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What are the pre-licensing education requirements for mortgage lenders?
What are the pre-licensing education requirements for mortgage lenders?
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The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE) specifies the educational requirements that must be fulfilled before one applies for a mortgage lender’s license or is qualified as a Mortgage Loan Originator (MLO). The SAFE MLO requirements for those applying to be foster mortgage lenders or MLOs are administered and managed through the Nationwide Multistate Licensing System & Registry (NMLS). Here’s a breath-through of the basic general pre-licensing requirements:
Complete 20 Hours of NMLS:
- NMLS needs to have approved Pre-Licensing Education.
- If you wish to become an MLO, at least twenty (20) hours of pre-licensing education, approved by the National Mortgage Licensing Service, must be completed.
The 20-hour NMLS MLO is a one-time required course. It can be in a brick-and-mortar certified school or online. The NMLS 20-hour MLO course study requires and usually includes the following elements:
- Federal Laws Related to the Mortgage Industry (3 hours).
- These laws include the RESPA, TILA, ECOA, and others.
Recommended upon completion of the general course (3 hours). Educating people on fraud protection, consumer rights protections, and non-discriminatory issues.
Non-traditional Mortgage Products (2 hours): This section concerns non-traditional & GE mortgage products, including ARMs & FHA, VA, & USDA loans.
Electives (12 hours).
Including other subjects in the practice of the industry of mortgage loans, advertisement, finance, administration, and laws of the particular state.
State Specific Education Requirements:
- In addition to the 20 hours of more general pre-licensing education.
- Some states require education covering laws and regulations unique to the state where the MLO will be licensed.
- This can vary from an additional 1 to 4 hours, depending on the state.
For example, if you are applying for a license in California, Florida, or Texas, you will be required to undertake mortgaging lessons specifically addressed in that region.
Pass the National SAFE MLO Exam:
- In addition, once the education has been completed, the last stage is passing the National SAFE Mortgage Loan Originator Test with at least 75 percent.
- The examination usually has two parts.
- One is for all applicants, while the other may be required only for specific states.
An outline of the national component includes understanding federal laws regarding mortgage loans, how loan origination activities are undertaken, the code of ethics, and federal laws.
Obtain a Unique NMLS Identifier:
As part of the requirement, you must also gain a unique NMLS identifier before applying for the license. This identifier is used to follow up on an individual’s education, examination, and state license.
License Application:
Once the education program is finished and the exam is passed, one must file a license application through the NMLS using the form.
It usually includes:
- Background Check: A criminal background check is also a must, and fingerprints must be collected.
- Credit Report: Your credit report might be retrieved and checked for any signs of possible danger.
Application Fee: An application fee varies from state to state, but it must be paid in each state where the mortgage loan originator wants to get a license.
State Licensing Requirements:
- A state may also have its own licensing rules.
- This holds even if the licensee belongs to NMLS and has completed the education and exam on the topics.
- These rules may include requiring the filing of certain documents, collecting some fees, and proving financial responsibility.
- Understanding the criteria for the geographical location where you will be working as an MLO is essential.
Summary of Pre-Licensing Obligations:
Complete twenty hours of pre-licensing education that has NMLS. Provider Approval.
Complete other education required by the state.
Achieve a passing score on the SAFE MLO Exam (with national and state sections, if applicable).
Register the Applicant with NMLS and obtain a specific NMLS identification number.
Fill in a license application while complying with state regulations.
These conditions help confirm that the mortgage loan origin advertising practitioners, MLOs, are competent and knowledgeable of the law, ethical considerations, and practice, and therefore, clients will be safeguarded from exploitation.
https://gcamortgage.com/how-to-study-and-pass-the-nmls-exam/
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