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The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) established requirements for the licensing and registration of all Mortgage Loan Originators (MLOs). MLOs who work for an insured depository or its owned or controlled subsidiary are not required to take the education or exams. All other MLOs need to be licensed by the state, complete the education requirements, and pass the state and national SAFE exams.
The SAFE Act requires that state-licensed MLOs pass a written qualified test with a score of 75% or better, complete at least 20 hours of pre-licensing education courses, and take eight hours of annual continuing education courses. The SAFE Act also requires all MLOs to submit fingerprints to the NMLS for submission to the FBI for a criminal background check. State-licensed MLOs will provide authorization for NMLS to obtain an independent credit report.
The NMLS is a secure Internet-based learning system for the residential mortgage industry. It is designed to be a centralized and standardized system that will streamline the licensing process for both regulatory agencies and the mortgage industry. The NMLS initiative was begun by state mortgage regulators in 2004 in response to the increased volume and variety of residential mortgage originators and the need to address these changes with modern tools and authorities. Specifically, NMLS was created by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR). It is owned and operated by the State Regulatory Registry LLC (SRR), a wholly owned subsidiary of CSBS. The system has been built and maintained by the Financial Industry Regulatory Authority (FINRA), who operates similar systems in the securities industry. There are 44 states (and Puerto Rico) that have joined the NMLS. The rest are to transition by the end of 2010.
The SAFE Mortgage Loan Originator Exam is divided into two sections: the national component and the state-specific component.
The national component of the SAFE Mortgage Loan Originator Exam consists of 90 operational (scored) questions and 10 pre-test (not scored) questions. The exam is 150 minutes in length with an additional 30 minutes available for completion of an optional candidate survey and tutorial.
Each state-specific component of the SAFE Mortgage Loan Originator Exam consists of 45 to 55 operational questions (scored) with an additional 10 pre-test (not scored) questions. The exact number of scored test questions for each state exam is listed in the state’s test content outline. The exam time is 90 minutes with an additional 30 minutes available for completion of an optional candidate survey and tutorial.
Learn more about the exam.
In order to meet the pre-licensing education requirements, state-licensed MLOs must complete 20 hours of NMLS approved education.
20-Hour Example*:
- 3 hours of federal law and regulations
- 3 hours of ethics, which includes instruction on fraud, consumer protection, and fair lending issues
- 2 hours of training related to lending standards for the nontraditional mortgage product marketplace
- 12 hours of undefined instruction on mortgage origination
*some states vary on the hour requirements.
For annual continuing education, the SAFE Act requires state-licensed MLOs to complete the following:
- 3 hours of federal law and regulation
- 2 hours of ethics, which includes instruction on fraud, consumer protection, and fair lending issues
- 2 hours of training related to lending standards for the nontraditional mortgage product market
- 1 hour of undefined instruction on mortgage origination
Learn more about the NMLS
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Steps To Take
The following guide summarizes the steps you must take in order to meet the new education and testing requirements set by the SAFE Act:
Step 1
Kaplan recommends that you register with the NMLS and receive your individual ID number. This number will allow Kaplan to report your successful completion of the required education and will allow you to sit for your exams with the NMLS testing provider.
Note: An NMLS individual ID number is not required to enroll in Kaplan’s courses, but you will need to provide us your NMLS ID number by the end of the course in order to receive credit for the education.
The link below will take you to the NMLS Web site for a complete ID number log in guide. [Visit NMLS Website]
Step 2
Enroll in your Kaplan courses and complete your orientation. Our live online virtual classroom course is presented in an innovative format. Live classroom instruction is also available in major metro areas of California, Colorado, and Minnesota. The National and State-Specific Exam Preparation courses are offered OnDemand to allow you access at your leisure. Kaplan has developed a quick, convenient, and superior way for you to complete your required education.
Step 3
Schedule your exam with the NMLS exam provider. You must complete both a national and state exam. The national exam consists of 90 questions and is reciprocal across all states. Your state exam will be between 45 and 55 questions and will differ across all states.
Reserve your SAFE exam date with an NMLS exam provider.
Step 4
Access and complete your licensing and exam prep courses.
Note: Kaplan will report your course completion to the NMLS within 7 days of completion.
Step 5
Successfully pass your National and State-Specific SAFE exams!
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