The rogue loan officer will certainly be discovered when the entity he works for (mortgage banker or mortgage broker) is examined by the appropriate licensing authority – usually the state banking commissioner. All files, loan records and employee records may be examined and verified during the audit. Catching an unlicensed loan officer should be a simple task. An elementary first step is to pull some loan files and look at the credentials of loan officers who accepted those applications. I doubt that any intelligent employer would permit an unlicensed loan officer to continue taking applications as it also puts the broker license at risk.

Once the Nationwide Mortgage Licensing System & Registry (NMLS) is opened up to consumers (sometime in 2010) it should be a simple task for anyone to learn if a loan originator is properly and currently licensed. NMLS issues a unique identifier to every loan originator and consumers will be able to locate the record based upon that number or name. The record will indicate current licensing and education credits plus consumer complaints.