The Secure and Fair Enforcement Mortgage Licensing Act was signed into law on June 30, 2008. This law, more commonly referred to as the “SAFE Act”, was enacted in order to increase uniformity, reduce regulatory burden, enhance consumer protection, and reduce fraud in the mortgage industry.

The SAFE Act requires that all Loan Originators register with the Nationwide Mortgage Licensing System & Registry (NMLS). The NMLS is responsible for maintaining information about Loan Originators (individuals) and Mortgage Brokers (companies) throughout the country.

The SAFE Act applies to all new and existing Loan Originators.

The SAFE Act defines a "loan originator" as an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain.

Under the SAFE Act, an individual assists a consumer in obtaining or applying to obtain a residential mortgage loan by, among other things, advising on loan terms (including rates, fees, other costs), preparing loan packages, or collecting information on behalf of the consumer with regard to a residential mortgage loan.

The Department of Housing and Urban Development (HUD) has further clarified that an individual cannot avoid licensure requirements by having someone else "take" the application.

HUD also clarified the limited contexts where offering or negotiating residential mortgage loan terms would not make an individual a loan originator:

• Offering or negotiating terms of a residential mortgage loan only with or on behalf of an immediate family member.
• Providing financing to a buyer pursuant to the sale of the seller's own residence.
• A licensed attorney negotiating terms of a residential mortgage loan with a prospective lender on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender, mortgage broker, or other mortgage loan originator or by an agent of such lender, mortgage broker, or other loan originator.
• In addition, loan processors that are purely involved in clerical functions are not required to be licensed as long as they are not independent contractors.

To date, all but one state has passed laws complying with the SAFE Act. States are in the process of transitioning to the new system.

Loan Originators who are employees of a FDIC insured bank or savings and loan, its subsidiary, or an institution regulated by the Farm Credit Administration are exempt from the state licensure, testing and education requirements of the Act.
However, these individuals are still required to register with the NMLS.

NMLS registration is required for all Loan Originators. This is intended to create a centralized national database of disciplinary information for individuals originating residential loans.

Registration is the only SAFE Act requirement for Loan Originators who are employees of a FDIC insured bank or savings and loan, its subsidiary, or an institution regulated by the Farm Credit Administration.

For all other Loan Originators, including those working for Mortgage Brokers and Mortgage Lenders, the SAFE Act also requires state licensure for each state where the individual originates loans. The licensure process will be facilitated through the NMLS and its systems. State-licensed loan originators are subject to the education and testing requirements of the SAFE Act.

The NMLS is an official system used to record information for state regulators. It is important that you coordinate your use of this system with your employer.

Detailed instructions are provided at the NMLS Website.

Yes, in addition to individual loan originators, a mortgage brokerage or mortgage lending company will create a record in the NMLS system. Using this "One Record Concept", NMLS allows for the creation and maintenance of a single record (Form MU1) for each company, regardless of the number of jurisdictions in which it is licensed.

This single record may be used to apply for, maintain, renew, or surrender licenses in all jurisdictions participating in NMLS. Companies will also be able to create and maintain a single record for each branch (Form MU3), control person (Form MU2) or mortgage loan originator (Form MU4).

The use of any of these forms is governed by the regulations of the state in which you are seeking licensure, not by NMLS.

Additional information is available at the NMLS Website.

Yes, however individuals are required to satisfy education, testing, and background check requirements before applying for a state license.

Requirements for individual state licensure are dictated by each state’s mortgage licensing law. However, certain requirements exist for all states, and the licensing process will be standardized and facilitated through the NMLS.

Requirements include:

• Background checks
• Testing
• Pre-license education
• Continuing education

Please continue to check our website for updated information about individual state requirements.

Yes. The deadline varies, depending on your current status:

PRE-NMLS STATE LICENSURE DATE	DEADLINE TO RECEIVE NMLS COMPLIANT STATE LICENSE
Not Currently Licensed	Ongoing**
Licensed 7/31/2009 or Earlier	7/31/2010
Licensed 8/1/2009 or Later	12/31/2010

** NMLS-compliant licensing is not yet available in all states. It may still be necessary for new applicants to become licensed under the old state rules, and then later apply for an NMLS-compliant state-license when it becomes available in that state.

Some states have established timelines requiring earlier licensure. For example, Pennsylvania requires all individuals to become licensed by 12/31/2009.

If you are not sure how to proceed, you should contact the state regulatory agency for more information.

Yes, you should be able to obtain a Loan Originator license under the current state law. To learn more about specific requirements and actions you must take to become licensed, you should contact the state regulatory agency.

Click here to view detailed information can be found at the NMLS website.

Individuals must submit to criminal history and credit report checks.

Yes. Loan Originators will have to resubmit to this process even if they completed a similar process to earn an existing state license.

Before applying for state licensure.

This information is not yet available from the NMLS. We will provide more information as it becomes available. You can also find information at the NMLS Website.

Applicants are required to:

• Pass a standardized national examination.
• Pass a standardized state examination.
• Complete 20 hours of pre-license course curriculum.
• Complete 8 hours of continuing education course curriculum each calendar year.
  NOTE: NMLS continuing education won't be required until at least 2010 for Loan Originators licensed under the NMLS. See below for additional information.

See below for more detailed information about the above requirements. Some exceptions apply.

No. You must complete the pre-license course requirement and pass the exam(s), but you may do so in either order.

If you work for an insured depository regulated by OCC, OTS, FDIC, FED and NCUA or the Farm Credit Administration you are not required to take the SAFE-required pre-license or continuing education courses or examinations.

You still can and may want to take the relevant pre-license and continuing education courses. This would be a good idea if you have considered changing employment and going to work for a state-licensed lender or broker.

Real Estate Institute is an NMLS-Approved Course Provider (#1400102).

We currently offer programs that will help prepare you for the required national exam component. Click here for more information.

The NMLS is just beginning to approve pre-license and continuing education programs. We plan to offer approved courses soon.

NOTE: Exam preparation programs are not required to be approved by the NMLS. As such, our exam preparation programs are not NMLS Approved courses.

Not necessarily. This requirement can be met if:

• the Loan Originator completes or has completed pre-license or continuing education as part of his or her existing state licensure requirement
and
• the state regulatory agency can certify that the 20 hours of state-required education has been completed. States are still determining the process for certifying such completed hours, and some states may not elect to certify hours.

We will post more information about this topic as it becomes available from the NMLS and individual states.

The SAFE Act requires that the 20 hours of pre-license education shall include:

• 3 hours of Federal law and regulations
• 3 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues
• 2 hours of training related to lending standards for the nontraditional mortgage product marketplace. HUD has acknowledged that “nontraditional mortgage product” means any mortgage product other than a 30 year fixed rate mortgage
• 12 hours of other instruction on mortgage origination

No. These courses must be offered as classroom courses, Classroom Equivalent Courses (such as video-conferencing), or Online Instructor Led Courses (a comprehensive, interactive online course similar to those offered at online universities).

This depends on whether you have an existing state-issued Loan Originator license.

Individuals with an existing state-issued license:
You should first determine if pre-license or continuing education you have already completed can be certified by your state regulatory agency. If so, this may mean that you won’t have to complete pre-license education before applying for state-licensure.

States are still developing standards and procedures for course certification. We will post more information about this topic as it becomes available from the NMLS and states.

Individuals without an existing state-issued license:
(This includes individuals who currently originate loans for a state that did not require individual licensing prior to conformance with the SAFE Act)

You are required to complete pre-license education before applying for state-licensure.

We will post more information as we begin to offer approved courses.

Loan originators who were previously licensed by July 31, 2009 must satisfy the requirement by December 31, 2010, or by an earlier deadline determined by a state.

Loan originators who have not been previously licensed must complete 20 hours of NMLS approved pre-license education by July 31, 2010, or by an earlier deadline determined by a state.

All new and existing Loan Originators will be required to pass the national examination component.

Individual state laws will determine if existing Loan Originators are exempt from the state component. States are still developing standards, requirements, and processes related to these exemptions.

Click here to view additional information at the NMLS website.

All questions are multiple-choice.

The national component contains 100 questions. Of those, 90 are scored and 10 are excluded from your score because they are being evaluated for use in future exams.

The number of questions varies for state components, but you should expect between 45 and 55 scored questions.

Each SAFE test requires a passing score of at least 75%.

You are permitted to retake the exam, but there are mandatory waiting periods between each attempt.

The following rules apply to both the national and state examinations:

• An individual may retake a test 3 consecutive times with each consecutive taking occurring at least 30 days after the preceding test.
• After failing 4 consecutive tests, an individual shall wait at least 6 months before taking the test again.

You should begin studying to pass the national examination, since all Loan Originators will be required to do so. We have created a Prep-to-Pass program that includes our comprehensive study guide and online assessment exams.

Click here for more information about our program.

It’s important that you begin to prepare now, as there are waiting periods between each attempt at passing the exam.

The following rules apply to both the national and state examinations:

• An individual may retake a test 3 consecutive times with each consecutive taking occurring at least 30 days after the preceding test.
• After failing 4 consecutive tests, an individual shall wait at least 6 months before taking the test again.

Exams locations are hosted by PearsonVUE and Prometric. Locations are available throughout the country. Click here to view a list of test center locations for your state.

Yes, you can schedule both tests for the same day. However, you must register and pay for the exams separately. If scheduling for the same day, be sure to allow enough time between scheduled tests so that you won't be rushed to complete the first test.

You are permitted to use a basic calculator, but not a financial calculator or any other device with memory features. Although the test may include math questions, you will be provided enough information to solve the problem without the use of a financial calculator.

The NMLS provides detailed information at their website.

Real Estate Institute offers a test preparation program specifically designed to help loan originators prepare for the National Component of the SAFE Test.

Click here for more information about our program.

Yes. The SAFE Act requires Loan Originators to complete eight hours of NMLS approved continuing education annually. However, Loan Originators do not need to take continuing education in the calendar year in which their first NMLS state license was granted.

As a result, no NMLS approved continuing education is required in any state for 2009. Continuing education will first be required in 2010, and then only for individuals who first obtained their NMLS state license in 2009. Most individuals will first require NMLS approved continuing education in 2011.

Not yet. No NMLS approved continuing education is required for Loan Originators in any state for 2009.

We plan to offer NMLS Approved continuing education courses in the future.

NOTE: Loan Originators who are not yet licensed under the NMLS must remain compliant with individual state requirements for 2009.

Yes, you should complete any continuing education required for you to remain compliant. Once you become licensed under the NMLS, you will then be subject to requirements of the SAFE Act.

For additional information about state-specific requirements, you should contact the appropriate state regulatory agency.

The NMLS website is a valuable resource: http://www.stateregulatoryregistry.org/AM/Template.cfm?Section=Home3

Our customer representatives at the Real Estate Institute are available to help.
Please call us with your questions: (800) 995-1700.

The NMLS Call Center is also available: (240) 386-4444.