-
Seasoned Mortgage Loan Officer , with credit issues, please advise
good morning all: any advise on this would be greatly appreciated
I am licensed currently in the state of Florida(been so since 2017) , I am renewed through the end of 2025 and I had a question as it pertains to renewal next year(2026) .
I am in a bad situation with my current car loan and due to a decrease in loan productions , some poor decisions and having multiple heart surgeries this year I am struggling financially. I am having a very hard time making the monthly payment on this vehicle and insurance and I need a way out … I am considering doing a voluntary repossession to turn the car in as I am underwater significantly(15-20k roughly) on the vehicle. I am current on this debt and all my credit cards and mortgage but I am struggling mightily to keep it all together
I wanted to confirm this will not impact my next NMLS renewal in any way?… as being an MLO is my main source income and I have been a great MLO the last 7 years helping many families.
I had a similar issue to a lesser extent in 2021 where i had a car charged off with 3k deficiency and i went on a payment plan for the remaining balance, but I am scared if I surrender it with such a big deficiency this time they would not grant me a payment plan I can afford
NMLS never questioned anything regarding credit fyi in my past renewals despite the past charge off and a few other late payments.
Any thoughts are greatly appreciated I am worried sick about this , I have always been a great loan officer I just made some judgment errors with my own finances unfortunately
-
5 Replies
-
It was a pleasure to meet you, Austin. I see situations like yours all the time, and I know being a loan officer the past few years has been very tough. However, I am confident the business will get better and with less competition due to half the loan originators and companies being out of business. With regards to your question, the good thing you have going is that you are renewing and not applying for a new license. In the past, you could renew with bad credit or while in a situation like you are in now. With me, I had tons of charge-offs and collections and even judgments and tax liens. It is up to the state. Each state has their own rules. Have you considered filing Chapter 7 bankruptcy? I had a hard time getting licensed in dozens of states. After filing Chapter 7 and getting it discharged, I had no problem getting licensed in all 50 states. I think that you should be fine with the extenuating circumstances on mortgage loan originators and real estate agents going through hard economic times due to high interest rates, skyrocketing inflation, and home values that are exorbitant prices and many being priced out of the market. Again, Florida is getting tougher on credit, as are Georgia, Texas, and other states. California, Illinois, Arizona, and Indiana are very easy states when it comes to credit. Please do not hesitate to contact me if you have any questions on this forum, or you can call or text me at 262-627-1965. You can try contacting each individual state, but depending on who answers the phone, they will just tell you to renew and wait what happens. I would seriously consider bankruptcy. You will be totally debt free and can get your credit to 700 in six to twelve months from discharge through getting secured credit cards as well as credit rebuilder cars. Or contact the auto finance lender and ask them if they can do a loan modification or voluntary surrender of your vehicle and will pay them $50 buck a month at a discounted balance amount at no interest. Or otherwise you are filing bankruptcy. Every credit is afraid of bankruptcy. Everything is negotiable.
-
Hope everything is good with you Austin. It saddens me to learn about your situation. In light of everything you have on your plate, it would be understandable to feel stressed. Now, with regards to your NMLS renewal and your current financial situation, here are some points to reflect upon:
NMLS Renewal Impact
Credit History: Yes, NMLS does review your credit history, but their focus is usually on the more serious matters such as bankruptcies and foreclosures. Because you have managed to stay current on your debts, I do not believe that a voluntary repossession would disqualify you from renewal, but it might raise questions.
Disclosure: In the event you do execute a voluntary repossession, be ready to report that in your renewal application. It is important to note that with your history of credit issues, transparency is very important.
Prior Experience: A good loan officer like yourself may have a history working in your favor. If you are able to prove that you are actively professional competent and willing to improve on your performance, it would soften concerns.
Financial Considerations
Voluntary Repossession: This certainly relieves most immediate pressure, but is important to note the impact it could have on a credit score long term. If you would be willing to negotiate a payment plan for the deficiency balance leftover, it could be less damaging than a repossession on your record.
Professional Help: You may look for a financial advisor or a credit counselor. They can guide you further on how to solve your issue using their debt consolidation services and assist you in avoiding repossession.
Emotional Support
If coping with stress seems very hard, not looking after your mental well-being during these tough times can be troublesome. Speak to family and close friends or join a support group so that you can express your concerns and seek attention.
Your credit issues may be a reason to worry during renewal, but as long as you remain transparent and show your professional strengths, you should be fine. The goal is to solve the matter in a way that suits your finances the best, so do not hesitate to get help.
All the best, and I wish you the best in recovering soon!
-
To start, I’m truly sorry that you’re dealing with this. You sound like you’ve been through a lot recently, so it’s perfectly normal to be concerned. The good news is an auto repossession by itself should not automatically disqualify you from renewing your NMLS license, but there are several things you need to remember.
How Credit Issues Affect NMLS Renewal
SAFE Act requires every MLO to show a certain level of financial responsibility, character, and general fitness. However, having a repossession or prior charge-off does not guarantee denial of renewal application.
For most states, Florida included, financial responsibility is looked at only for new license holders and not renewals. Considering you have been licensed since 2017 and have successfully renewed a number of times even with credit issues, it’s quite likely you will still be approved, barring any new severe regulatory issues or public complaints against you.
Do Voluntary Repossessions Create Problems?
A voluntary repossession will still impact your credit the same way as a regular repossession. The most worrisome part would be how the deficiency balance is managed.
If the lender were to send the deficiency to collections or take legal action against you, it could negatively damage your financial reputation.
Creating a repayment plan could improve the situation.
Considering NMLS has never flagged your credit issues during previous renewals, they probably won’t out of the blue this time. Although, if your credit report gets heavily damaged, they might request an explanation.
What steps can you take to protect your license?
Stay Ahead of Problems with the Lender
Attempt to negotiate a voluntary surrender with a set monthly repayment plan prior to turning in the vehicle.
Some lenders will consider a settlement for the owed amount, particularly if you convey you are in financial trouble.
If it’s within your financial means, even making a couple of dollars a month towards the deficiency will show responsibility on your part.
Keep an Eye on Your Credit
Your verified repossession won’t immediately disqualify you, but the sharp reduction in credit score or the defaulted collection account can be concerning.
If applicable, try to maintain other debts in good standing (which it appears you are already doing).
Draft an Explanation Letter (In Case of a Surprise Credit Inquiry)
If NMLS comes knocking on the door and asks about your credit, you can write an explanation for the following:
Financial hardships lived during medical issues (this is valid and understandable).
Your attempts to handle the debt in a reasonable manner.
Why this does not affect your ability to function as a loan officer.
Think About Speaking with A Credit Specialist or Lawyer
For those with large deficiencies and worries of collections or legal action, you may consider talking to a financial advisor or lawyer regarding potential options of reduced settlement or a hardship based repayment plan.
You were a loan officer for seven years, and NMLS has never put a flag on your credit before. A voluntary repossession can disqualify you but does not automatically disqualify you, provided you work on learning how to live with a deficiency balance. Considering your medical and financial problems, they may be willing to settle or allow you to make the payments.
If you stay on top of things, renewing should be a non-issue. Keep your head up. These steps you are taking prove you are not alone in this.
Do you want my assistance drafting an explanation letter in case NMLS calls?
-
Would you mind drafting a letter for my records?
-
Here’s a professional and well-structured letter for your records. This can be used for documentation purposes or shared with relevant parties for advice.
[Your Name]
[Your Address]
[City, State, ZIP Code]
[Your Email]
[Your Phone Number]
[Date]To Whom It May Concern,
Subject: Inquiry Regarding NMLS Renewal and Financial Hardship
Good morning,
I am writing to seek guidance regarding my NMLS license renewal for 2026 in light of some financial difficulties I am currently experiencing. I have been a licensed Mortgage Loan Officer in the state of Florida since 2017 and have successfully renewed my license each year, including my most recent renewal, which extends through the end of 2025.
Unfortunately, due to a combination of decreased loan production, personal financial missteps, and multiple heart surgeries this year, I have found myself in a challenging financial position. Specifically, I am struggling to keep up with the payments on my current vehicle, which is significantly underwater (by approximately $15,000–$20,000). Despite being current on my mortgage and credit card payments, I am finding it increasingly difficult to manage my overall financial obligations.
As a result, I am considering a voluntary repossession of the vehicle as a last resort. My concern is whether this action could negatively impact my ability to renew my NMLS license in 2026. I understand that financial responsibility is an important factor in maintaining licensure, and I want to ensure that this decision will not jeopardize my ability to continue working in my profession.
For context, I had a similar but less severe financial issue in 2021 when a previous vehicle was charged off with a deficiency of approximately $3,000. At that time, I was able to establish a payment plan, and my NMLS renewal was not affected. However, given the larger deficiency amount I may face this time, I am concerned that repayment options may not be as flexible.
I take great pride in my work as a Mortgage Loan Officer and have consistently helped families achieve homeownership over the past seven years. My financial difficulties do not reflect my commitment to ethical lending practices or my ability to perform my job effectively. I want to ensure that I handle this situation appropriately while protecting my career.
I would sincerely appreciate any guidance on this matter, particularly regarding how a voluntary repossession and potential deficiency balance might impact my next renewal. Any advice or resources you can provide would be extremely helpful during this difficult time.
Thank you for your time and consideration. I look forward to any insights you can share.
Sincerely,
[Your Name]Would you like any modifications or additions?
-
This reply was modified 1 month ago by Kay Anne.
-
This reply was modified 1 month ago by
-