?
On average, it usually takes Ohio a matter of weeks or months for the licensing process; though as applications are processed in the manner it reception to your responses might in turn speed up or impede that elongated timetable.
Will I have privilege to operate a bonded Ohio mortgage business if derogatory remarks lie in my credit score?
Yes, yet a lacking creditworthiness will affect the bond amount and fee structure, so failed communication building is key to review and respond in detail on doubtful concerns in a credit report before submitting such applications.
Once my business records as an Ohio organizer have recorded been filed with the local state offices, can any attorney from any state act as corporate intermediary?
Any firm acting for Ohio mortgagors must be authorized to work in Ohio or be in good standing with the pertinent external laws that specify residential financing regulation.
What is the process of forming a mortgage company in Ohio?
To form a mortgage company in Ohio, you need to register with the Ohio Division of Financial Institutions and obtain a mortgage broker license.
Why do I need a mortgage broker license to start a company in Ohio?
Ohio law requires that any person engaged in mortgage brokering activities must be licensed with the state.
How do I apply for a mortgage broker license in Ohio?
You can apply for a license online through the Nationwide Multistate Licensing System and Registry (NMLS) website.
What documents are required when applying for a mortgage broker license in Ohio?
You will need to provide proof of several things, including background information, financial statements, references, and proof of training.
How long does it take to get licensed as a mortgage broker in Ohio?
The timeframe for getting licensed as a mortgage broker in Ohio can vary depending on a number of factors. However, it typically takes several weeks to complete the application process.
Do I need to be a resident of Ohio to obtain a mortgage broker license?
No, but you will need to have a physical location in the state and be authorized to do business there.
Are there any educational requirements to obtain a mortgage broker license in Ohio?
Yes, you must complete both pre-licensure and continuing education courses.
How often do I need to renew my mortgage broker license in Ohio?
Mortgage broker licenses in Ohio are renewed annually.
How much does it cost to obtain and renew a mortgage broker license in Ohio?
Licensing fees in Ohio vary depending on a number of factors, including the size of your company.
How much start-up capital do I need to launch a mortgage company in Ohio?
The amount of capital you will need will depend on the size of your operation and the market areas you are targeting. It’s best to work with a financial advisor to determine this beforehand.
What type of insurance do I need for a mortgage company in Ohio?
You will need a number of different types of insurance, including general liability, property, and errors and omissions.
Do I need to register my mortgage company with any boards or associations in Ohio?
While you don’t need to register with any boards or associations in Ohio, you may choose to join professional organizations like the Ohio Association of Mortgage Professionals.
What types of mortgages can I offer to Ohio residents?
You can offer both primary and secondary market mortgages to Ohio residents.
How do I comply with Ohio lending laws?
To comply with Ohio lending laws, work with a lawyer or consultant to ensure that your company is adhering to all relevant regulations.
How can I ensure that my mortgage company is making ethical and fair lending decisions?
Follow best practices and your company’s code of ethics to ensure fair and ethical lending practices.
What penalties can I face for violating Ohio lending laws?
Penalties can range from fines to revocation of your mortgage broker license.
How do I find customers in Ohio for my mortgage company?
Some good places to start include online and traditional advertising, working with real estate agents, and networking within the community.
Are there any community outreach programs that can help me gain customers in Ohio?
Yes, establishing a community outreach program can help your company get noticed in the area and establish connections with individuals in need of mortgage services.
How can I protect my customers’ personal financial information?
By complying with federal and state regulations regarding data privacy.
Are there any tax incentives for starting a mortgage company in Ohio?
Check the Ohio tax code and consult with a financial advisor to determine whether any incentives apply for you.
What areas of Ohio would be best to target for my mortgage company?
Look at local demographics and real estate trends to establish the regions best-suited to your company.
How many employees do I need to hire to start a mortgage company in Ohio?
Again, this depends on the size of your operation and market areas. Start by hiring a few employees and expand as needed.
What types of software do I need for my mortgage company in Ohio?
You will need software for loan originations, loan servicing, and basic operational maintenance.
Do I need to hire a consultant to assist in launching my mortgage company in Ohio?
While you don’t need to hire a consultant, doing so can help ensure your company is built on steady footing.
Are there are any enterprise zone laws that could affect my mortgage company’s operations in Ohio?
Additionally to complying with Ohio law, you may want to check and ensure that you local community doesn’t have any enterprise zone tax breaks for new businesses.
Where can I find additional resources for starting a mortgage company in Ohio?
Look to the data and resources put together by professional organizations, regulatory institutions, and government agencies in Ohio.
Can having a criminal record affect my ability to obtain a mortgage broker license in Ohio?
Yes, but it will depend on the record, the nature of the several convictions, and the time elapsed since the most recent offense. The clean the record, the better all agencies responded, especially if the conviction relates to the violating industries’ standards.
How can I stay up-to-date on changes to Ohio mortgage lending laws?
Join professional organizations, attend conferences and events, and create processes in your business adapting to new regulations.
What are the interest rates generally in Ohio on a Mortgage?
Interest rates on a mortgage in Ohio depend on several factors like credit score, appraisal value among others.

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Conclusion

Forming a mortgage company in Ohio 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 Ohio.

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