[Gustan Cho]

It looks like automated underwriting does not capture the full picture of your financial situation.

• Your median credit score is 583.
• You have two years of uninterrupted W-2 employment.
• You receive $1,663 per month in tax-exempt VA disability income.
• Your employment income is $3,200 per month.
• For qualifying, your VA disability income is actually counted as more, which boosts your total qualifying income.
• Your high residual income is a major advantage in VA underwriting.
• You are looking to purchase a home for $200,000, which is a typical loan amount.

Rocket Mortgage and most large lenders use automated underwriting. If the system does not approve you, they usually will not consider manual underwriting due to their own rules.

Reason for Rocket’s $120,000 Limit

Such a Limit May be Due to:

• An automated underwriting system results in a higher debt-to-income ratio.
• Limited depth of credit profile.
• Recent derogatory credit events.
• Internal lender overlays.
• If the automated system gives a negative result, it can reduce the highest loan amount you can qualify for.

Lender Overlays are not VA Requirements

The Value of Manual Underwriting.

With VA manual underwriting, your steady job and strong leftover income matter even more. They also consider your rent history, other positive factors, and disabilities. VA loans are more flexible than most, so your high leftover income really helps you.

Information Needed to Assess $200,000 VA Loan Eligibility

To Pursue Manual Approval, Please Provide the Following:

• Auto loans
• Personal loans
• Student loans
• Credit cards
• Child support

1. Location of the property (County)
2. Estimated property taxes
3. Estimated homeowner’s insurance cost
4. Are there charge-offs, collections, late payments, etc.?
5. Are there bankruptcies, foreclosures, or repossessions?

Basic Key Calculations Based on the Income Details you Provided:

• W-2 income = $3200/month
• VA Disability = $1663/month
• Total monthly income = $4863
• VA disability income is tax-free and counted higher when figuring out if you qualify.

A $200,000 VA Loan May Result in a Monthly Payment of $1,400 to $1,700, Depending On:

• Interest rates
• Tax implications
• Insurance policies
• HOA fees

With your income, this payment should be affordable as long as you keep your debts low and keep a high leftover income.

Additional Considerations

Ask Loan Providers: Do you Offer True VA Manual Underwriting?

• Do you have a minimum credit score requirement that exceeds VA requirements?
• Would you consider a file with a median score of 583 and unfavorable AUS results for manual underwriting?
• What is your residual income calculation for VA manual underwrites?
• Have you closed VA manual underwrites for loans with a credit score under 620?

Many Lenders Say They Offer VA Loans, But Only a Few Truly Provide Manual Underwriting

.If You Provide the Following:

• Monthly debt obligations,
• The State and County where the property is located,
• The sales price,
• An estimate of the property tax,
• An indication of whether you are exempt from the VA Funding Fee due to a service-connected disability,

If you share this information, I can let you know if a $200,000 VA loan is possible for you and explain the reason behind the $120,000 limit.

VA DTI Manual Underwriting Guidelines on VA Loans

[Gustan Cho]

This topic and subject matter are very important. Many team leaders, mortgage net branch managers, and owners of mortgage brokerage companies neglect to do a thorough due diligence on their current P and L on their current company and pro-forma P and L on a new prospective company. There should be many existing free templates where you do not have to spend hundreds of dollars on an expensive CPA. Just from the top of my head, the following are important subject matters that need to be covered and once covered, you can expand from here using real data and numbers. Do compare and contrast.

• Partnership possibilities
• Origination platform: Organic leads through consumer direct, Buying leads, Realtor partnership, etc.
• Previous Employer vs. New Employer comparison
• Branch economics
• Long-term vision
• Compensation structures

Mortgage Due Diligence Template

Mortgage branch managers, team leaders, brokers, and owners often face the same issue: failing to conduct sufficient due diligence before making business decisions.

Whether the goal is to start a mortgage net branch, open a new mortgage brokerage, join a new firm, merge with a branch, form a partnership, build a new team, or buy a business, everyone should focus on facts, numbers, and the long-term effects of the decision, rather than just gut feelings. Surprisingly, some professionals don’t do a full profit-and-loss review of their current business before deciding it’s better than other options. Others focus only on profits and ignore costs such as support, compliance, lead generation, technology, growth, and recruiting.

Recruiting costs.

For any big business decision, carefully analyze both your current and proposed business models. Always use real facts and numbers instead of just estimates.

Fortunately for mortgage professionals, there are many free resources and due diligence templates to do an initial review. You can use these tools to check your operations before hiring an expensive CPA or consultant. After this first review, you can update it with your actual financial numbers. Going with a new mortgage company.

• Starting a mortgage net branch.
• Opening your own independent mortgage brokerage.
• Combining two branches.
• Getting a new company.
• Starting a joint venture.
• Making a recruiting partnership.
• Setting a marketing agreement.
• Going into more states.

Knowing the goal provides direction on which variables will be most important.

Step 2: Determine the Worth of a Partnership

Knowing your goal helps you figure out which factors matter most.ve.

Some things to think about are as follows:

• What do each of the people involved in the partnership have to offer?
• How will the profits be shared?
• Who has power over the business?
• Who will be in charge of hiring?
• Who has ownership of the leads and database?
• Who is in charge of compliance?
• How will disagreements be settled?
• What will the partnership look like if one person leaves?

A partnership only works if there are well-defined goals before the partnership starts.

Step 3: Examine. A partnership works best when everyone agrees on clear goals from the start.gination.

Analyze how each method of obtaining leads is beneficial and/or detrimental:

Consumer Direct Marketing: Look at how each way of getting leads helps or hurts your business:

• Consumer education
• Website traffic

Purchased Leads

• Cost per lead
• Conversion rates
• ROI (Return on Investment)
• Quality of Leads

Referral- Based Business

• Realtor relationships
• Builder relationships
• Attorney referrals
• Financial planner referrals
• Past client referrals

Hybrid Model

Using several lead sources in a partnership greatly improves business success. Having multiple lead sources can grow your business and reduce your risk. Compare these two partnerships.

Current Company ABC

• Compensation structure
• Technology platform
• CRM
• Compliance support
• Processing support
• Recruiting opportunities
• Marketing support
• Training
• Company culture
• Branch autonomy

Proposed Company XYZ

• Compensation structure
• Technology platform
• CRM
• Compliance support
• Processing support
• Recruiting opportunities
• Marketing support
• Training
• Company culture
• Branch autonomy

Remember, total value is about more than just pay.

Step 5: Review Branch Economics

Many branch managers focus on income but don’t always understand all the costs involved.

Items include:

• Payroll
• Payroll taxes
• Processing expenses
• Credit reports
• Technology costs
• CRM expenses
• Marketing expenses
• Recruiting expenses
• Licensing expenses
• Office expenses
• Insurance
• Compliance costs
• Professional services

Be sure to make sure to list and track every expense.

Profit and Loss Analysis.

Review the current branch P&L.

• Gross revenue
• Direct costs
• Fixed expenses
• Variable expenses
• Net operating income
• Profit margin
• Cost per loan
• Revenue per loan

This review can show you how your branch can make more profit without producing more.

Step 7: Create a Pro-Forma Financial Model

You can create many scenarios to predict how profitable a new branch setup might be. For example:

• 5 loans per month
• 10 loans per month
• 20 loans per month
• 50 loans per month

Test these models at different production levels and see how the results differ.

The goal is to determine whether the new setup is more profitable and can grow over time.

Step 8: Review Compensation Structures

Compensation is one element of the business model. Consider the following:

• MLO compensation
• Branch manager compensation
• Compensation for recruiters
• Revenue and profit sharing
• Bonuses and benefits
• Employer payroll taxes
• Independent Contractor vs. W-2

Sometimes, paying more can actually help you make more profit.

Step 9: Evaluate the Long-Term Vision

Look at how profitable the model will be over time. Some setups may seem good now but fail later.

Consider the following questions:

• Is it scalable?
• Can it recruit talent?
• Can it retain talent?
• Can it weather a downturn in the market?
• Can it expand geographically?
• Can it improve profitability?
• Can it increase long-term enterprise value?

A good business model should support both your short-term and long-term goals.

Step 10: Create a good business plan should support both your short-term and long-term goals in an objective manner.

• Determine the risks
• Determine the opportunities
• Create a plan with goals.
• Create deadlines

When making decisions, focus on the facts, not just the pay.

The best way to move forward is to use a well-rounded approach, not just one model for profitability, growth, or pay. Brokerages that succeed usually focus on partnerships and lead generation, which are proven ways to grow and add long-term value.

Questions for Discussion

• What do you look for in a mortgage branch due diligence process?
• What financial indicators do you believe carry the most significance?
• Has changing your workplace ever revealed hidden costs?
• When looking at new prospects, what blunders should the mortgage industry avoid?
• What tools and resources do you recommend for due diligence?

[Gustan Cho]

Here is a concise technical summary for Kai, Sapna, and Yogesh.

• I have experienced failures with two new HP laptops and am working to determine whether the cause is power-related, a defective HP batch, hardware failure, or malware.
• I purchased the first HP laptop new from Best Buy in Kenosha, WI in or around June 2022 and did not opened it to start using it until late 2025.
• .The reason I did not opened the HP laptop was because I had a laptop I was using and saved the newly purchased laptop until I needed to replace my existing one.
• When I did open it in mid-to-late 2025, it worked fine for several months.
• However, after several months, things went wrong with it.
• This is when I searched a reputable computer repair shop besides Best Buy Geek Squad and found Kai Knight of UBreakIFix.
• Kai Knight at UBreakiFix in Kenosha attempted several repairs, but the laptop could not be restored.
• I had an older laptop I could use until I purchased a new one.
• I found a new laptop on sale on Amazon and purchased it to get it delivered to my home.
• Upon delivery, I took it to UBreakIFix and Kai and the techs transferred my data and Apps from the broken HP laptop to the new HP laptop.
• They programmed and transferred all my needed data, programs, Apps, emails, and passwords to my new laptop.
• After a few months of using the new HP laptop, things were not going as expected, therefore, I dropped the HP laptop at UBreakiFix again.
• Very ironic that in a 12 month timeframe, I had two brand new HP laptop computers were not working properly and without delay, was taken to UBreakiFix for a complete maintenance, and complete inspection and repair of any or potential system failures.
• Extremely suspect that both newer laptops could not be repaired, and/or refurbished and was advised and recommended by Intake Manager Kai Knight, senior technician Zach and the Chief Technical Team Manager Robert as junk.
• Still seem puzzled on what went wrong and cannot buy the fact it was a mere coincidence.
• Asked a few business associates and tech savvy folks, and most of them suspected and identified the device may be compromised or that my setup is contributed to repeated failures.

After I purchased a second HP laptop, which also required service at UBreakiFix. Kai identified a motherboard issue. Recently, I learned about fake CAPTCHA messages and malware, which raises concerns that my devices may be compromised or that my setup is contributing to repeated failures.

Below are the potential causes I am considering. I would appreciate your assessment of which is most likely. charger or a wrong power adapter

• A power surge, outlet, or electrical issue
• A defective HP model or a bad batch of motherboards
• Damage to BIOS, firmware, or Windows
• There may be an issue with data transferred via my Microsoft account, browser sync, external drives, USB devices, or backup restoration. I am concerned about losing a third laptop and would appreciate your recommendations on the safest steps before setting up another device.
• Assessment, fake CAPTCHA malware can infect a Windows laptop, particularly if a user is deceived into executing commands via Win + R and running them in PowerShell or Windows Terminal.
• Security researchers have documented fake CAPTCHA “ClickFix” attacks that install infostealers and enable remote access to affected devices.
• According to Trend Micro, such attacks may be delivered through phishing, redirects, malvertising, or fraudulent search results, and frequently prompt users to copy and execute malicious commands.

However, malware typically does not cause physical damage to a motherboard in standard HP laptops. Motherboard failure is more commonly attributed to faulty hardware, power surges, incorrect or defective chargers, overheating, liquid exposure, static or electrical faults, charging circuit issues, or manufacturing defects. While malware can compromise Windows, facilitate data theft, and render a computer inoperable, a completely nonfunctional motherboard is almost always the result of hardware or power-related problems.

Kai maybe can discuss some potential solutions with Robert and Zack. The advice I am getting from other technical experts is begin by verifying several key aspects of the new laptop.,

• Test the charger and electrical outlet.
• Confirm the correct HP charger is used.
• Do not reuse the same charger, power strip, or outlet until the issue is identified.
• Do not restore old backups at this stage, as they may reintroduce previous issues through browser profiles, downloads, USB devices, or outdated software.
• Change important passwords on a secure, uncompromised device.
• Prioritize email, Microsoft, banking, administrative website logins, Google, hosting accounts, and password manager accounts.
• If both laptops failed in the same way, this suggests a faulty charger, outlet issue, power surge, or repeated setup and software steps.
• If they failed differently, it may indicate defects in HP.

Additionally, ask if the SSD can be removed and scanned for security. If the drive is functional, proceed with the scan.

The most important question for Kai is, “Did both laptops truly have motherboard failure, or could one or both have had Windows, BIOS, or SSD damage that appeared to be hardware failure?” Answering this will help determine whether the issue is hardware-related or due to setup or malware.

[Gustan Cho]

Did you hear the saying people who lie, deceive, steal, or hurt will get discovered and caught? It’s NOT if you are going to get caught BUT when. There is a God. A good God. Theres also Satan. A BAD SATAN that want to hurt people and all living things.

In this exclusive interview, Jimmy speaks with Senator Ron Johnson about his investigation into COVID-19 vaccine safety monitoring, focusing on allegations that federal health agencies overlooked or minimized safety signals reported through vaccine adverse event reporting systems. Johnson argues that FDA and CDC officials failed to adequately investigate reports of adverse events and criticizes what he describes as a lack of transparency regarding vaccine risks, while Jimmy contends that mainstream media and pharmaceutical industry influence discouraged scrutiny of official COVID policies.

The segment also features testimony and claims from several physicians and researchers who expressed concerns about mRNA vaccine safety, adverse events, and potential links to various health conditions, while arguing that additional research is needed. Throughout the interview, Johnson characterizes the issue as a major government accountability scandal and called for greater transparency, investigation, and public debate regarding pandemic-era health

https://youtu.be/ydkMwOp2Fhk?si=A1EPi4kn74dXFySJ

[Gustan Cho]

The department of Veterans Affairs has the most lenient agency guidelines on VA loans. The VA has a reputation of going above and beyond to help its active duty, disabled, or retired members of the United States Military qualify and get approved for a VA loan. There are no minimum credit score requirements on VA loans. There are no maximum debt-to-income ratio on VA loans as long as the borrower has sufficient residual income. The waiting period after bankruptcy, foreclosure, or other housing events is two years after the recorded date while other government-backed loans and conforming loans have waiting period after bankruptcy and significant housing event is three years to seven years. You do not have to pay outstanding collections or charge off accounts to be eligible and get approved for VA loans. VA loans do not have a cap on the maximum loan amount. The bottom line is the VA has the best mortgage loan program with the best rates and terms and lenient loan guidelines. However, from many years of experience, it is almost impossible for a borrower to get an approve/eligible on VA loans if the borrower has any 30 day late payments in the past 12 months. The team at Gustan Cho Associates has a national reputation for being able to close VA and FHA loans with credit scores down to 500 FICO. Many of our borrower do have derogatory credit tradelines, outstanding collection and charge-off accounts, late payments, repossessions, and other types of derogatory credit tradelines and in most instances, we breeze through the loan process and close VA loans in 30 days. However, one thing in common that all of lower credit score borrowers have is timely payments in the 12 months. Please take a look at the attached guide on VA loans with late payments by clicking the link. Don’t hesitate to leave a comment or call or text us. Thank you again for giving us the faith and trust with your mortgage inquiry.

Recent Late Payment VA Guidelines

gustancho.com

Recent Late Payment VA Guidelines

Recent Late Payment VA Guidelines says late payments in the past 12 months isn't always a deal killer in getting approved per AUS FINDINGS

[Gustan Cho]

Let me ask a few MLOs or wholesale reps who are more knowledgeable. Didn’t do a refinance in three years.

[Gustan Cho]

Hi Gustan,

If you’re working with clients who feel stuck between staying put and making their next move, HomeLight’s Buy Before You Sell (BBYS) paired with UWM’s 1-0 lender-paid buydown can be a powerful solution.

BBYS helps qualified homeowners purchase their next home before selling their current one, while UWM’s buydown can help ease payment concerns during the first year.

If you’d like to see how this works in action, we’re hosting HomeLight Office Hours with UWM this Thursday at 10:30am PST. It’s a live, small-group Q&A where we’ll walk through the BBYS program and answer questions in real time: Register here.

Feel free to call, text, or email me anytime, or click here to schedule a time to connect.

Thank you,

Kara Kleingarn

Lender Sales Manager

Direct (623) 526-0205

☎️ Schedule A Call With Me

[Gustan Cho]

Thanks, Danny for your input. Folks, just want to let all of you know that the mortgage process section of MLO TRAINING e-Learning Bootcamp consists of many different parts. After the module has been finished, I will try to somehow restructure it in an organized step-by-step fashion. This section consists of the general overview mortgage process. There are many sub-sections that need to get covered, which we will. Examples include, what loan program to advise borrowers, government-backed loans, conventional loans, non-QM loans, LLPAs (loan-level pricing adjustments), manual underwriting vs automated underwriting systems, third-party contract processing vs in-house processing, types of wholesale account executives, what happens if you disagree with the mortgage underwriter, and common issues during the mortgage process.

The next part of this discussion on the mortgage process relies on your knowledge of the key gatekeeping role played by the mortgage processor.

Summary of What You Described to Make Sure We are on the Same Page

• The borrower has a signed purchase contract and supporting paperwork.
• The file is assigned to a processor.
• The processor has a mission to optimize the file and submit it to the underwriter in the best possible position.
• To organize the file, the processor must ensure it has no missing pages and all required signatures, dates, and attachments.
• Any possible employment red flags, bankruptcies, other foreclosures, late payments, collection accounts, credit inquiries or disputes, and other possible employment red flags have to be explained in the file.
• The file must be submitted to the underwriter, with the best possible outcome being that the borrower has met all conditions and there are no outstanding conditions.
• Poor processing results in numerous conditions and an extended time to receive the Clear to Close, which can be very frustrating for closing.

The strongest competitive advantage in the mortgage industry is a processor who can quickly and flawlessly submit a file to the underwriter. A processor who does not excel at processing creates unnecessary friction in getting the deal done and damages relationships with real estate agents, the borrower, and even the underwriter.

Questions for You to Help Structure this Discussion:

What else do you want to discuss in detail in this area?

1. File Submission: What does a perfect submission file look like?
2. Writing a Letter of Explanation: What is the process for submitting a Letter of Explanation that is written for an underwriter and is likely to be accepted for highly unusual situations?
3. Red Flag Ranking – Learn which issues are of major concern to underwriters and how to deal with them in advance.
4. Processor–Underwriter Dynamics – Learn how to gain the level of trust with underwriters that allows them to work with your files.
5. Timeline Expectations – Understand the processing and underwriting timeframes.
6. Technology/Tools – Learn to work efficiently with modern LOS systems (Encompass, Calyx, Blend, etc.) and how systems can be leveraged by processors.
7. Next Phase – Learn what happens after the processor submits to underwriting (conditional approval review, etc. conditional approval, etc.).

I ALSO like to present a scenario, a pain point, or an example file, we can also work through this.

Let’s make this a great reference to level up processing.

This section examines real-life examples that illustrate the difference between active and careless processing methods. It also includes a detailed FAQ for processors, loan officers, and borrowers.

Case Scenarios: Processor Performance in Practice

Scenario 1: Employment Gap (Most Common)

• Eighteen months ago, the borrower faced a four-month employment gap after a layoff and company restructuring.

Mediocre Processor:

• Sends only basic pay stubs and W-2s, making the underwriter find the employment gap.
• The underwriter then requests a Letter of Explanation (LOE) and proof of unemployment benefits or a job search, delaying the file for 3 to 5 days.

Great Processor:

• Actively asks the borrower for a detailed LOE that explains the employment gap, layoff, job search, training, and recent promotion, demonstrating job security.
• Supporting documents, such as the severance letter, unemployment stubs, and new job offer, are submitted and clearly labeled in the Loan Origination System, such as LOE Employment Gap Result.
• The file usually moves through with few or no conditions because underwriters see that all concerns have already been addressed.
• Bank Deposit (Asset Sourcing Issue)

A $15,000 family gift is deposited into the borrower’s account for the down payment, flagged as a large deposit.

Mediocre Processor:

• Sends only the bank statement without showing where the money came from.
• The underwriter then asks for a gift letter and the donor’s bank statement, delaying Clear to Close by one to two weeks.

Great Processor:

• Gets a gift letter explaining the donor’s relationship and amount, confirming no repayment is needed.
• Collects the donor’s bank statement showing the withdrawal, the borrower’s deposit slip, and a short explanation letter.
• All documents are neatly organized in a subfolder named “Assets_Gift Funds_[Date].”
• Meeting these requirements regularly builds trust with the underwriter.

Result:

• The file earns a clean approval or faces only minor requirements.

Scenario 3: Previous Bankruptcy and Credit Derogatory.

Three years ago, the borrower filed for Chapter 7 bankruptcy. Some old derogatory accounts remain, along with recent credit inquiries from rate shopping. ping rates.

Mediocre:

• Sends only the basic credit report and application.
• The underwriter comes back with eight to ten requests, asking for bankruptcy details, fixes for bad accounts, and explanations for credit checks.
• The file is put on hold.

Great:

• Gets bankruptcy discharge papers and an LOE explaining the reason for bankruptcy, like medical problems, and describes steps taken to recover, supported by proof of on-time payments and no new bad marks.
• Provides proof of payment or settlement for bad accounts, or an LOE if payment is disputed or the account is small.
• Submits an LOE for all recent credit checks related to rate shopping in the last 30 to 45 days.
• Every document is clearly organized, leading to conditional approval with only one to three requests.

The borrower recently switched to a higher-paying commission-based job, though income has dipped slightly compared to last year.Mediocre:

• Sends only the latest pay stubs.
• The underwriter is concerned about income stability and requests additional documents, such as tax returns and year-to-date profit-and-loss statements, further delaying the process.

Great:

• Shows stable income by averaging the last two years or using the lower amount.
• Provides an LOE for the job change and a letter from the employer confirming income stability and future outlook.
• The underwriter sees that all two-year income documents are included.

Result:

• The file is stronger, with fewer income-related conditions.

Scenario 5: Missing Pages / Incomplete Docs

The file contains partial bank statements, a missing W-2 page, and an unsigned contract addendum.

Mediocre:

• Sends the file without fixing missing or incomplete documents.
• The underwriter quickly puts the file on hold because it is incomplete.

Great:

• Reviews every document for completeness, clarity, and signatures before sending.
• Uses a checklist and often does a pre-underwrite check, asking again for any missing items.
• Result: The file breezes through the initial review.

Key Takeaway Across Scenarios:

• Top processors stay ahead by predicting underwriter questions and following the Automated Underwriting System and guidelines.
• Their files tell a clear, complete story from the beginning.

Common FAQs on Mortgage Processing

How long does processing usually take?

• Processing takes 5-15 business days for simple files and 2-4 weeks for complex ones, like those with self-employment or credit problems.
• Highly effective processors shorten this time by gathering needed documents early.
• Speed this up by asking for documents up front.

Who Writes the Letter of Explanation (LOE)?

• The borrower must write, sign, and submit the LOE because it is a sworn statement.
• The processor helps by providing guidance or templates and ensures the LOE is clear, brief, factual, and highlights positive changes or improvements.

What Makes a Strong LOE?

• A strong LOE is short (half to one page), dated, signed, mentions the loan and specific issue, explains the main reason, and ends with the current positive situation and promises it won’t happen again.
• Supporting proof should be attached. The borrower should take responsibility without making excuses.

Can Processors Submit Files with Known Problems?

• Yes, but highly effective processors write down all known problems and include full explanations when submitting. Incomplete submissions cause delays or returns and hurt trust with underwriting teams.

What Conditions Do You See the Most from an Underwriter?

• Paystubs/bank statements.
• Current paystubs and bank statements, letters explaining gaps, bad accounts, and large deposits, employment verification, tax transcripts with gaps, and missing pages.

Loan Officers Impact the Processor’s Work?

• Loan officers should fully prepare borrowers, quickly respond to document requests, and act as a link between the sales team and processors.

Using a Standard Intake Checklist is Recommended.

What Ways Do You Think the Processors Need to be Supported?

• Processors benefit from using a Loan Origination System (LOS) like Encompass or Blend to stay organized, keeping documents labeled and sorted, and using checklists based on Fannie Mae, Freddie Mac, FHA, or VA rules.

When Does a Processor Finishes Their Job?

• The processor’s job usually ends at Clear to Close (CTC), but they may help with finishing final requirements and the closing process.

Mortgage Process Timeline From Application To Closing

gustancho.com

Mortgage Process Timeline From Application To Closing

In general, most mortgage process timeline from application to closing is normally 30 days as long as the lender has efficient operations staff.

[Gustan Cho]

As of May 26, 2026, my rough estimate is:

North Dakota + South Dakota company licensing only: about $3,000 to $6,500 if you handle most of it yourself.
With a licensing consultant: more realistically $7,000 to $14,000+ all-in for both states, depending on how much setup work they do.

This does not include payroll, LOS, compliance audits, E&O, warehouse line, accounting, registered agent, corporate formation, or ongoing compliance.

1. North Dakota Estimated Licensing Cost

For residential mortgage brokering/lending, North Dakota now uses the Residential Mortgage Lender License under NDCC Chapter 13-12. North Dakota confirms this replaced the prior Money Broker framework for residential mortgage lenders effective August 1, 2023.

Estimated North Dakota startup licensing cost:

North Dakota law states the application must include a $400 investigation fee, a $400 annual license fee, and $50 per branch location. It also requires a surety bond of not less than $50,000 and minimum net worth of $25,000.

2. South Dakota Estimated Licensing Cost

For a pure brokerage model, South Dakota uses the Mortgage Brokerage License, which applies to a company placing loans with investors for a fee and not servicing the loans.

Estimated South Dakota startup licensing cost:

South Dakota’s mortgage brokerage license fee is $500, and its MLO registration fee is $150. (Legal Information Institute) South Dakota’s bond schedule is volume-based: $25,000 bond under $25 million, $35,000 bond from $25,000,001 to $100 million, and $50,000 bond over $100 million in South Dakota mortgage volume.

3. NMLS Processing Fees

Current NMLS state licensing processing fees are:

NMLS lists these current fees directly in its processing fee schedule.

4. Consultant Cost Estimate

For a two-state mortgage company setup in North Dakota and South Dakota, I would budget:

Low-end consultant: $3,000 to $5,000
Experienced NMLS mortgage licensing consultant: $5,000 to $9,000
Full-service setup with policies, financial statement guidance, NMLS filings, deficiency responses, bond coordination, and regulator follow-up: $8,000 to $12,000+

That is consultant labor only. State fees, NMLS fees, bonds, registered agent, corporate filings, and background/credit fees are usually separate.

5. Brick-and-Mortar Requirement

North Dakota: No in-state brick-and-mortar office appears required. North Dakota’s DFI FAQ says North Dakota does not require a physical presence for the residential mortgage lender license.

South Dakota: I did not find a clear current state rule requiring an in-state brick-and-mortar office for an out-of-state mortgage brokerage. South Dakota requires a proposed business location and NMLS licensing, but the public state page does not say a physical South Dakota office is mandatory. (South Dakota Labor Department) I would still confirm this directly with the SD Division of Banking or your licensing consultant before filing.

6. Eligibility Requirements

For you individually as the MLO, you generally need:

You must have an NMLS individual account, completed SAFE education, passed the SAFE MLO test, authorized a credit report, completed fingerprints/background check, satisfy financial responsibility and character standards, complete annual CE, and be sponsored by the licensed company. CFPB SAFE Act rules require at least 20 hours of NMLS-approved pre-licensing education, including federal law, ethics, and nontraditional mortgage training.

For the company, expect:

Business entity registration/foreign qualification if needed, registered agent, NMLS company MU1, control person MU2s, ownership/management disclosures, financial statements, surety bond, company policies, AML/BSA policy, information security/cybersecurity policy, business plan, disclosure questions, and regulatory review of character, experience, financial condition, and fitness.

For North Dakota specifically, the company must maintain $25,000 minimum net worth and a $50,000 surety bond. North Dakota also prohibits a branch registration that constitutes a prohibited “net branch” or “net branching arrangement,” so the ownership/control structure must be clean.

7. Timeline Estimate

North Dakota: If your filing is clean, I would estimate 2 to 6 weeks. North Dakota says its average new MLO processing time is 1 to 14 days, depending on completeness and response time, but company licensing usually takes longer than individual MLO approval.

South Dakota: I would estimate 3 to 8 weeks for a clean company filing, possibly longer if they request additional documents, fingerprints, financials, policies, or explanations.

For both states together, a realistic planning timeline is 45 to 90 days from preparation to final approval, assuming the company entity, financials, bond, policies, and NMLS filings are ready.

8. Does Your Current Experience Help?

Yes, it helps a lot.

Because you have been a licensed MLO and branch manager in North Dakota and South Dakota for the past four years, you likely avoid the biggest delays tied to starting from scratch, such as SAFE testing, PE education, new MLO licensing, and proving basic mortgage experience. Your existing licensing history should also help with regulator comfort, assuming your record is clean.

However, it does not eliminate the company licensing review. The new company still needs its own NMLS company record, bond, financials, control person disclosures, policies, state approvals, and sponsorship setup.

Bottom Line Estimate

For North Dakota + South Dakota only, I would budget:

Do-it-yourself filing: about $3,000 to $6,500
With consultant: about $7,000 to $14,000+
More conservative cushion: $15,000 available before launching

Your existing MLO and branch manager history gives you a meaningful advantage. The main work is not your individual license. The main work is getting the new company NMLS approved, bonded, financially documented, compliant, and properly structured without triggering net-branch or control-person issues.