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 mortgage loan originators have an account with the Nationwide Mortgage Licensing System & Registry (NMLS). The NMLS is responsible for maintaining information about mortgage loan originators (individuals) and Mortgage Brokers (companies) throughout the country.

The SAFE Act applies to all new and existing mortgage loan originators.

The SAFE Act defines a "mortgage 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 mortgage 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 mortgage 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.

Yes. This law applies to all states, territories, and possessions of the United States.

Mortgage 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.

All mortgage loan originators must have an account with the NMLS. 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 mortgage 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 mortgage 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 mortgage loan originators are subject to the education and testing requirements of the SAFE Act.

Some states require additional education beyond the base requirements contained within the federal 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 mortgage 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 check the NMLS website for updated information about individual state requirements.

http://mortgage.nationwidelicensingsystem.org/profreq/Documents/SAFE%20Compliant%20Requirements.pdf

Individuals must submit to criminal history and credit report checks.

Before applying for state licensure.

You will 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.

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, 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).

Test preparation, 20-hour pre-license, and continuing education courses are available. Follow these links for more information:

• National component test preparation
• Illinois state component test preparation
• Pennsylvania state component test preparation
• 20-Hour pre-license courses
• Continuing education courses

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

Some states may have additional requirements. See the NMLS Website for details.

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).

All new mortgage loan originators are required to pass the national component of the SAFE MLO test.

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 2 consecutive times with each consecutive taking occurring at least 30 days after the preceding test.
• After failing 3 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 mortgage loan originators will be required to do so. We have created a Prep-to-Pass program that includes our comprehensive study guide and online practice tests.

Click here for more information about our program.

There are 3 steps to create a SAFE MLO test enrollment and schedule an appointment.

1. Step 1: Establish an Individual Account in NMLS
   
   Please visit the NMLS Resource Center for information on how to create an account. You can also reference the Create an Individual Account Quick Guide, which provides step-by-step instruction.



2. Step 2: Create and Pay for a Test Enrollment Window
   
   After you have established an account on NMLS, you can create and pay for a test enrollment window. Please note: you can NOT schedule a test appointment without creating and paying for a test enrollment first.
   
   For information on how to enroll for a test, please refer to the Test Enrollment Quick Guide for MLOs on the NMLS Resource Center.



3. Step 3: Schedule a Test Appointment
   
   Once you have created a test enrollment, you are now ready to schedule your test appointment. Exams locations are hosted by PearsonVUE and Prometric. Locations are available throughout the country. Please go to the Test Center Locations page of the NMLS Resource Center.
Last Updated: 9/21/2010

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 online NMLS Resource Center provides detailed information about the tests including what will be covered on each test component, the number of questions, how each test is weighted and corresponding reference lists.

Real Estate Institute offers a test preparation program specifically designed to help mortgage loan originators prepare for the National Component of the SAFE Test. State test preparation programs are also available for Illinois and Pennsylvania.

Click here for more information about our program.

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

All Loan Originators working for State-licensed companies are required to complete a minimum of eight (8) credit hours of NMLS-Approved continuing education each calendar year. Real Estate Institute offers NMLS-Approved CE courses. Click here to learn more.

Yes. The SAFE Act requires mortgage loan originators to complete eight hours of NMLS approved continuing education annually. However, mortgage loan originators do not need to take continuing education in the same calendar year in which they took an NMLS-approved 20-hour pre-license class.

Yes. Real Estate Institute will report your course completion to the NMLS within 7 days of course completion.

Yes, we can coordinate everything for your firm. You choose a group coordinator, and we will send all certificates directly to that person. In addition, we will work with your group coordinator to streamline registration, attendance, and recordkeeping for all loan originators at your firm. Call us to learn more!

Mortgage loan originators do not need to take continuing education in the same calendar year that they complete an NMLS-approved 20 hour pre-license course. This is because you have already completed the 20 hour pre-license coursework required by the NMLS. If you have not already done so, click here to learn more.

Yes, we offer NMLS Approved continuing education courses. Click here for more information.

The NMLS website is a valuable resource: http://Mortgage.NationwideLicensingSystem.org

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.