As a mortgage or real estate professional, hopefully by now you’re familiar with the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act). This act establishes nationwide requirements for the licensing and registration of all Mortgage Loan Originators (MLOs). Although states determine the timeframe for completing the SAFE requirements, there are guidelines that need to be met by all MLO professionals in a timely manner. If you are involved in any MLO activities, this means that you need to fulfill specific requirements.
Why the Secure and Fair Enforcement for Mortgage Licensing Act?
The Secure and Fair Enforcement for Mortgage Licensing Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loans. It serves to regulate the mortgage industry and decrease the number of faulty loans that are approved to non-qualifying buyers.
What are the Compliance Requirements for Industry Professionals?
As a professional involved in the mortgage loan origination process, you must meet the following requirements in order to become S.A.F.E. compliant. In addition to these requirements, your state may require additional action. Contact your state’s agency for specific information.
Pre-licensure Education: The Secure and Fair Enforcement for Mortgage Licensing Act requires you to complete 20 hours of NMLS approved pre-licensure education. If you are licensed in more than one state, the good news is that you only need to complete this education once. Please note, however, that there may be more than 20 hours of education required by your state – do your research to determine your state-specific information.
SAFE MLO Test: S.A.F.E. requires you to pass both the National and State Components of the S.A.F.E. MLO Test. The National Component only needs to be passed once and satisfies all state requirements – you must score 75% or better on the national part of the test. The State Component must be passed for each state in which you seek licensure.
Criminal Background Check: S.A.F.E. requires that you provide fingerprints for an FBI criminal history background check.
Credit report: The Secure and Fair Enforcement for Mortgage Licensing Act requires that you provide authorization for NMLS&R to obtain a credit report.
Continuing Education (CE): S.A.F.E. requires 8 hours of continuing education to be completed each year prior to renewal. Please note that continuing education hours are not required to be completed if pre-licensure education was completed in the same year. Each agency may require more than the designated 8 hours or require a certain number of hours with state content. For details on your state’s requirements, contact your state agency.
What Happens if Mortgage Loan Originators Don’t Complete the S.A.F.E. Requirements?
As a professional involved in the mortgage loan origination process, it is imperative that you complete the S.A.F.E. requirements by your state’s deadline. Failure to comply will result in a delay to your career because you will not be able to conduct loan origination activities. Additionally, if you do not properly prepare for the MLO test and fail to pass, you will have to re-take the exam, leading to more out-of-pocket costs and disruption to your career – there is a required 30-day waiting period between failed exams. There is no reason not to comply – get started today, avoid career interruption.
As a professional MLO, you need to complete the Secure and Fair Enforcement for Mortgage Licensing Act requirements in a timely manner so you meet your state’s deadline. Plan ahead today so you have ample time to prepare and complete all of the S.A.F.E. requirements. From the 20-hour course to prepping for the national and state components of the MLO test, the key is to be proactive. This is your career and you need to take action so that you are in compliance before the deadline.