A mortgage broker works as a conduit between the borrower and the lender. Most states require the mortgage broker to be licensed. States regulate lending practice and licensing, but the rules vary.

A mortgage broker is normally registered with the state, and personally liable (punishable by revocation or prison) for fraud for the life of a loan. MLBs have legal, moral, and professional responsibilities as well as liabilities to prevent fraud and fully disclose loan terms to both borrower and lender.

Mortgage brokers must also be licensed through the Nationwide Mortgage Licensing System and Registry (NMLS). The purpose of the Nationwide Mortgage Licensing System is to improve and enhance mortgage industry supervision, create better communication from state to state, and to create consistency in licensing requirements and automate the licensing process to the greatest degree possible.