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How Much of Your Past Should You Disclose on the Mortgage License Application
By Robin Gronsky
My firm completes the mortgage license applications for our clients and then sends them to the clients for signature. Before I start working on each client��s applications, I ask the owners whether there are any arrests, convictions, bankruptcies, or regulatory issues with other states that I need to know about. Frequently, the answer is ��no��, when the answer should be ��yes.��
If you have been arrested as a 17-year old and your arrest has been expunged, you still need to disclose it on the application. If you were arrested 20 years ago and the case was dismissed, you need to disclose that arrest on the application. The judge, the court clerk, your lawyer, told you didn��t need to disclose your arrest on a job application. But, you need to disclose it on the license application. Why? Because the criminal background search will disclose it and then you need to answer a lot of questions from the Banking Department reviewer: What was the arrest for? What was the disposition of your case? Why did you not disclose the arrest? What else are you not disclosing? Although the last question may not be asked by the reviewer, it is certainly on his mind. Your previously clean application has now become tainted by doubts as to your willingness to be honest with your customers.
Similar issues arise with bankruptcies. No matter how far in your past the bankruptcy happened, unless the application question limits the timeframe to a particular number of years in the past, should you disclose a bankruptcy that happened 15 years ago? Yes, full disclosure is better than non-disclosure. When you are upfront about past problems, and especially where they have not recurred, your honesty and willingness to divulge difficulties in your past disposes the reviewer towards your application.
What about issues with other regulatory agencies, other states�� banking departments? Examples are that an examination revealed that you did not register all of your loan officers, or that you failed to timely file an annual report and you had to enter into a cease and desist order, or you did not disclose that you had to issue refunds to borrowers. How much do you need to confess? I counsel my clients that when they are in doubt as to whether to disclose, they should give all of the details. The most important detail is that the difficulty with the regulatory agency was solved, that it has never happened again and that you have instituted procedures so that the problem will not happen in the future.
Licensing agencies do not expect every applicant to be a perfect candidate. They do expect that you will not try to hide your mistakes. Lying or omissions on the application can be a ground for denial of your application. And once an application is denied in one state, you may need to disclose that fact on every application and renewal in the future.
Gronsky Law Office represents numerous mortgage brokers and mortgage lenders with their licensing and compliance needs. Her office is in Ridgewood, New Jersey. Ms. Gronsky's practice is geared to maintain personal contact with her clients and develop a close-working professional relationship over a long period of time. This helps assure that her clients' work will be performed by the lawyer they have chosen.
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